EXHIBIT 10.3
LEASE
BY AND BETWEEN
SAN ▇▇▇▇ TECHNOLOGY PROPERTIES, LLC,
A DELAWARE LIMITED LIABILITY COMPANY,
AS LANDLORD
AND
ALL AMERICAN SEMICONDUCTOR OF
NORTHERN CALIFORNIA, INC.
A CALIFORNIA CORPORATION
AS TENANT
AFFECTING PREMISES COMMONLY KNOWN AS
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ AND ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
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TABLE OF CONTENTS
PAGE
----
ARTICLE 1 - DEFINITIONS 7
ARTICLE 2 - DEMISE, CONSTRUCTION, AND ACCEPTANCE 9
ARTICLE 3 - RENT 10
ARTICLE 4 - USE OF PREMISES 12
ARTICLE 5 - TRADE FIXTURES AND ALTERATIONS 14
ARTICLE 6 - REPAIR AND MAINTENANCE 16
ARTICLE 7 - WASTE DISPOSAL AND UTILITIES 18
ARTICLE 8 - COMMON OPERATING EXPENSES 19
ARTICLE 9 - INSURANCE 21
ARTICLE 10 - LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY 23
ARTICLE 11 - DAMAGE TO PREMISES 24
ARTICLE 12 - CONDEMNATION 25
ARTICLE 13 - DEFAULT AND REMEDIES 26
ARTICLE 14 - ASSIGNMENT AND SUBLETTING 28
ARTICLE 15 - GENERAL PROVISIONS 32
EXHIBITS
Exhibit A - Site plan of the Project containing a description of the
Premises
Exhibit B - Work Letter for Tenant Improvements (with Exhibit B-1, the
Space Plan)
Exhibit C - Acceptance Agreement
Addendum No. 1
2
SUMMARY OF BASIC LEASE TERMS
SECTION TERMS
(LEASE REFERENCE)
A. LEASE REFERENCE DATE: October 1, 1998
(Introduction)
B. LANDLORD: SAN ▇▇▇▇ TECHNOLOGY PROPERTIES,
(Introduction) LLC a Delaware limited
liability company
C. TENANT: ALL AMERICAN SEMICONDUCTOR OF
(Introduction) NORTHERN CALIFORNIA, INC. a
California corporation
D. PREMISES: That area consisting of (a)
(ss.1.21) approximately 9,400 square feet
of gross leasable area, the
address of which is ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ (the "Zanker
Road Space"), and (b)
approximately 10,791 square
feet of gross leasable area,
the address of which is ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ (the
"Devcon Drive Space"). The
Zanker Road Space and the
Devcon Drive Space are both
located within the Building as
shown on EXHIBIT A.
E. PROJECT: The land and improvements shown
(ss.1.22) on EXHIBIT A consisting of the
Building and three other
commercial buildings the
aggregate gross leasable area
of which is 163,073 square
feet.
F. BUILDING: The building in which the
(ss.1.7) Premises are located, as
outlined in Exhibit A attached
hereto, which building contains
approximately 45,123 square
feet of gross leasable area.
G. TENANT'S SHARE: Prior to the Commencement Date
(ss.1.29) for the Devcon Drive Space,
Tenant's Share shall be 20.83%
of the Building (i.e.,
9,400/45,123) and 5.76 of the
Project (i.e., 9,400/163,073).
From and after the Commencement
Date for the Devcon Drive
Space, Tenant's Share shall be
44.75% of the Building (i.e.,
20,191/45,123) and 12.38% of
the Project
(i.e.,20,191/163,073).
H. TENANT'S ALLOCATED
(ss.4.5) PARKING STALLS: A total of eighty-one (81)
parking stalls for all of the
Premises (i.e., the Zanker Road
Space and the Devcon Drive
Space). Prior to the
Commencement Date for the
Devcon Drive Space, Tenant
shall be allocated 38 parking
stalls for the Zanker Road
Space and upon the Commencement
Date for the Devcon Drive
Space, an additional 43 parking
stalls. Based approximately on
a ratio of four stalls per
1,000 square feet of space.
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I. SCHEDULED COMMENCEMENT February 1, 1999 for the Zanker
(ss.1.26) DATE: Road Space, and March 1, 1999
for the Devcon Drive Space.
Tenant has been leasing the
Devcon Drive Space pursuant to
the terms of the certain
Industrial Real Estate Lease
dated November 11, 1993,
initially by and between the
State Teachers' Retirement
System and Tenant (the
"Existing Devcon Space Lease").
Landlord has succeeded to the
interests of the Landlord under
the Existing Devcon Space
Lease. Effective as of March 1,
1999, Tenant will be leasing
the Devcon Drive Space pursuant
to the terms of this Lease and
the Existing Devcon Space Lease
shall be terminated
automatically.
J. LEASE TERM: For the Zanker Road Space,
(ss.1.18) commencing on the earlier of
(a) "Substantial Completion" of
the "Tenant Improvements" (as
such terms are defined in
Exhibit B attached hereto), or
(b) the date that Tenant takes
possession of the Zanker Road
Space and expiring on February
28, 2004; and for the Devcon
Drive Space, commencing on
March 1, 1999, with the Lease
Term expiring for all of the
Premises (i.e., the Zanker Road
Space and Devcon Drive Space)
on February 28, 2004. If the
Commencement Date is other than
the first day of the calendar
month and such date is prior to
March 1, 1999, the first
calendar month shall include
such partial month in which
such Commencement Date occurs
plus the next full calendar
month and Base Monthly Rent for
such first month shall include
the full monthly rent for the
first full calendar month plus
monthly rent for the partial
month in which the Commencement
Date occurs prorated on a daily
basis at the monthly rent
provided for the first calendar
month.
SEE ADDENDUM NO. 1 FOR TENANT'S
OPTION TO EXTEND.
4
K. Base Monthly Rent:
(ss.3.1) ------------------
Monthly Amount Monthly Amount
Months Zanker Road Space Devcon Drive Space
------ ----------------- ------------------
1st month - 2/28/99 $14,570.00 Governed by Existing
Devcon Space Lease
3/1/99 - 2/28/00 $14,570.00 $16,726.05
3/1/00 - 2/28/01 $15,298.50 $17,562.35
3/1/01 - 2/28/02 $16,063.43 $18,440.47
3/1/02 - 2/28/03 $16,866.60 $19,362.49
3/1/03 - 2/28/04 $17,709.93 $20,330.62
L. PREPAID RENT: $14,570.00, plus Tenant's Share of
(ss.3.3) Common Operating Expenses for the Zanker Road Space.
M. SECURITY DEPOSIT: The sum of $38,071.78, of which
(ss.3.5) $6,700.00 is currently held by
Landlord as the security
deposit under the Existing
Devcon Space Lease and will be
applied to the security deposit
required under this Lease
immediately following the
expiration of the term of the
Existing Devcon Space Lease.
N. PERMITTED USE: administrative offices,
(ss.4.1) engineering and sales offices,
light manufacturing and
warehouse for electronic
components for the
semiconductor industry and uses
incidental thereto.
O. PERMITTED TENANT'S ALTERATIONS LIMIT: $5,000.00, which
(ss.5.2) is applicable separately for each alteration project.
As provided in Exhibit B attached hereto, the
Construction Plans may also reflect work that may be
done in approximately 6,000 square feet of space in
the front of the Zanker Road Space ("Future Alteration
Work") , which is the area that Tenant may sublet as
hereinafter provided. Landlord's approval of the
Construction Plans in accordance with Exhibit B shall
constitute approval for the construction of the Future
Alteration Work to the extent such work is shown in
the Construction Plans even though such work will not
be done by the Landlord in connection with the
construction of the Tenant Improvements.
P. TENANT'S LIABILITY
(ss.9.1) INSURANCE MINIMUM: $3,000,000.00
Q. LANDLORD'S ADDRESS: c/o Divco West Group, LLC
(ss.1.3)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Property Manager
With a copy to: Divco West Group, LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: Asset Manager
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R. TENANT'S ADDRESS: All American Semiconductor of
(ss. 1.3) Northern California, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇,▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
With a copy to: All American Semiconductor,Inc.
▇▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
S. RETAINED REAL ESTATE BROKERS: ▇▇▇▇▇ ▇▇▇▇▇▇▇ and
(ss.15.13) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, of Colliers ▇▇▇▇▇▇▇ International,
Inc., representing the Landlord, and ▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ of ▇▇▇▇▇▇ ▇▇▇▇, Inc., representing
the Tenant.
T. LEASE: This Lease includes the summary of the
(ss.1.17) Basic Lease Terms, the Lease, and the
following exhibits and addenda:
EXHIBIT A - Project Site Plan and
Outline of the Premises
EXHIBIT B - Work Letter for Tenant
Improvements (with Exhibit B-1,
the Space Plan)
EXHIBIT C - Acceptance Agreement
ADDENDUM NO. 1
The foregoing Summary is hereby incorporated into and made a part of
this Lease. Each reference in this Lease to any term of the Summary shall mean
the respective information set forth above and shall be construed to incorporate
all of the terms provided under the particular paragraph pertaining to such
information. In the event of any conflict between the Summary and the Lease, the
Summary shall control.
LANDLORD: TENANT:
SAN ▇▇▇▇ TECHNOLOGY PROPERTIES, LLC, By: ALL AMERICAN SEMICONDUCTOR
a Delaware limited liability company OF NORTHERN CALIFORNIA, INC.
a California corporation
By: Divco West Group, LLC,
a Delaware limited liability company By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its Manager ---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Pres. & CEO
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its: President
6
LEASE
This Lease is dated as of the lease reference date specified in SECTION
A of the Summary and is made by and between the party identified as Landlord in
SECTION B of the Summary and the party identified as Tenant in SECTION C of the
Summary.
ARTICLE 1
DEFINITIONS
1.1 GENERAL: Any initially capitalized term that is given a special
meaning by this Article 1, the Summary, or by any other provision of this Lease
(including the exhibits attached hereto) shall have such meaning when used in
this Lease or any addendum or amendment hereto unless otherwise clearly
indicated by the context.
1.2 ADDITIONAL RENT: The term "Additional Rent" is defined in P.
3.2.
1.3 ADDRESS FOR NOTICES: The term "Address for Notices" shall mean
the addresses set forth in SECTIONS Q AND R of the Summary; provided, however,
that after the Commencement Date, Tenant's Address for Notices shall be the
address of the Premises.
1.4 AGENTS: The term "Agents" shall mean the following: (i) with
respect to Landlord or Tenant, the agents, employees, and contractors of such
party; and (ii) in addition with respect to Tenant, Tenant's subtenants and
their respective agents, employees and contractors.
1.5 AGREED INTEREST RATE: The term "Agreed Interest Rate" shall mean
that interest rate determined as of the time it is to be applied that is equal
to the lesser of (i) 5% in excess of the discount rate established by the
Federal Reserve Bank of San Francisco as it may be adjusted from time to time,
or (ii) the maximum interest rate permitted by Law.
1.6 BASE MONTHLY RENT: The term "Base Monthly Rent" shall mean the
fixed monthly rent payable by Tenant pursuant to P. 3.1 which is specified in
SECTION K of the Summary.
1.7 BUILDING: The term "Building" shall mean the building in which
the Premises are located which Building is identified in SECTION F of the
Summary, the gross leasable area of which is referred to herein as the "Building
Gross Leasable Area."
1.8 COMMENCEMENT DATE: The term "Commencement Date" is the date the
Lease Term commences, which term is defined in P. 2.2.
1.9 COMMON AREA: The term "Common Area" shall mean all areas and
facilities within the Project that are not designated by Landlord for the
exclusive use of Tenant or any other lessee or other occupant of the Project,
including the parking areas, access and perimeter roads, pedestrian sidewalks,
landscaped areas, trash enclosures, recreation areas and the like.
1.10 COMMON OPERATING EXPENSES: The term "Common Operating Expenses"
is defined in P. 8.2.
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1.11 EFFECTIVE DATE: The term "Effective Date" shall mean the date
the last signatory to this Lease whose execution is required to make it binding
on the parties hereto shall have executed this Lease.
1.12 EVENT OF TENANT'S DEFAULT: The term "Event of Tenant's Default"
is defined in P. 13.1.
1.13 HAZARDOUS MATERIALS: The terms "Hazardous Materials" and
"Hazardous Materials Laws" are defined in P. 7.2E.
1.14 INSURED AND UNINSURED PERIL: The terms "Insured Peril" and
"Uninsured Peril" are defined in P. 11.2E.
1.15 LAW: The term "Law" shall mean any judicial decision, statute,
constitution, ordinance, resolution, regulation, rule, administrative order, or
other requirement of any municipal, county, state, federal or other government
agency or authority having jurisdiction over the parties to this Lease or the
Premises, or both, in effect either at the Effective Date or any time during the
Lease Term, including, without limitation, any Hazardous Material Law (as
defined in P. 7.2E) and the Americans with Disabilities Act, 42 U.S.C. ▇▇.▇▇.
12101 et. SEQ. and any rules, regulations, restrictions, guidelines,
requirements or publications promulgated or published pursuant thereto.
1.16 LEASE: The term "Lease" shall mean the Summary and all elements
of this Lease identified in SECTION T of the Summary, all of which are attached
hereto and incorporated herein by this reference.
1.17 LEASE TERM: The term "Lease Term" shall mean the term of this
Lease which shall commence on the Commencement Date and continue for the period
specified in SECTION J of the Summary.
1.18 LENDER: The term "Lender" shall mean any beneficiary, mortgagee,
secured party, lessor, or other holder of any Security Instrument.
1.19 PERMITTED USE: The term "Permitted Use" shall mean the use
specified in SECTION N of the Summary.
1.20 PREMISES: The term "Premises" shall mean that building area
described in SECTION D of the Summary that is within the Building. Prior to the
Commencement Date for the Devcon Drive Space, the term "Premises" shall mean the
Zanker Road Space and from and after the Commencement Date for the Devcon Drive
Space, the term "Premises" shall mean the Zanker Road Space and the Devcon Drive
Space.
1.21 PROJECT: The term "Project" shall mean that real property and
the improvements thereon which are specified in SECTION E of the Summary, the
aggregate gross leasable area of which is referred to herein as the "Project
Gross Leasable Area."
1.22 PRIVATE RESTRICTIONS: The term "Private Restrictions" shall mean
all recorded covenants, conditions and restrictions, private agreements,
reciprocal easement agreements, and any other recorded instruments affecting the
use of the Premises which (i) exist as of the Effective Date, or (ii) are
recorded after the Effective Date and are approved by Tenant.
1.23 REAL PROPERTY TAXES: The term "Real Property Taxes" is defined
in P. 8.3.
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1.24 SCHEDULED COMMENCEMENT DATE: The term "Scheduled Commencement
Date" shall mean the date specified in SECTION I of the Summary.
1.25 SECURITY INSTRUMENT: The term "Security Instrument" shall mean
any underlying lease, mortgage or deed of trust which now or hereafter affects
the Project, and any renewal, modification, consolidation, replacement or
extension thereof.
1.26 SUMMARY: The term "Summary" shall mean the Summary of Basic
Lease Terms executed by Landlord and Tenant that is part of this Lease.
1.27 TENANT'S ALTERATIONS: The term "Tenant's Alterations" shall mean
all improvements, additions, alterations, and fixtures installed in the Premises
by Tenant at its expense which are not Trade Fixtures.
1.28 TENANT'S SHARE: The term "Tenant's Share" shall mean the
percentage obtained by dividing Tenant's Gross Leasable Area by the Building
Gross Leasable Area for Tenant's Share of the Building and by the Project Gross
Leasable Area for Tenant's Share of the Project, which as of the Effective Date
is the percentage identified in SECTION G of the Summary.
