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BUILD TO SUIT LEASE
BY AND BETWEEN
MARTIN/CAMPUS ASSOCIATES, L.P.
"LANDLORD"
AND
AT HOME CORPORATION
"TENANT"
For the approximately 86,904 sq. ft. Premises at 430 Broadway
Redwood City, CA 94063
<PAGE> 2
LEASE SUMMARY
Lease Date: _____________________________________
Landlord: Martin/Campus Associates, L.P.
Address of Landlord: 100 Bush Street, 26th Floor
San Francisco, CA 94104
Tenant: At Home Corporation
Address of Tenant: 425 Broadway
Redwood City, CA
Contact: Kenneth Goldman
Telephone: (650) 569-5353
Building Address: 430 Broadway
Redwood City, California
Total Building Square Footage: Approximately 86,904 square feet
Term: Fifteen years from the Commencement
Date under the 450 Broadway Lease
(see Paragraph 4.A.)
Monthly Rent: As provided under Paragraph 5.A, and subject to
adjustment pursuant to Paragraph 4.C and 5.B
Security Deposit: An amount equal to three (3) payments of the initial
Monthly Rent (see Paragraph 7)
Exhibit A: Premises
Exhibit B: Work Letter Agreement
Exhibit C: Site Plan for Project
Exhibit D: Commencement Date Memorandum
Exhibit E: Subordination, Nondisturbance and Attornment Agreement
Exhibit F: Option to Purchase Terms
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TABLE OF CONTENTS
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<S> <C> <C>
1. Parties..................................................................................................2
2. Premises.................................................................................................2
3. Definitions..............................................................................................2
A. Affiliate.......................................................................................2
B. Alterations.....................................................................................2
C. Broadway Lease..................................................................................2
D. Capital Improvements............................................................................3
E. CC&Rs...........................................................................................3
F. Collateral Agreements...........................................................................3
G. Commencement Date...............................................................................3
H. Common Area.....................................................................................3
I. Common Area Maintenance Costs...................................................................3
J. Final Plans.....................................................................................5
K. HVAC............................................................................................5
L. Impositions.....................................................................................6
M. Improvements....................................................................................6
N. Index...........................................................................................6
O. Interest Rate...................................................................................6
P. INTENTIONALLY DELETED...........................................................................6
Q. Landlord's Agents...............................................................................6
R. Lease Year......................................................................................7
S. Monthly Rent....................................................................................7
T. Parking Area....................................................................................7
U. Person..........................................................................................7
V. Project.........................................................................................7
W. Real Property Taxes.............................................................................7
X. Rent............................................................................................8
Y. Rentable Area...................................................................................8
AA. Security Deposit................................................................................8
BB. Sublet..........................................................................................8
CC. Subrent.........................................................................................9
DD. Subtenant.......................................................................................9
EE. Tenant Delay....................................................................................9
FF. Tenant Improvements.............................................................................9
GG. Tenant's Percentage Share.......................................................................9
HH. Tenant's Personal Property......................................................................9
II. Term...........................................................................................10
JJ. Fixed Charge Ratio.............................................................................10
4. Lease Term....................................................................................................10
A. Term...........................................................................................10
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B. Delays in Completion...........................................................................10
C. Option to Extend...............................................................................10
5. Rent and Additional Charges.............................................................................13
A. Monthly Rent...................................................................................13
B. Adjustments to Monthly Rent....................................................................14
C. Management Fee.................................................................................14
D. Common Area Maintenance Costs..................................................................15
E. Additional Rent................................................................................16
F. Prorations.....................................................................................16
G. Interest.......................................................................................16
6. Late Payment Charges....................................................................................16
7. Security Deposit........................................................................................17
A. Deposit Required...............................................................................17
8. Holding Over............................................................................................18
9. Tenant Improvements.....................................................................................19
10. Condition of Premises...................................................................................19
A. Capital Improvements...........................................................................19
B. Acceptance of Premises.........................................................................19
11. Use of the Premises and Common Area.....................................................................19
A. Tenant's Use...................................................................................20
B. Hazardous Materials............................................................................20
C. Special Provisions Relating to The Americans With Disabilities Act of 1990.....................24
D. Use and Maintenance of Common Area.............................................................25
12. Quiet Enjoyment.........................................................................................25
13. Alterations.............................................................................................26
A. Alteration Rights..............................................................................26
B. Performance of Alterations.....................................................................26
C. Trade Fixtures.................................................................................26
14. Surrender of the Premises...............................................................................27
15. Impositions and Real Property Taxes.....................................................................27
A. Payment by Tenant..............................................................................27
B. Taxes on Tenant Improvements and Personal Property.............................................28
C. Proration......................................................................................29
16. Utilities and Services..................................................................................29
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17. Repair and Maintenance..................................................................................29
A. Landlord's Obligations.........................................................................29
B. Tenant's Obligations...........................................................................30
C. Conditions Applicable to Repairs...............................................................31
D. Landlord's Rights..............................................................................31
E. Compliance with Governmental Regulations.......................................................31
18. Liens...................................................................................................31
19. Landlord's Right to Enter the Premises..................................................................32
20. Signs...................................................................................................32
21. Insurance...............................................................................................32
A. Indemnification................................................................................32
B. Tenant's Insurance.............................................................................33
C. Premises Insurance.............................................................................34
D. Increased Coverage.............................................................................34
E. Failure to Maintain............................................................................34
F. Insurance Requirements.........................................................................35
G. Waiver and Release.............................................................................35
22. Waiver of Subrogation...................................................................................35
23. Damage or Destruction...................................................................................36
A. Landlord's Obligation to Rebuild...............................................................36
B. Right to Terminate.............................................................................36
C. Limited Obligation to Repair...................................................................37
D. Abatement of Rent..............................................................................37
E. Damage Near End of Term........................................................................37
24. Condemnation............................................................................................37
25. Assignment and Subletting...............................................................................38
A. Landlord's Consent.............................................................................38
B. Tenant's Notice................................................................................38
C. Information to be Furnished....................................................................38
D. Landlord's Alternatives........................................................................39
E. Proration......................................................................................39
F. Parameters of Landlord's Consent...............................................................39
G. Permitted Transfers............................................................................40
26. Default.................................................................................................40
A. Tenant's Default...............................................................................40
B. Remedies.......................................................................................41
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C. Landlord's Default.............................................................................42
27. Subordination...........................................................................................42
A. Subordination..................................................................................42
B. Attornment.....................................................................................43
C. Non-Disturbance................................................................................43
28. Notices.................................................................................................43
29. Attorneys' Fees.........................................................................................44
30. Estoppel Certificates...................................................................................44
31. Transfer of the Premises by Landlord....................................................................45
32. Landlord's Right to Perform Tenant's Covenants..........................................................45
33. Tenant's Remedy.........................................................................................45
34. Mortgagee Protection....................................................................................45
35. Brokers.................................................................................................46
36. Acceptance..............................................................................................46
37. Parking.................................................................................................46
38. Right of First Offer to Purchase........................................................................46
A. Notice of Sale.................................................................................47
B. Acceptance.....................................................................................47
C. Rejection......................................................................................47
D. Offered Terms..................................................................................48
E. Acceptance of Tenant's Offer...................................................................48
F. Conditions.....................................................................................48
G. Process........................................................................................48
H. Rights Personal................................................................................49
39. General.................................................................................................49
A. Captions.......................................................................................49
B. Executed Copy..................................................................................49
C. Time...........................................................................................49
D. Separability...................................................................................49
E. Choice of Law..................................................................................49
F. Gender; Singular, Plural.......................................................................49
G. Binding Effect.................................................................................49
H. Waiver.........................................................................................50
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I. Entire Agreement...............................................................................50
J. Authority......................................................................................50
K. Exhibits.......................................................................................50
L. Lease Summary..................................................................................50
M. Memorandum of Lease............................................................................50
</TABLE>
<PAGE> 8
BUILD TO SUIT LEASE
1. Parties.
THIS BUILD TO SUIT LEASE (the "Lease"), dated as of ________
1998, is entered into by and between MARTIN/CAMPUS ASSOCIATES, L.P., a Delaware
limited partnership ("Landlord"), whose address is 100 Bush Street, San
Francisco, CA 94104, and AT HOME CORPORATION, a Delaware corporation ("Tenant"),
whose address is 425 Broadway, Redwood City, CA.
2. Premises.
Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord those certain premises to situated in a building to be constructed by
Landlord pursuant to the terms of this Lease which shall be commonly known as
430 Broadway (the "Building"), in the City of Redwood City, County of San Mateo,
State of California, as more particularly shown on Exhibit A (the "Premises"),
which Premises shall consist of a total area of approximately 86,904 square
feet. On or before the Commencement Date, Landlord shall measure the Rentable
Area of the Premises in accordance with BOMA Standard (ANSI Z65.1 1980) for full
floor office occupancy, and Landlord and Tenant shall amend this Lease if
necessary to reflect any discrepancy in the size of the Premises disclosed by
Landlord's measurement of the Premises by Landlord's architect. The Premises
also includes the appurtenant right to use in common with other tenants of the
Project (as defined below) the Common Area (as defined below) of the Project
owned by Landlord.
3. Definitions.
The following terms shall have the following meanings in this
Lease:
A. Affiliate. Any Person that controls, or is controlled by or
is under common control with, Landlord or Tenant. No Person shall be deemed in
control of another simply by virtue of being a partner, director, officer or
holder of voting securities of any Person. For purposes of this Paragraph 3.A,
"control" shall mean the ownership of, and/or the right to vote, stock,
partnership interests, membership interests, or other indicia of ownership
possessing at least fifty-one percent (51%) of either the total combined
interests in a Person, or the voting power of all classes of a Person's capital
stock, partnership interests, membership interests, or other indicia of
ownership, that have been issued, outstanding, and (if applicable) are entitled
to vote.
