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<SEC-DOCUMENT>0000891618-97-004205.txt : 19971023
<SEC-HEADER>0000891618-97-004205.hdr.sgml : 19971023
ACCESSION NUMBER: 0000891618-97-004205
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 11
CONFORMED PERIOD OF REPORT: 19970726
FILED AS OF DATE: 19971022
SROS: NASD
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: CISCO SYSTEMS INC
CENTRAL INDEX KEY: 0000858877
STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER COMMUNICATIONS EQUIPMENT [3576]
IRS NUMBER: 770059951
STATE OF INCORPORATION: CA
FISCAL YEAR END: 0731
FILING VALUES:
FORM TYPE: 10-K
SEC ACT:
SEC FILE NUMBER: 000-18225
FILM NUMBER: 97699167
BUSINESS ADDRESS:
STREET 1: 255 WEST TASMAN DRIVE
CITY: SAN JOSE
STATE: CA
ZIP: 95134-1706
BUSINESS PHONE: 4085264000
MAIL ADDRESS:
STREET 1: 225 WEST TASMAN DRIVE
CITY: SAN JOSE
STATE: CA
ZIP: 95134-1706
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<DESCRIPTION>FORM 10-K FOR PERIOD ENDING JULY 26, 1997
<TEXT>
<PAGE> 1
FORM 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark one)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the fiscal year ended July 26,1997
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from ________ to ________
Commission file number 0-18225
CISCO SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
California 77-0059951
- ------------------------------- --------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
170 West Tasman Drive
San Jose, California 95134
- ------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (408) 526-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- -------------------
None Nasdaq National Market
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
- --------------------------------------------------------------------------------
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
[ ]
As of September 15, 1997, the approximate aggregate market value of voting stock
held by non-affiliates of the registrant was $46,175,832,500 (based upon the
closing price for shares of the Registrant's Common Stock as reported by the
National Market System of the National Association of Securities Dealers
Automated Quotation System on that date). Shares of Common Stock held by each
officer, director, and holder of 5% or more of the outstanding Common Stock have
been excluded in that such persons may be deemed to be affiliates. This
determination of affiliate status is not necessarily a conclusive determination
for other purposes. As of September 15, 1997, 672,119,249 shares of registrant's
common stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of Annual Report to Shareholders for fiscal year ended July 26,
1997.
(2) Portions of the Registrant's Proxy Statement related to the 1997 Annual
Meeting of Shareholders, to be held on November 13, 1997, are
incorporated by reference into Part III of this Annual Report on 10-K
where indicated.
The table of exhibits filed appears at page 23.
<PAGE> 2
PART I
ITEM 1. BUSINESS
GENERAL
Certain Statements contained in this Annual Report on Form 10-K, including,
without limitation, statements containing the words "believes", "anticipates",
"estimates", "expects", and words of similar import, constitute forward looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Readers are referred to the "Financial Risk Management" and "Future Growth
Subject to Risks" sections, of Cisco System Inc.'s 1997 Annual Report to
Shareholders, which is hereby incorporated by reference, as well as the
"Acquisition, Investment and Alliances", "Competition", "Research and
Development", "Manufacturing", "Patents, Intellectual Property and Licensing"
and "Other Risk Factors" sections contained herein, which identify important
risk factors that could cause actual results to differ from those contained in
the forward looking statements.
Cisco Systems, Inc. and its subsidiaries ("Cisco", or the "Company") operate in
one industry segment providing networking solutions that connect computing
devices and computer networks. These allow people to access or transfer
information without regard to differences in time, place or type of computer
system.
Networking is a multi-billion dollar global market whose growth is spurred by
the increasingly critical role that electronic information plays in almost every
facet of life today. While computer networking for many years has been a highly
complex science employed primarily by large enterprises, the growth in use of
the global Internet has proved beneficial to organizations of all sizes, as well
as individuals, worldwide.
The Company markets its products through its direct sales force, distributors,
value-added resellers and system integrators. This multiple-channel approach
allows customers to select the channel that addresses their specific needs and
provides the Company with broad coverage of worldwide markets.
Cisco was incorporated in California in December 1984. The Company's executive
offices are located at 170 West Tasman Drive, San Jose, California 95134, and
its telephone number at that location is (408)526-4000.
END-TO-END NETWORKING SOLUTIONS
Cisco's strategy is to provide end-to-end networking solutions that customers
can use to a) build a unified information infrastructure of their own, or b) to
connect to someone else's network. An end-to-end networking solution provides a
common technical architecture that allows network services to be consistently
provided to all users on the network.
Cisco's products are used individually or in combination to connect computing
devices to networks, or computer networks with each other - whether they are
within a building, across a campus or around the world. The Company's breadth of
product offerings enables it to configure
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<PAGE> 3
hardware and software features to match customer needs. Many of the Company's
products are expandable, offering customers the option to upgrade their networks
as their needs grow.
Cisco's product offerings fall into several categories:
Routing
Routing is a foundation technology for computer communications. Routers move
information from one network to another, applying intelligence in the process to
ensure that the information reaches its destination securely and in the fastest
way possible. Cisco offers a broad range of routers, including the Cisco 7000,
4000, 2500 and 1000 families, as well as the recently introduced Cisco 12000, or
Gigabit Switch Router (GSR).
Switching
Switching is another important networking technology, used in both local-area
networks (LANs) and wide-area networks (WANs). Cisco's switching solutions
employ all widely used switching technologies -- Ethernet, Token Ring and
Asynchronous Transfer Mode (ATM). Cisco's LAN switching products are contained
in the Catalyst(TM) family. WAN switching products include the Cisco
StrataCom(R) IGX and BPX families, and the Cisco 3800 series.
Access
Computing and communications today are conducted in many locations, not just at
a company's head office. Cisco's access solutions give groups and individuals
who are remotely located the same level of connectivity and information access
they would have if they were located at the company's head office. Asynchronous
and ISDN remote-access routers and dial-up access servers are used for
supporting telecommuters and mobile workers, for Internet access and
branch-office connectivity. The Company's access products include the AS5000
family of access servers; access routers such as the Cisco 4000, 2500, and 1000
families, as well as network security and management software.
SNA/LAN
Most large organizations have existing IBM computing systems that use the System
Network Architecture (SNA) networking method, as well as LANs based on open
network architectures (such as the TCP/IP protocol). Network managers with both
types of networks increasingly want to combine them into a single network that
leverages existing investments. The Company's CiscoBlue strategy provides a
roadmap for consolidating and managing SNA and non-SNA networks. It also enables
an IBM data center to be used in Internet/intranet applications.
Internet Appliances and Software
Cisco offers products that improve a network manager's ability to cope with a
number of challenges posed by the growing popularity of the Internet, such as
security, network traffic volume, and network address shortage. These products
include: the PIX Firewall, which prevents unauthorized access to a network; the
Micro Webserver, which facilitates the set up of Web sites; IP/TV software,
which transmits audio and video to desktop PCs; IPeXchange Internet Gateways,
which are designed to provide Novell NetWare customers in small and medium-sized
businesses with easy and secure connectivity to the Internet; and LocalDirector
and
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<PAGE> 4
Distributed Director, which balance the load between multiple servers to enable
timely access and response to requests.
Cisco IOS Software
Cisco Internetwork Operating System (Cisco IOS(TM)) is the common platform that
transforms a network into a strategic asset and competitive advantage. Cisco IOS
technologies include a wide variety of features that provide the intelligence of
the Internet and of private networks. They are the unifying thread that connects
otherwise disparate hardware to build a seamless, efficient infrastructure which
facilitates network growth and the deployment of new applications, which in turn
enhances reliability, and interoperability, and lowers the cost of ownership.
The Cisco IOS software platform provides important network services and enables
networked applications. Cisco IOS network services fall into two categories.
Foundation Network Services are the building blocks of a robust network. They
include connectivity, security, scalability, reliability and management.
Enabling Network Services support the deployment of applications that take
advantage of the underlying network. Enabling Network services include such
areas as multimedia, quality of service(a network management and optimization
service) and voice.
Network Management
Cisco provides applications that centralize management, automate routine tasks,
and can be integrated into customers' existing network management environments.
The CiscoWorks software is a suite of standards-based applications that allow
users to manage their Cisco devices from a single integrated console. Cisco
Enterprise Accounting is a new family of powerful and easy-to-use enterprise
network management accounting and billing applications that help manage and
control the cost of owning corporate networks and Internet access. The NETSYS
Enterprise/Solver family of network intelligent management tools aids in
troubleshooting, managing, and network planning.
CUSTOMERS AND MARKETS
Networking needs are influenced by a number of factors, including the size of
the organization, number and types of computer systems, geographic locations,
and the applications requiring data communications. Cisco's customer base is not
concentrated in any particular industry and in each of the past five fiscal
years no single customer has accounted for ten percent or more of the Company's
net sales. For additional information regarding the Company's customers and
markets see Note 11, "Geographic Information and Major Customers," on page 49 of
the Company's 1997 Annual Report to Shareholders, which is incorporated by
reference herein.
Cisco's market strategy addresses three customer profiles:
Enterprise
Enterprise customers generally are large organizations with complex networking
needs, usually spanning multiple locations and types of computer systems.
Enterprise customers include corporations, government agencies, utilities and
educational institutions.
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<PAGE> 5
Service Providers
These customers provide data communication services, including telecommunication
carriers, Internet Service Providers, cable companies, and wireless
communication providers.
Small/Medium Business
These customers have a need for data networks of their own, as well as
connection to the Internet and/or to business partners. However, these customers
generally have limited resources; therefore, the Company attempts to provide
products which are affordable as well as easy to install and use.
The Company's worldwide direct sales organization at September 20, 1997
consisted of approximately 3,500 individuals, including managers, sales
representatives, and technical support personnel. The Company has approximately
105 U.S. field sales offices providing coverage in the following metropolitan
areas: Atlanta, Boston, Chicago, Cincinnati, Cleveland, Dallas, Denver, Durham,
Honolulu, Houston, Indianapolis, Los Angeles, Miami, New Orleans, New York,
Orlando, Phoenix, Pittsburgh, Portland (Oregon), Princeton, Salt Lake City, San
Antonio, San Diego, San Francisco, San Jose, Seattle, St. Louis, and Washington,
D.C., among others.
The Company's international sales are currently being made through multiple
channels including approximately 90 international distributors and resellers
throughout the world. These international distributors provide system
installation, technical support, and follow-up services to end-customers.
Generally, the Company's international distributors have nonexclusive,
country-wide agreements. International sales through the various channels,
including the Company's subsidiaries, accounted for approximately 43.5% of total
sales in fiscal 1997, 48.2% in fiscal 1996, and 41.7% in fiscal 1995. Sales to
international customers and distributors generally have been made in United
States dollars. During fiscal 1997, the Company established its European
Operations Center (EOC). On an ongoing basis, substantially all European orders
will be fulfilled from the EOC.
The Company has sales support subsidiaries worldwide. New subsidiaries formed in
fiscal 1997 include Greece, India, Israel, Poland, Taiwan, and Turkey.
ACQUISITIONS, INVESTMENTS AND ALLIANCES
The end-to-end strategy pursued by Cisco requires a wide variety of
technologies, products and capabilities. Additionally, the pace of change in the
industry is very rapid. The combination of complexity and rapid change make it
difficult for one company, no matter how large, to develop all technological
solutions alone. Acquisitions, investments and alliances are tools used by the
Company to fill gaps in its offerings and enable it to deliver complete
solutions to its customers and prospects in target markets. Satisfying
customers' networking needs requires a constant monitoring of market and
technology trends, plus an ability to act quickly. Cisco has a four-part
approach to satisfy the need for new or enhanced networking products and
solutions. In order of preference, this approach is to: develop new technologies
and products internally; enter into joint-development efforts with other
companies; resell another company's product; and acquire all or part of another
company. Acquisitions involve numerous risks, including difficulties in
assimilation of the operations, technologies, and products of the acquired
companies; the risk of diverting management's attention from normal daily
operations of the business; risks of entering markets in which the company has
no or limited direct prior experience and where competitors in such markets have
stronger market positions; and the potential loss of key employees of the
acquired company. The company must also maintain its ability to manage any such
growth effectively. Failure to manage growth effectively and successfully
integrate acquisitions made by the company could adversely affect the Company's
business and operating results.
5
<PAGE> 6
Since 1993, the Company has acquired a number of companies. The Company expects
to make future acquisitions where it believes that it can acquire new products
and channels of distribution or otherwise rapidly enter new or emerging markets.
Mergers and acquisitions of high-technology companies are inherently risky, and
no assurance can be given that the Company's previous or future acquisitions
will be successful and will not adversely affect the Company's financial
condition or results of operations.
Each of the Company's acquisitions has furthered the Company's commitment to
providing an end-to-end solution. The Company now has a broad set of product
offerings and technologies, which include Ethernet, Token Ring, Asynchronous
Transfer Mode (ATM) switching, Synchronous Optical Network/Synchronous Digit
Hierarchy (SONET/SDH), xDSL, and also network management software solutions,
among others.
Minority Investments
The Company makes minority investments in companies whose technologies or
expertise appear strategic to Cisco's interests and merit monitoring, but where
there is not yet a compelling need to have those capabilities in house.
Strategic Alliances
The Company pursues strategic alliances with other industry leaders in areas
where collaboration can produce mutual benefits. The motivation for a strategic
alliance can include: technology exchange, product development, joint marketing
and sales, and new-market creation. Cisco has strategic alliances with
Microsoft, Intel, Hewlett-Packard, GTE, and Alcatel, among others.
BACKLOG
The Company's backlog on September 20, 1997 was approximately $442.9 million
compared with an approximate backlog of $292.3 million at September 21, 1996.
The Company includes in its backlog only orders confirmed with a purchase order
for products to be shipped within six months to customers with approved credit
status. Because of the generally short cycle between order and shipment, and
occasional customer changes in delivery schedules or cancellation of orders
(which are made without significant penalty), the Company does not believe that
its backlog, as of any particular date, is necessarily indicative of actual net
sales for any future period.
COMPETITION
Cisco competes in the networking market, providing solutions for Internet,
intranet, and extranet connectivity. The networking market is characterized by
rapid growth, technological change, and a
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<PAGE> 7
convergence of technologies. These market factors represent both an opportunity
and a competitive threat to Cisco. The Company competes with numerous vendors in
each product category. Cisco expects that the overall number of vendors will
increase in these markets due to its attractive growth opportunities.
Cisco's traditional competitors include 3Com, Ascend, Bay Networks, Cabletron,
Fore, and IBM. As the Company focuses on new market opportunities, such as
transporting voice, video, and data traffic across the same network, it will
increasingly compete with large telecommunications equipment suppliers such as
Lucent, Ericsson and Nortel. Some of the Company's competitors compete across
all of Cisco's product lines, while others do not offer as wide a breadth of
networking solutions. Several of the Company's current and potential competitors
have greater financial, marketing and technical resources than the Company.
The principal competitive factors in the markets in which the Company presently
competes and may compete in the future are: price; performance; the ability to
provide end-to-end solutions and support; conformance to standards; the ability
to provide added value features such as security, reliability, and investment
protection; and market presence.
The Company also faces competition from customers it licenses technology to and
suppliers from whom it transfers technology. Networking's inherent nature is
such that the Company must compete, and at the same time cooperate, with these
companies. The Company's inability to effectively manage these complicated
relationships with customers and suppliers could have a material adverse effect
on the Company's business, operating results, and financial condition.
RESEARCH AND DEVELOPMENT
The Company is engaged in research and development efforts to develop customer
solutions for each of its three primary lines of business: Enterprise, Service
Provider, and Small/Medium Business. The Company focuses its product development
activities on networking products that are responsive to customer requirements
and that provide end-to-end networking solutions. The Company's research and
development investments are made either internally or through acquisition, and
in addition, the Company makes minority equity investments in early stage
technology development entities.
The Company has recently announced several new products, including the Gigabit
Switch Router, known as the GSR12000, and the Company's next-generation
universal access server, the AS5300. However, the industry in which Cisco
competes is subject to rapid technological developments, evolving industry
standards, changes in customer requirements and frequent new product
introductions and enhancements. As a result, the Company's success, in part,
depends upon its ability, on a cost-effective and timely basis, to continue to
enhance its existing solutions and to develop and introduce new solutions that
improve performance and reduce total cost of ownership. In order to achieve
these objectives, the Company's management and engineering personnel work
closely with customers, to identify and respond to customer needs, as well as
with other innovators of internetworking products, including universities,
laboratories, and corporations. The Company will also continue to make strategic
acquisitions and equity investments where appropriate. The Company intends to
remain dedicated to industry standards and to continue to support important
protocol standards as
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they emerge. Still, there can be no assurance that Cisco will be able to
successfully develop new products to address new customer requirements and
technological changes, or that such products will achieve market acceptance.
In fiscal 1997, 1996, and 1995, the Company's research and development
expenditures were approximately $698.2 million, $399.3 million, and $210.8
million, respectively. All of the Company's expenditures for research and
development costs, and purchased research and development of approximately
$508.4 million in fiscal 1997 and $95.8 million in fiscal 1995, have been
expensed as incurred.
MANUFACTURING
The Company's manufacturing operations consist primarily of quality assurance of
materials, components and subassemblies. Additionally, the Company performs
final assembly and test. The Company presently uses a variety of independent
third-party companies to perform printed circuit board assembly, in circuit
test, and product repair. The Company and single enterprise partners install
proprietary software on electronically programmable memory chips installed in
its systems in order to configure products to customer needs and to maintain
quality control and security. The manufacturing process enables the Company to
configure the hardware and software in unique combinations to meet a wide
variety of individual customer requirements. The Company and single enterprise
partners use automated testing equipment and "burn-in" procedures, as well as
comprehensive inspection, testing, and statistical process control to assure the
quality and reliability of its products. The Company's and its partners'
manufacturing processes and procedures are ISO 9001 certified. To date, the
Company has not experienced significant customer returns of its products.
PATENTS, INTELLECTUAL PROPERTY AND LICENSING
Cisco's success is dependent upon its proprietary technology. Cisco generally
relies upon patents, copyrights, trademarks and trade secret laws to establish
and maintain its proprietary rights in its technology and products. Cisco has a
program to file applications for and obtain patents in the United States and in
selected foreign countries where a potential market for Cisco's products exists.
Cisco has been issued a number of patents; other patent applications are
currently pending. There can be no assurance that any of these patents will not
be challenged, invalidated or circumvented, or that any rights granted
thereunder will provide competitive advantages to Cisco. In addition, there can
be no assurance that patents will be issued from pending applications, or that
claims allowed on any future patents will be sufficiently broad to protect
Cisco's technology. In addition, the laws of some foreign countries may not
permit the protection of Cisco's proprietary rights to the same extent as do the
laws of the United States. Although Cisco believes the protection afforded by
its patents, patent applications, copyrights and trademarks has value, the
rapidly changing technology in the networking industry makes Cisco's future
success dependent primarily on the innovative skills, technological expertise
and management abilities of its employees rather than on patent, copyright and
trademark protection.
Many of Cisco's products are designed to include software or other intellectual
property licensed from third parties. While it may be necessary in the future to
seek or renew licenses relating to various aspects of its products, Cisco
believes that based upon past experience
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and standard industry practice, such licenses generally could be obtained on
commercially reasonable terms. Because of the existence of a large number of
patents in the networking field and the rapid rate of issuance of new patents,
it is not economically practical to determine in advance whether a product or
any of its components infringe patent rights of others. From time to time, Cisco
receives notices from or is sued by third parties regarding patent claims. If
infringement is alleged, Cisco believes that, based upon industry practice, any
necessary license or rights under such patents may be obtained on terms that
would not have a material adverse effect on Cisco's business, operating results
and financial condition. Nevertheless, there can be no assurance that the
necessary licenses would be available on acceptable terms, if at all, or that
Cisco would prevail in any such challenge. The inability to obtain certain
licenses or other rights or to obtain such licenses or rights on favorable
terms, or the need to engage in litigation could have a material adverse effect
on Cisco's business, operating results and financial condition.
OTHER RISK FACTORS
The Company's business and stock is subject to a number of risks. Some of those
risks are described below. Other risks are presented in the "Financial Risk
Management," and "Future Growth Subject to Risks" sections on pages 25-29 of the
Company's Annual Report to Shareholders for the year ended July 26, 1997, which
is hereby incorporated by reference.
Potential Fluctuations in Quarterly Results
The Company's operating results have in the past been, and may continue to be,
subject to quarterly fluctuations as a result of a number of factors. These
factors include the introduction and market acceptance of new technologies,
including Gigabit Switch Routing and Tag Switching; the timing of orders and
manufacturing lead times; variations in sales channels, product costs or mix of
products sold; increased competition in the networking industry; the overall
trend toward industry consolidation; the integration of people, operations and
products from acquired businesses and technologies; and changes in general
economic conditions and specific economic conditions in the computer and
networking industries, any of which could have an adverse impact on operations
and financial results. For example, the Company from time to time has made
acquisitions that result in purchased research and development expenses being
charged in an individual quarter. These charges may occur in any particular
quarter resulting in variability in the Company's quarterly earnings.
Additionally, the dollar amounts of large orders for the Company's products have
been increasing, and therefore the operating results for a quarter could be
materially adversely affected if a number of large orders are either not
received or are delayed, due for example, to cancellations, delays or deferrals
by customers.
Dependence on New Product Development; Rapid Technological and Market Change
The Company's operating results will depend to a significant extent on its
ability to reduce the costs to produce existing products. In particular, the
Company broadened its product line by introducing network access products. Sales
of these products, which are generally lower priced and carry lower margins than
the Company's core products, have increased more rapidly than sales of the
Company's core products. The success of these and other
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new products is dependent on several factors, including proper new product
definition, product cost, timely completion and introduction of new products,
differentiation of new products from those of the Company's competitors and
market acceptance of these products. The Company has addressed the need to
develop new products through its internal development effort, joint development
with other companies and acquisitions. There can be no assurance that the
Company will successfully identify new product opportunities, develop and bring
new products to market in a timely manner, and achieve market acceptance of its
products or that products and technologies developed by others will not render
the Company's products or technologies obsolete or noncompetitive.
Strategic Alliances
The Company has a number of strategic alliances with companies including
Microsoft, Intel, Hewlett-Packard, GTE, and Alcatel, among others. These
arrangements are generally limited to specific projects, the goal of which is
generally to facilitate product compatibility and adoption of industry
standards. If successful, these relationships will be mutually beneficial and
result in industry growth. However, these alliances carry an element of risk
because, in most cases, the Company must compete in some business areas with a
Company with which it has strategic alliances and, at the same time, cooperate
with such companies in other business areas. Also, if these companies fail to
perform, or if these relationships fail to materialize as expected, Cisco could
suffer delays in product development or other operational difficulties.
Industry Consolidation
There has been a trend toward industry consolidation for several years. During
fiscal 1997, the Company saw this trend continue, with the completion of two
significant industry mergers. In June 1997, 3Com completed its acquisition of
U.S. Robotics and Ascend Communications, Inc. completed its acquisition of
Cascade Communications Corporation. The Company expects this trend toward
industry consolidation to continue as companies attempt to strengthen or hold
their market positions in an evolving industry. The Company believes that
industry consolidation may provide stronger competitors that are better able to
compete as sole-source vendors for customers. This could lead to more
variability in operating results as the Company competes to be a single vendor
solution and could have a material adverse effect on the Company's business,
operating results and financial condition.
Organizational Changes
The Company has realigned its business around three key customer groups or lines
of business. The Company believes this realignment of resources enables it to
better meet the needs of its customers. During fiscal 1997, the Company also
reorganized its sales management teams to better serve customers' needs. There
are risks inherent in any business realignment or reorganization, and the
Company can give no assurance that these organizational changes will meet their
intended objectives.
Entering New or Developing Markets
As the Company focuses on new market opportunities, such as transporting voice,
video and data traffic across the same network, it will increasingly compete
with a variety of large telecommunications equipment suppliers such as Lucent,
Ericsson, and Nortel, among others. Many of these companies have substantially
greater financial, marketing and technical resources than the Company. If the
Company cannot successfully compete with these and other potential competitors,
it
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could have a material adverse effect on the Company's business, operating
results and financial condition.
Variability in Service Provider Sales
Although sales to the service provider market have continued to grow, this
market is characterized by large, and often sporadic purchases. Sales activity
in this industry depends upon the stage of completion of expanding network
infrastructures, the availability of funding, and the extent that service
providers are affected by regulatory and business conditions in the country of
operations. A decline or delay in sales orders from this industry could have a
material adverse effect on the Company's business, operating results and
financial condition.
Manufacturing Risks
Although the Company generally uses standard parts and components for its
products, certain components are presently available only from a single source
or limited sources. The Company has generally been able to obtain adequate
supplies of all components in a timely manner from existing sources, or where
necessary, from alternative sources of supply. A reduction or interruption in
supply or a significant increase in the price of one or more components would
adversely affect the Company's business, operating results and financial
condition and could damage customer relationships.
Changes in Telecommunications Laws and Tariffs
Changes in domestic and international telecommunication requirements could
affect the Company's sales of its products. In particular, the Company believes
it is possible that there may be significant changes in domestic
telecommunications regulations in the near future that could slow the expansion
of the service providers' network infrastructures and adversely affect the
Company's business, operating results and financial condition. Future changes in
tariffs by regulatory agencies or application of tariff requirements to
currently untariffed services could affect the sales of the Company's products
for certain classes of customers. Additionally, in the U.S. the Company's
products must comply with various Federal Communication Commission requirements
and regulations. In countries outside of the U.S., the Company's products must
meet various requirements of local telecommunications authorities. Changes in
tariffs, or failure by the Company to obtain timely approval of products could
have a material adverse effect on the Company's business, operating results and
financial condition.
International Operations
The Company conducts business on a global basis. Accordingly, the Company's
future results could be adversely affected by a variety of uncontrollable and
changing factors including foreign currency exchange rates; regulatory,
political or economic conditions in a specific country or region; trade
protection measures and other regulatory requirements; government spending
patterns; and natural disasters, among other factors. In fiscal 1997, the
Company experienced slower sales growth in Japan, France and Germany, as well as
in certain other parts of Asia and Europe. Any or all of these factors could
have a material adverse impact on the Company's future international business in
these or other countries.
11
<PAGE> 12
Risks Associated With Internet Infrastructure
The Company's management believes that there will be performance problems with
Internet communications in the future which could receive a high degree of
publicity and visibility. As the Company is a large supplier of equipment for
the Internet infrastructure, customers' perceptions of the Company's products
and the marketplace's perception of Cisco as a supplier of networking products,
may be adversely affected, regardless of whether or not these problems are due
to the performance of Cisco's products. Such an event could also result in an
adverse effect on the market price of the Company's Common Stock and could
adversely affect Cisco's business, operating results and financial condition.
Volatility of Stock Price
The Company's Common Stock has experienced substantial price volatility,
particularly as a result of variations between the Company's actual or
anticipated financial results and the published expectations of analysts and as
a result of announcements by the Company and its competitors. In addition, the
stock market has experienced extreme price and volume fluctuations that have
affected the market price of many technology companies in particular and that
have often been unrelated to the operating performance of these companies. These
factors, as well as general economic and political conditions, may adversely
affect the market price of the Company's Common Stock in the future.
EMPLOYEES
As of September 20, 1997, the Company employed approximately 11,000 persons,
including 2,200 in manufacturing, service and support, 4,500 in sales and
marketing, 3,400 in engineering, and 900 in finance and administration.
Approximately 2,000 employees were in international locations.
None of the employees is represented by a labor union, and the Company considers
its relations with its employees to be positive. The Company has experienced no
work stoppages.
Competition for technical personnel in the Company's industry is intense. The
Company believes that its future success depends in part on its continued
ability to hire, assimilate, and retain qualified personnel. To date, the
Company believes that it has been successful in recruiting qualified employees,
but there is no assurance that it will continue to be successful in the future.
ITEM 2. PROPERTIES
The Company's principal corporate offices are located at sites in Santa Clara
and San Jose, California. The Santa Clara facilities are leased through June
1998 and have approximately .1 million square feet of office space. The
Company's main headquarters are situated on 221 acres of leased land in San
Jose, California. There are 15 buildings located at this site, one of which is a
manufacturing facility. The San Jose headquarters consist of approximately 1.6
million square feet of leased office space at the present time. A new site is
under construction that is located near its present corporate offices in San
Jose, California. The Company expects that initial construction on the site will
be completed in April 1998, with total leased office space of
12
<PAGE> 13
approximately 1.1 million square feet.
As part of the StrataCom acquisition, the Company also assumed certain operating
leases for buildings. The buildings, including an additional manufacturing
facility, are located at various sites in San Jose, California and total
approximately .5 million square feet.
In addition to the California facilities, the Company leases approximately 45
acres of land in Research Triangle Park, North Carolina, where the InterWorks
Business Unit, as well as a Technical Assistance Center, telesales, and various
other support functions, are located. Three buildings of approximately .3
million square feet have been constructed and are currently occupied under a
lease that expires in July 1999. A fourth building of .1 million square feet is
currently under construction with completion expected in the second quarter of
fiscal 1998.
The Company also leases various small offices throughout the U.S. and on a
worldwide basis. For additional information regarding the Company's obligations
under leases, see Note 7 "Commitments and Contingencies" on page 43 of the
Company's 1997 Annual Report to Shareholders, which is hereby incorporated by
reference.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
13
<PAGE> 14
EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
POSITION
NAME AGE POSITION HELD SINCE
---------------------------- ------ ------------------------------------------------------ -----------
<S> <C> <C> <C>
Larry R. Carter 54 Senior Vice President, Finance and Administration, 1995
Chief Financial Officer, and Secretary
Mr. Carter joined the Company in January 1995 in
his present position. From July 1992 to January
1995, he was Vice President and Corporate
Controller for Advanced Micro Devices. Prior to
that, he was with V.L.S.I. Technology, Inc. for
four years where he held the position of Vice
President, Finance and Chief Financial Officer.
John T. Chambers 48 President, Chief Executive Officer and Director 1995
Mr. Chambers has been a member of the Board of
Directors since November 1993. He joined the
Company as Senior Vice President in January 1991
and became Executive Vice President in June 1994.
Mr. Chambers became President and Chief Executive
Officer of the Company as of January 31, 1995.
Prior to his services at Cisco, he was with Wang
Laboratories for eight years, most recently as
Senior Vice President of U.S. Operations.
Gary Daichendt 47 Senior Vice President, Worldwide Operations 1997
Mr. Daichendt joined the Company in October 1994 as
Vice President for Intercontinental Operations,
covering Asia, Pacific Rim, Canada, Central and
South America and Mexico. In October 1997,
Mr. Daichendt became Sr. Vice President, Worldwide
Operations at Cisco Systems. He is responsible for
managing the sales and distribution operations of
Cisco offices worldwide. Prior to his services at
Cisco, he spent eight years at Wang Laboratories,
most recently as Vice President of Central
Operations and Vice President of Worldwide
Marketing. Mr. Daichendt also spent ten years
with IBM in various sales, marketing, and management
positions.
Edward R. Kozel 42 Senior Vice President and Chief Technical Officer 1996
Mr. Kozel, has been a member of the Board of
Directors since November 1996. He joined the
Company as Director, Program Management in
March 1989. In April 1992, became Director of
Field Operations and in February 1993, he became Vice
President of Business Development. Since January
1996, he has been Chief Technology Officer of the
Company. Mr. Kozel currently serves on the Board
of Directors of Cybercash, Inc. and
NetFrame Systems, Inc.
Donald J. Listwin 38 Senior Vice President, Service Provider Line of Business 1997
Mr. Listwin joined the Company in 1990 as a Product
Marketing Manager. He held various positions within
the marketing department before being promoted to
Vice President of Marketing in September 1993.
Mr. Listwin was promoted to Vice President and
General Manager of the Access Business Unit in
September of 1995. He became Senior Vice President
of Cisco IOS Development and Marketing in August of
1996. Since April 1997, Mr. Listwin has been the
Senior Vice President of the Service Provider Line
of Business. Mr. Listwin currently serves on the
Board of Directors of Software.com.
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
POSITION
NAME AGE POSITION HELD SINCE
---------------------------- ------ ------------------------------------------------------ -----------
<S> <C> <C> <C>
Mario Mazzola 50 Senior Vice President, Enterprise Line of Business 1997
Mr. Mazzola was the President and CEO of Crescendo
Communications, Inc. which he founded in 1990.
Crescendo was acquired by Cisco Systems in September
1993. At that time, Mr. Mazzola joined Cisco as the
Vice President and General Manager of the
Workgroup Business Unit. Mr. Mazzola became
Senior Vice President of the Enterprise Line of
Business in April 1997. Mr. Mazzola was
the VP of Engineering of David Systems which he
co-founded in June 1982. Mr. Mazzola holds several
patents on high-speed transmission techniques
on unshielded twisted-pair wiring.
Carl Redfield 50 Senior Vice President, Manufacturing 1993
Mr. Redfield joined the Company in August 1993 as
Director, Supply/Demand of Manufacturing and became
Vice President of Manufacturing in September 1993.
Prior to joining Cisco, he spent eighteen years at
Digital Equipment Company, most recently as Group
Manufacturing and Logistics Manager of the PC Group.
</TABLE>
15
<PAGE> 16
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required by this Item is incorporated by reference to page 51 of
the Company's 1997 Annual Report to Shareholders.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is incorporated by reference to page 21 of
the Company's 1997 Annual Report to Shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this Item is incorporated by reference to pages
22-30 of the Company's 1997 Annual Report to Shareholders.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this Item is incorporated by reference to pages
25-27 of the Company's 1997 Annual Report to Shareholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is incorporated by reference to pages
31-51 of the Company's 1997 Annual Report to Shareholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Reference is made to the information regarding Directors appearing under the
caption "Election of Directors" in the Company's proxy statement mailed to
Shareholders on or about October 1, 1997, which information is incorporated
herein by reference; and to the information under the heading "Executive
Officers of the Registrant" in Part I hereof.
ITEM 11. EXECUTIVE COMPENSATION
The information appearing at the end of Part I and under the caption "Executive
Compensation and Related Information" in the Company's proxy statement mailed to
Shareholders on or about October 1, 1997, is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information appearing under the captions "Election of Directors" and
"Ownership of Securities" in the Company's proxy statement mailed to
Shareholders on or about October 1, 1997, is incorporated herein by reference.
16
<PAGE> 17
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information appearing under the caption "Ownership of Securities" and
"Certain Relationships and Related Transactions" in the Company's proxy
statement mailed to Shareholders on or about October 1, 1997, is incorporated
herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The financial statements listed in Item 14(a) are filed or
incorporated by reference as part of this annual report. See
Index to Financial Statements and Financial Statement Schedule
on Page 20.
2. Financial Statement Schedule
The financial statement schedule listed in Item 14(a) is filed
as part of this annual report. See Index to Financial Statements
and Financial Statement Schedule on Page 20.
3. Exhibits
The exhibits listed in the accompanying Index to Exhibits on
pages 23-25 are filed or incorporated by reference as part of
this annual report.
(b) Reports on Form 8-K
The Company filed one report on form 8-K during the fourth
quarter ended July 26, 1997. The date of the filing was July 1,
1997. The item reported on was the acquisition of Global
Internet Software Group.
17
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Report on Form 10-K to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Jose, State of
California on this 17th day of October, 1997.
Cisco Systems, Inc.
/s/ John T. Chambers
----------------------------------------
(John T. Chambers, President and
Chief Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this Report on Form
10-K has been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
President and Chief
Executive Officer
/s/ John T. Chambers (Principal Executive October 17, 1997
- ------------------------------------------ Officer and Director)
John T. Chambers
Senior Vice President,
Finance and Administration,
Chief Financial Officer and
/s/ Larry R. Carter Secretary October 17, 1997
- ------------------------------------------ (Principal Financial and
Larry R. Carter Accounting Officer)
/s/ John P. Morgridge Chairman of the October 17, 1997
- ------------------------------------------ Board and Director
John P. Morgridge
/s/ Donald T. Valentine Vice Chairman of the October 17, 1997
- ------------------------------------------ Board and Director
Donald T. Valentine
/s/ Carol A. Bartz Director October 17, 1997
- ------------------------------------------
Carol A. Bartz
/s/ James F. Gibbons Director October 17, 1997
- ------------------------------------------
Dr. James F. Gibbons
/s/ Edward R. Kozel Senior Vice President, October 17, 1997
- ------------------------------------------ Chief Technical Officer
Edward R. Kozel and Director
/s/ Richard M. Moley Director October 17, 1997
- ------------------------------------------
Richard M. Moley
</TABLE>
18
<PAGE> 19
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Robert L. Puette Director October 17, 1997
- ------------------------------------------
Robert L. Puette
Director October , 1997
- ------------------------------------------
Masayoshi Son
/s/ Steven M. West Director October 17, 1997
- ------------------------------------------
Steven M. West
</TABLE>
19
<PAGE> 20
CISCO SYSTEMS, INC.
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE
ITEM 14(a)
<TABLE>
<CAPTION>
Page
------------------------------
1997 Annual
Report to
Form 10-K Shareholders
<S> <C> <C>
Data incorporated by reference from the 1997
Annual Report to Shareholders of
Cisco Systems, Inc.:
Financial Statements:
Consolidated statements of operations for each
of the three years in the period
ended July 26, 1997 ............................ 31
Consolidated balance sheets at July 26, 1997
and July 28, 1996 ............................... 32
Consolidated statements of cash flows for each of
the three years in the period ended July 26, 1997 33
Consolidated statements of shareholders' equity
for each of the three years in the period
ended July 26, 1997.............................. 34-35
Notes to consolidated financial statements.......... 36-49
Report of Independent Accountants................... 50
Supplementary financial data:
Fiscal years 1997 and 1996 by quarter (unaudited) 51
Data submitted herewith:
Financial Statement Schedule:
Report of independent accountants................. 21
II Valuation and qualifying accounts............ 22
</TABLE>
All other schedules have been omitted since the required information is not
present in amounts sufficient to require submission of the schedules, or because
the information required is included in the consolidated financial statements or
notes thereto.
With the exception of the consolidated financial statements and the independent
accountants' report thereon listed in the above index, the information referred
to in Items 1, 5, 6, 7 and 7A and the supplementary quarterly financial
information referred to in Item 8, all of which is included in the Company's
Annual Report to Shareholders incorporated by reference into this Form 10-K
Annual Report, the 1997 Annual Report to Shareholders is not to be deemed
"filed" as part of this report.
20
<PAGE> 21
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Shareholders
Cisco Systems, Inc.
San Jose, California
Our report on the consolidated financial statements of Cisco Systems, Inc. and
its subsidiaries has been incorporated by reference in this Form 10-K from Page
50 of the 1997 Annual Report to Shareholders of Cisco Systems, Inc. In
connection with our audits of such financial statements, we have also audited
the related financial statement schedule listed in the index on page 20 of this
Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
/s/ Coopers & Lybrand L.L.P.
San Jose, California
August 4, 1997
21
<PAGE> 22
CISCO SYSTEMS, INC.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
<TABLE>
<CAPTION>
Balance at Balance at
Beginning Charged to End of
of Period Expenses Deductions Period
------------ ------------ -------------- -----------
<S> <C> <C> <C> <C>
Year ended July 30, 1995:
Allowance for doubtful accounts 9,882 15,213 6,668 18,427
Allowance for excess and obsolete
inventory 19,531 55,783 29,072 (1) 46,242
Year ended July 28, 1996:
Allowance for doubtful accounts 18,427 18,548 15,901 21,074
Allowance for excess and obsolete
inventory 46,242 53,025 37,481 (1) 61,786
Year ended July 26, 1997:
Allowance for doubtful accounts 21,074 13,318 12,052 22,340
Allowance for excess and obsolete
inventory 61,786 123,431 104,404 (1) 80,813
</TABLE>
(1) Deductions principally relate to charges for standards changes.
22
<PAGE> 23
INDEX TO EXHIBITS
(Item 14 (a))
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
- ------ -------------------
<S> <C>
2.01** Agreement and Plan of Reorganization dated as of September 20, 1993
among the Company, Crescendo Communications Inc., and Co Acquisition
Corporation
2.02** Agreement of Merger among the Company, Crescendo Communications Inc.,
and Co Acquisition Corporation
2.03# Agreement and Plan of Reorganization dated as of July 11, 1994 among the
Company, Newport Systems Solutions, Inc. and New Acquisition Corporation
2.04@ Agreement and Plan of Reorganization dated as of October 21, 1994 among
the Company, Kalpana, Inc. and Pan Acquisition Corporation
2.05@@ Asset Purchase Agreement dated as of December 8, 1994 among the Company
and LightStream Corporation
2.06& Agreement and Plan of Reorganization by and among the Company, Jet
Acquisition Corporation, and StrataCom, Inc., dated as of April 21, 1996
3.01* The Company's Restated Articles of Incorporation, as currently in effect
3.02* The Company's Bylaws, as currently in effect
4.01## The Company's 1987 Stock Option Plan, as currently in effect
4.02* Form of Incentive Stock Option Agreement for granting incentive stock
options under the Company's 1987 Stock Option Plan
4.03* Series A Preferred Stock Purchase Agreement between the Company and
certain investors dated December 22, 1987, as amended
10.05* Form of Restricted Stock Purchase Agreement for sales of Common Stock to
employees, officers, directors and consultants
10.10* License Agreement between the Company and Network Equipment Technologies
Inc dated February 14, 1989
10.12* License Agreement between the Company and The Board of Trustees of
Leland Stanford Junior University dated April 15, 1987, as amended
10.13* 1989 Employee Stock Purchase Plan
10.14 Cisco Systems, Inc. Senior Management Incentive Plan- President, Vice
President & Director Fiscal Year 1997
10.16* Agreement between the Company and American Telephone and Telegraph
Company dated February 1, 1990
10.19* Letter of Employment between the Company and John T. Chambers dated
January 9, 1991
10.23* Lease Agreement between the Company and SGA Development Partnership,
Ltd., dated February 19, 1993, for the Company's site in San Jose,
California
10.24* Lease Agreement between the Company and Sumitomo Bank Leasing and
Finance, Inc., dated May 13, 1993 for the Company's facilities in San
Jose, California
10.25* Lease Agreement between the Company and SGA Development Partnership,
Ltd., dated February 19, 1993, for the Company's site in San Jose,
California
10.26* Lease Agreement between the Company and the State of California Public
Employees' Retirement System dated March 11, 1993, for the Company's
facilities at 3100 Smoketree Court
10.27* Lease Agreement between the Company and Sumitomo Bank Leasing and
Finance, Inc., dated July 11, 1994 for the Company's site in Wake
County, North Carolina
10.28* Lease Agreement between the Company and Sumitomo Bank Leasing and
Finance, Inc., dated August 12, 1994 for the Company's facilities in
Wake County, North Carolina
</TABLE>
23
<PAGE> 24
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
- ------ -------------------
<S> <C>
10.29&& Lease (Buildings "I" and "J") by and between Sumitomo Bank of New
York Trust Company ("SBNYTC"), as trustee under that certain Trust
Agreement dated May 22, 1995 between Sumitomo Bank Leasing and Finance,
Inc. and SBNYTC ("SB Trust"), as Landlord, and the Company, as tenant,
dated May 22, 1995
10.30&& First Amendment to Lease (Buildings "I" and "J") between SB Trust and
the Company, dated July 18, 1995
10.31&& Lease (Buildings "K" and "L") by and between SB Trust and the
Company, dated May 22, 1995
10.32&& First Amendment to Lease (Buildings "K" and "L") between SB Trust and
the Company, dated July 18, 1995
10.33&& Lease (Improvements Phase "C") by and between SB Trust and the
Company, dated May 22, 1995
10.34&& First Amendment to Lease (Improvements Phase "C") between SB Trust
and the Company, dated July 18, 1995
10.35&& Ground Lease (Parcel 2 and Lot 54) by and between Irish Leasing
Corporation ("Irish"), as Landlord, and the Company, as Tenant, dated
February 28, 1995 for the Company's site in San Jose, California
10.36&& First Amendment to Lease (Parcel 2 and Lot 54) by and between Irish
and the Company dated as of May 1, 1995
10.37&& Second Amendment to Lease (Parcel 2 and Lot 54) by and between Irish
and the Company dated as of May 22, 1995
10.38&& Ground Lease (Lots 58 and 59) by and between Irish and the Company
dated February 28, 1995 for the Company's site in San Jose, California
10.39&& First Amendment to Lease (Lots 58 and 59) by and between Irish and
the Company dated as of May 1, 1995
10.40&& Second Amendment to Lease (Lots 58 and 59) by and between Irish and
the Company dated as of May 22, 1995
10.41&& Ground Lease (Tasman Phase C) by and between Irish and the Company
dated April 12, 1995 for the Company's site in San Jose, California
10.42&& First Amendment to Lease (Tasman Phase C) by and between Irish and
the Company dated as of May 1, 1995
10.43&& Second Amendment to Lease (Tasman Phase C) by and between Irish and
the Company dated as of May 22, 1995
10.44&& Credit Agreement between the Company, the Banks Listed Herein, Bank
of America National Trust and Savings Association, as Administrative
Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent
and Bank of America National Trust and Savings Association, as Issuing
Bank dated as of May 22, 1995
10.45(1) Employment Agreement with Don LeBeau
10.46(2) Lease Agreement between the Company and First State Realty of
America, Inc., dated February 7, 1997, for the Company's site in Santa
Clara, California
10.47(2) Lease Agreement between the Company and Berg & Berg Enterprises,
Inc., dated December 31, 1996, for the Company's site in Santa Clara,
California
10.48(2) Lease (Buildings "A" and "C") by and between SBC&D Co., Inc. and the
Company, dated November 26, 1996, located in San Jose, California
10.49(2) Lease (Buildings "B" and "D") by and between SBC&D Co., Inc. and the
Company, dated November 26, 1996, located in San Jose, California
10.50 Lease agreement between the Company and Lincoln-Whitehall Realty(West)
L.L.C., dated December 12, 1996, for the Company's site in San Jose, CA
10.51 Lease agreement between the Company and Lincoln-Whitehall Realty(West)
L.L.C., dated December 18, 1996, for the Company's site in San Jose, CA
10.52 Master Lease between the Company, as the Lessee, and UBS MORTGAGE
FINANCE INC. as the Lessor, dated December 27, 1996
10.53 Credit Agreement dated as of July 2, 1997 among Cisco Systems, Inc., and
Citicorp USA, Inc., as Administrative Agent, Morgan Guaranty Trust
Company of New York, as Documentation Agent, Bank of America National
Trust and Savings Association, the Chase Manhattan Bank, as Co-Agents,
and Citicorp Securities, Inc., and J.P. Morgan Securities Inc. Arrangers
ll.01 Statement Regarding Computation of Net Income Per Share
13.01 Pages 21 through 51 of the Registrant's 1997 Annual Report to
Shareholders
21.01 Subsidiaries of the Company
23.02 Consent of Independent Accountants
27 Financial Data Schedule
</TABLE>
* Previously filed with registrant's registration statements (File
#33-32778)
** Previously filed with registrant's Form 8-K dated October 8, 1993
@ Previously filed with registrant's Form 8-K dated December 9, 1994
@@ Previously filed with registrant's Form 8-K dated January 25, 1995
# Previously filed with registrant's Form 8-K dated August 19, 1994
## Previously filed with registrant's Proxy statement dated October 2, 1995
& Previously filed with registrant's Form S-4 dated June 7, 1996
&& Previously filed with registrant's Form 10-K dated October 26, 1995
(1) Previously filed with registrant's Form 10-Q dated January 25, 1997
(2) Previously filed with registrant's Form 10-Q dated April 26, 1997
24
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.14
<SEQUENCE>2
<DESCRIPTION>CISCO SYSTEMS, INC. SENIOR MGMT. INCENTIVE PLAN
<TEXT>
<PAGE> 1
EXHIBIT 10.14
CISCO CONFIDENTIAL
CISCO SYSTEMS, INC.
SENIOR MANAGEMENT INCENTIVE PLAN
FY 1997
I. INTRODUCTION
A. THE OBJECTIVE OF THE SENIOR MANAGEMENT INCENTIVE PLAN is to financially
reward Senior Managers for their contributions to the success and
profitability of Cisco Systems, Inc.
B. PARTICIPANTS: This plan applies solely to Cisco Systems, Inc. senior
management staff in the following positions:
POSITION
President
Vice Presidents
Directors (excluding Operations Directors)
Managers, Grade 12 , Individual Contributors, Grade 13
Any exceptions to the above will need to be approved in writing by the
President. The participant must be employed in a bonus eligible position
on or before the first day of the last fiscal quarter of Fiscal Year
1997 and must be employed on the last working day of that year and may
not be concurrently enrolled in any other bonus, sales, or incentive
plan. Participants in the Plan with less than one year of service will
be eligible for a prorated bonus amount. In no event will any individual
accrue any right or entitlement to a bonus under this Plan unless that
individual is employed by Cisco Systems on the last working day of
Fiscal Year 1997.
C. EFFECTIVE DATE: The Plan is effective for the Fiscal Year 1997,
beginning July 29, 1996 through July 26, 1997.
D. CHANGES IN PLAN: The Company presently has no plan to change the Senior
Management Incentive Plan during the fiscal year. However, the Company
reserves the right to modify the Senior Management Bonus Plan in total
or in part, at any time. Any such change must be in writing and signed
by the President. The President or plan designers reserve the right to
interpret the plan document as needed.
E. ENTIRE AGREEMENT: This Plan is the entire agreement between Cisco
Systems, Inc. and the employee regarding the subject matter of this Plan
and supersedes all prior compensation or incentive plans or any written
or verbal representations regarding the subject matter of this Plan.
II. BONUS PLAN ELEMENTS
A. BASE SALARY is determined by the participant's manager, on the Focal
review date scheduled for either August 1, April 1, or October 1 of each
year. The annual base salary in effect at the end of the Fiscal Year
1997 represents the basis for the bonus calculation.