1.29 TRADE FIXTURES: The term "Trade Fixtures" shall mean (i)
Tenant's inventory, furniture, signs, and business equipment, and (ii) anything
affixed to the Premises by Tenant at its expense for purposes of trade,
manufacture, ornament or domestic use (except replacement of similar work or
material originally installed by Landlord) which can be removed without material
injury to the Premises unless such thing has, by the manner in which it is
affixed, become an integral part of the Premises.
ARTICLE 2
DEMISE, CONSTRUCTION, AND ACCEPTANCE
2.1 DEMISE OF PREMISES: Landlord hereby leases to Tenant, and Tenant
leases from Landlord, for the Lease Term upon the terms and conditions of this
Lease, the Premises for Tenant's own use in the conduct of Tenant's business
together with (i) the non-exclusive right to use the number of Tenant's
Allocated Parking Stalls within the Common Area (subject to the limitations set
forth in P. 4.5), and (ii) the non-exclusive right to use the Common Area for
ingress to and egress from the Premises. Landlord reserves the use of the
exterior walls, the roof and the area beneath and above the Premises, together
with the right to install, maintain, use, and replace ducts, wires, conduits and
pipes leading through the Premises in locations which will not materially
interfere with Tenant's use of the Premises.
2.2 COMMENCEMENT DATE: The Scheduled Commencement Date for the
Zanker Road Space is only an estimate of the actual Commencement Date for such
space, and the term of this Lease for the Zanker Road Space shall begin on the
earlier of: (a) "Substantial Completion" of the "Tenant Improvements" (as such
terms are defined in Exhibit B attached hereto), or (b) the date that Tenant
takes possession of the Zanker Road Space (herein referred to as the
"Commencement Date" as it pertains to the Zanker Road Space. As of the date of
this Lease, Tenant is currently leasing the Devcon Drive Space pursuant to the
Existing Devcon Space Lease which is scheduled to expire on February 28, 1998.
Immediately following the expiration of the Existing Devcon Space Lease, Tenant
shall lease the Devcon Space pursuant to this Lease and the "Commencement Date"
for the Devcon Drive Space shall be the date set forth as the Scheduled
Commencement Date for such space notwithstanding that the Tenant Improvements
for such space may not be completed by such date.
2.3 CONSTRUCTION OF IMPROVEMENTS: Landlord shall construct the
Tenant Improvements in the Premises in accordance with, the terms of EXHIBIT B.
2.4 DELIVERY AND ACCEPTANCE OF POSSESSION: If Landlord is unable to
deliver possession of the Zanker Road Space to Tenant with the Tenant
Improvements for such space Substantially Completed as provided in Exhibit B on
or before the Scheduled Commencement Date for such space, this Lease shall not
be void or voidable, and Landlord shall not be liable to Tenant for any loss or
damage resulting therefrom. However, if the Commencement Date is delayed due to
any Tenant Delay (as defined in Exhibit B attached hereto), then the
Commencement Date shall be deemed the date the Tenant Improvements would have
been completed but for the Tenant Delays and Tenant shall be obligated to
commencement paying Base Monthly Rent, Additional Rent and all other charges
notwithstanding that it may not be able to occupy or use the Premises at the
time.
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If the Tenant Improvements have not been Substantially Completed
(as defined in Exhibit B attached hereto) within the later of sixty (60) days
after (a) the approval of the Construction Plans by Landlord, Tenant and the
local governmental authority and the issuance to Landlord of all building
permits by the local governmental authority, or (b) the date provided in the
construction contract between Landlord and its general contractor to
Substantially Complete the Tenant Improvements, subject to in any event Tenant
Delays and Force Majeure Delays (as defined in Exhibit B attached hereto), then
Tenant shall have the right as its sole and exclusive remedy to terminate this
Lease upon written notice to Landlord within the earlier of (i) ten days after
receipt of notice from Landlord of the delay or (b) ten days after the end of
said sixty (60) day period but prior to Substantial Completion of the Tenant
Improvements.
Tenant acknowledges that it has been leasing the Devcon Drive
Space and is thoroughly familiar with such space, the Common Areas and the
Project. Tenant also acknowledges that it has had an opportunity to conduct, and
has conducted, such inspections of the Zanker Road Space as it deems necessary
to evaluate its condition. Tenant agrees to accept possession of the Premises
in, "as-is", including all patent and latent defects, subject to completion of
the Tenant Improvements. Tenant's taking possession of any part of the Premises
shall be deemed to be an acceptance by Tenant of any work of improvement done by
Landlord in such part as complete and in accordance with the terms of this Lease
except for defects of which Tenant has given Landlord written notice prior to
the time Tenant takes possession. After Substantial Completion of the separate
Tenant Improvements for the Zanker Road Space and Devcon Drive Space, Tenant, at
the request of Landlord, shall execute an acceptance agreement in the form
attached as EXHIBIT C, appropriately completed.
2.5 EARLY OCCUPANCY: If Tenant enters or permits its contractors to
enter the Zanker Road Space prior to the Commencement Date with the written
permission of Landlord, it shall do so upon all of the terms of this Lease
(including its obligations regarding indemnity and insurance) except those
regarding the obligation to pay rent, which shall commence on the Commencement
Date.
ARTICLE 3
RENT
3.1 BASE MONTHLY RENT: Commencing on the Commencement Date and
continuing throughout the Lease Term, Tenant shall pay to Landlord the Base
Monthly Rent set forth in SECTION K of the Summary.
3.2 ADDITIONAL RENT: Commencing on the Commencement Date and
continuing throughout the Lease Term, Tenant shall pay the following as
additional rent (the "Additional Rent"): (i) any late charges or interest due
Landlord pursuant to P. 3.4; (ii) Tenant's Share of Common Operating Expenses as
provided in P. 8.1; (iii) Landlord's share of any Subrent received by Tenant
upon certain assignments and sublettings as required by P. 14.1; (iv) any legal
fees and costs due Landlord pursuant to P. 15.9; and (v) any other charges due
Landlord pursuant to this Lease.
3.3 PAYMENT OF RENT: Concurrently with the execution of this Lease
by Tenant, Tenant shall pay to Landlord the amount set forth in SECTION L of the
Summary as prepayment of rent for credit against the first installment(s) of
Base Monthly Rent. All rent required to be paid in monthly installments shall be
paid in advance on the first day of each calendar month during the Lease Term.
If SECTION K of the Summary provides that the Base Monthly Rent is to be
increased during the Lease Term and if the date of such increase does not fall
on the first day of a calendar month, such increase shall become effective on
the first day of the next calendar month. All rent shall be paid in lawful money
of the United States, without any abatement, deduction or offset whatsoever
(except as specifically provided in P. 11.4 and P. 12.3), and without any prior
demand therefor. Rent shall be paid to Landlord at its address set forth in
SECTION Q of the Summary, or at such other place as Landlord may designate from
time to time. Tenant's obligation to pay Base Monthly Rent and Tenant's Share of
Common Operating Expenses shall be prorated at the commencement and expiration
of the Lease Term.
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3.4 LATE CHARGE, INTEREST AND QUARTERLY PAYMENTS:
(a) LATE CHARGE. Tenant acknowledges that the late payment
by Tenant of any installment of rent, or any other sum of money required to be
paid by Tenant under this Lease, will cause Landlord to incur certain costs and
expenses not contemplated under this Lease, the exact amount of such costs being
extremely difficult and impractical to fix. Such costs and expenses will
include, without limitation, attorneys' fees, administrative and collection
costs, and processing and accounting expenses and other costs and expenses
necessary and incidental thereto. If any Base Monthly Rent or Additional Rent is
not received by Landlord from Tenant within three (3) business days after
receipt of written notice, then Tenant shall immediately pay to Landlord a late
charge equal to 5% of such delinquent rent as liquidated damages for Tenant's
failure to make timely payment, provided, however, that if Landlord has provided
two notices of a late payment or default during any calendar year, Landlord
shall not be obligated to provide any notice during the remainder of the
calendar year in order for Tenant to be obligated to pay such late charge. In no
event shall this provision for a late charge be deemed to grant to Tenant a
grace period or extension of time within which to pay any rent or prevent
Landlord from exercising any right or remedy available to Landlord upon Tenant's
failure to pay any rent due under this Lease in a timely fashion, including any
right to terminate this Lease pursuant to this Lease.
(b) INTEREST. If any rent remains delinquent for a period in
excess of five (5) business days then, in addition to such late charge, Tenant
shall pay to Landlord interest on any rent that is not paid when due at the
Agreed Interest Rate following the date such amount became due until paid.
(c) QUARTERLY PAYMENTS. If Tenant during any calendar year
shall be more than five (5) business days after receipt of written notice
delinquent in the payment of any rent or other amount payable by Tenant
hereunder on three (3) or more occasions, then, notwithstanding anything herein
to the contrary, Landlord may, by written notice to Tenant, elect to require
Tenant to pay all Base Monthly Rent and Additional Rent quarterly in advance.
Such right shall be in addition to and not in lieu of any other right or remedy
available to Landlord hereunder or at law on account of Tenant's default
hereunder
3.5 SECURITY DEPOSIT: On the Effective Date, Tenant shall deposit
with Landlord the amount set forth in SECTION M of the Summary as security for
the performance by Tenant of its obligations under this Lease, and not as
prepayment of rent (the "Security Deposit"). Landlord may from time to time
apply such portion of the Security Deposit as is reasonably necessary for the
following purposes: (i) to remedy any default by Tenant in the payment of rent;
(ii) to repair damage to the Premises caused by Tenant; (iii) to clean the
Premises upon termination of the Lease only if Tenant fails to clean the
Premises to the extent required by this Lease; and (iv) to remedy any other
default of Tenant to the extent permitted by Law and, in this regard, Tenant
hereby waives any restriction on the uses to which the Security Deposit may be
put contained in California Civil Code Section 1950.7. In the event the Security
Deposit or any portion thereof is so used, Tenant agrees to pay to Landlord
promptly upon demand an amount in cash sufficient to restore the Security
Deposit to the full original amount. Landlord shall not be deemed a trustee of
the Security Deposit, may use the Security Deposit in business, and shall not be
required to segregate it from its general accounts. Tenant shall not be entitled
to any interest on the Security Deposit. If Landlord transfers the Premises
during the Lease Term, Landlord may pay the Security Deposit to any transferee
of Landlord's interest in conformity with the provisions of California Civil
Code Section 1950.7 and/or any successor statute, in which event the
transferring Landlord will be released from all liability for the return of the
Security Deposit.
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ARTICLE 4
USE OF PREMISES
4.1 LIMITATION ON USE: Tenant shall use the Premises solely for the
Permitted Use specified in SECTION N of the Summary. Any change in use shall be
subject to the prior written consent of Landlord, which will not be unreasonably
withheld. Tenant shall not do anything in or about the Premises which will (i)
cause structural injury to the Building, or (ii) cause damage to any part of the
Building except to the extent reasonably necessary for the installation of
Tenant's Trade Fixtures and Tenant's Alterations, and then only in a manner
which has been first approved by Landlord in writing. Tenant shall not operate
any equipment within the Premises which will (i) materially damage the Building
or the Common Area, (ii) overload existing electrical systems or other
mechanical equipment servicing the Building, (iii) impair the efficient
operation of the sprinkler system or the heating, ventilating or air
conditioning ("HVAC") equipment within or servicing the Building, or (iv)
damage, overload or corrode the sanitary sewer system. Tenant shall not attach,
hang or suspend anything from the ceiling, roof, walls or columns of the
Building or set any load on the floor in excess of the load limits for which
such items are designed nor operate hard wheel forklifts within the Premises.
Any dust, fumes, or waste products generated by Tenant's use of the Premises
shall be contained and disposed so that they do not (i) create an unreasonable
fire or health hazard, (ii) damage the Premises, or (iii) result in the
violation of any Law. Except as approved by Landlord, Tenant shall not change
the exterior of the Building or install any equipment or antennas on or make any
penetrations of the exterior or roof of the Building. Tenant shall not commit
any waste in or about the Premises, and Tenant shall keep the Premises in a
neat, clean, attractive and orderly condition, free of any nuisances. If
Landlord designates a standard window covering for use throughout the Building,
Tenant shall use this standard window covering to cover all windows in the
Premises. Tenant shall not conduct on any portion of the Premises or the Project
any sale of any kind, including any public or private auction, fire sale,
going-out-of-business sale, distress sale or other liquidation sale.
4.2 COMPLIANCE WITH REGULATIONS: Tenant shall not use the Premises
in any manner which violates any Laws or Private Restrictions which affect the
Premises. Tenant shall abide by and promptly observe and comply with all Laws
and Private Restrictions. Tenant shall not use the Premises in any manner which
will cause a cancellation of any insurance policy covering Tenant's Alternations
or any improvements installed by Landlord at its expense or which poses an
unreasonable risk of damage or injury to the Premises. Tenant shall not sell, or
permit to be kept, used, or sold in or about the Premises any article which may
be prohibited by the standard form of fire insurance policy. Tenant shall comply
with all reasonable requirements of any insurance company, insurance
underwriter, or Board of Fire Underwriters which are necessary to maintain the
insurance coverage carried by either Landlord or Tenant pursuant to this Lease.
4.3 OUTSIDE AREAS: No materials, supplies, tanks or containers,
equipment, finished products or semi-finished products, raw materials,
inoperable vehicles or articles of any nature shall be stored upon or permitted
to remain outside of the Premises except in fully fenced and screened areas
outside the Building which have been designed for such purpose and have been
approved in writing by Landlord for such use by Tenant.
4.4 SIGNS: Tenant shall not place on any portion of the Premises any
sign, placard, lettering in or on windows, banner, displays or other advertising
or communicative material which is visible from the exterior of the Building
without the prior written approval of Landlord. All such approved signs shall
strictly conform to all Laws, Private Restrictions, and Landlord's sign criteria
then in effect, and shall be installed at the expense of Tenant. Tenant shall
maintain such signs in good condition and repair.
12
As of the date hereof, there exists a monument sign by Devcon
Drive with Tenant's name located thereon. In lieu of using such existing
monument sign, Tenant shall have the right to have installed as part of the
Tenant Improvements a new monument sign by the corner of Devcon Drive and Zanker
Road, subject to the reasonable approval of Landlord and compliance by Tenant at
its expense with Landlord's signage criteria and all governmental ordinances and
requirements. Tenant acknowledges and agrees that it may only use one monument
sign and may not have rights to use the foregoing new monument sign and the
existing monument sign. As part of the Tenant Improvements, Tenant may also have
a sign installed on the Building by its Premises which is consistent with the
identification signs in the Project and subject to the reasonable approval of
Landlord and compliance by Tenant at its expense with Landlord's signage
criteria and all governmental ordinances and requirements. At its expense,
Tenant shall be responsible for removing such signs and repairing any damage by
the expiration or earlier termination of this Lease.
4.5 PARKING: Tenant is allocated and shall have the non-exclusive
right to use free of charge not more than the number of Tenant's Allocated
Parking Stalls contained within the Project described in SECTION H of the
Summary for its use and the use of Tenant's Agents, the location of which may be
designated from time to time by Landlord. Tenant shall not at any time use more
parking spaces than the number so allocated to Tenant or park its vehicles or
the vehicles of others in any portion of the Project not designated by Landlord
as a non-exclusive parking area. Tenant shall not have the exclusive right to
use any specific parking space. If Landlord grants to any other tenant the
exclusive right to use any particular parking space(s), Tenant shall not use
such spaces. Landlord reserves the right, after having given Tenant reasonable
notice, to have any vehicles owned by Tenant or Tenant's Agents utilizing
parking spaces in excess of the parking spaces allowed for Tenant's use to be
towed away at Tenant's cost. All trucks and delivery vehicles shall be (i)
parked at the rear of the Building, (ii) loaded and unloaded in a manner which
does not interfere with the businesses of other occupants of the Project, and
(iii) permitted to remain on the Project only so long as is reasonably necessary
to complete loading and unloading. In the event Landlord elects or is required
by any Law to limit or control parking in the Project, whether by validation of
parking tickets or any other method of assessment, Tenant agrees to participate
in such validation or assessment program under such reasonable rules and
regulations as are from time to time established by Landlord.
