GROUND LEASE
CITY OF MOUNTAIN VIEW
AND
SILICON GRAPHICS REAL ESTATE, INC.
NORTH CHARLESTON SITE
MARCH 7, 1995
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS......................................................2
ARTICLE 2 DEMISE, TERM AND SURRENDER.......................................20
2.1 Lease Of Property.....................................................20
2.2 Subdivision Of Property; Separate Ground Leases.......................21
2.3 Delivery Of Possession................................................22
2.4 Term And Possession...................................................22
2.4.1 Initial Term...................................................22
2.4.2 Option Terms...................................................23
2.5 Termination And Surrender.............................................24
2.6 Tenant's Right of Entry...............................................25
2.6.1 Notice.........................................................27
2.7 Landlord's Representations and Warranties.............................27
2.7.1 Zoning.........................................................27
2.7.2 Land Use.......................................................28
2.7.3 No Proceedings.................................................28
2.7.4 Compliance With Laws...........................................28
2.7.5 Title..........................................................28
2.7.6 Utilities......................................................28
2.7.7 CC&Rs..........................................................28
2.8 Condition of Property.................................................29
ARTICLE 3 RENT.............................................................30
3.1 Monthly Rent..........................................................30
3.1.1 Initial Monthly Rent...........................................30
3.1.2 Rent Escalation................................................30
3.1.3 Adjustment of Monthly Rent.....................................30
3.1.3.1 Guaranty In Effect...................................31
3.1.3.2 Other Cases..........................................31
3.1.3.3 Revaluation Procedure................................32
3.1.4 Continuing Escalation..........................................38
3.1.5 Proration......................................................39
3.2 Payment of Rent.......................................................39
3.3 Interest; Late Charge.................................................39
ARTICLE 4 USE..............................................................40
4.1 Permitted Uses........................................................40
4.2 Compliance with Law...................................................40
4.3 Waste.................................................................41
4.4 Leasehold Improvements................................................42
4.5 Hazardous Materials...................................................42
4.5.1 Representations And Warranties.................................42
4.5.1.1 By Landlord..........................................42
4.5.1.2 By Tenant............................................44
4.5.2 Right Of Entry.................................................45
4.5.2.1 Notice...............................................46
4.5.2.2 Terms of Entry.......................................47
4.5.2.3 Environmental Construction Activities................47
4.5.2.3.1 Meet and Confer..........................47
4.5.2.3.2 Activities Reasonably Necessary..........47
4.5.2.3.3 Alternative Locations....................48
4.5.2.3.4 Tenant's Written Approval................48
4.5.2.3.5 Meetings with Governmental Authorities...49
4.5.2.3.6 Dispute Resolution.......................49
4.5.2.4 Existing Permittees..................................49
4.5.2.5 Third Parties........................................51
4.5.2.6 Information Sharing..................................52
4.5.2.7 Insurance Requirements...............................52
4.5.3 Landlord's Indemnification.....................................54
4.5.3.1 Landlord's Environmental Indemnity Obligations.......54
4.5.3.2 Limitations..........................................55
4.5.3.3 Procedure............................................56
4.5.3.4 Settlement by Landlord...............................57
4.5.4 Tenant's Indemnification.......................................58
4.5.4.1 Tenant's Environmental Indemnity Obligations.........58
4.5.4.2 Limitations..........................................59
4.5.4.3 Procedure............................................60
4.5.4.4 Settlement by Tenant.................................61
4.5.5 Tenant's Environmental Obligations.............................61
4.5.6 Waivers........................................................62
4.5.6.1 Landlord's Waiver....................................62
4.5.6.2 Tenant's Waiver......................................62
4.5.6.3 General Release......................................63
4.5.7 Reservation of Rights..........................................63
4.5.8 Survival.......................................................64
4.5.9 Abatement Of Rent or Termination Due To New Contamination......64
4.5.9.1 Rent Abatement During Construction of Initial
Project............................................64
4.5.9.2 Tenant's Right to Terminate During Construction
of Initial Project.................................65
4.5.9.3 City's Right to Terminate During Construction.......66
4.5.9.4 Rent Abatement Upon Completion of Initial Project...66
4.5.9.5 Lease Termination Upon Completion of Leasehold
Improvements.......................................67
4.5.9.6 Failure to Agree Upon Consultant or Findings........67
4.5.10 Utility Costs Related to Contaminated Groundwater..............68
4.5.11 Building Costs Related to Methane..............................68
ARTICLE 5 PAYMENT OF REAL PROPERTY TAXES AND UTILITY CHARGES...............69
5.1 Notice of Possessory Interest: Payment of Taxes and
Assessments on Value of Entire Property..............................69
5.2 Utilities.............................................................69
5.3 Real Property Taxes...................................................69
5.4 Right to Contest......................................................70
ARTICLE 6 CONSTRUCTION OF IMPROVEMENTS AND MECHANIC'S LIENS................70
6.1 Construction Prior To Commencement Date...............................70
6.2 Construction of Initial Project.......................................71
6.3 Conditions Precedent to Construction of Initial Project and Other
Leasehold Improvements...............................................71
6.3.1 Insurance During the Course of Construction....................71
6.3.2 Permits........................................................74
6.4 Notice of Nonresponsibility...........................................75
6.5 Completion Requirements...............................................75
6.6 Landlord Free From Liability..........................................75
6.7 Mechanics' Liens......................................................76
6.8 Landlord's Right to Discharge Lien....................................77
6.9 Title to Leasehold Improvements.......................................78
6.10 Landlord's Cooperation................................................78
6.11 Tenant's Election to Redevelop........................................78
ARTICLE 7 INSURANCE AND INDEMNITY..........................................79
7.1 Required Insurance....................................................79
7.1.1 Liability Insurance............................................80
7.1.2 Property Insurance.............................................80
7.1.3 Insurance Coverage.............................................81
7.2 Required Terms........................................................81
7.3 Partial Release of Liability and Waiver of Subrogation................83
7.4 Indemnification of Landlord...........................................83
7.4.1 Limitation of Landlord's Liability.............................83
7.4.2 Tenant's Indemnity.............................................84
7.4.2.1 Scope of Tenant's Indemnity...........................84
7.4.2.2 Limitations on Tenant's Indemnity.....................85
7.5 Landlord's Indemnity..................................................86
7.5.1 Scope of Landlord's Indemnity..................................88
7.5.2 Limitations on Landlord's Indemnity............................88
ARTICLE 8 MAINTENANCE, REPAIR AND RESTORATION OF DAMAGE....................89
8.1 Tenant's Duty to Maintain and Repair..................................89
8.2 Casualties............................................................90
8.2.1 Tenant's Duty To Restore.......................................90
8.2.2 Tenant's Termination Rights....................................91
8.2.2.1 Election Not to Reconstruct...........................91
8.2.2.2 Infeasibility.........................................92
8.2.3 General Provisions.............................................94
ARTICLE 9 CONDEMNATION.....................................................95
9.1 Definitions...........................................................95
9.1.1 Condemnation...................................................95
9.1.2 Total Taking...................................................95
9.1.3 Partial Taking.................................................95
9.1.4 Date of Taking.................................................96
9.1.5 Award..........................................................96
9.2 Total Taking..........................................................96
9.3 Partial Taking........................................................96
9.4 Temporary Taking......................................................97
9.5 Apportionment of Award................................................97
9.6 General...............................................................98
ARTICLE 10 DEFAULT AND REMEDIES.............................................99
10.1 Events of Tenant's Default............................................99
10.1.1 Monetary Default..............................................99
10.1.2 Nonmonetary Default...........................................99
10.2 Landlord's Remedies..................................................100
10.2.1 Termination of Lease.........................................100
10.2.2 Landlord's Election to Continue Lease........................103
10.2.3 Appointment of Receiver......................................104
10.2.4 Cure of Default by Landlord..................................104
10.3 No Waiver............................................................104
10.4 Remedies Cumulative..................................................105
10.5 Landlord's Default...................................................105
10.6 Tenant's Remedies....................................................105
ARTICLE 11 ASSIGNMENT AND SUBLETTING.......................................106
11.11 Assignment by Tenant.................................................106
11.1.1 Assignment to Virtual Funding, Inc...........................106
11.1.2 Automatic Assignment Right...................................106
11.1.3 Landlord's Right of Approval.................................108
11.1.4 Processing Expenses..........................................111
11.1.5 Documentation................................................111
11.2 Subletting By Tenant.................................................112
11.3 Affiliate Transactions...............................................113
11.4 Waiver and Acknowledgment............................................113
ARTICLE 12 TRANSFER OF LEASED PREMISES BY LANDLORD.........................114
12.1 Transfer by Landlord.................................................114
12.2 Tenant's Rights of First Negotiation.................................115
12.2.1 Landlord's Duty To Notify....................................115
12.2.2 Exclusive Negotiation Period-Landlord-Initiated Transaction..116
12.2.2.1 Failure to Execute Agreement and Landlord's
Right to Transfer.................................116
12.2.3 Marketing Period.............................................116
12.2.3.1 Third-Party Offer Equal to or Less Than One Hundred
Six Percent of Final Offer........................117
12.2.3.2 Tenant's Right to Accept Reoffer...................117
12.2.3.3 Third-Party Offer Exceeding One Hundred Six
Percent of Final Offer............................118
12.2.3.4 New Tenant Offers..................................119
12.2.4 Third-Party Negotiations.....................................119
12.2.5 Third-Party Closing..........................................119
12.2.6 Reoffer to Tenant in Event Third Party Does Not Close........120
12.2.7 Tenant Renegotiations Following Unsuccessful Marketing.......122
12.2.8 Negotiation Period-Unsolicited Offer.........................123
12.2.9 Expiration of Right of First Negotiation.....................123
12.3 Indemnification From Taxes Due To Change in Ownership................124
ARTICLE 13 TENANT MORTGAGES................................................124
13.1 Tenant's Right to Encumber Tenant's Estate...........................124
13.1.1 No Modification Without Consent..............................125
13.1.2 No Termination...............................................125
13.1.3 Right to Cure................................................126
13.1.4 Rights Upon Default..........................................126
13.1.5 Rights Upon Default of Non-Monetary Obligations
Not Susceptible to Cure.....................................127
13.1.6 Rights Upon Bankruptcy, Insolvency...........................129
13.1.7 Notices......................................................129
13.1.8 Rights And Liability Upon Acquisition of Tenant's Estate.....130
13.1.9 Lease Upon Termination.......................................133
13.1.10 Estoppel Certificate.........................................134
13.1.11 No Merger....................................................134
13.1.12 Permitted Transfer...........................................135
13.1.13 Encumbrance on Fee...........................................136
13.1.14 Successors and Assigns.......................................140
13.1.15 Agreement to Amend...........................................140
13.1.16 Tenant Mortgages Subordinate to Lease........................141
ARTICLE 14 GENERAL PROVISIONS..............................................141
14.1 Guaranty.............................................................141
14.2 Estoppel Certificates................................................141
14.3 Holding Over.........................................................142
14.4 Notices..............................................................143
14.5 Attorneys' Fees......................................................145
14.6 No Merger............................................................145
14.7 Arbitration of Disputes..............................................145
14.8 No Partnership.......................................................148
14.9 Captions.............................................................149
14.10 Duplicate Originals..................................................149
14.11 Time of the Essence..................................................149
14.12 Severability.........................................................149
14.13 Interpretation.......................................................149
14.14 Successors Bound.....................................................150
14.15 No Waiver............................................................150
14.16 Remedies Cumulative..................................................150
14.17 Covenant of Fair Dealing.............................................150
14.18 Force Majeure........................................................150
14.19 Memorandum of Lease..................................................151
14.20 Authority............................................................151
14.21 Nondiscrimination....................................................151
14.22 Lease Fee............................................................152
14.23 Landlord's Termination Right.........................................152
14.24 Integration..........................................................152
14.25 No Remedy Limitation.................................................153
14.26 Exhibits.............................................................153
14.27 Incorporation of Certain Terms.......................................153
14.28 Right of Entry.......................................................153
14.28.1 Notice......................................................154
14.28.2 Terms of Entry..............................................154
14.28.3 Insurance Requirements......................................155
14.29 No Waiver of Police Powers or Rights.................................157
14.30 Survival.............................................................157
EXHIBIT A LEGAL DESCRIPTION OF PROPERTY...................................159
EXHIBIT B PERMITTED TITLE EXCEPTIONS......................................160
EXHIBIT C ENVIRONMENTAL DOCUMENTS.........................................161
EXHIBIT D SETBACK AREA....................................................162
EXHIBIT E INTENTIONALLY OMITTED...........................................163
EXHIBIT F CITY UTILITIES..................................................164
EXHIBIT G GUARANTY........................................................165
EXHIBIT H MEMORANDUM OF GROUND LEASE......................................166
EXHIBIT I MEMORANDUM OF DISPOSITION AND DEVELOPMENT AGREEMENT.............167
GROUND LEASE
THIS GROUND LEASE ("Lease") is made as of this ______ day of
_______________, 1995 (the "Effective Date"), by and between THE CITY OF
MOUNTAIN VIEW, a municipal corporation (hereinafter "Landlord") and SILICON
GRAPHICS REAL ESTATE, INC., a Delaware corporation (hereinafter "Tenant").
RECITALS
This Lease is made with reference to the following facts,
intentions, and understandings, which the parties hereto agree are relevant
to this transaction:
A. Landlord is the owner of that certain real property ("Property")
more particularly described in attached Exhibit A. The Property is located
within the Mountain View Shoreline Regional Park Community District, and is
subject to the Shoreline Regional Park Community District Act.
B. The Property is located within Area 1 of the North Bayshore
Precise Plan Area and is subject to the North Bayshore Precise Plan ("Precise
Plan"), adopted by the City Council of the City of Mountain View on April 12,
1994 pursuant to Resolution No. 15684.
C. The purpose of this Lease is to effectuate the leasing of the
Property to Tenant and to facilitate the construction of certain park and
creekside improve-
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ments pursuant to that certain Disposition and Development Agreement of even
date herewith ("DDA").
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 AGENTS, with respect to any person, means any other person for
whom such person is legally responsible (including, without limitation, the
officers, directors, employees, agents, consultants, personal
representatives, and independent contractors acting within the scope of their
relationship, subtenants, licensees and concessionaires, and invitees and
guests). In no event, however, shall Agents include any member of the public
entering any portion of the Project pursuant to a public right of access.
1.2 AFFILIATE TRANSACTIONS is defined in Section 11.3 of the Lease,
below.
1.3 AREA PLAN means the North Bayshore Area Plan, recorded in the
official Records of Santa ▇▇▇▇▇ County on December 27, 1977 in Book D366,
Page 444.
1.4 ASSIGNMENT is defined in Section 11.1.3, below.
1.5 AWARD is defined in Section 9.1.5, below.
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1.6 BUILDING(S) means one or more structures, to be constructed by
Tenant or its subtenant on the Property pursuant to the provisions of this
Lease and the DDA, and consistent with provisions of the DDA and the Planned
Community Permit (as defined in Section 1.53, below), but excluding any
common parking structure associated therewith.
1.7 CITY means The City of Mountain View, a municipal corporation.
1.8 CITY Council Approval is the approval by City of the Planned
Community Permit, as defined in Section 1.53, below.
1.9 CLAIMS is defined in Section 7.4.2, below.
1.10 COMMENCEMENT DATE is the later of (a) March 15, 1995 or (b)
the date upon which all of the following conditions have been satisfied by
City: (i) the City Council shall have approved the Planned Community Permit;
and (ii) all of the conditions contained in Sections 3.2(a) through (c) of
the DDA shall have been performed and satisfied.
1.11 CONDEMNATION is defined in Section 9.1.1, below.
1.12 CONTAMINATION means the presence at any time of any (i)
Hazardous Material(s) in, on or about the soil, ground water, surface water,
or air of the Project or any portion thereof in concentrations exceeding the
limits permitted by applicable Hazardous Materials Laws, including, without
limitation, any Hazardous Materials which are present in the soil, ground
water, surface water or air of the Project or any portion thereof as
described in the Environmental Documents, which have or which may hereafter
migrate to the Project from any source in concentrations exceeding the limits
permitted by applicable Hazardous Materials Laws; and (ii) methane gas in, on
or about the soil, ground water or air of the Project or any
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portion thereof from any source in concentrations exceeding the limits
permitted by applicable Hazardous Materials Laws or other applicable Laws,
including, without limitation, any methane gas which has or which may
hereafter migrate to any portion of the Project from any source in
concentrations exceeding the limits permitted by applicable Hazardous
Materials Laws or other applicable Laws.
1.13 DATE OF TAKING is defined in Section 9.1.4, below.
1.14 DDA means the Disposition and Development Agreement of even
date herewith by and between City and Tenant, as may be incorporated into any
Statutory Development Agreement for the Project.
1.15 ENVIRONMENTAL CLAIMS means any and all:
(i) Claims (as defined in Section 7.4.2 of this Lease)
arising out of or in connection with any actual or threatened bodily injury,
personal injury, emotional distress, or property damage resulting from the
presence of or exposure to any Contamination, which is asserted against or
issued to any Indemnitee;
(ii) Reasonable costs and expenses incurred or paid at any
time by an Indemnitee which arise out of or as a consequence of any cleanup,
investigation, removal, remediation, response to, abatement, containment,
closure, or monitoring
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of Contamination (including, without limitation, costs and expenses incurred
to fulfill any order of a Governmental Authority, and costs and expenses
incurred in the preparation of investigative studies, environmental reports,
laboratory testing, sampling, surveying, and posting of financial assurances
required by applicable Hazardous Materials Laws); and/or
(iii) Reasonable attorneys', consultants', accountants',
environ-mental consultants' and other professional fees and expenses paid or
incurred by an Indemnitee in connection with any of the foregoing,
without regard to whether any of the foregoing (i), (ii) and (iii) is
foreseeable or unforeseeable, suspected or unsuspected, conditional or
unconditional, known or unknown, as of the Effective Date.
1.16 ENVIRONMENTAL CONSTRUCTION ACTIVITY means any removal,
abandonment, construction or installation of equipment, monitoring ▇▇▇▇▇,
extraction ▇▇▇▇▇ and related equipment and piping, or fixtures; remediation,
removal, extraction, treatment, well development; or any other physical
disturbance of the Project prior to the completion of Tenant's Off-Site
Improvements, and at all times on the Property and/or the Leasehold
Improvements, as a consequence of Contamination or to determine whether
Contamination may exist.
1.17 ENVIRONMENTAL DOCUMENTS means those written environmental
reports and assessments and the correspondence concerning Contamination of
the Project which are listed on EXHIBIT C.
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1.18 EVENT OF DEFAULT is defined in Section 10.1, below.
1.19 EXISTING PERMITTEE means ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, under trust
agreement dated July 20, 1977 (▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Separate Property Trust), as
amended, and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, trustee, under trust agreement dated July 20,
1977 (▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Separate Property Trust), as amended, pursuant to that
certain Encroachment Agreement dated January 6, 1993 with respect to
monitoring well PA3 only).
1.20 FAIR MARKET RATE OF RETURN is defined in Section 3.1.3.3.B,
below.
1.21 FAIR MARKET VALUE is defined in Section 3.1.3.3.A, below.
1.22 FAR means the floor area ratio obtained by dividing the Floor
Area of the Buildings existing on the Property on the date of the
determination (or which would be existing on the Property if Tenant had
performed any outstanding restoration obligation of Tenant under Article 8 or
Article 9 hereof following any casualty or condemnation) by the square
footage of the Property subject to the Lease on the date of determination.
1.23 ▇▇▇▇▇▇'▇ FIELD is those parcels of real property bounded by
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and
Permanente Creek.
1.24 FLOOR AREA shall mean the gross floor of a Building area as
defined in the Mountain View Zoning Ordinance, Section 36.3.32, in effect as
of the Effective Date,
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to wit: "The floor area enclosed within the walls of a building and measured
from the outside perimeter of said walls expressed in square feet or
fractions thereof."
1.25 GOVERNMENTAL AUTHORITY means any legislative authority, court,
administrative agency, commission or other governmental authority or
instru-mentality of competent jurisdiction over the subject matter in
question.
1.26 GUARANTOR means Silicon Graphics, Inc., a Delaware corporation.
1.27 GUARANTY means that certain Guaranty executed concurrently
herewith by Guarantor, as attached as EXHIBIT G.
1.28 HAZARDOUS MATERIAL means any material or substance in a
concentra-tion or amount now or hereafter designated by any Governmental
Authority to be radioactive, toxic, hazardous or otherwise a danger to
health, reproduction or the environment, including, without limitation (i)
oil and petroleum products; (ii) radioactive substances and materials; (iii)
asbestos; (iv) urea formaldehyde; (v) radon gas; and (vi) chemicals,
materials or substance now or hereafter defined or included in the definition
of "hazardous substance," "hazardous waste," "hazardous material," or "toxic
substance," or words of similar import, under any Law, including, but not
limited to, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 ("CERCLA"), the California Hazardous Substances Account
Act, the Resource Conservation and Recovery Act, the California Hazardous
Waste Control Law, the Federal Insecticide, Fungicide and Rodenticide Act,
the Federal Water Pollution Control Act, the California ▇▇▇▇▇▇-Cologne Act,
the Clean Air Act, the California Clean Air Act, the Occupational
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Safety and Health Act, the California Occupational Safety and Health Act, as
the foregoing shall be now or hereafter amended, and similar Laws now or
hereafter enacted.
1.29 HAZARDOUS MATERIALS ACTIVITIES means the transportation,
transfer, recycling, storage, use, treatment, investigation, removal,
remediation, sampling, monitoring, abatement, production, discharge,
emission, release, exposure of others to, manufacture, formulation, sale,
disposal or distribution of any Hazardous Materials or any equipment or
product containing a Hazardous Material, including, without limitation, any
Environmental Construction Activity.
1.30 HAZARDOUS MATERIALS LAWS means all Laws now or hereafter
enacted, issued or promulgated by any Governmental Authority which relate to
Contamination, any Hazardous Material, or any Hazardous Material Activity.
1.31 INDEMNITEE means any Tenant Indemnitee or Landlord Indemnitee.
1.32 INITIAL MONTHLY RENT is equal to one-twelfth (1/12) of One
Million Five Hundred Eighty Thousand Seven Hundred Five Dollars
($1,580,705.00) (i.e., One Hundred Thirty-One Thousand Seven Hundred
Twenty-Five and 41/100 Dollars ($131,725.41) per month); provided, however,
that, notwithstanding Tenant's good-faith efforts to satisfy the guidelines
set forth in the Precise Plan, if the Floor Area of the Buildings approved by
the City of Mountain View pursuant to the Planned Community Permit is not at
least equal to 500,000 square feet (excluding parking and garage areas), then
the Initial Monthly Rent shall be equal to one-twelfth (1/12) of One Million
Five Hundred Eighty Thousand Seven Hundred Five Dollars
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($1,580,705.00) (i.e., One Hundred Thirty-One Thousand Seven Hundred
Twenty-Five and 41/100 Dollars ($131,725.41) per month), times a fraction,
the numerator of which is the approved Floor Area and the denominator of
which is 500,000 square feet.
1.33 INITIAL PROJECT means the Property, the parcels of land upon
which Tenant's Off-Site Improvements are to be constructed, and the Leasehold
Improvements and Tenant's Off-Site Improvements to be constructed pursuant to
the Planned Community Permit.
1.34 LANDLORD'S CONTAMINATION means any Contamination (i) which is
Pre-Existing Contamination; (ii) which is in the ground water (including any
attendant vadose zone) of the Project or migrating therefrom at any time
during the Lease Term (excluding Tenant's Contamination); (iii) which
migrates at any time during the Lease Term from the soil, surface water, or
air of any land owned or operated at any time by the City; (iv) which is
caused by the placement, discharge, emission or release of a Hazardous
Material by Landlord or Landlord's Agents; or (v) caused by the placement,
discharge, emission or release of a Hazardous Material directly onto the
surface of the Property or into the Leasehold Improvements by any member of
the public (except Tenant or Tenant's Agents), if such member of the public
is exercising any right of entry onto the Land during the hours of public
entry described in the DDA, except to the extent such placement, discharge,
emission or release could have been prevented by reasonable security
precautions commonly undertaken by owners of comparable projects with public
access, and such precautions were not undertaken by Tenant.
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1.35 LANDLORD'S ENVIRONMENTAL INDEMNITY OBLIGATION is defined in
Section 4.5.3, below.
1.36 LANDLORD'S ESTATE means all of Landlord's right, title and
interest in this Lease, the Property and the Leasehold Improvements.
1.37 LANDLORD INDEMNITEES means Landlord, any successor or assign
of Landlord's Estate (or any portion thereof or interest therein), and any
and all Agents, political subdivisions, affiliates, partners or subsidiaries
of Landlord or any successor or assign of Landlord's Estate (or any portion
thereof or interest therein).
1.38 INTENTIONALLY DELETED.
1.39 LATE TERM EXTENSIVE DAMAGE means any damage to the Leasehold
Improvements after the 30th Year Of The Lease Term, whether insured or
uninsured, if the reasonable cost to be incurred by Tenant to restore the
Leasehold Improvements to the condition required by Section 8.2.1 and 8.2.2
exceeds: (x) forty percent (40%) of the "replacement cost" (as defined
below) of the Leasehold Improvements, if such damage occurs during the
thirty-first (31st) Year Of The Lease Term through the end of the
thirty-fifth (35th) Year Of The Lease Term; (y) twenty percent (20%) of the
replacement cost for any such damage incurred during the thirty-sixth (36th)
Year Of The Lease Term, and (z) twenty percent (20%), less one percent (1%)
for each Year Of The Lease Term following the thirty-sixth (36th) Year Of The
Lease Term, of the replacement cost of the Leasehold Improvements, if the
damage occurs after the 36th Year Of The Lease Term until the end of the
Lease Term. For purposes of this Section 1.37, "replacement cost" shall mean
the actual
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cost of replacing the Leasehold Improvements as of the date of casualty in
accordance with applicable Law, including, without limitation, costs of
foundations and footings (excluding soils, excavation, grading and
compaction), if applicable, construction, architectural, engineering, legal
and administrative fees, inspection, supervision and landscape restoration.
1.40 LAW means any judicial decision, statute, constitution,
ordinance, resolution, treaty, protocol, regulation, rule, building code,
order, judgment, injunction, decree, permit, approval, or other requirement,
including, without limitation, Hazardous Materials Laws, of any Government
Authority having jurisdiction over the parties to this Lease, the Property,
the Leasehold Improvements or the Project, as appropriate.
1.41 LEASE EXPIRATION DATE is the last day of the fifty-fifth
(55th) Year Of The Lease Term, unless otherwise extended or terminated under
terms of this Lease.
1.42 LEASE FEE is the Two Hundred Fifty Thousand Dollars ($250,000)
paid by Tenant to Landlord upon execution and delivery of this Lease and the
DDA (and memorandums thereof in recordable form) pursuant to Section 14.22,
below.
1.43 LEASE MONTH is each complete calendar month following the
Commencement Date. If the Commencement Date does not occur on the first day
of a calendar month, then the partial month containing the Commencement Date
shall not be deemed a Lease Month and shall be added to the next calendar
month to become the first Lease Month of the Lease Term.
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1.44 LEASE RATE is the annual rate of interest equal to the
lesser of (i) two percent (2%) over the prevailing "reference rate" announced
from time to time by the Bank of America N.T.&S.A., or its successor, for
purposes of pricing loans; or (ii) the highest rate allowed by Law for
commercial obligations.
1.45 LEASE TERM is defined in Section 2.4.1, below, as it may be
extended pursuant to Section 2.4.2, below.
1.46 LEASEHOLD IMPROVEMENTS means the Buildings, any associated
parking structures and all improvements, structures, interior improvements,
landscaping, paving, building pipes, utility conduits, roads, walkways,
fencing, building service equipment, furniture, fixtures, equipment, and all
alterations and additions thereto and replacements thereof, which may be
erected on or installed on the Property after the Effective Date, regardless
of how the same may be affixed to the Property; provided, however, that
Leasehold Improvements shall not include Tenant's Off-Site Improvements or
Trade Fixtures.
1.47 MONTHLY RENT is defined in Section 3.1, below.
1.48 OPTION TERM is defined in Section 2.4.2, below.
1.49 PARCEL AND PARCEL LEASE are defined in Section 2.2, below.
1.50 PARTIAL TAKING is defined in Section 9.1.3, below.
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1.51 PERMITTED TITLE EXCEPTIONS means those title exceptions and
encumbrances more particularly described on EXHIBIT B, attached hereto, and
any other exceptions to title approved in writing by Landlord and Tenant.
1.52 PERMITTED USES means (i) corporate/professional,
administrative, office and research and development uses; (ii) light
assembly, manufacturing, warehousing and testing uses as approved by the
City's Zoning Administrator as provisional uses pursuant to the Precise Plan;
(iii) such other uses permitted by the Precise Plan; and (iv) any other
legally permitted uses.
1.53 PLANNED COMMUNITY PERMIT is the land use approval for the
Project to be issued by the City as contemplated by the DDA.
1.54 PREEXISTING CONTAMINATION means Contamination described in the
Environmental Documents or existing in the soil, ground water, surface water,
or air of the Project as of the Effective Date and/or Commencement Date.
1.55 PRECISE PLAN is that certain North Bayshore Precise Plan,
adopted by the City Council of the City of Mountain View on April 12, 1994
pursuant to Resolution No. 15684.