B. BONUS BASIS PERCENTAGE is a percentage level of base salary determined
by the position.
POSITION BONUS %
-------- -------
President 75%
Vice President 50%
Directors (excluding Operations Directors) 40%
Managers, Grade 12 & Individual Contributors, Grade 13 30%
CISCO CONFIDENTIAL
<PAGE> 2
Sr. Management Incentive Plan FY'97 Page 2 of 4
C. INDIVIDUAL PERFORMANCE FACTOR is based upon the manager's evaluation of
performance and contribution for the fiscal year. This factor may range
from .9 - 1.3. The assigned factor may also be a zero resulting in no
bonus based on the manager's evaluation of performance and contribution.
A written performance evaluation is required in conjunction with any
assigned factor of zero.
Employees who are on a Written Warning or Performance Improvement Plan
and/or are performing at a level of "Not Satisfactory" (N) at the end of
the fiscal year are not eligible to receive a bonus. Any exceptions to
this must be in writing and approved by the Vice President of Human
Resources.
D. COMPANY PERFORMANCE FACTOR consists of two elements: 50% based upon
achieving an established worldwide Revenue target and 50% based upon
achieving a worldwide Profit Before Interest and Tax (PBIT) target per
the current Plan. 80% of each objective must be achieved for any bonus
to be paid. The applicable targets for Fiscal Year 1997 are approved by
the Cisco Board of Directors within the first 90 days of each fiscal
year.
<TABLE>
<CAPTION>
COMPANY
REVENUE PBIT PERFORMANCE FACTOR MULTIPLIER
------- ---- ------------------ ----------
<S> <C> <C> <C>
<80% <80% <80% 0 (no bonus paid)
80-100% 80-100% 80-100% .8 - 1.0
>100% >100% 101%+ 4% for each 1% above 100%
5% for each 1% above 120%
</TABLE>
COMPANY PERFORMANCE FACTOR = (REVENUE + PBIT)/2
Example:
Actual Revenue Performance is 105% of goal
Actual PBIT Performance is 115% of goal
105% + 115% = 110%
-----------
2
COMPANY PERFORMANCE MULTIPLIER: = 1.40
E. CUSTOMER SATISFACTION FACTOR is based upon achievement of an overall
worldwide customer satisfaction survey score. This factor may range from
.95 - 1.20.
<TABLE>
<CAPTION>
WORLDWIDE SATISFACTION SCORE FACTOR
---------------------------- ------
<S> <C> <C>
<3.95 .95
3.95 - 4.07 1.05
4.08 - 4.14 1.10
4.15+ 1.20
</TABLE>
CISCO CONFIDENTIAL
<PAGE> 3
Sr. Management Incentive Plan FY'97 Page 3 of 4
F. PRORATION FACTOR accounts for the number of calendar days or hours
within the day during the fiscal year that the employee was in the
bonus-eligible position. For example, the Proration Factor for an
employee who has been on the Plan the entire year will be "1.00". For an
employee who has been on the plan for 6 months, this factor will be
".50". Employees in the following situations will have a proration
factor of less than "1.00":
o Participants in the Plan who transferred to a new position not
governed by any incentive plan.
o Employees who transferred from one bonus-eligible position to
another bonus-eligible position. Employees in this situation
will have their bonus prorated based on length of time in each
position.
o Employees who have been on the Plan less than 12 months (such as
a new hire).
o Employees who have been on a leave of absence of any length
during the fiscal year.
o Employees who have been on the Plan, terminated their
employment, and returned to a bonus-eligible position all in the
same fiscal year.
o Employees working less than a 40-hour week will receive bonuses
prorated according to the following schedule:
20 - 39 hours/week: prorated according to the average number
of hours worked
<20 hours/week: not bonus eligible
Any modification to the above schedule must be approved by the
next-level Manager and Compensation in advance of the year-end close
date.
G. BONUS FORMULA AND CALCULATION EXAMPLE: Assume a Director-level
participant with a base salary of $130,000 at the 40% level, individual
performance factor of 1.10, company performance of 110%, a customer
satisfaction factor of 1.05 and a proration factor of 1.00.
SAMPLE CALCULATION:
<TABLE>
<CAPTION>
BONUS INDIVIDUAL COMPANY CUSTOMER
BASE BASIS PERFORMANCE PERFORMANCE SATISFACTION PRORATION TOTAL
SALARY PERCENTAGE FACTOR FACTOR FACTOR FACTOR BONUS
-------- ---------- ----------- ----------- ------------ --------- -----
<S> <C> <C> <C> <C> <C>
$130,000 x .40 x 1.10 x 1.40 x 1.05 x
1.00 = $84,084
</TABLE>
In this example, the total bonus equals 64.7% of base salary.
CISCO CONFIDENTIAL
<PAGE> 4
Sr. Management Incentive Plan FY'97 Page 4 of 4
H. BONUS PAYMENTS: If company performance is at a minimum of 100% of mid-year
revenue and PBIT targets, a partial payment will be distributed to active
employees midway through the fiscal year. This advance will be 50% of the
bonus target by level net of any advances, draws, or prorations. The bonuses
will go to employees who have met job expectations and were hired on or
before the first day of the second quarter of Fiscal Year 1997 and are
active on the day of distribution. For example, a director would receive an
advance equal to 20% of base salary. In no event, however, will any right or
entitlement to such a partial payment accrue to any eligible participant
unless that individual is employed by Cisco Systems on the distribution
date. The balance (if any) will be paid after the close of the fiscal year,
typically in mid to late August.
III. PROCEDURES AND PRACTICES
A. PROCEDURE:
1. A list of eligible employees will be sent by Human Resources to the
Executive Staff for review at the beginning of the fiscal year.
Additions, deletions or other changes to the list will be made and
the approved list will be returned to Human Resources.
2. Once the list is confirmed, a copy of the Plan will be sent to each
participant.
3. Each eligible new hire and employees promoted into eligible
positions will receive a copy of the plan during the fiscal year.
4. A month before fiscal year end, a list of eligible employees with
all changes made during the year will again be sent to the Executive
Staff for final review and approval.
5. All bonus payments will be made net of applicable withholding taxes.
B. BUSINESS CONDUCT: It is the established policy of Cisco Systems, Inc. to
conduct business with the highest standards of business ethics. Cisco
employees may not offer, give, solicit or receive any payment that could
appear to be a bribe, kickback or other irregular type of payment from
anyone involved in any way with an actual or potential business
transaction. Gifts, favors and entertainment are allowed such that they
are consistent with our business practice, do not violate any applicable
laws, are of limited value ($50.00 or less) and would not embarrass
Cisco if publicly disclosed.
C. TRANSFERS AND TERMINATIONS: Employees who are participants in the Senior
Management Incentive Plan and who transfer to a new position not
governed by this Plan will be eligible on a pro-rata basis for the
applicable period and paid as defined by the Plan. Any exceptions to the
Plan must be designated in writing and approved by the President.
A participant must be employed as of the last working day of the fiscal
year to be eligible for the bonus and must be employed on the
distribution date in order to be eligible to receive a partial payment
under paragraph II-H. If an employee terminates prior to the applicable
date, the employee will not be eligible for such bonus or partial
payment.
D. EMPLOYMENT AT WILL: The employment of all Plan participants at Cisco
Systems, Inc. is for an indefinite period of time and is terminable at
any time by either party, with or without cause being shown or advance
notice by either party. This Plan shall not be construed to create a
contract of employment for a specified period of time between Cisco
Systems, Inc. and any Plan participant.
FY'97 SENIOR MGMT INCENTIVE PLAN 9/26/96
CISCO CONFIDENTIAL
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.50
<SEQUENCE>3
<DESCRIPTION>LEASE AGREEMENT DATED DECEMBER 12, 1996
<TEXT>
<PAGE> 1
EXHIBIT 10.50
LEASE AGREEMENT
(NNN)
BASIC LEASE INFORMATION
<TABLE>
<S> <C>
LEASE DATE: December 12, 1996
LANDLORD: Lincoln-Whitehall Realty (West), L.L.C.,
a Delaware limited liability company
LANDLORD'S ADDRESS: c/o Lincoln Property Company Management Services, Inc.
101 Lincoln Centre Drive, Fourth Floor
Foster City, California 94404-1167
TENANT: Cisco Systems, Inc., a California corporation
TENANT'S ADDRESS: 170 W. Tasman Drive
San Jose, California 95124
Attention: Chris Hampton, Director, Real Estate Worldwide
PREMISES: Approximately 103,890 rentable square feet as shown on Exhibit A
PREMISES ADDRESSES: Building A: 110 Baytech Drive, San Jose, California 95134
Building B: 120 Baytech Drive, San Jose, California 95134
BUILDINGS (A & B): Approximately 103,890 rentable square feet
LOT (PARK'S TAX PARCEL): APN 015-30-093
PARK (LINCOLN BAY TECH PARK): Approximately 188,825 rentable square feet
TERM: July 1, 1997 ("Commencement Date"), through December 31, 2000
("Expiration Date"), subject to the provisions of Section 2 hereof
BASE RENT (Paragraph 3): One hundred fifty thousand six hundred forty and 50/100 dollars
($150,640.50) per month ($1.45 per rentable square foot), commencing on the
Commencement Date through June 30, 1998.
ADJUSTMENTS TO BASE RENT: Effective July 1, 1998 through June 30, 1999, Base Rent shall increase to
$155,835.50 per month ($1.50 per rentable square foot).
Effective July 1, 1999 through June 30, 2000, Base Rent shall increase to
$161,029.50 per month ($1.55 per rentable square foot).
Effective July 1, 2000 through December 31, 2000, Base Rent shall increase
to $166,224.00 per month ($1.60 per rentable square foot).
SECURITY DEPOSIT (Paragraph 4): Waived
*TENANT'S SHARE OF OPERATING EXPENSES (Paragraph 6.1): 55% of the Park
*TENANT'S SHARE OF TAX EXPENSES (Paragraph 6.2): 55% of the Park
*TENANT'S SHARE OF COMMON AREA UTILITY COSTS (Paragraph 7): 55% of the Park
*TENANT'S SHARE OF UTILITY EXPENSES (Paragraph 7): 55% of the Park
*The amount of Tenant's Share of the expenses as referenced above shall be subject to modification as set forth
in this Lease.
PERMITTED USES (Paragraph 9): General office, industrial, assembly, light manufacturing and distribution of
computer products, but only to the extent permitted by the City of San Jose
and all agencies and governmental authorities having jurisdiction thereof
UNRESERVED
PARKING SPACES: Four hundred sixteen (416) non-exclusive and undesignated spaces
BROKERS (Paragraph 38): Dennis Chambers of CPS for Tenant
Wayne Mascia Associates for Landlord
EXHIBITS: Exhibit A - Premises, Building, Lot and/or Park
Exhibit B - Tenant Improvements
Exhibit C - Rules and Regulations
Exhibit D - Covenants, Conditions and Restrictions (Intentionally Omitted)
Exhibit E - Hazardous Materials Disclosure Certificate - Example
Exhibit F - Change of Commencement Date - Example
Exhibit G - Tenant's Initial Hazardous Materials Disclosure Certificate
Exhibit H - Sign Criteria
ADDENDA: Addendum 1: First Option to Extend the Lease
Addendum 2: Second Option to Extend the Lease
</TABLE>
1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
1. PREMISES...................................................................3
2. ADJUSTMENT OF COMMENCEMENT DATE; CONDITION OF THE PREMISES.................3
3. RENT.......................................................................3
4. SECURITY DEPOSIT...........................................................4
5. TENANT IMPROVEMENTS........................................................4
6. ADDITIONAL RENT............................................................4
7. UTILITIES..................................................................6
8. LATE CHARGES...............................................................7
9. USE OF PREMISES............................................................7
10. ALTERATIONS AND ADDITIONS; AND SURRENDER OF PREMISES.......................8
11. REPAIRS AND MAINTENANCE....................................................9
12. INSURANCE.................................................................10
13. WAIVER OF SUBROGATION.....................................................10
14. LIMITATION OF LIABILITY AND INDEMNITY.....................................11
15. ASSIGNMENT AND SUBLEASING.................................................12
16. AD VALOREM TAXES..........................................................13
17. SUBORDINATION.............................................................13
18. RIGHT OF ENTRY............................................................13
19. ESTOPPEL CERTIFICATE......................................................14
20. TENANT'S DEFAULT..........................................................14
21. REMEDIES FOR TENANT'S DEFAULT.............................................15
22. HOLDING OVER..............................................................16
23. LANDLORD'S DEFAULT........................................................16
24. PARKING...................................................................16
25. SALE OF PREMISES..........................................................16
26. WAIVER....................................................................16
27. CASUALTY DAMAGE...........................................................17
28. CONDEMNATION..............................................................17
29. ENVIRONMENTAL MATTERS/HAZARDOUS MATERIALS.................................17
30. FINANCIAL STATEMENTS......................................................19
31. GENERAL PROVISIONS........................................................19
32. SIGNS.....................................................................21
33. MORTGAGEE PROTECTION......................................................21
34. QUITCLAIM.................................................................21
35. MODIFICATIONS FOR LENDER..................................................22
36. WARRANTIES OF TENANT......................................................22
37. COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT...........................22
38. BROKERAGE COMMISSION......................................................22
39. QUIET ENJOYMENT...........................................................23
40. LANDLORD'S ABILITY TO PERFORM TENANT'S UNPERFORMED OBLIGATIONS............23
41. TENANT'S ABILITY TO PERFORM LANDLORD'S UNPERFORMED OBLIGATIONS............24
</TABLE>
2
<PAGE> 3
LEASE AGREEMENT
DATE: This Lease is made and entered into as of the Lease Date set forth on
Page 1. The Basic Lease Information set forth on Page 1 and this Lease
are and shall be construed as a single instrument.
1. PREMISES: Landlord hereby leases the Premises to Tenant upon the terms and
conditions contained herein. Landlord hereby grants to Tenant a license for the
right to use, on a non-exclusive basis, parking areas and ancillary facilities
located within the Common Areas of the Park, subject to the terms of this Lease;
provided, however, such license shall only be revocable (i) if Tenant is in
default of its obligations under this Lease beyond applicable cure periods, or
(ii) upon the expiration or earlier termination of this Lease. For purposes of
this Lease, the term "Premises" shall mean and refer to the entirety of both of
the Buildings, namely, Building A and Building B situated within the Park.
Landlord and Tenant hereby agree that for purposes of this Lease, as of the
Lease Date, the rentable square footage area of the Premises, the Buildings, the
Lot and the Park shall be deemed to be the number of rentable square feet as set
forth in the Basic Lease Information on Page 1; provided, however, within
fifteen (15) days after the date on which Landlord causes the Buildings to be
Substantially Completed (as such term is defined in Exhibit B hereto), Tenant
may have its architect verify the actual rentable square feet contained within
the Premises (i.e. the Buildings), provided that the basis of such measurement
shall be measured from drip line to drip line and not in accordance with BOMA
standards. Tenant hereby acknowledges that the rentable square footage of the
Premises may include a proportionate share of certain areas used in common by
all occupants of the Buildings (for example an electrical room or telephone
room). Landlord and Tenant hereby acknowledge and agree that as of the Lease
Date the Buildings have not been constructed on the Lot. After Landlord has
Substantially Completed (as such term is defined in Exhibit B hereto) the Shell
Improvements, Landlord and Tenant shall execute a written amendment to this
Lease, substantially in the form of Exhibit F hereto, wherein the parties shall
specify the (i) actual approximate rentable square footage of each of the
Premises, the Buildings and the Park, (ii) actual amount of Base Rent to be paid
by Tenant, which shall be based upon the amount of base rent per rentable square
foot as set forth in the Basic Lease Information, (iii) actual amount of
Tenant's Share of the expenses set forth in the Basic Lease Information, which
share shall be based upon such approximate rentable square footages, and (iv)
the Premises Addresses. Tenant further agrees that the number of rentable square
feet of the Buildings, the Lot and the Park may subsequently change after the
Lease Date commensurate with any modifications to any of the foregoing by
Landlord due to any casualty to, or condemnation of, any portion of the
Premises, and Tenant's Share shall accordingly change.
2. ADJUSTMENT OF COMMENCEMENT DATE; CONDITION OF THE PREMISES:
2.1 If on the Commencement Date (a) Landlord has not delivered
possession of the Premises with only the Shell Improvements (defined in Exhibit
B hereto) Substantially Completed, and (b) Tenant has not Substantially
Completed the Tenant Improvements, Landlord shall not be subject to any
liability nor shall the validity of the Lease be affected; provided, subject to
the provisions set forth below, the Lease Term and the obligation to pay Rent
shall commence on the date which is the earlier to occur of (i) the date on
which Tenant has Substantially Completed the Tenant Improvements (defined in
Exhibit B hereto), or (ii) the date which is ninety (90) business days after
Landlord has Substantially Completed the Shell Improvements (provided, said
90-business day period may be extended by a maximum of an additional period of
30 days if Tenant is delayed from Substantially Completing the Tenant
Improvements wholly due either to delays attributable to Landlord's failure to
timely perform its obligations with respect to the Shell Improvements because of
events within Landlord's control (the "Landlord Delays") or events considered to
be Force Majeure Delays (defined in Exhibit B hereto). The Expiration Date shall
also be extended commensurately therewith. In addition to the foregoing and
notwithstanding anything to the contrary contained herein or in Exhibit B
hereto, if Landlord does not tender possession to Tenant of the Premises with
the Shell Improvements Substantially Complete by November 15, 1997 (the "Outside
Date") (subject to any Force Majeure Delays or Tenant Delays, in which event the
date of November 15, 1997 shall be extended commensurately by the period of time
attributable to such delays), then either Tenant or Landlord may terminate this
Lease by delivering written notice thereof to the other party no later than the
date which is ten (10) business days after the Outside Date, as extended by the
period of time attributable to any Force Majeure Delays and/or Tenant Delays. In
addition to the foregoing and notwithstanding anything to the contrary contained
herein or in Exhibit B hereto, if Landlord does not tender possession to Tenant
of the Premises with the Shell Improvements Substantially Complete by March 1,
1998 (the "Ultimate Outside Date") (subject to any Tenant Delays, in which event
the date of March 1, 1998 shall be extended commensurately by the period of time
attributable to such delays), then either Tenant or Landlord may terminate this
Lease by delivering written notice thereof to the other party no later than the
date which is ten (10) business days after the Ultimate Outside Date, as
extended by the period of time attributable to any Tenant Delays. If either
party fails to timely terminate the Lease as and when provided herein, or if
Landlord delivers to Tenant possession of the Premises with the Tenant
Improvements Substantially Complete at any time earlier than the Outside Date
(as such date may be extended due to Force Majeure Delays or Tenant Delays, as
the case may be) or the Ultimate Outside Date (as such date may be extended due
to Tenant Delays), as applicable, then upon the occurrence of any such events
the foregoing right given to Tenant and Landlord to terminate this Lease as
provided herein shall lapse and be null and void upon the earlier occurrence of
such event and the Lease shall remain in full force and effect with Tenant and
Landlord having no further right to terminate this Lease pursuant to the
foregoing provisions. If Landlord does so timely deliver to Tenant possession of
the Premises with the Shell Improvements Substantially Complete, Tenant shall
promptly deliver
3
<PAGE> 4
written notice to Landlord confirming same. In the event the commencement date
and/or the expiration date of this Lease is other than the Commencement Date
and/or Expiration Date provided on Page 1 in the Basic Lease Information, as the
case may be, Landlord and Tenant shall execute a written amendment to this
Lease, substantially in the form of Exhibit F hereto, wherein the parties shall
specify the actual commencement date, expiration date, the date on which Tenant
is to commence paying Rent and the other matters referred to in Section 1 above.
The word "Term" whenever used herein refers to the initial term of this Lease
and any extension thereof. Except as otherwise expressly set forth below with
regard to Punchlist Items, by taking possession of the Premises with only the
Shell Improvements Substantially Completed, Tenant shall be deemed to have
accepted the Premises in a good, clean and completed condition and state of
repair. Notwithstanding the foregoing, within three (3) business days after the
Substantial Completion (as such term is defined in Exhibit B hereto) of the
Shell Improvements representatives of Landlord and Tenant shall make a joint
inspection of the Shell Improvements and the results of each such inspection
shall be set forth in a written list specifying the incomplete items as well as
those items for which corrections need to be made (the "Punchlist Items").
Landlord and Tenant shall promptly (by no later than three (3) business days
thereafter) and in good faith approve the written list of Punchlist Items.
Landlord, at its sole cost and expense, shall use commercially reasonable
efforts to cause the Punchlist Items to be promptly completed and/or corrected,
as applicable. The performance of the work associated with the Punchlist Items
shall be performed in such a manner so as not to preclude or substantially
prevent Tenant's ability to construct the Tenant Improvements in the Premises.
Upon the completion of the Punchlist Items to Tenant's reasonable satisfaction
Tenant shall immediately notify Landlord in writing that such items have been
completed to Tenant's reasonable satisfaction. In addition to the Punchlist
Items, Landlord shall also use commercially reasonable efforts to cause the
general contractor to correct any other patent deficiencies or defects in the
Shell Improvements during the thirty (30) day period following Substantial
Completion of the Shell Improvements. If Tenant fails to timely deliver to
Landlord any such written notice of the aforementioned patent defects or
deficiencies within said 30-day period, Landlord shall have no obligation to
perform any such work thereafter, except as otherwise specifically provided in
Sections 5 and 14 of this Lease. Tenant hereby acknowledges and agrees that
neither Landlord nor Landlord's agents or representatives has made any
representations or warranties as to the suitability, safety or fitness of the
Premises for the conduct of Tenant's business, Tenant's intended use of the
Premises or for any other purpose.
2.2 Landlord shall permit Tenant to enter and occupy the Premises prior
to the Commencement Date for purposes of installing a portion of the Tenant
Improvements and to perform Tenant's Pre-Occupancy Work (as such term is defined
in Exhibit B hereto). Landlord shall consult with its general contractor and
shall notify Tenant, in writing, of the date on which Tenant may commence such
limited purpose occupancy. In no event may Tenant conduct its business or
operations from the Premises until after the Commencement Date. Such limited
purpose occupancy by Tenant shall be at Tenant's sole risk and shall also be
subject to all of the provisions of this Lease other than the requirement to pay
Rent (other than any Utility Expenses incurred during the time period Tenant is
constructing the Tenant Improvements), including, but not limited to, the
requirement to obtain the insurance required pursuant to this Lease (including
without limitation, the provisions of Exhibit B hereto) and to deliver insurance
certificates as required herein, and to pay for all utilities and Utility
Expenses to the extent incurred during the time period Tenant is constructing
the Tenant Improvements. In addition to the foregoing and the provisions of
Exhibit B hereto regarding such early occupancy, Landlord shall have the right
to impose such additional conditions on Tenant's early entry as Landlord shall
deem reasonably appropriate. If, at any time, Tenant is in default of any term,
condition or provision of this Lease, any such waiver by Landlord of Tenant's
requirement to pay rental payments shall be null and void and Tenant shall
immediately pay to Landlord all rental payments so waived by Landlord.
3. RENT: On the date that Tenant executes this Lease, Tenant shall deliver to
Landlord the original executed Lease, the Base Rent (which shall be applied
against the Rent payable for the first month Tenant is required to pay Base
Rent), and all insurance certificates or, alternatively, the letter required
pursuant to Section 12.5 hereof, evidencing the insurance required to be
obtained by Tenant under Section 12 of this Lease and under the provisions of
Exhibit B hereto. Tenant agrees to pay Landlord, without prior notice or demand,
or abatement (except as otherwise set forth in Sections 27 and 41 hereof),
offset, deduction or claim, the Base Rent described on Page 1, payable in
advance at Landlord's address shown on Page 1 on the Commencement Date and
thereafter on the first (1st) day of each month throughout the Term of the
Lease. In addition to the Base Rent set forth on Page 1, Tenant shall pay
Landlord in advance, on the Commencement Date and thereafter on the first (1st)
day of each month throughout the Term of this Lease, as Additional Rent,
Tenant's Share of Operating Expenses, Tax Expenses, Common Area Utility Costs,
and Utility Expenses. The term "Rent" whenever used herein refers to the
aggregate of all these amounts. If Landlord permits Tenant to occupy the
Premises to conduct business operations therein without requiring Tenant to pay
rental payments for a period of time, the waiver of the requirement to pay
rental payments shall only apply to waiver of the Base Rent and Tenant shall
otherwise perform all other obligations of Tenant required hereunder. The Rent
for any fractional part of a calendar month at the commencement or termination
of the Lease term shall be a prorated amount of the Rent for a full calendar
month based upon a thirty (30) day month. The prorated Rent shall be paid on the
Commencement Date and the first day of the calendar month in which the date of
termination occurs, as the case may be.
4. SECURITY DEPOSIT: Intentionally omitted.
5. TENANT IMPROVEMENTS: Upon Substantial Completion by Landlord of the Shell
Improvements and the completion by Landlord of any Punchlist Items, Tenant
hereby agrees to accept the Premises in its then current
4
<PAGE> 5
"AS IS" condition. Subject to the provisions of Exhibit B hereto, Tenant shall
install the improvements ("Tenant Improvements") in the Premises in accordance
with the terms, conditions, criteria and provisions set forth in Exhibit B
hereto. Tenant acknowledges that neither Landlord nor any of Landlord's agents,
representatives or employees has made any representations as to the suitability
or fitness of the Premises for the conduct of Tenant's business, including
without limitation, any storage incidental thereto, or for any other purpose,
and that neither Landlord nor any of Landlord's agents, representatives or
employees has agreed to undertake any alterations or construct any Tenant
Improvements to the Premises except for the construction of the Shell
Improvements as expressly provided in Exhibit B to this Lease. Notwithstanding
the foregoing, Landlord shall allow Tenant to, concurrently with Landlord (if
Landlord so desires, otherwise separately), make a claim against Landlord's
general contractor for any patent or latent defects in the initial design or
construction of the Shell Improvements for a period of five (5) years after the
date on which the Shell Improvements are Substantially Completed. In addition to
the foregoing, Tenant shall be entitled to enforce, concurrently with Landlord,
any warranties made or given to Landlord from the general contractor and any
major subcontractors with respect to the Shell Improvements. Notwithstanding
anything to the contrary contained herein, Tenant shall allow Landlord to,
concurrently with Tenant (if Tenant so desires, otherwise separately), or after
the expiration or earlier termination of this Lease, individually, make a claim
against Tenant's general contractor, namely Devcon Construction Inc. (the
"Tenant's General Contractor") for any patent or latent defects in the initial
design or construction of the Tenant Improvements for a period of five (5) years
after the date on which the Tenant Improvements are substantially completed. In
addition to the foregoing, Landlord shall be entitled to enforce, concurrently
with Tenant, or after the expiration or earlier termination of this Lease,
individually, any warranties made or given to Tenant from the Tenant's General
Contractor and any major subcontractors with respect to the Tenant Improvements.
Each of Landlord and Tenant shall be third party beneficiaries of the other
party's construction agreements, and accordingly, each party hereby agrees to
include a provision in their respective construction contracts to effectuate
same.
6. ADDITIONAL RENT : It is intended by Landlord and Tenant that this Lease be
a "triple net lease". The costs and expenses described in this Section 6 and all
other sums, charges, costs and expenses specified in this Lease other than Base
Rent are to be paid by Tenant to Landlord as additional rent (collectively,
"Additional Rent").
6.1 OPERATING EXPENSES: In addition to the Base Rent set forth in
Section 3, Tenant shall pay Tenant's Share, which is defined on Page 1, of all
Operating Expenses as Additional Rent. The term "Operating Expenses" as used
herein shall mean the total actual amounts paid or payable by Landlord in
connection with the ownership, maintenance, repair and operation of the
Premises, the Buildings and the Lot, and where applicable, of the Park referred
to on Page 1. The amount of Tenant's Share of Operating Expenses shall be
reviewed from time to time by Landlord and shall be subject to modification by
Landlord if there is a change in the rentable square footage of the Premises,
the Buildings and/or the Park due to any casualty or condemnation of any portion
of the Premises. These Operating Expenses may include, but are not limited to:
6.1.1 Landlord's cost of repairs to, and maintenance of, the
non-structural portions of the roof, the roof membrane and the
non-structural portions of the exterior walls of the Buildings;
6.1.2 Landlord's cost of maintaining the outside paved area,
landscaping and other common areas for the Park. The term "Common Areas"
shall mean all areas and facilities within the Park exclusive of the
Premises and the other portions of the Park leased exclusively to other
tenants. The Common Areas include, but are not limited to, parking areas,
access and perimeter roads, sidewalks, landscaped areas and similar areas
and facilities;
6.1.3 Landlord's annual cost of insurance insuring against fire and
extended coverage (including, if Landlord elects, "all risk" or "special
purpose" coverage) and all other insurance, including, but not limited to,
earthquake, flood and/or surface water endorsements for the Buildings, the
Lot and the Park (including the Common Areas), rental value insurance
against loss of Rent in an amount equal to the amount of Rent for a period
of no more than twelve (12) months commencing on the date of loss, and
subject to the provisions of Section 27 below, any commercially reasonable
deductible;
6.1.4 Landlord's cost of: (i) modifications and/or new improvements
to the Buildings, the Common Areas and/or the Park occasioned by any
rules, laws or regulations effective subsequent to the date on which the
Buildings are Substantially Completed; (ii) reasonably necessary
replacement improvements to the Buildings, the Common Areas and the Park
after the Commencement Date; and (iii) new improvements to the Buildings,
the Common Areas and/or the Park that reduce operating costs or improve
life/safety conditions, all as reasonably determined by Landlord, in its
sole discretion; provided, however, if any of the foregoing are in the
nature of capital improvements, then the cost of such capital improvements
shall be amortized on a straight-line basis over a reasonable period,
which shall not be less than the lesser of fifteen (15) years or the
reasonably estimated useful life of such modifications, new improvements
or replacement improvements in question (at an interest rate as reasonably
determined by Landlord), and Tenant shall pay Tenant's Share of the
monthly amortized portion of such costs (including interest charges) as
part of the Operating Expenses herein;
6.1.5 If Landlord elects to so procure, Landlord's cost of
preventative maintenance, and repair contracts including, but not limited
to, contracts for elevator systems and heating, ventilation and air
conditioning systems, lifts for disabled persons, and trash or refuse
collection in the Buildings only;
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6.1.6 Landlord's cost of security and fire protection services for
the Buildings and/or the Park, as the case may be, if in Landlord's
reasonable discretion such services are provided;
6.1.7 Landlord's cost for the creation and negotiation of, and
pursuant to, any licenses, easements or other similar undertakings
benefitting the Buildings or Tenant's use of portions of the Park to the
extent incurred after the Commencement Date;
6.1.8 Landlord's cost of supplies, equipment, rental equipment and
other similar items used in the operation and/or maintenance of the Park;
6.1.9 Landlord's cost for the repairs and maintenance items set
forth in Section 11.2 below; and
6.1.10 Landlord's cost for the management and administration of the
Premises, the Buildings, the Common Areas and the Park, including without
limitation, a property management fee, accounting, auditing, billing,
salaries for clerical and supervisory employees (whether located within
the Park or off-site) and all fees, licenses and permits related to the
ownership, operation and management of any portion of the Park in an
amount not to exceed three percent (3%) of the Base Rent.
Notwithstanding anything to the contrary contained herein, for
purposes of this Lease, the term "Operating Expenses" shall not include the
following:
(a) Costs (including permit, license, and inspection fees)
incurred in renovating, improving, decorating, painting, or redecorating
vacant space or space for other tenants within the Park;
(b) Costs incurred because Landlord or another tenant actually
violated the terms of any lease for premises within the Buildings and/or
Park;
(c) Legal and auditing fees (other than those fees reasonably
incurred in connection with the maintenance and operation of the Buildings
and/or Park), leasing commissions, advertising expenses, and other costs
incurred in connection with the original development or original leasing
of the Buildings and/or Park or future re-leasing of the Buildings and/or
Park;
(d) Depreciation of the Buildings or any other improvements
situated within the Park;
(e) Any items for which Landlord is actually reimbursed by
insurance or by direct reimbursement by any other tenant of the Buildings
or Park;
(f) Costs of repairs or other work necessitated by fire, windstorm
or other casualty (excluding any commercially reasonable deductibles)
and/or costs of repair or other work necessitated by the exercise of the
right of eminent domain to the extent insurance proceeds or a condemnation
award, as applicable, is actually received by Landlord for such purposes;
provided such costs of repairs or other work shall be paid by the parties
in accordance with the provisions of Sections 27 and 28 below;
(g) Other than any interest charges for capital improvements
referred to in Section 6.1.4 hereinabove, any interest or payments on any
financing for the Buildings or the Park, interest and penalties incurred
as a result of Landlord's late payment of any invoice (provided that
Tenant pays Tenant's Share of Operating Expenses and Tax Expenses to
Landlord when due as set forth herein), and any bad debt loss, rent loss
or reserves for same;
(h) Costs associated with the investigation and/or remediation of
Hazardous Materials (hereafter defined) present in, on or about the
Premises, the Buildings or the Park, unless such costs and expenses are
the responsibility of Tenant as provided in Section 29 of this Lease, in
which event such costs and expenses shall be paid solely by Tenant in
accordance with the provisions of Section 29 of this Lease;
(i) Costs of correcting defects in the initial design or
construction of the Shell Improvements or the repair or replacement of any
original materials and equipment as a result of such defects, as long as
such defects are covered by warranties from the contractors performing
such work and Landlord has actually received compensation therefor; and
(j) Landlord's cost for the repairs and maintenance items set
forth in Section 11.3 below.
6.2 TAX EXPENSES: In addition to the Base Rent set forth in Section 3,
Tenant shall pay its share, which is defined on Page 1, of all real property
taxes applicable to the land and improvements included within the Lot on which
the Premises are situated and one hundred percent (100%) of all personal
property taxes now or hereafter assessed or levied against the Premises or
Tenant's personal property. The amount of Tenant's Share of Tax Expenses shall
be reviewed from time to time by Landlord and shall be subject to modification
by Landlord if there is a change in the rentable square footage of the Premises,
the Buildings and/or the Park. Tenant shall also pay one hundred percent (100%)
of any increase in real property taxes attributable, in Landlord's sole
discretion, to any and all alterations, Tenant Improvements or other
improvements of any kind, which are above standard improvements customarily
installed for similar buildings located within the Buildings or the Park (as
applicable), whatsoever placed in, on or about the Premises for the benefit of,
at the request
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of, or by Tenant. The term "Tax Expenses" shall mean and include, without
limitation, any form of tax and assessment (general, special, supplemental,
ordinary or extraordinary), commercial rental tax, payments under any
improvement bond or bonds, license fees, license tax, business license fee,
rental tax, transaction tax, levy, or penalty imposed by authority having the
direct or indirect power of tax (including any city, county, state or federal
government, or any school, agricultural, lighting, drainage or other improvement
district thereof) as against any legal or equitable interest of Landlord in the
Premises, the Buildings, the Lot or the Park, as against Landlord's right to
rent, or as against Landlord's business of leasing the Premises or the occupancy
of Tenant or any other tax, fee, or excise, however described, including, but
not limited to, any value added tax, or any tax imposed in substitution
(partially or totally) of any tax previously included within the definition of
real property taxes, or any additional tax the nature of which was previously
included within the definition of real property taxes. The term "Tax Expenses"
shall not include any (i) franchise, estate, inheritance, net income, or excess
profits tax imposed upon Landlord, or (ii) any interest or penalties resulting
solely from Landlord's failure to pay any Tax Expenses (excluding any failure on
the part of Landlord to so timely make such payments due to Tenant's failure to
timely make such payments to Landlord).
6.3 PAYMENT OF EXPENSES: Landlord shall estimate Tenant's Share of the
Operating Expenses and Tax Expenses for the calendar year in which the Lease
commences. Commencing on the Commencement Date, one-twelfth (1/12th) of this
estimated amount shall be paid by Tenant to Landlord, as Additional Rent, on the
first (1st) day of each month and throughout the remaining months of such
calendar year. Thereafter, Landlord may reasonably estimate such expenses as of
the beginning of each calendar year and Tenant shall pay one-twelfth (1/12th) of
such estimated amount as Additional Rent hereunder on the first day of each
month during such calendar year and for each ensuing calendar year throughout
the Term of this Lease. Tenant's obligation to pay Tenant's Share of Operating
Expenses and Tax Expenses shall survive the expiration or earlier termination of
this Lease.
6.4 ANNUAL RECONCILIATION: By June 30th of each calendar year, or as
soon thereafter as reasonably possible, Landlord shall endeavor to furnish
Tenant with an accounting prepared with reasonable detail of actual Operating
Expenses and Tax Expenses. Within thirty (30) days of Landlord's delivery of
such accounting, Tenant shall pay to Landlord the amount of any underpayment.
Notwithstanding the foregoing, failure by Landlord to give such accounting by
such date shall not constitute a waiver by Landlord of its right to collect any
of Tenant's underpayment at any time. Landlord shall credit the amount of any
overpayment by Tenant toward the next Base Rent falling due, or where the Term
of the Lease has expired, refund the amount of overpayment to Tenant. If the
Term of the Lease expires prior to the annual reconciliation of expenses
Landlord shall have the right to reasonably estimate Tenant's Share of such
expenses, and if Landlord determines that an underpayment is due, Tenant hereby
agrees to pay to Landlord the amount of such underpayment within thirty (30)
days after Landlord's delivery of a demand therefor. If Landlord reasonably
determines that an overpayment has been made by Tenant, Landlord shall refund
said overpayment to Tenant within thirty (30) days after Landlord has made such
determination. Notwithstanding the foregoing, failure of Landlord to accurately
estimate Tenant's Share of such expenses or to otherwise perform such
reconciliation of expenses, including without limitation, Landlord's failure to
make a written demand for any underpayment from Tenant, shall not constitute a
waiver of Landlord's right to collect any of Tenant's underpayment at any time
during the Term of the Lease during the one (1) year period following the last
day of the period to which such underpayment relates or at any time during the
one (1) year period following the expiration or earlier termination of this
Lease.
6.5 AUDIT: After delivery to Landlord of at least thirty (30) days prior
written notice, Tenant, at its sole cost and expense, shall have the right to
examine and/or audit the books and records evidencing such costs and expenses
for the previous one (1) calendar year, during Landlord's reasonable business
hours but not more frequently than once during any calendar year.
Notwithstanding the foregoing, Tenant may only audit the books and records of
Landlord with respect to the Premises and/or the Lease so long as Tenant fully
complies with all of the following requirements: (i) any audit by Tenant shall
be conducted by an accounting or audit firm or financial officer of Tenant; (ii)
any audit shall be conducted in Landlord's offices during reasonable business
hours, and after delivery to Landlord of at least thirty (30) days' prior
written notice; (iii) Tenant may only audit the books and records for the
previous one (1) year period in question and after the lapse of one (1) year
from the date on which Landlord delivers to Tenant any accounting or statement
regarding any rental payments to be made by Tenant under this Lease, Tenant
shall not have any right or ability to audit Landlord's books and records with
respect to such rental payments or charges; and (iv) if it is determined through
such audit that the amount of the expenses actually paid by Tenant to Landlord
for the period in question have not been overstated by an amount that is more
than seven percent (7%) of the aggregate of such expenses, then Tenant shall
immediately pay to Landlord, and reimburse Landlord for, the costs and expenses
incurred by Landlord in connection with such audit, including without
limitation, costs attributable to the time spent by Landlord's or Landlord's
property management company's staff in connection with such audit, as such costs
are reasonably determined by Landlord. Landlord and Tenant shall use their best
efforts to cooperate in such negotiations and to promptly resolve any
discrepancies between Landlord and Tenant in the accounting of such costs and
expenses.
7. UTILITIES: Utility Expenses, Common Area Utility Costs and all other sums
or charges set forth in this Section 7 are considered part of Additional Rent.
Tenant shall pay the cost of all water, sewer use, sewer discharge fees and
sewer connection fees, gas, heat, electricity, refuse pickup, janitorial
service, telephone and other utilities billed or metered separately to the
Premises and/or Tenant. Tenant shall also pay its share of any assessments or
charges for utility or similar purposes included within any tax bill for the Lot
on which the Premises are situated, including, without limitation, entitlement
fees related to Tenant's particular use of the
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Premises, allocation unit fees, and/or any similar fees or charges, and any
penalties related thereto to the extent any such penalties result from Tenant's
failure to so timely make such payments. For any such utility fees or use
charges that are not billed or metered separately to Tenant, Tenant shall pay to
Landlord, as Additional Rent, without prior notice or demand, on the
Commencement Date and thereafter on the first (1st) day of each month throughout
the balance of the Term of this Lease the amount which is attributable to
Tenant's use of the utilities or similar services, as reasonably estimated and
determined by Landlord based upon factors such as size of the Premises and
intensity of use of such utilities by Tenant such that Tenant shall pay the
portion of such charges reasonably consistent with Tenant's use of such
utilities and similar services ("Utility Expenses"). In addition, Tenant shall
pay to Landlord Tenant's Share, which is set forth on Page 1, as Additional
Rent, without prior notice or demand, on the Commencement Date and thereafter on
the first (1st) day of each month throughout the balance of the Term of this
Lease, of any Common Area utility costs, fees, charges or expenses ("Common Area
Utility Costs"). Tenant shall pay to Landlord one-twelfth (1/12th) of the
estimated amount of Tenant's Share of the Common Area Utility Costs in the same
manner and time periods as specified in Section 6.3 above and any reconciliation
thereof shall also be in the same manner as specified in Sections 6.3 and 6.4
above. The amount of Tenant's Share of Common Area Utility Costs shall be
reviewed from time to time by Landlord and shall be subject to modification by
Landlord if there is a change in the rentable square footage of the Premises,
the Buildings and/or the Park due to any casualty or condemnation of any portion
of the Premises. Tenant acknowledges that the Premises may become subject to the
rationing of utility services or restrictions on utility use as required by a
public utility company, governmental agency or other similar entity having
jurisdiction thereof. Notwithstanding any such rationing or restrictions on use
of any such utility services, Tenant acknowledges and agrees that its tenancy
and occupancy hereunder shall be subject to such rationing restrictions as may
be imposed upon Landlord, Tenant, the Premises, the Buildings or the Park, and
Tenant shall in no event be excused or relieved from any covenant or obligation
to be kept or performed by Tenant by reason of any such rationing or
restrictions. Tenant further agrees to timely and faithfully pay, prior to
delinquency, any amount, tax, charge, surcharge, assessment or imposition
levied, assessed or imposed upon the Premises, or Tenant's use and occupancy
thereof. Notwithstanding anything to the contrary contained herein, if due to
incidents, events or occurrences other than those arising from Tenant's or
Tenant's Representatives' negligent or intentional acts or omissions essential
utility services for the conduct of Tenant's operations in the Premises are
discontinued or interrupted for a consecutive period of one hundred eighty (180)
days or more, then such discontinuance or interruption of essential utility
services shall be considered to be a casualty and the provisions of Section 27
shall apply thereto.
8. LATE CHARGES: Any and all sums or charges set forth in this Section 8 are
considered part of Additional Rent. Tenant acknowledges that late payment (the
second day after Landlord's delivery of written notice that any sum has not been
paid when due or any time thereafter) by Tenant to Landlord of Base Rent,
Tenant's Share of Operating Expenses, Tax Expenses, Common Area Utility Costs,
and Utility Expenses or other sums due hereunder, will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of such costs being
extremely difficult and impracticable to fix. Such costs include, without
limitation, processing and accounting charges, and late charges that may be
imposed on Landlord by the terms of any note secured by any encumbrance against
the Premises, and late charges and penalties due to the late payment of real
property taxes on the Premises. Therefore, if any installment of Rent or any
other sum due from Tenant is not received by Landlord within two (2) days after
Landlord's delivery of written notice that such sum is otherwise due, Tenant
shall promptly pay to Landlord all of the following, as applicable: (a) an
additional sum equal to seven percent (7%) of such delinquent amount as a late
charge for every month or portion thereof that such sums remain unpaid, and (b)
the amount of fifty dollars ($50) relating to checks for which there are not
sufficient funds; provided, however, the foregoing late charges shall only be
required to be paid by Tenant if Tenant has been late in making such payments
more than three (3) times during the Term of this Lease. If Tenant delivers to
Landlord a check for which there are not sufficient funds, Landlord may, at its
sole option, require Tenant to replace such check with a cashier's check for the
amount of such check and all other charges payable hereunder. The parties agree
that this late charge and the other charges referenced above represent a fair
and reasonable estimate of the costs that Landlord will incur by reason of late
payment by Tenant. Acceptance of any late charge or other charges shall not
constitute a waiver by Landlord of Tenant's default with respect to the
delinquent amount, nor prevent Landlord from exercising any of the other rights
and remedies available to Landlord for any other breach of Tenant under this
Lease. If a late charge or other charge becomes payable for any three (3)
installments of Rent within any twelve (12) month period, then Landlord, at
Landlord's sole option, can either require the Rent be paid quarterly in
advance, or be paid monthly in advance by cashier's check or by electronic funds
transfer.
9. USE OF PREMISES:
9.1 COMPLIANCE WITH LAWS, RECORDED MATTERS, AND RULES AND REGULATIONS:
The Premises are to be used solely for the uses stated on Page 1 and for no
other uses or purposes without Landlord's prior written consent, which consent
shall not be unreasonably withheld or delayed so long as the proposed use (i)
does not involve the use of Hazardous Materials other than as expressly
permitted under the provisions of Section 29 below, (ii) does not require any
additional parking in excess of the parking spaces already licensed to Tenant
pursuant to the provisions of Section 24 of this Lease, and (iii) is compatible
and consistent with the other uses then being made in the Park and in other
similar type of buildings in the vicinity of the Park, as reasonably determined
by Landlord. The use of the Premises by Tenant and its employees,
representatives, agents, invitees, licensees, subtenants, customers or
contractors (collectively, "Tenant's Representatives") shall be subject to, and
at all times in compliance with, (a) any and all applicable laws, ordinances,
statutes, orders and regulations as same exist from time to time (collectively,
the "Laws"), (b) any and all documents, matters or instruments,
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including without limitation, any declarations of covenants, conditions and
restrictions, and any supplements thereto, each of which has been or hereafter
is recorded in any official or public records with respect to the Premises, the
Buildings, the Lot and/or the Park, or any portion thereof (collectively, the
"Recorded Matters"), provided, if any of the Recorded Matters which are
subsequently recorded after the Lease Date materially affect Tenant's rights and
obligations under this Lease (excluding any liens related to any mortgage, deed
of trust or similar type of security interest, and any easements, liens and
other recorded matters required or imposed in connection with the development
and construction of the Buildings and the other improvements to be made as part
of the Park), then Landlord shall obtain Tenant's prior written consent to same,
which consent shall not be unreasonably withheld or delayed, and (c) any and all
rules and regulations set forth in Exhibit C, attached to and made a part of
this Lease, and any other reasonable rules and regulations promulgated by
Landlord now or hereafter enacted relating to parking and the operation of the
Premises, the Buildings and the Park, provided same are enforced on a
non-discriminatory basis (collectively, the "Rules and Regulations"). Tenant
agrees to, and does hereby, assume full and complete responsibility to ensure
that the Premises are adequate to fully meet the needs and requirements of
Tenant's intended operations of its business within the Premises, and Tenant's
use of the Premises and that same are in compliance with all applicable Laws
throughout the Term of this Lease. Additionally, Tenant shall be solely
responsible for the payment of all costs, fees and expenses associated with any
modifications to the Premises, Buildings, the Common Areas and/or the Park
occasioned by the enactment of, or changes to, any Laws arising from Tenant's
particular use of, or alterations to, the Premises regardless of when such Laws
become effective.
9.2 PROHIBITION ON USE: Tenant shall not use the Premises or permit
anything to be done in or about the Premises nor keep or bring anything therein
which will in any way conflict with any of the requirements of the Board of Fire
Underwriters or similar body now or hereafter constituted or in any way increase
the existing rate of or affect any policy of fire or other insurance upon the
Buildings or any of its contents, or cause a cancellation of any insurance
policy. No auctions may be held or otherwise conducted in, on or about the
Premises, the Buildings, the Lot or the Park without Landlord's written consent
thereto, which consent may be given or withheld in Landlord's sole discretion.
Tenant shall not do or permit anything to be done in or about the Premises which
will in any way obstruct or interfere with the rights of Landlord, other tenants
or occupants of the Buildings, other buildings in the Park, or other persons or
businesses in the area, or injure or annoy other tenants or use or allow the
Premises to be used for any unlawful or objectionable purpose, as determined by
Landlord, in its reasonable discretion, for the benefit, quiet enjoyment and use
by Landlord and all other tenants or occupants of the Buildings or other
buildings in the Park; nor shall Tenant cause, maintain or permit any private or
public nuisance in, on or about the Premises, Buildings, Park and/or the Common
Areas, including, but not limited to, any offensive odors, noises, fumes or
vibrations. Tenant shall not damage or deface or otherwise commit or suffer to
be committed any waste in, upon or about the Premises. Except as may be
permitted under applicable Laws and as Landlord may otherwise approve in
writing, Tenant shall not place or store, nor permit any other person or entity
to place or store, any property, equipment, materials, supplies, personal
property or any other items or goods outside of the Premises for any period of
time except in outside enclosures that are fully fenced and screened in
compliance with all Recorded Matters and Laws, and which enclosures are designed
for such purpose, and which have been approved by Landlord for such use. Other
than seeing-eye dogs for the blind, Tenant shall not permit any animals,
including, but not limited to, any household pets, to be brought or kept in or
about the Premises. Tenant shall place no loads upon the floors, walls, or
ceilings in excess of the maximum designed load permitted by the applicable
Uniform Building Code or which may damage the Buildings or outside areas; nor
place any harmful liquids in the drainage systems; nor dump or store waste
materials, refuse or other such materials, or allow such to remain outside the
Building area, except for any non-hazardous or non-harmful materials which may
be stored in refuse dumpsters or in any enclosed trash areas provided. Tenant
shall honor the terms of all Recorded Matters relating to the Premises, the
Buildings, the Lot and/or the Park. Tenant shall honor the Rules and
Regulations. If Tenant fails to comply with such Laws, Recorded Matters, Rules
and Regulations or the provisions of this Lease, Landlord shall have the right
to collect from Tenant Landlord's costs and expenses, if any, to cure any of
such failures of Tenant, if Landlord, at its sole option, elects to undertake
such cure.