So long as Tenant is in occupancy at the Leased Premises (other
than for any subleases entered into in the space described in section 14.1G),
Landlord agrees not to grant another tenant in the Project an exclusive right to
parking in the portion of the areas that are in front of the Building facing
Zanker Road and Devcon Drive as outlined in EXHIBIT A attached hereto, nor shall
Landlord require Tenant to park in any specific areas in the Project.
4.6 RULES AND REGULATIONS: Landlord may from time to time promulgate
reasonable and nondiscriminatory rules and regulations applicable to all
occupants of the Project for the care and orderly management of the Project and
the safety of its tenants and invitees. Such rules and regulations shall be
binding upon Tenant upon delivery of a copy thereof to Tenant, and Tenant agrees
to abide by such rules and regulations. If there is a conflict between the rules
and regulations and any of the provisions of this Lease, the provisions of this
Lease shall prevail. Landlord shall not be responsible for the violation by any
other tenant of the Project of any such rules and regulations.
13
ARTICLE 5
TRADE FIXTURES AND ALTERATIONS
5.1 TRADE FIXTURES: Throughout the Lease Term, Tenant may provide
and install, and shall maintain in good condition, any Trade Fixtures required
in the conduct of its business in the Premises. All Trade Fixtures shall remain
Tenant's property.
5.2 TENANT'S ALTERATIONS: Construction by Tenant of Tenant's
Alterations shall be governed by the following:
A. Tenant shall not construct any of Tenant's Alterations
or otherwise alter the Premises without Landlord's prior written approval.
Landlord approves of the Future Alteration Work to the extent the Construction
Plans approved by Landlord in accordance with Exhibit B attached hereto include
the Future Alteration Work. Tenant shall be entitled, without Landlord's prior
approval, to make Tenant's Alterations (i) which do not affect the structural or
exterior parts or water tight character of the Building, and (ii) the reasonably
estimated cost of which, plus the original cost of any part of the Premises
removed or materially altered in connection with such Tenant's Alterations,
together do not exceed the Permitted Tenant Alterations Limit specified in
SECTION O of the Summary for each work of improvement. In the event Landlord's
approval for any Tenant's Alterations is required, Tenant shall not construct
the Leasehold Improvement until Landlord has approved in writing the plans and
specifications therefor, and such Tenant's Alterations shall be constructed
substantially in compliance with such approved plans and specifications by a
licensed contractor first approved by Landlord. All Tenant's Alterations
constructed by Tenant shall be constructed by a licensed contractor approved by
Landlord and otherwise in accordance with all Laws using new materials of good
quality.
B. Tenant shall not commence construction of any Tenant's
Alterations until (i) all required governmental approvals and permits have been
obtained, (ii) all requirements regarding insurance imposed by this Lease have
been satisfied, (iii) Tenant has given Landlord at least five days' prior
written notice of its intention to commence such construction, and (iv) if
reasonably requested by Landlord, Tenant has obtained contingent liability and
broad form builders' risk insurance in an amount reasonably satisfactory to
Landlord if there are any perils relating to the proposed construction not
covered by insurance carried pursuant to Article 9.
C. All Tenant's Alterations shall remain the property of
Tenant during the Lease Term but shall not be altered or removed from the
Premises. At the expiration or sooner termination of the Lease Term, all
Tenant's Alterations shall be surrendered to Landlord as part of the realty and
shall then become Landlord's property, and Landlord shall have no obligation to
reimburse Tenant for all or any portion of the value or cost thereof; provided,
however, that if Landlord requires Tenant to remove any Tenant's Alterations,
Tenant shall so remove such Tenant's Alterations prior to the expiration or
sooner termination of the Lease Term. Notwithstanding the foregoing, Tenant
shall not be obligated to remove any Tenant's Alterations with respect to which
the following is true: (i) Tenant was required, or elected, to obtain the
approval of Landlord to the installation of the Leasehold Improvement in
question; (ii) at the time Tenant requested Landlord's approval, Tenant
requested of Landlord in writing that Landlord inform Tenant of whether or not
Landlord would require Tenant to remove such Leasehold Improvement at the
expiration of the Lease Term; and (iii) at the time Landlord granted its
approval, it did not inform Tenant that it would require Tenant to remove such
Leasehold Improvement at the expiration of the Lease Term.
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5.3 ALTERATIONS REQUIRED BY LAW: Tenant shall make any alteration,
addition or change of any sort to the Premises that is required by any Law
because of (i) Tenant's particular use or change of use of the Premises; (ii)
Tenant's application for any permit or governmental approval, excluding,
however, any application for a permit for construction of the Tenant
Improvements pursuant to EXHIBIT B attached hereto, including without limitation
any Future Alteration Work, which additional work shall be considered part of
the Tenant Improvements and the cost included as part of the Constructions Costs
under EXHIBIT B attached hereto; or (iii) Tenant's construction or installation
of any Tenant's Alterations or Trade Fixtures. Any other alteration, addition,
or change required by Law which is not the responsibility of Tenant pursuant to
the foregoing shall be made by Landlord (subject to Landlord's right to
reimbursement from Tenant specified in P. 5.4). As provided in Exhibit B
attached hereto, the Tenant Improvements to be constructed by Landlord's
contractor shall be completed in a manner to comply with all Laws as the same
exist and apply as of the date hereof.
5.4 AMORTIZATION OF CERTAIN CAPITAL IMPROVEMENTS: Tenant shall pay
its proportionate share, as Additional Rent, of the following amortized costs as
provided in paragraph A below, in the event Landlord reasonably elects or is
required to make any of the following kinds of capital improvements to the
Project: (i) capital improvements required to be constructed in order to comply
with any Law (excluding any Hazardous Materials Law) not in effect or applicable
to the Project as of the Effective Date; (ii) modification of existing or
construction of additional capital improvements or building service equipment
for the purpose of reducing the consumption of utility services or Common
Operating Expenses of the Project; and (iii) replacement of capital improvements
or building service equipment existing as of the Effective Date when required
because of normal wear and tear. The amount of Additional Rent Tenant is to pay
with respect to each such capital improvement shall be determined as follows:
A. All costs paid by Landlord to construct such
improvements (including financing costs) shall be amortized over the useful life
of such improvement (as reasonably determined by Landlord in accordance with
generally accepted accounting principles) with interest on the unamortized
balance at the then prevailing market rate Landlord would pay if it borrowed
funds to construct such improvements from an institutional lender, and Landlord
shall inform Tenant of the monthly amortization payment required to so amortize
such costs, and shall also provide Tenant with the information upon which such
determination is made.
B. As Additional Rent, Tenant shall pay at the same time
the Base Monthly Rent is due an amount equal to Tenant's Share of that portion
of such monthly amortization payment fairly allocable to the Building (as
reasonably determined by Landlord) for each month after such improvements are
completed until the first to occur of (i) the expiration of the Lease Term (as
it may be extended), or (ii) the end of the term over which such costs were
amortized.
5.5 MECHANIC'S LIENS: Tenant shall keep the Project free from any
liens and shall pay when due all bills arising out of any work performed,
materials furnished, or obligations incurred by Tenant or Tenant's Agents
relating to the Project. If any claim of lien is recorded (except those caused
by Landlord or Landlord's Agents), Tenant shall bond against or discharge the
same within 10 days after Tenant's receipt of actual notice that the same has
been recorded against the Project. Should any lien be filed against the Project
or any action be commenced affecting title to the Project, the party receiving
notice of such lien or action shall immediately give the other party written
notice thereof.
5.6 TAXES ON TENANT'S PROPERTY: Tenant shall pay before delinquency
any and all taxes, assessments, license fees and public charges levied, assessed
or imposed against Tenant or Tenant's estate in this Lease or the property of
Tenant situated within the Premises which become due during the Lease Term. If
any tax or other charge is assessed by any governmental agency because of the
execution of this Lease, such tax shall be paid by Tenant. On demand by
Landlord, Tenant shall furnish Landlord with satisfactory evidence of these
payments.
15
ARTICLE 6
REPAIR AND MAINTENANCE
6.1 TENANT'S OBLIGATION TO MAINTAIN: Except as otherwise provided in
P. 6.2, P. 11.1, and P. 12.3, Tenant shall be responsible for the following
during the Lease Term:
A. Tenant shall clean and maintain in good order,
condition, and repair and replace when necessary the Premises and every part
thereof, through regular inspections and servicing, including, but not limited
to: (i) all plumbing and sewage facilities (including all sinks, toilets,
faucets and drains), and all ducts, pipes, vents or other parts of the HVAC or
plumbing system; (ii) all fixtures, interior walls, floors, carpets and
ceilings; (iii) all windows, doors, entrances, plate glass, showcases and
skylights (including cleaning both interior and exterior surfaces); (iv) all
electrical facilities and all equipment (including all lighting fixtures, lamps,
bulbs, tubes, fans, vents, exhaust equipment and systems); and (v) any automatic
fire extinguisher equipment in the Premises.
B. With respect to utility facilities serving the Premises
(including electrical wiring and conduits, gas lines, water pipes, and plumbing
and sewage fixtures and pipes), Tenant shall be responsible for the maintenance
and repair of any such facilities which serve only the Premises, including all
such facilities that are within the walls or floor, or on the roof of the
Premises, and any part of such facility that is not within the Premises, but
only up to the point where such facilities join a main or other junction (e.g.,
sewer main or electrical transformer) from which such utility services are
distributed to other parts of the Project as well as to the Premises. Tenant
shall replace any damaged or broken glass in the Premises (including all
interior and exterior doors and windows) with glass of the same kind, size and
quality. Tenant shall repair any damage to the Premises (including exterior
doors and windows) caused by vandalism or any unauthorized entry.
C. Tenant shall (i) maintain, repair and replace when
necessary all HVAC equipment which services only the Premises, and shall keep
the same in good condition through regular inspection and servicing, and (ii)
maintain continuously throughout the Lease Term a service contract for the
maintenance of all such HVAC equipment with a licensed HVAC repair and
maintenance contractor approved by Landlord, which contract provides for the
periodic inspection and servicing of the HVAC equipment at least once every 60
days during the Lease Term. Notwithstanding the foregoing, Landlord may elect at
any time to assume responsibility for the maintenance, repair and replacement of
such HVAC equipment which serves only the Premises. Tenant shall maintain
continuously throughout the Lease Term a service contract for the washing of all
windows (both interior and exterior surfaces) in the Premises with a contractor
approved by Landlord, which contract provides for the periodic washing of all
such windows at least once every 60 days during the Lease Term. Tenant shall
furnish Landlord with copies of all such service contracts, which shall provide
that they may not be changed without at least 30 days' prior written notice to
Landlord.
16
If the cost to replace in the future the HVAC system for
the Leased Premises, other than in connection with or as part of the Tenant
Improvements to be constructed pursuant to the Constructions Plans in accordance
with Exhibit B attached hereto, will be more than $5,000.00, then Landlord shall
arrange to perform and pay for such work, and the cost thereof shall be
amortized over the useful life, together with interest as provided in sections
5.4A. During the Lease Term, Tenant shall pay for such amortized cost, with
interest, as provided in section 5.4A. If the cost of such work is $5,000.00 or
less, Tenant shall perform the work at its expense, or if Landlord elects in its
sole discretion to perform such work, then Tenant shall reimburse Landlord for
the total amount of such expense.
D. All repairs and replacements required of Tenant shall be
promptly made with new materials of like kind and quality. If the work affects
the structural parts of the Building or if the estimated cost of any item of
repair or replacement is in excess of the Permitted Tenant's Alterations Limit,
then Tenant shall first obtain Landlord's written approval of the scope of the
work, plans therefor, materials to be used, and the contractor.
E. Tenant currently occupies the Devcon Drive Space and is
familiar with its condition. In connection with the Tenant Improvements to be
constructed in the Premises, Landlord agrees to partially assign to Tenant upon
request any warranties for such work that Landlord receives from its contractor
and any supplier in order for Tenant to pursue at its expense any claim for work
done in the Premises that may be covered under any such warranty. At no
additional expense to Landlord, Landlord agrees to cooperate with Tenant in
enforcing such warranty. The failure of Tenant to collect or enforce any such
warranty shall not change Tenant's repair and maintenance obligations under this
Lease.
6.2 LANDLORD'S OBLIGATION TO MAINTAIN: Landlord shall repair,
maintain and operate the Common Area and repair and maintain the roof, exterior
and structural parts of the building(s), including interior load bearing walls,
located on the Project so that the same are kept in good order and repair. If
there is central HVAC or other building service equipment and/or utility
facilities serving portions of the Common Area and/or both the Premises and
other parts of the Building, Landlord shall maintain and operate (and replace
when necessary) such equipment. Landlord shall not be responsible for repairs
required by an accident, fire or other peril or for damage caused to any part of
the Project by any act or omission of Tenant or Tenant's Agents except as
otherwise required by Article 11. Landlord may engage contractors of its choice
to perform the obligations required of it by this Article, and the necessity of
any expenditure to perform such obligations shall be at the sole discretion of
Landlord.
6.3 CONTROL OF COMMON AREA: Landlord shall at all times have
exclusive control of the Common Area. Landlord shall have the right, without the
same constituting an actual or constructive eviction and without entitling
Tenant to any abatement of rent, to: (i) close any part of the Common Area to
whatever extent required in the opinion of Landlord's counsel to prevent a
dedication thereof or the accrual of any prescriptive rights therein; (ii)
temporarily close the Common Area to perform maintenance or for any other reason
deemed sufficient by Landlord; (iii) change the shape, size, location and extent
of the Common Area; (iv) eliminate from or add to the Project any land or
improvement, including multi-deck parking structures; (v) make changes to the
Common Area including, without limitation, changes in the location of driveways,
entrances, passageways, doors and doorways, elevators, stairs, restrooms, exits,
parking spaces, parking areas, sidewalks or the direction of the flow of traffic
and the site of the Common Area; (vi) remove unauthorized persons from the
Project; and/or (vii) change the name or address of the Building or Project.
Tenant shall keep the Common Area clear of all obstructions created or permitted
by Tenant. If in the opinion of Landlord unauthorized persons are using any of
the Common Area by reason of the presence of Tenant in the Building, Tenant,
upon demand of Landlord, shall restrain such unauthorized use by appropriate
proceedings. In exercising any such rights regarding the Common Area, (i)
Landlord shall make a reasonable effort to minimize any disruption to Tenant's
business, and (ii) Landlord shall not exercise its rights to control the Common
Area in a manner that would materially interfere with Tenant's use of the
Premises without first obtaining Tenant's consent, which shall not be
unreasonably withheld. Landlord shall have no obligation to provide guard
services or other security measures for the benefit of the Project. Tenant
assumes all responsibility for the protection of Tenant and Tenant's Agents from
acts of third parties; provided, however, that nothing contained herein shall
prevent Landlord, at its sole option, from providing security measures for the
Project.
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ARTICLE 7
WASTE DISPOSAL AND UTILITIES
7.1 WASTE DISPOSAL: Tenant shall store its waste either inside the
Premises or within outside trash enclosures that are fully fenced and screened
in compliance with all Private Restrictions, and designed for such purpose. All
entrances to such outside trash enclosures shall be kept closed, and waste shall
be stored in such manner as not to be visible from the exterior of such outside
enclosures. Tenant shall cause all of its waste to be regularly removed from the
Premises at Tenant's sole cost. Tenant shall keep all fire corridors and
mechanical equipment rooms in the Premises free and clear of all obstructions at
all times.