1.56 PROCESSING COST is defined in Section 11.1.4, below.
1.57 PROJECT means the Initial Project and any other Leasehold
Improvements, taking into consideration such construction, reconstruction,
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demolition and redevelopment of the Leasehold Improvements as may be
performed by Tenant from time to time in accordance with this Lease.
1.58 PROPERTY means that parcel of real property, containing
approximately 21.6 acres of land situated in the County of Santa ▇▇▇▇▇, City
of Mountain View, State of California, as more particularly described in
EXHIBIT A, together with any easements or other rights appurtenant to said
land (excluding any easements held by the City and shown as Permitted Title
Exceptions). The term "Property" shall not include the Leasehold
Improvements, the Trade Fixtures or Tenant's Off-Site Improvements.
1.59 REAL PROPERTY TAXES means all Federal, State, County,
municipal or other governmental real property taxes, assessments, all taxes
in lieu of real property taxes, personal property taxes, possessory interest
taxes, excise taxes, license and permit fees, assessments for public
improvements or benefits, special or general assessments, and other or
similar taxes, assessments and/or fees (whether general, special, ordinary or
extraordinary) of any kind and nature whatsoever, imposed by any Governmental
Authority:
(i) Upon the Property or Leasehold Improvements, or any
part thereof or interest therein;
(ii) Upon any Trade Fixtures or other personal property of
Tenant located in, at or on the Property or Leasehold Improvements, or any
part thereof or interest therein;
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(iii) Upon the rent or income received by Tenant from
subtenants or licensees thereof;
(iv) Upon, measured by or reasonably attributable to the
cost or value of the Trade Fixtures, equipment, furniture and other personal
property located on the Property or Leasehold Improvements, or by the cost or
value of any alterations or additions made to the Property or Leasehold
Improvements by Tenant, or its sublessees and/or assignees, regardless of
whether title to such improvements shall be in Tenant, Landlord, or others;
(v) Upon or measured by the rent payable hereunder,
including, without limitation, any business, income or profits taxes assessed
against Landlord;
(vi) Upon or with respect to the possession, leasing,
operation, management, maintenance, alteration, repair, use or occupancy by
Tenant of the Property or Leasehold Improvements, Trade Fixtures or other
improvements or property located therein or any portion thereof;
(vii) Upon this transaction; and/or
(viii) Upon all or any portion of the Tenant's Estate.
Notwithstanding the foregoing, the term "Real Property Taxes" shall
not include any of the foregoing which are (i) estate, inheritance, transfer,
gift or franchise taxes; and (ii) levied on Landlord's net income from all
sources; and (iii) a lien, charge or levy under any Hazardous Materials Law
or to address any
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Contamination for which Landlord is responsible under this
Lease pursuant to Section 4.5 below; and (iv) increases in the foregoing Real
Property Taxes assessed against the Property which arise because of a change
in ownership of the Property (other than a transfer of the Property to SGREI
or any SGREI Related Party or Parties).
1.60 RENT ADJUSTMENT DATE is defined in Section 3.1.3, below.
1.61 RESTORATION AMOUNT is One Million Dollars ($1,000,000), which
amount shall be proportionally increased as of the date of casualty by
multiplying the Restoration Amount by a factor, the numerator of which shall
be the replacement cost of the Leasehold Improvements immediately prior to
the casualty and the denominator of which shall be the replacement cost of
the Leasehold Improvements on the date that such Leasehold Improvements were
originally completed. If the parties are unable to agree upon an appropriate
adjustment to the Restoration Amount, then the matter shall be resolved by
arbitration pursuant to Section 14.7. If the Property and this Lease is
parcelized pursuant to Section 2.2, below, then the Restoration Amount shall
be allocated among the Parcel Leases created pursuant to Section 2.2 hereof,
in the same proportion that Monthly Rent is apportioned to each Lease on the
date of the parcelization. For purposes of this Section 1.62, "replacement
cost" shall mean the actual cost of replacing the Leasehold Improvements in
accordance with applicable Law, including, without limitation, costs of
foundations and footings (excluding soils, excavation, grading and
compaction), construction, architectural, engineering, legal and
administrative fees, inspection, supervision and landscaping.
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1.62 SGREI means Silicon Graphics Real Estate, Inc., a Delaware
corporation.
1.63 SGREI RELATED PARTIES are (i) SGREI, so long as Guarantor
owns, directly or indirectly, the voting and ownership interest of SGREI;
(ii) any corporation, joint venture, partnership, limited liability company
or other person which controls, is under common control with, or is
controlled by Guarantor, whether directly or indirectly; (iii) any
corporation, joint venture, partnership, limited-liability company or other
person which controls, is under common control with or is controlled by
SGREI, whether directly or indirectly, so long as Guarantors owns, directly
or indirectly, the voting and ownership interest of SGREI; and (iv) a
transferee of Tenant's Estate or any portion thereof or interest therein
pursuant to a transaction permitted by Section 11.3 (entitled "Affiliate
Transactions"). For the purpose of subparts (ii) and (iii) of the foregoing
sentence, "control," owns, or ownership means the direct or indirect holding
of a voting interest in the entity sufficient to affect or direct the affairs
of the entity and/or equal to fifty percent (50%) of all outstanding voting
interests.
1.64 TENANT'S CONTAMINATION means any Contamination caused by the
placement, discharge, emission or release of a Hazardous Material (i) into
the soils, surface water or air of the Property during the Lease Term
(excluding Landlord's Contamination); (ii) into the Leasehold Improvements or
on or about the Property, or the soil, ground water, surface water, or air
thereof, by Tenant or Tenant's Agents during the Lease Term; or (iii)
directly onto the surface of the Property or into the Leasehold Improvements
during the Lease Term by any member of the public, if such member of the
public is exercising any right of entry onto the Property during such hours
permitted under the DDA, and if such act by a member of the public
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could have been prevented by reasonable security precautions commonly
undertaken by owners of comparable projects with public access, and such
precautions were not taken by Tenant.
1.65 TENANT'S ENVIRONMENTAL INDEMNITY OBLIGATIONS is defined in
Section 4.5.4, below.
1.66 TENANT'S ESTATE means all of Tenant's right, title and
interest in this Lease, the Property and the Leasehold Improvements.
1.67 INTENTIONALLY DELETED.
1.68 TENANT INDEMNITEES means Tenant, any Tenant Mortgagee, any
Tenant Mortgagee Related Party, any successor or assign of Tenant's Estate
(or any portion thereof or interest therein), and any and all Agents,
affiliates, partners or subsidiaries of Tenant, a Tenant Mortgagee or any
successor or assign of a Tenant's Estate (or any portion thereof or interest
therein).
1.69 TENANT MORTGAGE and TENANT MORTGAGEE are defined in Section
13.1, below.
1.70 TENANT MORTGAGEE RELATED PARTIES means any Tenant Mortgagee,
any successor or assign of a Tenant Mortgagee in the Tenant Mortgage and the
officers, directors, affiliates, constituent partners or subsidiaries of any
Tenant Mortgagee.
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1.71 TENANT'S OFF-SITE IMPROVEMENTS means (i) all sidewalks, curbs,
curb cuts, trees, landscaping to the curb, including frontage on-site buffer
landscaping along Amphitheatre Parkway and Charleston Road, and gutters for
the Project; (ii) the Permanente Creek Trail Improvements (as defined in the
DDA); and (iii) the Park Improvements (as defined in the DDA), all to be
provided by Tenant, or its subtenant, and subject to certain reimbursement
obligations of City, pursuant to the provisions hereof and of the DDA.
1.72 THIRD PARTY means any party other than Landlord or an Existing
Permittee or the respective employees, contractors or consultants of Landlord
or any Existing Permittee who has been granted a right of entry to the
Property and Leasehold Improvements in accordance with Section 4.5.2, below.
1.73 TOTAL TAKING is defined in Section 9.1.2, below.
1.74 TRADE FIXTURES are anything (including, without limitation,
furniture, fixtures, equipment, vessels, piping, electrical panels, conduit
and demountable partitions) brought onto or affixed to the Leasehold
Improvements for purposes of trade, manufacture, ornament or domestic use,
other than the building service equipment, if the removal thereof can be
effected without permanent injury to the Leasehold Improvements.
1.75 UNINSURABLE LOSS means the cost to restore the Leasehold
Improvements to the condition required by and in accordance with Section 8.2,
below, which is caused by (i) earthquake; (ii) pollution liability; (iii)
flood; or (iv) any other casualty which Tenant is not otherwise required to
obtain and maintain insurance coverage
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pursuant to Sections 6.3.1 or 7.1, below, as the same may be altered from
time to time in accordance with Section 7.1.3, below. Notwithstanding the
preceding, Uninsurable Loss shall not include (a) loss caused by flood, if
flood insurance can be obtained at commercially reasonable rates, nor (b)
loss caused by Tenant's Contamination.
1.76 YEAR OF THE LEASE TERM is a twelve (12) Lease Month period.
The first Year Of The Lease Term commences on the Commencement Date and ends
on the last day of the twelfth (12th) Lease Month. Each succeeding Year Of
The Lease Term is the next twelve (12) Lease Months, except that the last
Year Of The Lease Term will end on the last day of the Lease Term.
ARTICLE 2
DEMISE, TERM AND SURRENDER
2.1 LEASE OF PROPERTY. Landlord hereby leases and demises to
Tenant, and Tenant hereby leases and takes from Landlord, the Property. Each
party, upon the reasonable request of the other party or a public utility,
shall execute any and all documents reasonably necessary for the creation of
utility easements and rights-of-way to service the Property and/or which are
required by Law. Tenant reserves the right to request variances, zoning
amendments, approvals and/or permits in connection with Tenant's use and
enjoyment of the Property, and Landlord, as fee owner of the Property, agrees
to execute any such application or request and not object to the filing
thereof. Without limiting the generality of Section 14.29 below, the
foregoing shall not limit in any way the City's rights, powers and authority
under its police powers. Subject to the terms of this Lease and the DDA,
Tenant
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covenants to keep and perform each and all of the terms, covenants and
conditions to be kept and performed by Tenant hereunder. Subject to the
terms of this Lease and the DDA, Landlord covenants that Tenant shall at all
times during the term of this Lease peaceably and quietly have, hold and
enjoy the Tenant's Estate and all rights attendant thereto without
interference by Landlord or any person claiming the same by, through or under
Landlord.
2.2 SUBDIVISION OF PROPERTY; SEPARATE GROUND LEASES. Landlord and
Tenant acknowledge and agree that Tenant may seek, at its sole option, to
subdivide the Property from time to time into one or more legal parcels (each
a "Parcel") and, subject to Landlord's approval rights as set forth in this
Section 2.2, Landlord, as fee owner of the Property, agrees to execute any
such application or request and not object to the filing thereof. Without
limiting the generality of Section 14.29 below, the foregoing shall not limit
in any way the City's rights, powers and authority under its police powers.
Tenant, at its cost, shall comply with the provisions of the Subdivision Map
Act (California Government Code Sections 66410, ET SEQ.) and the Subdivision
Ordinance of the City of Mountain View in creating the additional Parcels.
If the City is the Landlord, Landlord shall consider and process Tenant's
parcelization plan in accordance with this Lease, the DDA and/or Development
Agreement and applicable Law. Additionally, if City is the Landlord, it
shall have the power to evaluate and reasonably approve or disapprove any
proposed subdivision (including, without limitation, Tenant's request or
application therefor) based on its interest as a property owner. No
subdivision plan may permit any Building to be located on more than one (1)
Parcel. As soon as reasonably possible, but in any event within thirty (30)
days after creation of each Parcel, Landlord and Tenant shall restate this
Lease ("Parcel Lease") for each Parcel upon the same terms
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and conditions as this Lease, except that Monthly Rent shall be equitably
apportioned between the Parcels based on the Floor Area of the Buildings to
be constructed thereon, as mutually agreed upon by Landlord and Tenant, and
set forth in the separate Parcel Lease for each Parcel to be prepared
pursuant to this Section 2.2 (or, if the parties cannot agree upon the
allocation within the time period set for above, then by an arbitration
pursuant to Section 14.7).
Landlord shall execute such documents, including, without
limitation, any required easements, conditions, covenants and restrictions,
maintenance agreements or reciprocal easement agreements as are consistent
with both the subdivision approval(s) and Landlord's interest as property
owner and reasonably requested by Tenant to implement the Parcel Leases and
to incorporate therein all applicable terms of this Lease so that the
provisions of this Lease are given their full force and effect. A memorandum
of ground lease for each Parcel Lease created shall be executed by Landlord
and Tenant and recorded by Tenant. The Parcel Leases shall constitute
separate ground leases and shall not be cross-defaulted.
2.3 DELIVERY OF POSSESSION. Possession of the Property shall be
delivered by Landlord to Tenant upon the Commencement Date, free and clear of
all tenants and occupants, and Tenant shall accept possession of the Property
in the condition required by the DDA.
2.4 TERM AND POSSESSION.
2.4.1 INITIAL TERM. The initial term of this Lease ("Lease
Term") shall be for a period of approximately fifty-five (55) years, unless
sooner terminated as
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herein provided, commencing on the Commencement Date and terminating at the
end of the fifty-fifth (55th) Year Of The Lease Term.
2.4.2 OPTION TERMS. Tenant shall have four (4) options to
extend the Lease Term, for a period of ten (10) calendar years for each such
option (an "Option Term"). In order to exercise any such option to extend
granted by this section, Tenant must notify Landlord in writing of its
election to exercise such option to extend not later than one hundred eighty
(180) days prior to the expiration of the Lease Term, or, as the case may be,
the Lease Term as extended by the prior exercise of any option to extend
granted by this section. The options may be exercised individually or
together with any other option so long as the remaining Lease Term, including
the term of the exercised options, does not exceed fifty-five (55) calendar
years. If any options are exercised together, Monthly Rent revaluation
pursuant to Section 3.1.3 hereof shall nevertheless occur at the time and as
if the renewal options were exercised serially. If Tenant fails to timely
exercise any renewal option, then all subsequent renewal options shall be
null and void and Tenant shall have no right to renew this Lease.
Notwithstanding the foregoing, Tenant shall have no right to renew this Lease
(i) if on the date Tenant exercises the renewal options, or (ii) if Tenant
exercises only one option, on the date immediately preceding the commencement
date of the applicable Option Term, or (iii) if Tenant exercises more than
one option simultaneously, on the commencement date of the first such Option
Term, there exists an uncured Event of Default under this Lease. Tenant's
lease of the Property for each such Option Term shall be upon all of the same
terms, covenants and conditions contained in this Lease. After the exercise
of any option to extend, all references in this Lease to the Lease Term shall
be considered to mean the Lease Term as extended, and all references to
termination or
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to the end of the Lease Term shall be considered to mean the termination or
end of the Lease Term as extended. If Tenant exercises any such option, then
each party shall, at the request of the other, execute a memorandum, in
recordable form, acknowledging the fact that the option has been exercised
and otherwise complying with the requirements of Law for an effective
memorandum of lease.
2.5 TERMINATION AND SURRENDER. Upon expiration of the Lease Term,
or any earlier termination of this Lease, Tenant shall remove all Trade
Fixtures and quit and surrender the Property and the Leasehold Improvements
to Landlord, free and clear of all liens, encumbrances or title exceptions
other than the Permitted Title Exceptions and exceptions to title not
otherwise created by or through Tenant, in a good, clean and sanitary
condition, excepting ordinary wear and tear, damage and destruction which
Tenant is not required to restore pursuant to Article 8, condemnation which
Tenant is not required to restore pursuant to Article 9, and Contamination
(other than Tenant's Contamination). Notwithstanding the preceding sentence
to the contrary, if this Lease is terminated prior to the natural expiration
of the Lease Term, then Tenant shall have a period of ninety (90) days
thereafter, or such longer period as reasonably may be necessary (not to
exceed one hundred eighty (180) days) to remove its Trade Fixtures and
personal property, provided that Tenant pays Monthly Rent for each month of
the removal period and, during the removal period, pays any and all other
rent or charges and amounts and complies with all covenants and obligations
of Tenant under this Lease, except for those payments and covenants which
were to be performed prior to the termination date of this Lease (and during
such removal period Tenant shall not be liable for holdover rent pursuant to
Section 14.3 below). Upon such termination, title to the Leasehold
Improvements then existing on the Property automatically
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shall vest in Landlord. In no event shall the provisions hereof impose any
obligation upon Tenant to restore and/or reconstruct Leasehold Improvements
that are demolished or removed or to restore and/or reconstruct Leasehold
Improvements following any damage, casualty loss, or condemnation, unless
Tenant is required to do so by Article 8 or Article 9 hereof. On the date
Tenant is required by this section to surrender possession, Tenant shall
deliver to Landlord such proper and executed instruments in recordable form,
releasing, quitclaiming and conveying to Landlord all right, title and
interest of Tenant and any other party claiming by or through Tenant or
Tenant's Estate in and to the Property and/or the Leasehold Improvements,
including, without limitation, such documents necessary for Landlord to
demonstrate to a title company that this Lease no longer encumbers the
Property and Leasehold Improvements, and that title to the Leasehold
Improvements shall have vested in Landlord, free and clear of all liens,
encumbrances or title exceptions, other than the Permitted Title Exceptions
and exceptions to title not otherwise created by or through Tenant. All
provisions of this Section 2.5 shall survive any termination of this Lease.
2.6 TENANT'S RIGHT OF ENTRY. Subject to the requirements of this
Section 2.6, Tenant and Tenant's agents, employees, contractors, consultants
and authorized representatives shall have the right to enter upon the Project
at all reasonable times after the Effective Date and before the Commencement
Date in order to conduct such surveys, examinations and tests as Tenant deems
necessary or desirable in connection with development of the Project. Tenant
shall keep the Project free and clear of any mechanic's liens, materialmen's
liens or other liens or claims arising out of any of Tenant's activities, or
those of its agents, employees, contractors, consultants or representatives.
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All activities of Tenant, its agents, employees, contractors,
consultants and representatives during, before or after any such entry onto
the Project shall be at Tenant's sole cost and expense. Any and all
inspections and examinations of the Project shall be done in a good and
workmanlike manner in accordance with all applicable Laws, and shall not
unreasonably disturb the quiet occupancy or enjoyment of any occupants or
owners of any adjoining land. Prior to the Commencement Date, Tenant may not
perform any test or inspection or carry out any construction activity on the
Project which damages the Project in any way or which is physically intrusive
into the ground, without the prior written consent of Landlord, which
Landlord shall not unreasonably withhold or delay. Prior to any entry
pursuant to this Section 2.6, at Landlord's request, Tenant shall provide
Landlord with evidence of commercial liability coverage as described in
Section 7.1.1, below. After each entry onto any part of the Project prior to
the Commencement Date, Tenant, at its sole cost and expense, shall repair all
damage to the Project caused by the entry.
Tenant shall obtain Landlord's written approval prior to performing
any such tests and inspections (which approval shall not be unreasonably
withheld or delayed) and, upon completion thereof, furnish copies of such
tests and inspections to Landlord. In no event, however, shall Tenant be
required to disclose any communication that is privileged under applicable
Laws. Except to the extent that a claim is made which would be covered by
Landlord's Environmental Indemnity Obligations pursuant to Section 4.5.4 or
Landlord's other indemnity obligations under Section 7.4.2, Tenant shall
indemnify, defend with competent counsel, protect and hold harmless Landlord
and Landlord's Agents, from and against any and all
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Claims for damages to persons or property to the extent arising from (i) the
acts or omissions of Tenant or its Agents on the Project pursuant to this
section; provided, however, that the foregoing shall not apply to liability
resulting from the findings and conclusions of any tests, inspections,
investigations or studies, or (ii) any breach of any of Tenant's covenants or
obligations under this Paragraph 2.6. The provisions of the preceding
sentence shall survive any termination of this Lease.
2.6.1 NOTICE. Prior to any entry contemplated in Section
2.6, above, Tenant shall provide Landlord with reasonable written notice of
Tenant's intention to enter the Project. Except in the case of an entry
limited to a "walk-through" inspection for which twenty-four (24) hour notice
to Landlord via delivery of written, facsimile or telephonic notice will
suffice, said notice shall be delivered at least three (3) business days
prior to the date of entry and shall identify the work to be conducted, the
portions of the Project that will be affected by the entry and the parties
who will enter. Notice of repetitive entries may be given in a consolidated
notice delivered prior to the first such entry.
2.7 LANDLORD'S REPRESENTATIONS AND WARRANTIES. Landlord represents
and warrants as of the Effective Date that, to the best of Landlord's
knowledge:
2.7.1 ZONING. The Property and the Park Site (as defined
in the DDA) is zoned to permit the construction of the Initial Project
consistent with the terms and conditions of the General Plan and Precise Plan.
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2.7.2 LAND USE. The City Council Approval of the Planned
Community Permit will complete City requirements for the issuance of building
permits pursuant thereto upon proper and complete application therefor by
Tenant.
2.7.3 NO PROCEEDINGS. Landlord has received no written
notice that the Property or the Park Site (as defined in the DDA) is in
violation of any order or decree of any court of competent jurisdiction or
any Governmental Authority.
2.7.4 COMPLIANCE WITH LAWS. Landlord has received no
written notice of any legal challenge to the Precise Plan (including, without
limitation, any CEQA challenge). No approval of this Lease or the Project by
the Mountain View Shoreline Regional Community Board is required by the Area
Plan or applicable Law.
2.7.5 TITLE. Landlord has not received any notice, written
or oral, challenging its status as record owner of fee title to the Property
or the Park Site (as defined in the DDA).
2.7.6 UTILITIES. The Property or the Park Site (as defined
in the DDA) is currently served by the City-provided utilities as described
in Exhibit F of the DDA, in the capacities listed on said exhibit, in the
general locations described on said exhibit.
2.7.7 CC&Rs. Landlord has not placed any covenants or
restrictions, or granted any easements, affecting the Property or the Park
Site (as defined in the DDA) other than those consented to by Tenant pursuant
to this Lease or the DDA,
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those consented to in writing by Tenant, or those shown in the Precise Plan or
on EXHIBIT B.
If a change of circumstances occurs on or before the Commencement
Date which causes Landlord's representations or warranties above to become
untrue, Landlord shall immediately inform Tenant of the same, and Tenant
shall have the right to terminate this Lease pursuant to Section 9.1(a) of
the DDA. If Landlord does not provide Tenant with written notice of any
change of circumstances, then Landlord shall be deemed to have remade the
foregoing representations and warranties as of the Commencement Date.
2.8 CONDITION OF PROPERTY. Tenant acknowledges that it is a
resident of the Shoreline Community District and is generally aware of
surrounding properties, uses and impacts associated therewith, including but
not limited to the Shoreline Amphitheatre, golf course, Vista Slope and
landfill locations. The foregoing shall not affect the City's obligations
under this Lease or the DDA nor waive any rights Tenant may have as a
corporate resident and/or citizen pursuant to Section 14.29, below.
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ARTICLE 3
RENT
3.1 MONTHLY RENT. For each Lease Month of the Lease Term
(including the Lease Months of any Option Term), Tenant shall pay to Landlord
"Monthly Rent" in advance as follows:
3.1.1 INITIAL MONTHLY RENT. For the first Year Of The
Lease Term, Tenant shall pay to Landlord Initial Monthly Rent, as provided in
Section 1.32 hereof. If the parties enter into Parcel Leases pursuant to
Section 2.2, the Initial Monthly Rent will be apportioned between the Parcel
Leases in accordance with Section 2.2 hereof.
3.1.2 RENT ESCALATION. For each of the second through
tenth Years Of The Lease Term, the Initial Monthly Rent provided for in
Subsection 3.1.1 shall be increased, effective on the first day of the second
Year Of The Lease Term and on the first day of each Year Of The Lease Term
thereafter through the end of the tenth (10th) Year Of The Lease Term, to an
amount equal to one hundred four percent (104%) of the Monthly Rent payable
for the immediately preceding Year Of The Lease Term.
3.1.3 ADJUSTMENT OF MONTHLY RENT. Effective as of the
first day of the eleventh (11th), twenty-first (21st), thirty-first (31st),
forty-first (41st) and fifty-first (51st) Years of the Lease Term and, if the
Lease Term is extended pursuant to Section 2.4.2, as of the commencement of
each Option Term (the "Rent Adjustment
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Dates"), the Monthly Rent shall be adjusted in accordance with Sections
3.1.3.1 through 3.1.3.3, below.
3.1.3.1 GUARANTY IN EFFECT. If, as of a given Rent
Adjustment Date, (a) the Guaranty has not been terminated pursuant to Section
11.1 of this Lease or Section 20 of the Guaranty or, (b) if so terminated,
the Guaranty has been reinstated by Guarantor, in accordance with Paragraph
22 of the Guaranty and Tenant has delivered to Landlord a re-executed
Guaranty in the form of Exhibit G prior to the applicable Rent Adjustment
Date, then Section 3.1.3.2 will not apply for that Rent Adjustment Date and
the Monthly Rent shall be adjusted and reset on that Rent Adjustment Date to
equal the greater of: (i) one-twelfth (1/12th) of seven percent (7%) of the
then Fair Market Value of the Property (determined in accordance with the
assumptions and procedures set forth in Section 3.1.3.3.A, below); or (ii)
the Initial Monthly Rent in effect as of the Commencement Date, as determined
in accordance with Section 3.1.1; provided, however, that if there has been
any adjustment to Monthly Rent pursuant to Sections 8.2.2.2 or 9.3(B) below,
the Initial Monthly Rent for purposes of this item shall be equitably reduced
to reflect such rent adjustments.
3.1.3.2 OTHER CASES. If, as of a given Rent
Adjustment Date, the Guaranty has been terminated pursuant to Section 11.1 of
this Lease or Section 20 of the Guaranty, and Guarantor has not elected to
reinstate the Guaranty prior to the applicable Rent Adjustment Date, then
Section 3.1.3.1 will not apply for that Rent Adjustment Date, and the Monthly
Rent shall be adjusted and reset on that Rent Adjustment Date to the greater
of: (i) one-twelfth (1/12) of the Fair Market Rate of Return (determined in
accordance with the assumptions and procedures set forth in
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Section 3.1.3.3.B, below) times the Fair Market Value of the Property
(determined in accordance with the assumptions and procedures set forth in
Section 3.1.3.3.A, below); or (ii) the Initial Monthly Rent in effect as of
the Commencement Date as determined in accordance with Section 3.1.1;
provided, however, that if there has been any adjustment to Monthly Rent,
pursuant to Sections 8.2.2.2 or 9.3(B) below, the Initial Monthly Rent for
purposes of this item (ii) shall be equitably reduced to reflect such rent
adjustments.
3.1.3.3 REVALUATION PROCEDURE.
A. FAIR MARKET VALUE OF PROPERTY.
Landlord and Tenant agree that for purposes of establishing Initial Monthly
Rent the fair market value of the Property has been deemed by the parties to
be Twenty-Four Dollars ($24.00) per square foot. On each Rent Adjustment
Date under Section 3.1.3.1 or 3.1.3.2, the "Fair Market Value" of the
Property shall be determined based upon the following assumptions:
(1) Fair Market Value shall be
based on the value of the entire original Property, without regard to whether
this Lease has been parcelized pursuant to Section 2.2, above, unencumbered
by this Ground Lease, except insofar as the Property have been reduced by
eminent domain or condemnation by any Governmental Authority.
(2) Fair Market Value shall not be
determined based on a theoretical highest and best use of the Property and/or
the Leasehold Improvements, but instead Fair Market Value shall be determined
based on the use
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then being made by Tenant of the Property and the Leasehold Improvements and
the FAR based on the Floor Area of all of the then-existing Buildings on the
date of the determination (or which would be applicable on such date if
Tenant had performed its obligations under Articles 8 and 9 of this Lease
following any casualty or condemnation). However, the value of the Leasehold
Improvements themselves shall not increase or decrease the Fair Market Value
of the Property.
(3) Fair Market Value shall be
based on the value of the Property to a third party and shall not be
increased because of any possible premium associated with the special needs
of Tenant or uses of the Leasehold Improvements by Tenant, or the proximity
of the Property to other buildings occupied by Tenant.
(4) Fair Market Value shall not be
reduced by demolition costs or other costs necessary to return the Property
to an unimproved buildable parcel.
(5) Fair Market Value shall not
consider the Monthly Rent prior to the Rent Adjustment Date, the Rent
Escalations pursuant to Sections 3.1.2 and 3.1.4, the Fair Market Rate of
Return to be applied to the Fair Market Value of the Property pursuant to
Subsection B, below, or the frequency of any future Rent Adjustment Dates.
(6) If Parcel Leases have been
created pursuant to Section 2.2, the Fair Market Value of the Property
determined in accordance with the foregoing shall be allocated between the
Parcels created pursuant to Section 2.2
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in the same proportion as the Monthly Rent was allocated between said Parcels
on the date of such parcelization.