10. ALTERATIONS AND ADDITIONS; AND SURRENDER OF PREMISES:
10.1 ALTERATIONS AND ADDITIONS: Tenant shall be permitted to make, at its
sole cost and expense, non-structural alterations and additions to the Premises
without obtaining Landlord's prior written consent provided the cost of same
does not exceed $75,000 cumulatively in any twelve-month period (the "Permitted
Improvements"). Tenant, however, shall first notify Landlord of such alterations
or additions comprising the Permitted Improvements so that Landlord may post a
Notice of Non-Responsibility on the Premises. Within ten (10) business days of
Landlord's receipt of Tenant's written notice of any item comprising the
Permitted Improvements, Landlord shall notify Tenant whether or not Landlord
will require Tenant to remove such item(s) from the Premises upon the expiration
or earlier termination of this Lease. Except for the Permitted Improvements,
Tenant shall not install any signs, fixtures (excluding trade fixtures),
improvements, nor make or permit any other alterations or additions to the
Premises without the prior written consent of Landlord. If any such alteration
or addition is expressly permitted by Landlord, including without limitation,
the Permitted Improvements, Tenant shall deliver at least twenty (20) days prior
notice to Landlord, from the date Tenant intends to commence construction,
sufficient to enable Landlord to post a Notice of Non-Responsibility. At the
time that Landlord notifies Tenant of its approval or disapproval of any such
request, Landlord shall advise Tenant in writing of those fixtures (excluding
trade fixtures), improvements, alterations and additions which Landlord will
require Tenant to remove upon the expiration or earlier termination of the
Lease. In all events, Tenant shall obtain all permits or other governmental
approvals prior to commencing any of such work and deliver a copy of same to
Landlord. All alterations and additions shall be installed by a licensed
contractor
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reasonably approved by Landlord (except with regard to any Permitted
Improvements the licensed contractor employed by Tenant therefor shall not be
subject to Landlord's prior approval), at Tenant's sole expense in compliance
with all applicable Laws (including, but not limited to, the ADA as defined
herein), Recorded Matters, and Rules and Regulations. Tenant shall keep the
Premises and the property on which the Premises are situated free from any liens
arising out of any work performed, materials furnished or obligations incurred
by or on behalf of Tenant. All alterations and additions performed by Tenant are
subject to Tenant obtaining all necessary building permits and shall be
performed in a first-class workmanlike manner by licensed and insured
contractors. As a condition to Landlord's consent to the installation of any
fixtures, additions or other improvements the cost of which exceeds $100,000 and
solely in the event that there has been a material change in the financial
condition of Tenant such that Tenant's net worth has fallen below
$100,000,000.00, Landlord may require Tenant to post and obtain a completion and
indemnity bond or a letter of credit in form reasonably acceptable to Landlord
for up to one hundred ten percent (110%) of the cost of the work. With respect
to the Tenant Improvements, except for any cafeteria and related items that are
part of the Tenant Improvements for which Landlord will require Tenant, at its
sole cost and expense, to demolish and/or remove from the Premises upon the
expiration or earlier termination of this Lease, Landlord shall not require
Tenant to demolish and/or remove any other items comprising the Tenant
Improvements from the Premises upon the expiration or earlier termination of
this Lease.
10.2 SURRENDER OF PREMISES: Upon the termination of this Lease, whether
by forfeiture, lapse of time or otherwise, or upon the termination of Tenant's
right to possession of the Premises, Tenant will at once surrender and deliver
up the Premises, together with the fixtures (other than trade fixtures),
furnishings, additions and improvements which Landlord has not notified Tenant,
in writing, that Landlord will require Tenant to remove (including without
limitation, any items comprising the Tenant Improvements), to Landlord in good
condition and repair subject to Tenant's compliance with its obligations under
Sections 9, 29 and 37 hereof, including, but not limited to, replacing all light
bulbs and ballasts not in good working condition, except for reasonable wear and
tear, casualty damage and repairs which are Landlord's obligations pursuant to
the provisions of Sections 11.2 and 11.3 below. Reasonable wear and tear shall
not include any damage or deterioration to the floors of the Premises arising
from the use of forklifts in, on or about the Premises (including, without
limitation, any marks or stains of any portion of the floors), and any damage or
deterioration that would have been prevented by proper maintenance by Tenant or
Tenant otherwise performing all of its obligations under this Lease. Upon such
termination of this Lease, Tenant shall remove any cafeteria and related items
that are part of the Tenant Improvements, all tenant signage, trade fixtures,
furniture, furnishings, equipment, personal property, additions, and such other
improvements Landlord requests, in writing, at the time of Landlord's delivery
of its consent to such installation, that Tenant remove some or all of such
additions or improvements installed by, or on behalf of Tenant or situated in or
about the Premises; provided, however, such requirement is reasonably based upon
the nature and type of additions, improvements or alterations being
substantially different than that improved or altered thereby. Tenant shall
repair any damage caused by the installation or removal of any cafeteria and
related items that are part of the Tenant Improvements, and such signs, trade
fixtures, furniture, furnishings, fixtures (other than trade fixtures),
equipment, personal property, additions and improvements which are to be removed
from the Premises by Tenant hereunder. Tenant shall ensure that the removal of
such items and the repair of the Premises will be completed prior to such
termination of this Lease.
11. REPAIRS AND MAINTENANCE:
11.1 TENANT'S REPAIRS AND MAINTENANCE OBLIGATIONS: Except for those
portions of the Buildings to be maintained by Landlord as provided in Sections
11.2 and 11.3 below, Tenant shall, at Tenant's sole cost and expense, keep and
maintain the interior non-structural portions of the Premises and the adjacent
dock and staging areas (including, without limitation, any portion of the Common
Areas used by Tenant or Tenant's Representatives) in good, clean and safe
condition and repair to the reasonable satisfaction of Landlord, reasonable wear
and tear and casualty excepted, including, but not limited to, repairing any
damage caused by Tenant or Tenant's Representatives and replacing any property
so damaged by Tenant or Tenant's Representatives. Without limiting the
generality of the foregoing, Tenant shall be solely responsible for maintaining,
repairing and replacing (a) all mechanical systems, heating, ventilation and air
conditioning systems serving the Premises, (b) all plumbing, electrical wiring
and equipment serving the Premises, (c) all interior lighting (including,
without limitation, light bulbs and/or ballasts) and exterior lighting serving
the Premises or immediately adjacent to the Premises, (d) all interior glass,
windows, window frames, window casements, skylights, interior and exterior
doors, door frames and door closers, (e) all roll-up doors, ramps and dock
equipment, including without limitation, dock bumpers, dock plates, dock seals,
dock levelers and dock lights, (f) all tenant signage, (g) lifts for disabled
persons serving the Premises, (h) sprinkler systems, fire protection systems and
security systems, (i) all partitions, fixtures, equipment, interior painting,
and interior walls and floors of the Premises and every part thereof (including,
without limitation, any demising walls contiguous to any portion of the
Premises), and (j) all interior lobbies and any mezzanines.
11.2 REIMBURSABLE REPAIRS AND MAINTENANCE OBLIGATIONS: Subject to the
provisions of Sections 6 and 9 of this Lease and except for (i) the obligations
of Tenant set forth in Section 11.1 above, (ii) the repairs rendered necessary
by the intentional or negligent acts or omissions of Tenant or Tenant's
Representatives, and (iii) the obligations of Landlord set forth in Section 11.3
below, Landlord agrees, at Landlord's expense, subject to reimbursement pursuant
to Section 6 above, to keep in good repair the Common Areas, plumbing and
mechanical systems exterior to the Premises, the roof, roof membranes, exterior
walls of the Buildings, signage (exclusive of tenant signage), and exterior
electrical wiring and equipment, exterior lighting, exterior glass, exterior
doors/entrances and door closers, exterior window casements, exterior painting
of the Buildings
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(exclusive of the Premises), and underground utility and sewer pipes outside the
exterior walls of the Buildings. For purposes of this Section 11.2, the term
"exterior" shall mean exterior to, and not serving the Premises. Unless
otherwise notified by Landlord, in writing, that Landlord has elected to procure
and maintain the following described contract(s), Tenant shall procure and
maintain (a) the heating, ventilation and air conditioning systems preventative
maintenance and repair contract(s); such contract(s) to be on a quarterly basis,
as reasonably determined by Landlord, and (b) the fire and sprinkler protection
services and preventative maintenance and repair contract(s) (including, without
limitation, monitoring services); such contract(s) to be on a quarterly basis.
Landlord reserves the right, but without the obligation to do so, to procure and
maintain, on similar terms with the foregoing requirements, (i) the heating,
ventilation and air conditioning systems preventative maintenance and repair
contract(s), and/or (ii) the fire and sprinkler protection services and
preventative maintenance and repair contract(s) (including, without limitation,
monitoring services). If Landlord so elects to procure and maintain any such
contract(s), Tenant will reimburse Landlord for the cost thereof in accordance
with the provisions of Section 6 above. If Tenant procures and maintains any of
such contract(s), Tenant will promptly deliver to Landlord a true and complete
copy of each such contract and any and all renewals or extensions thereof, and
each service report or other summary received by Tenant pursuant to or in
connection with such contract(s).
11.3 LANDLORD'S REPAIRS AND MAINTENANCE OBLIGATIONS: Except for repairs
rendered necessary by the intentional or negligent acts or omissions of Tenant
or Tenant's Representatives, Landlord agrees, at Landlord's sole cost and
expense, to (a) keep in good repair the structural portions of the floors,
foundations and exterior perimeter walls of the Buildings (exclusive of glass
and exterior doors), and (b) replace and repair the structural portions of the
roof of the Buildings (excluding the roof membrane) as, and when, Landlord
determines such replacement to be necessary in Landlord's reasonable discretion,
all of the foregoing to be performed in such a manner as is substantially
consistent with maintenance and repair of comparable buildings of similar type
and nature of construction in the San Jose area.
11.4 TENANT'S FAILURE TO PERFORM REPAIRS AND MAINTENANCE OBLIGATIONS:
Except for normal maintenance and repair of the items described above, Tenant
shall have no right of access to or right to install any device on the roof of
the Buildings nor make any penetrations of the roof of the Buildings without the
express prior written consent of Landlord. If Tenant refuses or neglects to
repair and maintain the Premises and the adjacent areas properly as required
herein and to the reasonable satisfaction of Landlord, Landlord may, but without
obligation to do so, at any time make such repairs and/or maintenance without
Landlord having any liability to Tenant for any loss or damage that may accrue
to Tenant's merchandise, fixtures or other property, or to Tenant's business by
reason thereof, except to the extent any damage is caused by the willful
misconduct or negligence of Landlord or its authorized agents and
representatives. In the event Landlord makes such repairs and/or maintenance,
upon completion thereof Tenant shall pay to Landlord, as additional rent, the
Landlord's costs for making such repairs and/or maintenance, plus ten percent
(10%) for overhead, upon presentation of a bill therefor. The obligations of
Tenant hereunder shall survive the expiration of the Term of this Lease or the
earlier termination thereof. Subject to the provisions of Section 41 hereof,
Tenant hereby waives any right to repair at the expense of Landlord under any
applicable Laws now or hereafter in effect respecting the Premises.
12. INSURANCE:
12.1 TYPES OF INSURANCE: Tenant shall maintain in full force and effect
at all times during the Term of this Lease, at Tenant's sole cost and expense,
for the protection of Tenant and Landlord, as their interests may appear,
policies of insurance issued by a carrier or carriers with an A.M. Best's rating
(or similar publication) of A-:VIII or better which afford the following
coverages: (i) worker's compensation: statutory limits; (ii) employer's
liability, as required by law, with a minimum limit of $100,000 per employee and
$500,000 per occurrence; (iii) commercial general liability insurance
(occurrence form) providing coverage against claims for bodily injury and
property damage occurring in, on or about the Premises arising out of Tenant's
and Tenant's Representatives' use and/or occupancy of the Premises. Such
insurance shall include coverage for blanket contractual liability, fire damage,
premises, personal injury, completed operations, and products liability. Such
insurance shall have a combined single limit of not less than One Million
Dollars ($1,000,000) per occurrence with at least a Three Million Dollar
($3,000,000) aggregate limit. If the aggregate limit is exhausted, then so long
as Tenant satisfies the requirements of Section 12.5 below Tenant shall be
deemed to have self-insured all of such risks. If the aggregate limit is
exhausted but Tenant does not satisfy the requirements of Section 12.5 below,
Tenant shall provide for restoration of the aggregate limit, as reasonably
determined by Landlord; (iv) comprehensive automobile liability insurance: a
combined single limit of not less than $2,000,000 per occurrence and insuring
Tenant against liability for claims arising out of the ownership, maintenance,
or use of any owned, hired or non-owned automobiles; (v) "all risk" or "special
purpose" property insurance, including without limitation, sprinkler leakage,
boiler and machinery comprehensive form, if applicable, covering damage to or
loss of any personal property, trade fixtures, inventory, fixtures and equipment
located in, on or about the Premises, and in addition, coverage for flood, and
business interruption of Tenant, together with, if the property of Tenant's
invitees is to be kept in the Premises, warehouser's legal liability or bailee
customers insurance for the full replacement cost of the property belonging to
invitees and located in the Premises. Such insurance shall be written on a
replacement cost basis (without deduction for depreciation) in an amount equal
to one hundred percent (100%) of the full replacement value of the aggregate of
the items referred to in this subparagraph (v); and (vi) such other insurance as
Landlord deems reasonably necessary and prudent or as may otherwise be required
by any of Landlord's lenders.
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12.2 INSURANCE POLICIES: Insurance required to be maintained by Tenant
shall be written by companies (i) licensed to do business in the State of
California, (ii) domiciled in the United States of America, and (iii) having a
"General Policyholders Rating" of at least A-:VIII as set forth in the most
current issue of "A.M. Best's Rating Guides" or similar publication. Any
deductible amounts under any of the insurance policies actually procured by
Tenant and as required hereunder is not in substitution of the limits of
insurance coverage which must be maintained by Tenant, rather such deductibles
are Tenant's self-insured retention for which Tenant shall be wholly
responsible. Tenant shall deliver to Landlord certificates of insurance together
with a true and complete copy of any waiver of subrogation endorsement required
herein for the insurance required to be maintained by Tenant hereunder at the
time of execution of this Lease by Tenant. If at any time Tenant is in default
of its obligations under this Lease beyond any applicable cure periods, Tenant
will deliver to Landlord a copy of any other endorsements to the insurance
policies obtained by Tenant upon Landlord's request therefor. Tenant shall, at
least five (5) days prior to expiration of each policy, furnish Landlord with
certificates of renewal or "binders" thereof. Each certificate shall expressly
provide that such policies shall not be cancelable or otherwise subject to
material reduction of coverage except after thirty (30) days prior written
notice to the parties named as additional insureds as required in this Lease
(except for cancellation for nonpayment of premium, in which event cancellation
shall not take effect until at least ten (10) days' notice has been given to
Landlord), as such certificates are reasonably acceptable to the insurers
issuing such policies and as is customarily provided to landlords in the general
vicinity of the Premises. Tenant shall have the right to provide insurance
coverage which it is obligated to carry pursuant to the terms of this Lease
under a blanket insurance policy.
12.3 ADDITIONAL INSUREDS AND COVERAGE: Landlord, any property management
company and/or agent of Landlord for the Premises, the Buildings, the Lot or the
Park, and any lender(s) of Landlord having a lien against the Premises, the
Buildings, the Lot or the Park shall be named as additional insureds under all
of the policies required in Section 12.1(iii) above, as each of such parties'
interests may appear. Additionally, such policies shall provide for severability
of interest. All insurance to be maintained by Tenant shall, except for workers'
compensation and employer's liability insurance, be primary, without right of
contribution from insurance maintained by Landlord. The limits of insurance
maintained by Tenant shall not limit Tenant's liability under this Lease. It is
the parties' intention that the insurance to be procured and maintained by
Tenant as required herein shall provide coverage for damage or injury arising
from or related to Tenant's operations of its business and/or Tenant's or
Tenant's Representatives' use of the Premises and/or any of the areas within the
Park, whether such events occur within the Premises (as described in Exhibit A
hereto) or in any other areas of the Park. It is not contemplated or anticipated
by the parties that the aforementioned risks of loss be borne by Landlord's
insurance carriers, rather it is contemplated and anticipated by Landlord and
Tenant that such risks of loss be borne by Tenant's insurance carriers pursuant
to the insurance policies procured and maintained by Tenant as required herein,
except to the extent of Landlord's or its authorized representatives' negligence
or willful misconduct.
12.4 FAILURE OF TENANT TO PURCHASE AND MAINTAIN INSURANCE: Subject to
Tenant's ability to self-insure such risks in accordance with the provisions of
Section 12.5 below, in the event Tenant does not purchase the insurance required
in this Lease or keep the same in full force and effect throughout the Term of
this Lease (including any renewals or extensions), Landlord may, but without
obligation to do so, purchase the necessary insurance and pay the premiums
therefor. If Landlord so elects to purchase such insurance, Tenant shall
promptly pay to Landlord as Additional Rent, the amount so paid by Landlord,
upon Landlord's demand therefor. In addition, Landlord may recover from Tenant
and Tenant agrees to pay, as Additional Rent, any and all damages which Landlord
may sustain by reason of Tenant's failure to so obtain and maintain such
insurance. If Tenant fails to maintain any insurance required in this Lease or
otherwise fails to comply with the provisions of Section 12.5 below regarding
Tenant's ability to self-insure such risks, Tenant shall be liable for all
losses, damages and costs resulting from such failure.
12.5 TENANT'S RIGHT TO SELF-INSURE: Notwithstanding anything to the
contrary contained herein, only with respect to the Tenant named herein as of
the Lease Date and provided that said Tenant has and maintains a net worth in
excess of One Hundred Million Dollars ($100,000,000.00), such originally named
Tenant may self-insure the risks contemplated in this Section 12 to the extent
that such self-insurance is permitted by all applicable Laws and provided
further that Tenant shall be fully and completely responsible and liable, at its
sole cost and expense, (1) to fully repair, restore, and replace any and all
items described above which may be damaged due to such risks contemplated
herein, (2) for all injuries to persons or property for which such risks would
otherwise have been insured against under any of the policies described above,
(3) for any losses experienced by Tenant or in Tenant's business which would
have otherwise been covered by business interruption insurance, and (4) for any
and all claims, damages, losses and other liabilities incurred by, or made
against, Tenant, Landlord, Landlord's property management company and/or lenders
arising from Tenant's election to self-insure the risks contemplated in this
Section 12.5, including without limitation, any and all costs of defense,
litigation or other similar proceeding. If the Tenant named herein as of the
Lease Date does so elect to self-insure such risks, then in lieu of delivering
to Landlord a certificate of insurance, Tenant shall deliver to Landlord
(annually) a letter certified by an authorized officer of its company that such
risks are being self-insured and that Tenant has complied with the financial
criteria set forth herein, and such letter shall also contain such other
information as Landlord's lender(s) may reasonably require (the "Self-Insurance
Certificate").
13. WAIVER OF SUBROGATION: Landlord and Tenant hereby mutually waive their
respective rights of recovery against each other for any loss of, or damage to,
either parties' property to the extent that such loss or damage is insured by an
insurance policy required to be in effect at the time of such loss or damage.
Each party shall obtain any special endorsements, if required by its insurer
whereby the insurer waives its rights of subrogation
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against the other party. This provision is intended to waive fully, and for the
benefit of the parties hereto, any rights and/or claims which might give rise to
a right of subrogation in favor of any insurance carrier. The coverage obtained
by Tenant pursuant to Section 12 of this Lease shall include, without
limitation, a waiver of subrogation endorsement attached to the certificate of
insurance. The provisions of this Section 13 shall not apply in those instances
in which such waiver of subrogation would invalidate such insurance coverage or
would cause either party's insurance coverage to be voided or otherwise
uncollectible.
14. LIMITATION OF LIABILITY AND INDEMNITY: Except to the extent of damage
resulting from the negligence or willful misconduct of Landlord or its
authorized representatives, Tenant agrees to protect, defend (with counsel
acceptable to Landlord) and hold Landlord and Landlord's lender(s), members,
partners, employees, representatives, legal representatives, successors and
assigns (collectively, the "Indemnitees") harmless and indemnify the Indemnitees
from and against all liabilities, damages, claims, losses, judgments, charges
and expenses (including reasonable attorneys' fees, costs of court and expenses
necessary in the prosecution or defense of any litigation including the
enforcement of this provision) arising from or in any way related to, directly
or indirectly, (i) Tenant's or Tenant's Representatives' use of the Premises,
Buildings and/or the Park, (ii) the failure by Tenant to perform its obligations
under this Lease or any breach on the part of Tenant of any of the provisions of
this Lease, or (iii) the conduct of Tenant's business, or from any activity,
work or thing done, permitted or suffered by Tenant in or about the Premises,
including, but not limited to, any liability for injury to person or property of
Tenant, Tenant's Representatives, or third party persons. Tenant agrees that the
obligations of Tenant herein shall survive the expiration or earlier termination
of this Lease.
Except to the extent of damage resulting from the negligence or willful
misconduct of Landlord or its authorized representatives, Landlord shall not be
liable to Tenant for any loss or damage to Tenant or Tenant's property, for any
injury to or loss of Tenant's business or for any damage or injury to any person
from any cause whatsoever, including, but not limited to, any acts, errors or
omissions by or on behalf of any other tenants or occupants of the Buildings
and/or the Park. Tenant shall not, in any event or circumstance, be permitted to
offset or otherwise credit against any payments of Rent required herein for
matters for which Landlord may be liable hereunder. Landlord and its authorized
representatives shall not be liable for any interference with light or air, or,
subject to the provisions of Section 5 above, for any latent defect in the
Premises or the Buildings. To the fullest extent permitted by law and except to
the extent of damage resulting from the negligence or willful misconduct of
Landlord or its authorized representatives, Tenant agrees that neither Landlord
nor any of Landlord's lender(s), members, partners, employees, representatives,
legal representatives, successors and assigns shall at any time or to any extent
whatsoever be liable, responsible or in any way accountable for any loss,
liability, injury, death or damage to persons or property which at any time may
be suffered or sustained by Tenant or by any person(s) whomsoever who may at any
time be using, occupying or visiting the Premises, the Buildings or the Park.
Except to the extent of damage resulting from the negligence or willful
misconduct of Tenant or any of Tenant's Representatives, Landlord agrees to
protect, defend (with counsel acceptable to Tenant) and hold Tenant and Tenant's
employees and representatives (collectively, the "Tenant Indemnitees") harmless
and indemnify the Tenant Indemnitees from and against all liabilities, damages,
claims, losses, judgments, charges and expenses (including reasonable attorneys'
fees, costs of court and expenses necessary in the prosecution or defense of any
litigation including the enforcement of this provision) resulting from
Landlord's or its authorized agents' negligence or willful misconduct. Landlord
agrees that the obligations of Landlord herein shall survive the expiration or
earlier termination of this Lease.
15. ASSIGNMENT AND SUBLEASING:
15.1 PROHIBITION: Except as expressly set forth herein with respect to a
Related Entity, Tenant shall not assign, mortgage, hypothecate, encumber, grant
any license or concession, pledge or otherwise transfer this Lease
(collectively, "assignment"), in whole or in part, whether voluntarily or
involuntarily or by operation of law, nor sublet or permit occupancy by any
person other than Tenant of all or any portion of the Premises without first
obtaining the prior written consent of Landlord, which consent shall not be
unreasonably withheld. Tenant hereby agrees that Landlord may withhold its
consent to any proposed sublease or assignment if the proposed sublessee or
assignee or its business is subject to compliance with additional requirements
of the ADA (defined below) beyond those requirements which are applicable to
Tenant, unless the proposed sublessee or assignee shall (a) first deliver plans
and specifications for complying with such additional requirements and obtain
Landlord's written consent thereto, which consent shall not be unreasonably
withheld, and (b) comply with all Landlord's conditions for or contained in such
consent, including without limitation, requirements for security to assure the
lien-free completion of such improvements. If Tenant seeks to sublet or assign
all or any portion of the Premises, Tenant shall deliver to Landlord at least
thirty (30) days prior to the proposed commencement of the sublease or
assignment (the "Proposed Effective Date") the following: (i) the name of the
proposed assignee or sublessee; (ii) such information as to such assignee's or
sublessee's financial responsibility and standing as Landlord may reasonably
require; and (iii) the aforementioned plans and specifications, if any. Within
ten (10) days after Landlord's receipt of a written request from Tenant that
Tenant seeks to sublet or assign all or any portion of the Premises, Landlord
shall deliver to Tenant a copy of Landlord's standard form of sublease or
assignment agreement (as applicable), which instrument shall be utilized for
each proposed sublease or assignment (as applicable), and such instrument shall
include a provision whereby the assignee or sublessee assumes all of Tenant's
obligations hereunder, but with respect to a sublease only, to the extent
applicable to the subleased portion of the Premises, and agrees to be bound by
the terms hereof. As Additional Rent hereunder, Tenant shall pay to Landlord a
fee in the amount of five hundred dollars ($500) plus Tenant
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shall reimburse Landlord for actual legal and other expenses incurred by
Landlord in connection with any actual or proposed assignment or subletting.
Notwithstanding anything to the contrary contained herein, if (I) the Term of
the Second Lease has expired or the Second Lease has been earlier terminated for
any reason whatsoever, in whole or in part, and (II) Tenant proposes to sublease
or assign this Lease to a party other than a Related Entity, then for the time
period during which there is any vacancy in Building C and/or Building D (as
referred to in the Second Lease) Landlord shall have the right, to be exercised
by giving written notice to Tenant, to either (1) recapture the space described
in the proposed sublease or assignment, or (2) consent to such proposed sublease
or assignment, in which event Tenant shall pay Landlord monthly, as Additional
Rent, at the same time as the monthly installments of Rent are payable
hereunder, fifty percent (50%) of the excess of each such payment of rent or
other consideration in excess of the Rent called for hereunder, after deduction
of the actual brokerage commission (if any) paid by Tenant in connection with
such proposed sublease or assignment, where the rent or other consideration
provided for in the proposed sublease or assignment either initially or over the
term of the sublease or assignment exceeds the Rent or pro rata portion of the
Rent, as the case may be, for such space reserved in the Lease. If such
recapture notice is given, it shall serve to terminate this Lease with respect
to the proposed sublease or assignment space, or, if the proposed sublease or
assignment space covers all the Premises, it shall serve to terminate the entire
term of this Lease in either case, as of the Proposed Effective Date, with
respect to such space. However, no termination of this Lease with respect to
part or all of the Premises shall become effective without the prior written
consent, where necessary, of the holder of each deed of trust encumbering the
Premises or any part thereof. If this Lease is terminated pursuant to the
foregoing with respect to less than the entire Premises, the Rent shall be
adjusted on the basis of the proportion of square feet retained by Tenant to the
square feet originally demised and this Lease as so amended shall continue
thereafter in full force and effect. Each permitted assignee or sublessee,
including without limitation, a Related Entity, shall assume and be deemed to
assume this Lease and shall be and remain liable jointly and severally with
Tenant for payment of Rent and for the due performance of, and compliance with
all the terms, covenants, conditions and agreements herein contained on Tenant's
part to be performed or complied with, for the term of this Lease. No assignment
or subletting shall affect the continuing primary liability of Tenant (which,
following assignment, shall be joint and several with the assignee), and Tenant
shall not be released from performing any of the terms, covenants and conditions
of this Lease. Tenant hereby acknowledges and agrees that it understands that
Landlord's accounting department may process and accept Rent payments without
verifying that such payments are being made by Tenant, a permitted sublessee or
a permitted assignee in accordance with the provisions of this Lease. Although
such payments may be processed and accepted by such accounting department
personnel, any and all actions or omissions by the personnel of Landlord's
accounting department shall not be considered as acceptance by Landlord of any
proposed assignee or sublessee nor shall such actions or omissions be deemed to
be a substitute for the requirement that Tenant obtain Landlord's prior written
consent to any such subletting or assignment, and any such actions or omissions
by the personnel of Landlord's accounting department shall not be considered as
a voluntary relinquishment by Landlord of any of its rights hereunder nor shall
any voluntary relinquishment of such rights be inferred therefrom. For purposes
hereof, and except with respect to a Related Entity, in the event Tenant is a
corporation, partnership, joint venture, trust or other entity other than a
natural person, any change in the direct or indirect ownership of Tenant
(whether pursuant to one or more transfers other than publicly traded stock
which does not confer upon any party or parties control over Tenant) which
results in a change of more than fifty percent (50%) in the direct or indirect
ownership of Tenant shall be deemed to be an assignment within the meaning of
this Section 15 and shall be subject to all the provisions hereof. Except for a
permissible assignment to a Related Entity, any and all options, first rights of
refusal, tenant improvement allowances and other similar rights granted to
Tenant in this Lease, if any, shall not be assignable by Tenant unless expressly
authorized in writing by Landlord, at Landlord's reasonable discretion.
Notwithstanding anything to the contrary contained herein, so long as Tenant
delivers to Landlord (x) at least fifteen (15) business days prior written
notice of its intention to assign or sublease the Premises to any Related
Entity, which notice shall set forth the name of the Related Entity, (y) a copy
of the proposed agreement pursuant to which such assignment or sublease shall be
effectuated, and (z) such other information concerning the Related Entity as
Landlord may reasonably require, including without limitation, information
regarding any change in the proposed use of any portion of the Premises and any
financial information with respect to such Related Entity, and so long as
Landlord approves, in writing, of any change in the proposed use of the subject
portion of the Premises, then Tenant may assign this Lease or sublease any
portion of the Premises (X) to any Related Entity, or (Y) in connection with any
merger, consolidation or sale of substantially all of the assets of Tenant,
without having to obtain the prior written consent of Landlord thereto. For
purposes of this Lease the term "Related Entity" shall mean and refer to any
corporation or entity which controls, is controlled by or is under common
control with Tenant, as all of such terms are customarily used in the industry,
and with an equal or greater net worth as Tenant has as of the proposed transfer
date.
15.2 EXCESS SUBLEASE RENTAL OR ASSIGNMENT CONSIDERATION: Notwithstanding
anything to the contrary contained herein, the provisions of this Section 15.2
are subject to the provisions of Section 15.1 above and in the event of any
conflict between such provisions, the terms and provisions of Section 15.1
hereof shall control and prevail. During the initial term of this Lease only, in
the event of any sublease or assignment of all or any portion of the Premises to
a party other than a Related Entity, which sublease or assignment only relates
to the initial term of this Lease and is expressly
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approved by Landlord, and where the rent or other consideration provided for in
the sublease or assignment either initially or over the term of the sublease or
assignment exceeds the Rent or pro rata portion of the Rent, as the case may be,
for such space reserved in the Lease, Tenant shall pay the Landlord monthly, as
Additional Rent, at the same time as the monthly installments of Rent are
payable hereunder, fifty percent (50%) of the excess of each such payment of
rent or other consideration in excess of the Rent called for hereunder, after
deduction of the actual brokerage commission (if any) paid by Tenant in
connection with such proposed sublease or assignment. During any renewal or
option terms of this Lease, in the event of any sublease or assignment of all or
any portion of the Premises to a party other than a Related Entity, which
sublease or assignment relates to such renewal or option term of this Lease and
is expressly approved by Landlord, and where the rent or other consideration
provided for in the sublease or assignment either initially or over the term of
the sublease or assignment exceeds the Rent or pro rata portion of the Rent, as
the case may be, for such space reserved in the Lease, Tenant shall pay the
Landlord monthly, as Additional Rent, at the same time as the monthly
installments of Rent are payable hereunder, fifty percent (50%) of the excess of
each such payment of rent or other consideration in excess of the Rent called
for hereunder, after deduction of the actual brokerage commission (if any) paid
by Tenant in connection with such proposed sublease or assignment.
15.3 WAIVER: Notwithstanding any assignment or sublease, or any
indulgences, waivers or extensions of time granted by Landlord to any assignee
or sublessee, or failure by Landlord to take action against any assignee or
sublessee, Tenant agrees that Landlord may, at its option, proceed against
Tenant without having taken action against or joined such assignee or sublessee,
except that Tenant shall have the benefit of any indulgences, waivers and
extensions of time granted to any such assignee or sublessee.
16. AD VALOREM TAXES: Prior to delinquency, Tenant shall pay all taxes and
assessments levied upon trade fixtures, alterations, additions, improvements,
inventories and personal property located and/or installed on or in the Premises
by, or on behalf of, Tenant; and if requested by Landlord, Tenant shall promptly
deliver to Landlord copies of receipts for payment of all such taxes and
assessments. To the extent any such taxes are not separately assessed or billed
to Tenant, Tenant shall pay the amount thereof as invoiced by Landlord.
17. SUBORDINATION: Landlord hereby represents to Tenant that as of the Lease
Date there does not exist a lien of a mortgage or deed of trust on all or any
portion of the Premises. Without the necessity of any additional document being
executed by Tenant for the purpose of effecting a subordination, and at the
election of Landlord or any bona fide mortgagee or deed of trust beneficiary
with a lien on all or any portion of the Premises or any ground lessor with
respect to the land of which the Premises are a part, the rights of Tenant under
this Lease and this Lease shall be subject and subordinate at all times to: (i)
all ground leases or underlying leases which may now exist or hereafter be
executed affecting the Buildings or the land upon which the Buildings are
situated or both provided such ground lease includes a provision that Tenant's
use, occupancy or quiet enjoyment of the Premises will not be disturbed so long
as Tenant is not in default of the terms and provisions of this Lease, and (ii)
the lien of any mortgage or deed of trust which may now exist or hereafter be
executed in any amount for which the Buildings, the Lot, ground leases or
underlying leases, or Landlord's interest or estate in any of said items is
specified as security. Notwithstanding the foregoing, Landlord or any such
ground lessor, mortgagee, or any beneficiary shall have the right to subordinate
or cause to be subordinated any such ground leases or underlying leases or any
such liens to this Lease. If any ground lease or underlying lease terminates for
any reason or any mortgage or deed of trust is foreclosed or a conveyance in
lieu of foreclosure is made for any reason, Tenant shall, notwithstanding any
subordination and upon the request of such successor to Landlord, attorn to and
become the Tenant of the successor in interest to Landlord, provided such
successor in interest will not disturb Tenant's use, occupancy or quiet
enjoyment of the Premises so long as Tenant is not in default of the terms and
provisions of this Lease. The successor in interest to Landlord following
foreclosure, sale or deed in lieu thereof shall not be (a) liable for any act or
omission of any prior lessor or with respect to events occurring prior to
acquisition of ownership; (b) subject to any offsets or defenses which Tenant
might have against any prior lessor; or (c) bound by prepayment of more than one
(1) month's Rent. Tenant covenants and agrees to execute (and acknowledge if
required by Landlord, any lender or ground lessor) and deliver, within ten (10)
business days of a demand or request by Landlord and in the form requested by
Landlord, ground lessor, mortgagee or beneficiary, any additional documents
evidencing the priority or subordination of this Lease with respect to any such
ground leases or underlying leases or the lien of any such mortgage or deed of
trust. Tenant's failure to timely execute and deliver such additional documents
shall, at Landlord's option, constitute a material default hereunder. Tenant's
agreement to subordinate this Lease to any future ground or underlying lease or
any future deed of trust or mortgage pursuant to the foregoing provisions of the
Section 17 is conditioned upon Landlord delivering to Tenant from the lessor
under such future ground or underlying lease or the holder of any such mortgage
or deed of trust, a non-disturbance agreement agreeing, among other things, that
Tenant's right to possession of the Premises pursuant to the terms and
conditions of this Lease shall not be disturbed provided Tenant is not in
default under this Lease beyond the applicable notice and cure periods
hereunder.
18. RIGHT OF ENTRY: Tenant grants Landlord or its agents the right to enter
the Premises at all reasonable times, upon 24 hours advance notice to Tenant,
for purposes of inspection, exhibition, posting of notices, repair or
alteration. At Landlord's option, Landlord shall at all times have and retain a
key with which to unlock all the doors not conspicuously designated as
restricted access areas for security reasons in, upon and about the Premises,
excluding Tenant's vaults and safes. It is further agreed that Landlord shall
have the right to use any and all means Landlord deems necessary to enter the
Premises in an emergency. Landlord shall also have the right to place "for sale"
signs in the Common Areas at any time during the Term of this Lease. Landlord
shall also have the right to place "for rent" or "for lease" signs (which
signage shall include a phrase to the effect that Tenant is moving to larger
quarters) on the outside of the Premises and/or in the Common Areas at any time
during the last nine (9) months of the Term or the earlier termination thereof.
Tenant hereby waives any claim from damages or for any injury or inconvenience
to or interference with Tenant's business, or any other loss occasioned thereby
except for any claim for any of the foregoing arising out of the negligence or
willful misconduct of Landlord or its authorized representatives.
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19. ESTOPPEL CERTIFICATE: Tenant shall execute (and acknowledge if required by
any lender or ground lessor) and deliver to Landlord, within not less than ten
(10) business days after Landlord provides such to Tenant, a statement in
writing certifying that this Lease is unmodified and in full force and effect
(or, if modified, stating the nature of such modification), the date to which
the Rent and other charges are paid in advance, if any, acknowledging that there
are not, to Tenant's knowledge, any uncured defaults on the part of Landlord
hereunder or specifying such defaults as are claimed, and such other matters as
Landlord may reasonably require. Any such statement may be conclusively relied
upon by Landlord and any prospective purchaser or encumbrancer of the Premises.
Tenant's failure to deliver such statement within such time shall be conclusive
upon the Tenant that (a) this Lease is in full force and effect, without
modification except as may be represented by Landlord; (b) there are no uncured
defaults in Landlord's performance; and (c) not more than one month's Rent has
been paid in advance, except in those instances when Tenant pays Rent quarterly
in advance pursuant to Section 8 hereof, then not more than three month's Rent
has been paid in advance. Failure by Tenant to so deliver such certified
estoppel certificate shall be a material default of the provisions of this
Lease. Tenant shall be liable to Landlord, and shall indemnify Landlord from and
against any loss, cost, damage or expense, incidental, consequential, or
otherwise, resulting from any failure of Tenant to execute or deliver to
Landlord any such certified estoppel certificate.
20. TENANT'S DEFAULT: The occurrence of any one or more of the following
events shall, at Landlord's option, constitute a material default by Tenant of
this Lease:
20.1 The abandonment of the Premises by Tenant or the vacation of the
Premises by Tenant which would cause any insurance policy to be invalidated or
otherwise lapse. Tenant agrees to notice and service of notice as provided for
in this Lease and waives any right to any other or further notice or service of
notice which Tenant may have under any statute or law now or hereafter in
effect;
20.2 The failure by Tenant to make any payment of Rent, Additional Rent
or any other payment required hereunder within three (3) days of Landlord's
delivery of written notice that said payment is due. Tenant agrees to notice and
service of notice as provided for in this Lease and waives any right to any
other or further notice or service of notice which Tenant may have under any
statute or law now or hereafter in effect;
20.3 The failure by Tenant to observe, perform or comply with any of the
conditions, covenants or provisions of this Lease (except failure to make any
payment of Rent and/or Additional Rent) and such failure is not cured within (i)
thirty (30) days of the date on which Landlord delivers written notice of such
failure to Tenant, complying with the notice requirements of Section 31.10
hereof, for all failures other than with respect to Hazardous Materials, and
(ii) ten (10) days of the date on which Landlord delivers written notice of such
failure to Tenant for all failures in any way related to Hazardous Materials.
However, Tenant shall not be in default of its obligations hereunder if such
failure cannot reasonably be cured within such thirty (30) or ten (10) day
period, as applicable, and Tenant promptly commences, and thereafter diligently
proceeds with same to completion, all actions necessary to cure such failure as
soon as is reasonably possible, but in no event shall the completion of such
cure be later than sixty (60) days after the date on which Landlord delivers to
Tenant written notice of such failure, unless Landlord, acting reasonably and in
good faith, otherwise expressly agrees in writing to a longer period of time
based upon the circumstances relating to such failure as well as the nature of
the failure and the nature of the actions necessary to cure such failure;
20.4 The making of a general assignment by Tenant for the benefit of
creditors, the filing of a voluntary petition by Tenant or the filing of an
involuntary petition by any of Tenant's creditors seeking the rehabilitation,
liquidation, or reorganization of Tenant under any law relating to bankruptcy,
insolvency or other relief of debtors and, in the case of an involuntary action,
the failure to remove or discharge the same within sixty (60) days of such
filing, the appointment of a receiver or other custodian to take possession of
substantially all of Tenant's assets or this leasehold, Tenant's insolvency or
inability to pay Tenant's debts or failure generally to pay Tenant's debts when
due, any court entering a decree or order directing the winding up or
liquidation of Tenant or of substantially all of Tenant's assets, Tenant taking
any action toward the dissolution or winding up of Tenant's affairs, the
cessation or suspension of Tenant's use of the Premises, or the attachment,
execution or other judicial seizure of substantially all of Tenant's assets or
this leasehold;
20.5 Tenant's use or storage of Hazardous Materials in, on or about the
Premises, the Buildings, the Lot and/or the Park other than as expressly
permitted by the provisions of Section 29 below;
20.6 The intentional making of any material misrepresentation or omission
by Tenant in any materials delivered by or on behalf of Tenant to Landlord
pursuant to this Lease; or
20.7 A material default by Tenant of any of the terms, provisions or
conditions of that certain Lease Agreement, of even date herewith, by and
between Landlord and Tenant for the leasing by Tenant of those two (2) certain
buildings situated within the Park and referred to as Buildings C and D (the
"Second Lease").
21. REMEDIES FOR TENANT'S DEFAULT:
21.1 LANDLORD'S RIGHTS: In the event of Tenant's material default or
breach of the Lease, Landlord may, after expiration of any applicable cure
period, terminate Tenant's right to possession of the Premises by any lawful
means in which case upon delivery of written notice by Landlord this Lease shall
terminate on the date specified by Landlord in such notice and Tenant shall
immediately surrender possession of the Premises
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to Landlord. In addition, the Landlord shall have the immediate right of
re-entry whether or not this Lease is terminated, and if this right of re-entry
is exercised following abandonment of the Premises by Tenant, Landlord may
consider any personal property belonging to Tenant and left on the Premises to
also have been abandoned. No re-entry or taking possession of the Premises by
Landlord pursuant to this Section 21 shall be construed as an election to
terminate this Lease unless a written notice of such intention is given to
Tenant. If Landlord relets the Premises or any portion thereof, (i) Tenant shall
be liable immediately to Landlord for all costs Landlord incurs in reletting the
Premises or any part thereof, including, without limitation, broker's
commissions, expenses of cleaning, redecorating, and further improving the
Premises and other similar costs (collectively, the "Reletting Costs"), and (ii)
the rent received by Landlord from such reletting shall be applied to the
payment of, first, any indebtedness from Tenant to Landlord other than Base
Rent, Operating Expenses, Tax Expenses, Common Area Utility Costs, and Utility
Expenses; second, all costs including maintenance, incurred by Landlord in
reletting; and, third, Base Rent, Operating Expenses, Tax Expenses, Common Area
Utility Costs, Utility Expenses, and all other sums due under this Lease. Any
and all of the Reletting Costs shall be fully chargeable to Tenant and shall not
be prorated or otherwise amortized in relation to any new lease for the Premises
or any portion thereof. After deducting the payments referred to above, any sum
remaining from the rental Landlord receives from reletting shall be held by
Landlord and applied in payment of future Rent as Rent becomes due under this
Lease. In no event shall Tenant be entitled to any excess rent received by
Landlord. Reletting may be for a period shorter or longer than the remaining
term of this Lease. No act by Landlord other than giving written notice to
Tenant shall terminate this Lease. Acts of maintenance, efforts to relet the
Premises or the appointment of a receiver on Landlord's initiative to protect
Landlord's interest under this Lease shall not constitute a termination of
Tenant's right to possession. So long as this Lease is not terminated, Landlord
shall have the right to remedy any default of Tenant, to maintain or improve the
Premises, to cause a receiver to be appointed to administer the Premises and new
or existing subleases and to add to the Rent payable hereunder all of Landlord's
reasonable costs in so doing, with interest at the maximum rate permitted by law
from the date of such expenditure.
21.2 DAMAGES RECOVERABLE: If Tenant breaches this Lease and abandons the
Premises before the end of the Term, or if Tenant's right to possession is
terminated by Landlord because of a breach or default of the Lease, then in
either such case, Landlord may recover from Tenant all damages suffered by
Landlord as a result of Tenant's failure to perform its obligations hereunder,
including, but not limited to, the unamortized portion of any broker's or
leasing agent's commission incurred with respect to the leasing of the Premises
to Tenant for the balance of the Term of the Lease remaining after the date on
which Tenant is in default of its obligations hereunder to the extent such sums
are not already included as part of the calculation of damages, and all
Reletting Costs, and the worth at the time of the award (computed in accordance
with paragraph (3) of Subdivision (a) of Section 1951.2 of the California Civil
Code) of the amount by which the Rent then unpaid hereunder for the balance of
the Lease Term exceeds the amount of such loss of Rent for the same period which
Tenant proves could be reasonably avoided by Landlord and in such case, Landlord
prior to the award, may relet the Premises for the purpose of mitigating damages
suffered by Landlord because of Tenant's failure to perform its obligations
hereunder; provided, however, that even though Tenant has abandoned the Premises
following such breach, this Lease shall nevertheless continue in full force and
effect for as long as Landlord does not terminate Tenant's right of possession,
and until such termination, Landlord shall have the remedy described in Section
1951.4 of the California Civil Code (Landlord may continue this Lease in effect
after Tenant's breach and abandonment and recover Rent as it becomes due, if
Tenant has the right to sublet or assign, subject only to reasonable
limitations) and may enforce all its rights and remedies under this Lease,
including the right to recover the Rent from Tenant as it becomes due hereunder.
The "worth at the time of the award" within the meaning of Subparagraphs (a)(1)
and (a)(2) of Section 1951.2 of the California Civil Code shall be computed by
allowing interest at the rate of ten percent (10%) per annum. Tenant waives
redemption or relief from forfeiture under California Code of Civil Procedure
Sections 1174 and 1179, or under any other present or future law, in the event
Tenant is evicted or Landlord takes possession of the Premises by reason of any
default of Tenant hereunder.
21.3 RIGHTS AND REMEDIES CUMULATIVE: The foregoing rights and remedies of
Landlord are not exclusive; they are cumulative in addition to any rights and
remedies now or hereafter existing at law, in equity by statute or otherwise, or
to any equitable remedies Landlord may have, and to any remedies Landlord may
have under bankruptcy laws or laws affecting creditor's rights generally.
21.4 WAIVER OF A DEFAULT: The waiver by Landlord of any material default
or breach of any provision of this Lease shall not be deemed or construed a
waiver of any other material breach or default by Tenant hereunder or of any
subsequent material breach or default of this Lease, except for the default
specified in the waiver.
22. HOLDING OVER: If Tenant holds possession of the Premises after the
expiration of the Term of this Lease with Landlord's consent, Tenant shall
become a tenant from month-to-month upon the terms and provisions of this Lease,
provided the monthly Base Rent during such hold over period shall be 125% of the
Base Rent due on the last month of the Lease Term, payable in advance on or
before the first day of each month. Acceptance by Landlord of the monthly Base
Rent without the additional twenty-five percent (25%) increase of Base Rent
shall not be deemed or construed as a waiver by Landlord of any of its rights to
collect the increased amount of the Base Rent as provided herein at any time.
Such month-to-month tenancy shall not constitute a renewal or extension for any
further term. All options, if any, granted under the terms of this Lease shall
be deemed automatically terminated and be of no force or effect during said
month-to-month tenancy. Tenant shall continue in possession until such tenancy
shall be terminated by either Landlord or Tenant giving written notice of
termination to the other party at least thirty (30) days prior to the effective
date of termination.
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This paragraph shall not be construed as Landlord's permission for Tenant to
hold over. Acceptance of Base Rent by Landlord following expiration or
termination of this Lease shall not constitute a renewal of this Lease. If
Tenant provides Landlord with at least twelve (12) months advance written notice
of Tenant's intention to hold over and the anticipated hold over period of time,
Landlord shall not be entitled to any consequential damages arising from such
hold over for the hold over period specified in such written notice; provided,
however, the foregoing shall not be considered as Landlord's waiver of the
requirement for Tenant to pay such additional twenty-five percent (25%) increase
of Base Rent during such holdover period as contemplated above.
23. LANDLORD'S DEFAULT: Landlord shall not be deemed in breach or default of
this Lease unless Landlord fails within a reasonable time to perform an
obligation required to be performed by Landlord hereunder. For purposes of this
provision, a reasonable time shall not be less than thirty (30) days after
receipt by Landlord of written notice specifying the nature of the obligation
Landlord has not performed (except for any items of repair or maintenance for
which a prompter response would be reasonably necessary or appropriate given the
then existing circumstances); provided, however, that if the nature of
Landlord's obligation is such that more than thirty (30) days, after receipt of
written notice, is reasonably necessary for its performance, then Landlord shall
not be in breach or default of this Lease if performance of such obligation is
commenced within such thirty (30) day period and thereafter diligently pursued
to completion.