B. Alterations. Any alterations, additions or improvements
made in, on or about the Premises after the substantial completion of the
Improvements, including, but not limited to, lighting, heating, ventilating, air
conditioning, electrical, partitioning, drapery and carpentry installations.
C. Broadway Lease. That certain lease dated as of October 18,
1996, by and between Landlord and Tenant, for those certain premises commonly
known as 425 Broadway,
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<PAGE> 9
situated in the City of Redwood City, County of San Mateo, State of California.
D. Capital Improvements. Those certain improvements to the
Building to be constructed by Landlord pursuant to Paragraph 10.A and the Work
Letter Agreement attached to this Lease as Exhibit B (the "Work Letter").
E. CC&Rs. Any declaration of conditions, covenants and/or
restrictions, or similar instrument, that now encumbers, or may in the future
encumber the Project or the Premises, as adopted by Landlord or its successors
in interest from time to time, and any modifications or amendments thereto.
F. Collateral Agreements. The following agreements: (i) the
Broadway Lease, (ii) that certain Build to Suit Option Agreement by and between
Landlord and Tenant, dated as of October 25, 1996 (the "Build to Suit
Agreement"), (iii) that certain Agreement Granting Rights of First Offer, by and
between Landlord and Tenant, dated as of October 25, 1996, (iv) that certain
Warrant to Purchase Series A Common Stock of At Home Corporation and that
certain Second Amended and Restated Registration Rights Agreement, executed by
Landlord, Tenant and certain other parties, each dated as of October 18, 1996
(collectively, the "Warrant Agreement"), and (v) any leases at any time executed
by Tenant arising out of Tenant's exercise of any of its rights set forth in the
agreements described in items (ii) and (iii) above. The "450 Broadway Lease"
shall mean that certain lease between Landlord and Tenant with respect to the
premises commonly known as 450 Broadway, Redwood City, California.
G. Commencement Date. The Commencement Date of this Lease
shall be the first day of the Term determined in accordance with Paragraph 4.A.
H. Common Area. All areas and facilities within the Project
not appropriated to the exclusive occupancy of tenants, including the Parking
Area, the sidewalks, pedestrian ways, driveways, signs, pools, ponds, service
delivery facilities, common storage areas, common utility facilities and all
other areas in the Project established by Landlord and/or its successors for
non-exclusive use. Landlord may, by written notice to Tenant, elect in its sole
discretion to increase and/or decrease the Common Area from time to time during
the Term for any reason whatsoever (including without limitation an election by
Landlord and/or its successors in their sole discretion to make changes to the
buildings situated in the Project, and/or to subdivide, sell, exchange, dispose
of, transfer, or change the configuration of all or any portion of the Common
Area from time to time), so long as Landlord neither unreasonably interferes
with ingress to or egress from the Building, nor permanently reduces the number
of parking spaces available for Tenant's use below the minimum requirements set
forth in Paragraph 37. No such subdivision, sale, exchange, disposition,
transfer, or change to the configuration of all or any portion of the Common
Area shall cause the Common Area to be increased or decreased unless and until
Landlord has given Tenant written notice of such increase or decrease.
I. Common Area Maintenance Costs. The total of all costs and
expenses paid or incurred by Landlord in connection with the operation,
maintenance, ownership and repair of the Common Area, and the performance of
Landlord's obligations under Paragraphs 17.A and 17.E. Without limiting the
generality of the foregoing, Common Area Maintenance
3
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Costs include all costs of and expense for: (i) maintenance and repairs of the
Common Area; (ii) resurfacing, resealing, remarking, painting, repainting,
striping or restriping the Parking Area; (iii) maintenance and repair of all
public or common facilities; (iv) maintenance, repair and replacement of
sidewalks, curbs, paving, walkways, Parking Area, Project signs, landscaping,
planting and irrigation systems, trash facilities, loading and delivery areas,
lighting, drainage and common utility facilities, directional or other signs,
markers and bumpers, and any fixtures, equipment and personal property located
on the Common Area; (v) wages, salaries, benefits, payroll burden fees and
charges of personnel employed by Landlord and the charges of all independent
contractors retained by Landlord (to the extent that such personnel and
contractors are utilized by Landlord) for the maintenance, repair, management
and/or supervision of the Project, and of any security personnel retained by
Landlord in connection with the operation and maintenance of the Common Area
(although Landlord shall not be required to obtain security services); (vi)
maintenance, repair and replacement of security systems and alarms installed by
Landlord (if any); (vii) depreciation or amortization (or in lieu thereof,
rental payments) on all tools, equipment and machinery used in the operation and
maintenance of the Common Area; (viii) premiums for Comprehensive General
Liability Insurance or Commercial General Liability Insurance, casualty
insurance, workers compensation insurance or other insurance on the Common Area,
or any portion thereof or interest therein, and any deductibles payable with
respect to such insurance policies; (ix) all personal property or real property
taxes and assessments levied or assessed on the Project, or any portion thereof
or interest therein, including without limitation the Real Property Taxes for
the Project, if applicable under Paragraph 15.A; (x) cleaning, collection,
storage and removal of trash, rubbish, dirt and debris, and sweeping and
cleaning the Common Area; (xi) legal, accounting and other professional services
for the Project, including costs, fees and expenses of contesting the validity
or applicability of any law, ordinance, rule, regulation or order relating to
the Building, and of contesting, appealing or otherwise attempting to reduce any
Real Property Taxes assessed against the Project; (xii) any alterations,
additions or improvements required to be made to the Common Area in order to
reduce Common Area Maintenance Costs or to protect the health or safety of
occupants of the Project, provided that the cost of any such alterations,
additions, improvements or capital improvements, together with interest at the
Interest Rate, shall be amortized over the useful life of the alteration,
addition, improvement or capital improvement in question and included in Common
Area Maintenance Costs for each year over which such costs are amortized; (xiii)
all costs and expenses of providing, creating, maintaining, repairing, managing,
operating, and supervising an amenity center for the Project, which may include
without limitation a dining facility (provided, however, that Landlord shall not
be required to provide or create such an amenity center), which costs and
expenses may include without limitation rent charged by Landlord for the space
occupied by such amenity center; (xiv) all costs and expenses incurred by
Landlord in performing its obligations under Paragraphs 17.A or 17.E, including
without limitation all costs and expenses incurred in performing any
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alterations, additions or improvements required to be made to the Building in
order to comply with applicable laws, ordinances, rules, regulations and orders
and all capital improvements required to made in connection with the operation,
maintenance and repair of the Building, provided that the cost of any such
alterations, additions, improvements or capital improvements, together with
interest at the Interest Rate, shall be amortized over the useful life of the
alteration, addition, improvement or capital improvement in question and
included in Common Area Maintenance Costs for each year over which such costs
are amortized; (xv) all costs and expenses incurred in performing any
alterations, additions or improvements required to be made to the Common Area in
order to comply with applicable laws, ordinances, rules, regulations and orders
and all capital improvements required to made in connection with the operation,
maintenance and repair of the Common Area, provided that the cost of any such
alterations, additions, improvements or capital improvements, together with
interest at the Interest Rate, shall be amortized over the useful life of the
alteration, addition, improvement or capital improvement in question and
included in Common Area Maintenance Costs for each year over which such costs
are amortized; (xvi) any and all payments due and owing on behalf of the Project
or any portion thereof with respect to any CC&Rs, including without limitation
any and all assessments and association dues; (xvii) any other cost or expense
which this Lease expressly characterizes as a Common Area Maintenance Cost, and
(xviii) all costs and expenses related to the adoption and maintenance of a
portion of Highway 101. However, notwithstanding the foregoing or anything to
the contrary in this Lease, Common Area Maintenance Costs shall not include the
cost of or expenses for the following: (A) leasing commissions, attorneys' fees
or other costs or expenses incurred in connection with negotiations or disputes
with other tenants of the Project; (B) depreciation of buildings in the Project;
(C) payments of principal, interest, late fees, prepayment fees or other charges
on any debt secured by a mortgage covering the Project, or rental payments under
any ground lease or underlying lease; (D) any penalties incurred due to
Landlord's violation of any governmental rule or authority (but not excluding
the cost of compliance therewith, if such cost is chargeable to Tenant pursuant
to this Lease); (E) any Real Property Taxes or costs for which Landlord is
separately and directly reimbursed by Tenant or any other tenant of the Project
which are assessed against the Premises or the premises leased by such other
tenant(s); (F) items for which Landlord is reimbursed by insurance; (G) all
costs arising from monitoring, cleaning up and otherwise remediating any release
of Hazardous Materials at the Premises that has been specifically identified by
Landlord and Tenant in writing as of the date of the Lease; (H) all costs
associated with the operation of the business of the entity which constitutes
"Landlord", as distinguished from the costs of operations, including, but not
limited to, costs of partnership accounting and legal matters, costs of
defending any lawsuits with any mortgagee (except as the actions of Tenant may
be in issue), costs of selling, syndicating, financing, mortgaging, or
hypothecating any of the Landlord's interest in the Project and/or Common Area,
or any portion thereof, costs of any disputes between Landlord and its
employees, costs of disputes of Landlord with Building management or costs paid
in connection with disputes with Tenant or any other tenants; (I) all costs
(including permit, license and inspection fees) incurred in renovating or
otherwise improving or decorating, painting or redecorating space for other
tenants in the Project; (J) the creation of any reserves for equipment or
capital replacement (but not the expenditure of any funds from such reserves);
and (K) all costs arising from monitoring, cleaning up and otherwise remediating
any release of Hazardous Materials at the Premises to the extent that Landlord
(who shall use reasonable efforts to obtain reimbursement) is actually
reimbursed by third parties for such costs (but not the costs of collection
incurred by Landlord, unless such costs of collection are also reimbursed by
third parties).