7.2 HAZARDOUS MATERIALS: Landlord and Tenant agree as follows with
respect to the existence or use of Hazardous Materials on the Project:
A. Any handling, transportation, storage, treatment,
disposal or use of Hazardous Materials by Tenant and Tenant's Agents after the
Effective Date in or about the Project shall strictly comply with all applicable
Hazardous Materials Laws. Tenant shall indemnify, defend upon demand with
counsel reasonably acceptable to Landlord, and hold harmless Landlord from and
against any liabilities, losses, claims, damages, lost profits, consequential
damages, interest, penalties, fines, monetary sanctions, attorneys' fees,
experts' fees, court costs, remediation costs, investigation costs, and other
expenses which result from or arise in any manner whatsoever out of the use,
storage, treatment, transportation, release, or disposal of Hazardous Materials
on or about the Project by Tenant or Tenant's Agents after the Effective Date.
B. If the presence of Hazardous Materials on the Project
caused or permitted by Tenant or Tenant's Agents after the Effective Date
results in contamination or deterioration of water or soil resulting in a level
of contamination greater than the levels established as acceptable by any
governmental agency having jurisdiction over such contamination, then Tenant
shall promptly take any and all action necessary to investigate and remediate
such contamination if required by Law or as a condition to the issuance or
continuing effectiveness of any governmental approval which relates to the use
of the Project or any part thereof. Tenant shall further be solely responsible
for, and shall defend, indemnify and hold Landlord and its agents harmless from
and against, all claims, costs and liabilities, including attorneys' fees and
costs, arising out of or in connection with any investigation and remediation
required hereunder to return the Project to its condition existing prior to the
appearance of such Hazardous Materials.
C. Landlord and Tenant shall each give written notice to
the other as soon as reasonably practicable of (i) any communication received
from any governmental authority concerning Hazardous Materials which relates to
the Project, and (ii) any contamination of the Project by Hazardous Materials
which constitutes a violation of any Hazardous Materials Law. Tenant may use
small quantities of household chemicals such as adhesives, lubricants, and
cleaning fluids in order to conduct its business at the Premises and such other
Hazardous Materials as are necessary for the operation of Tenant's business of
which Landlord receives notice prior to such Hazardous Materials being brought
onto the Premises and which Landlord consents in writing in its sole and
absolute discretion may be brought onto the Premises. At any time during the
Lease Term, Tenant shall, within five days after written request therefor
received from Landlord, disclose in writing all Hazardous Materials that are
being used by Tenant on the Project, the nature of such use, and the manner of
storage and disposal.
D. Landlord may cause testing ▇▇▇▇▇ to be installed on the
Project, and may cause the ground water to be tested to detect the presence of
Hazardous Material by the use of such tests as are then customarily used for
such purposes. If Tenant so requests, Landlord shall supply Tenant with copies
of such test results. The cost of such tests and of the installation,
maintenance, repair and replacement of such ▇▇▇▇▇ shall be paid by Tenant if
such tests disclose the existence of facts which give rise to liability of
Tenant pursuant to its indemnity given in P. 7.2A and/or P. 7.2B.
18
E. As used herein, the term "Hazardous Material," means any
hazardous or toxic substance, material or waste which is or becomes regulated by
any local governmental authority, the State of California or the United States
Government. The term "Hazardous Material," includes, without limitation,
petroleum products, asbestos, PCB's, and any material or substance which is (i)
listed under Article 9 or defined as hazardous or extremely hazardous pursuant
to Article 11 of Title 22 of the California Administrative Code, Division 4,
Chapter 20, (ii) defined as a "hazardous waste" pursuant to Section 1004 of the
Federal Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq. (42
U.S.C. 6903), or (iii) defined as a "hazardous substance" pursuant to Section
101 of the Comprehensive Environmental Response; Compensation and Liability Act,
42 U.S.C. 9601 et seq. (42 U.S.C. 9601). As used herein, the term "Hazardous
Material Law" shall mean any statute, law, ordinance, or regulation of any
governmental body or agency (including the U.S. Environmental Protection Agency,
the California Regional Water Quality Control Board, and the California
Department of Health Services) which now of in the future regulates the use,
storage, release or disposal of any Hazardous Material.
F. The obligations of Landlord and Tenant under this P. 7.2
shall survive the expiration or earlier termination of the Lease Term. The
rights and obligations of Landlord and Tenant with respect to issues relating to
Hazardous Materials are exclusively established by this P. 7.2. In the event of
any inconsistency between any other part of this Lease and this P. 7.2, the
terms of this P. 7.2 shall control.
7.3 UTILITIES: Tenant shall promptly pay, as the same become due,
all charges for water, gas, electricity, telephone, sewer service, waste pick-up
and any other utilities, materials or services furnished directly to or used by
Tenant on or about the Premises during the Lease Term, including, without
limitation, (i) meter, use and/or connection fees, hook-up fees, or standby fee
(excluding any connection fees or hook-up fees which relate to making the
existing electrical, gas, and water service available to the Premises as of the
Commencement Date), and (ii) penalties for discontinued or interrupted service.
If any utility service is not separately metered to the Premises, then Tenant
shall pay its pro rata share of the cost of such utility service with all others
served by the service not separately metered. However, if Landlord determines
that Tenant is using a disproportionate amount of any utility service not
separately metered, then Landlord at its election may (i) periodically charge
Tenant, as Additional Rent, a sum equal to Landlord's reasonable estimate of the
cost of Tenant's excess use of such utility service, or (ii) install a separate
meter (at Tenant's expense) to measure the utility service supplied to the
Premises.
7.4 COMPLIANCE WITH GOVERNMENTAL REGULATIONS: Landlord and Tenant
shall comply with all rules, regulations and requirements promulgated by
national, state or local governmental agencies or utility suppliers concerning
the use of utility services, including any rationing, limitation or other
control. Tenant shall not be entitled to terminate this Lease nor to any
abatement in rent by reason of such compliance.
ARTICLE 8
COMMON OPERATING EXPENSES
8.1 TENANT'S OBLIGATION TO REIMBURSE: As Additional Rent, Tenant
shall pay Tenant's Share (specified in SECTION G of the Summary) of all Common
Operating Expenses; provided, however, if the Project contains more than one
building, then Tenant shall pay Tenant's Share of all Common Operating Expenses
fairly allocable to the Building, including (i) all Common Operating Expenses
paid with respect to the Building, and (ii) a proportionate share (based on the
Building Gross Leasable Area as a percentage of the Project Gross Leasable Area)
of all Common Operating Expenses which relate to the Project in general are not
fairly allocable to any one building that is part of the Project. Tenant shall
pay such share of the actual Common Operating Expenses incurred or paid by
Landlord but not theretofore billed to Tenant within 10 days after receipt of a
written ▇▇▇▇ therefor from Landlord, on such periodic basis as Landlord shall
designate, but in no event more frequently than once a month. Alternatively,
Landlord may from time to time require that Tenant pay Tenant's Share of Common
Operating Expenses in advance in estimated monthly installments, in accordance
with the following: (i) Landlord shall deliver to Tenant Landlord's reasonable
estimate of the Common Operating expenses it anticipates will be paid or
incurred for the Landlord's fiscal year in question;
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(ii) during such Landlord's fiscal year Tenant shall pay such share of the
estimated Common Operating Expenses in advance in monthly installments as
required by Landlord due with the installments of Base Monthly Rent; and (iii)
within 180 days after the end of each Landlord's fiscal year, Landlord shall
furnish to Tenant a statement in reasonable detail of the actual Common
Operating Expenses paid or incurred by Landlord during the just ended Landlord's
fiscal year and thereupon there shall be an adjustment between Landlord and
Tenant, with payment to Landlord or credit by Landlord against the next
installment of Base Monthly Rent, as the case may require, within 10 days after
delivery by Landlord to Tenant of said statement, so that Landlord shall receive
the entire amount of Tenant's Share of all Common Operating Expenses for such
Landlord's fiscal year and no more. Tenant shall have the right at its expense,
exercisable upon reasonable prior written notice to Landlord, to inspect at
Landlord's office during normal business hours Landlord's books and records as
they relate to Common Operating Expenses. Such inspection must be within 90 days
of Tenant's receipt of Landlord's annual statement for the same, and shall be
limited to verification of the charges contained in such statement. Tenant may
not withhold payment of such ▇▇▇▇ pending completion of such inspection.
8.2 COMMON OPERATING EXPENSES DEFINED: The term "Common Operating
Expenses" shall mean the following:
A. All costs and expenses paid or incurred by Landlord in
doing the following (including payments to independent contractors providing
services related to the performance of the following): (i) maintaining,
cleaning, repairing and resurfacing the roof (including repair of leaks) and the
exterior surfaces (including painting) of all buildings located on the Project;
(ii) maintenance of the liability, fire, property damage, earthquake and other
insurance covering the Project carried by Landlord pursuant to P. 9.2 (including
the prepayment of premiums for coverage of up to one year); (iii) maintaining,
repairing, operating and replacing when necessary HVAC equipment, utility
facilities and other building service equipment, subject to section 5.4
regarding the amortization of certain capital improvements; (iv) providing
utilities to the Common Area (including lighting, trash removal and water for
landscaping irrigation); (v) complying with all applicable Laws and Private
Restrictions; (vi) operating, maintaining, repairing, cleaning, painting,
restriping and resurfacing the Common Area; (vii) replacement or installation of
lighting fixtures, directional or other signs and signals, irrigation systems,
trees, shrubs, ground cover and other plant materials, and all landscaping in
the Common Area; and (viii) providing security (provided, however, that Landlord
shall not be obligated to provide security and if it does, Landlord may
discontinue such service at any time and in any event Landlord shall not be
responsible for any act or omission of any security personnel); and (ix) capital
improvements as provided in P. 5.4 hereof;
B. The following costs: (i) Real Property Taxes as defined
in P. 8.3; (ii) the amount of any "deductible" paid by Landlord with respect to
damage caused by any Insured Peril up to $10,000.00 for each claim; and (iii)
that portion of all compensation (including benefits and premiums for workers'
compensation and other insurance) paid to or on behalf of employees of Landlord
but only to the extent they are involved in the performance of the work
described by P. 8.2A that is fairly allocable to the Project;
C. Fees for management services rendered by either Landlord
or a third party manager engaged by Landlord (which may be a party affiliated
with Landlord), except that the total amount charged for management services and
included in Tenant's Share of Common Operating Expenses shall not exceed the
monthly rate of four percent (4%) of the Base Monthly Rent.
D. All additional costs and expenses incurred by Landlord
with respect to the operation, protection, maintenance, repair and replacement
of the Project which would be considered a current expense (and not a capital
expenditure) pursuant to generally accepted accounting principles; provided,
however, that Common Operating Expenses shall not include any of the following:
(i) payments on any loans or ground leases affecting the Project; (ii)
depreciation of any buildings or any major systems of building service equipment
within the Project; (iii) leasing commissions; (iv) the cost of tenant
improvements installed or performed for the exclusive use of other tenants of
the Project and the cost of any special services for a particular tenant that is
not available or offered to Tenant; and (v) any cost incurred in complying with
Hazardous Materials Laws, which subject is governed exclusively by P. 7.2.
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Since the Project consists of multiple buildings, certain Common Area
Expenses may pertain to a particular building(s) and other Common Area Expenses
to the Project as a whole (such as Common Area Expenses for the Common Areas of
the Project). Common Area Expenses applicable to any particular building within
the Project shall be charged to the building in question whose tenants shall be
responsible for payment of their respective proportionate shares in the
pertinent building and other Common Area Expenses applicable to the Project
(such as the Common Areas of the Project) shall be charged to each building in
the Project (including the Building) with the tenants in each such building
being responsible for paying their respective proportionate shares in such
building of such costs. Landlord shall in good faith attempt to allocate such
Common Area Expenses to the buildings (including the Building) and such
allocation shall be binding on Tenant.
Any contrary provision contained in this Section 8.2 or Section 5.4 or
elsewhere in this Lease notwithstanding, for purposes of calculating Common
Operating Expenses, in no event shall such Common Operating Expenses include (i)
costs of correcting structural defects in the structural portions of the
Building, which for purposes hereof shall mean the roof, foundation and load
bearing walls, (ii) legal fees, space planners' fees, and advertising and
promotional expenses incurred in connection with and incidental to the
development or leasing of the Building or other space in the Project, or (iii)
any legal fees and costs of Landlord (including, but not limited to, those
incurred in connection with any litigation or other proceedings between Landlord
and any other tenant) except those legal fees and costs incurred in the normal
course of Landlord's business.
8.3 REAL PROPERTY TAXES DEFINED: The term "Real Property Taxes"
shall mean all taxes, assessments, levies, and other charges of any kind or
nature whatsoever, general and special, foreseen and unforeseen (including all
installments of principal and interest required to pay any existing or future
general or special assessments for public improvements, services or benefits,
and any increases resulting from reassessments resulting from a change in
ownership, new construction, or any other cause), now or hereafter imposed by
any governmental or quasi-governmental authority or special district having the
direct or indirect power to tax or levy assessments, which are levied or
assessed against, or with respect to the value, occupancy or use of all or any
portion of the Project (as now constructed or as may at any time hereafter be
constructed, altered, or otherwise changed) or Landlord's interest therein, the
fixtures, equipment and other property of Landlord, real or personal, that are
an integral part of and located on the Project, the gross receipts, income, or
rentals from the Project, or the use of parking areas, public utilities, or
energy within the Project, or Landlord's business of leasing the Project. If at
any time during the Lease Term the method of taxation or assessment of the
Project prevailing as of the Effective Date shall be altered so that in lieu of
or in addition to any Real Property Tax described above there shall be levied,
assessed or imposed (whether by reason of a change in the method of taxation or
assessment, creation of a new tax or charge, or any other cause) an alternate or
additional tax or charge (i) on the value, use or occupancy of the Project or
Landlord's interest therein, or (ii) on or measured by the gross receipts,
income or rentals from the Project, on Landlord's business of leasing the
Project, or computed in any manner with respect to the operation of the Project,
then any such tax or charge, however designated, shall be included within the
meaning of the term "Real Property Taxes" for purposes of this Lease. If any
Real Property Tax is based upon property or rents unrelated to the Project, then
only that part of such Real Property Tax that is fairly allocable to the Project
shall be included within the meaning of the term "Real Property Taxes".
Notwithstanding the foregoing, the term "Real Property Taxes" shall not include
estate, inheritance, transfer, gift or franchise taxes of Landlord or the
federal or state net income tax imposed on Landlord's income from all sources.
ARTICLE 9
INSURANCE
9.1 TENANT'S INSURANCE: Tenant shall maintain insurance complying
with all of the following:
A. Tenant shall procure, pay for and keep in full force and
effect the following:
(1) Commercial general liability insurance, including
property damage, against liability for personal injury, bodily injury, death and
damage to property occurring in or about, or resulting from an occurrence in or
about, the Premises with combined single limit coverage of not less than the
amount of Tenant's Liability Insurance Minimum specified in SECTION P of the
Summary, which insurance shall contain a "contractual liability" endorsement
insuring Tenant's performance of Tenant's obligation to indemnify Landlord
contained in P. 10.3;
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(2) Fire and property damage insurance in so-called "all
risk" form insuring Tenant's Trade Fixtures and Tenant's Alterations for the
full actual replacement cost thereof;
(3) Business interruption insurance with limits of
liability representing at least approximately six months of income, business
auto liability covering owned, non-owned and hired vehicles with a limit of not
less than $1,000,000 per accident, insurance protecting against liability under
workers' compensation laws with limits at least as required by statute,
insurance for all plate glass in the Premises, and such other insurance that is
either (i) required by any Lender, or (ii) reasonably required by Landlord and
customarily carried by tenants of similar property in similar businesses.