24. PARKING: Tenant shall have a license to use the number of undesignated and
nonexclusive parking spaces set forth on Page 1. Landlord shall exercise
reasonable efforts to insure that such spaces are available to Tenant for its
use, but Landlord shall not be required to enforce Tenant's right to use the
same. Tenant shall have the exclusive right to use up to ten (10) parking
spaces, in locations designated by Landlord, in close proximity to the entrance
of each of the Buildings for Tenant's exclusive use for visitor parking;
provided, Tenant shall be solely responsible for the payment of all costs
associated with such striping and designation and Tenant's General Contractor
shall perform the work associated therewith as part of the Tenant Improvements.
25. SALE OF PREMISES: In the event of any sale of the Premises by Landlord or
the cessation otherwise of Landlord's interest therein, Landlord shall be and is
hereby entirely released from any and all of its obligations to perform or
further perform under this Lease and from all liability hereunder accruing or
arising from and after the date of such sale; and the purchaser, at such sale or
any subsequent sale of the Premises shall be deemed, without any further
agreement between the parties or their successors in interest or between the
parties and any such purchaser, to have assumed and agreed to carry out any and
all of the covenants and obligations of the Landlord under this Lease except for
those obligations of Landlord which have accrued prior to the date of such
transfer. For purposes of this Section 25, the term "Landlord" means only the
owner and/or agent of the owner as such parties exist as of the date on which
Tenant executes this Lease. A ground lease or similar long term lease by
Landlord of the entire Buildings, of which the Premises are a part, shall be
deemed a sale within the meaning of this Section 25. Tenant agrees to attorn to
such new owner provided such new owner does not disturb Tenant's use, occupancy
or quiet enjoyment of the Premises so long as Tenant is not in default of any of
the provisions of this Lease.
26. WAIVER: No delay or omission in the exercise of any right or remedy of
Landlord on any default by Tenant shall impair such a right or remedy or be
construed as a waiver. The subsequent acceptance of Rent by Landlord after
breach by Tenant of any covenant or term of this Lease shall not be deemed a
waiver of such breach, other than a waiver of timely payment for the particular
Rent payment involved, and shall not prevent Landlord from maintaining an
unlawful detainer or other action based on such breach. No payment by Tenant or
receipt by Landlord of a lesser amount than the monthly Rent and other sums due
hereunder shall be deemed to be other than on account of the earliest Rent or
other sums due, nor shall any endorsement or statement on any check or
accompanying any check or payment be deemed an accord and satisfaction; and
Landlord may accept such check or payment without prejudice to Landlord's right
to recover the balance of such Rent or other sum or pursue any other remedy
provided in this Lease. No failure, partial exercise or delay on the part of the
Landlord in exercising any right, power or privilege hereunder shall operate as
a waiver thereof.
27. CASUALTY DAMAGE: If either of the Buildings or any part thereof shall be
damaged by fire or other casualty, Tenant shall give prompt written notice
thereof to Landlord. In case either of the Buildings shall be so damaged by fire
or other casualty that fifty percent (50%) or more of the affected Building(s)
requires substantial alteration or reconstruction, in Landlord's reasonable
opinion, Landlord may, at its option, terminate this Lease with respect only to
the affected Building by notifying Tenant in writing of such termination within
ninety (90) days after the date of such damage, in which event the Rent shall be
abated as of the date of such damage but only to the extent Tenant is not able
to conduct its operations in the affected Building(s). If either of the
Buildings or any part thereof shall be damaged by fire or other casualty such
that the reparation of such damage or casualty shall require more than one
hundred eighty (180) days to complete (subject to extension for Force Majeure
Delays or Tenant Delays), then either Tenant or Landlord may terminate this
Lease with respect only to the affected Building by notifying the other party of
such election to terminate this Lease within thirty (30) days after the date on
which it is determined by Landlord of the length of time necessary to
substantially complete such repairs, in which event the Rent shall be abated as
of the date of such damage but only to the extent Tenant is not able to conduct
its operations in the affected Building(s). If neither party exercises their
rights to so elect to terminate this Lease with respect only to the affected
Building in accordance with the aforesaid provisions, and provided insurance
proceeds are available to fully repair the damage (excluding any
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deductible), Landlord shall within ninety (90) days after the date of such
damage commence to repair and restore the affected Building(s) and shall proceed
with reasonable diligence to restore the affected Building(s) (except that
Landlord shall not be responsible for delays outside its control) to
substantially the same condition in which it was immediately prior to the
happening of the casualty; provided, Landlord shall not be required to rebuild,
repair, or replace any part of Tenant's furniture, furnishings or fixtures and
equipment removable by Tenant or any improvements, alterations or additions
installed by or for the benefit of Tenant under the provisions of this Lease.
Landlord shall not in any event be required to spend for such work an amount in
excess of the insurance proceeds (excluding any deductible) actually received by
Landlord as a result of the fire or other casualty. Landlord shall not be liable
for any inconvenience or annoyance to Tenant, injury to the business of Tenant,
loss of use of any part of the Premises by the Tenant or loss of Tenant's
personal property resulting in any way from such damage or the repair thereof,
except that, subject to the provisions of the next sentence, Landlord shall
allow Tenant a fair diminution of Rent during the time and to the extent the
affected Building(s) is unfit for occupancy. Notwithstanding anything to the
contrary contained herein, if either of the Buildings or any other portion
thereof be damaged by fire or other casualty resulting from the intentional or
negligent acts or omissions of Tenant or any of Tenant's Representatives, (i)
the Rent shall not be diminished during the repair of such damage, (ii) Tenant
shall not have any right to terminate this Lease with respect only to the
affected Building due to the occurrence of such casualty or damage, and (iii)
Tenant shall be liable to Landlord for the cost and expense of the repair and
restoration of all or any portion of the affected Building(s) caused thereby
(including, without limitation, any deductible) to the extent such cost and
expense is not covered by insurance proceeds. In the event the holder of any
indebtedness secured by the affected Building(s) requires that the insurance
proceeds be applied to such indebtedness, then Landlord shall have the right to
terminate this Lease with respect only to the affected Building by delivering
written notice of termination to Tenant within thirty (30) days after the date
of notice to Tenant of any such event, whereupon all rights and obligations
shall cease and terminate hereunder with respect only to the affected Building
except for those obligations expressly intended to survive any such termination
of this Lease. Any notices required to be delivered pursuant to the provisions
of this Section 27 shall be in compliance with the notice requirements of
Section 31.10 of this Lease. Except as otherwise provided in this Section 27,
Tenant hereby waives the provisions of Sections 1932(2.), 1933(4.), 1941 and
1942 of the California Civil Code.
28. CONDEMNATION: If twenty-five percent (25%) or more of the Premises is
condemned by eminent domain, inversely condemned or sold in lieu of condemnation
for any public or quasi-public use or purpose ("Condemned"), then Tenant or
Landlord may terminate this Lease as of the date when physical possession of the
Premises is taken and title vests in such condemning authority, and Rent shall
be adjusted to the date of termination. Tenant shall not because of such
condemnation assert any claim against Landlord or the condemning authority for
any compensation because of such condemnation, and Landlord shall be entitled to
receive the entire amount of any award without deduction for any estate of
interest or other interest of Tenant; provided, however, the foregoing
provisions shall not preclude Tenant, at Tenant's sole cost and expense, from
obtaining any separate award to Tenant for loss of or damage to Tenant's trade
fixtures and removable personal property or for damages for cessation or
interruption of Tenant's business provided such award is separate from
Landlord's award and provided further such separate award does not diminish nor
impair the award otherwise payable to Landlord. In addition to the foregoing,
Tenant shall be entitled to seek compensation for the relocation costs
recoverable by Tenant pursuant to the provisions of California Government Code
Section 7262. If a substantial portion of the Premises, Buildings or the Lot is
so Condemned, Landlord or Tenant may terminate this Lease. If neither party
elects to terminate this Lease, Landlord shall, if necessary, promptly proceed
to restore the Premises or the Buildings to substantially its same condition
prior to such partial condemnation, allowing for the reasonable effects of such
partial condemnation, and a proportionate allowance shall be made to Tenant, as
reasonably determined by Landlord, for the Rent corresponding to the time during
which, and to the part of the Premises of which, Tenant is deprived on account
of such partial condemnation and restoration. Landlord shall not be required to
spend funds for restoration in excess of the amount received by Landlord as
compensation awarded.
29. ENVIRONMENTAL MATTERS/HAZARDOUS MATERIALS:
29.1 HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE: Prior to executing this
Lease, Tenant has completed, executed and delivered to Landlord Tenant's initial
Hazardous Materials Disclosure Certificate (the "Initial HazMat Certificate"), a
copy of which is attached hereto as Exhibit G and incorporated herein by this
reference. Tenant covenants, represents and warrants to Landlord that the
information on the Initial HazMat Certificate is true and correct, to the best
of Tenant's knowledge, and accurately describes the use(s) of Hazardous
Materials which will be made and/or used on the Premises by Tenant. Commencing
with the date which is one year from the Commencement Date and continuing every
year thereafter, Tenant shall complete, execute, and deliver to Landlord, a
Hazardous Materials Disclosure Certificate ("the "HazMat Certificate")
describing Tenant's present use of Hazardous Materials on the Premises, and any
other reasonably necessary documents as requested by Landlord. The HazMat
Certificate required hereunder shall be in substantially the form as that which
is attached hereto as Exhibit E. Landlord hereby acknowledges and agrees that as
of the date on which both parties execute and deliver this Lease, Landlord has
approved the Initial HazMat Certificate; however, any such approval by Landlord
shall not be construed to relieve Tenant from its obligations and/or any
liabilities under the provisions of this Section 29.
29.2 DEFINITION OF HAZARDOUS MATERIALS: As used in this Lease, the term
Hazardous Materials shall mean and include (a) any hazardous or toxic wastes,
materials or substances, and other pollutants or contaminants, which are or
become regulated by any Environmental Laws; (b) petroleum, petroleum by
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products, gasoline, diesel fuel, crude oil or any fraction thereof; (c) asbestos
and asbestos containing material, in any form, whether friable or non-friable;
(d) polychlorinated biphenyls; (e) radioactive materials; (f) lead and
lead-containing materials; (g) any other material, waste or substance displaying
toxic, reactive, ignitable or corrosive characteristics, as all such terms are
used in their broadest sense, and are defined or become defined by any
Environmental Law (defined below); or (h) any materials which cause or threatens
to cause a nuisance upon or waste to any portion of the Premises, the Buildings,
the Lot, the Park or any surrounding property; or poses or threatens to pose a
hazard to the health and safety of persons on the Premises or any surrounding
property.
29.3 PROHIBITION; ENVIRONMENTAL LAWS: Except for and to the extent of the
type and quantities of Hazardous Materials specified in the Initial HazMat
Certificate, Tenant shall not be entitled to use nor store any Hazardous
Materials on, in, or about the Premises, the Buildings, the Lot and the Park, or
any portion of the foregoing, without, in each instance, obtaining Landlord's
prior written consent thereto. If Landlord consents to any such usage or
storage, then Tenant shall be permitted to use and/or store only those Hazardous
Materials that are necessary for Tenant's business and to the extent disclosed
in the HazMat Certificate and as expressly approved by Landlord in writing,
provided that such usage and storage is only to the extent of the quantities of
Hazardous Materials as specified in the then applicable HazMat Certificate as
expressly approved by Landlord and provided further that such usage and storage
is in full compliance with any and all local, state and federal environmental,
health and/or safety-related laws, statutes, orders, standards, courts'
decisions, ordinances, rules and regulations (as interpreted by judicial and
administrative decisions), decrees, directives, guidelines, permits or permit
conditions, currently existing and as amended, enacted, issued or adopted in the
future which are or become applicable to Tenant or all or any portion of the
Premises (collectively, the "Environmental Laws"). Tenant agrees that any
changes to the type and/or quantities of Hazardous Materials specified in the
most recent HazMat Certificate may be implemented only with the prior written
consent of Landlord, which consent may be given or withheld in Landlord's
reasonable discretion. Tenant shall not be entitled nor permitted to install any
tanks under, on or about the Premises for the storage of Hazardous Materials
without the express written consent of Landlord, which may be given or withheld
in Landlord's sole discretion. Landlord shall have the right at all times during
the Term of this Lease, upon reasonable advance notice to Tenant, to (i) inspect
the Premises, (ii) conduct tests and investigations to determine whether Tenant
is in compliance with the provisions of this Section 29, and (iii) request lists
of all Hazardous Materials used, stored or otherwise located on, under or about
the Premises, the Common Areas and/or the parking lots. The cost of all such
inspections, tests and investigations shall be borne solely by Tenant, if
Landlord reasonably determines that Tenant or any of Tenant's Representatives
are directly or indirectly responsible in any manner for any contamination
revealed by such inspections, tests and investigations. The aforementioned
rights granted herein to Landlord and its representatives shall not create (a) a
duty on Landlord's part to inspect, test, investigate, monitor or otherwise
observe the Premises or the activities of Tenant and Tenant's Representatives
with respect to Hazardous Materials, including without limitation, Tenant's
operation, use and any remediation related thereto, or (b) liability on the part
of Landlord and its representatives for Tenant's use, storage, disposal or
remediation of Hazardous Materials, it being understood that Tenant shall be
solely responsible for all liability in connection therewith.
29.4 TENANT'S ENVIRONMENTAL OBLIGATIONS: Tenant shall give to Landlord
immediate verbal and follow-up written notice of any spills, releases,
discharges, disposals, emissions, migrations, removals or transportation of
Hazardous Materials by Tenant, Tenant's Representatives or by any other party in
the event Tenant or Tenant's Representatives has actual knowledge thereof, on,
under or about the Premises, or in any Common Areas or parking lots. Tenant, at
its sole cost and expense, covenants and warrants to promptly investigate, clean
up, remove, restore and otherwise remediate (including, without limitation,
preparation of any feasibility studies or reports and the performance of any and
all closures) any spill, release, discharge, disposal, emission, migration or
transportation of Hazardous Materials arising from or related to the intentional
or negligent acts or omissions of Tenant or Tenant's Representatives such that
the affected portions of the Park and any adjacent property are returned to the
condition existing prior to the appearance of such Hazardous Materials. Any such
investigation, clean up, removal, restoration and other remediation shall only
be performed after Tenant has obtained Landlord's prior written consent, which
consent shall not be unreasonably withheld so long as such actions would not
potentially have a material adverse long-term or short-term effect on the
Premises, the Buildings, the Lot or the Park, or any portion of any of the
foregoing. Notwithstanding the foregoing, Tenant shall be entitled to respond
immediately to an emergency without first obtaining Landlord's prior written
consent. Tenant, at its sole cost and expense, shall conduct and perform, or
cause to be conducted and performed, all closures as required by any
Environmental Laws or any agencies or other governmental authorities having
jurisdiction thereof. If Tenant fails to so promptly investigate, clean up,
remove, restore, provide closure or otherwise so remediate, Landlord may, but
without obligation to do so, take any and all steps necessary to rectify the
same and Tenant shall promptly reimburse Landlord, upon demand, for all
reasonable costs and expenses to Landlord of performing investigation, clean up,
removal, restoration, closure and remediation work. All such work undertaken by
Tenant, as required herein, shall be performed in such a manner so as to enable
Landlord to make full economic use of the Premises, the Buildings, the Lot and
the Park after the satisfactory completion of such work.
29.5 ENVIRONMENTAL INDEMNITY: In addition to Tenant's obligations as set
forth hereinabove but subject to the provisions of Section 29.7 below, Tenant
agrees to, and shall, protect, indemnify, defend (with counsel reasonably
acceptable to Landlord) and hold Landlord and Landlord's lenders, members,
partners, property management company (if other than Landlord), agents,
directors, officers, employees, representatives, contractors, shareholders,
successors and assigns and each of their respective partners, directors,
employees, representatives, agents, contractors, shareholders, successors and
assigns harmless from and against any and all claims, judgments, damages,
penalties, fines, liabilities, losses (including, without limitation, diminution
in value
20
<PAGE> 21
of the Premises, the Buildings, the Lot, the Park, or any portion of any of the
foregoing, damages for the loss of or restriction on the use of rentable or
usable space, and from any adverse impact of Landlord's marketing of any space
within the Buildings and/or Park), suits, administrative proceedings and costs
(including, but not limited to, reasonable attorneys' and consultant fees and
court costs) arising at any time during or after the Term of this Lease in
connection with or related to, directly or indirectly, the use, presence,
transportation, storage, disposal, migration, removal, spill, release or
discharge of Hazardous Materials on, in or about the Premises, or in any Common
Areas or parking lots as a result (directly or indirectly) of the intentional or
negligent acts or omissions of Tenant or Tenant's Representatives. Neither the
written consent of Landlord to the presence, use or storage of Hazardous
Materials in, on, under or about any portion of the Premises, the Buildings, the
Lot and the Park, nor the strict compliance by Tenant with all Environmental
Laws shall excuse Tenant from its obligations of indemnification pursuant
hereto. Tenant shall not be relieved of its indemnification obligations under
the provisions of this Section 29.5 as a result of Landlord's status as either
an "owner" or "operator" under any Environmental Laws.
29.6 SURVIVAL: Tenant's obligations and liabilities pursuant to the
provisions of this Section 29 shall survive the expiration or earlier
termination of this Lease. If it is determined by Landlord that the condition of
all or any portion of the Premises, the Buildings, the Lot and/or the Park is
not in compliance with the provisions of this Lease with respect to Hazardous
Materials, including without limitation all Environmental Laws at the expiration
or earlier termination of this Lease, then at Landlord's sole option, Landlord
may require Tenant to hold over possession of the Premises until Tenant can
surrender the Premises to Landlord in the condition in which the Premises
existed as of the Commencement Date and prior to the appearance of such
Hazardous Materials except for reasonable wear and tear, including without
limitation, the conduct or performance of any closures as required by any
Environmental Laws. For purposes hereof, the term "reasonable wear and tear"
shall not include any deterioration in the condition or diminution of the value
of any portion of the Premises, the Buildings, the Lot and/or the Park in any
manner whatsoever related to directly, or indirectly, Hazardous Materials. Any
such holdover by Tenant will be with Landlord's consent, will not be terminable
by Tenant in any event or circumstance and will otherwise be subject to the
provisions of Section 22 of this Lease.
29.7 EXCULPATION OF TENANT: Tenant shall not be liable to Landlord for
nor otherwise obligated to Landlord under any provision of the Lease with
respect to the following: (i) any claim, remediation, obligation, investigation,
obligation, liability, cause of action, attorney's fees, consultants' cost,
expense or damage resulting from any Hazardous Materials present in, on or about
the Premises or the Buildings to the extent not caused nor otherwise permitted,
directly or indirectly, by Tenant or Tenant's Representatives; or (ii) the
removal, investigation, monitoring or remediation of any Hazardous Material
present in, on or about the Premises or the Buildings directly caused by any
source, including third parties, other than Tenant or Tenant's Representatives;
provided, however, Tenant shall be fully liable for and otherwise obligated to
Landlord under the provisions of this Lease for all liabilities, costs, damages,
penalties, claims, judgments, expenses (including without limitation, attorneys'
and experts' fees and costs) and losses to the extent (a) Tenant or any of
Tenant's Representatives contributes to the presence of such Hazardous
Materials, or Tenant and/or any of Tenant's Representatives exacerbates the
conditions caused by such Hazardous Materials, or (b) Tenant and/or Tenant's
Representatives allows or permits persons over which Tenant or any of Tenant's
Representatives has control, and/or for which Tenant or any of Tenant's
Representatives are legally responsible for, to cause such Hazardous Materials
to be present in, on, under, through or about any portion of the Premises, the
Common Areas, the Buildings or the Park, or (c) Tenant and/or any of Tenant's
Representatives does not take all reasonably appropriate actions to prevent such
persons over which Tenant or any of Tenant's Representatives has control and/or
for which Tenant or any of Tenant's Representatives are legally responsible from
causing the presence of Hazardous Materials in, on, under, through or about any
portion of the Premises, the Common Areas, the Buildings or the Park.
30. FINANCIAL STATEMENTS: Tenant, for the reliance of Landlord, any lender
holding or anticipated to acquire a lien upon the Premises, the Buildings or the
Park or any portion thereof, or any prospective purchaser of the Buildings or
the Park or any portion thereof, within thirty (30) days after Landlord's
request therefor, but not more often than once annually so long as Tenant is not
in default of this Lease, shall deliver to Landlord the then current audited
financial statements of Tenant (including interim periods following the end of
the last fiscal year for which annual statements are available) which statements
shall be prepared or compiled by a certified public accountant and shall present
fairly the financial condition of Tenant at such dates and the result of its
operations and changes in its financial positions for the periods ended on such
dates. So long as Tenant is a publicly-traded entity, Tenant's publicly-filed
financial statements shall be satisfactory for the satisfaction of the foregoing
requirement. If an audited financial statement has not been prepared, Tenant
shall provide Landlord with an unaudited financial statement and/or such other
information, the type and form of which are acceptable to Landlord in Landlord's
reasonable discretion, which reflects the financial condition of Tenant. If
Landlord so requests, Tenant shall deliver to Landlord an opinion of a certified
public accountant, including a balance sheet and profit and loss statement for
the most recent prior year, all prepared in accordance with generally accepted
accounting principles consistently applied. Any and all options granted to
Tenant hereunder shall be subject to and conditioned upon Landlord's reasonable
approval of Tenant's financial condition at the time of Tenant's exercise of any
such option.
31. GENERAL PROVISIONS:
31.1 TIME. Time is of the essence in this Lease and with respect to each
and all of its provisions in which performance is a factor.
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<PAGE> 22
31.2 SUCCESSORS AND ASSIGNS. The covenants and conditions herein
contained, subject to the provisions as to assignment, apply to and bind the
heirs, successors, executors, administrators and assigns of the parties hereto.
31.3 RECORDATION. Tenant shall not record this Lease or a short form
memorandum hereof without the prior written consent of the Landlord.
31.4 LANDLORD'S PERSONAL LIABILITY. The liability of Landlord (which, for
purposes of this Lease, shall include Landlord and the owner of the Buildings if
other than Landlord) to Tenant for any default by Landlord under the terms of
this Lease shall be limited to the actual interest of Landlord and its present
or future partners or members in the Park, and Tenant agrees to look solely to
the Park for satisfaction of any liability and shall not look to other assets of
Landlord nor seek any recourse against the assets of the individual members,
partners, directors, officers, shareholders, agents or employees of Landlord; it
being intended that Landlord and the individual partners, members, directors,
officers, shareholders, agents or employees of Landlord shall not be personally
liable in any manner whatsoever for any judgment or deficiency. The liability of
Landlord under this Lease is limited to its actual period of ownership of title
to the Buildings, and Landlord shall be automatically released from further
performance under this Lease and from all further liabilities and expenses
accruing hereunder after the date of such transfer of Landlord's interest in the
Buildings. The foregoing shall not in any way limit or impair Tenant's right, if
any, to recover proceeds of insurance or any condemnation award in accordance
with the provisions of this Lease.
31.5 SEPARABILITY. Any provisions of this Lease which shall prove to be
invalid, void or illegal shall in no way affect, impair or invalidate any other
provisions hereof and such other provision shall remain in full force and
effect.
31.6 CHOICE OF LAW. This Lease shall be governed by the laws of the State
of California.
31.7 ATTORNEYS' FEES. In the event any dispute between the parties
results in litigation or other proceeding or any other litigation involving the
parties arises from this Lease, the prevailing party shall be reimbursed by the
party not prevailing for all reasonable costs and expenses, including, without
limitation, reasonable attorneys' and experts' fees and costs incurred by the
prevailing party in connection with such litigation or other proceeding, and any
appeal thereof. Such costs, expenses and fees shall be included in and made a
part of the judgment recovered by the prevailing party, if any.
31.8 ENTIRE AGREEMENT. This Lease supersedes any prior agreements,
representations, negotiations or correspondence between the parties, and
contains the entire agreement of the parties on matters covered. No other
agreement, statement or promise made by any party, that is not in writing and
signed by all parties to this Lease, shall be binding.
31.9 WARRANTY OF AUTHORITY. On the date that Tenant executes this Lease,
Tenant shall deliver to Landlord an original certificate of status for Tenant
issued by the California Secretary of State or statement of partnership for
Tenant recorded in the county in which the Premises are located, as applicable,
and such other documents as Landlord may reasonably request with regard to the
lawful existence of Tenant. Each person executing this Lease on behalf of a
party represents and warrants that (1) such person is duly and validly
authorized to do so on behalf of the entity it purports to so bind, and (2) if
such party is a limited liability company, partnership, corporation or trustee,
that such limited liability company, partnership, corporation or trustee has
full right and authority to enter into this Lease and perform all of its
obligations hereunder.
31.10 NOTICES. Any and all notices and demands required or permitted to be
given hereunder to Landlord shall be in writing and shall be sent: (a) by United
States mail, certified and postage prepaid; or (b) by personal delivery; or (c)
by overnight courier, addressed to Landlord at 101 Lincoln Centre Drive, Fourth
Floor, Foster City, California 94404-1167. Any and all notices and demands
required or permitted to be given hereunder to Tenant shall be in writing and
shall be sent: (i) by United States mail, certified and postage prepaid; or (ii)
by personal delivery to any employee or agent of Tenant over the age of eighteen
(18) years of age; or (iii) by overnight courier, all of which shall be
addressed to Tenant at the Tenant's Address as provided on Page 1 of this Lease
or otherwise provided to Landlord. Notice and/or demand shall be deemed given
upon the earlier of actual receipt or the third day following deposit in the
United States mail. Any notice or requirement of service required by any statute
or law now or hereafter in effect, including, but not limited to, California
Code of Civil Procedure Sections 1161, 1161.1, and 1162, is hereby waived by
Tenant.
31.11 JOINT AND SEVERAL. If Tenant consists of more than one person or
entity, the obligations of all such persons or entities shall be joint and
several.
31.12 COVENANTS AND CONDITIONS. Each provision to be performed by Tenant
hereunder shall be deemed to be both a covenant and a condition.
31.13 WAIVER OF JURY TRIAL. Intentionally omitted.
31.14 COUNTERCLAIMS. In the event Landlord commences any proceedings for
nonpayment of Rent, Additional Rent, or any other sums or amounts due hereunder,
Tenant shall not interpose any counterclaim of whatever nature or description in
any such proceedings, provided, however, nothing contained herein shall be
deemed or construed as a waiver of the Tenant's right to assert such claims in
any separate action brought by Tenant or the right to offset the amount of any
final judgment owed by Landlord to Tenant.
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31.15 UNDERLINING. The use of underlining within the Lease is for
Landlord's reference purposes only and no other meaning or emphasis is intended
by this use, nor should any be inferred.
32. SIGNS: All signs and graphics of every kind visible in or from public view
or corridors or the exterior of the Premises shall be subject to Landlord's
prior written approval, which shall not be unreasonably withheld or delayed, and
shall also be subject to any applicable governmental laws, ordinances, and
regulations and in compliance with Landlord's sign criteria as same may exist
from time to time or as set forth in Exhibit H hereto and made a part hereof.
Tenant shall remove all such signs and graphics prior to the termination of this
Lease. Such installations and removals shall be made in a manner as to avoid
damage or defacement of the Premises; and Tenant shall repair any damage or
defacement, including without limitation, discoloration caused by such
installation or removal. Landlord shall have the right, at its option, to demand
payment from Tenant of such sums as are reasonably necessary to remove such
signs, including, but not limited to, the costs and expenses associated with any
repairs necessitated by such removal. Notwithstanding the foregoing, in no event
shall any: (a) neon, flashing or moving sign(s) or (b) sign(s) which shall
interfere with the visibility of any sign, awning, canopy, advertising matter,
or decoration of any kind of any other business or occupant of the Buildings or
the Park be permitted hereunder. Tenant further agrees to maintain any such
sign, awning, canopy, advertising matter, lettering, decoration or other thing
as may be approved in good condition and repair at all times.
33. MORTGAGEE PROTECTION: Upon any breach or default on the part of Landlord,
Tenant will give written notice by registered or certified mail to any
beneficiary of a deed of trust or mortgagee of a mortgage covering the Premises
who has provided Tenant with notice of their interest together with an address
for receiving notice, and shall offer such beneficiary or mortgagee a reasonable
opportunity to cure the default (which, in no event shall be more than ninety
(90) days), including time to obtain possession of the Premises by power of sale
or a judicial foreclosure, if such should prove necessary to effect a cure. If
such breach or default cannot be cured within such time period, then such
additional time as may be necessary will be given to such beneficiary or
mortgagee to effect such cure so long as such beneficiary or mortgagee has
commenced the cure within the original time period and thereafter diligently
pursues such cure to completion, in which event this Lease shall not be
terminated while such cure is being diligently pursued. Tenant agrees that each
lender to whom this Lease has been assigned by Landlord is an express third
party beneficiary hereof. Tenant shall not make any prepayment of Rent more than
one (1) month in advance without the prior written consent of each such lender,
except if Tenant is required to make quarterly payments of Rent in advance
pursuant to the provisions of Section 8 above. Tenant agrees to make all
payments under this Lease to the lender with the most senior encumbrance upon
receiving a direction, in writing, to pay said amounts to such lender. Tenant
shall comply with such written direction to pay without determining whether an
event of default exists under such lender's loan to Landlord.
34. QUITCLAIM: Upon any termination of this Lease, Tenant shall, at Landlord's
request, execute, have acknowledged and deliver to Landlord a quitclaim deed of
Tenant's interest in and to the Premises.
35. MODIFICATIONS FOR LENDER: If, in connection with obtaining financing for
the Premises or any portion thereof, Landlord's lender shall request reasonable
modification(s) to this Lease as a condition to such financing, Tenant shall not
unreasonably withhold, delay or defer its consent thereto, provided such
modifications do not materially adversely affect Tenant's rights hereunder or
the use, occupancy or quiet enjoyment of Tenant hereunder.
36. WARRANTIES OF TENANT: Tenant hereby warrants and represents to Landlord,
for the express benefit of Landlord, that Tenant has undertaken a complete and
independent evaluation of the risks inherent in the execution of this Lease and
the operation of the Premises for the use permitted hereby, and that, based upon
said independent evaluation, Tenant has elected to enter into this Lease and
hereby assumes all risks with respect thereto. Each party hereby warrants and
represents to the other party, for the express benefit of the other party, that
in entering into this Lease, the warranting party has not relied upon any
statement, fact, promise or representation (whether express or implied, written
or oral) not specifically set forth herein in writing and that any statement,
fact, promise or representation (whether express or implied, written or oral)
made at any time to it, which is not expressly incorporated herein in writing,
is hereby waived by it.
37. COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT: Landlord and Tenant
hereby agree and acknowledge that the Premises, the Buildings and/or the Park
may be subject to the requirements of the Americans with Disabilities Act, a
federal law codified at 42 U.S.C. 12101 et seq, including, but not limited to
Title III thereof, all regulations and guidelines related thereto, together with
any and all laws, rules, regulations, ordinances, codes and statutes now or
hereafter enacted by local or state agencies having jurisdiction thereof,
including all requirements of Title 24 of the State of California, as the same
may be in effect on the date of this Lease and may be hereafter modified,
amended or supplemented (collectively, the "ADA"). The Shell Improvements to be
constructed hereunder shall be in compliance with the requirements of the ADA as
of the date on which the Shell Improvements are Substantially Completed. Any
Tenant Improvements to be constructed hereunder shall be in compliance with the
requirements of the ADA, and all costs incurred for purposes of compliance
therewith shall be a part of and included in the costs of the Tenant
Improvements. Tenant shall be solely responsible for conducting its own
independent investigation of this matter and for ensuring that the design of all
Tenant Improvements strictly comply with all requirements of the ADA. Subject to
reimbursement pursuant to Section
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6 of the Lease, if any barrier removal work or other work is required to the
Buildings, the Common Areas or the Park under the ADA, then such work shall be
the responsibility of Landlord; provided, if such work is required under the ADA
as a result of Tenant's use of the Premises or any work or alteration made to
the Premises by or on behalf of Tenant, then such work shall be performed by
Landlord at the sole cost and expense of Tenant. Except as otherwise expressly
provided in this provision, Tenant shall be responsible at its sole cost and
expense for fully and faithfully complying with all applicable requirements of
the ADA, including without limitation, not discriminating against any disabled
persons in the operation of Tenant's business in or about the Premises, and
offering or otherwise providing auxiliary aids and services as, and when,
required by the ADA. Within ten (10) days after receipt, Landlord and Tenant
shall advise the other party in writing, and provide the other with copies of
(as applicable), any notices alleging violation of the ADA relating to any
portion of the Premises or the Buildings; any claims made or threatened in
writing regarding noncompliance with the ADA and relating to any portion of the
Premises or the Buildings; or any governmental or regulatory actions or
investigations instituted or threatened regarding noncompliance with the ADA and
relating to any portion of the Premises or the Buildings. Tenant shall and
hereby agrees to protect, defend (with counsel acceptable to Landlord) and hold
Landlord and Landlord's lender(s), members, partners, employees,
representatives, legal representatives, successors and assigns (collectively,
the "Indemnitees") harmless and indemnify the Indemnitees from and against all
liabilities, damages, claims, losses, penalties, judgments, charges and expenses
(including reasonable attorneys' fees, costs of court and expenses necessary in
the prosecution or defense of any litigation including the enforcement of this
provision) arising from or in any way related to, directly or indirectly,
Tenant's or Tenant's Representatives' violation of the ADA. Tenant agrees that
the obligations of Tenant herein shall survive the expiration or earlier
termination of this Lease.
38. BROKERAGE COMMISSION: Landlord and Tenant each represents and warrants for
the benefit of the other that it has had no dealings with any real estate
broker, agent or finder in connection with the Premises and/or the negotiation
of this Lease, except for the Broker(s) (as set forth on Page 1), and that it
knows of no other real estate broker, agent or finder who is or might be
entitled to a real estate brokerage commission or finder's fee in connection
with this Lease or otherwise based upon contacts between the claimant and
Tenant. Each party shall indemnify and hold harmless the other from and against
any and all liabilities or expenses arising out of claims made for a fee or
commission by any real estate broker, agent or finder in connection with the
Premises and this Lease other than Broker(s), if any, resulting from the actions
of the indemnifying party. Any real estate brokerage commission or finder's fee
payable to the Broker(s) in connection with this Lease shall only be payable and
applicable to the extent of the initial term of the Lease and to the extent of
the Premises as same exist as of the date on which Tenant executes this Lease.
Unless expressly agreed to in writing by Landlord and Broker(s), no real estate
brokerage commission or finder's fee shall be owed to, or otherwise payable to,
the Broker(s) for any renewals or other extensions of the initial Term of this
Lease or for any additional space leased by Tenant other than the Premises as
same exists as of the date on which Tenant executes this Lease. Tenant further
represents and warrants to Landlord that Tenant will not receive (i) any portion
of any brokerage commission or finder's fee payable to the Broker(s) in
connection with this Lease or (ii) any other form of compensation or incentive
from the Broker(s) with respect to this Lease.
39. QUIET ENJOYMENT: Landlord covenants with Tenant, upon the paying of Rent
and observing and keeping the covenants, agreements and conditions of this Lease
on its part to be kept, and during the periods that Tenant is not otherwise in
default of any of the terms or provisions of this Lease, and subject to the
rights of any of Landlord's lenders, (i) that Tenant shall and may peaceably and
quietly hold, occupy and enjoy the Premises and the Common Areas during the Term
of this Lease, and (ii) neither Landlord, nor any successor or assign of
Landlord, shall disturb Tenant's occupancy or enjoyment of the Premises and the
Common Areas.
40. LANDLORD'S ABILITY TO PERFORM TENANT'S UNPERFORMED OBLIGATIONS:
Notwithstanding anything to the contrary contained in this Lease, if Tenant
shall fail to perform any of the terms, provisions, covenants or conditions to
be performed or complied with by Tenant pursuant to this Lease, and/or if the
failure of Tenant relates to a matter which in Landlord's judgment reasonably
exercised is of an emergency nature and such failure shall remain uncured for a
period of time commensurate with such emergency, then Landlord may, at
Landlord's option without any obligation to do so, and in its sole discretion as
to the necessity therefor, perform any such term, provision, covenant, or
condition, or make any such payment and Landlord by reason of so doing shall not
be liable or responsible for any loss or damage thereby sustained by Tenant or
anyone holding under or through Tenant. If Landlord so performs any of Tenant's
obligations hereunder, the full amount of the cost and expense entailed or the
payment so made or the amount of the loss so sustained shall immediately be
owing by Tenant to Landlord, and Tenant shall promptly pay to Landlord upon
demand, as Additional Rent, the full amount thereof with interest thereon from
the date of payment at the greater of (i) ten percent (10%) per annum, or (ii)
the highest rate permitted by applicable law and Enforcement Expenses.
41. TENANT'S ABILITY TO PERFORM LANDLORD'S UNPERFORMED OBLIGATIONS:
Notwithstanding anything to the contrary contained in this Lease, if Landlord
shall fail to perform any of the terms, provisions, covenants or conditions to
be performed or complied with by Landlord pursuant to this Lease after
expiration of all applicable notice and cure periods for Landlord's and any
mortgagee's benefit as set forth in Sections 23 and 33, respectively, and/or if
the failure of Landlord relates to a matter which in Tenant's judgment
reasonably exercised is of an emergency nature and such failure shall remain
uncured for a period of time commensurate with such emergency, then Tenant may,
at Tenant's option without any obligation to do so, after delivery of prior
written notice to Landlord and affording Landlord an opportunity to cure such
failure, perform any such term,
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provision, covenant, or condition. If Tenant so performs any of Landlord's
obligations hereunder, the full amount of the reasonable costs and expenses
incurred shall immediately be owing by Landlord to Tenant, and Landlord shall
pay to Tenant the full amount thereof within ninety (90) days of Landlord's
receipt of Tenant's written demand and accompanying documentation therefor. If
Landlord fails to pay such sums within said 90-day period, and provided there
does not then exist a good faith dispute thereof on the part of Landlord, Tenant
may deduct such sums so demanded from the next installment of Base Rent then due
from Tenant hereunder.
IN WITNESS WHEREOF, this Lease is executed by the parties as of the Lease
Date referenced on page 1 of this Lease.
TENANT:
Cisco Systems, Inc., a California corporation
By: /s/Nancy Bareilles
----------------------------
Its: VP
----------------------------
Date: 12-19-96
----------------------------
LANDLORD:
LINCOLN-WHITEHALL REALTY (WEST), L.L.C.,
a Delaware limited liability company
By: Lincoln Property Company Management Services, Inc.,
as manager and agent for LINCOLN-WHITEHALL REALTY (WEST), L.L.C.
By: /s/Barry DiRaimondo
----------------------------
Vice President
Date: 12/23/96
----------------------------
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EXHIBIT A - PREMISES
PAGE 1 OF 1
LEASE DATED DECEMBER 12, 1996, BY AND BETWEEN
CISCO SYSTEMS, INC.,
A CALIFORNIA CORPORATION
("TENANT"),
AND
LINCOLN-WHITEHALL REALTY (WEST), L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY
PREMISES:
____________________________
_____________, CA __________
Approximately _______ rentable
square feet plus ___________
rentable square feet
(proportionate share of
electrical room) equals
____________ __________ total
rentable square feet within
Phase _________ of the Park
INITIALS:
TENANT: _______________
LANDLORD: _______________
<PAGE> 27
EXHIBIT B TO LEASE AGREEMENT
TENANT IMPROVEMENTS AND SHELL IMPROVEMENTS
This exhibit, entitled "Tenant Improvements and Shell Improvements", is and
shall constitute EXHIBIT B to that certain Lease Agreement dated December 12,
1996, (the "Lease"), by and between Lincoln-Whitehall Realty (West), L.L.C., a
Delaware limited liability company ("Landlord"), and Cisco Systems, Inc., a
California corporation ("Tenant"), for the leasing of certain premises located
at Fortran Court and Baytech Drive, (Buildings A & B), San Jose, California (the
"Premises"). The terms, conditions and provisions of this EXHIBIT B are hereby
incorporated into and are made a part of the Lease. Any capitalized terms used
herein and not otherwise defined herein shall have the meaning ascribed to such
terms as set forth in the Lease.
1. TENANT TO CONSTRUCT TENANT IMPROVEMENTS. Subject to the provisions below,
Tenant shall be solely responsible for the planning, construction and completion
of the interior tenant improvements ("Tenant Improvements") to the Premises in
accordance with the terms and conditions of this Exhibit B. The Tenant
Improvements shall not include any of Tenant's personal property, trade
fixtures, furnishings, equipment or similar items.
2. TENANT IMPROVEMENT PLANS.
A. PRELIMINARY PLANS AND SPECIFICATIONS. Tenant shall retain a
licensed, insured architect ("Architect") to prepare preliminary working
architectural and engineering plans and specifications ("Preliminary Plans and
Specifications") for the Tenant Improvements. Tenant shall deliver the
Preliminary Plans and Specifications to Landlord. The Preliminary Plans and
Specifications shall be in sufficient detail to show locations, types and
requirements for all heat loads, people loads, floor loads, power and plumbing,
regular and special HVAC needs, telephone communications, telephone and
electrical outlets, lighting, lighting fixtures and related power, and
electrical and telephone switches. Landlord shall reasonably approve or
disapprove the Preliminary Plans and Specifications within five (5) days after
Landlord receives the Preliminary Plans and Specifications and, if disapproved,
Landlord shall return the Preliminary Plans and Specifications to Tenant, who
shall make all necessary revisions within ten (10) days after Tenant's receipt
thereof. This procedure shall be repeated until Landlord approves the
Preliminary Plans and Specifications. The approved Preliminary Plans and
Specifications, as modified, shall be deemed the "Final Preliminary Plans and
Specifications".
B. FINAL PLANS AND SPECIFICATIONS. After the Final Preliminary Plans
and Specifications are approved by Landlord and are deemed to be the Final
Preliminary Plans and Specifications, Tenant shall cause the Architect to
prepare in twenty (20) days following Landlord's approval of the Final
Preliminary Plans and Specifications the final working architectural and
engineering plans, specifications and drawings, ("Final Plans and
Specifications") for the Tenant Improvements. Tenant shall then deliver the
Final Plans and Specifications to Landlord. Landlord shall reasonably approve or
disapprove the Final Plans and Specifications within five (5) days after
Landlord receives the Final Plans and Specifications and, if disapproved,
Landlord shall return the Final Plans and Specifications to Tenant who shall
make all necessary revisions within ten (10) days after Tenant's receipt
thereof. This procedure shall be repeated until Landlord approves, in writing,
the Final Plans and Specifications. The approved Final Plans and Specifications,
as modified, shall be deemed the "Construction Documents".
C. MISCELLANEOUS. All deliveries of the Preliminary Plans and
Specifications, the Final Preliminary Plans and Specifications, the Final Plans
and Specifications, and the Construction Documents shall be delivered by
messenger service, by personal hand delivery or by overnight parcel service.
While Landlord has the right to approve the Preliminary Plans and
Specifications, the Final Preliminary Plans and Specifications, the Final Plans
and Specifications, and the Construction Documents, Landlord's interest in doing
so is to protect the Premises, the Buildings and Landlord's interest.
Accordingly, Tenant shall not rely upon Landlord's approvals and Landlord shall
not be the guarantor of, nor responsible for, the adequacy and correctness or
accuracy of the Preliminary Plans and Specifications, the Final Preliminary
Plans and Specifications, the Final Plans and Specifications, and the
Construction Documents, or the compliance thereof with applicable laws, and
Landlord shall incur no liability of any kind by reason of granting such
approvals.
D. BUILDING STANDARD WORK. The Construction Documents shall provide
that the Tenant Improvements to be constructed in accordance therewith must be
at least equal, in quality, to Landlord's building standard materials,
quantities and procedures then in use by Landlord ("Building Standards")
attached hereto as Exhibit B-2. Notwithstanding the foregoing, so long as the
Construction Documents are consistent with Tenant's Tasman buildings, the
Construction Documents shall be considered to be in accordance with Landlord's
Building Standards.
3. PERMITS. Tenant, at its sole cost and expense (subject to the provisions
of Paragraph 5 below), shall obtain all governmental approvals of the
Construction Documents to the full extent necessary for the issuance of a
building permit for the Tenant Improvements based upon such Construction
Documents. Tenant, at its sole cost and expense, shall also cause to be obtained
all other necessary approvals and permits from all governmental agencies having
jurisdiction or authority for the construction and installation of the Tenant
Improvements in accordance with the approved Construction Documents. Tenant at
its sole cost and expense (subject to the provisions of Paragraph 5 below) shall
undertake all steps necessary to insure that the construction of the Tenant
Improvements is accomplished in strict compliance with all statutes, laws,
ordinances, codes, rules, and regulations applicable to the construction of the
Tenant Improvements and the requirements and standards of
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any insurance underwriting board, inspection bureau or insurance carrier
insuring the Premises and/or the Buildings.
4. CONSTRUCTION.
A. Tenant shall be solely responsible for the construction,
installation and completion of the Tenant Improvements in accordance with the
Construction Documents approved by Landlord and is solely responsible for the
payment of all amounts when payable in connection therewith without any cost or
expense to Landlord, except for Landlord's obligation to contribute the Tenant
Improvement Allowance in accordance with the provisions of Paragraph 5 below.
Tenant shall diligently proceed with the construction, installation and
completion of the Tenant Improvements in accordance with the Construction
Documents and the completion schedule reasonably approved by Landlord. No
material changes shall be made to the Construction Documents and the completion
schedule approved by Landlord without Landlord's prior written consent, which
consent shall not be unreasonably withheld or delayed.
B. Tenant at its sole cost and expense (subject to the provisions of
Paragraph 5 below) shall employ a licensed, insured and bondable general
contractor ("Contractor") to construct the Tenant Improvements in accordance
with the Construction Documents. The construction contracts between Tenant and
the Contractor and between the Contractor and subcontractors shall be subject to
Landlord's prior written approval, which approval shall not be unreasonably
withheld. In addition to the foregoing, each of such construction contracts
shall include a provision that Landlord shall be a third party beneficiary in,
to and under such construction contracts. Proof that the Contractor is licensed
in California, is bondable as required under California law, and has the
insurance specified in Exhibit B-1, attached hereto and incorporated herein by
this reference, shall be provided to Landlord at the time that Tenant requests
approval of the Contractor from Landlord. Tenant shall comply with or cause the
Contractor to comply with all other terms and provisions of Exhibit B-1.
Notwithstanding anything to the contrary contained herein, Landlord hereby
approves of Devcon Construction Inc. to be selected by Tenant as the Contractor
under this Exhibit B. Tenant shall keep the Premises and the property on which
the Premises are situated free from any liens arising out of any work performed,
materials furnished or obligations incurred by or on behalf of Tenant with
regard to the Tenant Improvements. Additionally, Tenant shall promptly
discharge, bond or otherwise cause the release of any and all liens arising out
of any work performed, materials furnished or obligations incurred by or on
behalf of Tenant with regard to the Tenant Improvements regardless of any
dispute Tenant or its Contractor may have regarding any such liens. In addition
to the foregoing and in consideration for Landlord not requiring the Contractor
to procure a bond with respect to the construction of the Tenant Improvements,
Tenant agrees to protect, defend (with counsel acceptable to Landlord) and hold
Landlord and the Indemnitees harmless and indemnify the Indemnitees from and
against all liabilities, damages, claims, losses, judgments, charges and
expenses (including reasonable attorneys' fees, costs of court and expenses
necessary in the prosecution or defense of any litigation including the
enforcement of this provision) arising from or in any way related to, directly
or indirectly, the construction of the Tenant Improvements, including without
limitation, the costs to complete the Tenant Improvements and all other matters
for which a payment and performance bond would have otherwise provided coverage.
C. Prior to the commencement of the construction and installation of
the Tenant Improvements, Tenant shall provide the following to Landlord, all of
which shall be to Landlord's reasonable satisfaction:
(i) An estimated budget and cost breakdown for the Tenant
Improvements.
(ii) Estimated completion schedule for the Tenant Improvements.
(iii) Copies of all required approvals and permits from governmental
agencies having jurisdiction or authority for the construction and installation
of the Tenant Improvements; provided, however, if prior to commencement of the
construction and installation of Tenant Improvements Tenant has not received the
electrical, plumbing or mechanical permits, Tenant shall only be required to
provide Landlord with evidence that Tenant has made application therefor, and,
upon receipt by Tenant of such permits, Tenant shall promptly provide Landlord
with copies thereof.
(iv) Evidence of Tenant's procurement of insurance required to be
obtained pursuant to the provisions of Paragraphs 4.B and 4.G.
D. Landlord shall at all reasonable times have a right to inspect the
Tenant Improvements (provided Landlord does not materially interfere with the
work being performed by the Contractor or its subcontractors) and Tenant shall
immediately cease work upon written notice from Landlord if the Tenant
Improvements are not in compliance with the Construction Documents approved by
Landlord. If Landlord shall give notice of faulty construction or any other
material deviation from the Construction Documents, Tenant shall cause the
Contractor to make corrections promptly. However, neither the privilege herein
granted to Landlord to make such inspections, nor the making of such inspections
by Landlord, shall operate as a waiver of any rights of Landlord to require good
and workmanlike construction and improvements constructed in accordance with the
Construction Documents.
E. Subject to Landlord complying with its obligations in Paragraph 5
below, Tenant shall pay and discharge promptly and fully all claims for labor
done and materials and services furnished in connection with the Tenant
Improvements. The Tenant Improvements shall not be commenced until five (5)
business days after Landlord has received notice from Tenant stating the date
the construction of the Tenant Improvements is to commence so that Landlord can
post and record any appropriate Notice of Non-Responsibility.
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F. Tenant acknowledges and agrees that the agreements and covenants of
Tenant in Sections 10 and 37 of the Lease shall be fully applicable to Tenant's
construction of the Tenant Improvements.
G. Tenant shall maintain, and cause to be maintained, during the
construction of the Tenant Improvements, at its sole cost and expense, insurance
of the types and in the amounts specified in Exhibit B-1 and in Section 12 of
the Lease, together with builders' risk insurance for the amount of the
completed value of the Tenant Improvements on an all-risk non-reporting form
covering all improvements under construction, including building materials, and
other insurance in amounts and against such risks as the Landlord shall
reasonably require in connection with the Tenant Improvements.