B. FAIR MARKET RATE OF RETURN. Landlord
and Tenant agree that for purposes of establishing Initial Monthly Rent the
fair market rate of return to Landlord for this Lease has been deemed by the
parties to be seven percent (7%). On each Rent Adjustment Date requiring
redetermination of the Fair Market Rate of Return under Section 3.1.3.2, the
"Fair Market Rate Of Return" shall be determined based upon the following
assumptions:
(1) Fair Market Rate Of Return
shall be based on the rate of return a private third party ground lessor
typically would expect to receive for property comparable to the Property,
unencumbered by this Lease;
(2) Fair Market Rate Of Return
shall not be determined based on a theoretical highest and best use of the
Property and/or the Leasehold Improvements, but instead Fair Market Rate Of
Return shall be determined based on the use then being made by Tenant of the
Property and the Leasehold Improvements and the FAR based upon the Building
Square Footage of all of the then-existing Buildings and all of the Property
on the date of the determination (or which would be applicable on such date
if Tenant had performed its obligations under Articles 8 and 9 of this Lease
following any casualty or condemnation). However, the value of the Leasehold
Improvements shall not increase or decrease the Fair Market Rate Of Return.
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(3) Fair Market Rate Of Return
shall not exceed nine and one-half percent (9.5%) nor be less than four and
one-half percent (4.5%) per annum.
C. GENERAL PROCEDURE. The Fair Market
Value and, if required by Section 3.1.3.2, the Fair Market Rate Of Return,
shall be determined by agreement between Landlord and Tenant. Negotiations
for redetermination shall begin one (1) year before each Rent Adjustment
Date. If the parties are unable to reach an agreement on the Fair Market
Value and Fair Market Rate Of Return within two hundred forty (240) days
before the Rent Adjustment Date, Landlord and Tenant each, at its cost and by
giving notice to the other party, shall appoint a competent M.A.I. real
estate appraiser, unlikely to be unduly influenced by either party, with at
least ten (10) years' commercial/ground lease appraisal experience in San
Francisco, San Mateo and Santa ▇▇▇▇▇ Counties, to appraise and set the Fair
Market Value, and, if required, the Fair Market Rate Of Return.
If either Landlord or Tenant does not appoint an appraiser within
ten (10) days after the other party has given written notice of the name of
its appraiser, the single appraiser appointed shall be the sole appraiser and
shall set the Fair Market Value and, if required, the Fair Market Rate Of
Return. If two (2) appraisers are appointed by Landlord and Tenant as stated
in this subsection, they shall meet promptly and attempt to set the Fair
Market Value and, if required, the Fair Market Rate of Return. If the two
(2) appraisers are unable to agree within thirty (30) days after the second
appraiser has been appointed, they shall attempt to select a third appraiser
meeting the qualifications stated in this subsection within ten (10) days
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after the last day the two (2) appraisers are given to set Fair Market Value
and, if required, Fair Market Rate Of Return.
If they are unable to agree on the third appraiser, either Landlord
or Tenant, by giving ten (10) days' prior written notice to the other party,
may apply to the then president of the Real Estate Board of Santa ▇▇▇▇▇
County, or to the Presiding Judge of the Superior Court of Santa ▇▇▇▇▇
County, as the applying party may elect, for the selection of a third
appraiser who meets the qualifications stated in this subsection (provided
that if both parties make such application for appointment of a third
appraiser, the appointment pursuant to the application which is first in time
shall determine the third appraiser). Landlord and Tenant each shall bear
one-half (1/2) of the cost of appointing the third appraiser and of paying
the third appraiser's fee. The third appraiser, however selected, shall be a
person who is unlikely to be unduly influenced by either party. Within
thirty (30) days after the selection of the third appraiser, a majority of
the appraisers shall set the Fair Market Value and, if required, the Fair
Market Rate Of Return for the ten (10) Years Of The Lease Term at issue.
If a majority of the appraisers is unable to set the Fair Market
Value or, if required, the Fair Market Rate Of Return, within the stipulated
period of time, Landlord or Tenant's appraiser shall arrange for simultaneous
exchange of written appraisals of the Fair Market Value or, if required, the
Fair Market Rate Of Return, as appropriate, from each of the appraisers and
the three (3) appraisals shall be added together and their total divided by
three (3); the resulting quotient shall be the Fair Market Value or, if
required, the Fair Market Rate Of Return for the ten (10) Years Of The Lease
Term at issue. If, however, the low appraisal and/or the high appraisal
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are/is more than ten percent (10%) lower and/or higher than the middle
appraisal, the low appraisal and/or the high appraisal of the Fair Market
Value or, if required, the Fair Market Rate Of Return, as appropriate, shall
be disregarded.
If only one (1) appraisal is disregarded, the remaining two (2)
shall be added together and their total divided by two (2); the resulting
quotient shall be the Fair Market Value or, if required, the Fair Market Rate
Of Return, as appropriate. If both the low appraisal and the high appraisal
are disregarded as stated in this subsection, the middle appraisal shall be
the Fair Market Value or, if required, the Fair Market Rate Of Return, as
appropriate. After the Fair Market Value and, if required, the Fair Market
Rate Of Return, for the ten (10) Years Of The Lease Term at issue has been
set, the appraisers shall immediately notify Landlord and Tenant, and
Landlord and Tenant promptly shall execute an amendment to this Lease stating
the Fair Market Value, and, if required, the Fair Market Rate Of Return, and
resulting Monthly Rent. The Monthly Rent at each redetermination may be
either increased or decreased to reflect the Fair Market Value and, if
appropriate pursuant to Section 3.1.3.2, the Fair Market Rate Of Return as of
the redetermination date, subject only to the restrictions on reduction
contained in Sections 3.1.3.1 and 3.1.3.2, above.
If the Rent Adjustment Date occurs prior to determination of the
readjusted rent under the within appraisal procedure, the Monthly Rent as of
the Rent Adjustment Date shall be one hundred four percent (104%) of the
Monthly Rental as of the Lease Month immediately preceding the Rent
Adjustment Date, and shall be increased by four percent (4%) on each
anniversary of the Rental Adjustment Date until the readjusted rent is
determined. When the readjusted rent is
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determined, it shall be retroactively effective from the Rental Adjustment
Date. Within ten (10) days of the determination of the adjusted rent, Tenant
shall pay to Landlord the amount, if any, which the adjusted rent for the
period after the Rental Adjustment Date exceeds the amounts paid by Tenant
after the Rental Adjustment Date, and Landlord shall pay to Tenant, the
amount, if any, by which said adjusted rent is less than the amounts so paid
by Tenant. In either event, the amount paid to either Landlord or Tenant
shall include interest on the over or underpayment at the Lease Rate from the
date the payment was first due until reimbursed.
3.1.4 CONTINUING ESCALATION. Commencing with the first day
of each Year Of The Lease Term immediately following the Year Of The Lease
Term which contains a Rental Adjustment Date, and continuing on the first day
of each of the nine ensuing Years Of The Lease Term until the next succeeding
Rental Adjustment Date, Monthly Rent in the amount established by
redetermination for such ten (10) Years Of The Lease Term (as described in
Section 3.1.3) shall be increased to an amount equal to one hundred four
percent (104%) of the Monthly Rent due for the immediately preceding Year Of
The Lease Term. (For example, Monthly Rent determined for the twelfth (12th)
Year Of The Lease Term shall be equal to one hundred four percent (104%) of
the Monthly Rent determined on the first Rental Adjustment Date (i.e., the
first day of the eleventh (11th) Year Of The Lease Term) and shall be further
increased by four percent (4%) over the Monthly Rent due for the immediately
preceding Year Of The Lease Term at the beginning of the thirteenth (13th)
through twentieth (20th) Years Of The Lease Term. On the second Rent
Adjustment Date (i.e., the first day of the twenty-first (21st) Year Of The
Lease Term), Monthly Rent will again be revalued in accordance with Section
3.1.3.3, and said Monthly Rent shall be increased by four percent (4%) over
the Monthly Rent
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due for the immediately preceding Year Of The Lease Term at the beginning of
each of the ensuing Years Of The Lease Term until the next Rental Adjustment
Date, when the Monthly Rent shall again be restated in accordance with
Section 3.1.3, above, and so on throughout the Lease Term.)
3.1.5 PRORATION. If the Commencement Date occurs on a day
other than the first day of a calendar month, or if this Lease terminates on
a day other than the last day of a calendar month, the Monthly Rent shall be
prorated based on the actual number of days of the calendar month at issue.
3.2 PAYMENT OF RENT. The Monthly Rent shall be paid in advance in
monthly installments due on the Commencement Date and on the first day of
each calendar month thereafter during the Lease Term. All rent shall be paid
in lawful money of the United States to Landlord at its address set forth in
Section 14.4, or to such other place as Landlord may designate from time to
time in writing, without abatement, deduction or offset. All monetary
obligations of Tenant under this Lease (including, without limitation,
interest and late charges payable pursuant to Section 3.3, below) shall be
deemed additional rent.
3.3 INTEREST; LATE CHARGE. If Tenant fails to pay Landlord Monthly
Rent on or before the fifth (5th) day after receipt of written notice from
Landlord that such sum is due, Tenant shall pay to Landlord a late charge
equal to five percent (5%) of the delinquent amount to compensate Landlord
for Landlord's administrative and other costs and efforts in connection
therewith. Landlord and Tenant agree that the foregoing late charge
represents a reasonable estimate of the cost and expense that Landlord will
incur in processing each delinquent payment. In addition, all
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Monthly Rent not paid on or before the fifteenth (15th) day following the due
date thereof shall bear interest from and after the due date until paid at
the Lease Rate, which interest shall be payable forthwith upon demand.
ARTICLE 4
USE
4.1 PERMITTED USES. The parties hereto acknowledge that Tenant
intends to, and may, use the Property and the Leasehold Improvements for the
Permitted Uses. Tenant shall not allow the Property or any Leasehold
Improvements to be used for any unlawful purpose, nor shall Tenant cause,
maintain or permit any nuisance in, on or about the Property or any Leasehold
Improvements located thereon. Tenant shall not commit or suffer to be
committed any waste in or upon the Property or the Leasehold Improvements
thereon.
4.2 COMPLIANCE WITH LAW. Tenant shall not do anything in or upon
the Project, or suffer or permit anything to be done in or upon the Leasehold
Improvements, the Property and, until the Tenant's Off-Site Improvements are
accepted as complete by the City, the Park Site (as defined in the DDA) which
will in any way conflict with any Law now in force or which may be
hereinafter enacted or promulgated. Tenant, at its sole cost and expense,
shall comply with the restrictions and covenants of the Permitted Title
Exceptions and with all federal, state, county or municipal Laws (including,
without limitation, the Americans With Disabilities Act of 1990 and so-called
California "Title 24" requirements) as the same shall be applicable to the
Property and Leasehold Improvements from time to time. The judgment of any
court of competent jurisdiction or the admission of Tenant in an
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action against Tenant, whether Landlord be a party thereto or not, that
Tenant has violated any covenant, restriction or Law shall be conclusive of
that fact as between Landlord and Tenant; provided, however, that Tenant
shall have the right, at its own cost and expense, to contest or review by
legal and/or administrative proceeding the validity or legality of any such
Law, restriction or covenant. During any such contest or review by Tenant of
a Law enacted by the City when the City is the Landlord hereunder, Tenant
shall not be in breach or default under this Lease for its failure to comply
with such Law, provided that Tenant commences such contest or review in good
faith and, if such Law is found to be valid, Tenant indemnifies, defends and
holds Landlord harmless from all Claims in connection with Tenant's failure
to comply with such Law. During the contest or review of any other Law,
restriction or covenant, or any, Tenant may refrain from complying therewith
and shall not be in breach or default under this Lease for failure to comply
with such Law, restriction or covenants provided that compliance therewith
may legally be so held in abeyance without subjecting Landlord or the
Property to any (i) civil liability, cost, lien or expense (except to the
extent such civil liability, cost, lien or expense is reasonably likely to be
less than Five Million Dollars ($5,000,000) and Tenant indemnifies, defends
and holds Landlord harmless from all Claims in connection therewith pursuant
to Section 7.4.2, below), or (ii) any criminal liability, which may result
from Tenant's failure to so comply therewith or from Tenant's contest
regarding compliance.
4.3 WASTE. Tenant shall not commit or permit waste of the
Property, or any Leasehold Improvements thereon, nor shall Tenant remove any
earth, rocks, gravel, minerals, or the like from the Property, except to the
extent reasonably necessary for the construction or reconstruction of the
Leasehold Improvements or
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Tenant's permitted use of the Property, or as otherwise required or permitted
by Law and by this Lease or the DDA. Nothing in this Lease or the DDA shall
prohibit Tenant from otherwise redeveloping the Property in the future,
including the demolition of existing Leasehold Improvements and the
construction of new Leasehold Improvements, provided that such redevelopment
is performed in accordance with Article 6 below.
4.4 LEASEHOLD IMPROVEMENTS. Tenant agrees that either Tenant or
its subtenant, at its respective sole cost and expense, shall cause
construction of the Initial Project in accordance with Article 6 hereof and
the DDA.
4.5 HAZARDOUS MATERIALS.
4.5.1 REPRESENTATIONS AND WARRANTIES.
4.5.1.1 BY LANDLORD. On the Effective Date,
Landlord represents and warrants to Tenant that each of the following is in
all material respects true, correct and complete so as to not be misleading:
A. Landlord has delivered to Tenant true
and correct copies of the Environmental Documents. The reports and documents
relating to the environmental condition of the Project are voluminous and are
not located in one place, and no individual employed or retained by Landlord
knows the full extent of the environmental condition concerning the Project.
Landlord has inquired of its departments and has received no response
indicating that there are any environmental reports, assessments or
correspondence that materially change
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the information concerning Contamination of the Project contained in the
Environmental Documents which have been delivered to Tenant.
B. Except as disclosed in the
Environmental Documents, Landlord has no reasonable cause to believe that:
(i) Any underground storage tanks
or asbestos-containing building materials are present on the Project; nor
(ii) Any Claim or request for
investigation by Landlord of the Project is pending which asserts that
Landlord is liable for Contamination of the Project; nor
(iii) Any Contamination is present
on the Project.
However, none of the foregoing representations by Landlord shall in
any way modify any of the rights and remedies of the parties under this Lease
or the DDA, including, without limitation, those covenants and indemnities of
the parties relating to Contamination and Environmental Claims.
If a change of circumstances occurs on or before the Commencement
Date which causes Landlord's representations or warranties above to become
untrue, Landlord shall immediately inform Tenant of the same, and Tenant
shall have the right to terminate this Lease pursuant to Section 9.1(a) of
the DDA. If Landlord does not provide Tenant with written notice of any
change of circumstances, then
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Landlord shall be deemed to have remade the foregoing representations and
warranties as of the Commencement Date.
4.5.1.2 BY TENANT. On the Effective Date, Tenant
represents and warrants to Landlord that each of the following is in all
material respects true, correct and complete so as to not be misleading:
A. Tenant has had the opportunity to
review the Environmental Documents provided by Landlord. Based upon
Landlord's representation, Tenant acknowledges that the reports and documents
relating to the environmental condition of the Project are voluminous and are
not located in one place, and that no individual employed by Landlord knows
the full extent of environmental documentation concerning the Project.
B. Tenant has performed its own
environmental studies and health risk assessments concerning the
Contamination of the Project.
C. By executing this Lease, Tenant
indicates to Landlord that it has determined, to its satisfaction and to the
best of Tenant's knowledge, that Tenant's use and occupancy of the Leasehold
Improvements on the Property in accordance with this Lease presents no
unacceptable risk to human health.
None of the foregoing representations by Tenant shall in any way
modify any of the rights and remedies of the parties under this Lease or the
DDA, including, without limitation, those covenants and indemnities of the
parties relating to Contamination and Environmental Claims.
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4.5.2 RIGHT OF ENTRY. Subject to the requirements and
conditions of this Section 4.5.2, below, Landlord and its employees,
consultants and contractors are hereby granted a reasonable right of entry
onto the Property and the Leasehold Improvements for the following purposes:
(i) conducting environmental tests, monitoring, inspections, investigations
and studies (other than Environmental Construction Activities); (ii)
discharging Landlord's obligations under Section 4.5.3 (other than
Environmental Construction Activities); (iii) confirming Tenant's compliance
with the provisions of this Lease concerning the Hazardous Materials
Activities of Tenant and Tenant's Agents (other than Environmental
Construction Activities); and (iv) subject to 4.5.2.3 and other Lease
sections, performing Environmental Construction Activities to the extent
required by any Hazardous Materials Law or otherwise necessary to
investigate, clean up, remediate or prevent Contamination of the Project or
to prevent the assertion of an Environmental Claim against Landlord. Any such
entry by Landlord shall not be deemed an admission by Landlord of any
responsibility for any Contamination of the Property and shall not release
Landlord or Tenant from their respective Environmental Indemnity Obligations
under this Lease.
4.5.2.1 NOTICE. Landlord and its employees,
contractors and consultants shall provide Tenant with reasonable notice of
its intention to enter the Property, the Leasehold Improvements or, prior to
acceptance of the Tenant's Off-Site Improvements by the City, the Park Site
(as defined in the DDA). With respect to any "walk-through" inspection for
purposes of confirming Tenant's compliance with the provisions of this Lease
regarding Tenant's Hazardous Materials Activities, Landlord shall provide
Tenant with at least twenty-four (24) hours prior notice of
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each such entry, which notice may be either written or by telephone.
With respect to any other entry of Landlord permitted under this Section
4.5.2, Landlord shall provide Tenant with at least seven (7) days prior
written notice, which notice shall identify the work to be conducted, the
portions of the Property, the Park Site and the Leasehold Improvements that
will be affected by the entry, and the names and addresses of any contractors
and consultants who will enter the Premises. Notice of repetitive entries
may be given in a consolidated notice delivered in accordance with this
Subsection 4.5.2.1 prior to the first such entry.
In the event of an emergency related to Landlord's Contamination,
Landlord shall provide prior notice to Tenant of such entry to the extent
reasonably possible under the circumstances.
4.5.2.2 TERMS OF ENTRY. In connection with any
entry, Landlord shall avoid, to the extent reasonably possible, any
disturbance to or interference with Tenant's use, occupancy and quiet
enjoyment of the Property and Leasehold Improvements, the construction of the
Initial Project, the conduct of Tenant's business thereon, and damage to the
Tenant's Off-Site Improvements, before acceptance thereof by the City,
Leasehold Improvements or Trade Fixtures. Tenant may exclude from the
Initial Project, the Property and Leasehold Improvements any person who, in
Tenant's reasonable business judgment, is causing a safety hazard or
unreasonably interfering with Tenant's quiet enjoyment of the Property or
Leasehold Improvements or Tenant's business conducted thereon. Landlord
shall keep the Landlord's Estate and the Tenant's Estate free and clear of
any mechanic's liens, materialmen's liens or other liens or claims arising of
Landlord or its employees, consultants or contractors during such entry.
Landlord shall conduct all
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activities during such entry in a good and workmanlike manner in accordance
with all applicable Laws. Landlord shall repair, at no cost to Tenant, all
damage to the Property , Leasehold Improvements or Trade Fixtures caused by
any such entry. Upon at least ten (10) business days' written notice from
Tenant, Landlord shall make available to Tenant, for Tenant's review and/or
duplication, any and all notices, correspondence, information, reports and
studies in Landlord's possession or control with regard to environmental
matters pertaining to such entry. With respect to any Environmental
Construction Activity, Landlord shall provide Tenant with copies of all
studies, investigations and reports pertaining to such entry promptly
following Landlord's receipt thereof. Landlord shall indemnify, defend and
hold Tenant and Tenant Indemnitees harmless from and against any and all
Claims arising from or in connection with the activities of any Existing
Permittee or Third Party (which Third Party desires to conduct any activities
in connection with Landlord's Contamination) hereinafter granted entry to the
Project pursuant to this Section 4.5.2
4.5.2.3 ENVIRONMENTAL CONSTRUCTION ACTIVITIES. The
following conditions shall apply to any entry which involves an Environmental
Construction Activity:
4.5.2.3.1 MEET AND CONFER. At least
thirty (30) days prior to any entry involving an Environmental Construction
Activity, Landlord shall meet and confer with Tenant to discuss the proposed
Environmental Construction Activity, including, without limitation, the
necessity thereof and alternative locations and/or procedures in connection
therewith.
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4.5.2.3.2 ACTIVITIES REASONABLY NECESSARY.
Landlord shall demonstrate to Tenant that such Environmental Construction
Activity is required by Hazardous Materials Laws or reasonably necessary to
investigate, clean up, remediate or prevent Contamination or to prevent the
assertion of an Environmental Claim against Landlord.
4.5.2.3.3 ALTERNATIVE LOCATIONS. Subject
to approval of applicable Governmental Authorities, all ground water
monitoring ▇▇▇▇▇, extraction ▇▇▇▇▇, and attendant facilities shall be placed
in mutually acceptable locations within the setback areas shown on Exhibit D.
Landlord shall consider alternative locations suggested by Tenant if Tenant
reasonably demonstrates that such locations are feasible and will achieve
substantially the same results as the proposed Environmental Construction
Activity.
4.5.2.3.4 TENANT'S WRITTEN APPROVAL.
Landlord shall obtain Tenant's prior written approval of a scope of work for
the Environmental Construction Activity, which approval shall not be withheld
if the Environmental Construction Activity is required by any Governmental
Authority and which approval shall not otherwise be unreasonably withheld or
delayed. Landlord shall submit the scope of work to Tenant following
satisfaction of the other provisions of this Section 4.5.2.3. Tenant shall
have fifteen (15) days to review the scope of work and provide Landlord with
Tenant's written approval or disapproval of the same (which disapproval shall
set forth the specific objections of Tenant thereto). Notwithstanding the
foregoing, Tenant shall have the right to protest the requirements of a
Governmental Authority provided that Tenant indemnifies, defends and holds
Landlord harmless as provided in Section 4.5.4.1, below (as
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limited by Subsection (D) thereof). It shall be deemed reasonable for Tenant
to object to the work on aesthetic grounds if more aesthetically appropriate
solutions are feasible at reasonable cost.
4.5.2.3.5 MEETINGS WITH GOVERNMENTAL
AUTHORITIES. At Tenant's request, Landlord shall cooperate with Tenant in
scheduling and attending a reasonable number of meetings with the applicable
Governmental Authority regarding the proposed Environmental Construction
Activity.
4.5.2.3.6 DISPUTE RESOLUTION. If the
parties are unable to resolve any dispute concerning any matter requiring the
consent of a party or the agreement of the parties to this Section 4.5.2.3
with respect to an Environmental Construction Activity within thirty (30)
days of delivery of a written demand by one party to the other, then the
matter shall be submitted to arbitration in accordance with the procedures
set forth in Section 14.7, below.
In no event shall the foregoing conditions require Landlord to
violate or incur any order or directive to Landlord from a Governmental
Authority regarding any Environmental Construction Activity required by such
Governmental Authority to be performed by Landlord.
4.5.2.4 EXISTING PERMITTEES. Landlord and Tenant
acknowledge and agree that (i) Landlord has previously granted or will grant
limited rights of access to the Existing Permittees pursuant to the terms and
conditions of their respective Existing Encroachment Permits (as defined
under the definition for
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Existing Permittees), and (ii) such Existing Encroachment Permits shall
govern the Existing Permittees' rights to enter the Land for the purposes
stated therein.
If any Existing Permittee desires to relocate its well(s) to another
location on the Property or otherwise amend its Existing Encroachment Permit,
the Existing Permittee shall be deemed a "Third Party" hereunder and shall be
subject to the provisions of Section 4.5.2.5, below. Landlord agrees that it
will not invoke any right to require or otherwise permit any Existing
Permittee to relocate any well or attendant facilities located on the
Property without first obtaining Tenant's prior written consent, which
consent shall not be unreasonably withheld.
Landlord shall, at Tenant's request, reasonably cooperate with
Tenant in relocating or removing any such ▇▇▇▇▇ and facilities, provided that
such relocation and/or removal can be effected in a manner that does not
violate the applicable Existing Encroachment Permits and is otherwise in
compliance with all applicable Hazardous Materials Laws and the requirements
of applicable Governmental Authorities, and provided, further, that Landlord
has determined, in its reasonable discretion, that such relocation and/or
removal will not conflict with the protection of human health and the
environment. In addition, Landlord shall reasonably cooperate with Tenant in
enforcing such other rights and remedies of Landlord under any Existing
Encroachment Permit. In no event shall the foregoing require Landlord to
violate or incur any order or directive to Landlord from a Governmental
Authority regarding any Environmental Construction Activity required by such
Governmental Authority to be performed by Existing Permittees on the Property.
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4.5.2.5 THIRD PARTIES. No Third Party will be
permitted to enter the Property or the Leasehold Improvements for the
purposes of performing any activities involving an Environmental
Construction Activity or any other environmental matter, unless Tenant and
such Third Party shall have entered into a written right of entry agreement
upon the terms and conditions substantially similar to this Section 4.5.2 and
upon such other terms and conditions as may be reasonably required by Tenant,
and Landlord shall have approved such agreement in writing, which approval
shall not be withheld if such activity is required by applicable Hazardous
Materials Laws, and which approval shall not be otherwise unreasonably
withheld or delayed.
In addition, as a condition to such entry, such Third Party shall
(i) submit to Landlord and Tenant appropriate characterization and/or
remediation plans approved by applicable Governmental Authorities; (ii)
reasonably demonstrate to Tenant that such entry is required by Hazardous
Materials Laws and/or Governmental Authorities, that such entry is reasonably
necessary to investigate, remediate, clean up or prevent Contamination of the
Property, and that alternative locations suggested by Tenant are not
reasonably feasible; and (iii) indemnify, defend and protect Tenant and
Landlord from any Claims arising in connection with such entry.
If Landlord and Tenant are unable to resolve any dispute concerning
a matter to be agreed upon or consented to by a party pursuant to this
Section 4.5.2.5 within thirty (30) days after delivery of a written demand
for resolution by one party to the other, then the matter shall be submitted
to arbitration in accordance with the procedures set forth in Section 14.7,
below.
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In no event shall the foregoing conditions require Landlord to
violate or incur any order or directive to Landlord from a Governmental
Authority regarding any Environmental Construction Activity on the Property
required by such Governmental Authority to be performed by a Third Party.
4.5.2.6 INFORMATION SHARING. Landlord and Tenant
agree that each party shall cooperate with the other in sharing information
pertinent to environmental matters affecting the Project, and all portions
thereof. Cooperation shall include making available for review and/or
inspection, within a reasonable period of time following a request by one
party, reports, studies, and communications from Governmental Authorities and
other information within the possession or control of the other party
concerning such environmental matters pertaining to the Project. In no event
shall the foregoing require Landlord or Tenant to disclose any communication
that is privileged under applicable Laws.
4.5.2.7 INSURANCE REQUIREMENTS. Prior to any such
entry by Landlord or its employees, contractors or consultants, Tenant shall
have received certificates of insurance evidencing the following insurance
coverages maintained by Landlord and its contractors and consultants issued
by carriers of recognized responsibility with a financial rating of at least
B+:IX when admitted in California or A:X if not admitted in California as
rated in the latest BEST'S INSURANCE GUIDE (or, if discontinued, a
comparable rating from a generally recognized standard for rating insurance
companies).
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(i) If any construction activities will be
undertaken, "builder's risk" insurance (as defined in Section 6.3.1),
including coverage for all material and equipment in place or delivered to
the Premises.
(ii) Statutory Workers Compensation and
employer's liability coverage for injury, disease and death as required by
law, covering all persons employed in connection with such entry.
(iii) Commercial general liability and
auto insurance with combined single limit coverage or equivalent in the
amount of One Million Dollars ($1,000,000) per occurrence. Such policy shall
provide coverage for premises and operations, completed operations (for at
least one (1) year following completion of the work) and broad form property
damage and blanket contractual liability coverage. If Landlord will be
performing excavation, trenching or other underground work, commercial
liability insurance shall be provided by Landlord and its contractors and
consultants, including coverage for explosion, collapse and underground
hazards. The minimum limits of such policies of liability insurance shall be
reasonably adjusted from time to time. All policies shall contain coverage
for automobile and general liability and shall be noncontributing with any
other insurance of Tenant. All commercial general liability and auto
liability policies shall name Landlord and Tenant as additional insureds. So
long as Landlord is the City, the foregoing shall not require Landlord to
obtain and maintain the above insurance coverages to the extent that Landlord
is self-insured, although Landlord shall cause its contractors and
consultants to provide certificates of insurance evidencing the coverages
required above.
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4.5.3 LANDLORD'S INDEMNIFICATION.
4.5.3.1 LANDLORD'S ENVIRONMENTAL INDEMNITY
OBLIGATIONS. Notwithstanding anything to the contrary in this Lease and the
DDA, Landlord shall indemnify, protect, defend with counsel reasonably
acceptable to Tenant and hold harmless Tenant and each of the other Tenant
Indemnitees from and against any and all Environmental Claims arising from or
in connection with:
A. Any entry onto the Property by Landlord
or its Agents or an Existing Permittee or Third Party pursuant to Section
4.5.2, above, or any breach of Landlord's obligations under that Section;
B. Any Hazardous Material Activity
conducted by Landlord or Landlord's Agents; or
C. To the extent that the amount of the
Environmental Claim is increased as a consequence of Landlord's unreasonable
denial of its approval of entry to the Property by Third Parties in violation
of Section 4.5.2.5;
D. To the extent that the amount of the
Environmental Claim is increased as a consequence of Landlord's unsuccessful
opposition or challenge to the policy, directive, requirements of a
Governmental Authority concerning Hazardous Materials in and around the soil,
groundwater, surface water or air of the Property or Leasehold Improvements;
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E. To the extent that the amount of the
Environmental Claim is increased as a consequence of Landlord's unreasonable
denial of its approval to enter any groundwater aquifer pursuant to Section
4.5.5.