Notwithstanding the foregoing, the original party signing this Lease as Tenant,
and its transferees under a Permitted Transfer, shall have the right to self
insure for the risks covered under business interruption insurance and plate
glass insurance, provided that no such self-insurance shall diminish the rights
and privileges to which Landlord would otherwise have been entitled under the
terms of the Lease had there been a third party insurer, including, without
limitation, the waiver of subrogation
B. Where applicable and required by Landlord, each policy
of insurance required to be carried by Tenant pursuant to this P. 9.1: (i) shall
name Landlord and such other parties in interest as Landlord reasonably
designates as additional insured; (ii) shall be primary insurance which provides
that the insurer shall be liable for the full amount of the loss up to and
including the total amount of liability set forth in the declarations without
the right of contribution from any other insurance coverage of Landlord; (iii)
shall be in a form satisfactory to Landlord; (iv) shall be carried with
companies reasonably acceptable to Landlord; (v) shall provide that such policy
shall not be subject to cancellation, lapse or change except after at least 30
days prior written notice to Landlord so long as such provision of 30 days
notice is reasonably obtainable, but in any event not less than 10 days prior
written notice; (vi) shall not have a "deductible" in excess of such amount as
is reasonably approved by Landlord; (vii) shall contain a cross liability
endorsement; and (viii) shall contain a "severability" clause. If Tenant has in
full force and effect a blanket policy of liability insurance with the same
coverage for the Premises as described above, as well as other coverage of other
premises and properties of Tenant, or in which Tenant has some interest, such
blanket insurance shall satisfy the requirements of this P. 9.1.
C. A copy of each paid-up policy evidencing the insurance
required to be carried by Tenant pursuant to this P. 9.1 (appropriately
authenticated by the insurer) or a certificate of the insurer, certifying that
such policy has been issued, providing the coverage required by this P. 9.1, and
containing the provisions specified herein, shall be delivered to Landlord prior
to the time Tenant or any of its Agents enters the Premises and upon renewal of
such policies, but not less than 5 days prior to the expiration of the term of
such coverage. Landlord may, at any time, and from time to time, inspect and/or
copy any and all insurance policies required to be procured by Tenant pursuant
to this P. 9.1. If any Lender or insurance advisor reasonably determines at any
time that the amount of coverage required for any policy of insurance Tenant is
to obtain pursuant to this P. 9.1 is not adequate, then Tenant shall increase
such coverage for such insurance to such amount as such Lender or insurance
advisor reasonably deems adequate, not to exceed the level of coverage for such
insurance commonly carried by comparable businesses similarly situated.
9.2 LANDLORD'S INSURANCE: Landlord shall have the following
obligations and options regarding insurance:
A. Landlord shall maintain a policy or policies of fire and
property damage insurance in so-called "all risk" form insuring Landlord (and
such others as Landlord may designate) against loss of rents for a period of not
less than 12 months and from physical damage to the Project with coverage of not
less than the full replacement cost thereof. Landlord may so insure the Project
separately, or may insure the Project with other property owned by Landlord
which Landlord elects to insure together under the same policy or policies.
Landlord shall have the right, but not the obligation, in its sole and absolute
discretion, to obtain insurance for such additional perils that Landlord deems
appropriate, including, without limitation, coverage for damage by earthquake
and/or flood. All such coverage shall contain "deductibles" which Landlord deems
appropriate, which in the case of earthquake and flood insurance, may be up to
10% of the replacement value of the property insured or such higher amount as is
then commercially reasonable. Landlord shall not be required to cause such
insurance to cover any Trade Fixtures or Tenant's Alterations of Tenant.
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B. Landlord may maintain a policy or policies of commercial
general liability insurance insuring Landlord (and such others as are designated
by Landlord) against liability for personal injury, bodily injury, death and
damage to property occurring or resulting from an occurrence in, on or about the
Project, with combined single limit coverage in such amount as Landlord from
time to time determines is reasonably necessary for its protection.
C. If Landlord's insurance rates for the Building are
increased at any time during the Lease Term as a result of the nature of
Tenant's use of the Premises, Tenant shall reimburse Landlord for the full
amount of such increase immediately upon receipt of a ▇▇▇▇ from Landlord
therefor.
9.4 RELEASE AND WAIVER OF SUBROGATION: The parties hereto release
each other, and their respective agents and employees, from any liability for
injury to any person or damage to property that is caused by or results from any
risk insured against under any valid and collectible insurance policy carried by
either of the parties which contains a waiver of subrogation by the insurer and
is in force at the time of such injury or damage; subject to the following
limitations: (i) the foregoing provision shall not apply to the commercial
general liability insurance described by subparagraphs P. 9.1A and P. 9.2B; (ii)
such release shall apply to liability resulting from any risk insured against or
covered by self-insurance maintained or provided by Tenant to satisfy the
requirements of P. 9.1 to the extent permitted by this Lease; and (iii) the
parties shall not be released from any such liability to the extent any damages
resulting from such injury or damage are not covered (other than the deductible
amounts and amounts not covered due to a party not having replacement cost
insurance or due to any co-insurance requirements) by the recovery obtained by
the other party from such insurance (or which would have been obtained had the
party carried insurance required under this Lease or had not self-insured), but
only if the insurance in question permits such partial release in connection
with obtaining a waiver of subrogation from the insurer. This release shall be
in effect only so long as the applicable insurance policy contains a clause to
the effect that this release shall not affect the right of the insured to
recover under such policy. Each party shall cause each insurance policy obtained
by it to provide that the insurer waives all right of recovery by way of
subrogation against the other party and its agents and employees in connection
with any injury or damage covered by such policy. However, if any insurance
policy cannot be obtained with such a waiver of subrogation, or if such waiver
of subrogation is only available at additional cost and the party for whose
benefit the waiver is to be obtained does not pay such additional cost, then the
party obtaining such insurance shall notify the other party of that fact and
thereupon shall be relieved of the obligation to obtain such waiver of
subrogation rights from the insurer with respect to the particular insurance
involved unless the other party pays the additional cost.
ARTICLE 10
LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY
10.1 LIMITATION ON LANDLORD'S LIABILITY: Landlord shall not be liable
to Tenant, nor shall Tenant be entitled to terminate this Lease or to any
abatement of rent (except as expressly provided otherwise herein), for any
injury to Tenant or Tenant's Agents, damage to the property of Tenant or
Tenant's Agents, or loss to Tenant's business resulting from any cause,
including without limitation any: (i) failure, interruption or installation of
any HVAC or other utility system or service; (ii) failure to furnish or delay in
furnishing any utilities or services when such failure or delay is caused by
fire or other peril, the elements, labor disturbances of any character, or any
other accidents or other conditions beyond the reasonable control of Landlord;
(iii) limitation, curtailment, rationing or restriction on the use of water or
electricity, gas or any other form of energy or any services or utility serving
the Project; (iv) vandalism or forcible entry by unauthorized persons or the
criminal act of any person; or (v) penetration of water into or onto any portion
of the Premises or the Building through roof leaks or otherwise. Notwithstanding
the foregoing but subject to P. 9.4, Landlord shall be liable for any such
injury, damage or loss which is proximately caused by Landlord's or Landlord's
Agents willful misconduct or gross negligence of which Landlord has actual
notice and a reasonable opportunity to cure but which it fails to so cure.
10.2 LIMITATION ON TENANT'S RECOURSE: If Landlord is a corporation,
trust, partnership, joint venture, unincorporated association or other form of
business entity: (i) the obligations of Landlord shall not constitute personal
obligations of the officers, directors, trustees, partners, joint venturers,
members, owners, stockholders, or other principals or representatives of such
business entity; and (ii) Tenant shall not have recourse to the assets of such
officers, directors, trustees, partners, joint venturers, members, owners,
stockholders, principals or representatives except to the extent of their
interest in the Project. Tenant shall have recourse only to the interest of
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Landlord in the Project for the satisfaction of the obligations of Landlord and
shall not have recourse to any other assets of Landlord for the satisfaction of
such obligations.
10.3 INDEMNIFICATION OF LANDLORD: Subject to section 9.4 and to the
extent not covered by Landlord's insurance but only after resorting to Tenant's
insurance as the primary insurance, Tenant shall hold harmless, indemnify and
defend Landlord, and its employees, agents and contractors, with competent
counsel reasonably satisfactory to Landlord (and Landlord agrees to accept
counsel that any insurer requires be used), from all liability, penalties,
losses, damages, costs, expenses, causes of action, claims and/or judgments
arising by reason of any death, bodily injury, personal injury or property
damage resulting from (i) any cause or causes whatsoever (other than the willful
misconduct or gross negligence of Landlord of which Landlord has had notice and
a reasonable time to cure, but which Landlord has failed to cure) occurring in
or about or resulting from an occurrence in or about the Premises during the
Lease Term, (ii) the negligence or willful misconduct of Tenant or its agents,
employees and contractors, wherever the same may occur, or (iii) an Event of
Tenant's Default. The provisions of this P. 10.3 shall survive the expiration or
sooner termination of this Lease.
ARTICLE 11
DAMAGE TO PREMISES
11.1 LANDLORD'S DUTY TO RESTORE: If the Premises are damaged by any
peril after the Effective Date, Landlord shall restore the Premises unless the
Lease is terminated by Landlord pursuant to P. 11.2 or by Tenant pursuant to P.
11.3. All insurance proceeds available from the fire and property damage
insurance carried by Landlord pursuant to P. 9.2 shall be paid to and become the
property of Landlord. If this Lease is terminated pursuant to either P. 11.2 or
P. 11.3, then all insurance proceeds available from insurance carried by Tenant
which covers loss to property that is Landlord's property or would become
Landlord's property on termination of this Lease shall be paid to and become the
property of Landlord. If this Lease is not so terminated, then upon receipt of
the insurance proceeds (if the loss is covered by insurance) and the issuance of
all necessary governmental permits, Landlord shall commence and diligently
prosecute to completion the restoration of the Premises, to the extent then
allowed by Law, to substantially the same condition in which the Premises were
immediately prior to such damage. Landlord's obligation to restore shall be
limited to the Premises and interior improvements constructed by Landlord as
they existed as of the Commencement Date, excluding any Tenant's Alterations,
Trade Fixtures and/or personal property constructed or installed by Tenant in
the Premises. Tenant shall forthwith replace or fully repair all Tenant's
Alterations and Trade Fixtures installed by Tenant and existing at the time of
such damage or destruction, and all insurance proceeds received by Tenant from
the insurance carried by it pursuant to P. 9.1A(2) shall be used for such
purpose.
11.2 LANDLORD'S RIGHT TO TERMINATE: Landlord shall have the right to
terminate this Lease in the event any of the following occurs, which right may
be exercised only by delivery to Tenant of a written notice of election to
terminate within 30 days after the date of such damage:
A. The Building is damaged by an Insured Peril to such an
extent that the estimated cost to restore exceeds 33% of the then actual
replacement cost thereof;
B. The Building is damaged by an Uninsured Peril to such an
extent that the estimated cost to restore exceeds 2% of the then actual
replacement cost thereof; provided, however, that Landlord may not terminate
this Lease pursuant to this P. 11.2B if one or more tenants of the Project agree
in writing to pay the amount by which the cost to restore the damage exceeds
such amount and subsequently deposit such amount with Landlord within 30 days
after Landlord has notified Tenant of its election to terminate this Lease;
C. The Premises are damaged by any peril within 12 months
of the last day of the Lease Term to such an extent that the estimated cost to
restore equals or exceeds an amount equal to six times the Base Monthly Rent
then due; provided, however, that Landlord may not terminate this Lease pursuant
to this P. 11.2C if Tenant, at the time of such damage, has a then valid express
written option to extend the Lease Term and Tenant exercises such option to
extend the Lease Term within 15 days following the date of such damage; or
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D. Either the Project or the Building is damaged by any
peril and, because of the Laws then in force, (i) cannot be restored at
reasonable cost to substantially the same condition in which it was prior to
such damage, or (ii) cannot be used for the same use being made thereof before
such damage if restored as required by this Article.
E. As used herein, the following terms shall have the
following meanings: (i) the term "Insured Peril" shall mean a peril actually
insured against for which the insurance proceeds actually received by Landlord
are sufficient (except for any "deductible" amount specified by such insurance)
to restore the Project under then existing building codes to the condition
existing immediately prior to the damage; and (ii) the term "Uninsured Peril"
shall mean any peril which is not an Insured Peril. Notwithstanding the
foregoing, if the "deductible" for earthquake or flood insurance exceeds 2% of
the replacement cost of the improvements insured, such peril shall be deemed an
"Uninsured Peril".
11.3 TENANT'S RIGHT TO TERMINATE: If the Premises are damaged by any
peril and Landlord does not elect to terminate this Lease or is not entitled to
terminate this Lease pursuant to P. 11.2, then as soon as reasonably
practicable, Landlord shall furnish Tenant with the written opinion of
Landlord's architect or construction consultant as to when the restoration work
required of Landlord may be completed. Tenant shall have the right to terminate
this Lease in the event any of the following occurs, which right may be
exercised only by delivery to Landlord of a written notice of election to
terminate within 7 days after Tenant receives from Landlord the estimate of the
time needed to complete such restoration.
A. The Premises are damaged by any peril and, in the
reasonable opinion of Landlord's architect or construction consultant, the
restoration of the Premises cannot be substantially completed within 180 days
after the date of such damage; or
B. The Premises are damaged by any peril within 12 months
of the last day of the Lease Term and, in the reasonable opinion of Landlord's
architect or construction consultant, the restoration of the Premises cannot be
substantially completed within 90 days after the date of such damage and such
damage renders unusable more than 30% of the Premises; or
C. If Landlord's insurance proceeds for the restoration of
the Premises are insufficient and the Premises are not restored to substantially
the same condition prior to such damage (except for Tenant's Alterations and
Tenant's Fixtures) and the Premises as restored materially impair Tenants
ability to use the Premises for the permitted use, as reasonably determined
prior to commencement of such restoration work by Landlord.
11.4 ABATEMENT OF RENT: In the event of damage to the Premises which
does not result in the termination of this Lease, the Base Monthly Rent and the
Additional Rent shall be temporarily abated during the period of restoration in
proportion to the degree to which Tenant's use of the Premises is impaired by
such damage. Tenant shall not be entitled to any compensation or damages from
Landlord for loss of Tenant's business or property or for any inconvenience or
annoyance caused by such damage or restoration. Tenant hereby waives the
provisions of California Civil Code Sections 1932(2) and 1933(4) and the
provisions of any similar law hereinafter enacted.
ARTICLE 12
CONDEMNATION
12.1 LANDLORD'S TERMINATION RIGHT: Landlord shall have the right to
terminate this Lease if, as a result of a taking by means of the exercise of the
power of eminent domain (including a voluntary sale or transfer by Landlord to a
condemnor under threat of condemnation), (i) all or any part of the Premises is
so taken, (ii) more than 10% of the Building Leasable Area is so taken, or (iii)
more than 50% of the Common Area is so taken. Any such right to terminate by
Landlord must be exercised within a reasonable period of time, to be effective
as of the date possession is taken by the condemnor.