H. No materials, equipment or fixtures shall be delivered to or
installed upon the Premises pursuant to any agreement by which another party has
a security interest or rights to remove or repossess such items, without the
prior written consent of Landlord, which consent shall not be unreasonably
withheld.
I. Landlord reserves the right to establish reasonable rules and
regulations for the use of the Buildings during the course of construction of
the Tenant Improvements, including, but not limited to, construction parking,
storage of materials, hours of work, use of elevators, and clean-up of
construction related debris.
J. Upon completion of the Tenant Improvements, Tenant shall deliver to
Landlord the following, all of which shall be to Landlord's reasonable
satisfaction:
(i) Any certificates required for occupancy, including a permanent
and complete Certificate of Occupancy issued by the City of San Jose.
(ii) A Certificate of Completion signed by the Architect who
prepared the Construction Documents, reasonably approved by Landlord.
(iii) A cost breakdown itemizing all expenses for the Tenant
Improvements, together with invoices and receipts for the same or other evidence
of payment.
(iv) Final and unconditional mechanic's lien waivers for all the
Tenant Improvements.
(v) A Notice of Completion for execution by Landlord, which
certificate once executed by Landlord shall be recorded by Tenant in the
official records of Santa Clara County, and Tenant shall then deliver to
Landlord a true and correct copy of the recorded Notice of Completion.
(vi) A true and complete copy of all as-built plans and drawings
for the Tenant Improvements.
K. The Tenant Improvements shall be deemed substantially complete on
the date that the building officials of the applicable governmental agency(s)
issues its final approval of the construction of the Tenant Improvements whether
in the form of the issuance of a final permit, certificate of occupancy or the
written approval evidencing its final inspection on the building permits, or the
date on which Tenant first takes occupancy of the Premises for purposes other
than to perform the Tenant's Pre-Occupancy Work (defined below), or the date
that the Contractor issues a certificate stating that the Tenant Improvements
have been substantially completed in accordance with the Construction Drawings,
whichever first occurs ("Substantial Completion", or "Substantially Completed",
or "Substantially Complete").
5. TENANT IMPROVEMENT ALLOWANCE.
A. Subject to Tenant's compliance with the provisions of this Exhibit
B, Landlord shall provide to Tenant an allowance in the approximate amount of
one million thirty-eight thousand nine hundred and 00/100 dollars and
($1,038,900) based upon a rate of ten dollars ($10.00) per rentable square foot
of the Premises (the "Tenant Improvement Allowance") to construct and install
only the Tenant Improvements. The actual amount of the Tenant Improvement
Allowance shall be adjusted commensurately based upon the actual rentable square
feet of the Premises after Landlord's Substantial Completion of the Shell
Improvements. The Tenant Improvement Allowance shall be used to design, prepare,
plan, obtain the approval of, construct and install the Tenant Improvements and
for no other purpose. Except as otherwise expressly provided herein, Landlord
shall have no obligation to contribute the Tenant Improvement Allowance unless
and until the Construction Documents have been approved by Landlord and Tenant
has complied with all requirements set forth in Paragraph 4.C. of this Exhibit
B. The costs to be paid out of the Tenant Improvement Allowance shall include
all reasonable costs and expenses associated with the design, preparation,
approval, planning, construction and installation of the Tenant Improvements
(the "Tenant Improvement Costs"), including all of the following:
(i) All costs of the Preliminary Plans and Specifications, the
Final Plans and Specifications, and the Construction Documents, and engineering
costs associated with completion of the State of California energy utilization
calculations under Title 24 legislation:
(ii) All costs of obtaining building permits and other necessary
authorizations from local governmental authorities;
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(iii) All costs of interior design and finish schedule plans and
specifications including as-built drawings, if applicable;
(iv) All direct and indirect costs of procuring, constructing and
installing the Tenant Improvements in the Premises, including, but not limited
to, the construction fee for overhead and profit and the cost of all on-site
supervisory and administrative staff, office, equipment and temporary services
rendered by the Contractor in connection with the construction of the Tenant
Improvements; provided, however, that the construction fee for overhead and
profit, the cost of all on-site supervisory and administrative staff, office,
equipment and temporary services shall not exceed amounts which are reasonable
and customary for such items in the local construction industry;
(v) All fees payable to the Architect and any engineer if they are
required to redesign any portion of the Tenant Improvements following Tenant's
and Landlord's approval of the Construction Documents;
(vi) Utility connection fees;
(vii) Inspection fees and filing fees payable to local governmental
authorities, if any;
(viii) All costs of all permanently affixed equipment and non-trade
fixtures provided for in the Construction Documents, including the cost of
installation; and,
(ix) A construction management fee (the "CM Fee") payable to
Landlord in the amount of one percent (1%) of the aggregate of the hard costs
for the construction and installation of the Tenant Improvements (excluding this
CM Fee).
The Tenant Improvement Allowance shall be the maximum contribution by Landlord
for the Tenant Improvement Costs, and the disbursement of the Tenant Improvement
Allowance is subject to the terms contained hereinbelow.
Except for payment of the CM Fee, Landlord will make payments to Tenant from the
Tenant Improvement Allowance to reimburse Tenant for Tenant Improvement Costs
paid or incurred by Tenant. Payment of the CM Fee shall be the first payment
from the Tenant Improvement Allowance and shall be made by means of a deduction
or credit against the Tenant Improvement Allowance. All other payments of the
Tenant Improvement Allowance shall be by progress payments not more frequently
than once per month and only after satisfaction of the following conditions
precedent: (a) receipt by Landlord of conditional mechanics' lien releases for
the work completed and to be paid by said progress payment, conditioned only on
the payment of the sums set forth in the mechanics' lien release, executed by
the Contractor and all subcontractors, labor suppliers and materialmen; (b)
receipt by Landlord of unconditional mechanics' lien releases from the
Contractor and all subcontractors, labor suppliers and materialmen for all work
other than that being paid by the current progress payment previously completed
by the Contractor, subcontractors, labor suppliers and materialmen and for which
Tenant has received funds from the Tenant Improvement Allowance to pay for such
work; (c) receipt by Landlord of any and all documentation reasonably required
by Landlord detailing the work that has been completed and the materials and
supplies used as of the date of Tenant's request for the progress payment,
including, without limitation, invoices, bills, or statements for the work
completed and the materials and supplies used; and (d) completion by Landlord or
Landlord's agents of any inspections of the work completed and materials and
supplies used as deemed reasonably necessary by Landlord. Except for the CM Fee
payment (credit), Tenant Improvement Allowance progress payments shall be paid
to Tenant within fourteen (14) days from the satisfaction of the conditions set
forth in the immediately preceding sentence. The preceding notwithstanding, all
Tenant Improvement Costs paid or incurred by Tenant prior to Landlord's approval
of the Construction Documents in connection with the design and planning of the
Tenant Improvements by Architect shall be paid from the Tenant Improvement
Allowance, without any retention, within fourteen (14) days following Landlord's
receipt of invoices, bills or statements from Architect evidencing such costs.
Notwithstanding the foregoing to the contrary, Landlord shall be entitled to
withhold and retain five percent (5%) of the Tenant Improvement Allowance or of
any Tenant Improvement Allowance progress payment until the lien-free expiration
of the time for filing of any mechanics' liens claimed or which might be filed
on account of any work ordered by Tenant or the Contractor or any subcontractor
in connection with the construction and installation of the Tenant Improvements.
B. Landlord shall not be obligated to pay any Tenant Improvement
Allowance progress payment or the Tenant Improvement Allowance retention if on
the date Tenant is entitled to receive the Tenant Improvement Allowance progress
payment or the Tenant Improvement Allowance retention Tenant is in material
default of this Lease. Such payments shall resume upon Tenant curing any such
default within the time periods which may be provided for in the Lease.
C. Should the total cost of constructing the Tenant Improvements be
less than the Tenant Improvement Allowance, the Tenant Improvement Allowance
shall be automatically reduced to the amount equal to said actual cost.
6. Termination. If the Lease is terminated prior to the date on which the
Tenant Improvements are completed, for any reason due to the default of Tenant
hereunder, in addition to any other remedies available to Landlord under the
Lease, Tenant shall pay to Landlord as Additional Rent under the Lease, within
five (5) days of receipt of a statement therefor, any and all costs incurred by
Landlord and not reimbursed or otherwise paid by Tenant through the date of
termination in connection with the Tenant Improvements to the extent
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planned, installed and/or constructed as of such date of termination, including,
but not limited to, any costs related to the removal of all or any portion of
the Tenant Improvements and restoration costs related thereto. Except for any
cafeteria and related items that are part of the Tenant Improvements for which
Landlord will require Tenant, at its sole cost and expense, to demolish and/or
remove from the Premises upon the expiration or earlier termination of this
Lease, Landlord shall not require Tenant to demolish and/or remove any other
items comprising the Tenant Improvements from the Premises upon the expiration
or earlier termination of this Lease.
7. Lease Provisions; Conflict. The terms and provisions of the Lease, insofar
as they are applicable, in whole or in part, to this EXHIBIT B, are hereby
incorporated herein by reference, and specifically including all of the
provisions of Section 31 of the Lease. In the event of any conflict between the
terms of the Lease and this EXHIBIT B, the terms of this EXHIBIT B shall
prevail. Any amounts payable by Tenant to Landlord hereunder shall be deemed to
be Additional Rent under the Lease and, upon any default in the payment of same,
Landlord shall have all rights and remedies available to it as provided for in
the Lease.
8. Tenant Access. Landlord, in Landlord's reasonable discretion and upon
receipt of written confirmation from Landlord's general contractor that such
entry will be in harmony with Landlord's general contractor's work schedule with
respect to the Shell Improvements, will grant Tenant a license to have access to
the Premises prior to the Shell Improvements being Substantially Completed
(defined below) to allow Tenant to do other work required by Tenant to install a
portion of the Tenant Improvements and to otherwise make the Premises ready for
Tenant's use and occupancy (the "Tenant's Pre-Occupancy Work"). It shall be a
condition to the grant by Landlord and continued effectiveness of such license
that:
(a) Tenant shall give to Landlord a written request to have such access
not less than five (5) business days prior to the date on which such proposed
access will commence (the "Access Notice"). The Access Notice shall contain or
be accompanied by each of the following items, all in form and substance
reasonably acceptable to Landlord: (i) a detailed description of and schedule
for Tenant's Pre-Occupancy Work; (ii) the names and addresses of all
contractors, subcontractors and material suppliers and all other representatives
of Tenant who or which will be entering the Premises on behalf of Tenant to
perform Tenant's Pre-Occupancy Work or will be supplying materials for such
work, and the approximate number of individuals, itemized by trade, who will be
present in the Premises; (iii) copies of all contracts, subcontracts, material
purchase orders, plans and specifications pertaining to Tenant's Pre-Occupancy
Work; (iv) copies of all licenses and permits required in connection with the
performance of Tenant's Pre-Occupancy Work; and (v) certificates of insurance
(in amounts satisfactory to Landlord and with the parties identified in, or
required by, the Lease named as additional insureds) and instruments of
indemnification against all claims, costs, expenses, penalties, fines, and
damages which may arise in connection with Tenant's Pre-Occupancy Work.
(b) Such pre-term access by Tenant and Tenant's employees, agents,
contractors, consultants, workmen, mechanics, suppliers and invitees shall be
subject to reasonable scheduling by Landlord.
(c) Tenant's employees, agents, contractors, consultants, workmen,
mechanics, suppliers and invitees shall fully cooperate, work in harmony and
not, in any manner, unreasonably interfere with Landlord or Landlord's agents or
representatives in performing the work related to substantial completion of the
Shell Improvements (the "Work") and any additional work pursuant to approved
change orders for the Shell Improvements, Landlord's work in other areas of the
Park, or the general operation of the Buildings. If at any time any such person
representing Tenant shall not be cooperative or shall otherwise cause or
threaten to cause any such disharmony or interference, including, without
limitation, labor disharmony, and Tenant fails to immediately institute and
maintain corrective actions as directed by Landlord, then Landlord may revoke
such license upon twenty-four (24) hours' prior written notice to Tenant.
(d) Any such entry into and occupancy of the Premises or any portion
thereof by Tenant or any person or entity working for or on behalf of Tenant
shall be deemed to be subject to all of the terms, covenants, conditions and
provisions of the Lease, excluding only the covenant to pay Rent. Landlord shall
not be liable for any injury, loss or damage that may occur to any of Tenant's
Pre-Occupancy Work made in or about the Premises or to any property placed
therein prior to the commencement of the term of the Lease, the same being at
Tenant's sole risk and liability. Tenant shall be liable to Landlord for any
damage to any portion of the Premises, the Work or the additional work related
to any approved change orders caused by Tenant or any of Tenant's employees,
agents, contractors, consultants, workmen, mechanics, suppliers and invitees. In
the event that the performance of Tenant's Pre-Occupancy Work causes extra costs
to be incurred by Landlord or requires the use of other Building services, after
delivery to Tenant of prior notice that such extra costs are reasonably
anticipated by Landlord to be incurred, Tenant shall promptly reimburse Landlord
for such extra costs and/or shall pay Landlord for such other Building services
at Landlord's standard rates then in effect.
INITIALS:
TENANT: _______________
LANDLORD: _______________
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9. Shell Improvements. Subject to the conditions set forth herein, Landlord,
at its sole cost and expense, agrees to construct and install certain shell
improvements ("Shell Improvements") on the Lot, including without limitation,
the construction of the Buildings substantially in accordance with those certain
plans, specifications, and drawings prepared by Cabak Rooney Jordan Associates,
dated September 30, 1996 (collectively, the "Shell Construction Drawings"), a
copy of which is attached hereto as Schedule 1. In constructing and installing
the Shell Improvements Landlord shall not deviate from the Shell Construction
Drawings in any substantial and material manner, without first obtaining
Tenant's prior consent thereto, which consent shall not be unreasonably
withheld, conditioned or delayed; provided, however, Tenant shall not have any
approval nor consensual rights (and Landlord shall not be required to obtain
Tenant's consent therefor) concerning any changes required to be made to the
Shell Construction Drawings or the Shell Improvements by (1) the fire
department, building or planning department, building inspectors or any other
agency or official having jurisdiction over the Buildings, the work related to
the Shell Improvements and/or the Shell Improvements, and/or (2) any committee,
declarant or other persons or entities having approval or similar rights under
any Recorded Matters with respect to the Shell Improvements, and/or (3)
Landlord's lender(s) making a construction loan(s) with respect to the Shell
Improvements. The Shell Improvements shall not include the Tenant Improvements
nor any of Tenant's personal property, equipment, furnishings, trade fixtures or
fixtures. All other improvements not specified in this Section 9 shall be
considered Tenant Improvements and shall be paid for in accordance with the
provisions of Sections 8 and 10 above. Landlord shall use commercially
reasonable efforts to cause its general contractor to Substantially Complete
(defined below) the Shell Improvements by the scheduled Commencement Date
specified in the Basic Lease Information (the "Completion Date"), subject to
delays due to (a) acts or events beyond its control including, but not limited
to, acts of God, earthquakes, strikes, lockouts, boycotts, casualties,
discontinuance of any utility or other service required for performance of the
Work, moratoriums, governmental agencies and inclement weather (including, but
not limited to, rain delays), (b) the lack of availability or shortage of
specialized materials used in the construction of the Tenant Improvements, (c)
any matters beyond the control of Landlord, the general contractor or any
subcontractors, (d) any changes required by the fire department, building and/or
planning department, building inspectors or any other agency having jurisdiction
over the Buildings, the Work, the Tenant Improvements and/or the Shell
Improvements (except to the extent such changes are directly attributable to
Tenant's use or Tenant's specialized tenant improvements, in which event such
delays are considered Tenant Delays) (the events and matters set forth in
Subsections (a), (b), (c) and (d) are collectively referred to as "Force Majeure
Delays"), or (e) any delay attributable to Tenant and/or any of Tenant's
Representatives or Tenant's intended use of the Premises (collectively, "Tenant
Delays"), including, but not limited to, any of the following described events
or occurrences: (i) delays related to changes made or requested by Tenant to the
Work, and/or the approved final drawings with respect to the Tenant
Improvements; (ii) the failure of Tenant to furnish all or any plans, drawings,
specifications, finish details or other information required above; (iii) the
failure of Tenant to comply with the requirements of this Exhibit B; (iv)
Tenant's requirements for special work or materials, finishes, or installations
other than the Building Standards or Tenant's requirements for special
construction or phasing; (v) any changes required by the fire department,
building or planning department, building inspectors or any other agency having
jurisdiction over the Buildings, the Work and/or the Tenant Improvements if such
changes are directly attributable to Tenant's particular use or Tenant's
specialized tenant improvements which do not conform to Landlord's Building
Standards; (vi) the performance of any additional work pursuant to a change
request which is requested by Tenant; (vii) the performance of work in or about
the Premises by any person, firm or corporation employed by or on behalf of
Tenant, including, without limitation, any failure to complete or any delay in
the completion of such work; or (viii) any and all delays caused by or arising
from acts or omissions of Tenant and/or Tenant's Representatives, in any manner
whatsoever. Any delays in the construction of the Shell Improvements due to any
of the events described above and designated as "Tenant Delays", shall in no way
extend or affect the date on which Tenant is required to commence paying Rent
under the terms of the Lease. It is the intention of the parties that all of
such delays will be considered Tenant Delays for which Tenant shall be wholly
and completely responsible for any and all consequences related to such delays,
including, without limitation, any costs and expenses attributable to increases
in labor or materials. The Shell Improvements shall be deemed substantially
complete on the date that the building officials of the applicable governmental
agency(s) issues its final approval of the construction of the Shell
Improvements whether in the form of the issuance of a final permit, certificate
of occupancy or the written approval evidencing its final inspection on the
building permits, or the date on which Tenant first takes occupancy of the
Premises for purposes other than to perform the Tenant's Pre-Occupancy Work
(defined below), or the date that Landlord's general contractor issues a
certificate stating that the Shell Improvements have been substantially
completed in accordance with the Shell Construction Drawings, whichever first
occurs ("Substantial Completion", or "Substantially Completed", or
"Substantially Complete"). Subject to the provisions set forth below, if the
Work with respect to the Shell Improvements is not deemed to be Substantially
Completed on or before the scheduled Completion Date, (A) Landlord agrees to use
reasonable efforts to Substantially Complete the Work as soon as practicable
thereafter, (B) the Lease shall remain in full force and effect, and (C)
Landlord shall not be deemed to be in breach or default of the Lease or this
EXHIBIT B as a result thereof and, Landlord shall have no liability to Tenant as
a result of any delay in occupancy (whether for damages, abatement of all or any
portion of the Rent, or otherwise). Subject to the provisions set forth below,
the Commencement Date and the Expiration Date of the term of the Lease (as
defined in Section 2 of the Lease) shall be extended commensurately by the
amount of time attributable to any Force Majeure Delays which delay the
Substantial Completion of the Shell Improvements. In addition to the foregoing
and notwithstanding anything to the contrary contained herein or in the Lease,
if Landlord does not tender possession to Tenant of
INITIALS:
TENANT: _______________
LANDLORD: _______________
6
<PAGE> 33
the Premises with the Shell Improvements Substantially Complete by November 15,
1997 (the "Outside Date") (subject to any Force Majeure Delays or Tenant Delays,
in which event the date of November 15, 1997 shall be extended commensurately by
the period of time attributable to such delays), then either Tenant or Landlord
may terminate this Lease by delivering written notice thereof to the other party
no later than the date which is ten (10) business days after the Outside Date,
as extended by the period of time attributable to any Force Majeure Delays
and/or Tenant Delays. In addition to the foregoing and notwithstanding anything
to the contrary contained herein or in the Lease, if Landlord does not tender
possession to Tenant of the Premises with the Shell Improvements Substantially
Complete by March 1, 1998 (the "Ultimate Outside Date") (subject to any Tenant
Delays, in which event the date of March 1, 1998 shall be extended
commensurately by the period of time attributable to such delays), then either
Tenant or Landlord may terminate this Lease by delivering written notice thereof
to the other party no later than the date which is ten (10) business days after
the Ultimate Outside Date, as extended by the period of time attributable to any
Tenant Delays. If either party fails to timely terminate the Lease as and when
provided herein, or if Landlord delivers to Tenant possession of the Premises
with the Tenant Improvements Substantially Complete at any time earlier than the
Outside Date (as such date may be extended due to Force Majeure Delays or Tenant
Delays, as the case may be) or the Ultimate Outside Date (as such date may be
extended due to Tenant Delays), as applicable, then upon the occurrence of any
such events the foregoing right given to Tenant and Landlord to terminate this
Lease as provided herein shall lapse and be null and void upon the earlier
occurrence of such event and the Lease shall remain in full force and effect
with Tenant and Landlord having no further right to terminate this Lease
pursuant to the foregoing provisions. If Landlord does so timely deliver to
Tenant possession of the Premises with the Shell Improvements Substantially
Complete, Tenant shall promptly deliver written notice to Landlord confirming
same. In the event the commencement date and/or the expiration date of this
Lease is other than the Commencement Date and/or Expiration Date provided on
Page 1 in the Basic Lease Information, as the case may be, Landlord and Tenant
shall execute a written amendment to this Lease, substantially in the form of
Exhibit F hereto, wherein the parties shall specify the actual commencement
date, expiration date, the date on which Tenant is to commence paying Rent and
the other matters referred to in Section 1 of the Lease. Landlord's employees,
agents, contractors, consultants, workmen, mechanics, suppliers and invitees
shall fully cooperate, work in harmony and not, in any manner, unreasonably
interfere with Tenant or Tenant's contractors, agents or representatives in
performing the work related to substantial completion of the Tenant Improvements
and any additional work pursuant to approved change orders for the Tenant
Improvements. If at any time any such person representing Landlord shall not be
cooperative or shall otherwise cause or threaten to cause any such disharmony or
interference, including, without limitation, labor disharmony, and Landlord
fails to immediately institute and maintain corrective actions as requested by
Tenant, then any delays in Substantially Completing the Tenant Improvements as a
result thereof shall be considered to be Landlord Delays.
INITIALS:
TENANT: _______________
LANDLORD: _______________
7
<PAGE> 34
EXHIBIT B-1
CONSTRUCTION INSURANCE REQUIREMENTS
Before commencing work, the contractor shall procure and maintain at its sole
cost and expense until completion and final acceptance of the work, at least the
following minimum levels of insurance.
A. Workers' Compensation in statutory amounts and Employers Liability
Insurance in the minimum amounts of $100,000 each accident for bodily
injury by accident and $100,000 each employee for bodily injury by disease
with a $500,000 policy limit, covering each and every worker used in
connection with the contract work.
B. Comprehensive General Liability Insurance on an occurrence basis
including, but not limited to, protection for Premises/Operations
Liability, Broad Form Contractual Liability, Owner's and Contractor's
Protective, and Products/Completed Operations Liability*, in the following
minimum limits of liability.
Bodily Injury, Property Damage, and
Personal Injury Liability $2,000,000/each occurrence
$3,000,000/aggregate
* Products/Completed Operations Liability Insurance is to be provided
for a period of at least one (1) year after completion of work.
Coverage should include protection for Explosion, Collapse and Underground
Damage.
C. Comprehensive Automobile Liability Insurance with the following minimum
limits of liability.
Bodily Injury and Property $1,000,000/each occurrence
Damage Liability $2,000,000/aggregate
This insurance will apply to all owned, non-owned or hired automobiles to
be used by the Contractor in the completion of the work.
D. Umbrella Liability Insurance in a minimum amount of five million dollars
($5,000,000), providing excess coverage on a following-form basis over the
Employer's Liability limit in Paragraph A and the liability coverages
outlined in Paragraphs B and C.
E. Equipment and Installation coverages in the broadest form available
covering Contractor's tools and equipment and material not accepted by
Tenant. Tenant will provide Builders Risk Insurance on all accepted and
installed materials.
All policies of insurance, duplicates thereof or certificates evidencing
coverage shall be delivered to Landlord prior to commencement of any work and
shall name Landlord, and its partners and lenders as additional insureds as
their interests may appear. All insurance policies shall (1) be issued by a
company or companies licensed to be business in the state of California, (2)
provide that no cancellation, non-renewal or material modification shall be
effective without thirty (30) days prior written notice provided to Landlord,
(3) provide no deductible greater than $15,000 per occurrence, (4) contain a
waiver to subrogation clause in favor of Landlord, and its partners and lenders,
and (5) comply with the requirements of Sections 12.2, 12.3 and 12.4 of the
Lease to the extent such requirements are applicable.
INITIALS:
TENANT: _______________
LANDLORD: _______________
8
<PAGE> 35
EXHIBIT B-2
BUILDING STANDARDS
OFFICE AREA
DEMISING PARTITION AND CORRIDOR WALLS:
A. 6" 20-gauge metal studs at 24" O.C. (or as required by code for
span) framed full height from finish floor to structure above
B. One (1) layer 5/8" drywall Type "X" both sides of wall, fire taped
only
INTERIOR PARTITIONS:
A. 3 5/8" 25-gauge metal studs at 24" O.C. to bottom of T-bar ceiling
grid approximately 9' - 0' high
B. Top track to be pre-formed slotted aluminum taped in
C. One (1) layer 5/8" drywall both sides of wall, taped texture ready
for paint
D. 3 5/8" metal studs including all lateral bracing as required by code
PERIMETER DRYWALL (AT OFFICE AREAS):
A. One (1) layer 5/8" Type "X" drywall taped texture ready for paint
B. Provide alternate to texture concrete in lieu of furring walls
COLUMN FURRING:
A. Furring channel all sides
B. One (1) layer 5/8" drywall taped texture and ready for paint
C. Provide deductive alternate for texturing columns where there are no
pipes to furred out
ACOUSTICAL CEILINGS:
A. 2' x 4' standard white T-bar grid system as manufactured by Chicago
Metallic or equal
B. 2' x 4' x 5/8" white, fissured, non-directional acoustical tile to
be Cortega as manufactured by Armstrong or equal
PAINTING:
A. Sheetrock walls to receive two (2) coats of interior latex paint as
manufactured by Kelly Moore or equal. Some portions of second coat
to be single accent color.
B. Provide a deductive alternate for not painting warehouse walls
WINDOW COVERING:
A. 1" aluminum mini-blinds as manufactured by Levelor or equal, color
to be selected by Lincoln Property Company
B. Blinds to be sized to fit window module
VCT:
VCT to be 1/8" x 12" x 12" as manufactured by Armstrong - Excelon Series
or equal
LIGHT FIXTURES:
2' x 4' T-bar lay in 3-tube energy efficient fixture with cool white
fluorescent tubes with prismatic acrylic lens as manufactured by Lithonia
or equal
LIGHT SWITCHES:
A. Double switching as required by Title 24
B. Switch assembly to be Leviton, color - Ivory
ELECTRICAL OUTLET:
A. 110-v duplex outlet in demising or interior partitions only, as
manufactured by Leviton, color to be Ivory
B. Eight (8) outlets per circuit, spacing to meet code (2 per office)
1
<PAGE> 36
C. Transformers to be a minimum of 20% or over required capacity
D. Contractors to inspect electric room and to include all necessary
metering costs
E. No aluminum wiring is acceptable
TELEPHONE OUTLET:
A. One (1) single outlet box in wall with pullwire from outlet box to
area above T-bar ceiling per office
B. Cover plate for phone outlets to be included
FIRE SPRINKLERS:
As required by fire codes
TOPSET BASE:
A. 4" rubber base as manufactured by Burke or equal, standard colors
only
B. 4" rubber base at VCT areas
TOILET AREAS:
Wet walls to receive marlite up to 48". Floors to receive sheetvinyl and
cove base as required by code
CARPET:
Minimum 30 ounce, commercial grade, level loop, UM44-C. Type 1 Class 1.
100% continuous filament. 5-year wear guarantee. Glue down, no pad.
WOOD DOORS:
Shall be 3'-0" x 7'-0" x 1 3/4" (unless otherwise specified) solid core,
prefinished birch "Cal-Wood" B-3 or equal if approved by owner
DOOR FRAMES:
Shall be ACI or equal, 3 3/4" or 4 7/8" throat, aluminum, dark bronze
anodized, snap-on trim
HARDWARE:
Shall be "Schlage", a lever type "Levon" D series, dark bronze 613 finish,
2 3/4" backset. Closers (where required) shall be Duro X PA X SN-1
INSULATION:
By Title 24 insulation
PLUMBING:
A. Shall comply with all local codes and handicapped code requirements.
Fixtures shall be either "American Standard", "Koher" or "Norris".
All toilet accessories and grab bars shall be "Bobrick" or equal and
approved by owner
B. Plumbing bid shall include 5 gallon minimum, or insta hot with mixer
valve electric water heater
TOILET PARTITIONS:
Shall be as manufactured by Fiat, global or equal if approved by owner.
Color shall be chosen by tenant
HVAC:
Five (5) year warranty provided on all HVAC compressor units. All
penetrations and sleeper supports to be hot mopped to LPC standard.
Provide alternate price for electric heat pumps at conditioned spaces.
Provide time overlay switch at compressors.
WAREHOUSE AREAS:
Floor - sealed concrete
Fire Extinguishers - 2A 10 BC surface mount by code x by S.F.
Lighting - 1x8 strip lighting single tube chain hung 25 ft.
Draft stops - by code UBC 198 Edition
Service electrical outlets - HVAC or heaters at tenant cost
(400 W metal halide lighting are acceptable in lieu of strip lighting at
warehouse minimum 15 F.C.)1
<PAGE> 37
EXHIBIT C TO LEASE AGREEMENT
RULES & REGULATIONS
This exhibit, entitled "Rules & Regulations", is and shall constitute EXHIBIT C
to that certain Lease Agreement dated December 12, 1996 (the "Lease"), by and
between Lincoln-Whitehall Realty (West), L.L.C., a Delaware limited liability
company ("Landlord"), and Cisco Systems, Inc., a California corporation
("Tenant"), for the leasing of certain premises located at Fortran Court and
Baytech Drive, (Buildings A & B), San Jose, California (the "Premises"). The
terms, conditions and provisions of this EXHIBIT C are hereby incorporated into
and are made a part of the Lease. Any capitalized terms used herein and not
otherwise defined herein shall have the meaning ascribed to such terms as set
forth in the Lease.
1. No advertisement, picture or sign of any sort shall be displayed on
or outside the Premises or the Buildings without the prior written
consent of Landlord. Landlord shall have the right to remove any
such unapproved item without notice and at Tenant's expense.
2. Tenant shall not regularly store motor vehicles in designated
parking areas after the conclusion of normal daily business
activity.
3. Tenant shall not use any method of heating or air conditioning other
than that supplied by Landlord without the prior written consent of
Landlord, which consent shall not be unreasonably withheld or
delayed.
4. All window coverings installed by Tenant and visible from the
outside of the Buildings require the prior written approval of
Landlord.
5. Tenant shall not use, keep or permit to be used or kept any foul or
noxious gas or substance or any flammable or combustible materials
on or around the Premises, the Buildings or the Park, except as
otherwise permitted pursuant to the provisions of Section 29 of the
Lease.
6. Tenant shall not alter any lock or install any new locks or bolts on
any door at the Premises without the prior consent of Landlord,
except any conspicuously designated security areas of Tenant.
7. Intentionally omitted.
8. Tenant shall park motor vehicles in those general parking areas as
designated by Landlord except for loading and unloading. During
those periods of loading and unloading, Tenant shall not
unreasonably interfere with traffic flow within the Park and loading
and unloading areas of other tenants.
9. Tenant shall not disturb, solicit or canvas any occupant of the
Buildings or Park and shall cooperate to prevent same.
10. No person shall go on the roof without Landlord's permission.
11. Business machines and mechanical equipment belonging to Tenant which
cause noise or vibration that may be transmitted to the structure of
the Buildings, to such a degree as to be objectionable to Landlord
or other Tenants, shall be placed and maintained by Tenant, at
Tenant's expense, on vibration eliminators or other devices
sufficient to eliminate noise or vibration.
12. All goods, including material used to store goods, delivered to the
Premises of Tenant shall be immediately moved into the Premises and
shall not be left in parking or receiving areas overnight without
the prior written consent of Landlord, which consent shall not be
unreasonably withheld or delayed.
13. Tractor trailers which must be unhooked or parked with dolly wheels
beyond the concrete loading areas must use steel plates or wood
blocks under the dolly wheels to prevent damage to the asphalt
paving surfaces. No parking or storing of such trailers will be
permitted in the auto parking areas of the Park or on streets
adjacent thereto.
14. Forklifts which operate on asphalt paving areas shall not have solid
rubber tires and shall only use tires that do not damage the
asphalt.
15. Tenant is responsible for the storage and removal of all trash and
refuse. All such trash and refuse shall be contained in suitable
receptacles stored behind screened enclosures at locations approved
by Landlord.
16. Tenant shall not store or permit the storage or placement of goods,
or merchandise or pallets or equipment of any sort in or around the
Premises, the Buildings, the Park or any of the Common Areas of the
foregoing. No displays or sales of merchandise shall be allowed in
the parking lots or other Common Areas.
17. Tenant shall not permit any animals, including, but not limited to,
any household pets, to be brought or kept in or about the Premises,
the Buildings, the Park or any of the Common Areas of the foregoing.
INITIALS:
TENANT: _______________
LANDLORD: _______________
2
<PAGE> 38
18. Tenant shall not permit any motor vehicles to be washed on any
portion of the Premises or in the Common Areas of the Park, nor shall
Tenant permit mechanical work or maintenance of motor vehicles to be
performed on any portion of the Premises or in the Common Areas of
the Park.
INITIALS:
TENANT: _______________
LANDLORD: _______________
<PAGE> 39
EXHIBIT E
HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE
Your cooperation in this matter is appreciated. Initially, the information
provided by you in this Hazardous Materials Disclosure Certificate is necessary
for the Landlord (identified below) to evaluate and finalize a lease agreement
with you as tenant. After a lease agreement is signed by you and the Landlord
(the "Lease Agreement"), on an annual basis in accordance with the provisions of
Section 29 of the signed Lease Agreement, you are to provide an update to the
information initially provided by you in this certificate. The information
contained in the initial Hazardous Materials Disclosure Certificate and each
annual certificate provided by you thereafter will be maintained in
confidentiality by Landlord subject to release and disclosure as required by (i)
any lenders and owners and their respective environmental consultants, (ii) any
prospective purchaser(s) of all or any portion of the property on which the
Premises are located, (iii) Landlord to defend itself or its lenders, partners
or representatives against any claim or demand, and (iv) any laws, rules,
regulations, orders, decrees, or ordinances, including, without limitation,
court orders or subpoenas. Any and all capitalized terms used herein, which are
not otherwise defined herein, shall have the same meaning ascribed to such term
in the signed Lease Agreement. Any questions regarding this certificate should
be directed to, and when completed, the certificate should be delivered to:
Landlord: ____________________________________________________________
____________________________________________________________
c/o Lincoln Property Company Management Services, Inc.
101 Lincoln Centre Drive, Fourth Floor
Foster City, California 94404
Attn:
Phone: (415) 571-2200
Name of (Prospective) Tenant: __________________________________________________
Mailing Address: _______________________________________________________________
________________________________________________________________________________
Contact Person, Title and Telephone Number(s): _________________________________
Contact Person for Hazardous Waste Materials Management and Manifests and
Telephone Number(s): ___________________________________________________________
________________________________________________________________________________
Address of (Prospective) Premises: _____________________________________________
Length of (Prospective) initial Term: __________________________________________
________________________________________________________________________________
1. GENERAL INFORMATION:
Describe the initial proposed operations to take place in, on, or about
the Premises, including, without limitation, principal products processed,
manufactured or assembled services and activities to be provided or
otherwise conducted. Existing tenants should describe any proposed changes
to on-going operations.
__________________________________________________________________________
__________________________________________________________________________
2. USE, STORAGE AND DISPOSAL OF HAZARDOUS MATERIALS
2.1 Will any Hazardous Materials be used, generated, stored or disposed
of in, on or about the Premises? Existing tenants should describe
any Hazardous Materials which continue to be used, generated, stored
or disposed of in, on or about the Premises.
Wastes Yes [ ] No [ ]
Chemical Products Yes [ ] No [ ]
Other Yes [ ] No [ ]
1
<PAGE> 40
If Yes is marked, please explain: __________________________________
____________________________________________________________________
____________________________________________________________________
2.2 If Yes is marked in Section 2.1, attach a list of any Hazardous
Materials to be used, generated, stored or disposed of in, on or
about the Premises, including the applicable hazard class and an
estimate of the quantities of such Hazardous Materials at any given
time; estimated annual throughput; the proposed location(s) and
method of storage (excluding nominal amounts of ordinary household
cleaners and janitorial supplies which are not regulated by any
Environmental Laws); and the proposed location(s) and method of
disposal for each Hazardous Material, including, the estimated
frequency, and the proposed contractors or subcontractors. Existing
tenants should attach a list setting forth the information requested
above and such list should include actual data from on-going
operations and the identification of any variations in such
information from the prior year's certificate.
3. STORAGE TANKS AND SUMPS
3.1 Is any above or below ground storage of gasoline, diesel, petroleum,
or other Hazardous Materials in tanks or sumps proposed in, on or
about the Premises? Existing tenants should describe any such actual
or proposed activities.
Yes [ ] No [ ]
If yes, please explain: ____________________________________________
____________________________________________________________________
____________________________________________________________________
4. WASTE MANAGEMENT
4.1 Has your company been issued an EPA Hazardous Waste Generator I.D.
Number? Existing tenants should describe any additional
identification numbers issued since the previous certificate.
Yes [ ] No [ ]
4.2 Has your company filed a biennial or quarterly reports as a
hazardous waste generator? Existing tenants should describe any new
reports filed.
Yes [ ] No [ ]
If yes, attach a copy of the most recent report filed.
5. WASTEWATER TREATMENT AND DISCHARGE
5.1 Will your company discharge wastewater or other wastes to:
____ storm drain? ____ sewer?
____ surface water? ____ no wastewater or other wastes discharged.
Existing tenants should indicate any actual discharges. If so,
describe the nature of any proposed or actual discharge(s).
____________________________________________________________________
____________________________________________________________________
5.2 Will any such wastewater or waste be treated before discharge?
Yes [ ] No [ ]
If yes, describe the type of treatment proposed to be conducted.
Existing tenants should describe the actual treatment conducted.
____________________________________________________________________
____________________________________________________________________
6. AIR DISCHARGES
2
<PAGE> 41
6.1 Do you plan for any air filtration systems or stacks to be used in
your company's operations in, on or about the Premises that will
discharge into the air; and will such air emissions be monitored?
Existing tenants should indicate whether or not there are any such
air filtration systems or stacks in use in, on or about the Premises
which discharge into the air and whether such air emissions are
being monitored.
Yes [ ] No [ ]
If yes, please describe: ___________________________________________
____________________________________________________________________
____________________________________________________________________
6.2 Do you propose to operate any of the following types of equipment,
or any other equipment requiring an air emissions permit? Existing
tenants should specify any such equipment being operated in, on or
about the Premises.
____ Spray booth(s) ____ Incinerator(s)
____ Dip tank(s) ____ Other (Please describe)
____ Drying oven(s) ____ No Equipment Requiring Air Permits
If yes, please describe:
7. HAZARDOUS MATERIALS DISCLOSURES
7.1 Has your company prepared or will it be required to prepare a
Hazardous Materials management plan ("Management Plan") pursuant to
Fire Department or other governmental or regulatory agencies'
requirements? Existing tenants should indicate whether or not a
Management Plan is required and has been prepared.
Yes [ ] No [ ]
If yes, attach a copy of the Management Plan. Existing tenants
should attach a copy of any required updates to the Management Plan.
7.2 Are any of the Hazardous Materials, and in particular chemicals,
proposed to be used in your operations in, on or about the Premises
regulated under Proposition 65? Existing tenants should indicate
whether or not there are any new Hazardous Materials being so used
which are regulated under Proposition 65.
Yes [ ] No [ ]
If yes, please explain: ____________________________________________
____________________________________________________________________
____________________________________________________________________
8. ENFORCEMENT ACTIONS AND COMPLAINTS
8.1 With respect to Hazardous Materials or Environmental Laws, has your
company ever been subject to any agency enforcement actions,
administrative orders, or consent decrees or has your company
received requests for information, notice or demand letters, or any
other inquiries regarding its operations? Existing tenants should
indicate whether or not any such actions, orders or decrees have
been, or are in the process of being, undertaken or if any such
requests have been received.
Yes [ ] No [ ]
If yes, describe the actions, orders or decrees and any continuing
compliance obligations imposed as a result of these actions, orders
or decrees and also describe any requests, notices or demands, and
attach a copy of all such documents. Existing tenants should
describe and attach a copy of any new actions, orders, decrees,
requests, notices or demands not already delivered
4
<PAGE> 42
to Landlord pursuant to the provisions of Section 29 of the signed
Lease Agreement.
8.2 Have there ever been, or are there now pending, any lawsuits against
your company regarding any environmental or health and safety
concerns?
Yes [ ] No [ ]
If yes, describe any such lawsuits and attach copies of the
complaint(s), cross-complaint(s), pleadings and all other documents
related thereto as requested by Landlord. Existing tenants should
describe and attach a copy of any new complaint(s),
cross-complaint(s), pleadings and other related documents not
already delivered to Landlord pursuant to the provisions of Section
29 of the signed Lease Agreement.
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
8.3 Have there been any problems or complaints from adjacent tenants,
owners or other neighbors at your company's current facility with
regard to environmental or health and safety concerns? Existing
tenants should indicate whether or not there have been any such
problems or complaints from adjacent tenants, owners or other
neighbors at, about or near the Premises.
Yes [ ] No [ ]
If yes, please describe. Existing tenants should describe any such
problems or complaints not already disclosed to Landlord under the
provisions of the signed Lease Agreement.
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
9. PERMITS AND LICENSES
9.1 Attach copies of all Hazardous Materials permits and licenses
including a Transporter Permit number issued to your company with
respect to its proposed operations in, on or about the Premises,
including, without limitation, any wastewater discharge permits, air
emissions permits, and use permits or approvals. Existing tenants
should attach copies of any new permits and licenses as well as any
renewals of permits or licenses previously issued.
The undersigned hereby acknowledges and agrees that (A) this Hazardous Materials
Disclosure Certificate is being delivered in connection with, and as required
by, Landlord in connection with the evaluation and finalization of a Lease
Agreement and will be attached thereto as an exhibit; (B) that this Hazardous
Materials Disclosure Certificate is being delivered in accordance with, and as
required by, the provisions of Section 29 of the Lease Agreement; and (C) that
Tenant shall have and retain full and complete responsibility and liability with
respect to any of the Hazardous Materials disclosed in the HazMat Certificate
notwithstanding Landlord's/Tenant's receipt and/or approval of such certificate.
Tenant further agrees that none of the following described acts or events shall
be construed or otherwise interpreted as either (a) excusing, diminishing or
otherwise limiting Tenant from the requirement to fully and faithfully perform
its obligations under the Lease with respect to Hazardous Materials, including,
without limitation, Tenant's indemnification of the Indemnitees and compliance
with all Environmental Laws, or (b) imposing upon Landlord, directly or
indirectly, any duty or liability with respect to any such Hazardous Materials,
including, without limitation, any duty on Landlord to investigate or otherwise
verify the accuracy of the representations and statements made therein or to
ensure that Tenant is in compliance with all Environmental Laws; (i) the
delivery of such certificate to Landlord and/or Landlord's acceptance of such
certificate, (ii) Landlord's review and approval of such certificate, (iii)
Landlord's failure to obtain such certificate from Tenant at any time, or (iv)
Landlord's actual or constructive knowledge of the types and quantities of
Hazardous Materials being used, stored, generated, disposed of or transported on
or about the Premises by Tenant or Tenant's Representatives. Notwithstanding the
foregoing
5
<PAGE> 43
or anything to the contrary contained herein, the undersigned acknowledges and
agrees that Landlord and its partners, lenders and representatives may, and
will, rely upon the statements, representations, warranties, and certifications
made herein and the truthfulness thereof in entering into the Lease Agreement
and the continuance thereof throughout the term, and any renewals thereof, of
the Lease Agreement.
I (print name)_________________________ , acting with full authority to bind the
(proposed) Tenant and on behalf of the (proposed) Tenant, certify, represent and
warrant that the information contained in this certificate is true and correct.
(PROSPECTIVE) TENANT:
By: _____________________________________
Title: _____________________________________
Date: _____________________________________
INITIALS:
TENANT: _______________
LANDLORD: _______________
5
<PAGE> 44
EXHIBIT F
FIRST AMENDMENT TO LEASE AGREEMENT
CHANGE OF COMMENCEMENT DATE
This First Amendment to Lease Agreement (the "Amendment") is made and entered
into as of ___________________, by and between ____________________________
("LANDLORD"), AND ________________________ ("TENANT"), with reference to the
following facts:
RECITALS
A. Landlord and Tenant have entered into that certain Lease Agreement dated
___________ (the "Lease"), for the leasing of certain premises located at
____________________________, California (the "Premises") as such Premises
are more fully described in the Lease.
B. Landlord and Tenant wish to amend the Commencement Date of the Lease.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Landlord and Tenant hereby agree as follows:
1. The Commencement Date of the Lease shall be
________________________.
2. The last day of the Term of the Lease (the "Expiration Date") shall
be ______________.
3. The dates on which the Base Rent will be adjusted are:
for the period _________ to ________ the monthly Base Rent shall be
$_____________;
for the period _________ to ________ the monthly Base Rent shall be
$_____________; and
for the period _________ to ________ the monthly Base Rent shall be
$_____________.
4. Effect of Amendment: Except as modified herein, the terms and
conditions of the Lease shall remain unmodified and continue in full
force and effect. In the event of any conflict between the terms and
conditions of the Lease and this Amendment, the terms and conditions
of this Amendment shall prevail.
5. Definitions: Unless otherwise defined in this Amendment, all terms
not defined in this Amendment shall have the meaning set forth in
the Lease.
6. Authority: Subject to the provisions of the Lease, this Amendment
shall be binding upon and inure to the benefit of the parties
hereto, their respective heirs, legal representatives, successors
and assigns. Each party hereto and the persons signing below warrant
that the person signing below on such party's behalf is authorized
to do so and to bind such party to the terms of this Amendment.
INITIALS:
TENANT: _______________
LANDLORD: _______________
<PAGE> 45
7. The terms and provisions of the Lease are hereby incorporated in
this Amendment.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date and
year first above written.
[PROPERTY MANAGER: PLEASE PROVIDE TENANT INFORMATION AND WORD PROCESSING WILL
COMPLETE THE SIGNATURE BLOCK]
INITIALS:
TENANT: _______________
LANDLORD: _______________
<PAGE> 46
EXHIBIT G
HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE
Your cooperation in this matter is appreciated. Initially, the information
provided by you in this Hazardous Materials Disclosure Certificate is necessary
for the Landlord (identified below) to evaluate and finalize a lease agreement
with you as tenant. After a lease agreement is signed by you and the Landlord
(the "Lease Agreement"), on an annual basis in accordance with the provisions of
Section 29 of the signed Lease Agreement, you are to provide an update to the
information initially provided by you in this certificate. The information
contained in the initial Hazardous Materials Disclosure Certificate and each
annual certificate provided by you thereafter will be maintained in
confidentiality by Landlord subject to release and disclosure as required by (i)
any lenders and owners and their respective environmental consultants, (ii) any
prospective purchaser(s) of all or any portion of the property on which the
Premises are located, (iii) Landlord to defend itself or its lenders, partners
or representatives against any claim or demand, and (iv) any laws, rules,
regulations, orders, decrees, or ordinances, including, without limitation,
court orders or subpoenas. Any and all capitalized terms used herein, which are
not otherwise defined herein, shall have the same meaning ascribed to such term
in the signed Lease Agreement. Any questions regarding this certificate should
be directed to, and when completed, the certificate should be delivered to:
Landlord: ____________________________________________________________
____________________________________________________________
c/o Lincoln Property Company Management Services, Inc.
101 Lincoln Centre Drive, Fourth Floor
Foster City, California 94404
Attn:
Phone: (415) 571-2200
Name of (Prospective) Tenant: __________________________________________________
Mailing Address: _______________________________________________________________
________________________________________________________________________________
Contact Person, Title and Telephone Number(s): _________________________________
Contact Person for Hazardous Waste Materials Management and Manifests and
Telephone Number(s): ___________________________________________________________
________________________________________________________________________________
Address of (Prospective) Premises: _____________________________________________
Length of (Prospective) initial Term: __________________________________________
________________________________________________________________________________
1. GENERAL INFORMATION:
Describe the initial proposed operations to take place in, on, or about
the Premises, including, without limitation, principal products processed,
manufactured or assembled services and activities to be provided or
otherwise conducted. Existing tenants should describe any proposed changes
to on-going operations.
__________________________________________________________________________
__________________________________________________________________________
2. USE, STORAGE AND DISPOSAL OF HAZARDOUS MATERIALS
2.1 Will any Hazardous Materials be used, generated, stored or disposed
of in, on or about the Premises? Existing tenants should describe
any Hazardous Materials which continue to be used, generated, stored
or disposed of in, on or about the Premises.
Wastes Yes [ ] No [ ]
Chemical Products Yes [ ] No [ ]
Other Yes [ ] No [ ]
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<PAGE> 47
If Yes is marked, please explain: __________________________________
____________________________________________________________________
____________________________________________________________________
2.2 If Yes is marked in Section 2.1, attach a list of any Hazardous
Materials to be used, generated, stored or disposed of in, on or
about the Premises, including the applicable hazard class and an
estimate of the quantities of such Hazardous Materials at any given
time; estimated annual throughput; the proposed location(s) and
method of storage (excluding nominal amounts of ordinary household
cleaners and janitorial supplies which are not regulated by any
Environmental Laws); and the proposed location(s) and method of
disposal for each Hazardous Material, including, the estimated
frequency, and the proposed contractors or subcontractors. Existing
tenants should attach a list setting forth the information requested
above and such list should include actual data from on-going
operations and the identification of any variations in such
information from the prior year's certificate.