F. Any Landlord's Contamination
(including, without limitation, any Landlord's Contamination migrating from
the Land).
As used herein, the term "Landlord's Environmental Indemnity
Obligations" shall mean and be limited to the obligations of Landlord under
this section, subject to Section 4.5.3.2, below.
4.5.3.2 LIMITATIONS. Notwithstanding the
foregoing, in no event shall Landlord's duty to indemnify, defend, protect
and hold harmless Tenant or any other Tenant Indemnitee from Environmental
Claims apply:
A. To the extent caused by Tenant's
Contamination;
B. To the extent that an Environmental
Claim is asserted by a Tenant Indemnitee for its own loss of profit, revenue
or business reputation as a consequence of Contamination;
C. Subject to Section 4.5.9., below, to
the extent the Environmental Claim is for loss of use by the Tenant
Indemnitee of the Property or the Leasehold Improvements as a consequence of
Contamination;
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D. To the extent that the amount of the
Environmental Claim is increased as a consequence of Tenant's breach of its
obligations under Section 4.5.5, below;
E. To the extent the Environmental Claim
is based upon the inability of the Tenant Indemnitee asserting the
Environmental Claim to sell, lease or obtain financing for Tenant's Estate,
the Leasehold Improvements, the Trade Fixtures or any other property of the
Tenant Indemnitee (whether real or personal) located on the Property or in
the Leasehold Improvements as a consequence of Contamination;
F. To the extent that any Environmental
Claim is for diminution of the value of the Property, this Lease, the
Leasehold Improvements, Trade Fixtures or any other property of the Tenant
Indemnitee (whether real or personal) as a consequence of Contamination;
G. Subject to Section 4.5.10, below, to
the extent the Environmental Claim is for excess costs incurred by the Tenant
Indemnitee to construct Leasehold Improvements on the Property as a
consequence of Contamination.
4.5.3.3 PROCEDURE. Each Tenant Indemnitee shall
tender to Landlord any matter covered by the Landlord's Environmental
Indemnity Obligations promptly upon learning of the existence of such matter
and shall reasonably cooperate to permit the Landlord to discharge Landlord's
Environmental Indemnity Obligations; provided, however, that a Tenant
Indemnitee's failure to
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promptly tender such matter to Landlord shall relieve Landlord of its
responsibilities under this Section only to the extent of the prejudice
caused thereby.
Landlord's Environmental Indemnity Obligations with respect to any
Environmental Claim shall be conditioned upon a reasonable demonstration by
Tenant or Tenant Indemnitee that the Environmental Claim arises from or in
connection with the matters identified in Subparts (A) through (F) of Section
4.5.3.1. If Landlord disagrees with such demonstration and the parties are
unable to resolve such dispute within thirty (30) days following Tenant's
submission to Landlord of the information supporting such demonstration, then
the matter shall be submitted to arbitration pursuant to Section 14.7 below.
Each Tenant Indemnitee shall cooperate in good faith to defend any
Environmental Claim asserted against the Tenant Indemnitee at no additional
cost or liability to the Tenant Indemnitee.
4.5.3.4 SETTLEMENT BY LANDLORD. No Environmental
Claim that is the subject of Landlord's Environmental Indemnity Obligations
shall be settled by Landlord without the prior written consent of the Tenant
Indemnitee who tendered the Environmental Claim if the settlement includes
any promise or stipulation which will be binding upon the Tenant Indemnitee
after the settlement. A Tenant Indemnitee's consent to any such settlement
shall not be unreasonably withheld or delayed.
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4.5.4 TENANT'S INDEMNIFICATION.
4.5.4.1 TENANT'S ENVIRONMENTAL INDEMNITY OBLIGATIONS.
Notwithstanding anything to the contrary in this Lease and the DDA, Tenant
shall indemnify, protect, defend with counsel reasonably acceptable to
Landlord, and hold harmless Landlord and each of the other Landlord
Indemnitees from and against any and all Environmental Claims which arise out
of or in connection with:
A. Any Hazardous Material Activity conducted
by Tenant or Tenant's Agents;
B. To the extent that the amount of the
Environmental Claim is increased as a consequence of the failure of Tenant to
perform Tenant's environmental obligations under Section 4.5.5, below;
C. To the extent that the amount of the
Environmental Claim is increased as a consequence of Tenant's unreasonable
denial of entry to the Property and the Leasehold Improvements in violation
of Section 4.5.2;
D. To the extent that the amount of the
Environmental Claim is increased as a consequence of Tenant's unsuccessful
opposition or challenge to the policy, directive or requirements of a
Governmental Authority concerning Hazardous Materials in and around the soil,
groundwater, surface water or air of the Property or Leasehold Improvements;
or
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E. Any Tenant's Contamination (including,
without limitation, Tenant's Contamination migrating from the Land).
As used herein, the term "Tenant's
Environmental Indemnity Obligations" shall mean and be limited to the
obligations of Tenant under this section, subject to Section 4.5.4.2, below.
4.5.4.2 LIMITATIONS. Notwithstanding the
foregoing, in no event shall Tenant's duty to indemnify, defend, protect and
hold harmless Landlord or any other Landlord Indemnitees from Environmental
Claims apply:
A. To the extent caused by Landlord's
Contamination;
B. To the extent the Environmental Claim
is asserted by a Landlord Indemnitee for its own loss of profit, revenue,
business or municipal reputation as a consequence of Contamination;
C. To the extent the Environmental Claim
is for loss of use by the Landlord Indemnitee of any real or personal
property located within the defined area of the ▇▇▇▇▇▇'▇ Field as a
consequence of Contamination;
D. To the extent that the Environmental
Claim is based on the inability of the Landlord Indemnitee asserting the
Environmental Claim to sell, lease, or obtain financing for Landlord's Estate
or any other real or personal property of the Landlord Indemnitee (whether
real or personal) located within the defined area of the ▇▇▇▇▇▇'▇ Field as a
consequence of Contamination;
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E. To the extent the Environmental Claim
is for diminution of the value of the Project, this Lease, or any other real
or personal property of the Landlord Indemnitee (whether real or personal)
located within the defined area of the ▇▇▇▇▇▇'▇ Field, as a consequence of
Contamination;
F. To the extent the Environmental Claim
is for excess costs incurred by a Landlord Indemnitee to construct
improvements on the Land as a consequence of Contamination.
4.5.4.3 PROCEDURE. Each Landlord Indemnitee shall
tender to Tenant any matter covered by the Tenant's Environmental Indemnity
Obligations promptly upon learning of the existence of such matter and shall
reasonably cooperate to permit the Tenant to discharge the Tenant's
Environmental Indemnity Obligations; provided, however, that a Landlord
Indemnitee's failure to promptly tender such matter to Tenant shall relieve
Tenant of its responsibilities under this section only to the extent of the
prejudice caused thereby.
Tenant's Environmental Indemnity Obligations with respect to such
Environmental Claim shall be conditioned upon a reasonable demonstration by
Landlord or Landlord Indemnitee that the Environmental Claim arises from or
in connection with the matters identified in Subparts (A) through (E) of
Section 4.5.4.1. If Tenant disputes Landlord's satisfaction of the foregoing
condition to Tenant's Environmental Indemnity Obligation, the matter shall be
submitted to arbitration pursuant to Section 14.7, below.
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Each Landlord Indemnitee shall cooperate in good faith to defend any
Environmental Claim asserted against the Landlord Indemnitee at no additional
cost or liability to the Landlord Indemnitee.
4.5.4.4 SETTLEMENT BY TENANT. No Environmental
Claim that is the subject of Tenant's Environmental Indemnity Obligations
shall be settled by Tenant without the prior written consent of the Landlord
Indemnitee who tendered the Environmental Claim if the settlement includes
any promise or stipulation which will be binding upon the Landlord Indemnitee
after the consummation of the settlement. A Landlord Indemnitee's consent to
any such settlement shall not be unreasonably withheld or delayed.
4.5.5 TENANT'S ENVIRONMENTAL OBLIGATIONS. Tenant shall not
perform, and shall not permit, any Third Party to perform any activity on or
about the soil, groundwater, surface water, air or improvements of the
Property that is reasonably likely to enter any groundwater aquifer or
otherwise disturb Contaminated groundwater, including, but not limited to,
subsurface construction, excavation, dewatering and pile driving, without the
prior written approval of Landlord, which approval shall not be withheld if
such activity is required by applicable Hazardous Materials Laws and/or any
Governmental Authority, and which approval shall not be otherwise
unreasonably withheld or delayed. If Tenant breaches its obligations under
this section, Landlord's Environmental Indemnity Obligations shall be reduced
to the extent, but only to the extent, that Tenant's breach of this section
increases the cost incurred by Landlord to discharge Landlord's Environmental
Indemnity Obligations. In no event shall Tenant be required to violate or
incur any order or directive to Tenant from a Governmental Authority
respecting any
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Environmental Construction Activity required by such Governmental Authority
to be performed by Tenant or any Third Party.
4.5.6 WAIVERS.
4.5.6.1 LANDLORD'S WAIVER. Landlord, for itself
and all other Landlord Indemnitees, hereby waives and releases Tenant and the
other Tenant Indemnitees from:
A. All Environmental Claims covered by
Landlord's Environmental Indemnity Obligations;
B. Other Environmental Claims, to the
extent said Environmental Claims arise out of or in connection with the
matters described in Subsection 4.5.4.2; and
C. All rights to join Tenant or any other
Tenant Indemnitee in any litigation or proceeding concerning any
Environmental Claims described in subparts (A) and (B) above.
4.5.6.2 TENANT'S WAIVER. Tenant, for itself and
all other Tenant Indemnitees, hereby waives and releases Landlord and the
other Landlord Indemnitees from:
A. All Environmental Claims covered by
Tenant's Environmental Indemnity Obligations;
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B. Other Environmental Claims, to the
extent said Environmental Claims arise out of or in connection with the
matters described in Subsection 4.5.3.2; and
C. All rights to join Tenant or any other
Tenant Indemnitee in any litigation or proceeding concerning any
Environmental Claims described in subparts (A) and (B) above.
4.5.6.3 GENERAL RELEASE. Landlord, being familiar
with the provisions of Civil Code Section 1542, for itself and all other
Landlord Indemnitees, hereby waives, and Tenant, being familiar with the
provisions of Civil Code Section 1542, for itself and all other Tenant
Indemnitees hereby waives, the provisions of Civil Code Section 1542 and any
other provision of Law which would limit the waivers or releases set forth in
this Section 4.5.6. Said Section 1542 reads as follows:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement
with the debtor."
4.5.7 RESERVATION OF RIGHTS. The parties each maintain
that they are innocent parties with regard to certain Contamination,
including, without limitation, the Teledyne/Spectra-Physics, Montwood and
▇▇▇▇▇/▇▇▇▇▇▇▇▇▇ contaminated groundwater plumes currently affecting the
Property and the Park Site (as determined in the DDA). Although the parties
have agreed to certain
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Environmental Indemnity Obligations with regard to Contamination, neither
party admits any responsibility whatsoever to any third party or Governmental
Authority under any applicable Law for such Contamination and reserves its
rights to pursue any and all Claims and to raise any and all defenses against
any third party or Governmental Authority in connection therewith. In
addition, to the extent that the Environmental Indemnity Obligations do not
allocate responsibility between the Landlord and Tenant for Contamination,
then no provision of this Agreement shall be read to modify, amend, or
supplement nor, except to the extent expressly set forth in Section 4.5.6, to
waive or release any right either party may have against the other under
applicable Law with respect to such Contamination.
4.5.8 SURVIVAL. Landlord's Environmental Indemnity
Obligations, Tenant's Environmental Indemnity Obligations, and the provisions
set forth in Sections 4.5.3 through 4.5.7, above, shall survive the
expiration or earlier termination of this Lease; and are independent of any
other obligation of the parties under this Lease.
4.5.9 ABATEMENT OF RENT OR TERMINATION DUE TO NEW
CONTAMINATION.
4.5.9.1 RENT ABATEMENT DURING CONSTRUCTION OF
INITIAL PROJECT. If, during the course of construction of the Initial
Project, any Contamination (other than Tenant's Contamination) causes Tenant
to cease construction of any material portion of the initial Leasehold
Improvements on the Property, then Tenant's obligation to pay Monthly Rent
shall be abated for each day construction of the Leasehold Improvements is
actually delayed.
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4.5.9.2 TENANT'S RIGHT TO TERMINATE DURING
CONSTRUCTION OF INITIAL PROJECT. If, during the course of construction of
the Initial Project, any Contamination (other than Tenant's Contamination) is
discovered on the Property and such Contamination (i) would render the
Leasehold Improvements which are part of the Initial Project uninhabitable or
unusable for their intended purposes, or (ii) otherwise causes Tenant to
cease construction of the Initial Project for more than one hundred eighty
(180) days, as determined by (i) a Governmental Authority; or (ii) a health
risk assessment prepared by a reputable environmental consultant of Tenant
(provided Tenant ceases construction and vacates the Property), then at its
election and in addition to its other rights and remedies, Tenant shall have
the right to terminate this Lease by delivery of written notice to Landlord
specifying the date of such termination (which date shall not be later than
one (1) year after the date of the notice). Tenant shall notify Landlord
within fifteen (15) days of the date that Tenant reasonably determines that
such Contamination will render the Property uninhabitable or unusable for its
intended purpose or causes Tenant to cease construction of the Project.
Landlord shall have the right to have a reputable environmental
consultant review the findings and conclusions of Tenant's health risk
assessment within thirty (30) days following Landlord's receipt thereof. If
Landlord's environmental consultant objects to any matter set forth in
Tenant's health risk assessment, Landlord's consultant and Tenant's
consultant shall meet and confer in order to resolve such objection within
fifteen (15) days following the aforementioned thirty- (30) day period. If
the consultants are unable to resolve such objection within said fifteen-
(15) day period, the dispute shall be submitted to arbitration by an
independent environmental consultant in accordance with Section 14.7, below.
In
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no event shall the provisions of this section limit or otherwise affect in
any manner Landlord's Environmental Indemnity Obligations under the Ground
Lease.
4.5.9.3 CITY'S RIGHT TO TERMINATE DURING
CONSTRUCTION. If Landlord is required to remediate Contamination discovered
during the course of constructing the Initial Project, and estimates for
costs to be incurred by Landlord for cleanup and related activities exceed
Five Million Dollars ($5,000,000), Landlord may elect to terminate the Ground
Lease or negotiate a mutually acceptable alternative with Tenant. If
Landlord elects termination, Landlord shall so notify Tenant in writing
within thirty (30) days of discovery and shall refund all rent paid by Tenant
and the Lease Fee, and shall reimburse Tenant for all costs and expenses
incurred by Tenant in connection with the Initial Project, the DDA, the
Development Agreement and this Lease (as evidenced by written documentation)
in an amount not to exceed One Million Dollars ($1,000,000) within thirty
(30) days after receipt of Tenant's written notice of acceptance of the
termination and documentation of the costs and expenses. Landlord shall not
be obligated for any costs or expenses for termination pursuant to this
section, except as provided herein.
4.5.9.4 RENT ABATEMENT UPON COMPLETION OF INITIAL
PROJECT. If Contamination (other than Tenant's Contamination) renders any
portion of the Leasehold Improvements uninhabitable or unusable for the
then-existing use thereof, as determined by (i) an appropriate Governmental
Authority; or (ii) a health risk assessment undertaken by a mutually
agreed-upon third party consultant using mutually agreed-upon assumptions and
procedures demonstrates that the space is not reasonably suited for existing
uses and Tenant vacates the affected space, rent will be equitably abated
based upon the extent and duration of
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such interference. If the consultant's findings are unable to resolve a
dispute between the Landlord and Tenant, the dispute shall be submitted
to arbitration by an independent environmental consultant in accordance with
Section 14.7, below. In no event shall the provisions of this section limit
or otherwise affect in any manner Landlord's Environmental Indemnity
Obligations under this Lease.
4.5.9.5 LEASE TERMINATION UPON COMPLETION OF
LEASEHOLD IMPROVEMENTS. If Contamination (other than Tenant's Contamination)
renders more than one-half of the Floor Area of a Building (on a
Parcel-by-Parcel basis) uninhabitable or unusable for a period of one hundred
eighty (180) days or more, the Tenant may terminate the Lease for the
unusable Parcel. If Contamination (other than Tenant's Contamination)
renders more than one-half of the parking structure and/or more than one-half
of the total Floor Area of all Buildings subject to Parcel Leases
uninhabitable or unusable for a period of one hundred eighty (180) days or
more, Tenant may terminate this Lease as to all Parcels, or if the Property
has been parcelized pursuant to Section 2.2, all Parcel Leases (i.e., as to
the entire Property), subject to Section 14.30 below. The determination that
the Contamination constitutes a health risk that causes the space to be
unusable for a period of one hundred eighty (180) days must be: (a) made by
an appropriate Government Authority; or (b) based on a health risk assessment
by a mutually agreed-upon consultant using mutually agreed-upon assumptions
and procedures.
4.5.9.6 FAILURE TO AGREE UPON CONSULTANT OR
FINDINGS. In the event that (a) Landlord and Tenant cannot agree upon the
health risk consultant or the assumptions and procedures to perform a health
risk assessment pursuant to Section 4.5.9.4 or 4.5.9.5 within thirty (30)
days following delivery of Tenant's
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written request for assessment to Landlord, or (b) following the completion
of such assessment Landlord and Tenant cannot agree upon the results and
findings of the assessment within a thirty (30) days following the parties'
receipt thereof, the dispute shall be submitted to arbitration by an
independent environmental consultant in accordance with Section 14.5.9,
above. In no event shall the provisions of this section limit or otherwise
affect in any manner Landlord's Environmental Indemnity Obligations under
this Lease.
4.5.10 UTILITY COSTS RELATED TO CONTAMINATED GROUNDWATER.
Landlord shall reimburse Tenant for reasonable costs and expenses incurred by
Tenant to install utilities for the Initial Project, or for any utilities now
or hereafter installed by Tenant during the Lease Term solely to fulfill the
requirements of a public utility or Governmental Authority and unrelated to
utility installations made at Tenant's discretion, but only to the extent
that such installation costs are increased by the presence of groundwater
Contamination. Notwithstanding the foregoing, Tenant shall be responsible for
all costs and expenses related to installation of utilities made at Tenant's
election following completion of the Initial Project, including, but not
limited to, utilities needed to expand or upgrade the Leasehold Improvements
(except to the extent required solely by a public utility or Governmental
Authority as described above). In no event shall the provisions of this
section limit or otherwise affect in any manner Landlord's Environmental
Indemnity Obligations under this Lease.
4.5.11 BUILDING COSTS RELATED TO METHANE. Landlord shall
reimburse Tenant for reasonable costs and expenses incurred by Tenant to
construct and install required building improvements, fixtures and equipment
related to methane
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("Methane Improvements") that are now or hereafter required solely to fulfill
the requirements of Governmental Authority and are not made at Tenant's
discretion. Tenant shall be responsible for all costs and expense related to
any improvements, fixtures and equipment related to methane, that Tenant
elects to construct but which are not Methane Improvements required to be
installed by a Governmental Authority.
ARTICLE 5
PAYMENT OF REAL PROPERTY TAXES AND UTILITY CHARGES
5.1 NOTICE OF POSSESSORY INTEREST: PAYMENT OF TAXES AND
ASSESSMENTS ON VALUE OF ENTIRE PROPERTY. In accordance with California
Revenue and Taxation Code Section 107.6(a), Lessor states that by entering
into this Lease, a possessory interest subject to property taxes may be
created. Tenant or other party in whom the possessory interest is vested may
be subject to the payment of property taxes levied on such interest.
5.2 UTILITIES. Tenant agrees that Landlord shall not be liable for
any charges for water, sewage, gas light, heat, telephone, electricity and
other utility and communication services rendered or used on the Property
and/or Leasehold Improvements at all times during the term of this Lease,
except as otherwise expressly provided in the Lease or the DDA.
5.3 REAL PROPERTY TAXES. Commencing as of the Effective Date,
Tenant shall pay and discharge or cause to be paid and discharged before
delinquency all Real Property Taxes accruing during and applicable to the
Lease Term, regardless of when
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due or when billed. Any Real Property Taxes required to be paid by Tenant
which relate to a tax year during which the Commencement Date or the
termination date of the Lease occurs shall be prorated between Landlord and
Tenant based on the actual days of said period within the Lease Term. If the
Law permits payment of any Real Property Tax in installments, Tenant may
utilize the permitted installment method over the maximum period of time
allowed by Law. If Tenant shall fail to pay any Real Property Tax prior to
the delinquency thereof, Tenant shall be required to pay all penalties
imposed by the taxing authority as a result of such delinquency, but shall
have no additional liability to Landlord for such failure.
5. 4 RIGHT TO CONTEST. Tenant shall have the right to pay any Real
Property Tax under protest and Tenant shall not be required to pay, discharge
or remove any Real Property Taxes, so long as Tenant shall (i) in good faith
contest the same or the validity thereof by appropriate legal proceedings in
such a manner as to prevent the tax sale of any portion of the Property, the
Leasehold Improvements and/or Tenant's Estate and the imposition of any lien
upon any portion of the Property or the Leasehold Improvements; and (ii) give
Landlord prompt written notice of its intention to do so at least thirty (30)
days before Tenant would have been obligated to pay such Real Property Taxes
pursuant to this Lease, but for such contest. In the event of any such
contest, within twenty (20) days after the final determination thereof
adversely to Tenant, Tenant shall pay and discharge the amounts determined to
be due from Tenant in accordance therewith and with Section 5.1, together
with any penalties, fines, interest, costs and expenses resulting from such
contest or other proceeding. During any such contest, Tenant shall pay the
uncontested amount of such Real Property Taxes and, to the extent required by
Law, the
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contested amount of such Real Property Taxes. Landlord shall not interfere
with Tenant's right to so initiate and prosecute a contest of Real Property
Taxes.
ARTICLE 6
CONSTRUCTION OF IMPROVEMENTS AND MECHANIC'S LIENS
6.1 CONSTRUCTION PRIOR TO COMMENCEMENT DATE. Prior to the
Commencement Date, Tenant shall not make or construct, or permit its
subtenant to make or construct, any improvements to the Property without the
written consent of Landlord, which consent shall not be unreasonably withheld
or delayed.
6.2 CONSTRUCTION OF INITIAL PROJECT. After the Commencement Date
and subject to the provisions of this Lease and the DDA, Tenant or its
subtenant, at its respective sole cost and expense, shall construct or cause
others to construct the Initial Project.
6.3 CONDITIONS PRECEDENT TO CONSTRUCTION OF INITIAL PROJECT AND
OTHER LEASEHOLD IMPROVEMENTS. Before any construction or work of improvement
(including, without limitation, the Initial Project) is commenced on the
Property and before any building materials have been delivered to the
Property by or at the direction of Tenant, Tenant shall complete each of the
following conditions precedent, or procure Landlord's written waiver thereof:
6.3.1 INSURANCE DURING THE COURSE OF CONSTRUCTION. At all
times during the course of any construction or work of improvement by Tenant
on the Property or in connection with Tenant's Off-Site Improvements, Tenant
shall procure and
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maintain or cause its general contractor to procure and maintain (i)
Builder's Risk Insurance (as defined below) or substantially similar property
insurance coverage; (ii) workers compensation and employers liability
insurance as required by law covering all persons employed in connection with
the work of improvement; and (iii) $5,000,000 per occurrence comprehensive
general liability and automobile liability insurance, including owned, hired
and non-owned autos. All such policies shall be "occurrence-based" policies
except to the extent that "claims-made" policies are generally acceptable
under reasonable risk management practices for similar ground lease projects
in Santa ▇▇▇▇▇ County, California. Tenant shall pay, or cause its
contractors and subcontractors to pay, all premiums required to maintain such
insurance at all times during which work is in progress. Tenant shall also
procure and maintain, at its sole cost and expense, all insurance required by
any lender financing Tenant's construction of the Leasehold Improvements.
All insurance provided pursuant to this section shall be from
insurance companies which are rated at least B+:IX in the latest Best's
Insurance Guide when admitted in California or, if not admitted in
California, from companies rated at least A:X in the latest Best's Insurance
Guide; or equivalent self-insurance that is acceptable to Landlord at its
sole discretion. If Best's Insurance Guide shall be discontinued, then the
parties shall establish comparable ratings from a similar, generally
recognized standard regarding insurance companies. The liability policies
described above shall name Landlord as an additional insured at no cost to
Landlord. Such policies may not be canceled, amended or changed without
thirty (30) days advance written notice to Landlord, and coverage shall be
unqualified as to the acceptance of liability for failure to notify;
provided, however, if any insurance company of Tenant agrees only to
"endeavor" to notify Landlord of cancellation or
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change in any insurance coverage required under this Section 6.3.1, then it
shall be the responsibility of Tenant to notify Landlord within twenty (20)
days prior to such cancellation or change of insurance coverage. The
foregoing insurance coverages shall be primary; any insurance of Landlord
shall be noncontributory and only for the benefit of Landlord. Tenant shall
immediately cease all work on the Project upon the absence of in-force
insurance for the coverages required under, or the reduction of limits below
the minimum policy limits specified in, this Section 6.3.1. If cancellation
of insurance occurs during the course of construction, Landlord, at its
option, may procure the same for Tenant's account, and the cost thereof shall
be paid to Landlord by Tenant upon demand.
For purposes of this Lease, "Builder's Risk Insurance" is insurance
written on a completed value basis policy form, insuring against loss to the
extent of at least ninety percent (90%) of the replacement cost of that which
is being covered.
Prior to commencing the construction of any improvement with a cost
in excess of Two Hundred Thousand Dollars ($200,000) (subject to adjustment
as provided hereinbelow) on the Property, Tenant shall deliver to Landlord
original certificates of insurance evidencing the insurance coverages
required under this Section 6.3.1. At the time Tenant desires to commence
the construction of any improvement, the foregoing Two Hundred Thousand
Dollars ($200,000) amount shall be adjusted by a factor, the numerator of
which shall be the replacement cost of the Leasehold Improvements as of the
date Tenant desires to commence construction, and the denominator of which
shall be the original cost of the Leasehold Improvements of the Initial
Project. The certificates of insurance shall provide the following:
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1. Policy number; name of insurance company; name,
address and telephone number of the agent or authorized representative; name,
address and telephone number of insured; project name and number or name of
corporation or agency; policy expiration date; and specific coverage amount;
2. That the policy will not be canceled, amended or
changed without thirty (30) days advance written notice to Landlord;
provided, however, if any insurance company of Tenant agrees only to
"endeavor" to notify Landlord of cancellation or change in any insurance
coverage required under this Section 6.3.1, then it shall be the
responsibility of Tenant to notify Landlord within twenty (20) days prior to
such cancellation or change of insurance coverage.
3. Deductibles and self-insured retentions not
exceeding those allowed in Section 7.2, below;
4. Name of Landlord contact;
5. Identification of endorsements required under
this Lease.
6. Copy of endorsement naming Landlord as an
additional insured on the liability insurance policy required of Tenant under
this section.
6.3.2 PERMITS. Tenant shall procure, at Tenant's sole cost
and expense, a demolition permit, grading permit, building permit and all
other governmental and quasi-governmental permits and approvals required by
Law for construction of
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any improvements undertaken by Tenant. No application for demolition,
grading, building or use permit may contain any knowing misstatement or
intentional concealment of material fact. Tenant shall obtain all permits
required for the construction to be undertaken by Tenant. All Leasehold
Improvements and Tenant's Off-Site Improvements shall be in conformity with
said permits.
6.4 NOTICE OF NONRESPONSIBILITY. Landlord shall record, or, at
Landlord's request, Tenant shall record on Landlord's behalf, all appropriate
notices of nonresponsibility in connection with a work of improvement to be
undertaken by Tenant. Tenant shall provide Landlord with at least ten (10)
calendar days' advance written notice of the proposed commencement of any
work of improvement costing in excess of Two Hundred Thousand Dollars
($200,000) on the Property and/or the initial delivery to the Property of
materials for work costing in excess of Two Hundred Thousand Dollars
($200,000) so that Landlord may record or require Tenant to record on its
behalf the required notices of nonresponsibility.
6.5 COMPLETION REQUIREMENTS. The Leasehold Improvements and
Tenant's Off-Site Improvements shall be constructed in a good and workmanlike
manner in accordance with all Laws and the building permits therefor. Tenant
shall obtain all temporary and final certificates of occupancy required by
Law.
6.6 LANDLORD FREE FROM LIABILITY. Landlord shall not be liable for
any labor or materials furnished or to be furnished to Tenant, and no
mechanic's lien or other lien shall attach to or affect the Landlord's Estate
as a result of Tenant's construction of a work of improvement, except to the
extent caused by Landlord's failure to reimburse Tenant for certain costs as
set forth in the DDA. Nothing in this Lease
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shall be deemed or construed in any way as constituting the request of or by
Landlord to any contractor, subcontractor, laborer, supplier or materialman
for the performance of any work or as giving Tenant, or its affiliates or
permitted sublessees, any right, power or authority to contract for or permit,
as to Landlord's Estate, the rendering of any services or the furnishing of
any materials for any work of improvement at the Property which would
subject Landlord's Estate to a lien. Tenant shall pay or cause to be paid
the total cost and expense of all works of improvement, as that phrase is
defined in the mechanics' lien law for the State of California in effect when
the work commences, undertaken at the direction of Tenant and in any way
associated with the Project, subject to Landlord's reimbursement obligations
under the DDA. No such payment for any work of improvement shall be
construed as a payment of Rent or as a payment in lieu of Rent under this
Lease.