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12.2 TENANT'S TERMINATION RIGHT: Tenant shall have the right to
terminate this Lease if, as a result of any taking by means of the exercise of
the power of eminent domain (including any voluntary sale or transfer by
Landlord to any condemnor under threat of condemnation), (i) 10% or more of the
Premises is so taken and that part of the Premises that remains cannot be
restored within a reasonable period of time not to exceed ninety (90) days and
thereby made reasonably suitable for the continued operation of the Tenant's
business, or (ii) there is a taking affecting the Common Area and, as a result
of such taking, Landlord cannot provide parking spaces within reasonable walking
distance of the Premises equal in number to at least 80% of the number of spaces
allocated to Tenant by P. 2.1, whether by rearrangement of the remaining parking
areas in the Common Area (including construction of multi-deck parking
structures or restriping for compact cars where permitted by Law) or by
alternative parking facilities on other land. Tenant must exercise such right
within a reasonable period of time, to be effective on the date that possession
of that portion of the Premises or Common Area that is condemned is taken by the
condemnor.
12.3 RESTORATION AND ABATEMENT OF RENT: If any part of the Premises
or the Common Area is taken by condemnation and this Lease is not terminated,
then Landlord shall restore the remaining portion of the Premises and Common
Area and interior improvements constructed by Landlord as they existed as of the
Commencement Date, excluding any Tenant's Alterations, Trade Fixtures and/or
personal property constructed or installed by Tenant. Thereafter, except in the
case of a temporary taking, as of the date possession is taken the Base Monthly
Rent shall be reduced in the same proportion that the floor area of that part of
the Premises so taken (less any addition thereto by reason of any
reconstruction) bears to the original floor area of the Premises.
12.4 TEMPORARY TAKING: If any portion of the Premises is temporarily
taken for one year or less, this Lease shall remain in effect. If any portion of
the Premises is temporarily taken by condemnation for a period which exceeds one
year or which extends beyond the natural expiration of the Lease Term, and such
taking materially and adversely affects Tenant's ability to use the Premises for
the Permitted Use, then Tenant shall have the right to terminate this Lease,
effective on the date possession is taken by the condemnor.
12.5 DIVISION OF CONDEMNATION AWARD: Any award made as a result of
any condemnation of the Premises or the Common Area shall belong to and be paid
to Landlord, and Tenant hereby assigns to Landlord all of its right, title and
interest in any such award; provided, however, that Tenant shall be entitled to
receive any condemnation award that is made directly to Tenant for the following
so long as the award made to Landlord is not thereby reduced: (i) for the taking
of personal property or Trade Fixtures belonging to Tenant, (ii) for the
interruption of Tenant's business or its moving costs, (iii) for loss of
Tenant's goodwill; or (iv) for any temporary taking where this Lease is not
terminated as a result of such taking. The rights of Landlord and Tenant
regarding any condemnation shall be determined as provided in this Article, and
each party hereby waives the provisions of California Code of Civil Procedure
Section 1265.130 and the provisions of any similar law hereinafter enacted
allowing either party to petition the Superior Court to terminate this Lease in
the event of a partial taking of the Premises.
ARTICLE 13
DEFAULT AND REMEDIES
13.1 EVENTS OF TENANT'S DEFAULT: Tenant shall be in default of its
obligations under this Lease if any of the following events occurs (an "Event of
Tenant's Default"):
A. Tenant shall have failed to pay Base Monthly Rent or
Additional Rent when due; provided, however, that not more frequently than twice
each calendar year, Tenant shall not be in default for failure to pay rent or
any other sum unless Tenant fails to make such payment within five (5) days
after receipt of written notice of such failure from Landlord; or
B. Tenant shall have failed to perform any term, covenant,
or condition of this Lease except those requiring the payment of Base Monthly
Rent or Additional Rent, and Tenant shall have failed to cure such breach within
30 days after written notice from Landlord specifying the nature of such breach
where such breach could reasonably be cured within said 30 day period, or if
such breach could not be reasonably cured within said 30 day period, Tenant
shall have failed to commence such cure within said 30 day period and thereafter
continue with due diligence to prosecute such cure to completion within such
time period as is reasonably needed; or
C. Tenant shall have sublet the Premises or assigned its
interest in the Lease in violation of the provisions contained in Article 14; or
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D. The occurrence of the following: (i) the making by
Tenant of any general arrangements or assignments for the benefit of creditors;
(ii) Tenant becomes a "debtor" as defined in 11 USC ss.101 or any successor
statute thereto (unless, in the case of a petition filed against Tenant, the
same is dismissed within 60 days); (iii) 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 60 days; or (iv) the attachment, execution or other
judicial seizure of 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 60 days; provided, however, in the event that any provision of this
Section 13.1E is contrary to any applicable Law, such provision shall be of no
force or effect; or
E. Tenant shall have failed to deliver documents required
of it pursuant to P. 15.4 or P. 15.6 within the time periods specified therein;
or
13.2 LANDLORD'S REMEDIES: If an Event of Tenant's Default occurs,
Landlord shall have the following remedies, in addition to all other rights and
remedies provided by any Law or otherwise provided in this Lease, to which
Landlord may resort cumulatively or in the alternative:
A. Landlord may keep this Lease in effect and enforce by an
action at law or in equity all of its rights and remedies under this Lease,
including (i) the right to recover the rent and other sums as they become due by
appropriate legal action, (ii) the right to make payments required of Tenant or
perform Tenant's obligations and be reimbursed by Tenant for the cost thereof
with interest at the Agreed Interest Rate from the date the sum is paid by
Landlord until Landlord is reimbursed by Tenant, and (iii) the remedies of
injunctive relief. Notwithstanding anything contained in this Lease, in the
event of a breach of an obligation by Tenant which results in a condition which
poses an imminent danger to safety of persons or damage to property, an
unsightly condition visible from the exterior of the Building, or a threat to
insurance coverage, then if Tenant does not cure such breach within 3 days after
delivery to it of written notice from Landlord identifying the breach, Landlord
may cure the breach of Tenant and be reimbursed by Tenant for the actual and
reasonable cost thereof with interest at the Agreed Interest Rate from the date
the sum is paid by Landlord until Landlord is reimbursed by Tenant.
B. Landlord may enter the Premises and release them to
third parties for Tenant's account for any period, whether shorter or longer
than the remaining Lease Term. Tenant shall be liable immediately to Landlord
for all commercially reasonable and actual costs Landlord incurs in releasing
the Premises, including brokers' commissions, expenses of altering and preparing
the Premises required by the releasing. Tenant shall pay to Landlord the rent
and other sums due under this Lease on the date the rent is due, less the rent
and other sums Landlord received from any releasing. No act by Landlord allowed
by this subparagraph shall terminate this Lease unless Landlord notifies Tenant
in writing that Landlord elects to terminate this Lease. Notwithstanding any
releasing without termination, Landlord may later elect to terminate this Lease
because of the default by Tenant.
C. Landlord may terminate this Lease by giving Tenant
written notice of termination, in which event this Lease shall terminate on the
date set forth for termination in such notice. Any termination under this P.
13.2C shall not relieve Tenant from its obligation to pay sums then due Landlord
or from any claim against Tenant for damages or rent previously accrued or then
accruing. In no event shall any one or more of the following actions by
Landlord, in the absence of a written election by Landlord to terminate this
Lease, constitute a termination of this Lease: (i) appointment of a receiver or
keeper in order to protect Landlord's interest hereunder; (ii) consent to any
subletting of the Premises or assignment of this Lease by Tenant, whether
pursuant to the provisions hereof or otherwise; or (iii) any other action by
Landlord or Landlord's Agents intended to mitigate the adverse effects of any
breach of this Lease by Tenant, including without limitation any action taken to
maintain and preserve the Premises or any action taken to relet the Premises or
any portions thereof to the extent such actions do not affect a termination of
Tenant's right to possession of the Premises.
D. In the event Tenant breaches this Lease and abandons the
Premises, this Lease shall not terminate unless Landlord gives Tenant written
notice of its election to so terminate this Lease. No act by or on behalf of
Landlord intended to mitigate the adverse effect of such breach, including those
described by P. 13.C, shall constitute a termination of Tenant's right to
possession unless Landlord gives Tenant written notice of termination. Should
Landlord not terminate this Lease by giving Tenant written notice, Landlord may
enforce all its rights and remedies under this Lease, including the right to
recover the rent as it becomes due under the Lease as provided in California
Civil Code Section 1951.4.
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E. In the event Landlord terminates this Lease, Landlord
shall be entitled, at Landlord's election, to damages in an amount as set forth
in California Civil Code Section 1951.2 as in effect on the Effective Date. For
purposes of computing damages pursuant to California Civil Code Section 1951.2,
(i) an interest rate equal to the Agreed Interest Rate shall be used where
permitted, and (ii) the term "rent" includes Base Monthly Rent and Additional
Rent. Such damages shall include:
(1) 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, computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent (1%); and
(2) Any other amount necessary to compensate Landlord
for all detriment proximately caused by Tenant's failure to perform Tenant's
obligations under this Lease, or which in the ordinary course of things would be
likely to result therefrom, including the following: (i) expenses for cleaning,
repairing or restoring the Premises; (ii) expenses for altering, remodeling or
otherwise improving the Premises for the purpose of reletting, including
installation of leasehold improvements (whether such installation be funded by a
reduction of rent, direct payment or allowance to a new tenant, or otherwise);
(iii) broker's fees, advertising costs and other expenses of reletting the
Premises; (iv) costs of carrying the Premises, such as taxes, insurance
premiums, utilities and security precautions; (v) expenses in retaking
possession of the Premises; and (vi) reasonable attorneys' fees and court costs
incurred by Landlord in retaking possession of the Premises and in releasing the
Premises or otherwise incurred as a result of Tenant's default.
F. Nothing in this P. 13.2 shall limit Landlord's right to
indemnification from Tenant as provided in P. 7.2 and P. 10.3. Any notice given
by Landlord in order to satisfy the requirements of P. 13.1A or P. 13.1B above
shall also satisfy the notice requirements of California Code of Civil Procedure
Section 1161 regarding unlawful detainer proceedings.
13.3 WAIVER: One party's consent to or approval of any act by the
other party requiring the first party's consent or approval shall not be deemed
to waive or render unnecessary the first party's consent to or approval of any
subsequent similar act by the other party. The receipt by Landlord of any rent
or payment with or without knowledge of the breach of any other provision hereof
shall not be deemed a waiver of any such breach unless such waiver is in writing
and signed by Landlord. No delay or omission in the exercise of any right or
remedy accruing to either party upon any breach by the other party under this
Lease shall impair such right or remedy or be construed as a waiver of any such
breach theretofore or thereafter occurring. The waiver by either party of any
breach of any provision of this Lease shall not be deemed to be a waiver of any
subsequent breach of the same or of any other provisions herein contained.
13.4 LIMITATION ON EXERCISE OF RIGHTS: At any time that an Event of
Tenant's Default has occurred and remains uncured, (i) it shall not be
unreasonable for Landlord to deny or withhold any consent or approval requested
of it by Tenant which Landlord would otherwise be obligated to give, and (ii)
Tenant may not exercise any option to extend, right to terminate this Lease, or
other right granted to it by this Lease which would otherwise be available to
it.
13.5 WAIVER BY TENANT OF CERTAIN REMEDIES: Tenant waives the
provisions of Sections 1932(1), 1941 and 1942 of the California Civil Code and
any similar or successor law regarding Tenant's right to terminate this Lease or
to make repairs and deduct the expenses of such repairs from the rent due under
this Lease. Tenant hereby waives any right of redemption or relief from
forfeiture under the laws of the State of California, or under any other present
or future law, including the provisions of Sections 1174 and 1179 of the
California Code of Civil Procedure.
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 TRANSFER BY TENANT: The following provisions shall apply to any
assignment, subletting or other transfer by Tenant or any subtenant or assignee
or other successor in interest of the original Tenant (collectively referred to
in this P. 14.1 as "Tenant"):
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A. Tenant shall not do any of the following (collectively
referred to herein as a "Transfer"), whether voluntarily, involuntarily or by
operation of law, without the prior written consent of Landlord, which consent
shall not be unreasonably withheld: (i) sublet all or any part of the Premises
or allow it to be sublet, occupied or used by any person or entity other than
Tenant; (ii) assign its interest in this Lease; (iii) mortgage or encumber the
Lease (or otherwise use the Lease as a security device) in any manner; or (iv)
materially amend or modify an assignment, sublease or other transfer that has
been previously approved by Landlord. Tenant shall reimburse Landlord for all
reasonable costs and attorneys' fees incurred by Landlord in connection with the
evaluation, processing, and/or documentation of any requested Transfer, whether
or not Landlord's consent is granted. Landlord's reasonable costs shall include
the cost of any review or investigation performed by Landlord or consultant
acting on Landlord's behalf of (i) Hazardous Materials (as defined in Section
7.2E of this Lease) used, stored, released, or disposed of by the potential
Subtenant or Assignee, and/or (ii) violations of Hazardous Materials Law (as
defined in Section 7.2E of this lease) by the Tenant or the proposed Subtenant
or Assignee. Any Transfer so approved by Landlord shall not be effective until
Tenant has delivered to Landlord an executed counterpart of the document
evidencing the Transfer which (i) is in a form reasonably approved by Landlord,
(ii) contains the same terms and conditions as stated in Tenant's notice given
to Landlord pursuant to P. 14.1B, and (iii) in the case of an assignment of the
Lease, contains the agreement of the proposed transferee to assume all
obligations of Tenant under this Lease arising after the effective date of such
Transfer and to remain jointly and severally liable therefor with Tenant. Any
attempted Transfer without Landlord's consent shall constitute an Event of
Tenant's Default and shall be voidable at Landlord's option. Landlord's consent
to any one Transfer shall not constitute a waiver of the provisions of this P.
14.1 as to any subsequent Transfer or a consent to any subsequent Transfer. No
Transfer, even with the consent of Landlord, shall relieve Tenant of its
personal and primary obligation to pay the rent and to perform all of the other
obligations to be performed by Tenant hereunder. The acceptance of rent by
Landlord from any person shall not be deemed to be a waiver by Landlord of any
provision of this Lease nor to be a consent to any Transfer.
B. At least 30 days before a proposed Transfer is to become
effective, Tenant shall give Landlord written notice of the proposed terms of
such Transfer and request Landlord's approval, which notice shall include the
following: (i) the name and legal composition of the proposed transferee; (ii)
the latest annual and quarterly report of the transferee if the transferee is a
public company, otherwise a current financial statement of the transferee and
financial statements of such transferee covering the preceding three years if
the same exist, and (if available) an audited financial statement of the
transferee for a period ending not more than one year prior to the proposed
effective date of the Transfer, all of which statements are prepared in
accordance with generally accepted accounting principles; (iii) the nature of
the proposed transferee's business to be carried on in the Premises; (iv) all
consideration to be given on account of the Transfer; (v) a current financial
statement of Tenant; and (vi) an accurately filled out response to Landlord's
standard hazardous materials questionnaire. Tenant shall provide to Landlord
such other information as may be reasonably requested by Landlord within seven
days after Landlord's receipt of such notice from Tenant. Landlord shall respond
in writing to Tenant's request for Landlord's consent to a Transfer within the
later of (i) 30 days of receipt of such request together with the required
accompanying documentation, or (ii) 15 days after Landlord's receipt of all
information which Landlord reasonably requests within seven days after it
receives Tenant's first notice regarding the Transfer in question. If Landlord
fails to respond in writing within said period, then Tenant shall provide a
second written notice to Tenant requesting such consent and if Landlord fails to
respond within 7 days after receipt of such second notice, then Landlord will be
deemed to have consented to such Transfer. Tenant shall immediately notify
Landlord of any modification to the proposed terms of such Transfer, which shall
also be subject Landlord's consent in accordance with the same process for
obtaining Landlord's initial consent to such Transfer.