3. STORAGE TANKS AND SUMPS
3.1 Is any above or below ground storage of gasoline, diesel, petroleum,
or other Hazardous Materials in tanks or sumps proposed in, on or
about the Premises? Existing tenants should describe any such actual
or proposed activities.
Yes [ ] No [ ]
If yes, please explain: ____________________________________________
____________________________________________________________________
____________________________________________________________________
4. WASTE MANAGEMENT
4.1 Has your company been issued an EPA Hazardous Waste Generator I.D.
Number? Existing tenants should describe any additional
identification numbers issued since the previous certificate.
Yes [ ] No [ ]
4.2 Has your company filed a biennial or quarterly reports as a
hazardous waste generator? Existing tenants should describe any new
reports filed.
Yes [ ] No [ ]
If yes, attach a copy of the most recent report filed.
5. WASTEWATER TREATMENT AND DISCHARGE
5.1 Will your company discharge wastewater or other wastes to:
____ storm drain? ____ sewer?
____ surface water? ____ no wastewater or other wastes discharged.
Existing tenants should indicate any actual discharges. If so,
describe the nature of any proposed or actual discharge(s).
____________________________________________________________________
____________________________________________________________________
5.2 Will any such wastewater or waste be treated before discharge?
Yes [ ] No [ ]
If yes, describe the type of treatment proposed to be conducted.
Existing tenants should describe the actual treatment conducted.
____________________________________________________________________
____________________________________________________________________
6. AIR DISCHARGES
2
<PAGE> 48
6.1 Do you plan for any air filtration systems or stacks to be used in
your company's operations in, on or about the Premises that will
discharge into the air; and will such air emissions be monitored?
Existing tenants should indicate whether or not there are any such
air filtration systems or stacks in use in, on or about the Premises
which discharge into the air and whether such air emissions are
being monitored.
Yes [ ] No [ ]
If yes, please describe: ___________________________________________
____________________________________________________________________
____________________________________________________________________
6.2 Do you propose to operate any of the following types of equipment,
or any other equipment requiring an air emissions permit? Existing
tenants should specify any such equipment being operated in, on or
about the Premises.
____ Spray booth(s) ____ Incinerator(s)
____ Dip tank(s) ____ Other (Please describe)
____ Drying oven(s) ____ No Equipment Requiring Air Permits
If yes, please describe:
7. HAZARDOUS MATERIALS DISCLOSURES
7.1 Has your company prepared or will it be required to prepare a
Hazardous Materials management plan ("Management Plan") pursuant to
Fire Department or other governmental or regulatory agencies'
requirements? Existing tenants should indicate whether or not a
Management Plan is required and has been prepared.
Yes [ ] No [ ]
If yes, attach a copy of the Management Plan. Existing tenants
should attach a copy of any required updates to the Management Plan.
7.2 Are any of the Hazardous Materials, and in particular chemicals,
proposed to be used in your operations in, on or about the Premises
regulated under Proposition 65? Existing tenants should indicate
whether or not there are any new Hazardous Materials being so used
which are regulated under Proposition 65.
Yes [ ] No [ ]
If yes, please explain: ____________________________________________
____________________________________________________________________
____________________________________________________________________
8. ENFORCEMENT ACTIONS AND COMPLAINTS
8.1 With respect to Hazardous Materials or Environmental Laws, has your
company ever been subject to any agency enforcement actions,
administrative orders, or consent decrees or has your company
received requests for information, notice or demand letters, or any
other inquiries regarding its operations? Existing tenants should
indicate whether or not any such actions, orders or decrees have
been, or are in the process of being, undertaken or if any such
requests have been received.
Yes [ ] No [ ]
If yes, describe the actions, orders or decrees and any continuing
compliance obligations imposed as a result of these actions, orders
or decrees and also describe any requests, notices or demands, and
attach a copy of all such documents. Existing tenants should
describe and attach a copy of any new actions, orders, decrees,
requests, notices or demands not already delivered
4
<PAGE> 49
to Landlord pursuant to the provisions of Section 29 of the signed
Lease Agreement.
8.2 Have there ever been, or are there now pending, any lawsuits against
your company regarding any environmental or health and safety
concerns?
Yes [ ] No [ ]
If yes, describe any such lawsuits and attach copies of the
complaint(s), cross-complaint(s), pleadings and all other documents
related thereto as requested by Landlord. Existing tenants should
describe and attach a copy of any new complaint(s),
cross-complaint(s), pleadings and other related documents not
already delivered to Landlord pursuant to the provisions of Section
29 of the signed Lease Agreement.
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
8.3 Have there been any problems or complaints from adjacent tenants,
owners or other neighbors at your company's current facility with
regard to environmental or health and safety concerns? Existing
tenants should indicate whether or not there have been any such
problems or complaints from adjacent tenants, owners or other
neighbors at, about or near the Premises.
Yes [ ] No [ ]
If yes, please describe. Existing tenants should describe any such
problems or complaints not already disclosed to Landlord under the
provisions of the signed Lease Agreement.
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
9. PERMITS AND LICENSES
9.1 Attach copies of all Hazardous Materials permits and licenses
including a Transporter Permit number issued to your company with
respect to its proposed operations in, on or about the Premises,
including, without limitation, any wastewater discharge permits, air
emissions permits, and use permits or approvals. Existing tenants
should attach copies of any new permits and licenses as well as any
renewals of permits or licenses previously issued.
The undersigned hereby acknowledges and agrees that (A) this Hazardous Materials
Disclosure Certificate is being delivered in connection with, and as required
by, Landlord in connection with the evaluation and finalization of a Lease
Agreement and will be attached thereto as an exhibit; (B) that this Hazardous
Materials Disclosure Certificate is being delivered in accordance with, and as
required by, the provisions of Section 29 of the Lease Agreement; and (C) that
Tenant shall have and retain full and complete responsibility and liability with
respect to any of the Hazardous Materials disclosed in the HazMat Certificate
notwithstanding Landlord's/Tenant's receipt and/or approval of such certificate.
Tenant further agrees that none of the following described acts or events shall
be construed or otherwise interpreted as either (a) excusing, diminishing or
otherwise limiting Tenant from the requirement to fully and faithfully perform
its obligations under the Lease with respect to Hazardous Materials, including,
without limitation, Tenant's indemnification of the Indemnitees and compliance
with all Environmental Laws, or (b) imposing upon Landlord, directly or
indirectly, any duty or liability with respect to any such Hazardous Materials,
including, without limitation, any duty on Landlord to investigate or otherwise
verify the accuracy of the representations and statements made therein or to
ensure that Tenant is in compliance with all Environmental Laws; (i) the
delivery of such certificate to Landlord and/or Landlord's acceptance of such
certificate, (ii) Landlord's review and approval of such certificate, (iii)
Landlord's failure to obtain such certificate from Tenant at any time, or (iv)
Landlord's actual or constructive knowledge of the types and quantities of
Hazardous Materials being used, stored, generated, disposed of or transported on
or about the Premises by Tenant or Tenant's Representatives. Notwithstanding the
foregoing
5
<PAGE> 50
or anything to the contrary contained herein, the undersigned acknowledges and
agrees that Landlord and its partners, lenders and representatives may, and
will, rely upon the statements, representations, warranties, and certifications
made herein and the truthfulness thereof in entering into the Lease Agreement
and the continuance thereof throughout the term, and any renewals thereof, of
the Lease Agreement.
I (print name)_________________________ , acting with full authority to bind the
(proposed) Tenant and on behalf of the (proposed) Tenant, certify, represent and
warrant that the information contained in this certificate is true and correct.
(PROSPECTIVE) TENANT:
By: _____________________________________
Title: _____________________________________
Date: _____________________________________
INITIALS:
TENANT: _______________
LANDLORD: _______________
5
<PAGE> 51
ADDENDUM 1
FIRST OPTION TO EXTEND THE LEASE
This Addendum 1 is incorporated as a part of that certain Lease Agreement, dated
December 12, 1996 (the "Lease"), by and between Lincoln-Whitehall Realty (West),
L.L.C., a Delaware limited liability company ("Landlord"), and Cisco Systems,
Inc., a California corporation ("Tenant"), of those certain premises located at
Fortran Court and Baytech Drive (Buildings A & B) (the "Premises"). Any
capitalized terms used herein and not otherwise defined herein shall have the
meaning ascribed to such terms as set forth in the Lease.
1. GRANT OF EXTENSION OPTION. Subject to the provisions of Sections 5 and 6
hereinbelow, if Tenant has not at any time been in default of its obligations
beyond applicable cure periods more than three (3) times in any twelve-month
period ("Chronic Default"), or at the time of Tenant's exercise of this option,
is currently not, in default in the performance of any of its obligations under
this Lease beyond applicable cure periods, and contingent upon review and
approval of Tenant's then current financial condition by Landlord [which
financial condition shall be deemed to be acceptable to Landlord so long as
Tenant, at the time of exercise of this option and for the prior twelve month
period of time prior to Tenant's exercise of this option, has a net worth of at
least One Hundred Million Dollars ($100,000,000.00)], Tenant shall have the
right at its option (the "First Option") to extend the initial term of the Lease
for an additional period of one (1) year (the "First Extended Term").
2. TENANT'S FIRST OPTION NOTICE. If Landlord does not receive written notice
from Tenant of its exercise of this First Option on a date which is not more
than five hundred forty (540) days nor less than three hundred sixty (360) days
prior to the end of the initial term of the Lease (the "First Option Notice"),
all rights of Tenant in, to and under this First Option shall automatically
lapse and terminate and shall be of no further force or effect. Time is of the
essence herein.
3. ESTABLISHING THE MONTHLY BASE RENT FOR THE FIRST EXTENDED TERM. In the
event Tenant duly exercises its rights under this First Option, the monthly Base
Rent payable by Tenant to Landlord during the First Extended Term shall be one
hundred seventy-one thousand four hundred eighteen and 50/100 dollars
($171,418.50). If Tenant duly exercises this First Option in accordance with the
terms outlined above, Landlord and Tenant shall immediately execute, at
Landlord's sole option, either the standard lease agreement then in use by
Landlord, or an amendment to this Lease. Such new lease agreement or amendment,
as the case may be, shall set forth among other things, the monthly Base Rent
quoted above for the First Extended Term and the actual commencement date and
expiration date of the First Extended Term. Tenant shall have no other right to
extend the initial term of the Lease under this Addendum 1 unless Landlord and
Tenant otherwise agree in writing.
4. CONDITION OF PREMISES AND BROKERAGE COMMISSIONS FOR THE FIRST EXTENDED
TERM. If Tenant duly exercises this First Option in accordance with the terms
contained herein, the following shall apply: (1) Tenant shall accept the
Premises in its then "As-Is" condition and, accordingly, Landlord shall not be
required to perform nor install any additional improvements to the Premises; and
(2) Tenant hereby agrees that it will be solely responsible for any and all
brokerage commissions and finder's fees payable to any broker except for
Landlord's broker in connection with the First Option described herein, and
Tenant hereby further agrees that Landlord shall in no event or circumstance be
responsible for the payment of any such commissions and fees.
5. LIMITATIONS ON, AND CONDITIONS TO, FIRST EXTENSION OPTION. This First
Option is personal to Tenant and except for a Related Entity may not be
assigned, voluntarily or
INITIALS:
TENANT: _______________
LANDLORD: _______________
1
<PAGE> 52
involuntarily, separate from or as part of the Lease, unless Landlord otherwise
expressly consents in writing to such assignment. At Landlord's option, all
rights of Tenant under this First Option shall terminate and be of no force or
effect if any of the following individual events occur or any combination
thereof occur: (1) Tenant or the Related Entity, as applicable, has been in
Chronic Default at any time during the initial term of the Lease, or at the time
of exercise of the First Option is then currently in default of any provision of
the Lease beyond applicable cure periods; and/or (2) Tenant has assigned its
rights and obligations under all or part of the Lease to any party or entity
other than a Related Entity, or Tenant has subleased all or part of the Premises
to any party or entity other than a Related Entity, unless Landlord otherwise
expressly consents in writing to such assignment or sublease; and/or (3)
Tenant's or the Related Entity's (as applicable) financial condition is
unacceptable to Landlord at the time the First Option Notice is delivered to
Landlord [which financial condition shall be deemed to be acceptable to Landlord
so long as Tenant or the Related Entity, as applicable, at the time of exercise
of this First Option and for the prior twelve month period of time prior to
delivery of the First Option Notice, has a net worth of at least One Hundred
Million Dollars ($100,000,000.00)]; and/or (4) Tenant or the Related Entity (as
applicable) has failed to exercise this First Option in a timely manner and in
strict accordance with the provisions of this Addendum 1; and/or (5) Tenant, a
Related Entity, or a third party subtenant or assignee for which Landlord has
expressly consented, as the case may be, no longer has possession of all or any
part of the Premises under the Lease, or if the Lease has been terminated
earlier, pursuant to the terms of the Lease.
6. RECAPTURE AND EXCESS SUBLEASE RENTAL OR ASSIGNMENT CONSIDERATION.
Notwithstanding anything to the contrary contained in the Lease or herein, if
(I) the Term of the Second Lease has expired or the Second Lease has been
earlier terminated for any reason whatsoever, in whole or in part, and (II)
during the First Extended Term Tenant proposes to sublease or assign this Lease
to a party other than a Related Entity, then for the time period during which
there is any vacancy in Building C and/or Building D (as referred to in the
Second Lease) Landlord shall have the right, to be exercised by giving written
notice to Tenant, to either (1) recapture the space described in the proposed
sublease or assignment, or (2) consent to such proposed sublease or assignment,
in which event Tenant shall pay Landlord monthly, as Additional Rent, at the
same time as the monthly installments of Rent are payable hereunder, fifty
percent (50%) of the excess of each such payment of rent or other consideration
in excess of the Rent called for hereunder, after deduction of the actual
brokerage commission (if any) paid by Tenant in connection with such proposed
sublease or assignment, where the rent or other consideration provided for in
the proposed sublease or assignment either initially or over the term of the
sublease or assignment exceeds the Rent or pro rata portion of the Rent, as the
case may be, for such space reserved in the Lease. If such recapture notice is
given, it shall serve to terminate this Lease with respect to the proposed
sublease or assignment space, or, if the proposed sublease or assignment space
covers all the Premises for the First Extended Term, it shall serve to terminate
the entire term of this Lease in either case, as of the Proposed Effective Date,
with respect to such space.
INITIALS:
TENANT: _______________
LANDLORD: _______________
2
<PAGE> 53
ADDENDUM 2
SECOND OPTION TO EXTEND THE LEASE
This Addendum 2 is incorporated as a part of that certain Lease Agreement, dated
December 12, 1996 (the "Lease"), by and between Lincoln-Whitehall Realty (West),
L.L.C., a Delaware limited liability company ("Landlord"), and Cisco Systems,
Inc., a California corporation ("Tenant"), of those certain premises located at
Fortran Court and Baytech Drive (Buildings A & B) (the "Premises"). Any
capitalized terms used herein and not otherwise defined herein shall have the
meaning ascribed to such terms as set forth in the Lease.
1. GRANT OF EXTENSION OPTION. Subject to the provisions of Sections 5 and 6
hereinbelow, if (i) Tenant has not at any time been in Chronic Default, or at
the time of Tenant's exercise of this Second Option, is currently not, in
default in the performance of any of its obligations under this Lease beyond any
applicable cure periods, (ii) Tenant has duly exercised the First Option in
accordance with the provisions of Addendum 1 to the Lease, and (iii) contingent
upon review and approval of Tenant's then current financial condition by
Landlord [which financial condition shall be deemed to be acceptable to Landlord
so long as Tenant, at the time of exercise of this option and for the prior
twelve month period of time prior to Tenant's exercise of this Second Option,
has a net worth of at least One Hundred Million Dollars ($100,000,000.00)],
Tenant shall have the right at its option (the "Second Option") to further
extend the term of the Lease for an additional one (1) year period (the "Second
Extended Term").
2. TENANT'S SECOND OPTION NOTICE. If Landlord does not receive written notice
from Tenant of its exercise of this Second Option on a date which is not more
than five hundred forty (540) days nor less than three hundred sixty (360) days
prior to the end of the First Extended Term of the Lease (the "Second Option
Notice"), all rights of Tenant in, to and under this Second Option shall
automatically lapse and terminate and shall be of no further force or effect.
Time is of the essence herein.
3. ESTABLISHING THE MONTHLY BASE RENT FOR THE SECOND EXTENDED TERM. In the
event Tenant duly exercises its rights under this Second Option, the monthly
Base Rent payable by Tenant to Landlord during the Second Extended Term shall be
one hundred seventy-six thousand six hundred thirteen and 00/100 dollars
($176,613.00). If Tenant duly exercises this Second Option in accordance with
the terms outlined above, Landlord and Tenant shall immediately execute, at
Landlord's sole option, either the standard lease agreement then in use by
Landlord, or an amendment to this Lease. Such new lease agreement or amendment,
as the case may be, shall set forth among other things, the monthly Base Rent
quoted above for the Second Extended Term and the actual commencement date and
expiration date of the Second Extended Term. Tenant shall have no other right to
extend the then applicable term of the Lease under this Addendum 2 unless
Landlord and Tenant otherwise agree in writing.
4. CONDITION OF PREMISES AND BROKERAGE COMMISSIONS FOR THE SECOND EXTENDED
TERM. If Tenant duly exercises this Second Option in accordance with the terms
contained herein: (1) Tenant shall accept the Premises in its then "As-Is"
condition and, accordingly, Landlord shall not be required to perform nor
install any additional improvements to the Premises; and (2) Tenant hereby
agrees that it will be solely responsible for any and all brokerage commissions
and finder's fees payable to any broker except for Landlord's broker in
connection with the Second Option described herein, and Tenant hereby further
agrees that Landlord shall in no event or circumstance be responsible for the
payment of any such commissions and fees.
INITIALS:
TENANT: _______________
LANDLORD: _______________
1
<PAGE> 54
5. LIMITATIONS ON, AND CONDITIONS TO, SECOND EXTENSION OPTION. This Second
Option is personal to Tenant and except for a Related Entity may not be
assigned, voluntarily or involuntarily, separate from or as part of the Lease,
unless Landlord otherwise expressly consents in writing to such assignment. At
Landlord's option, all rights of Tenant under this First Option shall terminate
and be of no force or effect if any of the following individual events occur or
any combination thereof occur: (1) Tenant or the Related Entity, as applicable,
has been in Chronic Default at any time during the initial term or First
Extended Term of the Lease, or at the time of exercise of the Second Option is
then currently in default of any provision of the Lease beyond applicable cure
periods; and/or (2) Tenant has assigned its rights and obligations under all or
part of the Lease to any party or entity other than a Related Entity, or Tenant
has subleased all or part of the Premises to any party or entity other than a
Related Entity, unless Landlord otherwise expressly consents in writing to such
assignment or sublease; and/or (3) Tenant's or the Related Entity's (as
applicable) financial condition is unacceptable to Landlord at the time the
Second Option Notice is delivered to Landlord [which financial condition shall
be deemed to be acceptable to Landlord so long as Tenant or the Related Entity,
as applicable, at the time of exercise of this Second Option and for the prior
twelve month period of time prior to delivery of the Second Option Notice, has a
net worth of at least One Hundred Million Dollars ($100,000,000.00)]; and/or (4)
Tenant or the Related Entity, as applicable, has failed to exercise the First
Option in a timely manner in strict accordance with the provisions of Addendum 1
to the Lease; (5) Tenant or the Related Entity (as applicable) has failed to
exercise this Second Option in a timely manner and in strict accordance with the
provisions of this Addendum 2; and/or (6) Tenant, a Related Entity, or a third
party subtenant or assignee for which Landlord has expressly consented, as the
case may be, no longer has possession of all or any part of the Premises under
the Lease, or if the Lease has been terminated earlier, pursuant to the terms of
the Lease.
6. RECAPTURE AND EXCESS SUBLEASE RENTAL OR ASSIGNMENT CONSIDERATION.
Notwithstanding anything to the contrary contained in the Lease or herein, if
(I) the Term of the Second Lease has expired or the Second Lease has been
earlier terminated for any reason whatsoever, in whole or in part, and (II)
during the Second Extended Term Tenant proposes to sublease or assign this Lease
to a party other than a Related Entity, then for the time period during which
there is any vacancy in Building C and/or Building D (as referred to in the
Second Lease) Landlord shall have the right, to be exercised by giving written
notice to Tenant, to either (1) recapture the space described in the proposed
sublease or assignment, or (2) consent to such proposed sublease or assignment,
in which event Tenant shall pay Landlord monthly, as Additional Rent, at the
same time as the monthly installments of Rent are payable hereunder, fifty
percent (50%) of the excess of each such payment of rent or other consideration
in excess of the Rent called for hereunder, after deduction of the actual
brokerage commission (if any) paid by Tenant in connection with such proposed
sublease or assignment, where the rent or other consideration provided for in
the proposed sublease or assignment either initially or over the term of the
sublease or assignment exceeds the Rent or pro rata portion of the Rent, as the
case may be, for such space reserved in the Lease. If such recapture notice is
given, it shall serve to terminate this Lease with respect to the proposed
sublease or assignment space, or, if the proposed sublease or assignment space
covers all the Premises for the Second Extended Term, it shall serve to
terminate the entire term of this Lease in either case, as of the Proposed
Effective Date, with respect to such space.
INITIALS:
TENANT: _______________
LANDLORD: _______________
2
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.51
<SEQUENCE>4
<DESCRIPTION>LEASE AGREEMENT DATED DECEMBER 18, 1996
<TEXT>
<PAGE> 1
EXHIBIT 10.51
LEASE AGREEMENT
(NNN)
BASIC LEASE INFORMATION
LEASE DATE: December 18, 1996
LANDLORD: Lincoln-Whitehall Realty (West), L.L.C.,
a Delaware limited liability company
LANDLORD'S ADDRESS: c/o Lincoln Property Company Management Services, Inc.
101 Lincoln Centre Drive, Fourth Floor
Foster City, California 94404-1167
TENANT: Cisco Systems, Inc., a California corporation
TENANT'S ADDRESS: 170 W. Tasman Drive
San Jose, California 95124
Attention: Chris Hampton, Director,
Real Estate Worldwide
PREMISES: Approximately 84,935 rentable square feet as shown on
Exhibit A
PREMISES ADDRESSES: Building C: 130 Baytech Drive, San Jose,
California 95134
Building D: 140 Baytech Drive, San Jose,
California 95134
BUILDINGS (C & D): Approximately 84,935
rentable square feet
LOT (PARK'S TAX PARCEL): APN 015-30-093
PARK (LINCOLN BAY TECH PARK): Approximately 188,825
rentable square feet
TERM: July 1, 1997 ("Commencement Date"), through June 30,
2001 ("Expiration Date"), subject to the
provisions of Section 2 hereof.
BASE RENT (Paragraph 3): One hundred twenty-three
thousand one hundred fifty-five and
75/100 dollars ($123,155.75) per month
($1.45 per rentable square foot)
commencing on the Commencement Date
through June 30, 1998.
ADJUSTMENTS TO BASE RENT: Effective July 1, 1998, Base Rent shall increase to
$127,402.50 per month ($1.50 per rentable square
foot).
Effective July 1, 1999, Base Rent shall
increase to $131,649.25 per month ($1.55
per rentable square foot).
Effective July 1, 2000, Base Rent shall increase to
$135,896.00 per month ($1.60 per rentable square
foot).
SECURITY DEPOSIT
(Paragraph 4): Waived
*TENANT'S SHARE OF OPERATING EXPENSES (Paragraph 6.1): 45% of the Park
*TENANT'S SHARE OF TAX EXPENSES (Paragraph 6.2): 45% of the Park
*TENANT'S SHARE OF COMMON AREA UTILITY COSTS (Paragraph 7): 45% of the Park
*TENANT'S SHARE OF UTILITY EXPENSES (Paragraph 7): 45% of the Park
*The amount of Tenant's Share of the expenses as referenced above shall be
subject to modification as set forth in this Lease.
PERMITTED USES
(Paragraph 9): General office, industrial, assembly, light
manufacturing and distribution of computer products,
but only to the extent permitted by the City of San
Jose and all agencies and governmental authorities
having jurisdiction thereof
UNRESERVED
PARKING SPACES: Three hundred nineteen (319) non-exclusive and
undesignated spaces
BROKERS (Paragraph 38): Dennis Chambers of CPS for Tenant
Wayne Mascia Associates for Landlord
EXHIBITS: Exhibit A - Premises, Building, Lot and/or Park
Exhibit B - Tenant Improvements
Exhibit C - Rules and Regulations
Exhibit D - Covenants, Conditions and Restrictions
(Intentionally Omitted)
Exhibit E - Hazardous Materials Disclosure
Certificate - Example
Exhibit F - Change of Commencement Date - Example
Exhibit G - Tenant's Initial Hazardous Materials
Disclosure Certificate
Exhibit H - Sign Criteria (Intentionally Omitted)
ADDENDA: Addendum 1: First Option to Extend the Lease
Addendum 2: Second Option to Extend the Lease
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TABLE OF CONTENTS
SECTION PAGE
1. PREMISES.............................................................. 3
2. ADJUSTMENT OF COMMENCEMENT DATE; CONDITION OF THE PREMISES............ 3
3. RENT.................................................................. 4
4. SECURITY DEPOSIT...................................................... 5
5. TENANT IMPROVEMENTS................................................... 5
6. ADDITIONAL RENT....................................................... 5
7. UTILITIES............................................................. 8
8. LATE CHARGES.......................................................... 9
9. USE OF PREMISES....................................................... 9
10. ALTERATIONS AND ADDITIONS; AND SURRENDER OF PREMISES..................10
11. REPAIRS AND MAINTENANCE...............................................11
12. INSURANCE.............................................................12
13. WAIVER OF SUBROGATION.................................................14
14. LIMITATION OF LIABILITY AND INDEMNITY.................................14
15. ASSIGNMENT AND SUBLEASING.............................................15
16. AD VALOREM TAXES......................................................17
17. SUBORDINATION.........................................................17
18. RIGHT OF ENTRY........................................................17
19. ESTOPPEL CERTIFICATE..................................................18
20. TENANT'S DEFAULT......................................................18
21. REMEDIES FOR TENANT'S DEFAULT.........................................19
22. HOLDING OVER..........................................................20
23. LANDLORD'S DEFAULT....................................................20
24. PARKING...............................................................20
25. SALE OF PREMISES......................................................20
26. WAIVER................................................................21
27. CASUALTY DAMAGE.......................................................21
28. CONDEMNATION..........................................................22
29. ENVIRONMENTAL MATTERS/HAZARDOUS MATERIALS.............................22
30. FINANCIAL STATEMENTS..................................................24
31. GENERAL PROVISIONS....................................................24
32. SIGNS.................................................................26
33. MORTGAGEE PROTECTION..................................................26
34. QUITCLAIM.............................................................26
35. MODIFICATIONS FOR LENDER..............................................26
36. WARRANTIES OF TENANT..................................................26
37. COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT.......................27
38. BROKERAGE COMMISSION..................................................27
39. QUIET ENJOYMENT.......................................................28
40. LANDLORD'S ABILITY TO PERFORM TENANT'S UNPERFORMED OBLIGATIONS........28
41. TENANT'S ABILITY TO PERFORM LANDLORD'S UNPERFORMED OBLIGATIONS........24
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LEASE AGREEMENT
DATE: This Lease is made and entered into as of the Lease Date set forth on
Page 1. The Basic Lease Information set forth on Page 1 and this Lease
are and shall be construed as a single instrument.
1. PREMISES: Landlord hereby leases the Premises to Tenant upon the terms and
conditions contained herein. Landlord hereby grants to Tenant a license for the
right to use, on a non-exclusive basis, parking areas and ancillary facilities
located within the Common Areas of the Park, subject to the terms of this Lease;
provided, however, such license shall only be revocable (i) if Tenant is in
default of its obligations under this Lease beyond applicable cure periods, or
(ii) upon the expiration or earlier termination of this Lease. For purposes of
this Lease, the term "Premises" shall mean and refer to the entirety of both of
the Buildings, namely, Building A and Building B situated within the Park.
Landlord and Tenant hereby agree that for purposes of this Lease, as of the
Lease Date, the rentable square footage area of the Premises, the Buildings, the
Lot and the Park shall be deemed to be the number of rentable square feet as set
forth in the Basic Lease Information on Page 1; provided, however, within
fifteen (15) days after the date on which Landlord causes the Buildings to be
Substantially Completed (as such term is defined in Exhibit B hereto), Tenant
may have its architect verify the actual rentable square feet contained within
the Premises (i.e. the Buildings), provided that the basis of such measurement
shall be measured from drip line to drip line and not in accordance with BOMA
standards. Tenant hereby acknowledges that the rentable square footage of the
Premises may include a proportionate share of certain areas used in common by
all occupants of the Buildings (for example an electrical room or telephone
room). Landlord and Tenant hereby acknowledge and agree that as of the Lease
Date the Buildings have not been constructed on the Lot. After Landlord has
Substantially Completed (as such term is defined in Exhibit B hereto) the Shell
Improvements, Landlord and Tenant shall execute a written amendment to this
Lease, substantially in the form of Exhibit F hereto, wherein the parties shall
specify the (i) actual approximate rentable square footage of each of the
Premises, the Buildings and the Park, (ii) actual amount of Base Rent to be paid
by Tenant, which shall be based upon the amount of base rent per rentable square
foot as set forth in the Basic Lease Information, (iii) actual amount of
Tenant's Share of the expenses set forth in the Basic Lease Information, which
share shall be based upon such approximate rentable square footages, and (iv)
the Premises Addresses. Tenant further agrees that the number of rentable square
feet of the Buildings, the Lot and the Park may subsequently change after the
Lease Date commensurate with any modifications to any of the foregoing by
Landlord due to any casualty to, or condemnation of, any portion of the
Premises, and Tenant's Share shall accordingly change.
2. ADJUSTMENT OF COMMENCEMENT DATE; CONDITION OF THE PREMISES:
2.1 If on the Commencement Date (a) Landlord has not delivered
possession of the Premises with only the Shell Improvements (defined in Exhibit
B hereto) Substantially Completed, and (b) Tenant has not Substantially
Completed the Tenant Improvements, Landlord shall not be subject to any
liability nor shall the validity of the Lease be affected; provided, subject to
the provisions set forth below, the Lease Term and the obligation to pay Rent
shall commence on the date which is the earlier to occur of (i) the date on
which Tenant has Substantially Completed the Tenant Improvements (defined in
Exhibit B hereto), or (ii) the date which is ninety (90) business days after
Landlord has Substantially Completed the Shell Improvements (provided, said
90-business day period may be extended by a maximum of an additional period of
30 days if Tenant is delayed from Substantially Completing the Tenant
Improvements wholly due either to delays attributable to Landlord's failure to
timely perform its obligations with respect to the Shell Improvements because of
events within Landlord's control (the "Landlord Delays") or events considered to
be Force Majeure Delays (defined in Exhibit B hereto). The Expiration Date shall
also be extended commensurately therewith. In addition to the foregoing and
notwithstanding anything to the contrary contained herein or in Exhibit B
hereto, if Landlord does not tender possession to Tenant of the Premises with
the Shell Improvements Substantially Complete by November 15, 1997 (the "Outside
Date") (subject to any Force Majeure Delays or Tenant Delays, in which event the
date of November 15, 1997 shall be extended commensurately by the period of time
attributable to such delays), then either Tenant or Landlord may terminate this
Lease by delivering written notice thereof to the other party no later than the
date which is ten (10) business days after the Outside Date, as extended by the
period of time attributable to any Force Majeure Delays and/or Tenant Delays. In
addition to the foregoing and notwithstanding anything to the contrary contained
herein or in Exhibit B hereto, if Landlord does not tender possession to Tenant
of the Premises with the Shell Improvements Substantially Complete by March 1,
1998 (the "Ultimate Outside Date") (subject to any Tenant Delays, in which event
the date of March 1, 1998 shall be extended commensurately by the period of time
attributable to such delays), then either Tenant or Landlord may terminate this
Lease by delivering written notice thereof to the other party no later than the
date which is ten (10) business days after the Ultimate Outside Date, as
extended by the period of time attributable to any Tenant Delays. If either
party fails to timely terminate the Lease as and when provided herein, or if
Landlord delivers to Tenant possession of the Premises with the Tenant
Improvements Substantially Complete at any time earlier than the Outside Date
(as such date may be extended due to Force Majeure Delays or Tenant Delays, as
the case may be) or the Ultimate Outside Date (as such date may be extended due
to Tenant Delays), as applicable, then upon the occurrence of any such events
the foregoing right given to Tenant and Landlord to terminate this Lease as
provided herein shall lapse and be null and void upon the earlier occurrence of
such event and the Lease shall remain in full force and effect with Tenant and
Landlord having no further right to terminate this Lease pursuant to the
foregoing provisions. If Landlord does so timely deliver to Tenant possession of
the Premises with the Shell Improvements Substantially Complete, Tenant shall
promptly deliver
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written notice to Landlord confirming same. In the event the commencement date
and/or the expiration date of this Lease is other than the Commencement Date
and/or Expiration Date provided on Page 1 in the Basic Lease Information, as the
case may be, Landlord and Tenant shall execute a written amendment to this
Lease, substantially in the form of Exhibit F hereto, wherein the parties shall
specify the actual commencement date, expiration date, the date on which Tenant
is to commence paying Rent and the other matters referred to in Section 1 above.
The word "Term" whenever used herein refers to the initial term of this Lease
and any extension thereof. Except as otherwise expressly set forth below with
regard to Punchlist Items, by taking possession of the Premises with only the
Shell Improvements Substantially Completed, Tenant shall be deemed to have
accepted the Premises in a good, clean and completed condition and state of
repair. Notwithstanding the foregoing, within three (3) business days after the
Substantial Completion (as such term is defined in Exhibit B hereto) of the
Shell Improvements representatives of Landlord and Tenant shall make a joint
inspection of the Shell Improvements and the results of each such inspection
shall be set forth in a written list specifying the incomplete items as well as
those items for which corrections need to be made (the "Punchlist Items").
Landlord and Tenant shall promptly (by no later than three (3) business days
thereafter) and in good faith approve the written list of Punchlist Items.
Landlord, at its sole cost and expense, shall use commercially reasonable
efforts to cause the Punchlist Items to be promptly completed and/or corrected,
as applicable. The performance of the work associated with the Punchlist Items
shall be performed in such a manner so as not to preclude or substantially
prevent Tenant's ability to construct the Tenant Improvements in the Premises.
Upon the completion of the Punchlist Items to Tenant's reasonable satisfaction
Tenant shall immediately notify Landlord in writing that such items have been
completed to Tenant's reasonable satisfaction. In addition to the Punchlist
Items, Landlord shall also use commercially reasonable efforts to cause the
general contractor to correct any other patent deficiencies or defects in the
Shell Improvements during the thirty (30) day period following Substantial
Completion of the Shell Improvements. If Tenant fails to timely deliver to
Landlord any such written notice of the aforementioned patent defects or
deficiencies within said 30-day period, Landlord shall have no obligation to
perform any such work thereafter, except as otherwise specifically provided in
Sections 5 and 14 of this Lease. Tenant hereby acknowledges and agrees that
neither Landlord nor Landlord's agents or representatives has made any
representations or warranties as to the suitability, safety or fitness of the
Premises for the conduct of Tenant's business, Tenant's intended use of the
Premises or for any other purpose.
2.2 Landlord shall permit Tenant to enter and occupy the Premises
prior to the Commencement Date for purposes of installing a portion of the
Tenant Improvements and to perform Tenant's Pre-Occupancy Work (as such term is
defined in Exhibit B hereto). Landlord shall consult with its general contractor
and shall notify Tenant, in writing, of the date on which Tenant may commence
such limited purpose occupancy. In no event may Tenant conduct its business or
operations from the Premises until after the Commencement Date. Such limited
purpose occupancy by Tenant shall be at Tenant's sole risk and shall also be
subject to all of the provisions of this Lease other than the requirement to pay
Rent (other than any Utility Expenses incurred during the time period Tenant is
constructing the Tenant Improvements), including, but not limited to, the
requirement to obtain the insurance required pursuant to this Lease (including
without limitation, the provisions of Exhibit B hereto) and to deliver insurance
certificates as required herein, and to pay for all utilities and Utility
Expenses to the extent incurred during the time period Tenant is constructing
the Tenant Improvements. In addition to the foregoing and the provisions of
Exhibit B hereto regarding such early occupancy, Landlord shall have the right
to impose such additional conditions on Tenant's early entry as Landlord shall
deem reasonably appropriate. If, at any time, Tenant is in default of any term,
condition or provision of this Lease, any such waiver by Landlord of Tenant's
requirement to pay rental payments shall be null and void and Tenant shall
immediately pay to Landlord all rental payments so waived by Landlord.
3. RENT: On the date that Tenant executes this Lease, Tenant shall deliver to
Landlord the original executed Lease, the Base Rent (which shall be applied
against the Rent payable for the first month Tenant is required to pay Base
Rent), and all insurance certificates or, alternatively, the letter required
pursuant to Section 12.5 hereof, evidencing the insurance required to be
obtained by Tenant under Section 12 of this Lease and under the provisions of
Exhibit B hereto. Tenant agrees to pay Landlord, without prior notice or demand,
or abatement (except as otherwise set forth in Sections 27 and 41 hereof),
offset, deduction or claim, the Base Rent described on Page 1, payable in
advance at Landlord's address shown on Page 1 on the Commencement Date and
thereafter on the first (1st) day of each month throughout the Term of the
Lease. In addition to the Base Rent set forth on Page 1, Tenant shall pay
Landlord in advance, on the Commencement Date and thereafter on the first (1st)
day of each month throughout the Term of this Lease, as Additional Rent,
Tenant's Share of Operating Expenses, Tax Expenses, Common Area Utility Costs,
and Utility Expenses. The term "Rent" whenever used herein refers to the
aggregate of all these amounts. If Landlord permits Tenant to occupy the
Premises to conduct business operations therein without requiring Tenant to pay
rental payments for a period of time, the waiver of the requirement to pay
rental payments shall only apply to waiver of the Base Rent and Tenant shall
otherwise perform all other obligations of Tenant required hereunder. The Rent
for any fractional part of a calendar month at the commencement or termination
of the Lease term shall be a prorated amount of the Rent for a full calendar
month based upon a thirty (30) day month. The prorated Rent shall be paid on the
Commencement Date and the first day of the calendar month in which the date of
termination occurs, as the case may be.
4. SECURITY DEPOSIT: Intentionally omitted.
5. TENANT IMPROVEMENTS: Upon Substantial Completion by Landlord of the Shell
Improvements and the completion by Landlord of any Punchlist Items, Tenant
hereby agrees to accept the Premises in its then current
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"AS IS" condition. Subject to the provisions of Exhibit B hereto, Tenant shall
install the improvements ("Tenant Improvements") in the Premises in accordance
with the terms, conditions, criteria and provisions set forth in Exhibit B
hereto. Tenant acknowledges that neither Landlord nor any of Landlord's agents,
representatives or employees has made any representations as to the suitability
or fitness of the Premises for the conduct of Tenant's business, including
without limitation, any storage incidental thereto, or for any other purpose,
and that neither Landlord nor any of Landlord's agents, representatives or
employees has agreed to undertake any alterations or construct any Tenant
Improvements to the Premises except for the construction of the Shell
Improvements as expressly provided in Exhibit B to this Lease. Notwithstanding
the foregoing, Landlord shall allow Tenant to, concurrently with Landlord (if
Landlord so desires, otherwise separately), make a claim against Landlord's
general contractor for any patent or latent defects in the initial design or
construction of the Shell Improvements for a period of five (5) years after the
date on which the Shell Improvements are Substantially Completed. In addition to
the foregoing, Tenant shall be entitled to enforce, concurrently with Landlord,
any warranties made or given to Landlord from the general contractor and any
major subcontractors with respect to the Shell Improvements. Notwithstanding
anything to the contrary contained herein, Tenant shall allow Landlord to,
concurrently with Tenant (if Tenant so desires, otherwise separately), or after
the expiration or earlier termination of this Lease, individually, make a claim
against Tenant's general contractor, namely Devcon Construction Inc. (the
"Tenant's General Contractor") for any patent or latent defects in the initial
design or construction of the Tenant Improvements for a period of five (5) years
after the date on which the Tenant Improvements are substantially completed. In
addition to the foregoing, Landlord shall be entitled to enforce, concurrently
with Tenant, or after the expiration or earlier termination of this Lease,
individually, any warranties made or given to Tenant from the Tenant's General
Contractor and any major subcontractors with respect to the Tenant Improvements.
Each of Landlord and Tenant shall be third party beneficiaries of the other
party's construction agreements, and accordingly, each party hereby agrees to
include a provision in their respective construction contracts to effectuate
same.
6. ADDITIONAL RENT : It is intended by Landlord and Tenant that this Lease be a
"triple net lease". The costs and expenses described in this Section 6 and all
other sums, charges, costs and expenses specified in this Lease other than Base
Rent are to be paid by Tenant to Landlord as additional rent (collectively,
"Additional Rent").
6.1 OPERATING EXPENSES: In addition to the Base Rent set forth in
Section 3, Tenant shall pay Tenant's Share, which is defined on Page 1, of all
Operating Expenses as Additional Rent. The term "Operating Expenses" as used
herein shall mean the total actual amounts paid or payable by Landlord in
connection with the ownership, maintenance, repair and operation of the
Premises, the Buildings and the Lot, and where applicable, of the Park referred
to on Page 1. The amount of Tenant's Share of Operating Expenses shall be
reviewed from time to time by Landlord and shall be subject to modification by
Landlord if there is a change in the rentable square footage of the Premises,
the Buildings and/or the Park due to any casualty or condemnation of any portion
of the Premises. These Operating Expenses may include, but are not limited to:
6.1.1 Landlord's cost of repairs to, and maintenance of,
the non-structural portions of the roof, the roof membrane and the
non-structural portions of the exterior walls of the Buildings;
6.1.2 Landlord's cost of maintaining the outside paved
area, landscaping and other common areas for the Park. The term
"Common Areas" shall mean all areas and facilities within the Park
exclusive of the Premises and the other portions of the Park leased
exclusively to other tenants. The Common Areas include, but are not
limited to, parking areas, access and perimeter roads, sidewalks,
landscaped areas and similar areas and facilities;
6.1.3 Landlord's annual cost of insurance insuring against
fire and extended coverage (including, if Landlord elects, "all risk"
or "special purpose" coverage) and all other insurance, including, but
not limited to, earthquake, flood and/or surface water endorsements
for the Buildings, the Lot and the Park (including the Common Areas),
rental value insurance against loss of Rent in an amount equal to the
amount of Rent for a period of no more than twelve (12) months
commencing on the date of loss, and subject to the provisions of
Section 27 below, any commercially reasonable deductible;
6.1.4 Landlord's cost of: (i) modifications and/or new
improvements to the Buildings, the Common Areas and/or the Park
occasioned by any rules, laws or regulations effective subsequent to
the date on which the Buildings are Substantially Completed; (ii)
reasonably necessary replacement improvements to the Buildings, the
Common Areas and the Park after the Commencement Date; and (iii) new
improvements to the Buildings, the Common Areas and/or the Park that
reduce operating costs or improve life/safety conditions, all as
reasonably determined by Landlord, in its sole discretion; provided,
however, if any of the foregoing are in the nature of capital
improvements, then the cost of such capital improvements shall be
amortized on a straight-line basis over a reasonable period, which
shall not be less than the lesser of fifteen (15) years or the
reasonably estimated useful life of such modifications, new
improvements or replacement improvements in question (at an interest
rate as reasonably determined by Landlord), and Tenant shall pay
Tenant's Share of the monthly amortized portion of such costs
(including interest charges) as part of the Operating Expenses herein;
6.1.5 If Landlord elects to so procure, Landlord's cost of
preventative maintenance, and repair contracts including, but not
limited to, contracts for elevator systems and heating, ventilation
and air conditioning systems, lifts for disabled persons, and trash or
refuse collection in the Buildings only;
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6.1.6 Landlord's cost of security and fire protection
services for the Buildings and/or the Park, as the case may be, if in
Landlord's reasonable discretion such services are provided;
6.1.7 Landlord's cost for the creation and negotiation of,
and pursuant to, any licenses, easements or other similar undertakings
benefitting the Buildings or Tenant's use of portions of the Park to
the extent incurred after the Commencement Date;
6.1.8 Landlord's cost of supplies, equipment, rental
equipment and other similar items used in the operation and/or
maintenance of the Park;
6.1.9 Landlord's cost for the repairs and maintenance items
set forth in Section 11.2 below; and
6.1.10 Landlord's cost for the management and
administration of the Premises, the Buildings, the Common Areas and
the Park, including without limitation, a property management fee,
accounting, auditing, billing, salaries for clerical and supervisory
employees (whether located within the Park or off-site) and all fees,
licenses and permits related to the ownership, operation and
management of any portion of the Park in an amount not to exceed three
percent (3%) of the Base Rent.
Notwithstanding anything to the contrary contained herein,
for purposes of this Lease, the term "Operating Expenses" shall not include the
following:
(a) Costs (including permit, license, and inspection fees)
incurred in renovating, improving, decorating, painting, or
redecorating vacant space or space for other tenants within the Park;
(b) Costs incurred because Landlord or another tenant
actually violated the terms of any lease for premises within the
Buildings and/or Park;
(c) Legal and auditing fees (other than those fees
reasonably incurred in connection with the maintenance and operation
of the Buildings and/or Park), leasing commissions, advertising
expenses, and other costs incurred in connection with the original
development or original leasing of the Buildings and/or Park or future
re-leasing of the Buildings and/or Park;
(d) Depreciation of the Buildings or any other improvements
situated within the Park;
(e) Any items for which Landlord is actually reimbursed by
insurance or by direct reimbursement by any other tenant of the
Buildings or Park;
(f) Costs of repairs or other work necessitated by fire,
windstorm or other casualty (excluding any commercially reasonable
deductibles) and/or costs of repair or other work necessitated by the
exercise of the right of eminent domain to the extent insurance
proceeds or a condemnation award, as applicable, is actually received
by Landlord for such purposes; provided such costs of repairs or other
work shall be paid by the parties in accordance with the provisions of
Sections 27 and 28 below;
(g) Other than any interest charges for capital
improvements referred to in Section 6.1.4 hereinabove, any interest or
payments on any financing for the Buildings or the Park, interest and
penalties incurred as a result of Landlord's late payment of any
invoice (provided that Tenant pays Tenant's Share of Operating
Expenses and Tax Expenses to Landlord when due as set forth herein),
and any bad debt loss, rent loss or reserves for same;
(h) Costs associated with the investigation and/or
remediation of Hazardous Materials (hereafter defined) present in, on
or about the Premises, the Buildings or the Park, unless such costs
and expenses are the responsibility of Tenant as provided in Section
29 of this Lease, in which event such costs and expenses shall be paid
solely by Tenant in accordance with the provisions of Section 29 of
this Lease;
(i) Costs of correcting defects in the initial design or
construction of the Shell Improvements or the repair or replacement of
any original materials and equipment as a result of such defects, as
long as such defects are covered by warranties from the contractors
performing such work and Landlord has actually received compensation
therefor; and
(j) Landlord's cost for the repairs and maintenance items
set forth in Section 11.3 below.
6.2 TAX EXPENSES: In addition to the Base Rent set forth in Section 3,
Tenant shall pay its share, which is defined on Page 1, of all real property
taxes applicable to the land and improvements included within the Lot on which
the Premises are situated and one hundred percent (100%) of all personal
property taxes now or hereafter assessed or levied against the Premises or
Tenant's personal property. The amount of Tenant's Share of Tax Expenses shall
be reviewed from time to time by Landlord and shall be subject to modification
by Landlord if there is a change in the rentable square footage of the Premises,
the Buildings and/or the Park. Tenant shall also pay one hundred percent (100%)
of any increase in real property taxes attributable, in Landlord's sole
discretion, to any and all alterations, Tenant Improvements or other
improvements of any kind, which are above standard improvements customarily
installed for similar buildings located within the Buildings or the Park (as
applicable), whatsoever placed in, on or about the Premises for the benefit of,
at the request
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of, or by Tenant. The term "Tax Expenses" shall mean and include, without
limitation, any form of tax and assessment (general, special, supplemental,
ordinary or extraordinary), commercial rental tax, payments under any
improvement bond or bonds, license fees, license tax, business license fee,
rental tax, transaction tax, levy, or penalty imposed by authority having the
direct or indirect power of tax (including any city, county, state or federal
government, or any school, agricultural, lighting, drainage or other improvement
district thereof) as against any legal or equitable interest of Landlord in the
Premises, the Buildings, the Lot or the Park, as against Landlord's right to
rent, or as against Landlord's business of leasing the Premises or the occupancy
of Tenant or any other tax, fee, or excise, however described, including, but
not limited to, any value added tax, or any tax imposed in substitution
(partially or totally) of any tax previously included within the definition of
real property taxes, or any additional tax the nature of which was previously
included within the definition of real property taxes. The term "Tax Expenses"
shall not include any (i) franchise, estate, inheritance, net income, or excess
profits tax imposed upon Landlord, or (ii) any interest or penalties resulting
solely from Landlord's failure to pay any Tax Expenses (excluding any failure on
the part of Landlord to so timely make such payments due to Tenant's failure to
timely make such payments to Landlord).