J. Final Plans. As defined in the Work Letter.
K. HVAC. Heating, ventilating and air conditioning.
L. Impositions. Taxes, assessments, charges, excises and
levies, business
5
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taxes, license, permit, inspection and other authorization fees, transit
development fees, assessments or charges for housing funds, service payments in
lieu of taxes and any other fees or charges of any kind at any time levied,
assessed, charged or imposed by any federal, state or local entity, (i) upon,
measured by or reasonably attributable to the cost or value of Tenant's
equipment, furniture, fixtures or other personal property located in the
Premises, or the cost or value of any Alterations; (ii) upon, or measured by,
any Rent payable hereunder, including any gross receipts tax; (iii) upon, with
respect to or by reason of the development, possession, leasing, operation,
management, maintenance, alteration, repair, use or occupancy by Tenant of the
Premises, or any portion thereof; or (iv) upon this Lease transaction, or any
document to which Tenant is a party creating or transferring any interest or
estate in the Premises. Impositions do not include franchise, transfer,
inheritance or capital stock taxes, or income taxes measured by the net income
of Landlord from all sources, except to the extent any such taxes are levied or
assessed against Landlord as a substitute for, in whole or in part, any item
that would otherwise be deemed an Imposition under this paragraph.
M. Improvements. Collectively, the Tenant Improvements and the
Capital Improvements.
N. Index. The Consumer Price Index, All Urban Consumers, All
Items, published by the U.S. Department of Labor, Bureau of Labor Statistics for
the San Francisco- Oakland-San Jose Metropolitan Area (1982-84=100). If the Base
Year of the Index is changed, then all calculations pursuant to this Lease which
require the use of the Index shall be made by using the appropriate conversion
factor published by the Bureau of Labor Statistics (or successor agency) to
correlate to the Base Year of the Index herein specified. If no such conversion
factor is published, then Landlord shall, if possible, make the necessary
calculation to achieve such conversion. If such conversion is not in Landlord's
good-faith, business judgment possible, or if publication of the Index is
discontinued, or if the basis of calculating the Index is materially changed,
then the term "Index" shall mean comparable statistics on the cost of living, as
computed either (i) by an agency of the United States Government performing a
function similar to the Bureau of Labor Statistics, or (ii) if no such agency
performs such function, by a substantial and responsible periodical or
publication of recognized authority most closely approximating the result which
would have been achieved by the Index, as may be determined by Landlord in the
exercise of its reasonable good faith business judgment.
O. Interest Rate. Either (i) the greater of (a) twelve percent
(12%) per annum, or (b) the reference rate, or succeeding similar index,
announced from time to time by the Bank of America's main San Francisco office,
plus three percent (3%) per annum; or (ii) the maximum rate of interest
permitted by law, whichever is less.
P. INTENTIONALLY DELETED
Q. Landlord's Agents. Landlord's authorized agents, partners,
subsidiaries, directors, officers, and employees.
R. Lease Year. A period of twelve (12) consecutive calendar
months during the Term, commencing with the Commencement Date if the
Commencement Date is the first day
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of a calendar month, or commencing with the first day of the month following the
Commencement Date if the Commencement Date is not the first day of a calendar
month. The first Lease Year shall include the period between the Commencement
Date and the first day of the month following the Commencement Date if the
Commencement Date is not the first day of a calendar month. The last Lease Year
shall consist of the period between the date on which the Term expires or
terminates and the day after the last day of the preceding Lease Year.
S. Monthly Rent. The rent payable pursuant to Paragraph 5.A.,
as adjusted from time to time pursuant to the terms of this Lease.
T. Parking Area. All Common Area (except sidewalks and service
delivery facilities) now or hereafter designated by Landlord for the parking or
access of motor vehicles, including roads, traffic lanes, vehicular parking
spaces, landscaped areas and walkways, and including any parking structure
constructed during the Term. Landlord and/or its successors may, by written
notice to Tenant, elect in their sole discretion to increase and/or decrease the
Parking Area from time to time during the Term for any reason whatsoever
(including without limitation an election by Landlord and/or its successors in
their sole discretion to make changes to the buildings situated in the Project,
and/or to subdivide, sell, exchange, dispose of, transfer, or change the
configuration of all or any portion of the Parking Area from time to time), so
long as such changes to the Parking Area do not permanently reduce the number of
parking spaces available for Tenant's use below the minimum requirements set
forth in Paragraph 37. No such subdivision, sale, exchange, disposition,
transfer, or change to the configuration of all or any portion of the Parking
Area shall cause the Parking Area to be increased or decreased unless and until
Landlord has given Tenant written notice of such increase or decrease.
U. Person. Any individual, partnership, firm, association,
corporation, limited liability company, trust, or other form of business or
legal entity.
V. Project. That certain real property shown on Exhibit C.
Landlord and/or its successors may, by written notice to Tenant, elect in their
sole discretion to increase and/or decrease the number of buildings and/or the
amount of Rentable Area situated in the Project from time to time during the
Term for any reason whatsoever.
W. Real Property Taxes. Taxes, assessments and charges now or
hereafter levied or assessed upon, or with respect to, the Project, or any
personal property of Landlord used in the operation thereof or located therein,
or Landlord's interest in the Project or such personal property, by any federal,
state or local entity, including: (i) all real property taxes and general and
special assessments; (ii) charges, fees or assessments for transit, housing, day
care, open space, art, police, fire or other governmental services or benefits
to the Project, including assessments, taxes, fees, levies and charges imposed
by governmental agencies for such purposes as street, sidewalk, road, utility
construction and maintenance, refuse removal and for other governmental
services; (iii) service payments in lieu of taxes; (iv) any tax, fee or excise
on the use or occupancy of any part of the Project, or on rent for space in the
Project; (v) any other tax, fee or excise, however described, that may be levied
or assessed as a substitute for, or as an addition to, in whole or in part, any
other Real Property Taxes; and (vi) reasonable consultants, and attorneys' fees
and expenses incurred in connection with proceedings to contest, determine or
reduce Real
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Property Taxes. Real Property Taxes do not include: (A) franchise, transfer,
inheritance or capital stock taxes, or income taxes measured by the net income
of Landlord from all sources, unless any such taxes are levied or assessed
against Landlord as a substitute for, in whole or in part, any Real Property
Tax; (B) Impositions and all similar amounts payable by tenants of the Project
under their leases; and (C) penalties, fines, interest or charges due for late
payment of Real Property Taxes by Landlord. If any Real Property Taxes are
payable, or may at the option of the taxpayer be paid, in installments, such
Real Property Taxes shall, together with any interest that would otherwise be
payable with such installment, be deemed to have been paid in installments,
amortized over the maximum time period allowed by applicable law. If the tax
statement from a taxing authority does not allocate Real Property Taxes to the
Building, Landlord shall make the determination of the proper allocation of such
Real Property Taxes based, to the extent possible, upon records of the taxing
authority and, if not so available, then on an equitable basis.
X. Rent. Monthly Rent plus the Additional Rent as defined in
Paragraph 5.E.
Y. Rentable Area. The aggregate square footage in any one or
more buildings in the Project, as appropriate, as reasonably determined by
Landlord's architect from time to time in accordance with BOMA Standard (ANSI
Z65.1 1980) for full floor office occupancy.
AA. Security Deposit. That amount paid by Tenant pursuant to
Paragraph 7.
BB. Sublet. Any transfer, sublet, assignment, license or
concession agreement, change of ownership, mortgage, or hypothecation of this
Lease or the Tenant's interest in the Lease or in and to all or a portion of the
Premises. As used herein, a Sublet includes the following: (i) if Tenant is a
partnership or a limited liability company, a transfer, voluntary or
involuntary, of all or any part of any interest in such partnership or limited
liability company, or the dissolution of the partnership or limited liability
company, whether voluntary or involuntary; (ii) if Tenant is a corporation, any
dissolution, merger, consolidation or other reorganization of Tenant, or the
transfer, either by a single transaction or in a series of transactions, of a
controlling percentage of the stock of Tenant (except that a Sublet shall not
include any such transfer of a controlling percentage of the stock of Tenant
occurring at a time when the stock of Tenant is publicly traded on a nationally
recognized stock exchange or over the counter), or the sale, by a single
transaction of or series of transaction, within any one (1) year period, of
corporate assets equaling or exceeding twenty percent (20%) of the total value
of Tenant's assets (except in connection with an initial public offering of the
stock of Tenant on a nationally recognized stock exchange or over the counter);
(iii) if Tenant is a trust, the transfer, voluntarily or involuntarily, of all
or any part of the controlling interest in such trust; and (iv) if Tenant is any
other form of entity, a transfer, voluntary or involuntary, of all or any part
of any interest in such entity. As used herein, the phrases "controlling
percentage" and "controlling interest" means the ownership of, and/or the right
to vote, stock, partnership interests, membership interests, or other indicia of
ownership possessing at least fifty-one percent (51%) of either the total
combined interests in Tenant, or the voting power of all classes of Tenant's
capital stock, partnership interests, membership interests, or other indicia of
ownership, that have been issued, outstanding, and (if applicable) are entitled
to vote.