6.7 MECHANICS' LIENS. Subject to Landlord's reimbursement
obligations under the DDA, Tenant shall not suffer or permit to be enforced
against the Project or any portion thereof, any mechanics', materialmen's,
contractors', or subcontractors' lien or liens arising from any work of
improvement by or at the direction of Tenant, however it or they may arise.
Tenant may, however, in good faith and at Tenant's sole cost and expense,
contest the validity of any such asserted lien, claim or demand provided that
Tenant has furnished Landlord with the bond required under California Civil
Code Section 3143 or any comparable statute hereafter enacted for providing a
bond freeing the Landlord's Estate from the effect of such a lien, claim or
demand. In the event no such statute should exist, Tenant shall supply
Landlord with cash security or other security reasonably acceptable to
Landlord in an amount of no less than one hundred fifty percent (150%) of any
lien,
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claim or demand. Tenant shall indemnify, protect, defend and hold Landlord
and Landlord's successors and assigns, the Property, the Leasehold
Improvements and the Project free and harmless from and against all Claims
arising out of any mechanics' liens for works of improvement performed on or
at the Project by or at the direction of Tenant or its affiliates,
subtenants, concessionaires, licensees or Agents, together with reasonable
attorneys' and experts' fees and all costs and expenses reasonably incurred
in defending or otherwise protecting against such claims.
6.8 LANDLORD'S RIGHT TO DISCHARGE LIEN. If Tenant does not cause
to be recorded the bond described in California Civil Code Section 3143 (or
any comparable statute hereafter enacted for providing a bond freeing the
Property, the Leasehold Improvements and the Project from the effect of such
a lien, claim or demand) or otherwise protect the same under any alternative
or successor statute or other security arrangement acceptable to Landlord in
the manner described in Section 6.7, above, and a final judgment has been
rendered by a court of competent jurisdiction for the foreclosure of a
mechanics', materialmen's, contractors' or subcontractors' lien, claim or
demand, and if Tenant fails to stay the execution of the judgment by lawful
means or to pay the judgment, Landlord shall have the right, but not the
duty, to pay or otherwise discharge, stay, or prevent the execution of any
such judgment or lien or both. Upon demand therefor by Landlord, Tenant shall
reimburse Landlord for all sums paid by Landlord under this Section 6.8,
together with all Landlord's reasonable attorneys' fees and costs, plus
interest on those sums, fees and costs at the Lease Rate from the date of
payment until the date of full reimbursement.
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6.9 TITLE TO LEASEHOLD IMPROVEMENTS. During the term of this
Lease, title to the Leasehold Improvements shall be in Tenant or its
subtenants, as applicable, and in no event shall Landlord have any interest
or claim upon the Trade Fixtures or any additions, alterations and
improvements thereto or replacements thereof. At the expiration or earlier
termination of this Lease, all right, title and interest of Tenant and any
other party in the Leasehold Improvements and all additions, alterations and
improvements thereto or replacements thereof shall automatically pass to and
vest in Landlord without the necessity of notice or documentation.
Notwithstanding the foregoing, in no event shall Landlord have any interest
whatsoever in Tenant's Trade Fixtures or those of its permitted subtenants,
and Landlord shall execute any document reasonably necessary to facilitate
the collateralization of equipment leases or other financing for the benefit
of Tenant or subtenants, and acknowledge its waiver of any lien or interest
in the Trade Fixtures.
6.10 LANDLORD'S COOPERATION. At any time that Tenant undertakes a
work of improvement pursuant to the provisions of this Article 6, Landlord
shall use good faith efforts to cooperate with Tenant in applying for
(including execution thereof) all necessary governmental and
quasi-governmental permits and approvals required for such construction and
all inspections, certificates of occupancy and other certificates evidencing
completion of the work in accordance with applicable Law. Without limiting
the generality of Section 14.29 below, the foregoing shall not limit in any
manner the City's rights, powers and authority under its police powers.
6.11 TENANT'S ELECTION TO REDEVELOP. Following completion of the
Initial Project, Tenant shall have the right, but not the obligation (except
as otherwise required in connection with damage or destruction of the
Leasehold Improvements
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under Article 8 or condemnation under Article 9), to demolish, remove,
replace, relocate, reconstruct and/or redevelop the Leasehold Improvements,
provided that, as of the commencement of such work, (i) no Event of Default
exists under the Lease; (ii) at least fifteen (15) years of the Lease Term
(including any option periods exercised by Tenant) are remaining under the
Lease; (iii) Tenant agrees to construct new Leasehold Improvements promptly
following the demolition, removal, replacement and/or relocation of the then
existing Leasehold Improvements, all in accordance with the terms and
conditions of this Article 6; (iv) the Leasehold Improvements after the
reconstruction will have an estimated fair market value equal to or greater
than the fair market value of the Leasehold Improvements existing prior to
such demolition, removal, replacements, relocation, reconstruction and/or
redevelopment, and (v) any one of the following exists: (A) the Guaranty has
not been terminated pursuant to Section 20 of the Guaranty, (B) the Lease has
been assigned to an assignee (or is otherwise guaranteed by any entity)
meeting the financial criteria set forth in Section 11.1.2 above at either
the time of assignment or the commencement of such work, or (C) Tenant has
provided Landlord with reasonable assurances that Tenant has the financial
capability and/or financing commitment to perform the construction of the new
Leasehold Improvements.
ARTICLE 7
INSURANCE AND INDEMNITY
7.1 REQUIRED INSURANCE. Tenant, at its sole cost and expense,
shall procure the following insurance on or before the Commencement Date and
shall maintain the same at all times during the Lease Term:
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7.1.1 LIABILITY INSURANCE. Tenant shall obtain and
maintain a policy or policies of comprehensive general and automobile
liability insurance in an amount of not less than $5,000,000 per occurrence,
including bodily injury, death, personal injury, contractual liability,
including, without limitation, performance by Tenant of the indemnity
provisions contained in Section 7.4.2 of this Lease to the extent it is
insurable, and property damage as a combined single limit or equivalent.
Such insurance shall name Landlord as an additional insured. No such
insurance shall be deemed to limit the parties' respective indemnity
obligations or such other obligations of the parties under this Lease. The
limits of the liability coverage and, if necessary, the terms and conditions
of insurance, shall be reasonably adjusted from time to time (not less than
every five years after the Commencement Date nor more than once in every
three-year period) to meet any change of circumstance, including, but not
limited to, changes in the purchasing power of the dollar and the litigation
climate in California. If the parties are unable to agree on the amount by
which the minimum coverage required of Tenant is to be adjusted, the
controversy shall be resolved by arbitration according to the procedure set
forth in Section 14.7 below.
7.1.2 PROPERTY INSURANCE. Tenant shall maintain all risk
property damage insurance (without deduction for depreciation) in an amount
equal to not less than 90 percent of the full cost of rebuilding and
replacing the Leasehold Improvements, including increased costs due to
changes in building codes, regulations and similar laws. In addition, Tenant
shall carry a standard boiler and machinery all-risk policy covering the
Leasehold Improvements (if the Leasehold Improvements contain a boiler), and
such other insurance as may be requested by
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Landlord pursuant to Section 7.1.3 below. Landlord shall be named as a loss
payee for proceeds in excess of One Million Dollars ($1,000,000).
7.1.3 INSURANCE COVERAGE. Notwithstanding anything to the
contrary contained herein, Tenant shall not be required to carry (i)
earthquake insurance; (ii) pollution liability insurance; (iii) flood
insurance; or (iv) any other insurance that cannot be procured or maintained
by Tenant at commercially reasonable rates (other than the commercial
liability and property insurance coverages described in Sections 6.3.1, 7.1.1
and 7.1.2, above). Except as provided in the preceding sentence, Tenant,
within thirty (30) days after Landlord's written request therefor (which
request may not be made more than once in every three-year period), shall
obtain and thereafter maintain property insurance against such additional
casualties not otherwise described in Section 7.1 as Landlord may reasonably
request, provided that such coverage is generally maintained by owners of
similar projects in Santa ▇▇▇▇▇ County, California.
7.2 REQUIRED TERMS. All policies provided for under this Article 7
must be from insurance companies which are rated at least B+:IX in the latest
BEST'S INSURANCE GUIDE when admitted in California or, if not admitted in
California, from companies rated at least A:X in the latest BEST'S INSURANCE
GUIDE, or equivalent self-insurance that is acceptable to Landlord at its
sole discretion. If BEST'S INSURANCE GUIDE shall be discontinued, then the
parties shall establish comparable ratings from a similar, generally
recognized standard regarding insurance companies. The liability insurance
described in 7.1.1 above shall name Landlord as an additional insured at no
cost to Landlord. Such policies may not be canceled, amended or changed
without thirty (30) days advance written notice to Landlord, and coverage
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shall be unqualified as to the acceptance of liability for failure to notify;
provided, however, if any insurance company of Tenant agrees only to
"endeavor" to notify Landlord of cancellation or change in any insurance
coverage required under Section 7.1, then it shall be the responsibility of
Tenant to notify Landlord within twenty (20) days prior to such cancellation
or change of insurance coverage. All such policies shall be
"occurrence-based" policies except to the extent that "claims-made" policies
are generally acceptable under reasonable risk management practices for
similar ground lease projects in Santa ▇▇▇▇▇ County, California. The
foregoing insurance coverages shall be primary; any insurance of Landlord
shall be noncontributory and only for the benefit of Landlord. All
deductibles and self-insured retentions shall be in amounts generally
maintained by owners of similar projects in Santa ▇▇▇▇▇ County, California.
Prior to the Commencement Date, Tenant shall deliver to Landlord
original certificates of insurance evidencing the insurance coverages
required under this Section 7.1 and otherwise containing the information
required under Section 6.3.1 above. At least thirty (30) days prior to the
expiration of such policies, Tenant shall furnish Landlord with evidence of
renewal or binders showing no lapse in coverage and, as soon as practicable
thereafter, certificates of renewal setting forth the information required
under Section 6.3.1 above, as applicable. If Tenant fails to procure any
insurance required by this Lease, or to deliver to Landlord such policies or
certificates as required by this Lease, Landlord at its option may procure
the same for Tenant's account, and the cost thereof shall be paid to Landlord
by Tenant upon demand.
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7.3 PARTIAL RELEASE OF LIABILITY AND WAIVER OF SUBROGATION.
Landlord and Tenant release each other and their respective employees,
officers and directors from any Claims such releasing party may have for
damage to the Leasehold Improvements, the Project or any of the releasing
party's fixtures, personal property, improvements and alterations in or about
the Project that is caused by or results from risks insured against under any
fire and extended coverage insurance policies actually carried by such
releasing party, without regard to the fault of the party released, provided
that such waiver shall be limited to the extent of the net insurance proceeds
paid by the relevant insurance company with respect to such loss or damage.
This release shall be in effect with respect to any loss only so long as the
applicable insurance policy(s) contain a clause to the effect that this
release shall not affect the right of the named insured to recover under such
policies. Tenant and Landlord shall cause each insurance policy obtained by
it to provide that the insurance company waives all rights of recovery by way
of subrogation against either or both Landlord and Tenant in connection with
any damage covered by such policy so long as such a waiver of subrogation is
available and can be obtained without unreasonable additional cost.
7.4 INDEMNIFICATION OF LANDLORD.
7.4.1 LIMITATION OF LANDLORD'S LIABILITY. Except as
otherwise expressly provided in this Lease or the DDA (including, without
limitation, Landlord's indemnity obligations under Sections 4.5.3 and 7.5
hereof), Landlord shall not be liable to Tenant, and Tenant hereby waives all
Claims against Landlord for any loss, injury or other damage to person or
property in or about the Project from any cause whatsoever, including,
without limitation, water leakage of any character from the
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roof, walls, basement or other portion of the Property, the Leasehold
Improvements or the Project, or gas, fire, explosion or other electricity
within the Property, the Leasehold Improvements or the Project.
7.4.2 TENANT'S INDEMNITY.
7.4.2.1 SCOPE OF TENANT'S INDEMNITY. Subject to
the limitations contained in Section 7.4.2.1 below, Tenant shall defend with
competent counsel, indemnify, protect and hold harmless Landlord and each of
the Landlord Indemnitees from any and all demands, suits, governmental
orders, writs, injunctions, claims, actions, proceedings, causes of action,
liabilities, obligations, losses, damages, costs or expenses, including
reasonable attorneys' fees and costs incurred in defending against the same
(collectively, "Claims"), to the extent arising from:
(i) The negligent act or omission or
willful misconduct of Tenant or Tenant's Agents (a) in or on the Property or
the Leasehold Improvements at any time during the Lease Term or (b) on or
about the Permanente Creek Trail or the Park Site (as defined in the DDA)
after acceptance of the Tenant's Off-Site Improvements; or
(ii) Any construction or other work
undertaken by Tenant on the Project, whether prior to or during the Lease
Term; or
(iii) Any Event of Default under this
Lease by Tenant; or
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(iv) Any accident, injury or damage,
howsoever and by whomsoever caused, to any person or property, occurring on
the Property or in the Leasehold Improvements during the Lease Term; or
(v) Tenant's violation of Law.
7.4.2.2 LIMITATIONS ON TENANT'S INDEMNITY.
Notwithstanding anything to the contrary in this Section 7.4.2, in no event
shall Tenant have any obligation under this Section 7.4.2 to indemnify,
defend or hold harmless Landlord or any other Landlord Indemnitee from any
Claim, nor to waive any Claim which Tenant may have against Landlord or
another Landlord Indemnitee, to the extent the Claim arises from:
(i) The negligent act or omission or
willful misconduct of Landlord or Landlord's Agents in or on the Project
during the Lease Term;
(ii) A breach of the obligations of
Landlord set forth in this Lease;
(iii) Landlord's violation of Law;
(iv) The ownership, use or operation of
the Tenant's Off-Site Improvements after acceptance of the Tenant's Off-Site
Improvements by Landlord, Landlord's governmental subdivisions, their
respective Agents or the general public and, except as provided in Section
8.6 of the DDA, any design or construction defects in the Tenant's Off-Site
Improvements;
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(v) Bodily injury, property damage or
personal injury suffered or caused by the use by the general public (other
than Tenant's Agents, invitees, customers, and guests) of those portions of
the Leasehold Improvements on the Property made available pursuant to Section
8.7 of the DDA for the use of the general public, except to the extent that
such bodily injury or property damage could have been prevented by reasonable
safety and security precautions commonly undertaken by owners of comparable
projects in Santa ▇▇▇▇▇ County, California, and such precautions were not
undertaken by Tenant; and
(vi) Any Environmental Claim,
Environmental Construction Activity, Contamination, Hazardous Materials
Activity or Hazardous Materials Law (which shall be governed solely by the
provisions of Section 4.5 above);
The foregoing indemnities are intended to be "occurrence-based"
indemnities rather than "claims-made" indemnities. Accordingly, the
provisions of this section shall survive the expiration or earlier
termination of this Lease to the extent that the injury or damage giving rise
to the Claim occurs prior to such expiration or termination.
7.5 LANDLORD'S INDEMNITY.
7.5.1 SCOPE OF LANDLORD'S INDEMNITY. Subject to the
limitations contained in Section 7.5.2, Landlord shall defend with competent
counsel,
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indemnify, protect and hold harmless Tenant and each Tenant Indemnitee from
any and all Claims to the extent arising from:
(i) The negligent act or omission or willful
misconduct of Landlord, a governmental unit thereof, or any of their Agents
in or on the Project during the Lease Term;
(ii) A breach of the obligations of Landlord set
forth in this Lease; and
(iii) Landlord's violation of Law.
(iv) The ownership, use or operation of the
Tenant's Off-Site Improvements after acceptance of the Tenant's Off-Site
Improvements by Landlord, Landlord's governmental subdivisions, their
respective Agents or the general public and, except as provided in Section
8.6 of the DDA, any design or construction defects in the Tenant's Off-Site
Improvements;
(v) Bodily injury, property damage or personal
injury suffered or caused by the use by the general public (other than
Tenant's Agents, invitees, customers, and guests) of those portions of the
Leasehold Improvements on the Property made available pursuant to Section 8.7
of the DDA for the use of the general public, except to the extent that such
bodily injury or property damage could have been prevented by reasonable
safety and security precautions commonly undertaken by owners of comparable
projects in Santa ▇▇▇▇▇ County, California, and such precautions were not
undertaken by Tenant.
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7.5.2 LIMITATIONS ON LANDLORD'S INDEMNITY. Notwithstanding
anything to the contrary in this Section 7.5, in no event shall Landlord have
any obligation under this Section 7.5 to indemnify, defend or hold harmless
Tenant or any other Tenant Indemnitee from any Claim, nor to waive any Claim
which Landlord may have against Tenant or another Tenant Indemnitee, to the
extent the Claim arises from:
(i) The negligent act or omission or willful
misconduct of Tenant or Tenant's Agents (a) in or on the Property or the
Leasehold Improvements at any time during the Lease Term or (b) on or about
the Permanente Creek Trail or the Park Site (as defined in the DDA) after
acceptance of the Tenant's Off-Site Improvements; or
(ii) Any Event of Default under this Lease by
Tenant;
(iii) Any Environmental Claim, Environmental
Construction Activity, Contamination, Hazardous Materials Activity or
Hazardous Materials Law (which shall be governed solely by the provisions of
Section 4.5 above); or
(iv) Tenant's violation of Law.
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ARTICLE 8
MAINTENANCE, REPAIR AND RESTORATION OF DAMAGE
8.1 TENANT'S DUTY TO MAINTAIN AND REPAIR. Subject to this Article
8, Article 9, Section 4.5, and Section 7.5 hereof, during the Lease Term,
Tenant, at its sole cost and expense, shall keep and maintain the Leasehold
Improvements, and every part thereof, including, without limitation, any
appurtenances and fixtures, the structural elements of the Buildings, all
parking structures and facilities, the roofs, walls, plumbing, heating,
ventilation, air conditioning, plazas, and landscaping on the Property, in
such condition as may be required by Law. Other than Landlord's
environmental obligations set forth in Article 4 hereof, Landlord shall have
no maintenance responsibility whatsoever in connection with the Property, the
Leasehold Improvements or Trade Fixtures.
Notwithstanding the preceding to the contrary, in the event of an
assignment of Tenant's Estate to any party other than an assignee (or any
guarantor thereof) meeting the financial criteria set forth in Section 11.1.2
below, an assignee in an Affiliate Transaction, a Tenant Mortgagee or any
successor or assign of such Tenant Mortgagee in the Tenant Mortgage, Tenant
shall deliver the Leasehold Improvements to such assignee in good, clean and
sanitary condition, excepting ordinary wear and tear, damage or destruction
which Tenant is not required to restore pursuant to this Article 8,
condemnation which Tenant is not required to restore pursuant to Article 9,
and Contamination (other than Tenant's Contamination).
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Nothing herein shall prohibit Tenant from otherwise redeveloping the
Property in the future, including the demolition of existing Leasehold
Improvements and reconstruction of new Leasehold Improvements, provided that
such redevelopment is performed in accordance with Article 6 above.
8.2 CASUALTIES.
8.2.1 TENANT'S DUTY TO RESTORE. Subject to Section 8.2.2,
below, if any Leasehold Improvements are damaged by fire, other peril or any
other cause during the initial fifty-five (55) years of the Lease Term, then
Tenant, at its sole cost and expense, shall, within four (4) years after the
date of casualty (subject to force majeure delays described in Section 14.18,
below), restore the Leasehold Improvements in compliance with and to the
extent permitted by all then applicable Laws, and this Lease shall remain in
full force and effect, without abatement of Monthly Rent or other charges.
All insurance proceeds payable as a result of such casualty shall be applied
in the following order of priority:
A. First, as provided by any Tenant Mortgage, to
the satisfaction and payment of the Tenant Mortgagee;
B. Second, to Tenant for the payment of all costs
and expenses to complete the restoration of the Leasehold Improvements
required of Tenant pursuant to this subsection; and
C. Third, the remainder of insurance proceeds, if
any, shall be paid to Tenant.
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The proceeds paid to Tenant pursuant to Subsection (B) above shall
be deemed to be held in trust for the benefit of Landlord and Tenant by the
recipient for the purpose of restoration of the Leasehold Improvements.
8.2.2 TENANT'S TERMINATION RIGHTS. Notwithstanding
anything to the contrary in this Lease:
8.2.2.1 ELECTION NOT TO RECONSTRUCT. If an
Uninsurable Loss in excess of the Restoration Amount or any Late Term
Extensive Damage occurs, then Tenant, by delivery of written notice to
Landlord within six (6) months after the occurrence of the damage, may elect
not to reconstruct the Leasehold Improvements, in which case Tenant, at its
sole cost, shall (i) demolish the damaged Leasehold Improvements; (ii) remove
all debris from the Property; (iii) erect necessary structures to preclude
unauthorized access to the Property and otherwise remove all safety hazards
from the Property; (iv) clear the Property of the damaged Leasehold
Improvements and return that portion of the Property to a level grade, to the
extent reasonably practicable; and (v) maintain such Leasehold Improvements
on the Property which are not damaged in the condition required by this
Lease. Following such election, this Lease shall continue to remain in full
force and effect, without abatement of Monthly Rent or other charges.
Tenant's failure to make an election in writing within six (6) months after
the date of the occurrence of the damage shall constitute Tenant's
affirmative election to restore the damaged Leasehold Improvements pursuant
to Section 8.2.1, above. All insurance proceeds payable as a result of such
casualty with regard to Late Term Extensive Damage
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which Tenant elects not to reconstruct as provided hereinabove shall be applied
in the following order of priority:
A. First, as provided in any Tenant
Mortgage, to the satisfaction and payment of the Tenant Mortgagee;
B. Second, to Tenant for the payment of
all costs and expenses to complete the demolitions and/or restorations
required of Tenant pursuant to this subsection; and
C. Third, the remainder of insurance
proceeds, if any, shall be paid to Landlord and Tenant as their interest may
appear; provided, however, that the portion of such proceeds otherwise
payable to Tenant under this Subsection (C) shall be reduced by the amount
paid to Tenant Mortgagee pursuant to Subsection (A) above.
The proceeds paid to Tenant pursuant to Subsection (B), above, shall
be deemed to be held in trust for the purposes and uses described therein.
Notwithstanding the foregoing, Tenant shall be responsible for
repairing any injury or damage to Leasehold Improvements caused by an
Uninsurable Loss if the Uninsurable Loss is less than the Restoration Amount.
8.2.2.2 INFEASIBILITY. Notwithstanding Section
8.2.1, if reconstruction of the Leasehold Improvements following any casualty
is physically infeasible because of physical conditions of the Property, or
if the City or any other
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Governmental Authority cannot legally grant the permits and approvals for
repair or restoration of the Leasehold Improvements so that the total Floor
Area of all Buildings after the restoration will be at least two hundred fifty
thousand (250,000) square feet, then Tenant may terminate this Lease as of the
date set forth in its written notice to Landlord so stating. If the City or
any Government Authority can legally grant permits and approvals for repair and
restoration of the Leasehold Improvements so that the total Floor Area of all
Buildings will be greater than two hundred fifty thousand (250,000) but less
than five hundred thousand (500,000) square feet, the Monthly Rent shall
thereafter be proportionately reduced in the same manner as described under
Section 1.3.2. If Tenant elects to terminate this Lease pursuant to this
section, Tenant, at its sole cost, shall (i) demolish the damaged Leasehold
Improvements; (ii) remove all debris from the Property; (iii) erect necessary
structures to preclude unauthorized access to the Property and otherwise remove
all safety hazards from the Property; and (iv) clear the Property of the
damaged improvements and return that portion of the Property to a level grade.
Upon the termination date set forth in Tenant's written notice to Landlord of
its election to terminate: (i) all Monthly Rent and other sums due pursuant to
this Lease shall be prorated as of the date of termination and paid by Tenant;
(ii) this Lease shall expire and terminate; (iii) neither Landlord nor Tenant
shall have any further obligations hereunder except for those obligations which
are intended to survive termination of this Lease; and (iv) Guarantor shall be
released from all obligations under the Guaranty, except for those obligations
which have accrued prior to the date of termination or which are intended to
survive termination of the Lease. All insurance proceeds payable as a result
of such damage and Tenant's election to terminate shall be applied in the
following order of priority:
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A. First, as provided in any Tenant
Mortgage, to the satisfaction and payment of the Tenant Mortgagee;
B. Second, to the payment of all expenses
incurred by Tenant in completing the demolition and/or restoration required
of Tenant pursuant to this Subsection; and
C. Third, the remainder of insurance
proceeds, if any, shall be paid to Landlord and Tenant, as their interests
may appear; provided, however, that the portion of such proceeds otherwise
payable to Tenant under this Subsection (C) shall be reduced by the amount
paid to a Tenant Mortgagee pursuant to Subsection (A) above.
8.2.3 GENERAL PROVISIONS. Landlord shall not be required
to repair any injury or damage to the Leasehold Improvements or the Property,
except to the extent of Landlord's obligations in Article 4 hereof. Landlord
and Tenant hereby waive the provisions of (i) Sections 1932(2) and 1933(4) of
the Civil Code of California and any other provisions of Law from time to
time in effect during the term of this Lease and relating to the effect on
leases of partial or total destruction of leased premises; and (ii) Sections
1941 and 1942 of the Civil Code, providing for repairs to and of premises.
Landlord and Tenant agree that their respective rights upon any damage or
destruction of the Leasehold Improvements and the Property shall be those
specifically set forth in this Article 8.
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ARTICLE 9
CONDEMNATION
9.1 DEFINITIONS. As used in this Article 9, the following terms
shall have the following meanings:
9.1.1 CONDEMNATION shall mean (i) any permanent taking by
the exercise of the power of eminent domain, whether by legal proceedings or
otherwise, by any person or entity having the legal power to do so; (ii) a
voluntary sale or transfer by Landlord to any condemnor, either under threat
of condemnation or while legal proceedings for condemnation are pending; or
(iii) any permanent taking by inverse condemnation.
9.1.2 TOTAL TAKING shall mean a Condemnation of (i) all or
substantially all of the Leasehold Improvements and/or the Property; or (ii)
any portion of the Leasehold Improvements and/or the Property which leaves
remaining a balance which, in Tenant's reasonable judgment, even after a
reasonable amount of reconstruction, may not be restored so as to permit the
balance to be economically operated for Tenant's intended purpose or which
materially reduces Tenant's actual occupancy of the Leasehold Improvements
(by reduction of parking or otherwise) so that it cannot be economically
operated for Tenant's intended purpose.
9.1.3 PARTIAL TAKING shall mean a Condemnation of a portion
of the Leasehold Improvements and/or the Property which does not constitute a
"Total Taking."
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9.1.4 DATE OF TAKING shall mean the date that the condemnor
takes possession of the property being condemned; and
9.1.5 AWARD shall mean the net amount of all compensation,
sums or anything of value awarded, paid or received on or because of a Total
Taking, a Partial Taking, or a temporary Condemnation, after deduction of
attorneys' fees and court costs awarded to Landlord and/or Tenant in the
Condemnation proceeding.
9.2 TOTAL TAKING. If, during the Lease Term, there occurs a Total
Taking, this Lease shall terminate on the Date of Taking, and all obligations
hereunder shall be prorated to that date.
9.3 PARTIAL TAKING. If, during the Lease Term, there occurs a
Partial Taking, the following shall apply:
A. This Lease shall terminate as to the portion so taken
and shall remain in full force and effect as to the portion remaining.
B. Effective as of the Date of Taking, the Monthly Rent
shall be equitably reduced based upon the reduced fair market value of the
Property as a consequence of the Taking (and the Initial Monthly Rent used in
the formula for calculating adjustments to Monthly Rent as set forth in
Section 3.1.3.1 and 3.1.3.2 shall be equitably reduced), as determined by the
mutual agreement of the parties, or if they cannot agree within sixty (60)
days following the Date of the Taking, then by arbitration pursuant to
Section 14.7 hereof.
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C. Tenant shall, at its sole cost and with reasonable
diligence, to the extent reasonably practicable, commence and complete the
restoration of the portion of any affected Leasehold Improvements and the
Property not taken to a condition which is economically viable,
architecturally complete and suitable for the uses being made of the
Leasehold Improvements and the Property immediately prior to the Date of
Taking, in accordance with the terms of Article 6 of this Lease.
9.4 TEMPORARY TAKING. If there occurs a Temporary Taking of all or
any part of the Leasehold Improvements or the Property during the Lease Term
(i) this Lease shall not be affected in any way; (ii) Tenant shall continue
to pay and perform all of its obligations hereunder; and (iii) any Award made
as a result of said Temporary Taking shall be paid solely to Tenant.