C. Except for a Permitted Transfer under section 14.1F or a
Transfer described in section 14.1G, in the event that Tenant seeks to make any
Transfer, Landlord shall have the right to terminate this Lease or, in the case
of a sublease of less than all of the Premises, terminate this Lease as to that
part of the Premises proposed to be so sublet, either (i) on the condition that
the proposed transferee immediately enter into a direct lease of the Premises
with Landlord (or, in the case of a partial sublease, a lease for the portion
proposed to be so sublet) on the same terms and conditions contained in Tenant's
notice, or (ii) so that Landlord is thereafter free to lease the Premises (or,
in the case of a partial sublease, the portion proposed to be so sublet) to
whomever it pleases on whatever terms are acceptable to Landlord. In the event
Landlord elects to so terminate this Lease, then
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(i) if such termination is conditioned upon the execution of a lease between
Landlord and the proposed transferee, Tenant's obligations under this Lease
shall not be terminated until such transferee executes a new lease with
Landlord, enters into possession and commences the payment of rent, and (ii) if
Landlord elects simply to terminate this Lease (or, in the case of a partial
sublease, terminate this Lease as to the portion to be so sublet), the Lease
shall so terminate in its entirety (or as to the space to be so sublet) fifteen
(15) days after Landlord has notified Tenant in writing of such election. Upon
such termination, Tenant shall be released from any further obligation under
this Lease if it is terminated in its entirety, or shall be released from any
further obligation under the Lease with respect to the space proposed to be
sublet in the case of a proposed partial sublease. In the case of a partial
termination of the Lease, the Base Monthly Rent and Tenant's Share shall be
reduced to an amount which bears the same relationship to the original amount
thereof as the area of that part of the Premises which remains subject to the
Lease bears to the original area of the Premises. Landlord and Tenant shall
execute a cancellation and release with respect to the Lease to effect such
termination.
D. If Landlord consents to a Transfer proposed by Tenant,
Tenant may enter into such Transfer, and if Tenant does so, the following shall
apply:
(1) Tenant shall not be released of its liability for
the performance of all of its obligations under the Lease. However, Tenant shall
not be liable for any obligation that accrues during any extension of this Lease
beyond the initial Lease Term, unless Tenant was a party to any such extension
or the Transfer was a Permitted Transfer.
(2) If Tenant assigns its interest in this Lease, then
Tenant shall pay to Landlord 50% of all Subrent (as defined in P. 14.1D(5))
received by Tenant over and above (i) the assignee's agreement to assume the
obligations of Tenant under this Lease, and (ii) all Permitted Transfer Costs
related to such assignment. In the case of assignment, the amount of Subrent
owed to Landlord shall be paid to Landlord on the same basis, whether periodic
or in lump sum, that such Subrent is paid to Tenant by the assignee. All
Permitted Transfer Costs shall be amortized on a straight line basis over the
term of such sublease (excluding any extension options) for purposes of
calculating the amount due Landlord hereunder.
(3) If Tenant sublets any part of the Premises, then
with respect to the space so subleased, Tenant shall pay to Landlord 50% of the
positive difference, if any, between (i) all Subrent paid by the subtenant to
Tenant, less (ii) the sum of all Base Monthly Rent and Additional Rent allocable
to the space sublet and all Permitted Transfer Costs related to such sublease.
Such amount shall be paid to Landlord on the same basis, whether periodic or in
lump sum, that such Subrent is paid to Tenant by its subtenant. All Permitted
Transfer Costs shall be amortized on a straight line basis over the term of such
sublease (excluding any extension options) for purposes of calculating the
amount due Landlord hereunder.
(4) Tenant's obligations under this P. 14.1D shall
survive any Transfer, and Tenant's failure to perform its obligations hereunder
shall be an Event of Tenant's Default. At the time Tenant makes any payment to
Landlord required by this P. 14.1D, Tenant shall deliver an itemized statement
of the method by which the amount to which Landlord is entitled was calculated,
certified by Tenant as true and correct. Landlord shall have the right at
reasonable intervals to inspect Tenant's books and records relating to the
payments due hereunder. Upon request therefor, Tenant shall deliver to Landlord
copies of all bills, invoices or other documents upon which its calculations are
based. Landlord may condition its approval of any Transfer upon obtaining a
certification from both Tenant and the proposed transferee of all Subrent and
other amounts that are to be paid to Tenant in connection with such Transfer.
(5) As used in this P. 14.1D, the term "Subrent" shall
mean any consideration of any kind received, or to be received, by Tenant as a
result of the Transfer, if such sums are related to Tenant's interest in this
Lease or in the Premises, including payments from or on behalf of the transferee
(in excess of the book value thereof) for Tenant's assets, fixtures, leasehold
improvements, inventory, accounts, goodwill, equipment, furniture, and general
intangibles. As used in this P. 14.1D, the term "Permitted Transfer Costs" shall
mean (i) all reasonable leasing commissions paid to third parties not affiliated
with Tenant in order to obtain the Transfer in question, and (ii) all reasonable
attorneys' fees incurred by Tenant with respect to the Transfer in question, and
(iii) the unamortized cost of the Tenant Improvements (as defined in Exhibit B
attached hereto) to the extent the cost for such Tenant Improvements were in
excess of Landlord's Allowances (as defined in Exhibit B attached hereto).
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E. If Tenant is a corporation, the following shall be
deemed a voluntary assignment of Tenant's interest in this Lease: (i) any
dissolution, merger, consolidation, or other reorganization of or affecting
Tenant, whether or not Tenant is the surviving corporation; and (ii) if the
capital stock of Tenant is not publicly traded, the sale or transfer to one
person or entity (or to any group of related persons or entities) stock
possessing more than 50% of the total combined voting power of all classes of
Tenant's capital stock issued, outstanding and entitled to vote for the election
of directors. If Tenant is a partnership, limited liability company or other
entity any withdrawal or substitution (whether voluntary, involuntary or by
operation of law, and whether occurring at one time or over a period of time) of
any partner, member or other party owning 25% or more (cumulatively) of any
interest in the capital or profits of the partnership, limited liability company
or other entity or the dissolution of the partnership, limited liability company
or other entity, shall be deemed a voluntary assignment of Tenant's interest in
this Lease.
F. Notwithstanding anything contained in P. 14.1, so
long as Tenant otherwise complies with the provisions of P. 14.1 Tenant may
enter into any of the following transfers (a "Permitted Transfer") without
Landlord's prior written consent, and Landlord shall not be entitled to
terminate the Lease pursuant to P. 14.1C or to receive any part of any
Subrent resulting therefrom that would otherwise be due it pursuant to P.
14.1D:
(1) Tenant may sublease all or part of the Premises or
assign its interest in this Lease to any corporation which controls, is
controlled by, or is under common control with the original Tenant to this Lease
by means of an ownership interest of more than 50%;
(2) Tenant may assign its interest in the Lease to a
corporation which results from a merger, consolidation or other reorganization
in which Tenant is not the surviving corporation, so long as the surviving
corporation has a net worth at the time of such assignment that is equal to or
greater than the net worth of Tenant immediately prior to such transaction; and
(3) Tenant may assign this Lease to a corporation which
purchases or otherwise acquires all or substantially all of the assets of
Tenant, so long as such acquiring corporation has a net worth at the time of
such assignment that is equal to or greater than the net worth of Tenant
immediately prior to such transaction.
G. Notwithstanding anything to the contrary, the merger of
All American Semiconductor, Inc. (the parent corporation of Tenant) with a
wholly owned subsidiary of Reptron Electronics, Inc. during the first year
following the Commencement Date, shall not constitute a Transfer requiring the
Landlord's consent or be subject to the bonus rent provisions of section
14.1D(2) and (3) or the recapture provisions of section 14.1C, or similar
provisions under the Devcon Lease. In addition, so long as Tenant otherwise
complies with the provisions of P. 14.1, the recapture provisions of section
14.1C shall not apply to a sublease by Tenant to another party for any portion
of the space located in front of the Zanker Road Space consisting of
approximately 6,000 square feet of space, as outlined in Exhibit B-1 attached to
the Work Letter attached hereto as Exhibit B.
14.2 TRANSFER BY LANDLORD: Landlord and its successors in interest
shall have the right to transfer their interest in this Lease and the Project at
any time and to any person or entity. In the event of any such transfer, the
Landlord originally named herein (and, in the case of any subsequent transfer,
the transferor) from the date of such transfer, shall be automatically relieved,
without any further act by any person or entity, of all liability for the
performance of the obligations of the Landlord hereunder which may accrue after
the date of such transfer. After the date of any such transfer, the term
"Landlord" as used herein shall mean the transferee of such interest in the
Premises.
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ARTICLE 15
GENERAL PROVISIONS
15.1 LANDLORD'S RIGHT TO ENTER: Landlord and its agents may enter the
Premises at any reasonable time after giving at least 24 hours' prior notice to
Tenant (and immediately in the case of emergency) for the purpose of: (i)
inspecting the same; (ii) posting notices of non-responsibility; (iii) supplying
any service to be provided by Landlord to Tenant; (iv) showing the Premises to
prospective purchasers, mortgagees or tenants; (v) making necessary alterations,
additions or repairs; (vi) performing Tenant's obligations when Tenant has
failed to do so after written notice from Landlord; (vii) placing upon the
Premises ordinary "for lease" signs or "for sale" signs; and (viii) responding
to an emergency. Landlord shall have the right to use any and all means Landlord
may deem necessary and proper to enter the Premises in an emergency. Any entry
into the Premises obtained by Landlord in accordance with this P. 15.1 shall not
be a forcible or unlawful entry into, or a detainer of, the Premises, or an
eviction, actual or constructive, of Tenant from the Premises.
15.2 SURRENDER OF THE PREMISES: Upon the expiration or sooner
termination of this Lease, Tenant shall vacate and surrender the Premises to
Landlord in the same condition as existed at the Commencement Date, except for
(i) reasonable wear and tear, (ii) damage caused by any peril or condemnation,
and (iii) contamination by Hazardous Materials for which Tenant is not
responsible pursuant to P. 7.2A or P. 7.2B. In this regard, normal wear and tear
shall be construed to mean wear and tear caused to the Premises by the natural
aging process which occurs in spite of prudent application of the best standards
for maintenance, repair and janitorial practices, and does not include items of
neglected or deferred maintenance. In any event, Tenant shall cause the
following to be done prior to the expiration or the sooner termination of this
Lease: (i) all interior walls shall be cleaned or if necessary painted to appear
in good condition, reasonable wear and tear excepted; (ii) all tiled floors
shall be cleaned and waxed; (iii) all carpets shall be cleaned and shampooed;
(iv) all broken, marred, stained or nonconforming acoustical ceiling tiles shall
be replaced; (v) all exterior and interior windows shall be washed; (vi) the
HVAC system shall be serviced by a reputable and licensed service firm and left
in good operating condition and repair as so certified by such firm; and (vii)
the plumbing and electrical systems and lighting shall be placed in good order
and repair (including replacement of any burned out, discolored or broken light
bulbs, ballasts, or lenses). If Landlord so requests, Tenant shall, prior to the
expiration or sooner termination of this Lease, (i) remove any Tenant's
Alterations which Tenant is required to remove pursuant to P. 5.2 and repair all
damage caused by such removal, and (ii) return the Premises or any part thereof
to its original configuration existing as of the time the Premises were
delivered to Tenant with the Tenant Improvements completed, except for any
portion of the Tenant Improvements that Landlord notifies Tenant at the time
Landlord approves of the Construction Plans for the Tenant Improvements must be
removed by Tenant at or prior to the expiration or earlier termination of this
Lease. If the Premises are not so surrendered at the termination of this Lease,
Tenant shall be liable to Landlord for all costs incurred by Landlord in
returning the Premises to the required condition, plus interest on all costs
incurred at the Agreed Interest Rate. Tenant shall indemnify Landlord against
loss or liability resulting from delay by Tenant in so surrendering the
Premises, including, without limitation, any claims made by any succeeding
tenant or losses to Landlord due to lost opportunities to lease to succeeding
tenants only if there is a delay of more than thirty (30) days in completing
such work.
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15.3 HOLDING OVER: This Lease shall terminate without further notice
at the expiration of the Lease Term. Any holding over by Tenant after expiration
of the Lease Term shall not constitute a renewal or extension of the Lease or
give Tenant any rights in or to the Premises except as expressly provided in
this Lease. Any holding over after such expiration with the written consent of
Landlord shall be construed to be a tenancy from month to month on the same
terms and conditions herein specified insofar as applicable except that Base
Monthly Rent shall be increased to an amount equal to 150% of the greater of (a)
the Base Monthly Rent payable during the last full calendar month of the Lease
Term, or (b) the then prevailing fair market rent.
15.4 SUBORDINATION: The following provisions shall govern the
relationship of this Lease to any Security Instrument:
A. The Lease is subject and subordinate to all Security
Instruments existing as of the Effective Date. However, if any Lender so
requires, this Lease shall become prior and superior to any such Security
Instrument.
B. At Landlord's election, this Lease shall become subject
and subordinate to any Security Instrument created after the Effective Date.
Notwithstanding such subordination, Tenant's right to quiet possession of the
Premises shall not be disturbed so long as Tenant is not in default and performs
all of its obligations under this Lease, unless this Lease is otherwise
terminated pursuant to its terms.
C. Tenant shall upon request execute any document or
instrument required by any Lender to make this Lease either prior or subordinate
to a Security Instrument, which may include such other matters as the Lender
customarily and reasonably requires in connection with such agreements,
including provisions that the Lender not be liable for (i) the return of any
security deposit unless the Lender receives it from Landlord, and (ii) any
defaults on the part of Landlord occurring prior to the time the Lender takes
possession of the Project in connection with the enforcement of its Security
Instrument, except that such Lender shall be responsible for correcting any
continuing default in the nature of the failure of Landlord to repair the
Building or Common Areas for which Tenant has previously provided Landlord and
such Lender with notice of default. Tenant's failure to execute any such
document or instrument within 15 days after written demand therefor shall
constitute an Event of Tenant's Default.
Landlord shall request the beneficiary (or its servicer) of the
deed of trust that encumbers the Project as of the date hereof issue its
subordination, non-disturbance and attornment agreement ("SNDA"), pursuant to
which such beneficiary agrees to recognize this Lease in the event of default
under such deed of trust or sale under such deed of trust, so long as Tenant is
not in default hereunder beyond the expiration of any applicable cure period.
The failure of such beneficiary to issue its SNDA shall not be grounds to
terminate this Lease or afford Tenant any right or remedy against Landlord.
Tenant shall be responsible for paying any legal fees or charges required by
beneficiary to issue such SNDA.
15.5 MORTGAGEE PROTECTION AND ATTORNMENT: In the event of any default
on the part of the Landlord, Tenant will use reasonable efforts to give notice
by certified mail to any Lender whose name has been provided to Tenant and shall
offer such Lender a reasonable opportunity to cure the default, including time
to obtain possession of the Premises by power of sale or judicial foreclosure or
other appropriate legal proceedings, if such should prove necessary to effect a
cure. Tenant shall attorn to any purchaser of the Premises at any foreclosure
sale or private sale conducted pursuant to any Security Instrument encumbering
the Premises, or to any grantee or transferee designated in any deed given in
lieu of foreclosure.