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CC. Subrent. Any consideration of any kind received, or to be
received, by Tenant from a subtenant if such sums are related to Tenant's
interest in this Lease or in the Premises, including without limitation bonus
money and payments (in excess of book value) for Tenant's assets, including
without limitation its trade fixtures, equipment and other personal property,
goodwill, general intangibles, and any capital stock or other equity ownership
of Tenant.
DD. Subtenant. The person or entity with whom a Sublet
agreement is proposed to be or is made.
EE. Tenant Delay. Any delay that Landlord may encounter in the
performance of Landlord's obligations under the Lease because of any act or
omission of any nature by Tenant or its agents or contractors, including without
limitation any (i) delay attributable to the postponement of any Improvements at
the request of Tenant; (ii) delay by Tenant in the submission of information or
the giving of authorizations or approvals within the time limits set forth in
the Lease or the Work Letter; (iii) delay attributable to the failure of Tenant
to pay, when due, any amounts required to be paid by Tenant pursuant to the
Lease or the Work Letter; and (iv) delay resulting from any change order request
initiated or requested by Tenant.
FF. Tenant Improvements. Those certain improvements to the
Premises to be constructed by Landlord pursuant to Exhibit B, other than the
Capital Improvements. The Tenant Improvements shall at all times be the property
of Landlord and shall not be deemed Tenant's Personal Property.
GG. Tenant's Percentage Share. The ratio (expressed as a
percentage) of the total Rentable Area of the Premises to the total Rentable
Area of all of the buildings at the Project owned by Landlord from time to time,
which as of the Commencement Date shall equal ________% (i.e., the Rentable Area
of the Premises divided by the Rentable Area of the buildings at the Project
owned by Landlord as of the date of this Lease). Tenant's Percentage Share shall
be recalculated each and every time that the amount of Rentable Area contained
in Premises is adjusted, or the Premises is expanded, buildings are added to or
removed from the Project, or there is a change in the total Rentable Area of
those buildings in the Project owned by Landlord, or Landlord sells, exchanges,
or otherwise transfers any or all of the buildings situated in the Project
(including without limitation the Building). The parties acknowledge and agree
that the total Rentable Area of all of the buildings in the Project owned by
Landlord may increase and/or decrease from time to time during the Term, since
Landlord may elect in its sole discretion to sell a building or buildings or to
make changes to the buildings it owns in the Project (so long as Landlord does
not unreasonably interfere with ingress to or egress from the Premises).
HH. Tenant's Personal Property. Tenant's trade fixtures,
furniture, equipment and other personal property in the Premises.
II. Term. The Term of this Lease set forth in Paragraph 4.A.,
as it may be extended hereunder pursuant to any options to extend granted
herein.
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JJ. Fixed Charge Ratio. Tenant's consolidated earnings before
income taxes, depreciation and amortization during the fiscal year in question,
divided by the sum of (i) all interest charges occurring during the fiscal year
in question, and (ii) all of Tenant's scheduled debt amortization payable during
the fiscal year in question.
4. Lease Term.
A. Term. Subject to adjustment for Tenant Delays pursuant to
Paragraph 4.B below, the Term shall commence on the date of substantial
completion of the Improvements to be constructed by Landlord (the "Commencement
Date"), and terminate on the date that is fifteen (15) years after the
"Commencement Date" under the 450 Broadway Lease. For the purposes of this
Lease, substantial completion shall mean that the Improvements have been
completed in accordance with the Final Plans approved by Landlord and Tenant,
subject only to minor punch-list items, and the City of Redwood City has issued
a final building inspection approval for such Improvements.
B. Delays in Completion. Tenant agrees that if Landlord, for
any reason whatsoever, is unable to substantially complete the Improvements on
or before Landlord's initial estimate of the Commencement Date, Landlord shall
not be liable to Tenant for any loss or damage therefrom, nor shall this Lease
be void or voidable. Upon the establishment of the actual Commencement Date,
Landlord and Tenant shall execute a Commencement Date Memorandum in the form set
forth in Exhibit D. Notwithstanding any provision of this Lease to the contrary,
if at any time after the date of this Lease a Tenant Delay occurs, then the
Commencement Date shall be moved earlier two (2) days for each one (1) day of
Tenant Delay that delays the substantial completion of the Improvements. In
addition, Tenant shall pay any and all costs and expenses incurred by Landlord
which result from any Tenant Delay, including, without limitation, any and all
costs and expenses attributable to increases in the cost of labor or materials.
C. Option to Extend.
(i) Grant of Option. Landlord hereby grants to
Tenant one (1) option (the "Option to Extend") to extend the Term of this Lease,
for an additional term of five (5) years. The option term (the "Extended Term")
shall commence upon the expiration of the initial Term. The Option to Extend is
expressly conditioned upon Tenant's not being in default under any term or
condition of this Lease after the expiration of any applicable cure period
granted by this Lease, either at the time the Option to Extend is exercised or
at the time the applicable Extended Term would commence. The Option to Extend
shall be personal to the Tenant originally named in this Lease, and shall not be
assigned, sold, conveyed or otherwise transferred to any other party (including
without limitation any assignee or sublessee of such Tenant) without the prior
written consent of Landlord, which consent may be withheld in Landlord's sole
discretion; provided, however, that the Option to Extend may be transferred to
the transferee pursuant to a Permitted Transfer without Landlord's consent. The
Option to Extend shall be exercisable only so long as the Lease remains in full
force and effect and shall be an interest appurtenant to and not separable from
Tenant's estate under the Lease. Under no circumstances shall Landlord be
required to pay any real estate commission to any party with respect to Tenant's
exercise of the Option to Extend.
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(ii) Manner of Exercise. Tenant may exercise the
Option to Extend the Lease only by giving Landlord written notice not less than
one (1) year prior to the expiration of the Term. If Tenant fails to exercise
the Option to Extend prior to such 1-year period, then the Option to Extend
automatically shall lapse and thereafter Tenant shall have no right to exercise
the Option to Extend.
(iii) Terms and Rent. The initial Monthly Rent for
the Premises for the Extended Term shall be equal to the greater of (w)
ninety-five percent (95%) of the fair market rent, as determined below, for the
Premises as of the commencement of the Extended Term, or (x) an amount equal to
the Monthly Rent payable during the fourteenth (14th) Lease Year of the initial
Term, multiplied by the greater of (A) the lesser of (I) a fraction, the
numerator of which is the Index published most recently before the first day of
the fourteenth (14th) Lease Year of the initial Term, and the denominator of
which is the Index published most recently before the first day of the
thirteenth (13th) Lease Year of the initial Term, or (II) one hundred sixteen
percent (116%), or (B) one hundred seven percent (107%). During the Extended
Term the Monthly Rent shall continue to be subject to adjustment in accordance
with the provisions of Paragraph 5.B below. All other terms and conditions of
the Lease, as amended from time to time by the parties in accordance with the
provisions of the Lease, shall remain in full force and effect and shall apply
during the Extended Term; provided, however, that neither the Option to Extend
nor Landlord's obligations under the Work Letter shall be of any force or effect
during the Extended Term.
(iv) Determination of Rent. For the purposes of
calculating the Monthly Rent for the Extended Term, the fair market rent shall
be equal to the net effective rent per rentable square foot being charged for
leases executed within the preceding twelve (12) months for comparable space (in
buildings with 2 - 4 stories) at either the Project (if any), or if there are
none, for comparable space (in buildings with 2 - 4 stories) in office and
research and development complexes located in the Redwood Shores area or the
Menlo Oaks Business Park (located in Menlo Park, California), with terms
comparable to the terms contained in this Lease, taking into consideration
relevant factors such as the presence or absence of tenant improvement
contributions by the lessor, and the fact that the Monthly Rent during the
Extended Term shall be subject to adjustment under Paragraph 5.B. Any value
added to the Premises by the Tenant Improvements and any Alterations paid for by
Tenant shall not be considered or included in the determination of the fair
market rent. The fair market rent shall be determined by mutual agreement of the
parties or, if the parties are unable to agree within thirty (30) days after
Tenant's exercise of an Option, then fair market rent shall be determined
pursuant to the procedure set forth in Paragraphs 4.C.(v) and 4.C.(vi).
(v) Landlord's Initial Determination. If the parties
are unable mutually to agree upon the fair market rent pursuant to Paragraph
4.C.(iv), then the fair market rent initially shall be determined by Landlord by
written notice ("Landlord's Notice") given to Tenant promptly following the
expiration of the 30-day period set forth in Paragraph 4.C.(iv). If Tenant
disputes the amount of fair market rent set forth in Landlord's Notice, then,
within thirty (30) days after the date of Landlord's Notice, Tenant shall send
Landlord a written notice ("Tenant's Notice") which specifically (a) disputes
the fair market rent set forth in Landlord's Notice, (b) demands arbitration
pursuant to Paragraph 4.C.(vi), and (c) states the name and address of the
person who shall act as arbitrator on Tenant's behalf. Tenant's Notice shall be
deemed defective,
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and not given to Landlord, if it fails strictly to comply with the Requirements
and time period set forth above. If Tenant does not send Tenant's Notice within
thirty (30) days after the date of Landlord's Notice, or if Tenant's Notice
fails to contain all of the required information, then the Monthly Rent for the
Extended Term shall equal ninety-five percent (95%) of the fair market rent
specified in Landlord's Notice. If Tenant sends Tenant's Notice in the proper
form within thirty (30) days after the date of Landlord's Notice, then the
Monthly Rent for the Extended Term shall be determined by arbitration pursuant
to Paragraph 4.C(vi) below. If the arbitration is not concluded prior to the
commencement of the Extended Term, then Tenant shall pay Monthly Rent equal to
one hundred twenty-five percent (125%) of the Monthly Rent payable immediately
prior to the commencement of the Extended Term. If the fair market rent
determined by arbitration differs from that paid by Tenant pending the results
of arbitration, then any adjustment required to adjust the amount previously
paid shall be made by payment by the appropriate party within ten (10) days
after the determination of fair market rent.