9.5 APPORTIONMENT OF AWARD. Any Award made as a result of a Total
Taking shall be deposited, in trust, with Landlord, and any Award made as a
result of a Partial Taking shall be deposited in trust with Tenant, and shall
be paid as follows:
A. First, as provided in a Tenant Mortgage, to the
satisfaction and payment of the Tenant Mortgage, to the extent of the value
of Tenant's Estate in the Property and in the Leasehold Improvements so taken;
B. Second, in the event of a Partial Taking, Tenant shall
receive any portion of the Award payable for restoration of the remaining
Leasehold Improvements not taken or, in the event of a Total Taking, Landlord
shall receive any portion of the Award payable for restoration of any
remaining Leasehold Improvements not taken;
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C. The remainder, if any, shall be paid to Landlord and
Tenant, as their interests may appear for the taking of Landlord's Estate and
Tenant's Estate, respectively; provided, however, that for the purpose of
this subject, the value of Tenant's Estate shall be reduced by any amount
paid to a Tenant Mortgagee pursuant to Subsection (A) above.
Tenant shall receive any Award payable for (i) a taking of Tenant's
Trade Fixtures and other personal property, Tenant's relocation costs and/or
Tenant's loss of goodwill, and (ii) with respect to a Partial Taking, any
severance damages attributable to the impairment of Tenant's use of the
remaining portion of the Property and Leasehold Improvements during the
remaining Lease Term.
9.6 GENERAL. Each party hereto shall be responsible for
representing its own interest (at its own cost) in any proceeding or
negotiation regarding any Condemnation or any Award, and shall cooperate to
maximize the total amount of the Award. Issues between Landlord and Tenant
which must be resolved to implement the provisions of this Article shall be
joined in any pending Condemnation proceeding, to the extent permissible under
then applicable Law, to the end that multiplicity of actions shall be avoided.
Any dispute between Landlord and Tenant arising under this Article which is not
so joined in a Condemnation proceeding shall be determined by arbitration
pursuant to Section 14.7 hereof.
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ARTICLE 10
DEFAULT AND REMEDIES
10.1 EVENTS OF TENANT'S DEFAULT. An "Event of Default" by Tenant
shall occur if:
10.1.1 MONETARY DEFAULT. Tenant shall fail to pay the
Monthly Rent or any other monetary sum owing to Landlord or any other party
(including without limitation, the payment of Real Property Taxes) under the
terms of this Lease on or before the tenth (10th) day after receipt of
written notice from Landlord that such obligation is due and unpaid; or
10.1.2 NONMONETARY DEFAULT. Tenant shall fail to perform
any term, covenant or condition of this Lease to be performed by Tenant,
except those requiring the payment of money, and Tenant shall have failed to
cure the same on or before the thirtieth (30th) day after written notice from
Landlord, delivered in accordance with the provisions of this Lease, where
such failure could reasonably be cured within said thirty (30) day period or
shall fail to commence to cure any such failure which could not reasonably be
cured within said thirty (30) day period on or before the thirtieth (30th)
day after written notice of the default or to thereafter continue to make
diligent and reasonable efforts to cure such failure as soon as practicable.
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10.2 LANDLORD'S REMEDIES. Subject to the provisions of Article 13
hereof regarding Tenant Mortgages, upon an Event of Default, Landlord shall
have all of the following remedies:
10.2.1 TERMINATION OF LEASE. Landlord, at its election,
may terminate this Lease and be entitled to the remedies described below.
Landlord shall effect the termination of this Lease by delivery of written
notice to Tenant, which notice shall be delivered to Tenant in the manner
described in Section 14.4, below. Termination of this Lease shall be
effective as of the later of (a) the date set forth in Landlord's notice
which date shall not be earlier than ninety (90) days after the date of the
notice or, (b) such longer period (not to exceed one hundred eighty (180)
days) after delivery of Landlord's termination notice to Tenant as may be
necessary for Tenant to complete its surrender of the Property and the
Leasehold Improvements, if Tenant pays to Landlord the Monthly Rent for each
month of the extended surrender period and during such period pays any and
all other rent, charges and amounts, and complies with all other covenants
and obligations of Tenant under this Lease (but during such surrender period
Tenant shall not be liable for holdover rent pursuant to Section 14.3 below)
as provided in Section 2.5 above. Upon termination of this Lease by Landlord
under and in accordance with the provisions of this Section 10.2.1, Landlord
shall be entitled to recover from Tenant the following:
A. The worth, at the time of the award, of the
unpaid rent that had been earned at the time of termination of this Lease;
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B. The worth, at the time of the award, of the
amount by which the unpaid rent which would have been earned after the date
of termination of this Lease until the time of award exceeds the amount of
the loss of rent that Tenant proves could have been reasonably avoided. In
no event, however, shall the amount described in this subparagraph (B)
include any damages which are not recognized under California landlord/tenant
law as recoverable damages on account of Tenant's default.
C. The worth, at the time of the award, of the
amount by which the unpaid rent for the balance of the term of this Lease
after the time of award exceeds the amount of the loss of rent that Tenant
proves could have been reasonably avoided; and
D. Any other amount, including court costs,
necessary to compensate Landlord for all detriment proximately caused by
Tenant's default, or which in the ordinary course of events would be likely
to result therefrom, including, without limitation, brokerage fees,
advertising costs and other costs reasonably necessary to relet the Property
and relet or demolish the Leasehold Improvements, operating and maintenance
costs for the Property and the Leasehold Improvements and such other costs
recoverable by Landlord under California Civil Code Section 1951.2 which are
proximately caused by the Event of Default and termination of this Lease. In
no event, however, shall the amount described in this subparagraph (D)
include (i) any lost profits or revenue or loss of reputation; (ii) so long
as City is Landlord, any loss of real property taxes and assessments, use
taxes and/or sales taxes, which result or are likely to result from the
termination of this Lease; and (iii) any of the aforesaid damages under this
subparagraph (D) (a) which
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will be incurred more than five (5) years after the termination of this Lease
and Tenant's surrender of the Property and the legal vesting of title to the
Leasehold Improvements in Landlord free and clear of this Lease, (b) which will
be incurred after more than seventy-five percent (75%) of the Floor Area of the
Buildings have been relet or reoccupied following surrender of the Buildings by
Tenant, or (c) which are not recognized under California landlord/tenant law as
recoverable damages under this subparagraph (D) on account of Tenant's default,
because of rents received by Landlord as a consequence of the surrender of the
Leasehold Improvements to Landlord, Landlord's failure to mitigate damages or
otherwise.
The worth, at the time of the award, as used in Subparts (A) and
(B), above, shall include interest at the Lease Rate. The worth, at the time
of award, as referred to in Subpart (C) above, shall be computed by
discounting such amount at the discount rate as set forth in California Civil
Code Section 1951.2, or, if no provision for discounting is then set forth
therein, at the discount rate of the Federal Reserve Bank of San Francisco at
the time of the award plus one percent (1%).
Notwithstanding the foregoing, the amount of any damages payable by
Tenant to Landlord pursuant to Section 10.2.1 (C) shall be further reduced
(but not below zero) by the amount, if any, by which the fair market value of
the Leasehold Improvements exceeds any deductions for the benefit of Tenant
pursuant to Subpart 10.2.1(C), above. For purposes of the preceding
sentence, the "value" of the Leasehold Improvements shall be determined as of
the date of the termination of this Lease on account of an Event of Default
equal to (i) the price at which a willing buyer and a willing seller would
agree to a sale of a fee interest in the Property and
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Leasehold Improvements, as if unencumbered by this Lease; less (ii) the Fair
Market Value of the Property, as if unimproved and unencumbered by this Lease.
10.2.2 LANDLORD'S ELECTION TO CONTINUE LEASE. Even though
Tenant has breached this Lease, this Lease shall remain in full force and
effect for so long as Landlord does not terminate this Lease on account of an
Event of Default in accordance with applicable Law and this Lease by delivery
of written notice of termination to Tenant, Landlord may enforce all of its
rights and remedies hereunder, including, without limitation, the right to
recover the rent as it becomes due. Tenant acknowledges that in the event
Landlord should elect to continue this Lease after an Event of Default,
Tenant has the obligation to mitigate its damages and obtain a sublessee or
assignee subject to the terms and conditions of Section 11, below. The
parties hereto agree that Landlord has the remedy described in California
Civil Code Section 1951.4 (Landlord may continue this Lease in effect after
Tenant's default and recover rent as it becomes due, if Tenant has the right
to sublet or assign, subject to the limitations set forth in Section 11,
below). The parties further agree that no election by Landlord to continue
this Lease in accordance with this Section shall diminish in any way the
Landlord's right to later terminate this Lease on account of an continuing
Event of Default as permitted by, and in accordance with, Section 10.2.1,
above, or to pursue any other remedy. In this regard, without written notice
of termination, this Lease shall not be terminated by Landlord' s acts of
maintenance or preservation of the Property or the Leasehold Improvements, or
by Landlord's efforts to relet any of the foregoing, or by Landlord's acts to
have a receiver appointed pursuant to Section 10.2.3, below. The failure or
refusal of Landlord to relet the Property, the Leasehold Improvements or any
part thereof shall not release or affect Tenant's liability hereunder.
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10.2.3 APPOINTMENT OF RECEIVER. In addition to all other
remedies provided herein, if an Event of Default is continuing, Landlord
shall have the absolute right to have a receiver appointed to collect Monthly
Rental and any rentals payable by any subtenant to Tenant with respect to the
Property and the Leasehold Improvements. Neither the filing of a petition
for the appointment of a receiver nor the appointment itself shall constitute
an election by Landlord to terminate this Lease.
10.2.4 CURE OF DEFAULT BY LANDLORD. Landlord, at any time
during an Event of Default, may cure the default at Tenant's cost. Landlord
shall provide Tenant with ten (10) days' advance written notice prior to
entering the Property and/or Leasehold Improvements or expending any sums on
Tenant's account, except in cases of emergency. If Landlord, by reason of an
Event of Default, pays any sum or does any act that requires the payment of
any sum, the reasonable sum paid by Landlord shall be due immediately from
Tenant upon Landlord's written demand therefor and shall bear interest at the
Lease Rate from the date the sum is paid by Landlord to the date Landlord is
reimbursed.
10.3 NO WAIVER. The waiver by Landlord of any agreement, condition
or provision in this Lease shall not be a waiver of any subsequent breach of
the same or any other agreement, condition, covenant or provision, nor shall
any custom or practice which may develop between the parties in the
administration of the terms of this Lease be construed to waive or to lessen
the right of Landlord to insist upon the performance by Tenant in strict
accordance with all such terms. The subsequent acceptance of rental under
this Lease by Landlord shall not be a waiver of any
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preceding breach by Tenant of any agreement, condition, covenant or provision
of this Lease, other than the failure of Tenant to pay the particular rental so
accepted, regardless of Landlord's knowledge of such preceding breach at the
time of acceptance of such rental.
10.4 REMEDIES CUMULATIVE. The remedies conferred by this Lease
upon Landlord are not intended to be exclusive, but are cumulative and in
addition to all other remedies provided at law or in equity.
10.5 LANDLORD'S DEFAULT. Landlord shall not be in default under
this Lease unless Landlord fails to perform obligations required of Landlord
within a reasonable time, but in no event later than thirty (30) days after
written notice by Tenant to Landlord specifying wherein Landlord has failed
to perform such obligation; provided, however, that if the nature of
Landlord's obligation is such that more than thirty (30) days are required
for performance, then Landlord shall not be in default if Landlord commences
performance within such thirty (30) day period and thereafter diligently
prosecutes the same to completion.
10.6 TENANT'S REMEDIES. Exclusive of environmental obligations, if
Landlord is in default for failure to perform any of its obligations required
under this Lease, then Tenant shall have the right, after thirty (30) days'
written notice to Landlord of its intent to do so, to perform any obligation
of Landlord and to obtain immediate reimbursement of all reasonable costs of
performing such obligation plus interest at the Lease Rate from the date any
sum is expended until Landlord reimburses Tenant. The remedies conferred by
this Lease upon Tenant are not intended to be exclusive, but are cumulative
and in addition to all other remedies provided at law
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or in equity, except for those remedies expressly prohibited by this Lease,
including, without limitation, the prohibition of the remedy of offset set
forth in Section 3.2.
ARTICLE 11
ASSIGNMENT AND SUBLETTING
11.1 ASSIGNMENT BY TENANT. Tenant shall have the following rights
to assign or otherwise transfer Tenant's Estate:
11.1.1 ASSIGNMENT TO VIRTUAL FUNDING, INC. Tenant shall
have the right to assign, sublease or otherwise transfer Tenant's Estate to
Virtual Funding Limited Partnership, a Delaware limited partnership, at any
time after the Effective Date, and Landlord hereby consents to such
assignment, sublease or other transfer, provided neither Tenant nor Guarantor
shall be released from their respective obligations under this Lease and the
Guaranty.
11.1.2 AUTOMATIC ASSIGNMENT RIGHT. After completion of the
Initial Project, Tenant shall have the right to assign all of Tenant's
Estate, in whole, as to the entirety of the Property or in part, but only in
part as to the entirety of Tenant's Estate in any Parcel Lease created
pursuant to Section 2.2, above (but not as to any part of any legal Parcel
nor as to any part of any Building), without the consent of Landlord, whether
by written assignment or operation of law, and upon assumption in writing of
each and every term, condition and obligation of this Lease by the assignee,
thereby be released and discharged from (and the Guarantor likewise released
and discharged from) all liability for the performance of the obligations of
the Tenant under this Lease to be performed from and after the effective date
of
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such Assignment which are assumed by the assignee (other than its obligations
under those Lease provisions which are intended to survive a termination of
this Lease and which have been incurred prior to the date of the Assignment);
so long as each and every one of the following conditions is satisfied as of
the date of the Assignment:
A. Tenant provides Landlord with at least fifteen
(15) days' prior written notice of the identity of the assignee the form of
the documentation that will be used to satisfy Section 11.1.5 and all items
required under Section 11.1.2(B).
B. Tenant provides Landlord with the proposed
assignee's financial statements for its two (2) most recent fiscal year(s),
the most recent of which will either be audited by a certified public
accountant or certified as true and correct by an officer or general partner
of the proposed assignee, showing each of the following:
(i) The ratio of the proposed assignee's
cash, cash equivalents, and accounts receivable to current liabilities is not
less than 0.75 to 1; and
(ii) The ratio of the proposed assignee's
debt to net worth is no greater than 2 to 1; and
(iii) The proposed assignee's average net
profit over each of the preceding two (2) fiscal years (excluding
extraordinary income and expense) is
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no less than sixty (60) times the Monthly Rent payable for the Lease Month
during which the Assignment occurs; and
(iv) The proposed assignee's net worth is
not less than three hundred (300) times the Monthly Rent payable for the
Lease Month during which the Assignment occurs.
(v) Upon Tenant's request and within
fifteen (15) days after Landlord's receipt of the materials required to be
delivered to Landlord in this Section 11.1.2 and payment of the amounts
payable to Landlord under Section 11.1.4, Landlord shall acknowledge in
writing that a proposed assignment meeting the criteria set forth above is
permitted under this Section 11.1.2 and , if so permitted, that the same is
not a breach of this Lease and that Landlord's consent to the proposed
assignment is not required. Any permitted assignee shall further assign this
Lease only in compliance with the provisions of this Article 11.
11.1.3 LANDLORD'S RIGHT OF APPROVAL. Subject to Sections
11.1.1, 11.1.2, 11.2, 11.3 and Article 13, after completion of the Initial
Project, neither the Tenant's Estate nor any part thereof or interest therein
shall, directly or indirectly, voluntarily or involuntarily, by operation of
Law or otherwise, be assigned, mortgaged, pledged, encumbered or otherwise
transferred by Tenant or Tenant's legal representatives or successors in
interest (collectively, an "Assignment") except upon Landlord's prior written
consent, which consent shall not be unreasonably withheld or delayed.
Assignments shall be limited to the entire Tenant's Estate, or if the Lease
is parcelized pursuant to Section 2.2, the entire Tenant's Estate in a Parcel
Lease created pursuant to Section 2.2, above, and no Assignment may encompass
a portion of a
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Parcel or a portion of a Building. Any Assignment requiring Landlord's consent
undertaken without Landlord's prior written consent shall, at Landlord's
option, be void and unenforceable.
In determining whether to approve a proposed Assignment under this
Section 11.1.3, Landlord shall place its sole decision-making criteria on the
creditworthiness of the proposed assignee, and such decision shall be made in
good faith and in Landlord's reasonable business judgment. Upon request by
the assignor Tenant and/or Guarantor, Landlord shall also determine whether
or not it is appropriate for Landlord to release the assignor Tenant and/or
Guarantor, as may be requested, in connection with the obligations under this
Lease to be performed after the Assignment by the proposed assignee.
Landlord's determination to release Tenant and/or the Guarantor shall not be
unreasonably withheld and shall be based solely on the financial security for
performance of all obligations under this Lease. Landlord shall not be
deemed to have acted unreasonably for declining to release the Tenant and/or
the Guarantor, if the proposed assignee's creditworthiness (when taken
together with any new guarantor of the new assignee Tenant's obligations)
under this Lease is not sufficient to perform the Tenant's obligations under
this Lease, including, without limitation, the payment of Rent and the
performance of Tenant's Environmental Indemnity Obligations under this Lease.
The consent by Landlord to an Assignment shall not relieve the
assignor Tenant or any assignee Tenant from obtaining Landlord's express
prior written consent to any other or further Assignment, which consent shall
not be unreasonably withheld or delayed. Neither an Assignment nor the
collection of rent by Landlord from any person other than Tenant, nor the
application of any
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such rent as provided in this Section shall be deemed a waiver of any of the
provisions of this Section or release Tenant from its obligation to comply with
the provisions of this Lease.
Notwithstanding the foregoing, if Landlord approves an Assignment,
and if the assignee either: (i) pays to Tenant all cash consideration for
the Assignment; or (ii) obtains third-party financing in order to pay all
cash for the Assignment; or (iii) obtains financing from any lender of
Silicon Graphics Real Estate, Inc. (in an arm's-length market transaction) to
pay all cash for the Assignment, then Landlord shall release Tenant and
Guarantor from liability for performance of the obligations of the Tenant
under this Lease to be performed from and after the effective date of such
Assignment by the assignee (other than the obligations under this Lease which
are to survive a termination of this Lease and which have been incurred prior
to the date of the Assignment).
In order to obtain Landlord's decision regarding a proposed
Assignment under this Section 11.1.3, Tenant shall submit to Landlord the
proposed assignee's financial statements, either audited by a public
accountant or certified as true and correct by an officer or general partner
of the proposed assignee, for its most recent fiscal year. Landlord shall
have forty-five (45) days after the date of Tenant's submittal to Landlord of
such financial statements and payment of these sums due Landlord under
Section 11.1.4 to approve or disapprove, in writing, the proposed Assignment,
and if requested, the proposed release of the assignor Tenant and/or
Guarantor. If Landlord's decision is not received by Tenant within said
forty-five (45) day period, Landlord shall be deemed to have disapproved such
Assignment and to have refused to release the assignor Tenant and the
Guarantor. Immediately
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following approval of the proposed Assignment and Landlord's receipt of the
documentation to be delivered to Landlord pursuant to Section 11.1.5, below,
Landlord shall execute, acknowledge and deliver to Tenant, Landlord's written
consent to said Assignment and the release of the assignor Tenant and/or the
Guarantor, as appropriate, in such form as may be reasonably requested by the
parties.
11.1.4 PROCESSING COSTS. Tenant shall pay to Landlord the
amount of Landlord's reasonable costs of processing each proposed Assignment,
including, without limitation, attorneys' fees and other professional fees as
reasonably required, and the amount of all reasonable expenses incurred by
Landlord arising from the assignee taking occupancy of the subject space
(collectively, "Processing Costs"). Notwithstanding anything to the contrary
herein, Landlord shall not be required to process any request for Landlord's
consent to an Assignment until Tenant has paid to Landlord the amount of
Landlord's reasonable estimate of the Processing Costs. Once Landlord's
final Processing Costs have been determined, Landlord shall provide Tenant
with written itemization of such costs, and if an additional sum is required
to be paid by Tenant, or if Landlord is required to reimburse the excess over
such costs to Tenant, such sums will be paid or reimbursed, respectively,
within ten (10) days after receipt by Tenant of Landlord's written
itemization. In the case of an automatic assignment pursuant to Section
11.1.2, the Processing Cost shall be paid within five (5) days following
delivery of Landlord's written demand therefore.
11.1.5 DOCUMENTATION. No permitted Assignment shall be
effective unless and until there has been delivered to Landlord a counterpart
of the
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Assignment in which the assignee Tenant shall have, by written agreement,
agreed to: (1) recognize Landlord under this Lease; (2) assume the obligation
of the Tenant imposed by this Lease to be performed after the date of the
Assignment; and (3) be bound by the terms of this Lease. Tenant agrees that
any instrument that is an Assignment of all or any portion of this Lease shall
expressly provide that the assignee may only enter into a further Assignment of
this Lease pursuant to the provisions hereof, and that the assignee will comply
with all of the provisions of this Lease and that Landlord may enforce the
Lease provisions assumed by the assignee directly against such assignee.
11.2 SUBLETTING BY TENANT. Without the necessity of obtaining
Landlord's consent thereto, Tenant may sublease the Tenant's Estate or any
portion thereof at any time during the Lease Term for use by any subtenant.
All such subleases shall be subordinate to this Lease, and all subtenants
must agree to abide by all of the terms and covenants of this Lease except
for the payment of rent. Within fifteen (15) days after Tenant's request,
Landlord shall state in writing that a sublease pursuant to this section is
not a breach of this Lease, and that Landlord's consent is not required for
such sublease.
In the event that this Lease is terminated prior to the natural
expiration of the Lease Term, all of the subleases shall, at Landlord's
option, automatically terminate, and be null and void. Notwithstanding the
foregoing, Landlord shall, promptly following Tenant's request, enter into a
nondisturbance, recognition and attornment agreement ("Nondisturbance
Agreement") in recordable form with any subtenant of Tenant leasing space in
the Leasehold Improvements, provided that the sublease provides that (i) rent
substantially equivalent to fair market rent for the
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subleased premises; (ii) the sublease is subject to the provisions of this
Lease; (iii) the only consideration for possession of the subleased Leasehold
Improvements is in the form of rent and no rent is paid more than two (2)
months in advance; (iv) the rent payable by the sublessee shall not be
front-end loaded; (v) Landlord shall have no liability for prior acts, omission
or defaults of Tenant under the sublease nor any obligation to make any payment
or take any action for the benefit of the sublessee upon recognition of the
sublease beyond Landlord's obligations as set forth in this Lease; and (vi) the
remaining provisions of the sublease are approved by Landlord, which approval
shall not be unreasonably withheld nor delayed beyond fifteen (15) days
following delivery to Landlord of a copy of the final form of the sublease and
a request for the nondisturbance agreement. In no event shall such
Nondisturbance Agreement or any sublease impose any obligation upon Landlord
not set forth in this Lease or the DDA (as said agreements may be amended from
time to time).
11.3 AFFILIATE TRANSACTIONS. Notwithstanding the provisions of
this Article 11, Tenant may enter into any Assignment of this Lease or sublet
all or a portion of the Tenant's Estate without Landlord's consent (i) to an
entity "controlled by" or "under common control" (as defined below) with
Tenant or Guarantor or to an entity "controlling" Tenant, so long as Tenant
is owned, controlled by or under the common control of Guarantor; (ii) in
connection with the transfer of stock of Tenant through a public exchange;
(iii) so long as Tenant is owned, controlled by or under the common control
of Guarantor, a transfer of stock of Tenant in connection with the merger,
consolidation or nonbankruptcy reorganization of Guarantor; or (iv) in
connection with a merger, consolidation, or nonbankruptcy reorganization of
Tenant through a public exchange; or (v) to the holder of a Tenant Mortgage,
a
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Tenant Mortgagee Related Party or the purchaser of all or any portion of
the Tenant's Estate at a foreclosure sale of a Tenant Mortgage (collectively,
"Affiliate Transactions"). For the purpose of the foregoing, "control" will
be the ownership of more than fifty percent (50%) of the voting and ownership
interest of the controlled entity.
11.4 WAIVER AND ACKNOWLEDGMENT. Consent by Landlord to one or more
Assignments of this Lease, or to one or more sublettings of the Tenant's
Estate, or Tenant Mortgages shall not be deemed to be a consent to any
subsequent assignment. However, upon written request by Tenant, Landlord
shall execute such documents as Tenant shall reasonably request acknowledging
that an Assignment, subletting or other transfer of the Tenant's Estate, or
any portion thereof or interest therein, complies with the provisions of this
Article.
ARTICLE 12
TRANSFER OF LEASED PREMISES BY LANDLORD
12.1 TRANSFER BY LANDLORD. Subject to Section 12.2, below,
Landlord may assign and transfer Landlord's Estate or any portion thereof or
interest therein at any time during the Lease Term, but only if such
transferee shall have, by written agreement, agreed to:
(i) Recognize Tenant under this Lease;
(ii) Assume the obligations of Landlord imposed herein to
be performed after the date of the transfer; and
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(iii) Be bound by the terms of this Lease. In no event
shall such transfer affect a release of Landlord of its obligations under
this Lease.
12.2 TENANT'S RIGHTS OF FIRST NEGOTIATION.
12.2.1 LANDLORD'S DUTY TO NOTIFY. If, at any time during
the Lease Term (but subject to Landlord's obligation, if any, to comply with
applicable Laws regarding the transfer of an interest in City-owned real
property, if City is then Landlord hereunder), Landlord shall desire to sell
or otherwise transfer, directly or indirectly, Landlord's Estate, or any
portion thereof or interest therein, to a person or entity (other than a
"City Affiliate," as defined below, if the City is then Landlord under this
Lease), whether by way of a Landlord-initiated transaction or by way of an
unsolicited offer, then Landlord shall first offer to Tenant the opportunity
to negotiate its acquisition of such portion of Landlord's Estate by giving
Tenant written notice by Certified U.S. Mail of its intention. For purposes
of this Lease, a "City Affiliate" shall mean the City of Mountain View and
related agencies and, upon acquisition of Landlord's Estate or any portion
thereof, the City Affiliate shall be bound to the terms of this Section 12.2
with respect to any subsequent transfer of such interest by the City
Affiliate.
12.2.2 EXCLUSIVE NEGOTIATION PERIOD--LANDLORD-INITIATED
TRANSACTION. If Landlord desires to sell or otherwise transfer all or any
portion of Landlord's Estate ("Subject Landlord's Estate), Tenant and
Landlord shall meet and attempt to mutually agree upon the price and general
terms and conditions for acquisition by Tenant of the Subject Landlord's
Estate. Tenant and Landlord shall use good-faith efforts in exclusive
negotiations to attempt to reach such an agreement during the
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forty-five (45) day period commencing upon Tenant's receipt of Landlord's
notice of its intention to transfer the Subject Landlord's Estate ("Negotiation
Period"). The exclusive negotiations shall be commenced by Landlord delivering
to Tenant by Certified U.S. Mail written notice of its willingness to sell the
Subject Landlord's Estate. During the Negotiation Period, Landlord shall
negotiate exclusively with Tenant regarding the sale of the Subject Landlord's
Estate. The Negotiation Period may be extended for such time as may be
mutually agreed upon by Landlord and Tenant.
12.2.2.1 FAILURE TO EXECUTE AGREEMENT AND
LANDLORD'S RIGHT TO TRANSFER. If Landlord and Tenant do not develop mutually
acceptable terms and conditions for the transfer of the Subject Landlord's
Estate during the Negotiation Period, then, no later than three (3) business
days following expiration of the Negotiation Period, Tenant shall deliver to
Landlord written notice of the last purchase price actually offered by Tenant
during the Negotiation Period ("Benchmark Price"). This Benchmark Price
shall be the benchmark price for calculations required under this right of
first negotiation, but shall not constitute an actual offer by Tenant to
purchase the Subject Landlord's Estate. If Tenant does not deliver the
Benchmark Price within this time frame, then it shall be deemed that Tenant
has no interest in purchasing the Subject Landlord's Estate, and Landlord
shall have no obligation to reoffer the Subject Landlord's Estate to Tenant
during the period that Landlord continues to market the Subject Landlord's
Estate.
12.2.3 MARKETING PERIOD. Landlord may proceed with the
disposition of Landlord's Estate for a period of one hundred eighty (180)
days following submission by Tenant of the Benchmark Price ("Marketing
Period").
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12.2.3.1 THIRD PARTY OFFER EQUAL TO OR LESS THAN
ONE HUNDRED SIX PERCENT OF FINAL OFFER. If, during the Marketing Period,
Landlord receives a written bona fide offer from a third party for the
acquisition of all or any portion of Subject Landlord's Estate for a price
which is less than or equal to one hundred six percent (106%) of Tenant's
Benchmark Price, and Landlord desires to accept such offer, then Landlord
shall give written notice to Tenant by Certified Mail setting forth the terms
of such offer and the fact that Landlord is willing to accept such offer.
12.2.3.2 TENANT'S RIGHT TO ACCEPT REOFFER. Tenant
shall have the right to acquire the Subject Landlord's Estate at the price
and upon the terms and conditions stated in Landlord's written notice of such
third-party offer only if Tenant exercises such right by delivery to Landlord
of written notice of Tenant's election on or before the:
(i) Fifth (5th) business day following
Tenant's receipt of Landlord's written notice of such third-party offer if
the price is greater than the Benchmark Price but is less than or equal to
one hundred six percent (106%) of the Benchmark Price; or
(ii) Fifteen (15) days following Tenant's
receipt of Landlord's written notice of such third-party offer if the price
is equal to or less than the Benchmark Price.