6.3 PAYMENT OF EXPENSES: Landlord shall estimate Tenant's Share of the
Operating Expenses and Tax Expenses for the calendar year in which the Lease
commences. Commencing on the Commencement Date, one-twelfth (1/12th) of this
estimated amount shall be paid by Tenant to Landlord, as Additional Rent, on the
first (1st) day of each month and throughout the remaining months of such
calendar year. Thereafter, Landlord may reasonably estimate such expenses as of
the beginning of each calendar year and Tenant shall pay one-twelfth (1/12th) of
such estimated amount as Additional Rent hereunder on the first day of each
month during such calendar year and for each ensuing calendar year throughout
the Term of this Lease. Tenant's obligation to pay Tenant's Share of Operating
Expenses and Tax Expenses shall survive the expiration or earlier termination of
this Lease.
6.4 ANNUAL RECONCILIATION: By June 30th of each calendar year, or as
soon thereafter as reasonably possible, Landlord shall endeavor to furnish
Tenant with an accounting prepared with reasonable detail of actual Operating
Expenses and Tax Expenses. Within thirty (30) days of Landlord's delivery of
such accounting, Tenant shall pay to Landlord the amount of any underpayment.
Notwithstanding the foregoing, failure by Landlord to give such accounting by
such date shall not constitute a waiver by Landlord of its right to collect any
of Tenant's underpayment at any time. Landlord shall credit the amount of any
overpayment by Tenant toward the next Base Rent falling due, or where the Term
of the Lease has expired, refund the amount of overpayment to Tenant. If the
Term of the Lease expires prior to the annual reconciliation of expenses
Landlord shall have the right to reasonably estimate Tenant's Share of such
expenses, and if Landlord determines that an underpayment is due, Tenant hereby
agrees to pay to Landlord the amount of such underpayment within thirty (30)
days after Landlord's delivery of a demand therefor. If Landlord reasonably
determines that an overpayment has been made by Tenant, Landlord shall refund
said overpayment to Tenant within thirty (30) days after Landlord has made such
determination. Notwithstanding the foregoing, failure of Landlord to accurately
estimate Tenant's Share of such expenses or to otherwise perform such
reconciliation of expenses, including without limitation, Landlord's failure to
make a written demand for any underpayment from Tenant, shall not constitute a
waiver of Landlord's right to collect any of Tenant's underpayment at any time
during the Term of the Lease during the one (1) year period following the last
day of the period to which such underpayment relates or at any time during the
one (1) year period following the expiration or earlier termination of this
Lease.
6.5 AUDIT: After delivery to Landlord of at least thirty (30) days
prior written notice, Tenant, at its sole cost and expense, shall have the right
to examine and/or audit the books and records evidencing such costs and expenses
for the previous one (1) calendar year, during Landlord's reasonable business
hours but not more frequently than once during any calendar year.
Notwithstanding the foregoing, Tenant may only audit the books and records of
Landlord with respect to the Premises and/or the Lease so long as Tenant fully
complies with all of the following requirements: (i) any audit by Tenant shall
be conducted by an accounting or audit firm or financial officer of Tenant; (ii)
any audit shall be conducted in Landlord's offices during reasonable business
hours, and after delivery to Landlord of at least thirty (30) days' prior
written notice; (iii) Tenant may only audit the books and records for the
previous one (1) year period in question and after the lapse of one (1) year
from the date on which Landlord delivers to Tenant any accounting or statement
regarding any rental payments to be made by Tenant under this Lease, Tenant
shall not have any right or ability to audit Landlord's books and records with
respect to such rental payments or charges; and (iv) if it is determined through
such audit that the amount of the expenses actually paid by Tenant to Landlord
for the period in question have not been overstated by an amount that is more
than seven percent (7%) of the aggregate of such expenses, then Tenant shall
immediately pay to Landlord, and reimburse Landlord for, the costs and expenses
incurred by Landlord in connection with such audit, including without
limitation, costs attributable to the time spent by Landlord's or Landlord's
property management company's staff in connection with such audit, as such costs
are reasonably determined by Landlord. Landlord and Tenant shall use their best
efforts to cooperate in such negotiations and to promptly resolve any
discrepancies between Landlord and Tenant in the accounting of such costs and
expenses.
7. UTILITIES: Utility Expenses, Common Area Utility Costs and all other sums or
charges set forth in this Section 7 are considered part of Additional Rent.
Tenant shall pay the cost of all water, sewer use, sewer discharge fees and
sewer connection fees, gas, heat, electricity, refuse pickup, janitorial
service, telephone and other utilities billed or metered separately to the
Premises and/or Tenant. Tenant shall also pay its share of any assessments or
charges for utility or similar purposes included within any tax bill for the Lot
on which the Premises are situated, including, without limitation, entitlement
fees related to Tenant's particular use of the
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Premises, allocation unit fees, and/or any similar fees or charges, and any
penalties related thereto to the extent any such penalties result from Tenant's
failure to so timely make such payments. For any such utility fees or use
charges that are not billed or metered separately to Tenant, Tenant shall pay to
Landlord, as Additional Rent, without prior notice or demand, on the
Commencement Date and thereafter on the first (1st) day of each month throughout
the balance of the Term of this Lease the amount which is attributable to
Tenant's use of the utilities or similar services, as reasonably estimated and
determined by Landlord based upon factors such as size of the Premises and
intensity of use of such utilities by Tenant such that Tenant shall pay the
portion of such charges reasonably consistent with Tenant's use of such
utilities and similar services ("Utility Expenses"). In addition, Tenant shall
pay to Landlord Tenant's Share, which is set forth on Page 1, as Additional
Rent, without prior notice or demand, on the Commencement Date and thereafter on
the first (1st) day of each month throughout the balance of the Term of this
Lease, of any Common Area utility costs, fees, charges or expenses ("Common Area
Utility Costs"). Tenant shall pay to Landlord one-twelfth (1/12th) of the
estimated amount of Tenant's Share of the Common Area Utility Costs in the same
manner and time periods as specified in Section 6.3 above and any reconciliation
thereof shall also be in the same manner as specified in Sections 6.3 and 6.4
above. The amount of Tenant's Share of Common Area Utility Costs shall be
reviewed from time to time by Landlord and shall be subject to modification by
Landlord if there is a change in the rentable square footage of the Premises,
the Buildings and/or the Park due to any casualty or condemnation of any portion
of the Premises. Tenant acknowledges that the Premises may become subject to the
rationing of utility services or restrictions on utility use as required by a
public utility company, governmental agency or other similar entity having
jurisdiction thereof. Notwithstanding any such rationing or restrictions on use
of any such utility services, Tenant acknowledges and agrees that its tenancy
and occupancy hereunder shall be subject to such rationing restrictions as may
be imposed upon Landlord, Tenant, the Premises, the Buildings or the Park, and
Tenant shall in no event be excused or relieved from any covenant or obligation
to be kept or performed by Tenant by reason of any such rationing or
restrictions. Tenant further agrees to timely and faithfully pay, prior to
delinquency, any amount, tax, charge, surcharge, assessment or imposition
levied, assessed or imposed upon the Premises, or Tenant's use and occupancy
thereof. Notwithstanding anything to the contrary contained herein, if due to
incidents, events or occurrences other than those arising from Tenant's or
Tenant's Representatives' negligent or intentional acts or omissions essential
utility services for the conduct of Tenant's operations in the Premises are
discontinued or interrupted for a consecutive period of one hundred eighty (180)
days or more, then such discontinuance or interruption of essential utility
services shall be considered to be a casualty and the provisions of Section 27
shall apply thereto.
8. LATE CHARGES: Any and all sums or charges set forth in this Section 8 are
considered part of Additional Rent. Tenant acknowledges that late payment (the
second day after Landlord's delivery of written notice that any sum has not been
paid when due or any time thereafter) by Tenant to Landlord of Base Rent,
Tenant's Share of Operating Expenses, Tax Expenses, Common Area Utility Costs,
and Utility Expenses or other sums due hereunder, will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of such costs being
extremely difficult and impracticable to fix. Such costs include, without
limitation, processing and accounting charges, and late charges that may be
imposed on Landlord by the terms of any note secured by any encumbrance against
the Premises, and late charges and penalties due to the late payment of real
property taxes on the Premises. Therefore, if any installment of Rent or any
other sum due from Tenant is not received by Landlord within two (2) days after
Landlord's delivery of written notice that such sum is otherwise due, Tenant
shall promptly pay to Landlord all of the following, as applicable: (a) an
additional sum equal to seven percent (7%) of such delinquent amount as a late
charge for every month or portion thereof that such sums remain unpaid, and (b)
the amount of fifty dollars ($50) relating to checks for which there are not
sufficient funds; provided, however, the foregoing late charges shall only be
required to be paid by Tenant if Tenant has been late in making such payments
more than three (3) times during the Term of this Lease. If Tenant delivers to
Landlord a check for which there are not sufficient funds, Landlord may, at its
sole option, require Tenant to replace such check with a cashier's check for the
amount of such check and all other charges payable hereunder. The parties agree
that this late charge and the other charges referenced above represent a fair
and reasonable estimate of the costs that Landlord will incur by reason of late
payment by Tenant. Acceptance of any late charge or other charges shall not
constitute a waiver by Landlord of Tenant's default with respect to the
delinquent amount, nor prevent Landlord from exercising any of the other rights
and remedies available to Landlord for any other breach of Tenant under this
Lease. If a late charge or other charge becomes payable for any three (3)
installments of Rent within any twelve (12) month period, then Landlord, at
Landlord's sole option, can either require the Rent be paid quarterly in
advance, or be paid monthly in advance by cashier's check or by electronic funds
transfer.
9. USE OF PREMISES:
9.1 COMPLIANCE WITH LAWS, RECORDED MATTERS, AND RULES AND REGULATIONS:
The Premises are to be used solely for the uses stated on Page 1 and for no
other uses or purposes without Landlord's prior written consent, which consent
shall not be unreasonably withheld or delayed so long as the proposed use (i)
does not involve the use of Hazardous Materials other than as expressly
permitted under the provisions of Section 29 below, (ii) does not require any
additional parking in excess of the parking spaces already licensed to Tenant
pursuant to the provisions of Section 24 of this Lease, and (iii) is compatible
and consistent with the other uses then being made in the Park and in other
similar type of buildings in the vicinity of the Park, as reasonably determined
by Landlord. The use of the Premises by Tenant and its employees,
representatives, agents, invitees, licensees, subtenants, customers or
contractors (collectively, "Tenant's Representatives") shall be subject to, and
at all times in compliance with, (a) any and all applicable laws, ordinances,
statutes, orders and regulations as same exist from time to time (collectively,
the "Laws"), (b) any and all documents, matters or instruments,
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including without limitation, any declarations of covenants, conditions and
restrictions, and any supplements thereto, each of which has been or hereafter
is recorded in any official or public records with respect to the Premises, the
Buildings, the Lot and/or the Park, or any portion thereof (collectively, the
"Recorded Matters"), provided, if any of the Recorded Matters which are
subsequently recorded after the Lease Date materially affect Tenant's rights and
obligations under this Lease (excluding any liens related to any mortgage, deed
of trust or similar type of security interest, and any easements, liens and
other recorded matters required or imposed in connection with the development
and construction of the Buildings and the other improvements to be made as part
of the Park), then Landlord shall obtain Tenant's prior written consent to same,
which consent shall not be unreasonably withheld or delayed, and (c) any and all
rules and regulations set forth in Exhibit C, attached to and made a part of
this Lease, and any other reasonable rules and regulations promulgated by
Landlord now or hereafter enacted relating to parking and the operation of the
Premises, the Buildings and the Park, provided same are enforced on a
non-discriminatory basis (collectively, the "Rules and Regulations"). Tenant
agrees to, and does hereby, assume full and complete responsibility to ensure
that the Premises are adequate to fully meet the needs and requirements of
Tenant's intended operations of its business within the Premises, and Tenant's
use of the Premises and that same are in compliance with all applicable Laws
throughout the Term of this Lease. Additionally, Tenant shall be solely
responsible for the payment of all costs, fees and expenses associated with any
modifications to the Premises, Buildings, the Common Areas and/or the Park
occasioned by the enactment of, or changes to, any Laws arising from Tenant's
particular use of, or alterations to, the Premises regardless of when such Laws
become effective.
9.2 PROHIBITION ON USE: Tenant shall not use the Premises or permit
anything to be done in or about the Premises nor keep or bring anything therein
which will in any way conflict with any of the requirements of the Board of Fire
Underwriters or similar body now or hereafter constituted or in any way increase
the existing rate of or affect any policy of fire or other insurance upon the
Buildings or any of its contents, or cause a cancellation of any insurance
policy. No auctions may be held or otherwise conducted in, on or about the
Premises, the Buildings, the Lot or the Park without Landlord's written consent
thereto, which consent may be given or withheld in Landlord's sole discretion.
Tenant shall not do or permit anything to be done in or about the Premises which
will in any way obstruct or interfere with the rights of Landlord, other tenants
or occupants of the Buildings, other buildings in the Park, or other persons or
businesses in the area, or injure or annoy other tenants or use or allow the
Premises to be used for any unlawful or objectionable purpose, as determined by
Landlord, in its reasonable discretion, for the benefit, quiet enjoyment and use
by Landlord and all other tenants or occupants of the Buildings or other
buildings in the Park; nor shall Tenant cause, maintain or permit any private or
public nuisance in, on or about the Premises, Buildings, Park and/or the Common
Areas, including, but not limited to, any offensive odors, noises, fumes or
vibrations. Tenant shall not damage or deface or otherwise commit or suffer to
be committed any waste in, upon or about the Premises. Except as may be
permitted under applicable Laws and as Landlord may otherwise approve in
writing, Tenant shall not place or store, nor permit any other person or entity
to place or store, any property, equipment, materials, supplies, personal
property or any other items or goods outside of the Premises for any period of
time except in outside enclosures that are fully fenced and screened in
compliance with all Recorded Matters and Laws, and which enclosures are designed
for such purpose, and which have been approved by Landlord for such use. Other
than seeing-eye dogs for the blind, Tenant shall not permit any animals,
including, but not limited to, any household pets, to be brought or kept in or
about the Premises. Tenant shall place no loads upon the floors, walls, or
ceilings in excess of the maximum designed load permitted by the applicable
Uniform Building Code or which may damage the Buildings or outside areas; nor
place any harmful liquids in the drainage systems; nor dump or store waste
materials, refuse or other such materials, or allow such to remain outside the
Building area, except for any non-hazardous or non-harmful materials which may
be stored in refuse dumpsters or in any enclosed trash areas provided. Tenant
shall honor the terms of all Recorded Matters relating to the Premises, the
Buildings, the Lot and/or the Park. Tenant shall honor the Rules and
Regulations. If Tenant fails to comply with such Laws, Recorded Matters, Rules
and Regulations or the provisions of this Lease, Landlord shall have the right
to collect from Tenant Landlord's costs and expenses, if any, to cure any of
such failures of Tenant, if Landlord, at its sole option, elects to undertake
such cure.
10. ALTERATIONS AND ADDITIONS; AND SURRENDER OF PREMISES:
10.1 ALTERATIONS AND ADDITIONS: Tenant shall be permitted to make, at
its sole cost and expense, non-structural alterations and additions to the
Premises without obtaining Landlord's prior written consent provided the cost of
same does not exceed $75,000 cumulatively in any twelve-month period (the
"Permitted Improvements"). Tenant, however, shall first notify Landlord of such
alterations or additions comprising the Permitted Improvements so that Landlord
may post a Notice of Non-Responsibility on the Premises. Within ten (10)
business days of Landlord's receipt of Tenant's written notice of any item
comprising the Permitted Improvements, Landlord shall notify Tenant whether or
not Landlord will require Tenant to remove such item(s) from the Premises upon
the expiration or earlier termination of this Lease. Except for the Permitted
Improvements, Tenant shall not install any signs, fixtures (excluding trade
fixtures), improvements, nor make or permit any other alterations or additions
to the Premises without the prior written consent of Landlord. If any such
alteration or addition is expressly permitted by Landlord, including without
limitation, the Permitted Improvements, Tenant shall deliver at least twenty
(20) days prior notice to Landlord, from the date Tenant intends to commence
construction, sufficient to enable Landlord to post a Notice of
Non-Responsibility. At the time that Landlord notifies Tenant of its approval or
disapproval of any such request, Landlord shall advise Tenant in writing of
those fixtures (excluding trade fixtures), improvements, alterations and
additions which Landlord will require Tenant to remove upon the expiration or
earlier termination of the Lease. In all events, Tenant shall obtain all permits
or other governmental approvals prior to commencing any of such work and deliver
a copy of same to Landlord. All alterations and additions shall be installed by
a licensed contractor
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reasonably approved by Landlord (except with regard to any Permitted
Improvements the licensed contractor employed by Tenant therefor shall not be
subject to Landlord's prior approval), at Tenant's sole expense in compliance
with all applicable Laws (including, but not limited to, the ADA as defined
herein), Recorded Matters, and Rules and Regulations. Tenant shall keep the
Premises and the property on which the Premises are situated free from any liens
arising out of any work performed, materials furnished or obligations incurred
by or on behalf of Tenant. All alterations and additions performed by Tenant are
subject to Tenant obtaining all necessary building permits and shall be
performed in a first-class workmanlike manner by licensed and insured
contractors. As a condition to Landlord's consent to the installation of any
fixtures, additions or other improvements the cost of which exceeds $100,000 and
solely in the event that there has been a material change in the financial
condition of Tenant such that Tenant's net worth has fallen below
$100,000,000.00, Landlord may require Tenant to post and obtain a completion and
indemnity bond or a letter of credit in form reasonably acceptable to Landlord
for up to one hundred ten percent (110%) of the cost of the work. With respect
to the Tenant Improvements, except for any cafeteria and related items that are
part of the Tenant Improvements for which Landlord will require Tenant, at its
sole cost and expense, to demolish and/or remove from the Premises upon the
expiration or earlier termination of this Lease, Landlord shall not require
Tenant to demolish and/or remove any other items comprising the Tenant
Improvements from the Premises upon the expiration or earlier termination of
this Lease.
10.2 SURRENDER OF PREMISES: Upon the termination of this Lease,
whether by forfeiture, lapse of time or otherwise, or upon the termination of
Tenant's right to possession of the Premises, Tenant will at once surrender and
deliver up the Premises, together with the fixtures (other than trade fixtures),
furnishings, additions and improvements which Landlord has not notified Tenant,
in writing, that Landlord will require Tenant to remove (including without
limitation, any items comprising the Tenant Improvements), to Landlord in good
condition and repair subject to Tenant's compliance with its obligations under
Sections 9, 29 and 37 hereof, including, but not limited to, replacing all light
bulbs and ballasts not in good working condition, except for reasonable wear and
tear, casualty damage and repairs which are Landlord's obligations pursuant to
the provisions of Sections 11.2 and 11.3 below. Reasonable wear and tear shall
not include any damage or deterioration to the floors of the Premises arising
from the use of forklifts in, on or about the Premises (including, without
limitation, any marks or stains of any portion of the floors), and any damage or
deterioration that would have been prevented by proper maintenance by Tenant or
Tenant otherwise performing all of its obligations under this Lease. Upon such
termination of this Lease, Tenant shall remove any cafeteria and related items
that are part of the Tenant Improvements, all tenant signage, trade fixtures,
furniture, furnishings, equipment, personal property, additions, and such other
improvements Landlord requests, in writing, at the time of Landlord's delivery
of its consent to such installation, that Tenant remove some or all of such
additions or improvements installed by, or on behalf of Tenant or situated in or
about the Premises; provided, however, such requirement is reasonably based upon
the nature and type of additions, improvements or alterations being
substantially different than that improved or altered thereby. Tenant shall
repair any damage caused by the installation or removal of any cafeteria and
related items that are part of the Tenant Improvements, and such signs, trade
fixtures, furniture, furnishings, fixtures (other than trade fixtures),
equipment, personal property, additions and improvements which are to be removed
from the Premises by Tenant hereunder. Tenant shall ensure that the removal of
such items and the repair of the Premises will be completed prior to such
termination of this Lease.
11. REPAIRS AND MAINTENANCE:
11.1 TENANT'S REPAIRS AND MAINTENANCE OBLIGATIONS: Except for those
portions of the Buildings to be maintained by Landlord as provided in Sections
11.2 and 11.3 below, Tenant shall, at Tenant's sole cost and expense, keep and
maintain the interior non-structural portions of the Premises and the adjacent
dock and staging areas (including, without limitation, any portion of the Common
Areas used by Tenant or Tenant's Representatives) in good, clean and safe
condition and repair to the reasonable satisfaction of Landlord, reasonable wear
and tear and casualty excepted, including, but not limited to, repairing any
damage caused by Tenant or Tenant's Representatives and replacing any property
so damaged by Tenant or Tenant's Representatives. Without limiting the
generality of the foregoing, Tenant shall be solely responsible for maintaining,
repairing and replacing (a) all mechanical systems, heating, ventilation and air
conditioning systems serving the Premises, (b) all plumbing, electrical wiring
and equipment serving the Premises, (c) all interior lighting (including,
without limitation, light bulbs and/or ballasts) and exterior lighting serving
the Premises or immediately adjacent to the Premises, (d) all interior glass,
windows, window frames, window casements, skylights, interior and exterior
doors, door frames and door closers, (e) all roll-up doors, ramps and dock
equipment, including without limitation, dock bumpers, dock plates, dock seals,
dock levelers and dock lights, (f) all tenant signage, (g) lifts for disabled
persons serving the Premises, (h) sprinkler systems, fire protection systems and
security systems, (i) all partitions, fixtures, equipment, interior painting,
and interior walls and floors of the Premises and every part thereof (including,
without limitation, any demising walls contiguous to any portion of the
Premises), and (j) all interior lobbies and any mezzanines.
11.2 REIMBURSABLE REPAIRS AND MAINTENANCE OBLIGATIONS: Subject to the
provisions of Sections 6 and 9 of this Lease and except for (i) the obligations
of Tenant set forth in Section 11.1 above, (ii) the repairs rendered necessary
by the intentional or negligent acts or omissions of Tenant or Tenant's
Representatives, and (iii) the obligations of Landlord set forth in Section 11.3
below, Landlord agrees, at Landlord's expense, subject to reimbursement pursuant
to Section 6 above, to keep in good repair the Common Areas, plumbing and
mechanical systems exterior to the Premises, the roof, roof membranes, exterior
walls of the Buildings, signage (exclusive of tenant signage), and exterior
electrical wiring and equipment, exterior lighting, exterior glass, exterior
doors/entrances and door closers, exterior window casements, exterior painting
of the Buildings
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(exclusive of the Premises), and underground utility and sewer pipes outside the
exterior walls of the Buildings. For purposes of this Section 11.2, the term
"exterior" shall mean exterior to, and not serving the Premises. Unless
otherwise notified by Landlord, in writing, that Landlord has elected to procure
and maintain the following described contract(s), Tenant shall procure and
maintain (a) the heating, ventilation and air conditioning systems preventative
maintenance and repair contract(s); such contract(s) to be on a quarterly basis,
as reasonably determined by Landlord, and (b) the fire and sprinkler protection
services and preventative maintenance and repair contract(s) (including, without
limitation, monitoring services); such contract(s) to be on a quarterly basis.
Landlord reserves the right, but without the obligation to do so, to procure and
maintain, on similar terms with the foregoing requirements, (i) the heating,
ventilation and air conditioning systems preventative maintenance and repair
contract(s), and/or (ii) the fire and sprinkler protection services and
preventative maintenance and repair contract(s) (including, without limitation,
monitoring services). If Landlord so elects to procure and maintain any such
contract(s), Tenant will reimburse Landlord for the cost thereof in accordance
with the provisions of Section 6 above. If Tenant procures and maintains any of
such contract(s), Tenant will promptly deliver to Landlord a true and complete
copy of each such contract and any and all renewals or extensions thereof, and
each service report or other summary received by Tenant pursuant to or in
connection with such contract(s).
11.3 LANDLORD'S REPAIRS AND MAINTENANCE OBLIGATIONS: Except for
repairs rendered necessary by the intentional or negligent acts or omissions of
Tenant or Tenant's Representatives, Landlord agrees, at Landlord's sole cost and
expense, to (a) keep in good repair the structural portions of the floors,
foundations and exterior perimeter walls of the Buildings (exclusive of glass
and exterior doors), and (b) replace and repair the structural portions of the
roof of the Buildings (excluding the roof membrane) as, and when, Landlord
determines such replacement to be necessary in Landlord's reasonable discretion,
all of the foregoing to be performed in such a manner as is substantially
consistent with maintenance and repair of comparable buildings of similar type
and nature of construction in the San Jose area.
11.4 TENANT'S FAILURE TO PERFORM REPAIRS AND MAINTENANCE OBLIGATIONS:
Except for normal maintenance and repair of the items described above, Tenant
shall have no right of access to or right to install any device on the roof of
the Buildings nor make any penetrations of the roof of the Buildings without the
express prior written consent of Landlord. If Tenant refuses or neglects to
repair and maintain the Premises and the adjacent areas properly as required
herein and to the reasonable satisfaction of Landlord, Landlord may, but without
obligation to do so, at any time make such repairs and/or maintenance without
Landlord having any liability to Tenant for any loss or damage that may accrue
to Tenant's merchandise, fixtures or other property, or to Tenant's business by
reason thereof, except to the extent any damage is caused by the willful
misconduct or negligence of Landlord or its authorized agents and
representatives. In the event Landlord makes such repairs and/or maintenance,
upon completion thereof Tenant shall pay to Landlord, as additional rent, the
Landlord's costs for making such repairs and/or maintenance, plus ten percent
(10%) for overhead, upon presentation of a bill therefor. The obligations of
Tenant hereunder shall survive the expiration of the Term of this Lease or the
earlier termination thereof. Subject to the provisions of Section 41 hereof,
Tenant hereby waives any right to repair at the expense of Landlord under any
applicable Laws now or hereafter in effect respecting the Premises.
12. INSURANCE:
12.1 TYPES OF INSURANCE: Tenant shall maintain in full force and
effect at all times during the Term of this Lease, at Tenant's sole cost and
expense, for the protection of Tenant and Landlord, as their interests may
appear, policies of insurance issued by a carrier or carriers with an A.M.
Best's rating (or similar publication) of A-:VIII or better which afford the
following coverages: (i) worker's compensation: statutory limits; (ii)
employer's liability, as required by law, with a minimum limit of $100,000 per
employee and $500,000 per occurrence; (iii) commercial general liability
insurance (occurrence form) providing coverage against claims for bodily injury
and property damage occurring in, on or about the Premises arising out of
Tenant's and Tenant's Representatives' use and/or occupancy of the Premises.
Such insurance shall include coverage for blanket contractual liability, fire
damage, premises, personal injury, completed operations, and products liability.
Such insurance shall have a combined single limit of not less than One Million
Dollars ($1,000,000) per occurrence with at least a Three Million Dollar
($3,000,000) aggregate limit. If the aggregate limit is exhausted, then so long
as Tenant satisfies the requirements of Section 12.5 below Tenant shall be
deemed to have self-insured all of such risks. If the aggregate limit is
exhausted but Tenant does not satisfy the requirements of Section 12.5 below,
Tenant shall provide for restoration of the aggregate limit, as reasonably
determined by Landlord; (iv) comprehensive automobile liability insurance: a
combined single limit of not less than $2,000,000 per occurrence and insuring
Tenant against liability for claims arising out of the ownership, maintenance,
or use of any owned, hired or non-owned automobiles; (v) "all risk" or "special
purpose" property insurance, including without limitation, sprinkler leakage,
boiler and machinery comprehensive form, if applicable, covering damage to or
loss of any personal property, trade fixtures, inventory, fixtures and equipment
located in, on or about the Premises, and in addition, coverage for flood, and
business interruption of Tenant, together with, if the property of Tenant's
invitees is to be kept in the Premises, warehouser's legal liability or bailee
customers insurance for the full replacement cost of the property belonging to
invitees and located in the Premises. Such insurance shall be written on a
replacement cost basis (without deduction for depreciation) in an amount equal
to one hundred percent (100%) of the full replacement value of the aggregate of
the items referred to in this subparagraph (v); and (vi) such other insurance as
Landlord deems reasonably necessary and prudent or as may otherwise be required
by any of Landlord's lenders.
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12.2 INSURANCE POLICIES: Insurance required to be maintained by Tenant
shall be written by companies (i) licensed to do business in the State of
California, (ii) domiciled in the United States of America, and (iii) having a
"General Policyholders Rating" of at least A-:VIII as set forth in the most
current issue of "A.M. Best's Rating Guides" or similar publication. Any
deductible amounts under any of the insurance policies actually procured by
Tenant and as required hereunder is not in substitution of the limits of
insurance coverage which must be maintained by Tenant, rather such deductibles
are Tenant's self-insured retention for which Tenant shall be wholly
responsible. Tenant shall deliver to Landlord certificates of insurance together
with a true and complete copy of any waiver of subrogation endorsement required
herein for the insurance required to be maintained by Tenant hereunder at the
time of execution of this Lease by Tenant. If at any time Tenant is in default
of its obligations under this Lease beyond any applicable cure periods, Tenant
will deliver to Landlord a copy of any other endorsements to the insurance
policies obtained by Tenant upon Landlord's request therefor. Tenant shall, at
least five (5) days prior to expiration of each policy, furnish Landlord with
certificates of renewal or "binders" thereof. Each certificate shall expressly
provide that such policies shall not be cancelable or otherwise subject to
material reduction of coverage except after thirty (30) days prior written
notice to the parties named as additional insureds as required in this Lease
(except for cancellation for nonpayment of premium, in which event cancellation
shall not take effect until at least ten (10) days' notice has been given to
Landlord), as such certificates are reasonably acceptable to the insurers
issuing such policies and as is customarily provided to landlords in the general
vicinity of the Premises. Tenant shall have the right to provide insurance
coverage which it is obligated to carry pursuant to the terms of this Lease
under a blanket insurance policy.
12.3 ADDITIONAL INSUREDS AND COVERAGE: Landlord, any property
management company and/or agent of Landlord for the Premises, the Buildings, the
Lot or the Park, and any lender(s) of Landlord having a lien against the
Premises, the Buildings, the Lot or the Park shall be named as additional
insureds under all of the policies required in Section 12.1(iii) above, as each
of such parties' interests may appear. Additionally, such policies shall provide
for severability of interest. All insurance to be maintained by Tenant shall,
except for workers' compensation and employer's liability insurance, be primary,
without right of contribution from insurance maintained by Landlord. The limits
of insurance maintained by Tenant shall not limit Tenant's liability under this
Lease. It is the parties' intention that the insurance to be procured and
maintained by Tenant as required herein shall provide coverage for damage or
injury arising from or related to Tenant's operations of its business and/or
Tenant's or Tenant's Representatives' use of the Premises and/or any of the
areas within the Park, whether such events occur within the Premises (as
described in Exhibit A hereto) or in any other areas of the Park. It is not
contemplated or anticipated by the parties that the aforementioned risks of loss
be borne by Landlord's insurance carriers, rather it is contemplated and
anticipated by Landlord and Tenant that such risks of loss be borne by Tenant's
insurance carriers pursuant to the insurance policies procured and maintained by
Tenant as required herein, except to the extent of Landlord's or its authorized
representatives' negligence or willful misconduct.
12.4 FAILURE OF TENANT TO PURCHASE AND MAINTAIN INSURANCE: Subject to
Tenant's ability to self-insure such risks in accordance with the provisions of
Section 12.5 below, in the event Tenant does not purchase the insurance required
in this Lease or keep the same in full force and effect throughout the Term of
this Lease (including any renewals or extensions), Landlord may, but without
obligation to do so, purchase the necessary insurance and pay the premiums
therefor. If Landlord so elects to purchase such insurance, Tenant shall
promptly pay to Landlord as Additional Rent, the amount so paid by Landlord,
upon Landlord's demand therefor. In addition, Landlord may recover from Tenant
and Tenant agrees to pay, as Additional Rent, any and all damages which Landlord
may sustain by reason of Tenant's failure to so obtain and maintain such
insurance. If Tenant fails to maintain any insurance required in this Lease or
otherwise fails to comply with the provisions of Section 12.5 below regarding
Tenant's ability to self-insure such risks, Tenant shall be liable for all
losses, damages and costs resulting from such failure.
12.5 TENANT'S RIGHT TO SELF-INSURE: Notwithstanding anything to the
contrary contained herein, only with respect to the Tenant named herein as of
the Lease Date and provided that said Tenant has and maintains a net worth in
excess of One Hundred Million Dollars ($100,000,000.00), such originally named
Tenant may self-insure the risks contemplated in this Section 12 to the extent
that such self-insurance is permitted by all applicable Laws and provided
further that Tenant shall be fully and completely responsible and liable, at its
sole cost and expense, (1) to fully repair, restore, and replace any and all
items described above which may be damaged due to such risks contemplated
herein, (2) for all injuries to persons or property for which such risks would
otherwise have been insured against under any of the policies described above,
(3) for any losses experienced by Tenant or in Tenant's business which would
have otherwise been covered by business interruption insurance, and (4) for any
and all claims, damages, losses and other liabilities incurred by, or made
against, Tenant, Landlord, Landlord's property management company and/or lenders
arising from Tenant's election to self-insure the risks contemplated in this
Section 12.5, including without limitation, any and all costs of defense,
litigation or other similar proceeding. If the Tenant named herein as of the
Lease Date does so elect to self-insure such risks, then in lieu of delivering
to Landlord a certificate of insurance, Tenant shall deliver to Landlord
(annually) a letter certified by an authorized officer of its company that such
risks are being self-insured and that Tenant has complied with the financial
criteria set forth herein, and such letter shall also contain such other
information as Landlord's lender(s) may reasonably require (the "Self-Insurance
Certificate").
13. WAIVER OF SUBROGATION: Landlord and Tenant hereby mutually waive their
respective rights of recovery against each other for any loss of, or damage to,
either parties' property to the extent that such loss or damage is insured by an
insurance policy required to be in effect at the time of such loss or damage.
Each party shall obtain any special endorsements, if required by its insurer
whereby the insurer waives its rights of subrogation
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against the other party. This provision is intended to waive fully, and for the
benefit of the parties hereto, any rights and/or claims which might give rise to
a right of subrogation in favor of any insurance carrier. The coverage obtained
by Tenant pursuant to Section 12 of this Lease shall include, without
limitation, a waiver of subrogation endorsement attached to the certificate of
insurance. The provisions of this Section 13 shall not apply in those instances
in which such waiver of subrogation would invalidate such insurance coverage or
would cause either party's insurance coverage to be voided or otherwise
uncollectible.
14. LIMITATION OF LIABILITY AND INDEMNITY: Except to the extent of damage
resulting from the negligence or willful misconduct of Landlord or its
authorized representatives, Tenant agrees to protect, defend (with counsel
acceptable to Landlord) and hold Landlord and Landlord's lender(s), members,
partners, employees, representatives, legal representatives, successors and
assigns (collectively, the "Indemnitees") harmless and indemnify the Indemnitees
from and against all liabilities, damages, claims, losses, judgments, charges
and expenses (including reasonable attorneys' fees, costs of court and expenses
necessary in the prosecution or defense of any litigation including the
enforcement of this provision) arising from or in any way related to, directly
or indirectly, (i) Tenant's or Tenant's Representatives' use of the Premises,
Buildings and/or the Park, (ii) the failure by Tenant to perform its obligations
under this Lease or any breach on the part of Tenant of any of the provisions of
this Lease, or (iii) the conduct of Tenant's business, or from any activity,
work or thing done, permitted or suffered by Tenant in or about the Premises,
including, but not limited to, any liability for injury to person or property of
Tenant, Tenant's Representatives, or third party persons. Tenant agrees that the
obligations of Tenant herein shall survive the expiration or earlier termination
of this Lease.
Except to the extent of damage resulting from the negligence or
willful misconduct of Landlord or its authorized representatives, Landlord shall
not be liable to Tenant for any loss or damage to Tenant or Tenant's property,
for any injury to or loss of Tenant's business or for any damage or injury to
any person from any cause whatsoever, including, but not limited to, any acts,
errors or omissions by or on behalf of any other tenants or occupants of the
Buildings and/or the Park. Tenant shall not, in any event or circumstance, be
permitted to offset or otherwise credit against any payments of Rent required
herein for matters for which Landlord may be liable hereunder. Landlord and its
authorized representatives shall not be liable for any interference with light
or air, or, subject to the provisions of Section 5 above, for any latent defect
in the Premises or the Buildings. To the fullest extent permitted by law and
except to the extent of damage resulting from the negligence or willful
misconduct of Landlord or its authorized representatives, Tenant agrees that
neither Landlord nor any of Landlord's lender(s), members, partners, employees,
representatives, legal representatives, successors and assigns shall at any time
or to any extent whatsoever be liable, responsible or in any way accountable for
any loss, liability, injury, death or damage to persons or property which at any
time may be suffered or sustained by Tenant or by any person(s) whomsoever who
may at any time be using, occupying or visiting the Premises, the Buildings or
the Park.
Except to the extent of damage resulting from the negligence or
willful misconduct of Tenant or any of Tenant's Representatives, Landlord agrees
to protect, defend (with counsel acceptable to Tenant) and hold Tenant and
Tenant's employees and representatives (collectively, the "Tenant Indemnitees")
harmless and indemnify the Tenant Indemnitees from and against all liabilities,
damages, claims, losses, judgments, charges and expenses (including reasonable
attorneys' fees, costs of court and expenses necessary in the prosecution or
defense of any litigation including the enforcement of this provision) resulting
from Landlord's or its authorized agents' negligence or willful misconduct.
Landlord agrees that the obligations of Landlord herein shall survive the
expiration or earlier termination of this Lease.
15. ASSIGNMENT AND SUBLEASING:
15.1 PROHIBITION: Except as expressly set forth herein with respect to
a Related Entity, Tenant shall not assign, mortgage, hypothecate, encumber,
grant any license or concession, pledge or otherwise transfer this Lease
(collectively, "assignment"), in whole or in part, whether voluntarily or
involuntarily or by operation of law, nor sublet or permit occupancy by any
person other than Tenant of all or any portion of the Premises without first
obtaining the prior written consent of Landlord, which consent shall not be
unreasonably withheld. Tenant hereby agrees that Landlord may withhold its
consent to any proposed sublease or assignment if the proposed sublessee or
assignee or its business is subject to compliance with additional requirements
of the ADA (defined below) beyond those requirements which are applicable to
Tenant, unless the proposed sublessee or assignee shall (a) first deliver plans
and specifications for complying with such additional requirements and obtain
Landlord's written consent thereto, which consent shall not be unreasonably
withheld, and (b) comply with all Landlord's conditions for or contained in such
consent, including without limitation, requirements for security to assure the
lien-free completion of such improvements. If Tenant seeks to sublet or assign
all or any portion of the Premises, Tenant shall deliver to Landlord at least
thirty (30) days prior to the proposed commencement of the sublease or
assignment (the "Proposed Effective Date") the following: (i) the name of the
proposed assignee or sublessee; (ii) such information as to such assignee's or
sublessee's financial responsibility and standing as Landlord may reasonably
require; and (iii) the aforementioned plans and specifications, if any. Within
ten (10) days after Landlord's receipt of a written request from Tenant that
Tenant seeks to sublet or assign all or any portion of the Premises, Landlord
shall deliver to Tenant a copy of Landlord's standard form of sublease or
assignment agreement (as applicable), which instrument shall be utilized for
each proposed sublease or assignment (as applicable), and such instrument shall
include a provision whereby the assignee or sublessee assumes all of Tenant's
obligations hereunder, but with respect to a sublease only, to the extent
applicable to the subleased portion of the Premises, and agrees to be bound by
the terms hereof. As Additional Rent hereunder, Tenant shall pay to Landlord a
fee in the amount of five hundred dollars ($500) plus Tenant
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shall reimburse Landlord for actual legal and other expenses incurred by
Landlord in connection with any actual or proposed assignment or subletting.
Notwithstanding anything to the contrary contained herein, if (I) the Term of
the First Lease has expired or the First Lease has been earlier terminated for
any reason whatsoever, in whole or in part, and (II) Tenant proposes to sublease
or assign this Lease to a party other than a Related Entity, then for the time
period during which there is any vacancy in Building A and/or Building B (as
referred to in the First Lease) Landlord shall have the right, to be exercised
by giving written notice to Tenant, to either (1) recapture the space described
in the proposed sublease or assignment, or (2) consent to such proposed sublease
or assignment, in which event Tenant shall pay Landlord monthly, as Additional
Rent, at the same time as the monthly installments of Rent are payable
hereunder, fifty percent (50%) of the excess of each such payment of rent or
other consideration in excess of the Rent called for hereunder, after deduction
of the actual brokerage commission (if any) paid by Tenant in connection with
such proposed sublease or assignment, where the rent or other consideration
provided for in the proposed sublease or assignment either initially or over the
term of the sublease or assignment exceeds the Rent or pro rata portion of the
Rent, as the case may be, for such space reserved in the Lease. If such
recapture notice is given, it shall serve to terminate this Lease with respect
to the proposed sublease or assignment space, or, if the proposed sublease or
assignment space covers all the Premises, it shall serve to terminate the entire
term of this Lease in either case, as of the Proposed Effective Date, with
respect to such space. However, no termination of this Lease with respect to
part or all of the Premises shall become effective without the prior written
consent, where necessary, of the holder of each deed of trust encumbering the
Premises or any part thereof. If this Lease is terminated pursuant to the
foregoing with respect to less than the entire Premises, the Rent shall be
adjusted on the basis of the proportion of square feet retained by Tenant to the
square feet originally demised and this Lease as so amended shall continue
thereafter in full force and effect. Each permitted assignee or sublessee,
including without limitation, a Related Entity, shall assume and be deemed to
assume this Lease and shall be and remain liable jointly and severally with
Tenant for payment of Rent and for the due performance of, and compliance with
all the terms, covenants, conditions and agreements herein contained on Tenant's
part to be performed or complied with, for the term of this Lease. No assignment
or subletting shall affect the continuing primary liability of Tenant (which,
following assignment, shall be joint and several with the assignee), and Tenant
shall not be released from performing any of the terms, covenants and conditions
of this Lease. Tenant hereby acknowledges and agrees that it understands that
Landlord's accounting department may process and accept Rent payments without
verifying that such payments are being made by Tenant, a permitted sublessee or
a permitted assignee in accordance with the provisions of this Lease. Although
such payments may be processed and accepted by such accounting department
personnel, any and all actions or omissions by the personnel of Landlord's
accounting department shall not be considered as acceptance by Landlord of any
proposed assignee or sublessee nor shall such actions or omissions be deemed to
be a substitute for the requirement that Tenant obtain Landlord's prior written
consent to any such subletting or assignment, and any such actions or omissions
by the personnel of Landlord's accounting department shall not be considered as
a voluntary relinquishment by Landlord of any of its rights hereunder nor shall
any voluntary relinquishment of such rights be inferred therefrom. For purposes
hereof, and except with respect to a Related Entity, in the event Tenant is a
corporation, partnership, joint venture, trust or other entity other than a
natural person, any change in the direct or indirect ownership of Tenant
(whether pursuant to one or more transfers other than publicly traded stock
which does not confer upon any party or parties control over Tenant) which
results in a change of more than fifty percent (50%) in the direct or indirect
ownership of Tenant shall be deemed to be an assignment within the meaning of
this Section 15 and shall be subject to all the provisions hereof. Except for a
permissible assignment to a Related Entity, any and all options, first rights of
refusal, tenant improvement allowances and other similar rights granted to
Tenant in this Lease, if any, shall not be assignable by Tenant unless expressly
authorized in writing by Landlord, at Landlord's reasonable discretion.
Notwithstanding anything to the contrary contained herein, so long as Tenant
delivers to Landlord (x) at least fifteen (15) business days prior written
notice of its intention to assign or sublease the Premises to any Related
Entity, which notice shall set forth the name of the Related Entity, (y) a copy
of the proposed agreement pursuant to which such assignment or sublease shall be
effectuated, and (z) such other information concerning the Related Entity as
Landlord may reasonably require, including without limitation, information
regarding any change in the proposed use of any portion of the Premises and any
financial information with respect to such Related Entity, and so long as
Landlord approves, in writing, of any change in the proposed use of the subject
portion of the Premises, then Tenant may assign this Lease or sublease any
portion of the Premises (X) to any Related Entity, or (Y) in connection with any
merger, consolidation or sale of substantially all of the assets of Tenant,
without having to obtain the prior written consent of Landlord thereto. For
purposes of this Lease the term "Related Entity" shall mean and refer to any
corporation or entity which controls, is controlled by or is under common
control with Tenant, as all of such terms are customarily used in the industry,
and with an equal or greater net worth as Tenant has as of the proposed transfer
date.
15.2 EXCESS SUBLEASE RENTAL OR ASSIGNMENT CONSIDERATION:
Notwithstanding anything to the contrary contained herein, the provisions of
this Section 15.2 are subject to the provisions of Section 15.1 above and in the
event of any conflict between such provisions, the terms and provisions of
Section 15.1 hereof shall control and prevail. During the initial term of this
Lease only, in the event of any sublease or assignment of all or any portion of
the Premises to a party other than a Related Entity, which sublease or
assignment only relates to the initial term of this Lease and is expressly
approved by Landlord, and where the rent or other consideration provided for in
the sublease or assignment either initially or over the term of the sublease or
assignment exceeds the Rent or pro rata portion of the Rent, as the case may be,
for such space reserved in the Lease, Tenant shall pay the Landlord monthly, as
Additional Rent, at the same time as the monthly installments of Rent are
payable hereunder, fifty percent (50%) of the excess of each such payment of
rent or other consideration in excess of the Rent called for hereunder, after
deduction of the actual brokerage commission (if any) paid by Tenant in
connection with such proposed sublease or assignment. During any renewal or
option terms of this Lease, in the event of any sublease or assignment of all or
any portion of the Premises to a party other than a Related Entity, which
sublease or assignment relates to such renewal or option term of this Lease and
is expressly
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approved by Landlord, and where the rent or other consideration provided for in
the sublease or assignment either initially or over the term of the sublease or
assignment exceeds the Rent or pro rata portion of the Rent, as the case may be,
for such space reserved in the Lease, Tenant shall pay the Landlord monthly, as
Additional Rent, at the same time as the monthly installments of Rent are
payable hereunder, fifty percent (50%) of the excess of each such payment of
rent or other consideration in excess of the Rent called for hereunder, after
deduction of the actual brokerage commission (if any) paid by Tenant in
connection with such proposed sublease or assignment.
15.3 WAIVER: Notwithstanding any assignment or sublease, or any
indulgences, waivers or extensions of time granted by Landlord to any assignee
or sublessee, or failure by Landlord to take action against any assignee or
sublessee, Tenant agrees that Landlord may, at its option, proceed against
Tenant without having taken action against or joined such assignee or sublessee,
except that Tenant shall have the benefit of any indulgences, waivers and
extensions of time granted to any such assignee or sublessee.
16. AD VALOREM TAXES: Prior to delinquency, Tenant shall pay all taxes and
assessments levied upon trade fixtures, alterations, additions, improvements,
inventories and personal property located and/or installed on or in the Premises
by, or on behalf of, Tenant; and if requested by Landlord, Tenant shall promptly
deliver to Landlord copies of receipts for payment of all such taxes and
assessments. To the extent any such taxes are not separately assessed or billed
to Tenant, Tenant shall pay the amount thereof as invoiced by Landlord.
17. SUBORDINATION: Landlord hereby represents to Tenant that as of the Lease
Date there does not exist a lien of a mortgage or deed of trust on all or any
portion of the Premises. Without the necessity of any additional document being
executed by Tenant for the purpose of effecting a subordination, and at the
election of Landlord or any bona fide mortgagee or deed of trust beneficiary
with a lien on all or any portion of the Premises or any ground lessor with
respect to the land of which the Premises are a part, the rights of Tenant under
this Lease and this Lease shall be subject and subordinate at all times to: (i)
all ground leases or underlying leases which may now exist or hereafter be
executed affecting the Buildings or the land upon which the Buildings are
situated or both provided such ground lease includes a provision that Tenant's
use, occupancy or quiet enjoyment of the Premises will not be disturbed so long
as Tenant is not in default of the terms and provisions of this Lease, and (ii)
the lien of any mortgage or deed of trust which may now exist or hereafter be
executed in any amount for which the Buildings, the Lot, ground leases or
underlying leases, or Landlord's interest or estate in any of said items is
specified as security. Notwithstanding the foregoing, Landlord or any such
ground lessor, mortgagee, or any beneficiary shall have the right to subordinate
or cause to be subordinated any such ground leases or underlying leases or any
such liens to this Lease. If any ground lease or underlying lease terminates for
any reason or any mortgage or deed of trust is foreclosed or a conveyance in
lieu of foreclosure is made for any reason, Tenant shall, notwithstanding any
subordination and upon the request of such successor to Landlord, attorn to and
become the Tenant of the successor in interest to Landlord, provided such
successor in interest will not disturb Tenant's use, occupancy or quiet
enjoyment of the Premises so long as Tenant is not in default of the terms and
provisions of this Lease. The successor in interest to Landlord following
foreclosure, sale or deed in lieu thereof shall not be (a) liable for any act or
omission of any prior lessor or with respect to events occurring prior to
acquisition of ownership; (b) subject to any offsets or defenses which Tenant
might have against any prior lessor; or (c) bound by prepayment of more than one
(1) month's Rent. Tenant covenants and agrees to execute (and acknowledge if
required by Landlord, any lender or ground lessor) and deliver, within ten (10)
business days of a demand or request by Landlord and in the form requested by
Landlord, ground lessor, mortgagee or beneficiary, any additional documents
evidencing the priority or subordination of this Lease with respect to any such
ground leases or underlying leases or the lien of any such mortgage or deed of
trust. Tenant's failure to timely execute and deliver such additional documents
shall, at Landlord's option, constitute a material default hereunder. Tenant's
agreement to subordinate this Lease to any future ground or underlying lease or
any future deed of trust or mortgage pursuant to the foregoing provisions of the
Section 17 is conditioned upon Landlord delivering to Tenant from the lessor
under such future ground or underlying lease or the holder of any such mortgage
or deed of trust, a non-disturbance agreement agreeing, among other things, that
Tenant's right to possession of the Premises pursuant to the terms and
conditions of this Lease shall not be disturbed provided Tenant is not in
default under this Lease beyond the applicable notice and cure periods
hereunder.