(vi) Arbitration. The arbitration shall be conducted
in the City of San Francisco in accordance with the then prevailing rules of the
American Arbitration Association (or its successor) for the arbitration of
commercial disputes, except that the procedures mandated by such rules shall be
modified as follows:
(a) Each arbitrator must be a real estate
appraiser with at least five (5) years of full-time commercial appraisal
experience who is familiar with the fair market rent of office and research and
development complexes located in the vicinity of the Premises. Within ten (10)
business days after receipt of Tenant's Notice, Landlord shall notify Tenant of
the name and address of the person designated by Landlord to act as arbitrator
on Landlord's behalf.
(b) The two arbitrators chosen pursuant to
Paragraph 4.C.(vi)(a) shall meet within ten (10) business days after the second
arbitrator is appointed and shall either agree upon the fair market rent or
appoint a third arbitrator possessing the qualifications set forth in Paragraph
4.C.(vi)(a). If the two arbitrators agree upon the fair market rent within such
ten (10) business day period, the Monthly Rent for the Extended Term shall equal
ninety-five percent (95%) of such fair market rent. If the two arbitrators are
unable to agree upon the fair market rent and are unable to agree upon the third
arbitrator within five (5) business days after the expiration of such ten (10)
business day period, the third arbitrator shall be selected by the parties
themselves. If the parties do not agree on the third arbitrator within five (5)
business days after the expiration of such five (5) business day period, then
either party, on behalf of both, may request appointment of the third arbitrator
by the Association of South say Brokers. The three arbitrators shall decide the
dispute, if it has not been previously resolved, by following the procedures set
forth in Paragraph 4.C.(vi)(c). Each party shall pay the fees and expenses of
its respective arbitrator and both shall share the fees and expenses of the
third arbitrator. Each party shall pay its own attorneys' fees and costs of
witnesses.
(c) The three arbitrators shall determine
the fair market rent in accordance with the following procedures. Each of
Landlord's arbitrator and Tenant's arbitrator shall state, in writing, his or
her determination of the fair market rent, supported by the reasons therefor,
and shall make counterpart copies for the other arbitrators. All of the
arbitrators shall arrange for a simultaneous exchange of the proposed
resolutions within ten (10) business days
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after appointment of the third arbitrator. If any arbitrator fails to deliver
his or her own determination to the other arbitrators within such ten (10)
business day period, then the fair market rent shall equal the average of the
resolutions submitted by the other arbitrators. If all three (3) arbitrators
deliver their determinations to the other arbitrators within such ten (10)
business day period, then the two (2) closest determinations of the arbitrators
shall be averaged, and the resulting quotient shall be the fair market rent, and
the Monthly Rent for the Extended Term shall equal ninety-five percent (95%) of
such fair market rent; provided, however, that if the determination of one (1)
of the arbitrators (the "Average Determination") is equal to the average of the
determinations of the other two (2) arbitrators, then the Average Determination
shall be the fair market rent. However, the arbitrators shall not attempt to
reach a mutual agreement of the fair market rent; each arbitrator shall
independently arrive at his or her proposed resolution.
(d) The arbitrators shall have the right
to consult experts and competent authorities for factual information or evidence
pertaining to a determination of fair market rent, but any such consultation
shall be made in the presence of both parties with full right on their part to
cross-examine. The arbitrators shall render the decision and award in writing
with counterpart copies to each party. The arbitrators shall have no power to
modify the provisions of this Lease. In the event of a failure, refusal or
inability of any arbitrator to act, his or her successor shall be appointed by
him or her, but in the case of the third arbitrator, his or her successor shall
be appointed in the same manner as that set forth herein with respect to the
appointment of the original third arbitrator.
5. Rent and Additional Charges.
A. Monthly Rent. Tenant shall pay to Landlord, in lawful money
of the United States, Monthly Rent as follows: commencing on the Commencement
Date, and continuing through the balance of the Term (subject to adjustment
pursuant to Paragraph 5.B), the initial Monthly Rent shall equal that amount
calculated pursuant to the Build to Suit Agreement as the Monthly Rent for the
Building. Tenant shall have no obligation to pay Monthly Rent before the
Commencement Date. Until the Monthly Rent is established under the Build to Suit
Agreement, the Monthly Rent shall be deemed to equal that amount designated from
time to time in writing by Landlord to Tenant as Landlord's reasonable estimate
of the amount of Monthly Rent that will be established under the Build to Suit
Agreement upon completion of the construction of the Building (collectively, the
"Estimated Monthly Rent"), based upon Landlord's estimate of the Development
Costs (as defined in the Build to Suit Agreement) that have been or will be
incurred in constructing the Building. Upon the final establishment of the
initial Monthly Rent in accordance with the Build to Suit Agreement, Landlord
and Tenant shall each execute an addendum to this Lease setting forth the
initial Monthly Rent under this Lease. If as of the date the initial Monthly
Rent under this Lease is established (the "Rent Establishment Date"), the
aggregate amount of Estimated Monthly Rent previously paid by Tenant exceeds the
aggregate amount of Monthly Rent payable under this Lease from the Commencement
Date to the Rent Establishment Date, then Landlord may elect, in its sole
discretion, to either refund such excess to Tenant within thirty (30) days after
the Rent Establishment Date, or offset such overpayment against Rent due or
remaining due under this Lease. If as of the Rent Establishment Date the
aggregate amount of Estimated Monthly Rent previously paid by Tenant is less
than the
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aggregate amount of Monthly Rent payable under this Lease from the Commencement
Date to the Rent Establishment Date, then Tenant shall pay the deficiency to
Landlord within thirty (30) days after the Rent Establishment Date.
Monthly Rent shall be paid in advance, on the first day of
each calendar month during the Term, without abatement, deduction, claim,
offset, prior notice or demand. Tenant shall pay to Landlord an amount equal to
one (1) month's advance payment of Monthly Rent for the Premises upon the
execution of this Lease by Landlord and Tenant. Additionally, Tenant shall pay,
as and with the Monthly Rent, the management fee described in Paragraph 5.C.,
Tenant's Percentage Share of Common Area Maintenance Costs pursuant to Paragraph
5.D, the Real Property Taxes and Impositions payable by Tenant pursuant to
Paragraph 15, and the monthly cost of insurance premiums required pursuant to
Paragraph 21.C.
B. Adjustments to Monthly Rent. The Monthly Rent may be
adjusted at any time during the Term in accordance with the provisions of
Paragraph 2.1.1 of Exhibit D to the Build to Suit Agreement. In addition, the
Monthly Rent shall be increased, but not decreased, as of the first day of the
month which is twenty-five (25) months from the Commencement Date and every
twenty-four (24) months thereafter during the Term (including without limitation
the Extended Term) (each, an "Adjustment Date") by the greater of (i) the
percentage increase in the Index from the previous Adjustment Date (or, for the
first Adjustment Date, from the Commencement Date), up to a maximum of sixteen
percent (16%), or (ii) seven percent (7%). If, however, the last Adjustment Date
occurs at any time after the first day of a calendar month, the first Adjustment
Date shall be the first day of the immediately following calendar month. On each
Adjustment Date, the total aggregate amount of Monthly Rent then in effect shall
be multiplied by the greater of (x) the lesser of (A) a fraction, the numerator
of which is the Index published most recently before the applicable Adjustment
Date, and the denominator of which is the Index published most recently before
the prior Adjustment Date (or, in the case of the first Adjustment Date, the
Index published most recently before the Commencement Date), or (B) one hundred
sixteen percent (116%), or (y) one hundred seven percent (107%); and the
corresponding product shall be the Monthly Rent in effect until the next
Adjustment Date. In no event shall the Monthly Rent in effect after an
Adjustment Date be less than one hundred seven percent (107%) of the Monthly
Rent in effect immediately prior to such Adjustment Date. If no Index is
published for either of the months set forth above, the Index for the next
preceding month shall be used.
C. Management Fee. Tenant shall pay to Landlord monthly, as
Additional Rent, a management fee equal to three and one-half percent (3.5%) of
the then Monthly Rent.
D. Common Area Maintenance Costs.
(i) Estimated Payments. Commencing on the
Commencement Date and continuing throughout the entire Term, Tenant shall pay
Tenant's Percentage Share of all Common Area Maintenance Costs paid or payable
by Landlord in each year; provided, however, that Tenant shall pay one hundred
percent (100%) of those Common Area Maintenance Costs arising from Landlord's
performance of its obligations under Paragraphs 17.A and Tenant's obligations
under Paragraph 17.D. Before commencement of the Term and during December of
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each calendar year or as soon thereafter as practicable, Landlord shall give
Tenant notice of its estimate of amounts payable under this Paragraph 5.D.(i)
for the ensuing calendar year. Such notice shall show in reasonable detail the
basis on which the estimate was determined. On or before the first day of each
month during the ensuing calendar year, Tenant shall pay to Landlord one-twelfth
(1/12th) of such estimated amounts, provided that if such notice is not given in
December, Tenant shall continue to pay on the basis of the prior year's estimate
until the month after such notice is given. If at any time or times it appears
to Landlord, in its reasonable judgment, that the amounts payable under this
Paragraph 5.D.(i) for the current calendar year will vary from its then-current
estimate by more than five percent (5%), Landlord may, in its sole discretion,
by notice to Tenant, showing in reasonable detail the basis for such variance,
revise its estimate for such year, in which case subsequent payments by Tenant
for such year shall be based upon such revised estimate. Landlord's election not
to give the notice described in the foregoing sentence shall not affect
Landlord's ability to charge Tenant for, nor Tenant's liability to pay for, any
shortfall in the estimated payments for such calendar year previously made by
Tenant, as set forth in Paragraph 5.D.(ii).