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In the event that Tenant shall elect to acquire the Subject
Landlord's Estate, then it shall do so upon the terms and conditions
contained in Landlord's written notice of such third-party offer.
If Tenant does not deliver written notice to Landlord of its
agreement to acquire the Subject Landlord's Estate upon the terms set forth
in Landlord's notice within the applicable period set forth in (i) and (ii)
above, or declines to accept the terms and conditions stated in Landlord's
notice, then Landlord may transfer the Subject Landlord's Estate to any third
party on the terms stated in Landlord's notice of such third-party offer
during such period that Landlord thereafter continuously markets the Subject
Landlord's Estate. Any other attempt by Landlord to transfer the Subject
Landlord's Estate or any portion thereof or interest therein shall be deemed
to be a new election by Landlord to transfer and will be subject to all of
the provisions of this Section 12.2.
12.2.3.3 THIRD-PARTY OFFER EXCEEDING ONE HUNDRED
SIX PERCENT OF FINAL OFFER. If, during the Marketing Period, Landlord
receives a bona fide written offer from a third party which exceeds one
hundred six percent (106%) of the Benchmark Price and Landlord initiates
exclusive negotiations for the sale of the Subject Landlord's Estate to said
party, Landlord shall, no later than five (5) business days after Landlord
and such third party have entered into an agreement regarding such exclusive
negotiations (but in any event prior to the expiration of the Marketing
Period), deliver written notice to Tenant by Certified Mail setting forth the
terms of such offer and Landlord's intent to negotiate exclusively with said
party, in which event the Benchmark Price will automatically be extended for
purposes of this Section 12.2 and Landlord may proceed with its negotiations
with
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such third party for a period of one hundred eighty (180) days following
delivery of such written notice to Tenant ("Preauthorization Period").
12.2.3.4 NEW TENANT OFFERS. Tenant may submit a
new offer, either higher or lower than the Benchmark Price, to Landlord at
any time during the Marketing Period, the Preauthorization Period, or at any
other time during the marketing of the Subject Landlord's Estate. Landlord
will consider any such new offer from Tenant as it would any others
presented. Subject to Sections 12.2.4 through 12.2.6, below, Landlord will
not consider any new offer from Tenant during the period of exclusive
negotiations with a third party as described in Section 12.2.3.3, above, and
12.2.4, below.
Any offer made by Tenant as provided in this Section 12.2.3.4 above
shall replace the Benchmark Price and become the New Benchmark Price for
calculations required under this right of first negotiation.
12.2.4 THIRD-PARTY NEGOTIATIONS. Landlord may proceed with
its negotiations with such third party during the Preauthorization Period.
Landlord must receive appropriate authorization from the City Council, if
Landlord is the City, or the requisite number of its general partners or
board of directors, if Landlord is a partnership or corporation,
respectively, or the requisite member of trustees, if Landlord is a trust,
("Authorization") to accept the offer within said one hundred eighty (180)
day period.
12.2.5 THIRD-PARTY CLOSING. If, during the
Preauthorization Period, Landlord receives Authorization to accept the
third-party offer (which offer shall
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have a price exceeding one hundred six percent (106%) of the Benchmark Price),
Landlord shall, within fifteen (15) business days following receipt of such
Authorization (but in any event prior to the expiration of the Preauthorization
Period), deliver written notice regarding such authorization to Tenant, in
which the Benchmark Price will be automatically extended for purposes of this
Section 12.2, and Landlord may proceed with its negotiations with such third
party, for a period of one hundred eighty (180) days following Landlord's
receipt of Authorization ("Closing Period"). The transaction with such third
party must then close (i.e., the recordation of a deed conveying Landlord's
Estate to such third party) within the Closing Period (which closing shall
require the payment of a purchase price in excess of one hundred six percent
(106%) of the Benchmark Price).
12.2.6 REOFFER TO TENANT IN EVENT THIRD PARTY DOES NOT
CLOSE.
If one of the following occurs:
(i) Landlord has not received Authorization to
accept such third-party offer within the Preauthorization Period;
(ii) The sale of the Subject Landlord's Estate to
such third party fails to close within the Closing Period; or
(iii) The negotiations with such third party
otherwise fails or the agreement with such third party otherwise terminates.
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then, Landlord shall promptly provide Tenant with written notice thereof, and
Landlord and Tenant shall thereafter negotiate in good faith for a period of
thirty (30) days following Tenant's receipt of such notice to develop
mutually acceptable terms and conditions for the acquisition by Tenant of the
Subject Landlord's Estate (which period may be extended by mutual agreement
of Landlord and Tenant). During such negotiation period, Landlord shall
negotiate exclusively with Tenant regarding the transfer of the Subject
Landlord's Estate; provided, however, that if Tenant does not provide
Landlord with written notice of its desire to acquire the Subject Landlord's
Estate within five (5) business days following Tenant's receipt of Landlord's
notice as provided in this Section 12.2.6 above, said negotiations shall be
on a non-exclusive basis during the remaining portion of the thirty (30) day
negotiation period; and provided, further, that if Tenant does not submit a
written offer to Landlord to acquire the Subject Landlord's Estate within
fifteen (15) calendar days following receipt of Landlord's notice pursuant to
this Section 12.2.6, said negotiations shall thereafter be on a non-exclusive
basis during the remaining portion of the thirty (30) day negotiation period.
If the parties are unable to agree upon such terms and conditions
within said thirty (30) day period, Tenant shall deliver to Landlord written
notice of the Benchmark Price no later than three (3) business days following
said thirty (30) day period, and any transfer of the Subject Landlord's
Estate shall again be subject to Sections 12.2.3 through 12.2.6 above. This
Benchmark Price shall be the benchmark price for calculations required under
this first right of negotiation as described in Sections 12.2.3 through
12.2.5 above.
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12.2.7 TENANT RENEGOTIATIONS FOLLOWING UNSUCCESSFUL
MARKETING. If Landlord has not provided Tenant with written notice of a third
party offer within the Marketing Period, Landlord shall promptly provide
written notice of the same to Tenant, and Landlord and Tenant shall
thereafter negotiate in good faith for a period of fifteen (15) days to
develop mutually acceptable terms and conditions for the acquisition of the
Subject Landlord's Estate (which period may be extended by mutual agreement
of Landlord and Tenant). During such negotiation period, Landlord shall
negotiate exclusively with the Tenant regarding the transfer of the Subject
Landlord's Estate; provided, however, that if Tenant does not provide
Landlord with written notice of its desire to acquire the Subject Landlord's
Estate within five (5) business days following Tenant's receipt of Landlord's
notice as provided in this Section 12.2.7 above, said negotiations shall
thereafter be on a non-exclusive basis during the remaining portion of the
fifteen (15) day negotiation period; and provided, further, that if Tenant
does not submit a written offer to Landlord within ten (10) calendar days
following receipt of Landlord's notice, said negotiations shall thereafter be
on a non-exclusive basis during the remaining portion of the fifteen (15) day
negotiation period.
If the parties are unable to agree upon such terms and conditions,
Tenant shall deliver to Landlord written notice of the Benchmark Price no
later than three (3) business days following expiration of such negotiation
period and otherwise pursuant to this Section 12.2, in which event Landlord
shall have a new one hundred eighty (180) day Marketing Period, and any
transfer of the Subject Landlord's Estate shall again be subject to Sections
12.2.3 through 12.2.6 above. The new Benchmark Price shall become the
benchmark price for calculations required under this right of first
negotiations as described in Sections 12.2.2 through
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12.2.4 above. This process may continue for as long as Landlord continues to
market Landlord's Estate.
12.2.8 Negotiation Period--Unsolicited Offer. If Landlord
receives an unsolicited offer from a third party to purchase or otherwise
acquire all or any portion of Landlord's Estate, and Landlord desires to
accept such offer, Landlord shall give written notice to Tenant by Certified
Mail setting forth the true and complete terms and conditions of such offer
and the fact that Landlord is willing to accept the offer. Within fifteen
(15) business days after receipt by Tenant of Landlord's notice of such
unsolicited offer, Tenant shall notify Landlord in writing that Tenant
desires to acquire the subject Landlord's Estate upon the terms and
conditions contained in Landlord's notice. If Tenant agrees to acquire the
subject Landlord's Estate on the terms set forth in Landlord's notice, Tenant
shall acquire the subject Landlord's Estate on the terms set forth in
Landlord's notice within a reasonable time or at such time and such other
terms as the parties may mutually agree in writing.
If Tenant does not elect to acquire the subject Landlord's Estate on
the terms set forth in Landlord's notice of the unsolicited offer, but does
wish to acquire the subject Landlord's Estate on terms and conditions
comparable to those contained in Landlord's notice, the parties shall
continue to negotiate the terms and conditions of the sale of the subject
Landlord's Estate until the expiration of the forty-five (45) day period
following Tenant's receipt of Landlord's notice of such unsolicited offer.
12.2.9 EXPIRATION OF RIGHT OF FIRST NEGOTIATION. This
Article 12 shall be in effect only so long as the sole Tenant(s) under this
Lease and all of any Parcel
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Leases created pursuant to Section 2.2 are SGREI Related Parties and only so
long as no portion of this Lease or any Parcel Lease is transferred or assigned
except to a SGREI Related Party. This Article 12 shall be deemed null, void
and deleted from this Lease and automatically extinguished as to the original
Tenant hereunder and any and all successor tenants upon assignment of all or
any portion of Tenant's interest in this Lease or any Parcel, except to a SGREI
Related Party, and no rights under this Article 12 shall be assignable to any
third party who is not a SGREI Related Party.
12.3 INDEMNIFICATION FROM TAXES DUE TO CHANGE IN OWNERSHIP.
Landlord shall indemnify Tenant from any and all increases in Real Property
Taxes or related Proposition 13 impacts to the extent caused by a transfer of
Landlord's Estate or any portion thereof or interest therein pursuant to this
Article 12, other than to Tenant or a SGREI Related Party.
ARTICLE 13
TENANT MORTGAGES
13.1 TENANT'S RIGHT TO ENCUMBER TENANT'S ESTATE. Tenant may from
time to time during the Lease Term encumber Tenant's Estate by one or more
mortgages, deeds of trust, assignment of rents, issues and profits or other
proper instruments (including, without limitation, those instruments and
estates created by sublease or assignment), as security for the repayment of
loan(s) or financing(s) as Tenant may desire, provided that such encumbrance
shall be subject to the provisions of this Article 13. Tenant shall deliver
to Landlord in writing the name of each Tenant Mortgagee, the address for
notice of the Tenant Mortgagee, and true copies of each
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mortgage, deed of trust or other security instrument encumbering Tenant's
Estate. Any such encumbrance shall be referred to herein as a "Tenant
Mortgage." The holder of any Tenant Mortgage, and any entity owned or
controlled by a holder of a Tenant Mortgage, shall be referred to herein as a
"Tenant Mortgagee." Any Tenant Mortgage shall be subject to the conditions set
forth below.
13.1.1 NO MODIFICATION WITHOUT CONSENT. Landlord and/or
Tenant shall have no right to modify, amend, alter, terminate (except
pursuant to Article 10), surrender this Lease or the Property, and Tenant
shall have no right to otherwise acquire any right, title or interest in and
to Landlord's Estate, without the prior written consent of Tenant Mortgagee,
which consent shall not be unreasonably withheld. Tenant Mortgagee will
endeavor to provide written notice regarding the granting or withholding of
such consent within thirty (30) days following Tenant Mortgagee's receipt of
Tenant's written request therefor and such information and documentation as
may be reasonably requested by Tenant Mortgagee. No modification, amendment,
termination (except pursuant to Article 10), alteration or surrender of this
Lease by Landlord and/or Tenant shall be effective as to any Tenant
Mortgagee, unless consented to in writing by such Tenant Mortgagee.
13.1.2 NO TERMINATION. Landlord shall have the right to
terminate this Lease by reason of the occurrence of any Event of Default by
Tenant hereunder only when all of the following shall have occurred:
(i) Landlord shall have given written notice to
Tenant Mortgagee setting forth the nature of such default as provided in
Section 13.1.7
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below, provided that Tenant or Tenant Mortgagee has provided written notice to
Landlord of the name and address of Tenant Mortgagee;
(ii) Tenant Mortgagee shall have failed to cure or
commence to cure the Event of Default to the extent and within the time
periods prescribed in Sections 13.1.4 and 13.1.5 below, as applicable; and
(iii) Tenant Mortgagee shall have failed to
commence to acquire Tenant's Estate or to commence foreclosure or other
appropriate proceedings under the Tenant Mortgage to the extent and within
the time periods prescribed in Sections 13.1.4 and 13.1.5 below, as
applicable.
13.1.3 RIGHT TO CURE. Tenant Mortgagee shall have the
right, but not the obligation, to do any act or thing required to cure any
default by Tenant under this Lease, and Landlord shall accept such
performance by or at the instance of Tenant Mortgagee as if the same had been
made by Tenant instead of by Tenant Mortgagee. The foregoing is provided to
Tenant Mortgagee in addition to, and not in derogation of, any other rights
Tenant Mortgagee may have under the Tenant Mortgage or this Lease, including,
without limitation, Tenant Mortgagee's right to a new lease pursuant to
Section 13.1.9 below.
13.1.4 RIGHTS UPON DEFAULT. Upon an Event of Default by
Tenant under this Lease, Tenant Mortgagee shall have a period of sixty (60)
days after the Event of Default to cure the same; provided, however, that if
the Event of Default is such that it cannot be reasonably cured by Tenant
Mortgagee within said sixty (60) day period and/or possession of the Property
and/or the Leasehold Improvements is
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necessary to cure such Event of Default, Tenant Mortgagee shall have a
reasonable period of time after the expiration of said sixty (60) day period to
obtain possession of the Property and the Leasehold Improvements and cure the
Event of Default, provided that: (i) Tenant Mortgagee shall have cured the
initial Event of Default in the payment of monetary obligations of Tenant under
the Lease (and any subsequent Event of Default in the payment of monetary
obligations) within sixty (60) days after delivery of written notice of said
Event of Default to the Tenant Mortgagee; and (ii) Tenant Mortgagee shall have
commenced to acquire Tenant's Estate or to commence foreclosure or other
appropriate proceedings under the Tenant Mortgage within said sixty (60) day
period and, thereafter, shall continue to prosecute the same to completion.
13.1.5 RIGHTS UPON DEFAULT OF NON-MONETARY OBLIGATIONS NOT
SUSCEPTIBLE TO CURE. If any Event of Default in the performance of a
non-monetary obligation of Tenant under this Lease is not reasonably
susceptible to being cured by Tenant Mortgagee, Landlord shall have no right
to terminate this Lease with respect to such Event of Default and such Event
of Default shall be deemed waived for the benefit of Tenant Mortgagee only,
provided that:
(i) Tenant Mortgagee shall have cured the initial
Event(s) of Default in the payment of monetary obligations of Tenant (and any
subsequent Event(s) of Default in the payment of monetary obligations of
Tenant) within the time periods prescribed under Section 13.1.4, above;
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(ii) Tenant Mortgagee shall have commenced to
acquire Tenant's Estate or to commence foreclosure or other appropriate
proceedings under the Tenant Mortgage within the time periods prescribed
under Section 13.1.4 above;
(iii) if Tenant Mortgagee shall acquire Tenant's
Estate in and/or obtain possession of the Property, then, during the period
of such ownership and/or possession of the Property, Tenant Mortgagee shall,
subject to Section 13.1.8 below;
(A) cure or commence to cure all
non-monetary Events of Default that are reasonably susceptible to being cured
by Tenant Mortgagee; and
(B) perform and observe all other
agreements, covenants and conditions which are to be performed or observed by
Tenant under the Lease after the date of such acquisition.
(iv) if any third party shall, by foreclosure or
deed-in-lieu of foreclosure under the Tenant Mortgage or by assignment or
other transfer from Tenant Mortgagee, acquire Tenant's Estate under this
Lease, such third party shall, subject to Section 13.1.8 below:
(A) cure or commence to cure all
non-monetary Events of Default that are reasonably susceptible to being cured
by such third-party; and
(B) perform and observe all other
agreements, covenants and conditions which are to be performed and observed
by Tenant under this Lease after the date of such acquisition.
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13.1.6 RIGHTS UPON BANKRUPTCY, INSOLVENCY. If Tenant
Mortgagee is prohibited by any order, stay or injunction issued by any court
or by reason of any action of any court having jurisdiction of any bankruptcy
or insolvency proceedings involving Tenant from commencing or prosecuting
foreclosure or other appropriate proceedings to acquire or foreclose upon
Tenant's Estate in and/or obtain possession of the Property, the time periods
specified in Sections 13.1.4 and 13.1.5 shall be extended for the period of
such prohibition, provided that Tenant Mortgagee shall have cured any Event
of Default in the payment of any monetary obligations of Tenant and shall
have cured any subsequent Event(s) of Default in the payment of monetary
obligations of Tenant under this Lease within sixty (60) days following
delivery to the Tenant Mortgagee of a written notice of the Event of Default
in question.
13.1.7 NOTICES. Landlord shall deliver to Tenant
Mortgagee, by personal delivery or by certified mail, postage prepaid, a
duplicate copy of any notice of (i) any default by Tenant under this Lease,
or (ii) a termination of this Lease. The copy of any such notice shall be
delivered to Tenant Mortgagee concurrently with the delivery of such notice
to Tenant, provided that Tenant or Tenant Mortgagee has provided written
notice to Landlord of the name and address of Tenant Mortgagee. No such
notice by Landlord to Tenant shall be effective against Tenant or be deemed
to have been duly given to Tenant unless and until a copy of such notice
shall have been delivered to Tenant Mortgagee as required by this Section
13.1.7. Landlord expressly agrees that it shall have no right to effect a
termination of this Lease in the case of an Event of Default by Tenant unless
it has provided a copy of the foregoing notice(s) to Tenant Mortgagee as and
when required by this Section
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13.1.7 and provided the Tenant Mortgagee with the opportunity to exercise the
rights of Tenant Mortgagee under Sections 13.1.4 and 13.1.5 above.
13.1.8 RIGHTS AND LIABILITY UPON ACQUISITION OF TENANT'S
ESTATE. If Tenant Mortgagee or any third party shall acquire Tenant's Estate
through foreclosure of the Tenant Mortgage or any sale thereunder, whether by
judicial proceedings or by virtue of any power reserved in the Tenant
Mortgage, transfer or other conveyance of Tenant's Estate to Tenant Mortgagee
(including, without limitation, a sale or an assignment in lieu of
foreclosure) or the exercise by Tenant Mortgagee of any right, power or
privilege reserved in the Tenant Mortgage, or if any third party shall
acquire Tenant's Estate from Tenant Mortgagee (by purchase and sale or
otherwise) following Tenant Mortgagee's acquisition of Tenant's Estate as
described hereinabove, Landlord shall recognize Tenant Mortgagee or any such
third party, as the case may be, as the successor-in-interest to Tenant under
this Lease and DDA. Such third party shall promptly execute a written
assumption agreement in which such third party assumes the obligations of
Tenant in this Lease, in a form reasonably acceptable to Landlord.
Notwithstanding any provision of this Lease to the contrary, in no
event shall any act or omission of Tenant Mortgagee (including, without
limitation, the acquisition of Tenant's Estate in a transaction described in
this Section 13.1.8 or the taking of possession of the Property or Leasehold
Improvements through a receiver or other means) require Tenant Mortgagee to
assume, or cause Tenant Mortgagee to be deemed to have assumed, any
obligation or liability of Tenant under this Lease, and Tenant Mortgagee
shall have no personal liability to Landlord for Tenant Mortgagee's failure
to so perform and observe any agreement, covenant or
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conditions of Tenant under this Lease, it being expressly understood and
agreed that, in the event of any such failure, Landlord's sole and exclusive
remedy shall be to terminate this Lease, without any recourse or claim for
damages against Tenant Mortgagee.
Notwithstanding any provision of this Lease to the contrary, in the
event of any transfer of Tenant's Estate to Tenant Mortgagee or any third
party by or through foreclosure of the Tenant Mortgage or any sale
thereunder, whether by judicial proceedings or by virtue of any power
reserved in the Tenant Mortgage, transfer or other conveyance of Tenant's
Estate to Tenant Mortgagee (including, without limitation, a sale or an
assignment in lieu of foreclosure) or the exercise by Tenant Mortgagee of any
right, power or privilege reserved in the Tenant Mortgage:
(i) except as expressly provided in subpart (iii)
below, any third party acquiring Tenant's Estate shall perform the
obligations imposed upon Tenant under this Lease commencing from the date
that such transferee obtains possession of the Property or is entitled to
possession thereof following such party's acquisition of Tenant's Estate
("Acquisition Date");
(ii) the acquisition by Tenant Mortgagee or any
third-party of Tenant's Estate through the aforesaid mechanisms shall not
release Guarantor or Tenant from their respective obligations under this
Lease;
(iii) as of the Acquisition Date, this Lease shall
be deemed amended to provide as follows:
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(A) the obligations of Tenant under this
Lease to construct the Initial Project and/or to restore any Leasehold
Improvements following any casualty or condemnation, including, without
limitation, the obligations of Tenant set forth in Sections 6.2, 6.5, 8.2.1
and 9.3.(C) above, shall not be binding upon Tenant Mortgagee or its
successors and assigns in the Tenant Mortgage;
(B) the obligations of Tenant to
indemnify, defend, protect and/or hold Landlord harmless with respect to any
Environmental Claim or other Claim arising (on an "occurrence" basis) prior
to the Acquisition Date (including, without limitation, any Environmental
Claim or Claim arising under Section 4.5.4 or 7.4 of this Lease) shall not be
binding upon Tenant Mortgagee or any such third-party acquiring Tenant's
Estate or their respective successors and assigns;
(C) the obligations of Tenant to conduct
Environmental Construction Activities or to otherwise indemnify, defend,
protect or hold Landlord harmless with respect to (1) any Tenant
Environmental Indemnity Obligation accruing (on an "occurrence" basis) prior
to the Acquisition Date, (2) any Contamination existing on the Acquisition
Date, and (iii) any Hazardous Material Activity conducted prior to such
Acquisition Date, shall not be binding upon Tenant Mortgagee or any such
third-party acquiring Tenant's Estate or their successors and assigns; and
(D) the representations and warranties of
Tenant under this Lease shall not be binding upon Tenant Mortgagee or any
such third-party acquiring Tenant's Estate or their successors and assigns.
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(iv) if a third party shall acquire Tenant's Estate
in the manner described in this Section 13.1.8 above and, as of the
Acquisition Date, such third party (or any guarantor of the third party's
obligations under this Lease) does not satisfy the financial criteria set
forth in Section 11.1.2(B) above, and the Guaranty has been or is thereafter
terminated pursuant to Section 20 of the Guaranty, then Section 4.5.8 of this
Lease shall be deemed amended to provide Landlord with such common law,
statutory or other rights of set-off against Landlord's Environmental
Indemnity Obligations to the extent of any Claim(s) held by Landlord arising
from such third-party's failure to perform any of its obligations under this
Lease (including, without limitation, Tenant's Environmental Indemnity
Obligations accruing from and after the Acquisition Date). In no event shall
this subparagraph (iv) apply to a Tenant Mortgagee during the Tenant
Mortgagee's ownership of Tenant's Estate or affect in any manner the
provisions of Article 10 hereof.
At the request of Tenant Mortgagee or such third-party, Landlord
shall execute, acknowledge and deliver such documents and instruments as may
be reasonably requested for purposes of confirming the amendments to this
Lease under Subpart (iii) above, including, without limitation, a written
amendment to this Lease (in recordable form) in form and substance
satisfactory to Tenant Mortgagee or such third-party.
13.1.9 LEASE UPON TERMINATION. In the event of the
termination of this Lease, whether by reason of the bankruptcy of Tenant and
rejection of this Lease by the trustee in bankruptcy or Tenant as
debtor-in-possession, an Event of Default by Tenant under this Lease,
operation of law or any other reason, Landlord agrees
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that this Lease shall not terminate as to Tenant Mortgagee and that this
Lease shall, without any further act or action, automatically continue upon
the same terms and conditions, provided that Tenant Mortgagee complies with
Sections 13.1.4 through 13.1.6 above as appropriate. Without limiting the
effect of the preceding sentences of this Section 13.1.9, Landlord agrees to
execute such additional documents as may be requested by Tenant Mortgagee
from time to time to confirm or carry out the intent of this Section 13.1.9,
including entering a new lease if Tenant Mortgagee so elects upon the same
terms and conditions as set forth in this Lease for the remainder of the
Lease Term. Such new lease shall be of the same priority as this Lease.
13.1.10 ESTOPPEL CERTIFICATE. Upon Tenant Mortgagee's
written request, Landlord shall, without charge, provide Tenant Mortgagee
with an estoppel certificate which shall certify to Tenant Mortgagee, to the
best of Landlord's knowledge, (i) as to the full satisfaction and compliance
by Tenant of any payments, covenants or conditions required to be paid and/or
performed by Tenant under this Lease; (ii) that Tenant is not in default in
the payment, performance or observance of any condition or covenant to be
performed or observed by Tenant under this Lease, or if any such default
exists, specifying such default; (iii) that there are no offsets or
counterclaims on the part of Landlord with respect to this Lease, or setting
forth such offsets or counterclaims; and (iv) as to such other matters
related to this Lease as Tenant Mortgagee may reasonably request.
13.1.11 NO MERGER. So long as any of the obligations
secured by the Tenant Mortgage remain unsatisfied and the Tenant Mortgage
remains of record,
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there shall be no merger of this Lease or Tenant's Estate created thereby
with the fee estate in the Land.
13.1.12 PERMITTED TRANSFER. For the benefit of Tenant
Mortgagee, Landlord and Tenant hereby agree that, notwithstanding anything
contained in this Lease to the contrary,
(i) the foreclosure of the Tenant Mortgage or any
sale thereunder, whether by judicial proceedings or by virtue of any power
reserved in the Tenant Mortgage, the transfer or other conveyance of Tenant's
Estate to Tenant Mortgagee (including, without limitation, a sale or
assignment in lieu of foreclosure) or the exercise by Tenant Mortgagee of any
right, power or privilege reserved in the Tenant Mortgage, shall not be held
in violation of any of the terms and/or restrictions of this Lease;
(ii) a transfer of Tenant's Estate to Tenant
Mortgagee or any third party by or through foreclosure of the Tenant Mortgage
or any sale thereunder, whether by judicial proceedings or by virtue of any
power reserved in the Tenant Mortgage, the transfer or other conveyance of
Tenant's Estate to Tenant Mortgagee (including, without limitation, a sale or
an assignment in lieu of foreclosure) or the exercise by Tenant Mortgagee of
any right, power or privilege reserved in the Tenant Mortgage, shall be a
permitted transfer for purposes of this Lease and shall not require
Landlord's consent; and
(iii) If Tenant Mortgagee shall acquire Tenant's
Estate as a result of a sale under the Tenant Mortgage pursuant to a judgment
of foreclosure and sale,
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or through any transfer or assignment in lieu of foreclosure or through
settlement or arising out of any pending or contemplated foreclosure action,
or otherwise, Tenant Mortgagee shall have the right to transfer its interest
in this Lease to any other person, firm or corporation without the consent of
Landlord, such transfer shall be a permitted transfer for purposes of this
Lease and to the extent Tenant Mortgagee shall have assumed liability under
this Lease, Tenant Mortgagee shall thereafter be released from all such
liability. At the request of Tenant Mortgagee, Landlord shall execute,
acknowledge and deliver to Tenant Mortgagee a written release evidencing the
foregoing.
13.1.13 ENCUMBRANCE ON FEE. Landlord may not encumber the
Landlord's Estate, or any portion thereof or interest therein with any
mortgage, deed of trust, or similar security instrument, except in accordance
with this Section 13.1.13. Landlord may from time to time place any
mortgage, deed of trust or similar security instrument upon all or any
portion of Landlord's Estate, as security for such loans(s) (a "Landlord's
Lien") as Landlord may desire, provided that such encumbrance shall be
subject to the provisions of this Section 13.1.13. Such Landlord's Lien on
the fee estate in the Property shall be expressly subordinate to and subject
in all respects to Tenant's Estate in this Lease (including any extension
hereof in accordance with the terms of this Lease and any lease entered into
pursuant to Section 13.1.9 above). Neither the creation, enforcement or
modification of a Landlord's Lien on Landlord's Estate or any sale
thereunder, whether by judicial proceedings or by virtue of any power
reserved therein, or the transfer or other conveyance of Landlord's Estate to
the holder thereof (including, without limitation, any deed-in-lieu of
foreclosure), shall terminate, extinguish or otherwise affect in any manner
the Lease, Tenant's Estate or any Tenant Mortgage,
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or any amendments, modifications, extensions, substitutions or replacements
of the Tenant Mortgage, whether then existing or thereafter created, nor
release Landlord or Tenant from any of their respective obligations and
liabilities under this Lease.