15.6 ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS: At all times
during the Lease Term, each party agrees, following any request by the other
party, promptly to execute and deliver to the requesting party within 15 days
following delivery of such request an estoppel certificate: (i) certifying that
this Lease is unmodified and in full force and effect or, if modified, stating
the nature of such modification and certifying that this Lease, as so modified,
is in full force and effect, (ii) stating the date to which the rent and other
charges are paid in advance, if any, (iii) acknowledging that there are not, to
the certifying party's knowledge, any uncured defaults on the part of any party
hereunder or, if there are uncured defaults, specifying the nature of such
defaults, and (iv) certifying such other factual information about the Lease as
may be reasonably required by the requesting party. A failure to deliver an
estoppel certificate within 15 days after delivery of a request therefor shall
be a conclusive admission that, as of the date of the request for such
statement: (i) this Lease is unmodified except as may be represented by the
requesting party in said request and is in full force and effect, (ii) there are
no uncured defaults in the requesting party's performance, and (iii) no rent has
been paid more than 30 days in advance. At any time during the Lease Term Tenant
shall, upon 15 days' prior written notice from Landlord, provide Tenant's most
recent annual and quarterly reports if Tenant is a public company, otherwise a
current financial statement and financial statements covering the 24 month
period prior to the date of such most recent financial statement to any existing
Lender or to any potential Lender or buyer of the Premises.
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15.7 INTENTIONALLY DELETED.
15.8 NOTICES: Any notice required or desired to be given regarding
this Lease shall be in writing and may be given by personal delivery, by
facsimile, by courier service, or by mail. A notice shall be deemed to have been
given (i) when delivered if given by personal delivery, including overnight
courier service, and (ii) in all other cases when actually received at the
party's Address for Notices or on date delivery is refused. Either party may
change its address by giving notice of the same in accordance with this P. 15.8,
provided, however, that any address to which notices may be sent must be a
California address.
15.9 ATTORNEYS' FEES: In the event either Landlord or Tenant shall
bring any action or legal proceeding for an alleged breach of any provision of
this Lease, to recover rent, to terminate this Lease or otherwise to enforce,
protect or establish any term or covenant of this Lease, the prevailing party
shall be entitled to recover as a part of such action or proceeding, or in a
separate action brought for that purpose, reasonable attorneys' fees, court
costs, and experts' fees as may be fixed by the court.
15.10 CORPORATE AUTHORITY: If Tenant is a corporation (or
partnership), each individual executing this Lease on behalf of Tenant
represents and warrants that he is duly authorized to execute and deliver this
Lease on behalf of such corporation in accordance with the by-laws of such
corporation (or partnership in accordance with the partnership agreement of such
partnership) and that this Lease is binding upon such corporation (or
partnership) in accordance with its terms. Each of the persons executing this
Lease on behalf of a corporation does hereby covenant and warrant that the party
for whom it is executing this Lease is a duly authorized and existing
corporation, that it is qualified to do business in California, and that the
corporation has full right and authority to enter into this Lease.
15.11 MISCELLANEOUS: Should any provision of this Lease prove to be
invalid or illegal, such invalidity or illegality shall in no way affect, impair
or invalidate any other provision hereof, and such remaining provisions shall
remain in full force and effect. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor. The captions used in this Lease are for convenience only and shall not
be considered in the construction or interpretation of any provision hereof. Any
executed copy of this Lease shall be deemed an original for all purposes. This
Lease shall, subject to the provisions regarding assignment, apply to and bind
the respective heirs, successors, executors, administrators and assigns of
Landlord and Tenant. "Party" shall mean Landlord or Tenant, as the context
implies. If Tenant consists of more than one person or entity, then all members
of Tenant shall be jointly and severally liable hereunder. This Lease shall be
construed and enforced in accordance with the laws of the State of California.
The language in all parts of this Lease shall in all cases be construed as a
whole according to its fair meaning, and not strictly for or against either
Landlord or Tenant. When the context of this Lease requires, the neuter gender
includes the masculine, the feminine, a partnership or corporation or joint
venture, and the singular includes the plural. The terms "shall", "will" and
"agree" are mandatory. The term "may" is permissive. When a party is required to
do something by this Lease, it shall do so at its sole cost and expense without
right of reimbursement from the other party unless a provision of this Lease
expressly requires reimbursement. Landlord and Tenant agree that (i) the gross
leasable area of the Premises includes any atriums, depressed loading docks,
covered entrances or egresses, and covered loading areas, (ii) each has had an
opportunity to determine to its satisfaction the actual area of the Project and
the Premises, (iii) all measurements of area contained in this Lease are
conclusively agreed to be correct and binding upon the parties, even if a
subsequent measurement of any one of these areas determines that it is more or
less than the amount of area reflected in this Lease, and (iv) any such
subsequent determination that the area is more or less than shown in this Lease
shall not result in a change in any of the computations of rent, improvement
allowances, or other matters described in this Lease where area is a factor.
Where a party hereto is obligated not to perform any act, such party is also
obligated to restrain any others within its control from performing said act,
including the Agents of such party. Landlord shall not become or be deemed a
partner or a joint venturer with Tenant by reason of the provisions of this
Lease.
15.12 TERMINATION BY EXERCISE OF RIGHT: If this Lease is terminated
pursuant to its terms by the proper exercise of a right to terminate
specifically granted to Landlord or Tenant by this Lease, then this Lease shall
terminate 30 days after the date the right to terminate is properly exercised
(unless another date is specified in that part of the Lease creating the right,
in which event the date so specified for termination shall prevail), the rent
and all other charges due hereunder shall be prorated as of the date of
termination, and neither Landlord nor Tenant shall have any further rights or
obligations under this Lease except for those that have accrued prior to the
date of termination or those obligations which this Lease specifically provides
are to survive termination. This P. 15.12 does not apply to a termination of
this Lease by Landlord as a result of an Event of Tenant's Default.
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15.13 BROKERAGE COMMISSIONS: Each party hereto (i) represents and
warrants to the other that it has not had any dealings with any real estate
brokers, leasing agents or salesmen, or incurred any obligations for the payment
of real estate brokerage commissions or finder's fees which would be earned or
due and payable by reason of the execution of this Lease, other than to the
Retained Real Estate Brokers described in SECTION S of the Summary, and (ii)
agrees to indemnify, defend, and hold harmless the other party from any claim
for any such commission or fees which result from the actions of the
indemnifying party. Landlord shall be responsible for the payment of any
commission owed to the Retained Real Estate Brokers if there is a separate
written commission agreement between Landlord and the Retained Real Estate
Brokers for the payment of a commission as a result of the execution of this
Lease.
15.14 FORCE MAJEURE: Any prevention, delay or stoppage due to strikes,
lock-outs, inclement weather, labor disputes, inability to obtain labor,
materials, fuels or reasonable substitutes therefor, governmental restrictions,
regulations, controls, action or inaction, civil commotion, fire or other acts
of God, and other causes beyond the reasonable control of Landlord or Tenant
(except financial inability) shall excuse the performance by Landlord or Tenant,
for a period equal to the period of any said prevention, delay or stoppage, of
any obligation hereunder, except Tenant shall not be excused form the payment of
rent or any other sum under this Lease.
15.15 ENTIRE AGREEMENT: This Lease constitutes the entire agreement
between the parties, and there are no binding agreements or representations
between the parties except as expressed herein. Tenant acknowledges that neither
Landlord nor Landlord's Agents has made any legally binding representation or
warranty as to any matter except those expressly set forth herein, including any
warranty as to (i) whether the Premises may be used for Tenant's intended use
under existing Law, (ii) the suitability of the Premises or the Project for the
conduct of Tenant's business, or (iii) the condition of any improvements. There
are no oral agreements between Landlord and Tenant affecting this Lease, and
this Lease supersedes and cancels any and all previous negotiations,
arrangements, brochures, agreements and understandings, if any, between Landlord
and Tenant or displayed by Landlord to Tenant with respect to the subject matter
of this Lease. This instrument shall not be legally binding until it is executed
by both Landlord and Tenant. No subsequent change or addition to this Lease
shall be binding unless in writing and signed by Landlord and Tenant.
15.16 WAIVER OF LANDLORD'S LIEN. Landlord agrees to waives its
"landlord's lien" or any other statutory lien, contractual lien or security
interest given by law or this Lease to Landlord in any equipment, furniture,
trade fixtures, inventory, supplies or personal property of Tenant now or
hereafter placed in or upon the Premises. Upon Tenant's request, Landlord agrees
to cooperate with Tenant's third party lender's request in executing a consent
to such financing and removal of such furniture, trade fixtures and equipment,
provided such form of consent (a) does not require the delivery to such lender
of notice of any default by Tenant, (b) does not permit any auction, bulk sale
or similar sale at the Premises or Project, (c) provides for an indemnity by
such lender to Landlord for any injury to any person or damage to any property,
including, without limitation, the Project caused by such lender or its agents,
consultants or contractors and (d) is acceptable to Landlord in its good faith
discretion.
15.17 LANDLORD'S REPRESENTATIONS. Landlord represents and warrants to
Tenant that as of the date hereof: (a) Landlord is the sole owner of fee simple
title to the Project, subject to all liens, encumbrances, rights of way,
easements, restrictions and other matters of record; and (b) Landlord has full
power and authority, and has taken all necessary action, to execute, deliver and
perform under this Lease.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease with
the intent to be legally bound thereby, to be effective as of the Effective
Date.
LANDLORD: TENANT:
By: SAN ▇▇▇▇ TECHNOLOBY PROPERTIES, LLC By: ALL AMERICAN SEMICONDUCTOR
a Delaware limited liability company OF NORTHERN CALIFORNIA, INC.
a California corporation
By: Divco West Group, LLC,
a Delaware limited By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
liability company -----------------------
Its Manager Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: PRES. & CEO
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its: President
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ADDENDUM NO. 1
This ADDENDUM NO. 1 (this "Addendum") is made in connection with and is
a part of that certain Lease, dated as of October 1, 1998, by and between ALL
AMERICAN SEMICONDUCTOR OF NORTHERN CALIFORNIA, INC., a California corporation,
as Tenant, and SAN ▇▇▇▇ TECHNOLOGY PROPERTIES, LLC, a Delaware limited liability
company, as Landlord (the "Lease").
1. DEFINITIONS AND CONFLICT. All capitalized terms referred to in
this Addendum shall have the same meaning as provided in the Lease, except as
expressly provided to the contrary in this Addendum. In case of any conflict
between any term or provision of the Lease and any exhibits attached thereto and
this Addendum, this Addendum shall control.
2. OPTION TO EXTEND AND RENT DURING THE EXTENDED PERIOD: Tenant
shall have one (1) option to extend the term of the Lease for a period of five
(5) years (the period shall be referred to as the "Extension Period") by giving
written notice of exercise of such option ("Extension Option Notice") at least
one hundred eighty (180) days, but not more than three hundred sixty-five (365)
days, prior to the expiration of the initial Lease Term. The Extension Period
shall commence, if at all, immediately following the expiration of the initial
Lease Term. If Tenant is in default (after notice and the expiration of the
applicable cure period) under any term or provision of the Lease on the date of
giving an Extension Option Notice, or if Tenant is in default (after notice and
the expiration of the applicable cure period) under any term or provision of the
Lease on the date of the applicable Extension Period is to commence, the
Extension Period at the option of Landlord shall not commence and the Lease
shall expire at the end of initial Lease Term. The Extension Period shall be
upon all of the terms and provisions of the Lease, except that the Base Monthly
Rent during such Extension Period shall be one hundred percent (100%) of then
Fair Market Rent. Tenant may not rescind, cancel, terminate or modify its
Extension Option Notice once given.
2.1 FAIR MARKET RENT. The term "Fair Market Rent" for
purposes of determining Base Monthly Rent during the Extension Period shall mean
the greater of (i) the Base Monthly Rent payable during the last month prior to
the commencement of the Extension Period, or (ii) the base monthly rent
generally applicable to similar leases in like buildings with annual increases
in base monthly rent for space of comparable size, age, quality of the Premises
in the San Jose, California area within the boundaries of Highways 237, 880 and
101, projected as of the first day of the Extension Period by giving due
consideration for the quality of the Building and improvements therein
(including the quality of the then existing improvements in the Premises), for a
term comparable to the Extension Period at the time the commencement of the
Extension Period is scheduled to commence, without any deduction for
amortization or cost of Tenant improvements or commissions whether or not
incurred by Landlord, and otherwise subject to the terms and conditions of this
Lease that will be applicable during the Extension Period.
2.2 PROCEDURE TO DETERMINE FAIR MARKET RENT. Landlord shall
notify Tenant in writing of Landlord's determination of the Fair Market Rent
("Landlord's FMR") after receipt of the Extension Option Notice. Within thirty
(30) days after receipt of such written notice of Landlord's FMR, Tenant shall
have the right either to: (i) accept Landlord's FMR, or (ii) elect to have the
Fair Market Rent determined in accordance with the appraisal procedure set forth
below. The failure of Tenant to provide written notice of its election under the
preceding sentence shall be deemed an acceptance of Landlord's FMR. The election
(or deemed election ) by Tenant under this section shall be non-revocable and
binding on the parties.
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2.3 APPRAISERS. If Tenant has elected to have the Fair
Market Rent determined by an appraisal, then within ten (10) days after receipt
of Tenant's written notice of such an election, each party, by giving written
notice to the other party, shall appoint an appraiser to render a written
opinion of the Fair Market Rent for the Extension Period. Each appraiser must be
a member of the Appraisal Institute of America (MAI) for at least five years and
with at least five years experience in the appraisal of rental rates of similar
commercial buildings in the area in which the Building is located and otherwise
unaffiliated with either Landlord or Tenant. The two appraisers shall render
their written opinion of the Fair Market Rent for the Extension Period to
Landlord and Tenant within thirty (30) days after the appointment of the second
appraiser. If the Fair Market Rent of each appraiser is within five percent (5%)
of each other, then the average of the two appraisals of Fair Market Rent shall
be the Base Monthly Rent for the Extension Period. If one party does not appoint
its appraiser as provided above, then the one appointed shall determine the Fair
Market Rent. The Fair Market Rent so determined under this section shall be
binding on Landlord and Tenant.
2.4 THIRD APPRAISER. If the Fair Market Rent determined by
the appraisers is more than five percent (5%) apart, then the two appraisers
shall pick a third appraiser within ten (10) days after the two appraisers have
rendered their opinions of Fair Market Rent as provided above. If the two
appraisers are unable to agree on the third appraiser within said ten (10) day
period, Landlord and Tenant shall mutually agree on the third appraiser within
ten (10) days thereafter. The third appraiser shall be a person who has not
previously acted in any capacity for either party and must meet the
qualifications stated above.
2.5 IMPARTIAL APPRAISAL. Within thirty (30) days after its
appointment, the third appraiser shall render its written opinion of the Fair
Market Rent for the Extension Period ("Third Opinion"). If the Fair Market Rent
set forth in the Third Opinion is equidistant from the Fair Market Rent made by
Landlord's or Tenant's appraiser, then the Fair Market Rent contained in the
Third Opinion shall be the Fair Market Rent during the Extension Period.
Otherwise, the Fair Market Rent of Landlord's or Tenant's appraiser that is
closest to the Fair Market Rent of the Third Opinion shall be averaged with the
Fair Market Rent of Third Option to determine the Fair Market Rent during the
Extension Period.
2.6 APPRAISAL COSTS. Each party shall bear the cost of its
own appraiser and one-half (1/2) the cost of the third appraiser.
2.7 ACKNOWLEDGMENT OF RENT. After the Fair Market Rent for
the Extension Period has been established in accordance with the foregoing
procedure, Landlord and Tenant shall promptly execute an amendment to the Lease
to reflect the Base Monthly Rent for the Extension Period.
2.8 OPTION PERSONAL. The option to extend under this
Addendum is applicable only for the original party signing the Lease as "Tenant"
as of the date of the Lease and such Tenant's transferee under a Permitted
Transfer as defined in sections 14.1F or 14.1G of the Lease, but may not be
relied upon or exercise by any other assignee, sublessee, transferee under a
Transfer or any other successor to Tenant.
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