(ii) Adjustment. Within one hundred twenty (120)
days after the close of each calendar year or as soon after such 120-day period
as reasonably practicable, Landlord shall deliver to Tenant a reasonably
detailed statement of Common Area Maintenance Costs for such calendar year,
certified by Landlord or its property manager, subject to Tenant's right to
audit as hereinafter provided. At that time, Landlord shall also deliver to
Tenant a statement, certified as correct by Landlord, of the adjustments to be
made pursuant to Paragraph 5.D.(i) above. If Landlord's statement shows that
Tenant owes an amount that is less than the estimated payments for such calendar
year previously made by Tenant, Landlord may elect, in its sole discretion, to
either refund such excess to Tenant within thirty (30) days after delivery of
the statement, or offset such overpayment against Rent due or remaining due
under this Lease; provided that if no Rent remains due, Landlord shall refund
such excess to Tenant within thirty (30) days after delivery of the statement.
If such statement shows that Tenant owes an amount that is more than the
estimated payments for such calendar year previously made by Tenant, Tenant
shall pay the deficiency to Landlord within thirty (30) days after delivery of
the statement.
(iii) Last Year. If this Lease shall terminate on a
day other than the last day of a calendar year, the adjustment in Rent
applicable to the calendar year in which such termination shall occur shall be
prorated on the basis which the number of days from the commencement of such
calendar year to and including such termination date bears to three hundred
sixty (360). The termination of this Lease shall not affect the obligations of
Landlord and Tenant pursuant to Paragraph 5.D.(ii) to be performed after such
termination.
(iv) Audit. Within one hundred eighty (180) days
after receipt of Landlord's statement of Common Area Maintenance Costs as
provided in Paragraph 5.D.(ii), Tenant or its designee, on not less than five
(5) days' prior written notice to Landlord, shall have the right to, at Tenant's
sole cost and expense, audit, examine and copy Landlord's books and records with
respect to the Common Area Maintenance Costs for the calendar year pertaining to
the year for which the Landlord's statement pertains. Landlord shall cooperate
with Tenant in any such examination of its books and records.
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E. Additional Rent. All monies required to be paid by Tenant
under this Lease, including, without limitation, the Tenant Improvement costs
pursuant to Exhibit B, the management fee described in Paragraph 5.D, Tenant's
Percentage Share of Common Area Maintenance Costs pursuant to Paragraph 5.D,
Real Property Taxes and Impositions pursuant to Paragraph 15, and the monthly
cost of insurance premiums required pursuant to Paragraph 21.C, shall be deemed
Additional Rent.
F. Prorations. If the Commencement Date or the Second Half
Commencement Date is not the first (1st) day of a month, or if the termination
date of this Lease is not the last day of a month, a prorated installment of
Monthly Rent based on a 30-day month shall be paid for the fractional month
during which such date occurs or the Lease terminates.
G. Interest. Any amount of Rent or other charges provided for
under this Lease due and payable to Landlord which is not paid when due shall
bear interest at the Interest Rate from the date that is (i) five (5) days after
the date such Rent is due until such Rent is paid, or (ii) ten (10) days after
Tenant receives written notice from Landlord that any other charge provided for
under this Lease (other than Rent) is due and payable, until such other charge
is paid.
6. Late Payment Charges.
Tenant acknowledges that late payment by Tenant to Landlord of
Rent and other charges provided for under this Lease will cause Landlord to
incur costs not contemplated by this Lease, the exact amount of such costs being
extremely difficult or impracticable to fix. Therefore, if any installment of
Rent or any other charge due from Tenant (excluding late release of the
Set-Aside Funds pursuant to the Work Letter) is not received by Landlord within
three (3) days after the date such Rent or other charge is due, Tenant shall pay
to Landlord an additional sum equal to seven percent (7%) of the amount overdue
as a late charge for every month or portion thereof that the Rent or other
charges remain unpaid. The parties agree that this late charge represents a fair
and reasonable estimate of the costs that Landlord will incur by reason of the
late payment by Tenant.
Initials:
/s/ /s/
---------------------------------- ------------------------------------
Landlord Tenant
7. Security Deposit.
A. Deposit Required. Tenant shall deposit with Landlord upon
the execution of this Lease by Landlord and Tenant, an amount equal to three (3)
payments of the Estimated Monthly Rent under this Lease, as the "Security
Deposit" for the full and faithful performance of every provision of this Lease
to be performed by Tenant. Effective as of the Rent Establishment Date, the
Security Deposit shall be adjusted (if necessary) to equal three (3) payments of
the initial Monthly Rent under this Lease. If as of the Rent Establishment Date
the Estimated
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Monthly Rent exceeds the initial Monthly Rent as determined under Paragraph 5.A
above, then Landlord shall refund to Tenant, within thirty (30) days after the
Rent Establishment Date, any overpayment of the Security Deposit. If as of the
Rent Establishment Date the Estimated Monthly Rent is less than the initial
Monthly Rent as determined under Paragraph 5.A above, then Tenant shall increase
the Security Deposit by paying the deficiency in the Security Deposit to
Landlord within thirty (30) days after the Rent Establishment Date. For the
purposes of this Lease, the term "Security Deposit" shall include the initial
sum deposited by Tenant as the Security Deposit and any other sum deposited by
Tenant as the Security Deposit and any other sum deposited by Tenant towards the
Security Deposit pursuant to this Paragraph 7.A. At Tenant's option, the
Security Deposit may be in the form of an irrevocable standby letter of credit
("L-C"). Landlord shall not be required to segregate the Security Deposit from
Landlord's general funds; Landlord's obligations with respect to the Security
Deposit shall be those of a debtor and not a trustee, and Tenant shall not be
entitled to any interest on the Security Deposit. Invocation by Landlord of its
rights hereunder shall not constitute a waiver of nor relieve Tenant from any
liability or obligation for any default by Tenant under this Lease.
(i) Reduction or Replacement. So long as Tenant has
not committed any default under this Lease, then if Tenant can demonstrate to
the reasonable satisfaction of Landlord that Tenant has maintained a Fixed
Charge Ratio of at least 1.25 to 1 for a period of four (4) consecutive fiscal
years at any time after the Commencement Date, then Tenant may elect to reduce
the Security Deposit to a sum equal to the then-current amount of Monthly Rent.
For the purposes of this Paragraph 7, in order for Tenant to demonstrate that it
has maintained the required Fixed Charge Ratio for the fiscal year or years in
question, Tenant must at a minimum deliver to Landlord an audited financial
statement of Tenant, showing that Tenant has maintained the required Fixed
Charge Ratio for the fiscal year or years in question.
If Tenant is entitled to and does elect to reduce the amount
of the Security Deposit pursuant to this Paragraph 7.A.(i), and Tenant delivers
to Landlord written notice of its election to so reduce the amount of the
Security Deposit and the financial statement described in the foregoing
grammatical paragraph, then either (x) if the Security Deposit is in the form of
cash, Landlord shall pay to Tenant the excess amount of the Security Deposit,
without interest, within thirty (30) days after Landlord's receipt of such
notice and statement; or (y) if the Security Deposit is in the form of an L-C,
then Tenant may, not less than ten (10) days after Landlord's receipt of such
notice and statement, replace the L-C with an L-C in an amount equal to the
reduced amount of the Security Deposit.
(ii) Consequences of Default. If Tenant defaults
with respect to any provision of this Lease, after the expiration of any
applicable cure or grace periods expressly provided for in this Lease, Landlord
may apply all or any part of the Security Deposit for the payment of any Rent or
other sum in default, the repair of such damage to the Premises or the payment
of any other amount which Landlord may spend or become obligated to spend by
reason of Tenant's default or to compensate Landlord for any other loss or
damage which Landlord may suffer by reason of Tenant's default to the full
extent permitted by law. If any portion of a cash Security Deposit is so
applied, or any portion of an L-C posted as the Security Deposit, if applicable,
is drawn upon, by Landlord for such purposes, Tenant shall either, within ten
(10) days after written demand therefor, deposit cash with Landlord in an amount
sufficient to restore
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the Security Deposit to its original amount or deposit a replacement L-C with
Landlord in the amount of the original L-C. If Tenant is not otherwise in
default, the Security Deposit or any balance thereof shall be returned to Tenant
within thirty (30) days of termination of the Lease.