Notwithstanding the preceding paragraph, Tenant's right of first
negotiation contained in Article 12 hereof shall not apply to (i) any
transfer of Landlord's Estate pursuant to a foreclosure sale or trustee's
sale under a Landlord's Lien encumbering Landlord's Estate, or (ii) any
transfer of Landlord's Estate by the holder of such Landlord's Lien following
the holder's acquisition of Landlord's Estate by foreclosure sale or
trustee's sale. Tenant's right of first negotiation, however, shall apply to
any transfer of Landlord's Estate or any portion thereof or interest therein
by a third party (other than to the holder of a Landlord's Lien) acquiring
Landlord's Estate through foreclosure, trustee's sale, or deed-in-lieu of
foreclosure. Tenant agrees to execute such documents and instruments, in
recordable form, as may be reasonably requested by the holder of such
mortgage, deed of trust or similar security instrument for purposes of
evidencing and/or confirming the foregoing.
Notwithstanding the preceding paragraph to the contrary, if Landlord
desires to transfer Landlord's Estate by deed-in-lieu of foreclosure or
similar conveyance to the holder of any Landlord's Lien, Landlord shall give
written notice to Tenant by Certified Mail setting forth the amount of all
principal, interest and other charges then outstanding under the loan secured
by such Landlord's Lien, together with such other terms and conditions as are
applicable to the proposed transfer. Tenant shall have a period of fifteen
(15) days to notify Landlord in writing of Tenant's desire to acquire
Landlord's Estate which is security for Landlord's Lien for a purchase price
equal to the then outstanding balance of principal, interest and other
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charges secured by the Landlord's Lien and upon such other terms and
conditions as are contained in Landlord's notice. The Landlord's Estate will
be transferred free of the Landlord's Lien and the close of escrow shall
occur on a date that the parties mutually agree. If Tenant so notifies
Landlord that it will acquire such Landlord's Estate, the parties shall be
deemed to have entered into a binding contract on the terms and conditions
stated in Landlord's Notice. If Tenant fails to so notify Landlord, Landlord
may transfer the encumbered Landlord's Estate to the holder of the Landlord's
Lien on terms no more favorable to the holder of the Landlord's Lien than
those stated in the Landlord's Notice.
Landlord and any holder of a Landlord's Lien on Landlord's Estate
shall execute, acknowledge and deliver any instruments and documents
reasonably requested from time to time by Tenant or Tenant Mortgagee to
confirm the foregoing, including, without limitation, a written agreement (in
recordable form) in form and substance satisfactory to Tenant and Tenant
Mortgagee, acknowledging, for the benefit of Tenant and Tenant Mortgagee and
their respective successors and assigns, that:
(i) such Landlord's Lien shall be expressly
subordinate and subject in all respects to the Lease (including any extension
hereof in accordance with the terms of this Lease and any new lease entered
into pursuant to Section 13.1.9, above), and Tenant's Estate in all respects;
(ii) the holder of such Landlord's Lien shall have
no rights in and to any proceeds arising from casualty to or condemnation of
the Property
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and/or Leasehold Improvements except to the extent payable to Landlord under
the Lease;
(iii) neither the creation, enforcement or
modification of Landlord's Lien nor the foreclosure of any such mortgage,
deed of trust or other encumbrance on Landlord's Estate or any sale
thereunder, whether by judicial proceedings or by virtue of any power
reserved therein, or the transfer or other conveyance of Landlord's Estate to
the holder thereof (including, without limitation, any deed-in-lieu of
foreclosure), shall terminate, extinguish or otherwise affect in any manner
the Lease, Tenant's Estate or any Tenant Mortgage, or any amendments,
modifications, extensions of the Tenant Mortgage, or substitutions or
replacements thereof, whether then existing or thereafter created, and shall
not release Landlord or Tenant from any of their respective obligations and
liabilities under this Lease;
(iv) that any transferee acquiring Landlord's
Estate by reason of foreclosure of any Landlord's Lien on Landlord's Estate
or any sale thereunder, whether by judicial proceedings or by virtue of any
power reserved therein, or the transfer or other conveyance of Landlord's
Estate to the holder thereof (including, without limitation, any deed-in-lieu
of foreclosure), shall be deemed to have assumed all of the obligations and
liabilities of Landlord under this Lease except to the extent the same have
accrued prior to the date of transfer, and such transferee shall promptly
execute a written assumption agreement in form reasonably acceptable to
Tenant and Tenant Mortgagee; and
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(v) such other matters as may be reasonably
requested by Tenant and/or Tenant Mortgagee.
13.1.14 SUCCESSORS AND ASSIGNS. The terms of this Article
13 shall (i) inure to the benefit of each Tenant Mortgagee and its successors
and assigns in the Tenant Mortgage, or any portion thereof or interest
therein (and, to the extent applicable), any transferee or purchaser at a
foreclosure sale (whether by judicial proceedings or by virtue of any power
reserved in the Tenant Mortgagee, transfer or other conveyance of Tenant's
Estate to Tenant Mortgagee or the exercise by Tenant Mortgagee of any right,
power or privilege reserved in the Tenant Mortgagee), any transferee by sale
or assignment-in-lieu of foreclosure, and any transferee of Tenant Mortgagee
(by purchase and sale or otherwise) if Tenant Mortgagee shall acquire
Tenant's Estate through foreclosure, trustee's sale, assignment-in-lieu of
foreclosure or otherwise under the Tenant Mortgage; and (ii) survive any
foreclosure (whether by judicial foreclosure, trustee's sale or otherwise) or
acceptance of an assignment-in-lieu of foreclosure or any other exercise of
Tenant Mortgagee's rights under the Tenant Mortgage or any other documents
evidencing, securing or pertaining to the Tenant Mortgage.
13.1.15 AGREEMENT TO AMEND. Landlord recognizes the
importance of Tenant's ability to obtain Tenant Mortgages, and that the
provisions of this Lease may be subject to the approval of Tenant Mortgagees.
If Tenant Mortgagee should require, as a condition to such financing, any
modifications of this Lease, whether for purposes of clarifying the
provisions of this Lease or to include provisions then customary for
leasehold financing transactions, Landlord agrees to execute the appropriate
amendments to this Lease; provided, however, that no such
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modification shall, to the detriment of Landlord, impair any of Landlord's
rights, or increase or change any of Landlord's obligations, under this Lease.
13.1.16 TENANT MORTGAGES SUBORDINATE TO LEASE. In no event
shall a Tenant Mortgage encumber Landlord's Estate in the Land. If this
Lease is terminated in accordance with this Article 13 and Tenant Mortgagee
does not elect to enter a new lease as provided in Section 13.1.9 above,
title to the Leasehold Improvements shall automatically vest in Landlord free
and clear of all rights and interests of the Tenant Mortgagee therein. In
such event, Tenant Mortgagee shall promptly provide Landlord with such
quitclaim deeds and/or assignments reasonably necessary to evidence the
foregoing.
ARTICLE 14
GENERAL PROVISIONS
14.1 GUARANTY. Tenant's performance under this Lease is guaranteed
by Guarantor under a separate Guaranty, which is attached hereto as EXHIBIT G
and is incorporated herein, and which shall be executed by Guarantor and
delivered to Landlord concurrently with the execution of this Lease. The
Guaranty will remain in full force and effect unless terminated pursuant to
Section 11.1 above or Section 20 of the Guaranty. Notwithstanding the early
termination of the Guaranty, Guarantor shall have the right to reinstate the
Guaranty in accordance with Section 22 of the Guaranty by executing and
delivering a guaranty in the same form as attached hereto as EXHIBIT G, and
Landlord shall be deemed to have accepted such guaranty. In no event shall
Landlord have any right to take any action to reject or
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otherwise terminate the Guaranty other than at Tenant's request pursuant to
Section 11.1.3, above.
14.2 ESTOPPEL CERTIFICATES. Each party agrees, within twenty (20)
days following request by the other, to execute and deliver to the other an
estoppel certificate (i) certifying that this Lease is unmodified and has not
been terminated, or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect and
the date to which the Monthly Rent and other charges are paid in advance, if
any; and (ii) acknowledging that, to the responding party's knowledge, there
are not any uncured defaults on the part of either party hereunder, or, if
there exist any such uncured defaults, stating the nature of such uncured
defaults; and (iii) evidencing the status of the Lease as may be reasonably
required either by a lender making a loan to be secured by all or any portion
of the Project or by a purchaser of all or any portion of the Project. A
party's failure to deliver an estoppel certificate as required herein within
twenty (20) days following receipt of written request therefor shall be
conclusive upon such party that, as of the date of said request (x) this
Lease has not been terminated and is without modification; (y) there are to
the responding party's knowledge no uncured defaults under this Lease on the
part of either party; and (z) no Monthly Rent or other charges have been paid
in advance, except as may otherwise be set forth in such request.
14.3 HOLDING OVER. Unless extended pursuant to Section 2.4.2
hereof, this Lease shall terminate without further notice on the Lease
Expiration Date. Any holding over by Tenant after the Lease expiration date
shall not constitute a renewal or extension of this Lease, or give Tenant any
rights in or to the Project except as
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expressly provided herein. Subject to Section 2.5 above, any holding over
after the Lease Expiration Date with the written consent of Landlord shall be
construed to be a tenancy from month to month, 125 percent of the rental due
as of the last month of the term hereof, and shall otherwise be on the terms
and conditions herein specified insofar as applicable. Any holding over
after the Lease Expiration Date without the written consent of Landlord shall
be a tenancy at sufferance.
14.4 NOTICES. Any notice required or desired to be given pursuant
to this Lease shall be in writing with copies directed as indicated below
indicated and shall be personally delivered, or in lieu of personal delivery,
by depositing same with a prepaid commercial overnight courier for next day
delivery, in which event such notice shall be deemed delivered on the next
business day after deposit with the courier, or by United States registered
or certified mail, return receipt requested, postage prepaid, with a signed
receipt, in which event such notice shall be deemed delivered upon receipt.
If such notice shall be addressed to Landlord, the address of Landlord is:
CITY OF MOUNTAIN VIEW
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: City Manager
With a copy to:
CITY OF MOUNTAIN VIEW
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▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: City Attorney
And if addressed to Tenant, the address of Tenant is:
SILICON GRAPHICS REAL ESTATE INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Mail Stop 720
Attention: Facilities Department
With a copy to:
SILICON GRAPHICS, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Mail Stop 710
Attention: Legal Services
Either Landlord or Tenant may change its respective address by
giving written notice to the other in accordance with the provisions of this
paragraph.
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14.5 ATTORNEYS' FEES. In the event either party shall bring any
action, arbitration, or legal proceeding for an alleged breach of any
provision of this Lease, to recover rent, to terminate this Lease, or to
enforce, protect, determine or establish any term or covenant of this Lease
or the rights hereunder of either party, the prevailing party, in addition to
whatever other relief it may be entitled, shall be entitled to recover from
the nonprevailing party, as a part of such action or proceedings or in a
separate action brought for that purpose, reasonable attorneys' fees,
expenses and court costs.
14.6 NO MERGER. The voluntary termination or other expiration of
this Lease shall not work a merger except as so elected by Landlord and
shall, at the option of Landlord, operate as an assignment to Landlord of any
and/or all subleases of subtenants.
14.7 ARBITRATION OF DISPUTES. ANY QUESTION, DISPUTE OR CONTROVERSY
SPECIFICALLY REQUIRED BY THE TERMS OF THIS LEASE TO BE DETERMINED BY
ARBITRATION UNDER ANY TERM OR PROVISION OF THIS LEASE (AND ONLY SUCH
QUESTIONS, DISPUTES OR CONTROVERSIES) SHALL BE DETERMINED PURSUANT TO THE
PROVISIONS OF THIS SECTION. EITHER LANDLORD OR TENANT MAY INITIATE SUCH
PROCEEDINGS BY GIVING WRITTEN NOTICE TO THE OTHER STATING AN INTENTION TO
ARBITRATE, THE ISSUE TO BE ARBITRATED, AND THE RELIEF SOUGHT. SUCH
ARBITRATION SHALL BE CONDUCTED PURSUANT TO THE PROVISIONS OF THE LAWS OF THE
STATE OF CALIFORNIA THEN IN FORCE, WITH THE THEN-EXISTING RULES OF PROCEDURE
TO BE THOSE OF THE AMERICAN ARBITRATION ASSOCIATION OR ITS SUCCESSOR INSOFAR AS
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SAID RULES OF PROCEDURE DO NOT CONFLICT WITH THE LAWS OF THE STATE OF
CALIFORNIA THEN IN FORCE; EXCEPT THAT THE CALIFORNIA CODE OF CIVIL PROCEDURE
WITH RESPECT TO THE RULES OF DISCOVERY SHALL APPLY TO ANY ARBITRATION
UNDERTAKEN PURSUANT TO THIS SECTION. ONCE NOTICE TO ARBITRATE HAS BEEN
GIVEN, LANDLORD AND TENANT SHALL JOINTLY, WITHIN FIFTEEN (15) DAYS AFTER SUCH
NOTICE, SELECT ONE (1) ARBITRATOR, OR IF THEY CANNOT AGREE ON ONE (1)
ARBITRATOR THEN EACH SHALL SELECT AN ARBITRATOR WITHIN TWENTY (20) DAYS AFTER
DELIVERY OF SAID NOTICE, AND THE TWO (2) ARBITRATORS SELECTED SHALL DESIGNATE
THE THIRD ARBITRATOR WITHIN TWENTY-FIVE (25) DAYS AFTER DELIVERY OF SAID
NOTICE. THE THREE (3) ARBITRATORS SHALL CONVENE AS SOON AS PRACTICABLE AND
OFFER LANDLORD AND TENANT THE OPPORTUNITY TO PRESENT THEIR CASES. IF ANY
PARTY TO THE ARBITRATION, AFTER BEING DULY NOTIFIED, FAILS TO APPEAR,
PARTICIPATE OR PRODUCE EVIDENCE AT AN ARBITRATION HEARING, THE ARBITRATOR(S)
MAY MAKE AN AWARD BASED SOLELY ON THE EVIDENCE ACTUALLY PRESENTED. THE
ARBITRATORS SHALL, BY MAJORITY VOTE, MAKE SUCH AWARD AND DECISION AS IS
APPROPRIATE, AND IN ACCORD WITH THE TERMS OF THIS LEASE AND APPLICABLE LAW,
AND SUCH AWARD SHALL BE BINDING UPON LANDLORD AND TENANT AND ENFORCEABLE IN A
COURT OF LAW. THE COST OF ARBITRATION SHALL BE BORNE BY LANDLORD AND TENANT
AS DETERMINED BY THE ARBITRATORS. IN THE EVENT EITHER PARTY FAILS TO APPOINT
AN ARBITRATOR OR THE TWO (2) ARBITRATORS FAIL TO SELECT A THIRD ARBITRATOR
WITHIN THE TIME REQUIRED BY THIS SECTION, THEN UPON APPLICATION OF EITHER
PARTY, THE ARBITRATOR
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SHALL BE APPOINTED BY THE, AMERICAN ARBITRATION ASSOCIATION, OR IF THERE BE
NO AMERICAN ARBITRATION ASSOCIATION OR IT SHALL REFUSE TO PERFORM THIS
FUNCTION, THEN, AT THE REQUEST OF EITHER LANDLORD OR TENANT, SUCH ARBITRATOR
SHALL BE APPOINTED BY THE THEN PRESIDING JUDGE OF THE SUPERIOR COURT OF THE
STATE OF CALIFORNIA FOR THE COUNTY OF SANTA ▇▇▇▇▇.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THIS SECTION,
IF THE MATTER TO BE ARBITRATED INVOLVES A DETERMINATION OF WHETHER TENANT HAS
COMMITTED A BREACH OR DEFAULT OF ITS NONMONETARY OBLIGATIONS UNDER THIS
LEASE, AND TENANT IS FOUND IN BREACH OR DEFAULT THEREOF PURSUANT TO THE
ARBITRATION DECISION, TENANT SHALL HAVE THE RIGHT TO CURE SUCH BREACH OR
DEFAULT WITHIN A PERIOD OF THIRTY (30) DAYS FROM THE DATE THAT TENANT
RECEIVES WRITTEN NOTICE OF THE ARBITRATION DECISION (OR, IF SUCH BREACH OR
DEFAULT CANNOT BE REASONABLY CURED WITHIN SAID THIRTY (30) DAY PERIOD, WITHIN
A REASONABLE PERIOD OF TIME PROVIDED THAT TENANT COMMENCES SUCH CURE WITHIN
SAID THIRTY (30) DAY PERIOD AND THEREAFTER DILIGENTLY PROSECUTES THE SAME TO
COMPLETION). IF TENANT CURES THE EVENT OF DEFAULT AND PAYS ALL DAMAGES AND
OTHER SUMS AWARDED IN THE ARBITRATION WITHIN THE CURE PERIOD PROVIDED
HEREINABOVE, THE AWARD SHALL BE DEEMED SATISFIED AND THE EVENT OF DEFAULT
CURED
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NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE
ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE ARBITRATION OF
DISPUTES' PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA
LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE
LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE
GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS
ARE ,SPECIFICALLY INCLUDED IN THIS 'ARBITRATION OF DISPUTES' PROVISION. IF
YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY
BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL
PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. WE
HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING
OUT OF THE MATTERS INCLUDED IN THE 'ARBITRATION OF DISPUTES' PROVISION TO
NEUTRAL ARBITRATION.
---------------------------------- -----------------------------------
LANDLORD TENANT
14.8 NO PARTNERSHIP. It is agreed that nothing contained in this
Lease or the DDA shall be deemed or construed as creating a partnership,
joint venture, unincorporated association or other similar relationship
between Landlord and Tenant, or cause Landlord to be responsible in any way
for the debts or obligations of Tenant. Neither the method of computing rent
nor any other provision contained in this Lease, nor any acts of the parties
hereto, shall be deemed to create any
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relationship between Landlord and Tenant other than the relationship of
landlord and tenant.
14.9 CAPTIONS. The captions used in this Lease are for the purpose
of convenience only and shall not be construed to limit or extend the meaning
of any part of this Lease.
14.10 DUPLICATE ORIGINALS. Any executed copy of this Lease shall
be deemed an original for all purposes.
14.11 TIME OF THE ESSENCE. Time is of the essence for the
performance of each covenant and term of this Agreement.
14.12 SEVERABILITY. In the event any one or more of the provisions
contained herein shall for any reason be held to be invalid, illegal or
unenforceable in any respect, every other provision of this Lease shall
remain and subsist in full force and effect, and this Lease shall be
construed as if such invalid, illegal or unenforceable provision had not been
contained herein.
14.13 INTERPRETATION. 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, a reference to one gender includes the other genders, a
partnership, a corporation, and a joint venture, and the singular includes
the plural. This Lease shall be construed and enforced in accordance with
the laws of the State of California.
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14.14 SUCCESSORS BOUND. The covenants and agreements contained in
this Lease shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, successors, and permitted assigns,
all subject to the rights and limitations contained in this Lease, including,
without limitation, Articles 11 and 13.
14.15 NO WAIVER. The waiver by Landlord or Tenant of any breach of
any term, covenant or condition herein contained shall not be deemed to be a
waiver of such term, covenant or condition or any subsequent breach of the
same or any other term, covenant or condition herein contained.
14.16 REMEDIES CUMULATIVE. Subject to the provisions of Section
10.2 hereof, all remedies herein conferred upon Landlord or Tenant shall be
deemed cumulative, and no one remedy shall be exclusive of any other remedy
herein conferred or created by law or in equity.
14.17 COVENANT OF FAIR DEALING. Each party hereto agrees to act
reasonably and in good faith with respect to the performance and fulfillment
of the terms of each and every covenant and condition contained in this Lease.
14.18 FORCE MAJEURE. Shall mean prevention, delay, or stoppage due
to strikes, lockouts, inclement weather, labor disputes, acts of God,
inability to obtain labor, materials, or fuels or reasonable substitute
therefor, governmental restrictions, regulations, controls, action or
inaction, civil commotion, fire or other casualty, governmental moratoriums
and other causes beyond the reasonable control of the party obligated to
perform shall excuse the performance (other than
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an obligation for the payment of money), for a period equal to the period of
any said prevention, delay, or stoppage, of the obligation hereunder.
14.19 MEMORANDUM OF LEASE. Landlord and Tenant shall execute, and
Tenant shall record, a Memorandum of Lease in substantially the form of
EXHIBIT F. The cost of such recording shall be borne by Tenant.
14.20 AUTHORITY. Each party hereto represents and warrants to the
other that it has the legal power, right and authority to enter this Lease,
and that all requisite action has been taken or obtained by said party in
connection therewith. Each signatory of a party hereto represents and
warrants to the other that he or she is duly authorized to execute this Lease
on behalf of said party and binds said party to the terms and conditions
hereof.
14.21 NONDISCRIMINATION. Tenant covenants by and for itself, its
heirs, executors, administrators and assigns and all persons claiming under
or through it, and this Lease is made and accepted upon and subject to the
condition, that there shall be no discrimination against or segregation of
any person or group of persons on account of sex, marital status, race,
color, religion, creed, national origin or ancestry in the leasing,
subleasing, transferring, use or enjoyment of the Property and/or Leasehold
Improvements, nor shall Tenant, or any person claiming under or through it,
establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or
occupancy of tenants, subtenants, licensees, concessionaires, vendees,
invitees or customers with respect to the Property and/or Leasehold
Improvements or the operation of the Project.
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14.22 LEASE FEE. Following execution and delivery of this Lease
and the DDA (including memorandums thereof in recordable form), Tenant shall
pay to Landlord a lease consideration fee ("Lease Fee") equal to Two Hundred
Fifty Thousand Dollars ($250,000), which Fee shall be in addition to the
Monthly Rent payable during the Lease Term. The Lease Fee shall be
nonrefundable to Tenant, except as otherwise provided in this Lease or the
DDA.
14.23 LANDLORD'S TERMINATION RIGHT. If, following the Commencement
Date, the construction of the Initial Project does not commence within one
(1) year after the issuance of the initial grading and building permits for
the Initial Project, Landlord, at any time prior to commencement of building
shell construction for the initial Building or the garage, may, in its sole
discretion and as its sole and exclusive remedy, elect to terminate this
Lease by delivery of a written notice of termination to Tenant. If this
Lease is so terminated by Landlord, then the Lease Fee shall be retained by
Landlord, and the parties shall have no further rights or obligations to the
other except for those obligations that survive termination of this Lease,
including, without limitation, any payment obligations of either party then
outstanding (including any obligation of Tenant to refund all or a portion of
the Fill Material Allowance pursuant to Section 2.7 (b) of the DDA) and the
respective objectives of each party under the indemnity provisions of this
Lease and the DDA.
14.24 INTEGRATION. This Lease, the Exhibits hereto, the Guaranty
and the DDA and the Exhibits thereto constitute the entire agreement between
the parties with respect to the subject matter hereof, and there are no such
agreements or representations between the parties except as expressed herein.
Except as otherwise provided
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herein, no subsequent change or addition to this Lease shall be binding
unless in writing and signed by both Landlord and Tenant. This Lease and the
DDA shall be construed harmoniously so as to give effect to all of the terms,
covenants and conditions of both documents to the greatest extent permitted.
14.25 NO REMEDY LIMITATION. No security or guaranty which may now
or hereafter be furnished Landlord for the payment of any amounts under this
Lease, or for performance by Tenant of the other covenants or conditions of
this Lease shall in any way be a bar or defense to any action in unlawful
detainer, or for the recovery of the Property or the Leasehold Improvements,
or to any action which Landlord may be legally entitled to commence for a
breach of any of the covenants or conditions of this Lease.
14.26 EXHIBITS. Exhibits A through G are attached hereto and
incorporated by reference herein.
14.27 INCORPORATION OF CERTAIN TERMS. Notwithstanding anything to
the contrary in this Lease or the DDA, the terms and conditions of Sections
8.4 and 8.5 of the DDA regarding Landlord's obligations to operate, maintain,
repair and replace the Tenant's Off-Site Improvements are incorporated herein
by reference.
14.28 RIGHT OF ENTRY. Subject to the requirements and conditions
of this section 14.28 below, Tenant shall permit Landlord and its Agents to
enter the Property and/or the Leasehold Improvements at any reasonable time
for the purpose of: (i) inspecting the Property and Leasehold Improvements
(with no obligation to do so) to verify Tenant's compliance with the terms of
this Lease;
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(ii) curing Tenant's failure to perform any of its maintenance, replacement
or repair obligations under this Lease, as provided in section 10.2.4, above,
and (iii) posting notices of nonresponsibility for alterations, additions or
repairs to be made by or on behalf of Tenant;
14.28.1 NOTICE. Landlord and its employees, contractors
and consultants shall provide Tenant with reasonable notice of its intention
to enter the Property and/or Leasehold Improvements. With respect to any
"walk-through" inspection for purposes of confirming Tenant's compliance with
the provisions of this Lease, Landlord shall provide Tenant with at least
three (3) business days prior written notice of each such entry. With
respect to any other entry of Landlord permitted under this Section 14.28,
Landlord shall provide Tenant with at least seven (7) days prior written
notice, which notice shall identify any work to be conducted, the portions of
the Property and Leasehold Improvements that will be affected by the entry,
and the names and addresses of any contractors and consultants who will enter
the Property. Notice of repetitive entries may be given in a consolidated
notice delivered in accordance with this Subsection 14.28.1 prior to the
first such entry. In the event of an emergency, Landlord shall provide prior
notice to Tenant of such entry to the extent reasonably possible under the
circumstances.
14.28.2 TERMS OF ENTRY. In connection with any entry,
Landlord shall avoid, to the extent reasonably possible, any disturbance to
or interference with Tenant's use, occupancy and quiet enjoyment of the
Property and Leasehold Improvements, the conduct of Tenant's business
thereon, and damage to the Leasehold Improvements or Trade Fixtures. Tenant
may exclude from the Property
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and Leasehold Improvements any person who, in Tenant's reasonable business
judgment, is causing a safety hazard or unreasonably interfering with
Tenant's quiet enjoyment of the Property or Leasehold Improvements or
Tenant's business conducted thereon. Landlord shall keep the Landlord's
Estate and the Tenant's Estate free and clear of any mechanic's liens,
materialmen's liens or other liens or Claims arising out of any activities of
Landlord and its employees, consultants or contractors. Landlord shall
conduct all activities during such entry in a good and workmanlike manner in
accordance with all applicable Laws. Landlord shall repair, at no cost to
Tenant, all damage to the Property, Leasehold Improvements or Trade Fixtures
caused by any such entry. Upon at least ten (10) business days' written
notice from Tenant, Landlord shall make available to Tenant, for Tenant's
review and/or duplication, any and all notices, correspondence, information,
reports and studies in Landlord's possession or control with regard to such
entry. Landlord shall indemnify, defend and hold Tenant and Tenant
Indemnitees harmless from and against any and all Claims arising from or in
connection with any such entry.
14.28.3 INSURANCE REQUIREMENTS. Prior to any such entry,
Tenant shall have received certificates of insurance evidencing the following
insurance coverages maintained by Landlord and its contractors and
consultants issued by carriers of recognized responsibility with a financial
rating of at least B+:IX when admitted in California or A:X if not admitted
in California as rated in the latest BEST'S INSURANCE GUIDE (or, if
discontinued, a comparable rating from a generally recognized standard for
rating insurance companies).
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(i) If any construction activities will be
undertaken, "Builder's Risk" insurance, including coverage for all material
and equipment in place or delivered to the Property.
(ii) Statutory Workers Compensation and employer's
liability coverage as required by law for injury, disease and death.
(iii) Commercial general liability and auto
insurance with combined single limit coverage or equivalent in the amount of
One Million Dollars ($1,000,000) per occurrence. Such policy shall provide
coverage for premises and operations, completed operations (for at least one
(1) year following completion of the work) and broad form property damage and
blanket contractual liability coverage. The minimum limits of such policies
of liability insurance and, if necessary, the terms and conditions of
insurance, shall be reasonably adjusted from time to time. All policies
shall contain coverage for automobile and general liability and shall be
noncontributing with any other insurance of Tenant and shall be
"occurrence-based," except to the extent that "claims-made" policies are
generally acceptable under reasonable risk management practices for similar
projects in Santa ▇▇▇▇▇ County, California. All commercial general liability
and auto liability policies shall name Landlord and Tenant as additional
insureds. So long as Landlord is City, then the foregoing shall not require
Landlord to obtain and maintain the above coverages to the extent that it is
self-insured, although Landlord shall cause its contractors and consultants
to provide certificates of insurance evidencing the coverages required above.
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14.29 NO WAIVER OF POLICE POWERS OR RIGHTS. In no event shall this
Lease or DDA be construed to limit in any way (i) City's rights, powers or
authority under the police power and other powers of the City to regulate or
take any action in the interest of the health, safety and welfare of its
citizens or (ii) Tenant's rights and privileges as a corporate resident
and/or citizen of the City of Mountain View, State of California and/or the
United States of America as provided under applicable Laws, except as
expressly waived or limited by this Lease.
14.30 SURVIVAL. All obligations of Landlord and Tenant which,
under the terms of this Lease, are reasonably to be expected to be performed
after any termination of this Lease shall survive said termination.
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IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
effective date specified above.
"LANDLORD": "TENANT":
CITY OF MOUNTAIN VIEW, SILICON GRAPHICS REAL ESTATE, INC.,
a municipal corporation a Delaware corporation
By:__________________________ By: ________________________
Its:__________________________ Its: ________________________
ATTEST: APPROVED AS TO FORM:
By: __________________________ By: _______________________
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Commercial Counsel
City Clerk
APPROVED AS TO FORM
By:_______________________________
City Attorney
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