18. RIGHT OF ENTRY: Tenant grants Landlord or its agents the right to enter the
Premises at all reasonable times, upon 24 hours advance notice to Tenant, for
purposes of inspection, exhibition, posting of notices, repair or alteration. At
Landlord's option, Landlord shall at all times have and retain a key with which
to unlock all the doors not conspicuously designated as restricted access areas
for security reasons in, upon and about the Premises, excluding Tenant's vaults
and safes. It is further agreed that Landlord shall have the right to use any
and all means Landlord deems necessary to enter the Premises in an emergency.
Landlord shall also have the right to place "for sale" signs in the Common Areas
at any time during the Term of this Lease. Landlord shall also have the right to
place "for rent" or "for lease" signs (which signage shall include a phrase to
the effect that Tenant is moving to larger quarters) on the outside of the
Premises and/or in the Common Areas at any time during the last nine (9) months
of the Term or the earlier termination thereof. Tenant hereby waives any claim
from damages or for any injury or inconvenience to or interference with Tenant's
business, or any other loss occasioned thereby except for any claim for any of
the foregoing arising out of the negligence or willful misconduct of Landlord or
its authorized representatives.
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19. ESTOPPEL CERTIFICATE: Tenant shall execute (and acknowledge if required by
any lender or ground lessor) and deliver to Landlord, within not less than ten
(10) business days after Landlord provides such to Tenant, a statement in
writing certifying that this Lease is unmodified and in full force and effect
(or, if modified, stating the nature of such modification), the date to which
the Rent and other charges are paid in advance, if any, acknowledging that there
are not, to Tenant's knowledge, any uncured defaults on the part of Landlord
hereunder or specifying such defaults as are claimed, and such other matters as
Landlord may reasonably require. Any such statement may be conclusively relied
upon by Landlord and any prospective purchaser or encumbrancer of the Premises.
Tenant's failure to deliver such statement within such time shall be conclusive
upon the Tenant that (a) this Lease is in full force and effect, without
modification except as may be represented by Landlord; (b) there are no uncured
defaults in Landlord's performance; and (c) not more than one month's Rent has
been paid in advance, except in those instances when Tenant pays Rent quarterly
in advance pursuant to Section 8 hereof, then not more than three month's Rent
has been paid in advance. Failure by Tenant to so deliver such certified
estoppel certificate shall be a material default of the provisions of this
Lease. Tenant shall be liable to Landlord, and shall indemnify Landlord from and
against any loss, cost, damage or expense, incidental, consequential, or
otherwise, resulting from any failure of Tenant to execute or deliver to
Landlord any such certified estoppel certificate.
20. TENANT'S DEFAULT: The occurrence of any one or more of the following events
shall, at Landlord's option, constitute a material default by Tenant of this
Lease:
20.1 The abandonment of the Premises by Tenant or the vacation of the
Premises by Tenant which would cause any insurance policy to be invalidated or
otherwise lapse. Tenant agrees to notice and service of notice as provided for
in this Lease and waives any right to any other or further notice or service of
notice which Tenant may have under any statute or law now or hereafter in
effect;
20.2 The failure by Tenant to make any payment of Rent, Additional
Rent or any other payment required hereunder within three (3) days of Landlord's
delivery of written notice that said payment is due. Tenant agrees to notice and
service of notice as provided for in this Lease and waives any right to any
other or further notice or service of notice which Tenant may have under any
statute or law now or hereafter in effect;
20.3 The failure by Tenant to observe, perform or comply with any of
the conditions, covenants or provisions of this Lease (except failure to make
any payment of Rent and/or Additional Rent) and such failure is not cured within
(i) thirty (30) days of the date on which Landlord delivers written notice of
such failure to Tenant, complying with the notice requirements of Section 31.10
hereof, for all failures other than with respect to Hazardous Materials, and
(ii) ten (10) days of the date on which Landlord delivers written notice of such
failure to Tenant for all failures in any way related to Hazardous Materials.
However, Tenant shall not be in default of its obligations hereunder if such
failure cannot reasonably be cured within such thirty (30) or ten (10) day
period, as applicable, and Tenant promptly commences, and thereafter diligently
proceeds with same to completion, all actions necessary to cure such failure as
soon as is reasonably possible, but in no event shall the completion of such
cure be later than sixty (60) days after the date on which Landlord delivers to
Tenant written notice of such failure, unless Landlord, acting reasonably and in
good faith, otherwise expressly agrees in writing to a longer period of time
based upon the circumstances relating to such failure as well as the nature of
the failure and the nature of the actions necessary to cure such failure;
20.4 The making of a general assignment by Tenant for the benefit of
creditors, the filing of a voluntary petition by Tenant or the filing of an
involuntary petition by any of Tenant's creditors seeking the rehabilitation,
liquidation, or reorganization of Tenant under any law relating to bankruptcy,
insolvency or other relief of debtors and, in the case of an involuntary action,
the failure to remove or discharge the same within sixty (60) days of such
filing, the appointment of a receiver or other custodian to take possession of
substantially all of Tenant's assets or this leasehold, Tenant's insolvency or
inability to pay Tenant's debts or failure generally to pay Tenant's debts when
due, any court entering a decree or order directing the winding up or
liquidation of Tenant or of substantially all of Tenant's assets, Tenant taking
any action toward the dissolution or winding up of Tenant's affairs, the
cessation or suspension of Tenant's use of the Premises, or the attachment,
execution or other judicial seizure of substantially all of Tenant's assets or
this leasehold;
20.5 Tenant's use or storage of Hazardous Materials in, on or about
the Premises, the Buildings, the Lot and/or the Park other than as expressly
permitted by the provisions of Section 29 below;
20.6 The intentional making of any material misrepresentation or
omission by Tenant in any materials delivered by or on behalf of Tenant to
Landlord pursuant to this Lease; or
20.7 A material default by Tenant of any of the terms, provisions or
conditions of that certain Lease Agreement, of even date herewith, by and
between Landlord and Tenant for the leasing by Tenant of those two (2) certain
buildings situated within the Park and referred to as Buildings A and B (the
"First Lease").
21. REMEDIES FOR TENANT'S DEFAULT:
21.1 LANDLORD'S RIGHTS: In the event of Tenant's material default or
breach of the Lease, Landlord may, after expiration of any applicable cure
period, terminate Tenant's right to possession of the Premises by any lawful
means in which case upon delivery of written notice by Landlord this Lease shall
terminate on the date specified by Landlord in such notice and Tenant shall
immediately surrender possession of the Premises
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to Landlord. In addition, the Landlord shall have the immediate right of
re-entry whether or not this Lease is terminated, and if this right of re-entry
is exercised following abandonment of the Premises by Tenant, Landlord may
consider any personal property belonging to Tenant and left on the Premises to
also have been abandoned. No re-entry or taking possession of the Premises by
Landlord pursuant to this Section 21 shall be construed as an election to
terminate this Lease unless a written notice of such intention is given to
Tenant. If Landlord relets the Premises or any portion thereof, (i) Tenant shall
be liable immediately to Landlord for all costs Landlord incurs in reletting the
Premises or any part thereof, including, without limitation, broker's
commissions, expenses of cleaning, redecorating, and further improving the
Premises and other similar costs (collectively, the "Reletting Costs"), and (ii)
the rent received by Landlord from such reletting shall be applied to the
payment of, first, any indebtedness from Tenant to Landlord other than Base
Rent, Operating Expenses, Tax Expenses, Common Area Utility Costs, and Utility
Expenses; second, all costs including maintenance, incurred by Landlord in
reletting; and, third, Base Rent, Operating Expenses, Tax Expenses, Common Area
Utility Costs, Utility Expenses, and all other sums due under this Lease. Any
and all of the Reletting Costs shall be fully chargeable to Tenant and shall not
be prorated or otherwise amortized in relation to any new lease for the Premises
or any portion thereof. After deducting the payments referred to above, any sum
remaining from the rental Landlord receives from reletting shall be held by
Landlord and applied in payment of future Rent as Rent becomes due under this
Lease. In no event shall Tenant be entitled to any excess rent received by
Landlord. Reletting may be for a period shorter or longer than the remaining
term of this Lease. No act by Landlord other than giving written notice to
Tenant shall terminate this Lease. Acts of maintenance, efforts to relet the
Premises or the appointment of a receiver on Landlord's initiative to protect
Landlord's interest under this Lease shall not constitute a termination of
Tenant's right to possession. So long as this Lease is not terminated, Landlord
shall have the right to remedy any default of Tenant, to maintain or improve the
Premises, to cause a receiver to be appointed to administer the Premises and new
or existing subleases and to add to the Rent payable hereunder all of Landlord's
reasonable costs in so doing, with interest at the maximum rate permitted by law
from the date of such expenditure.
21.2 DAMAGES RECOVERABLE: If Tenant breaches this Lease and abandons
the Premises before the end of the Term, or if Tenant's right to possession is
terminated by Landlord because of a breach or default of the Lease, then in
either such case, Landlord may recover from Tenant all damages suffered by
Landlord as a result of Tenant's failure to perform its obligations hereunder,
including, but not limited to, the unamortized portion of any broker's or
leasing agent's commission incurred with respect to the leasing of the Premises
to Tenant for the balance of the Term of the Lease remaining after the date on
which Tenant is in default of its obligations hereunder to the extent such sums
are not already included as part of the calculation of damages, and all
Reletting Costs, and the worth at the time of the award (computed in accordance
with paragraph (3) of Subdivision (a) of Section 1951.2 of the California Civil
Code) of the amount by which the Rent then unpaid hereunder for the balance of
the Lease Term exceeds the amount of such loss of Rent for the same period which
Tenant proves could be reasonably avoided by Landlord and in such case, Landlord
prior to the award, may relet the Premises for the purpose of mitigating damages
suffered by Landlord because of Tenant's failure to perform its obligations
hereunder; provided, however, that even though Tenant has abandoned the Premises
following such breach, this Lease shall nevertheless continue in full force and
effect for as long as Landlord does not terminate Tenant's right of possession,
and until such termination, Landlord shall have the remedy described in Section
1951.4 of the California Civil Code (Landlord may continue this Lease in effect
after Tenant's breach and abandonment and recover Rent as it becomes due, if
Tenant has the right to sublet or assign, subject only to reasonable
limitations) and may enforce all its rights and remedies under this Lease,
including the right to recover the Rent from Tenant as it becomes due hereunder.
The "worth at the time of the award" within the meaning of Subparagraphs (a)(1)
and (a)(2) of Section 1951.2 of the California Civil Code shall be computed by
allowing interest at the rate of ten percent (10%) per annum. Tenant waives
redemption or relief from forfeiture under California Code of Civil Procedure
Sections 1174 and 1179, or under any other present or future law, in the event
Tenant is evicted or Landlord takes possession of the Premises by reason of any
default of Tenant hereunder.
21.3 RIGHTS AND REMEDIES CUMULATIVE: The foregoing rights and remedies
of Landlord are not exclusive; they are cumulative in addition to any rights and
remedies now or hereafter existing at law, in equity by statute or otherwise, or
to any equitable remedies Landlord may have, and to any remedies Landlord may
have under bankruptcy laws or laws affecting creditor's rights generally.
21.4 WAIVER OF A DEFAULT: The waiver by Landlord of any material
default or breach of any provision of this Lease shall not be deemed or
construed a waiver of any other material breach or default by Tenant hereunder
or of any subsequent material breach or default of this Lease, except for the
default specified in the waiver.
22. HOLDING OVER: If Tenant holds possession of the Premises after the
expiration of the Term of this Lease with Landlord's consent, Tenant shall
become a tenant from month-to-month upon the terms and provisions of this Lease,
provided the monthly Base Rent during such hold over period shall be 125% of the
Base Rent due on the last month of the Lease Term, payable in advance on or
before the first day of each month. Acceptance by Landlord of the monthly Base
Rent without the additional twenty-five percent (25%) increase of Base Rent
shall not be deemed or construed as a waiver by Landlord of any of its rights to
collect the increased amount of the Base Rent as provided herein at any time.
Such month-to-month tenancy shall not constitute a renewal or extension for any
further term. All options, if any, granted under the terms of this Lease shall
be deemed automatically terminated and be of no force or effect during said
month-to-month tenancy. Tenant shall continue in possession until such tenancy
shall be terminated by either Landlord or Tenant giving written notice of
termination to the other party at least thirty (30) days prior to the effective
date of termination.
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This paragraph shall not be construed as Landlord's permission for Tenant to
hold over. Acceptance of Base Rent by Landlord following expiration or
termination of this Lease shall not constitute a renewal of this Lease. If
Tenant provides Landlord with at least twelve (12) months advance written notice
of Tenant's intention to hold over and the anticipated hold over period of time,
Landlord shall not be entitled to any consequential damages arising from such
hold over for the hold over period specified in such written notice; provided,
however, the foregoing shall not be considered as Landlord's waiver of the
requirement for Tenant to pay such additional twenty-five percent (25%) increase
of Base Rent during such holdover period as contemplated above.
23. LANDLORD'S DEFAULT: Landlord shall not be deemed in breach or default of
this Lease unless Landlord fails within a reasonable time to perform an
obligation required to be performed by Landlord hereunder. For purposes of this
provision, a reasonable time shall not be less than thirty (30) days after
receipt by Landlord of written notice specifying the nature of the obligation
Landlord has not performed (except for any items of repair or maintenance for
which a prompter response would be reasonably necessary or appropriate given the
then existing circumstances); provided, however, that if the nature of
Landlord's obligation is such that more than thirty (30) days, after receipt of
written notice, is reasonably necessary for its performance, then Landlord shall
not be in breach or default of this Lease if performance of such obligation is
commenced within such thirty (30) day period and thereafter diligently pursued
to completion.
24. PARKING: Tenant shall have a license to use the number of undesignated and
nonexclusive parking spaces set forth on Page 1. Landlord shall exercise
reasonable efforts to insure that such spaces are available to Tenant for its
use, but Landlord shall not be required to enforce Tenant's right to use the
same. Tenant shall have the exclusive right to use up to ten (10) parking
spaces, in locations designated by Landlord, in close proximity to the entrance
of each of the Buildings for Tenant's exclusive use for visitor parking;
provided, Tenant shall be solely responsible for the payment of all costs
associated with such striping and designation and Tenant's General Contractor
shall perform the work associated therewith as part of the Tenant Improvements.
25. SALE OF PREMISES: In the event of any sale of the Premises by Landlord or
the cessation otherwise of Landlord's interest therein, Landlord shall be and is
hereby entirely released from any and all of its obligations to perform or
further perform under this Lease and from all liability hereunder accruing or
arising from and after the date of such sale; and the purchaser, at such sale or
any subsequent sale of the Premises shall be deemed, without any further
agreement between the parties or their successors in interest or between the
parties and any such purchaser, to have assumed and agreed to carry out any and
all of the covenants and obligations of the Landlord under this Lease except for
those obligations of Landlord which have accrued prior to the date of such
transfer. For purposes of this Section 25, the term "Landlord" means only the
owner and/or agent of the owner as such parties exist as of the date on which
Tenant executes this Lease. A ground lease or similar long term lease by
Landlord of the entire Buildings, of which the Premises are a part, shall be
deemed a sale within the meaning of this Section 25. Tenant agrees to attorn to
such new owner provided such new owner does not disturb Tenant's use, occupancy
or quiet enjoyment of the Premises so long as Tenant is not in default of any of
the provisions of this Lease.
26. WAIVER: No delay or omission in the exercise of any right or remedy of
Landlord on any default by Tenant shall impair such a right or remedy or be
construed as a waiver. The subsequent acceptance of Rent by Landlord after
breach by Tenant of any covenant or term of this Lease shall not be deemed a
waiver of such breach, other than a waiver of timely payment for the particular
Rent payment involved, and shall not prevent Landlord from maintaining an
unlawful detainer or other action based on such breach. No payment by Tenant or
receipt by Landlord of a lesser amount than the monthly Rent and other sums due
hereunder shall be deemed to be other than on account of the earliest Rent or
other sums due, nor shall any endorsement or statement on any check or
accompanying any check or payment be deemed an accord and satisfaction; and
Landlord may accept such check or payment without prejudice to Landlord's right
to recover the balance of such Rent or other sum or pursue any other remedy
provided in this Lease. No failure, partial exercise or delay on the part of the
Landlord in exercising any right, power or privilege hereunder shall operate as
a waiver thereof.
27. CASUALTY DAMAGE: If either of the Buildings or any part thereof shall be
damaged by fire or other casualty, Tenant shall give prompt written notice
thereof to Landlord. In case either of the Buildings shall be so damaged by fire
or other casualty that fifty percent (50%) or more of the affected Building(s)
requires substantial alteration or reconstruction, in Landlord's reasonable
opinion, Landlord may, at its option, terminate this Lease with respect only to
the affected Building by notifying Tenant in writing of such termination within
ninety (90) days after the date of such damage, in which event the Rent shall be
abated as of the date of such damage but only to the extent Tenant is not able
to conduct its operations in the affected Building(s). If either of the
Buildings or any part thereof shall be damaged by fire or other casualty such
that the reparation of such damage or casualty shall require more than one
hundred eighty (180) days to complete (subject to extension for Force Majeure
Delays or Tenant Delays), then either Tenant or Landlord may terminate this
Lease with respect only to the affected Building by notifying the other party of
such election to terminate this Lease within thirty (30) days after the date on
which it is determined by Landlord of the length of time necessary to
substantially complete such repairs, in which event the Rent shall be abated as
of the date of such damage but only to the extent Tenant is not able to conduct
its operations in the affected Building(s). If neither party exercises their
rights to so elect to terminate this Lease with respect only to the affected
Building in accordance with the aforesaid provisions, and provided insurance
proceeds are available to fully repair the damage (excluding any
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deductible), Landlord shall within ninety (90) days after the date of such
damage commence to repair and restore the affected Building(s) and shall proceed
with reasonable diligence to restore the affected Building(s) (except that
Landlord shall not be responsible for delays outside its control) to
substantially the same condition in which it was immediately prior to the
happening of the casualty; provided, Landlord shall not be required to rebuild,
repair, or replace any part of Tenant's furniture, furnishings or fixtures and
equipment removable by Tenant or any improvements, alterations or additions
installed by or for the benefit of Tenant under the provisions of this Lease.
Landlord shall not in any event be required to spend for such work an amount in
excess of the insurance proceeds (excluding any deductible) actually received by
Landlord as a result of the fire or other casualty. Landlord shall not be liable
for any inconvenience or annoyance to Tenant, injury to the business of Tenant,
loss of use of any part of the Premises by the Tenant or loss of Tenant's
personal property resulting in any way from such damage or the repair thereof,
except that, subject to the provisions of the next sentence, Landlord shall
allow Tenant a fair diminution of Rent during the time and to the extent the
affected Building(s) is unfit for occupancy. Notwithstanding anything to the
contrary contained herein, if either of the Buildings or any other portion
thereof be damaged by fire or other casualty resulting from the intentional or
negligent acts or omissions of Tenant or any of Tenant's Representatives, (i)
the Rent shall not be diminished during the repair of such damage, (ii) Tenant
shall not have any right to terminate this Lease with respect only to the
affected Building due to the occurrence of such casualty or damage, and (iii)
Tenant shall be liable to Landlord for the cost and expense of the repair and
restoration of all or any portion of the affected Building(s) caused thereby
(including, without limitation, any deductible) to the extent such cost and
expense is not covered by insurance proceeds. In the event the holder of any
indebtedness secured by the affected Building(s) requires that the insurance
proceeds be applied to such indebtedness, then Landlord shall have the right to
terminate this Lease with respect only to the affected Building by delivering
written notice of termination to Tenant within thirty (30) days after the date
of notice to Tenant of any such event, whereupon all rights and obligations
shall cease and terminate hereunder with respect only to the affected Building
except for those obligations expressly intended to survive any such termination
of this Lease. Any notices required to be delivered pursuant to the provisions
of this Section 27 shall be in compliance with the notice requirements of
Section 31.10 of this Lease. Except as otherwise provided in this Section 27,
Tenant hereby waives the provisions of Sections 1932(2.), 1933(4.), 1941 and
1942 of the California Civil Code.
28. CONDEMNATION: If twenty-five percent (25%) or more of the Premises is
condemned by eminent domain, inversely condemned or sold in lieu of condemnation
for any public or quasi-public use or purpose ("Condemned"), then Tenant or
Landlord may terminate this Lease as of the date when physical possession of the
Premises is taken and title vests in such condemning authority, and Rent shall
be adjusted to the date of termination. Tenant shall not because of such
condemnation assert any claim against Landlord or the condemning authority for
any compensation because of such condemnation, and Landlord shall be entitled to
receive the entire amount of any award without deduction for any estate of
interest or other interest of Tenant; provided, however, the foregoing
provisions shall not preclude Tenant, at Tenant's sole cost and expense, from
obtaining any separate award to Tenant for loss of or damage to Tenant's trade
fixtures and removable personal property or for damages for cessation or
interruption of Tenant's business provided such award is separate from
Landlord's award and provided further such separate award does not diminish nor
impair the award otherwise payable to Landlord. In addition to the foregoing,
Tenant shall be entitled to seek compensation for the relocation costs
recoverable by Tenant pursuant to the provisions of California Government Code
Section 7262. If a substantial portion of the Premises, Buildings or the Lot is
so Condemned, Landlord or Tenant may terminate this Lease. If neither party
elects to terminate this Lease, Landlord shall, if necessary, promptly proceed
to restore the Premises or the Buildings to substantially its same condition
prior to such partial condemnation, allowing for the reasonable effects of such
partial condemnation, and a proportionate allowance shall be made to Tenant, as
reasonably determined by Landlord, for the Rent corresponding to the time during
which, and to the part of the Premises of which, Tenant is deprived on account
of such partial condemnation and restoration. Landlord shall not be required to
spend funds for restoration in excess of the amount received by Landlord as
compensation awarded.
29. ENVIRONMENTAL MATTERS/HAZARDOUS MATERIALS:
29.1 HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE: Prior to executing
this Lease, Tenant has completed, executed and delivered to Landlord Tenant's
initial Hazardous Materials Disclosure Certificate (the "Initial HazMat
Certificate"), a copy of which is attached hereto as Exhibit G and incorporated
herein by this reference. Tenant covenants, represents and warrants to Landlord
that the information on the Initial HazMat Certificate is true and correct, to
the best of Tenant's knowledge, and accurately describes the use(s) of Hazardous
Materials which will be made and/or used on the Premises by Tenant. Commencing
with the date which is one year from the Commencement Date and continuing every
year thereafter, Tenant shall complete, execute, and deliver to Landlord, a
Hazardous Materials Disclosure Certificate ("the "HazMat Certificate")
describing Tenant's present use of Hazardous Materials on the Premises, and any
other reasonably necessary documents as requested by Landlord. The HazMat
Certificate required hereunder shall be in substantially the form as that which
is attached hereto as Exhibit E. Landlord hereby acknowledges and agrees that as
of the date on which both parties execute and deliver this Lease, Landlord has
approved the Initial HazMat Certificate; however, any such approval by Landlord
shall not be construed to relieve Tenant from its obligations and/or any
liabilities under the provisions of this Section 29.
29.2 DEFINITION OF HAZARDOUS MATERIALS: As used in this Lease, the
term Hazardous Materials shall mean and include (a) any hazardous or toxic
wastes, materials or substances, and other pollutants or contaminants, which are
or become regulated by any Environmental Laws; (b) petroleum, petroleum by
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products, gasoline, diesel fuel, crude oil or any fraction thereof; (c) asbestos
and asbestos containing material, in any form, whether friable or non-friable;
(d) polychlorinated biphenyls; (e) radioactive materials; (f) lead and
lead-containing materials; (g) any other material, waste or substance displaying
toxic, reactive, ignitable or corrosive characteristics, as all such terms are
used in their broadest sense, and are defined or become defined by any
Environmental Law (defined below); or (h) any materials which cause or threatens
to cause a nuisance upon or waste to any portion of the Premises, the Buildings,
the Lot, the Park or any surrounding property; or poses or threatens to pose a
hazard to the health and safety of persons on the Premises or any surrounding
property.
29.3 PROHIBITION; ENVIRONMENTAL LAWS: Except for and to the extent of
the type and quantities of Hazardous Materials specified in the Initial HazMat
Certificate, Tenant shall not be entitled to use nor store any Hazardous
Materials on, in, or about the Premises, the Buildings, the Lot and the Park, or
any portion of the foregoing, without, in each instance, obtaining Landlord's
prior written consent thereto. If Landlord consents to any such usage or
storage, then Tenant shall be permitted to use and/or store only those Hazardous
Materials that are necessary for Tenant's business and to the extent disclosed
in the HazMat Certificate and as expressly approved by Landlord in writing,
provided that such usage and storage is only to the extent of the quantities of
Hazardous Materials as specified in the then applicable HazMat Certificate as
expressly approved by Landlord and provided further that such usage and storage
is in full compliance with any and all local, state and federal environmental,
health and/or safety-related laws, statutes, orders, standards, courts'
decisions, ordinances, rules and regulations (as interpreted by judicial and
administrative decisions), decrees, directives, guidelines, permits or permit
conditions, currently existing and as amended, enacted, issued or adopted in the
future which are or become applicable to Tenant or all or any portion of the
Premises (collectively, the "Environmental Laws"). Tenant agrees that any
changes to the type and/or quantities of Hazardous Materials specified in the
most recent HazMat Certificate may be implemented only with the prior written
consent of Landlord, which consent may be given or withheld in Landlord's
reasonable discretion. Tenant shall not be entitled nor permitted to install any
tanks under, on or about the Premises for the storage of Hazardous Materials
without the express written consent of Landlord, which may be given or withheld
in Landlord's sole discretion. Landlord shall have the right at all times during
the Term of this Lease, upon reasonable advance notice to Tenant, to (i) inspect
the Premises, (ii) conduct tests and investigations to determine whether Tenant
is in compliance with the provisions of this Section 29, and (iii) request lists
of all Hazardous Materials used, stored or otherwise located on, under or about
the Premises, the Common Areas and/or the parking lots. The cost of all such
inspections, tests and investigations shall be borne solely by Tenant, if
Landlord reasonably determines that Tenant or any of Tenant's Representatives
are directly or indirectly responsible in any manner for any contamination
revealed by such inspections, tests and investigations. The aforementioned
rights granted herein to Landlord and its representatives shall not create (a) a
duty on Landlord's part to inspect, test, investigate, monitor or otherwise
observe the Premises or the activities of Tenant and Tenant's Representatives
with respect to Hazardous Materials, including without limitation, Tenant's
operation, use and any remediation related thereto, or (b) liability on the part
of Landlord and its representatives for Tenant's use, storage, disposal or
remediation of Hazardous Materials, it being understood that Tenant shall be
solely responsible for all liability in connection therewith.
29.4 TENANT'S ENVIRONMENTAL OBLIGATIONS: Tenant shall give to Landlord
immediate verbal and follow-up written notice of any spills, releases,
discharges, disposals, emissions, migrations, removals or transportation of
Hazardous Materials by Tenant, Tenant's Representatives or by any other party in
the event Tenant or Tenant's Representatives has actual knowledge thereof, on,
under or about the Premises, or in any Common Areas or parking lots. Tenant, at
its sole cost and expense, covenants and warrants to promptly investigate, clean
up, remove, restore and otherwise remediate (including, without limitation,
preparation of any feasibility studies or reports and the performance of any and
all closures) any spill, release, discharge, disposal, emission, migration or
transportation of Hazardous Materials arising from or related to the intentional
or negligent acts or omissions of Tenant or Tenant's Representatives such that
the affected portions of the Park and any adjacent property are returned to the
condition existing prior to the appearance of such Hazardous Materials. Any such
investigation, clean up, removal, restoration and other remediation shall only
be performed after Tenant has obtained Landlord's prior written consent, which
consent shall not be unreasonably withheld so long as such actions would not
potentially have a material adverse long-term or short-term effect on the
Premises, the Buildings, the Lot or the Park, or any portion of any of the
foregoing. Notwithstanding the foregoing, Tenant shall be entitled to respond
immediately to an emergency without first obtaining Landlord's prior written
consent. Tenant, at its sole cost and expense, shall conduct and perform, or
cause to be conducted and performed, all closures as required by any
Environmental Laws or any agencies or other governmental authorities having
jurisdiction thereof. If Tenant fails to so promptly investigate, clean up,
remove, restore, provide closure or otherwise so remediate, Landlord may, but
without obligation to do so, take any and all steps necessary to rectify the
same and Tenant shall promptly reimburse Landlord, upon demand, for all
reasonable costs and expenses to Landlord of performing investigation, clean up,
removal, restoration, closure and remediation work. All such work undertaken by
Tenant, as required herein, shall be performed in such a manner so as to enable
Landlord to make full economic use of the Premises, the Buildings, the Lot and
the Park after the satisfactory completion of such work.
29.5 ENVIRONMENTAL INDEMNITY: In addition to Tenant's obligations as
set forth hereinabove but subject to the provisions of Section 29.7 below,
Tenant agrees to, and shall, protect, indemnify, defend (with counsel reasonably
acceptable to Landlord) and hold Landlord and Landlord's lenders, members,
partners, property management company (if other than Landlord), agents,
directors, officers, employees, representatives, contractors, shareholders,
successors and assigns and each of their respective partners, directors,
employees, representatives, agents, contractors, shareholders, successors and
assigns harmless from and against any and all claims, judgments, damages,
penalties, fines, liabilities, losses (including, without limitation, diminution
in value
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of the Premises, the Buildings, the Lot, the Park, or any portion of any of the
foregoing, damages for the loss of or restriction on the use of rentable or
usable space, and from any adverse impact of Landlord's marketing of any space
within the Buildings and/or Park), suits, administrative proceedings and costs
(including, but not limited to, reasonable attorneys' and consultant fees and
court costs) arising at any time during or after the Term of this Lease in
connection with or related to, directly or indirectly, the use, presence,
transportation, storage, disposal, migration, removal, spill, release or
discharge of Hazardous Materials on, in or about the Premises, or in any Common
Areas or parking lots as a result (directly or indirectly) of the intentional or
negligent acts or omissions of Tenant or Tenant's Representatives. Neither the
written consent of Landlord to the presence, use or storage of Hazardous
Materials in, on, under or about any portion of the Premises, the Buildings, the
Lot and the Park, nor the strict compliance by Tenant with all Environmental
Laws shall excuse Tenant from its obligations of indemnification pursuant
hereto. Tenant shall not be relieved of its indemnification obligations under
the provisions of this Section 29.5 as a result of Landlord's status as either
an "owner" or "operator" under any Environmental Laws.
29.6 SURVIVAL: Tenant's obligations and liabilities pursuant to the
provisions of this Section 29 shall survive the expiration or earlier
termination of this Lease. If it is determined by Landlord that the condition of
all or any portion of the Premises, the Buildings, the Lot and/or the Park is
not in compliance with the provisions of this Lease with respect to Hazardous
Materials, including without limitation all Environmental Laws at the expiration
or earlier termination of this Lease, then at Landlord's sole option, Landlord
may require Tenant to hold over possession of the Premises until Tenant can
surrender the Premises to Landlord in the condition in which the Premises
existed as of the Commencement Date and prior to the appearance of such
Hazardous Materials except for reasonable wear and tear, including without
limitation, the conduct or performance of any closures as required by any
Environmental Laws. For purposes hereof, the term "reasonable wear and tear"
shall not include any deterioration in the condition or diminution of the value
of any portion of the Premises, the Buildings, the Lot and/or the Park in any
manner whatsoever related to directly, or indirectly, Hazardous Materials. Any
such holdover by Tenant will be with Landlord's consent, will not be terminable
by Tenant in any event or circumstance and will otherwise be subject to the
provisions of Section 22 of this Lease.
29.7 EXCULPATION OF TENANT: Tenant shall not be liable to Landlord for
nor otherwise obligated to Landlord under any provision of the Lease with
respect to the following: (i) any claim, remediation, obligation, investigation,
obligation, liability, cause of action, attorney's fees, consultants' cost,
expense or damage resulting from any Hazardous Materials present in, on or about
the Premises or the Buildings to the extent not caused nor otherwise permitted,
directly or indirectly, by Tenant or Tenant's Representatives; or (ii) the
removal, investigation, monitoring or remediation of any Hazardous Material
present in, on or about the Premises or the Buildings directly caused by any
source, including third parties, other than Tenant or Tenant's Representatives;
provided, however, Tenant shall be fully liable for and otherwise obligated to
Landlord under the provisions of this Lease for all liabilities, costs, damages,
penalties, claims, judgments, expenses (including without limitation, attorneys'
and experts' fees and costs) and losses to the extent (a) Tenant or any of
Tenant's Representatives contributes to the presence of such Hazardous
Materials, or Tenant and/or any of Tenant's Representatives exacerbates the
conditions caused by such Hazardous Materials, or (b) Tenant and/or Tenant's
Representatives allows or permits persons over which Tenant or any of Tenant's
Representatives has control, and/or for which Tenant or any of Tenant's
Representatives are legally responsible for, to cause such Hazardous Materials
to be present in, on, under, through or about any portion of the Premises, the
Common Areas, the Buildings or the Park, or (c) Tenant and/or any of Tenant's
Representatives does not take all reasonably appropriate actions to prevent such
persons over which Tenant or any of Tenant's Representatives has control and/or
for which Tenant or any of Tenant's Representatives are legally responsible from
causing the presence of Hazardous Materials in, on, under, through or about any
portion of the Premises, the Common Areas, the Buildings or the Park.
30. FINANCIAL STATEMENTS: Tenant, for the reliance of Landlord, any lender
holding or anticipated to acquire a lien upon the Premises, the Buildings or the
Park or any portion thereof, or any prospective purchaser of the Buildings or
the Park or any portion thereof, within thirty (30) days after Landlord's
request therefor, but not more often than once annually so long as Tenant is not
in default of this Lease, shall deliver to Landlord the then current audited
financial statements of Tenant (including interim periods following the end of
the last fiscal year for which annual statements are available) which statements
shall be prepared or compiled by a certified public accountant and shall present
fairly the financial condition of Tenant at such dates and the result of its
operations and changes in its financial positions for the periods ended on such
dates. So long as Tenant is a publicly-traded entity, Tenant's publicly-filed
financial statements shall be satisfactory for the satisfaction of the foregoing
requirement. If an audited financial statement has not been prepared, Tenant
shall provide Landlord with an unaudited financial statement and/or such other
information, the type and form of which are acceptable to Landlord in Landlord's
reasonable discretion, which reflects the financial condition of Tenant. If
Landlord so requests, Tenant shall deliver to Landlord an opinion of a certified
public accountant, including a balance sheet and profit and loss statement for
the most recent prior year, all prepared in accordance with generally accepted
accounting principles consistently applied. Any and all options granted to
Tenant hereunder shall be subject to and conditioned upon Landlord's reasonable
approval of Tenant's financial condition at the time of Tenant's exercise of any
such option.
31. GENERAL PROVISIONS:
31.1 TIME. Time is of the essence in this Lease and with respect to
each and all of its provisions in which performance is a factor.
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31.2 SUCCESSORS AND ASSIGNS. The covenants and conditions herein
contained, subject to the provisions as to assignment, apply to and bind the
heirs, successors, executors, administrators and assigns of the parties hereto.
31.3 RECORDATION. Tenant shall not record this Lease or a short form
memorandum hereof without the prior written consent of the Landlord.
31.4 LANDLORD'S PERSONAL LIABILITY. The liability of Landlord (which,
for purposes of this Lease, shall include Landlord and the owner of the
Buildings if other than Landlord) to Tenant for any default by Landlord under
the terms of this Lease shall be limited to the actual interest of Landlord and
its present or future partners or members in the Park, and Tenant agrees to look
solely to the Park for satisfaction of any liability and shall not look to other
assets of Landlord nor seek any recourse against the assets of the individual
members, partners, directors, officers, shareholders, agents or employees of
Landlord; it being intended that Landlord and the individual partners, members,
directors, officers, shareholders, agents or employees of Landlord shall not be
personally liable in any manner whatsoever for any judgment or deficiency. The
liability of Landlord under this Lease is limited to its actual period of
ownership of title to the Buildings, and Landlord shall be automatically
released from further performance under this Lease and from all further
liabilities and expenses accruing hereunder after the date of such transfer of
Landlord's interest in the Buildings. The foregoing shall not in any way limit
or impair Tenant's right, if any, to recover proceeds of insurance or any
condemnation award in accordance with the provisions of this Lease.
31.5 SEPARABILITY. Any provisions of this Lease which shall prove to
be invalid, void or illegal shall in no way affect, impair or invalidate any
other provisions hereof and such other provision shall remain in full force and
effect.
31.6 CHOICE OF LAW. This Lease shall be governed by the laws of the
State of California.
31.7 ATTORNEYS' FEES. In the event any dispute between the parties
results in litigation or other proceeding or any other litigation involving the
parties arises from this Lease, the prevailing party shall be reimbursed by the
party not prevailing for all reasonable costs and expenses, including, without
limitation, reasonable attorneys' and experts' fees and costs incurred by the
prevailing party in connection with such litigation or other proceeding, and any
appeal thereof. Such costs, expenses and fees shall be included in and made a
part of the judgment recovered by the prevailing party, if any.
31.8 ENTIRE AGREEMENT. This Lease supersedes any prior agreements,
representations, negotiations or correspondence between the parties, and
contains the entire agreement of the parties on matters covered. No other
agreement, statement or promise made by any party, that is not in writing and
signed by all parties to this Lease, shall be binding.
31.9 WARRANTY OF AUTHORITY. On the date that Tenant executes this
Lease, Tenant shall deliver to Landlord an original certificate of status for
Tenant issued by the California Secretary of State or statement of partnership
for Tenant recorded in the county in which the Premises are located, as
applicable, and such other documents as Landlord may reasonably request with
regard to the lawful existence of Tenant. Each person executing this Lease on
behalf of a party represents and warrants that (1) such person is duly and
validly authorized to do so on behalf of the entity it purports to so bind, and
(2) if such party is a limited liability company, partnership, corporation or
trustee, that such limited liability company, partnership, corporation or
trustee has full right and authority to enter into this Lease and perform all of
its obligations hereunder.
31.10 NOTICES. Any and all notices and demands required or permitted
to be given hereunder to Landlord shall be in writing and shall be sent: (a) by
United States mail, certified and postage prepaid; or (b) by personal delivery;
or (c) by overnight courier, addressed to Landlord at 101 Lincoln Centre Drive,
Fourth Floor, Foster City, California 94404-1167. Any and all notices and
demands required or permitted to be given hereunder to Tenant shall be in
writing and shall be sent: (i) by United States mail, certified and postage
prepaid; or (ii) by personal delivery to any employee or agent of Tenant over
the age of eighteen (18) years of age; or (iii) by overnight courier, all of
which shall be addressed to Tenant at the Tenant's Address as provided on Page 1
of this Lease or otherwise provided to Landlord. Notice and/or demand shall be
deemed given upon the earlier of actual receipt or the third day following
deposit in the United States mail. Any notice or requirement of service required
by any statute or law now or hereafter in effect, including, but not limited to,
California Code of Civil Procedure Sections 1161, 1161.1, and 1162, is hereby
waived by Tenant.
31.11 JOINT AND SEVERAL. If Tenant consists of more than one person or
entity, the obligations of all such persons or entities shall be joint and
several.
31.12 COVENANTS AND CONDITIONS. Each provision to be performed by
Tenant hereunder shall be deemed to be both a covenant and a condition.
31.13 WAIVER OF JURY TRIAL. Intentionally omitted.
31.14 COUNTERCLAIMS. In the event Landlord commences any proceedings
for nonpayment of Rent, Additional Rent, or any other sums or amounts due
hereunder, Tenant shall not interpose any counterclaim of whatever nature or
description in any such proceedings, provided, however, nothing contained herein
shall be deemed or construed as a waiver of the Tenant's right to assert such
claims in any separate action brought by Tenant or the right to offset the
amount of any final judgment owed by Landlord to Tenant.
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31.15 UNDERLINING. The use of underlining within the Lease is for
Landlord's reference purposes only and no other meaning or emphasis is intended
by this use, nor should any be inferred.
32. SIGNS: All signs and graphics of every kind visible in or from public view
or corridors or the exterior of the Premises shall be subject to Landlord's
prior written approval, which shall not be unreasonably withheld or delayed, and
shall also be subject to any applicable governmental laws, ordinances, and
regulations and in compliance with Landlord's sign criteria as same may exist
from time to time or as set forth in Exhibit H hereto and made a part hereof.
Tenant shall remove all such signs and graphics prior to the termination of this
Lease. Such installations and removals shall be made in a manner as to avoid
damage or defacement of the Premises; and Tenant shall repair any damage or
defacement, including without limitation, discoloration caused by such
installation or removal. Landlord shall have the right, at its option, to demand
payment from Tenant of such sums as are reasonably necessary to remove such
signs, including, but not limited to, the costs and expenses associated with any
repairs necessitated by such removal. Notwithstanding the foregoing, in no event
shall any: (a) neon, flashing or moving sign(s) or (b) sign(s) which shall
interfere with the visibility of any sign, awning, canopy, advertising matter,
or decoration of any kind of any other business or occupant of the Buildings or
the Park be permitted hereunder. Tenant further agrees to maintain any such
sign, awning, canopy, advertising matter, lettering, decoration or other thing
as may be approved in good condition and repair at all times.
33. MORTGAGEE PROTECTION: Upon any breach or default on the part of Landlord,
Tenant will give written notice by registered or certified mail to any
beneficiary of a deed of trust or mortgagee of a mortgage covering the Premises
who has provided Tenant with notice of their interest together with an address
for receiving notice, and shall offer such beneficiary or mortgagee a reasonable
opportunity to cure the default (which, in no event shall be more than ninety
(90) days), including time to obtain possession of the Premises by power of sale
or a judicial foreclosure, if such should prove necessary to effect a cure. If
such breach or default cannot be cured within such time period, then such
additional time as may be necessary will be given to such beneficiary or
mortgagee to effect such cure so long as such beneficiary or mortgagee has
commenced the cure within the original time period and thereafter diligently
pursues such cure to completion, in which event this Lease shall not be
terminated while such cure is being diligently pursued. Tenant agrees that each
lender to whom this Lease has been assigned by Landlord is an express third
party beneficiary hereof. Tenant shall not make any prepayment of Rent more than
one (1) month in advance without the prior written consent of each such lender,
except if Tenant is required to make quarterly payments of Rent in advance
pursuant to the provisions of Section 8 above. Tenant agrees to make all
payments under this Lease to the lender with the most senior encumbrance upon
receiving a direction, in writing, to pay said amounts to such lender. Tenant
shall comply with such written direction to pay without determining whether an
event of default exists under such lender's loan to Landlord.
34. QUITCLAIM: Upon any termination of this Lease, Tenant shall, at Landlord's
request, execute, have acknowledged and deliver to Landlord a quitclaim deed of
Tenant's interest in and to the Premises.
35. MODIFICATIONS FOR LENDER: If, in connection with obtaining financing for the
Premises or any portion thereof, Landlord's lender shall request reasonable
modification(s) to this Lease as a condition to such financing, Tenant shall not
unreasonably withhold, delay or defer its consent thereto, provided such
modifications do not materially adversely affect Tenant's rights hereunder or
the use, occupancy or quiet enjoyment of Tenant hereunder.
36. WARRANTIES OF TENANT: Tenant hereby warrants and represents to Landlord, for
the express benefit of Landlord, that Tenant has undertaken a complete and
independent evaluation of the risks inherent in the execution of this Lease and
the operation of the Premises for the use permitted hereby, and that, based upon
said independent evaluation, Tenant has elected to enter into this Lease and
hereby assumes all risks with respect thereto. Each party hereby warrants and
represents to the other party, for the express benefit of the other party, that
in entering into this Lease, the warranting party has not relied upon any
statement, fact, promise or representation (whether express or implied, written
or oral) not specifically set forth herein in writing and that any statement,
fact, promise or representation (whether express or implied, written or oral)
made at any time to it, which is not expressly incorporated herein in writing,
is hereby waived by it.
37. COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT: Landlord and Tenant hereby
agree and acknowledge that the Premises, the Buildings and/or the Park may be
subject to the requirements of the Americans with Disabilities Act, a federal
law codified at 42 U.S.C. 12101 et seq, including, but not limited to Title III
thereof, all regulations and guidelines related thereto, together with any and
all laws, rules, regulations, ordinances, codes and statutes now or hereafter
enacted by local or state agencies having jurisdiction thereof, including all
requirements of Title 24 of the State of California, as the same may be in
effect on the date of this Lease and may be hereafter modified, amended or
supplemented (collectively, the "ADA"). The Shell Improvements to be constructed
hereunder shall be in compliance with the requirements of the ADA as of the date
on which the Shell Improvements are Substantially Completed. Any Tenant
Improvements to be constructed hereunder shall be in compliance with the
requirements of the ADA, and all costs incurred for purposes of compliance
therewith shall be a part of and included in the costs of the Tenant
Improvements. Tenant shall be solely responsible for conducting its own
independent investigation of this matter and for ensuring that the design of all
Tenant Improvements strictly comply with all requirements of the ADA. Subject to
reimbursement pursuant to Section
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6 of the Lease, if any barrier removal work or other work is required to the
Buildings, the Common Areas or the Park under the ADA, then such work shall be
the responsibility of Landlord; provided, if such work is required under the ADA
as a result of Tenant's use of the Premises or any work or alteration made to
the Premises by or on behalf of Tenant, then such work shall be performed by
Landlord at the sole cost and expense of Tenant. Except as otherwise expressly
provided in this provision, Tenant shall be responsible at its sole cost and
expense for fully and faithfully complying with all applicable requirements of
the ADA, including without limitation, not discriminating against any disabled
persons in the operation of Tenant's business in or about the Premises, and
offering or otherwise providing auxiliary aids and services as, and when,
required by the ADA. Within ten (10) days after receipt, Landlord and Tenant
shall advise the other party in writing, and provide the other with copies of
(as applicable), any notices alleging violation of the ADA relating to any
portion of the Premises or the Buildings; any claims made or threatened in
writing regarding noncompliance with the ADA and relating to any portion of the
Premises or the Buildings; or any governmental or regulatory actions or
investigations instituted or threatened regarding noncompliance with the ADA and
relating to any portion of the Premises or the Buildings. Tenant shall and
hereby agrees to protect, defend (with counsel acceptable to Landlord) and hold
Landlord and Landlord's lender(s), members, partners, employees,
representatives, legal representatives, successors and assigns (collectively,
the "Indemnitees") harmless and indemnify the Indemnitees from and against all
liabilities, damages, claims, losses, penalties, judgments, charges and expenses
(including reasonable attorneys' fees, costs of court and expenses necessary in
the prosecution or defense of any litigation including the enforcement of this
provision) arising from or in any way related to, directly or indirectly,
Tenant's or Tenant's Representatives' violation of the ADA. Tenant agrees that
the obligations of Tenant herein shall survive the expiration or earlier
termination of this Lease.
38. BROKERAGE COMMISSION: Landlord and Tenant each represents and warrants for
the benefit of the other that it has had no dealings with any real estate
broker, agent or finder in connection with the Premises and/or the negotiation
of this Lease, except for the Broker(s) (as set forth on Page 1), and that it
knows of no other real estate broker, agent or finder who is or might be
entitled to a real estate brokerage commission or finder's fee in connection
with this Lease or otherwise based upon contacts between the claimant and
Tenant. Each party shall indemnify and hold harmless the other from and against
any and all liabilities or expenses arising out of claims made for a fee or
commission by any real estate broker, agent or finder in connection with the
Premises and this Lease other than Broker(s), if any, resulting from the actions
of the indemnifying party. Any real estate brokerage commission or finder's fee
payable to the Broker(s) in connection with this Lease shall only be payable and
applicable to the extent of the initial term of the Lease and to the extent of
the Premises as same exist as of the date on which Tenant executes this Lease.
Unless expressly agreed to in writing by Landlord and Broker(s), no real estate
brokerage commission or finder's fee shall be owed to, or otherwise payable to,
the Broker(s) for any renewals or other extensions of the initial Term of this
Lease or for any additional space leased by Tenant other than the Premises as
same exists as of the date on which Tenant executes this Lease. Tenant further
represents and warrants to Landlord that Tenant will not receive (i) any portion
of any brokerage commission or finder's fee payable to the Broker(s) in
connection with this Lease or (ii) any other form of compensation or incentive
from the Broker(s) with respect to this Lease.
39. QUIET ENJOYMENT: Landlord covenants with Tenant, upon the paying of Rent and
observing and keeping the covenants, agreements and conditions of this Lease on
its part to be kept, and during the periods that Tenant is not otherwise in
default of any of the terms or provisions of this Lease, and subject to the
rights of any of Landlord's lenders, (i) that Tenant shall and may peaceably and
quietly hold, occupy and enjoy the Premises and the Common Areas during the Term
of this Lease, and (ii) neither Landlord, nor any successor or assign of
Landlord, shall disturb Tenant's occupancy or enjoyment of the Premises and the
Common Areas.
40. LANDLORD'S ABILITY TO PERFORM TENANT'S UNPERFORMED OBLIGATIONS:
Notwithstanding anything to the contrary contained in this Lease, if Tenant
shall fail to perform any of the terms, provisions, covenants or conditions to
be performed or complied with by Tenant pursuant to this Lease, and/or if the
failure of Tenant relates to a matter which in Landlord's judgment reasonably
exercised is of an emergency nature and such failure shall remain uncured for a
period of time commensurate with such emergency, then Landlord may, at
Landlord's option wit