(ii) Form of L-C. If at any time Tenant elects to
deposit an L-C as the Security Deposit, the L-C shall be issued by a bank
reasonably acceptable to Landlord, shall be issued for a term of at least twelve
(12) months and shall be in a form and with such content reasonably acceptable
to Landlord. Tenant shall either replace the expiring L-C with an L-C in an
amount equal to the original L-C or renew the expiring L-C, in any event no
later than thirty (30) days prior to the expiration of the term of the L-C then
in effect. If Tenant fails to deposit a replacement L-C or renew the expiring
L-C, Landlord shall have the right to draw upon the expiring L-C for the full
amount thereof and hold the same as the Security Deposit; provided, however,
that if Tenant provides a replacement L-C that meets the requirements of this
Paragraph, then Landlord shall return to Tenant promptly in cash that amount of
the L-C that had been drawn upon by Landlord. Drawing upon the L-C shall be
conditioned upon the presentation to the issuer of the L-C of a certified
statement executed by a general partner of Landlord that (i) Tenant is in
default under the Lease and Landlord is exercising its right to draw upon so
much of the L-C as is necessary to cure Tenant's default, or (ii) Tenant has not
renewed or replaced an expiring L-C as required by this Lease and Landlord is
authorized to draw upon the L-C prior to its expiration. The L-C shall not be
mortgaged, assigned or encumbered in any manner whatsoever by Tenant without the
prior written consent of Landlord. The use, application or retention of the L-C,
or any portion thereof, by Landlord shall not prevent Landlord from exercising
any other right or remedy provided by this Lease or by law, it being intended
that Landlord shall not first be required to proceed against the L-C, and such
use, application or retention shall not operate as a limitation on any recovery
to which Landlord may otherwise be entitled.
8. Holding Over.
If Tenant remains in possession of all or any part of the
Premises after the expiration of the Term, with the express or implied consent
of Landlord, such tenancy shall be at sufferance only, and shall not constitute
a renewal or extension for any further term. If Tenant remains in possession
after the expiration of the Term, either with or without Landlord's consent,
Rent shall be payable at a rental equal to one hundred thirty percent (130%) of
the Monthly Rent payable during the last month of the Term (which rental shall
be due and payable at the same time as Monthly Rent is due under this Lease),
and any other sums due under this Lease shall be payable in the amount and at
the times specified in this Lease. Such holdover tenancy shall be subject to
every other term, condition, and covenant contained herein; provided, however,
that neither the Holdover Option (as defined below) nor Landlord's obligations
under the Work Letter shall be of any force or effect during any such holdover
tenancy.
9. Tenant Improvements.
Landlord agrees to construct the Tenant Improvements pursuant
to the terms of Exhibit B.
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10. Condition of Premises.
A. Capital Improvements. Landlord shall complete the Capital
Improvements in accordance with the terms of Exhibit B; provided, however, that
the construction of the shell and core of the Building shall be governed by the
terms of the Build to Suit Agreement. Except for its obligation to perform the
Capital Improvements and the Tenant Improvements as set forth in this Lease and
the Work Letter, Landlord shall have no obligation whatsoever to do any work or
perform any improvements whatsoever to any portion of the Premises or the
Building.
B. Acceptance of Premises. Within ten (10) days after
completion of the Tenant Improvements Tenant shall conduct a walk-through
inspection of the Premises with Landlord and complete a punch list of items
needing additional work. Other than the items specified in the punch list, if
any, and subject to Landlord's representations and warranties described below,
by taking possession of the Premises, Tenant shall be deemed to have accepted
the Premises in good, clean and completed condition and repair, subject to all
applicable laws, codes and ordinances. Any damage to the Premises caused by
Tenant's move-in shall be repaired or corrected by Tenant, at its sole cost and
expense, which repair or corrective work shall not be paid for out of the Tenant
Improvements Allowance. Tenant acknowledges that neither Landlord nor Landlord's
Agents have made any representations or warranties as to the suitability or
fitness of the Premises for the conduct of Tenant's business or for any other
purpose, nor has Landlord or Landlord's Agents agreed to undertake any
Alterations or construct any Improvements to the Premises except as expressly
provided in this Lease. If Tenant fails to submit a punch-list to Landlord
within such 10-day period, it shall be deemed that there are no Improvement
items needing additional work or repair. Landlord's contractor shall complete
all reasonable punch-list items within thirty (30) days after the walk-through
inspection or as soon as practicable thereafter. Upon completion of such
punch-list items, Tenant shall approve such completed items in writing to
Landlord. If Tenant fails to approve such items within fourteen (14) days of
completion, such items shall be deemed approved by Tenant.
11. Use of the Premises and Common Area.
A. Tenant's Use. Tenant shall use the Premises only for
general office, research and development, marketing, sales, and storage related
to such activities, and any other legal use consistent with any CC&Rs. Tenant
shall not use the Premises or suffer or permit anything to be done in or about
the Premises which will in any way conflict with any law, statute, zoning
restriction, ordinance or governmental law, rule, regulation or requirement of
public authorities now in force or which may hereafter be in force, relating to
or affecting the condition, use or occupancy of the Premises. Tenant shall not
commit any public or private nuisance or any other act or thing which might or
would disturb the quiet enjoyment of any other tenant of Landlord or any
occupant of nearby property. Tenant shall place no loads upon the floors, walls
or ceilings in excess of the maximum designed load determined by a licensed
structural engineer or which endanger the structure; nor place any harmful
liquids in the drainage systems; nor dump or store waste materials or refuse or
allow waste materials or refuse to remain outside the Building proper, except in
the enclosed trash areas provided. Tenant shall not store or permit to be stored
or otherwise placed any other material of any nature whatsoever outside the
Building, except on a temporary basis.
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B. Hazardous Materials.
(i) Hazardous Materials Defined. As used herein, the
term "Hazardous Materials" shall mean any wastes, materials or substances
(whether in the form of liquids, solids or gases, and whether or not air-borne),
which are or are deemed to be (a) pollutants or contaminants, or which are or
are deemed to be hazardous, toxic, ignitable, reactive, corrosive, dangerous,
harmful or injurious, or which present a risk to public health or to the
environment, or which are or may become regulated by or under the authority of
any applicable local, state or federal laws, judgments, ordinances, orders,
rules, regulations, codes or other governmental restrictions, guidelines or
requirements, any amendments or successor(s) thereto, replacements thereof or
publications promulgated pursuant thereto, including, without limitation, any
such items or substances which are or may become regulated by any of the
Environmental Laws (as hereinafter defined); (b) listed as a chemical known to
the State of California to cause cancer or reproductive toxicity pursuant to
Section 25249.8 of the California Health and Safety Code, Division 20, Chapter
6.6 (Safe Drinking Water and Toxic Enforcement Act of 1986); or (c) a pesticide,
petroleum, including crude oil or any fraction thereof, asbestos or any
asbestos- containing material, a polychlorinated biphenyl, radioactive material,
or urea formaldehyde.
(ii) Environmental Laws Defined. In addition to the
laws referred to in Paragraph 11.B.(i) above, the term "Environmental Laws"
shall be deemed to include, without limitation, 33 U.S.C. Section 1251 et seq.,
42 U.S.C. Section 6901 et seq., 42 U.S.C. Section 7401 et seq., 42 U.S.C.
Section 9601 et seq., and California Health and Safety Code Section 25100 et
seq., and 25300 et seq., California Water Code, Section 13020 et seq., or any
successor(s) thereto, all local, state and federal laws, judgments, ordinances,
orders, rules, regulations, codes and other governmental restrictions,
guidelines and requirements, any amendments and successors thereto, replacements
thereof and publications promulgated pursuant thereto, which deal with or
otherwise in any manner relate to, air or water quality, air emissions, soil or
ground conditions or other environmental matters of any kind.
(iii) Use of Hazardous Materials. Tenant agrees that
during the Term of this Lease, Tenant shall not use, or permit the use of, nor
store, generate, treat, manufacture or dispose of Hazardous Materials on, from
or under the Premises (individually and collectively, "Hazardous Use") except to
the extent that, and in accordance with such conditions as, Landlord may have
previously approved in writing in its sole and absolute discretion.
Notwithstanding the foregoing, Tenant shall be entitled to use and store only
those Hazardous Materials which are (a) set forth in a list prepared by Tenant
and approved in writing by Landlord, which shall be deemed given with respect to
the Approved Hazardous Materials (hereinafter defined), (b) necessary for
Tenant's business, but then only in the amounts and for the purposes previously
disclosed in writing to and approved in writing by Landlord, and (c) in full
compliance with Environmental Laws, and all judicial and administrative
decisions pertaining thereto. All Hazardous Materials approved in writing by
Landlord as provided in the preceding sentence shall collectively be referred to
as the "Approved Hazardous Materials". Within thirty (30) days after request by
Landlord, Tenant shall deliver to Landlord a list of the Approved Hazardous
Materials. Tenant shall not be entitled 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. For the purposes of this Paragraph 11.B.(iii), the
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term Hazardous Use shall include Hazardous Use(s) on, from or under the Premises
by Tenant, any Subtenant occupying all or any portion of the Premises during the
Term, or any of their directors, officers, employees, shareholders, partners,
invitees, agents, contractors or occupants (collectively, "Tenants Parties"),
whether known or unknown to Tenant, occurring during the Term of this Lease. The
term "Tenant's Parties" shall not include any tenants of the Project other than
Tenant, except that the term "Tenant's Parties" shall include any Subtenant
occupying all or any portion of the Premises during the Term.
(iv) Hazardous Materials Report; When Required.
Tenant shall submit to Landlord a written report with respect to Hazardous
Materials ("Report") in the form prescribed in Paragraph 11.B.(v) below on the
following dates:
(a) At any time within ten (10) days after
written request by Landlord, and
(b) At any time when there has been a
violation of any Environmental Law, or in connection with any proposed request
for Landlord's consent to any change in the list of Approved Hazardous Materials
or for an increase in the intensity of usage or storage of such Approved
Hazardous Materials.
(v) Hazardous Materials Report; Contents. The Report
shall contain, without limitation, the following information:
(a) Whether on the date of the Report and
(if applicable) during the period since the last Report there has been any
Hazardous Use on, from or under the Premises, other than the use of Approved
Hazardous Materials.
(b) If there was such Hazardous Use, the
exact identity of the Hazardous Materials (other than the Approved Hazardous
Materials), the dates upon which such materials were brought upon the Premises,
the dates upon which such Hazardous Materials were removed therefrom, and the
quantity, location, use and purpose thereof.
(c) If there was such Hazardous Use, any
governmental permits maintained by Tenant with respect to such Hazardous
Materials, the issuing agency, original date of issue, renewal dates (if any)
and expiration date. Copies of any such permits and applications therefor shall
be attached.
(d) If there was such Hazardous Use, any
governmental reporting or inspection requirements with respect to such Hazardous
Materials, the governmental agency to which reports are made and/or which
conducts inspections, and the dates of all such reports and/or inspections (if
applicable) since the last Report. Copies of any such Reports shall be attached.
(e) If there was such Hazardous Use,
identification of any operation or business plan prepared for any government
agency with respect to Hazardous Use.
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(f) Any liability insurance carried by
Tenant with respect to Hazardous Materials, if any, the insurer, policy number,
date of issue, coverage amounts, and date of expiration. Copies of any such
policies or certificates of coverage shall be attached.
(g) Any notices of violation of
Environmental Laws, written or oral, received by Tenant from any governmental
agency since the last Report, the date, name of agency, and description of
violation. Copies of any such written notices shall be attached.
(h) Any knowledge, information or
communication which Tenant has acquired or received relating to (x) any
enforcement, cleanup, removal or other governmental or regulatory action
threatened or commenced against Tenant or with respect to the Premises pursuant
to any Environmental Laws; (y) any claim made or threatened by any person or
entity against Tenant or the Premises on account of any alleged loss or injury
claimed to result from any alleged Hazardous Use on or about the Premises; or
(z) any report, notice or complaint made to or filed with any governmental
agency concerning any Hazardous Use on or about the Premises. The Report shall
be accompanied by copies of any such claim, report, complaint, notice, warning
or other communication that is in the possession of or is available to Tenant.
(i) Such other pertinent information or
documents as are reasonably requested by Landlord in writing.
(vi) Release of Hazardous Materials; Notification
and Cleanup.
(a) At any time during the Term, if Tenant
knows or believes that any release of any Hazardous Materials has come or will
come to be located upon, about or beneath the Premises, then Tenant shall
immediately, either prior to the release or following the discovery thereof by
Tenant, give verbal and follow-up written notice of that condition to Landlord.
(b) At its sole cost and expense, Tenant
covenants to investigate, clean up and otherwise remediate any release of
Hazardous Materials which were caused or created by Tenant or any of Tenant's
Parties. Such investigation, clean-up and remediation shall be performed only
after Tenant has obtained, if practicable, Landlord's written consent, which
shall not be unreasonably withheld; provided, however, that Tenant shall be
entitled to respond immediately to an emergency without first obtaining
Landlord's written consent. All clean-up and remediation shall be done in
compliance with Environmental Laws and to the reasonable satisfaction of
Landlord.
(c) Notwithstanding the foregoing,
Landlord shall have the right, but not the obligation, in Landlord's sole and
absolute discretion, exercisable by written notice to Tenant, to undertake
within or outside the Premises all or any portion of any reasonable
investigation, clean-up or remediation with respect to any Hazardous Use of such
Hazardous Materials by Tenant or any of Tenant's Parties (or, once having
undertaken any of such work, to cease same, in which case Tenant shall perform
the work), all at Tenant's sole cost and expense, which shall be paid by Tenant
as Additional Rent within ten (10) days after receipt of written request
therefor by Landlord (and which Landlord may require to be paid prior to
commencement
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of any work by Landlord); provided, however, that Tenant's obligation to pay for
such work shall only be applicable if Tenant fails to perform its obligations
under this Paragraph 11 (including without limitation the obligations described
in Paragraph 11.B.(vi)(b)). No such work by Landlord shall create any liability
on the part of Landlord to Tenant or any other party in connection with such
Hazardous Materials by Tenant or any of Tenant's Parties or constitute an
admission by Landlord of any responsibility with respect to such Hazardous
Materials.
(d) It is the express intention of the
parties hereto that Tenant shall be liable under this Paragraph 11.B.(vi) for
any and all conditions covered hereby which were or are caused or created by
Tenant or any of Tenant's Parties, whether occurring prior to, on, or after the
Commencement Date. Tenant shall not enter into any settlement agreement, consent
decree or other compromise with respect to any claims relating to any Hazardous
Materials in any way connected to the Premises without first (x) notifying
Landlord of Tenant's intention to do so and affording Landlord the opportunity
to participate in any such proceedings, and (y) obtaining Landlord's written
consent, which shall not be unreasonably withheld.
(vii) Inspection and Testing by Landlord. Landlord
shall have the right at all times during the Term of this Lease to (a) inspect
the Premises, as well as such of Tenant's books and records pertaining to the
Premises and the conduct of Tenant's business therein, and to (b) conduct tests
and investigations to determine whether Tenant is in compliance with the
provisions of this Paragraph 11.B. Except in case of emergency, Landlord shall
give reasonable notice to Tenant before conducting any inspections, tests, or
investigations in accordance with Paragraph 19, shall provide Tenant with a work
plan describing any testing that shall be performed at the Premises, and shall
use reasonable efforts to minimize interference with the conduct of Tenant's
business at the Premises caused by any such inspections, tests, or
investigations. The cost of all such inspections, tests and investigations shall
be borne by Tenant. Neither any action nor inaction on the part of Landlord
pursuant to this Paragraph 11.B.(vii) shall be deemed in any way to release
Tenant from, or in any way modify or alter, Tenant's responsibilities,
obligations, and liabilities incurred pursuant to Paragraph 11.B hereof.
(viii) Indemnity. Tenant shall indemnify, defend,
protect, hold harmless, and, at Landlord's option (with such attorneys as
Landlord may approve in advance and in writing), defend Landlord, Landlord's
Agents, and Landlord's officers, directors, shareholders, partners, employees,
contractors, property managers, agents and mortgagees and other lien holders,
from and against any and all Losses (as defined below), whenever such Losses
arise, arising from or related to: (a) any violation or alleged violation by
Tenant or any of Tenant's Parties of any of the requirements, ordinances,
statutes, regulations or other laws referred to in this Paragraph 11.b,
including, without limitation, the Environmental Laws, whether such violation or
alleged violation occurred prior to, on, or after the Commencement Date; (b) any
breach of the provisions of this Paragraph 11.b by Tenant or any of Tenant's
Parties; or (c) any Hazardous Use on, about or from the Premises by Tenant or
any of Tenant's Parties of any Hazardous Materials (whether or not approved by
Landlord under this Lease), whether such Hazardous Use occurred prior to, on, or
after the Commencement Date. The term "Losses" shall mean all claims, demands,
expenses, actions, judgments, damages (whether consequential, direct or
indirect, known or unknown, foreseen or unforeseen), penalties, fines,
liabilities, losses of every kind and nature (including, without limitation,
property damage, diminution in value of
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Landlord's interest in the Premises, damages for the loss of restriction on use
of any space or amenity within the Premises, damages arising from any adverse
impact on marketing space in the Premises, sums paid in settlement of claims and
any costs and expenses associated with injury, illness or death to or of any
person), suits, administrative proceedings, costs and fees, including, but not
limited to, attorneys' and consultants' fees and expenses, and the costs of
cleanup, remediation, removal and restoration, that are in any way related to
any matter covered by the foregoing indemnity.
(ix) Survival. The provisions of this Paragraph 11.b
shall survive the expiration or earlier termination of this Lease.
C. Special Provisions Relating to The Americans With
Disabilities Act of 1990.
(i) Allocation of Responsibility to Landlord. As
between Landlord and Tenant, Landlord shall be responsible that the Common Area
owned by Landlord complies with the requirements of Title III of the Americans
with Disabilities Act of 1990 (42 U.S.C. 12181, et seq., The Provisions
Governing Public Accommodations and Services Operated by Private Entities), and
all regulations promulgated thereunder, and all amendments, revisions or
modifications thereto now or hereafter adopted or in effect in connection
therewith (hereinafter collectively referred to as the "ADA"), and to take such
actions and make such alterations and improvements as are necessary for such
compliance; provided, however, that to the extent such requirements arise from
the construction of any Alterations to the Premises made by or on behalf of
Tenant, then as between Landlord and Tenant, Tenant shall be responsible that
the Common Area complies with the requirements of the ADA, and to take such
actions and make such alterations and improvements as are necessary for such
compliance.
(ii) Allocation of Responsibility to Tenant. Except
as expressly provided in the Work Letter, as between Landlord and Tenant,
Tenant, at its sole cost and expense, shall be responsible that the Premises
(and all modifications made by Tenant of access to the Premises from the
street), and all alterations and improvements in the Premises (including without
limitation the Tenant Improvements), and Tenant's use and occupancy of the
Premises, and Tenant's performance of its obligations under this Lease, comply
with the requirements of the ADA, and to take such actions and make such
alterations and improvements as are necessary for such compliance; provided,
however, that Tenant shall not make any such alterations or improvements except
upon Landlord's prior written consent (which shall not be unreasonably withheld)
pursuant to the terms and conditions of this Lease. If Tenant fails diligently
to take such actions or make such alterations or improvements as are necessary
for such compliance, Landlord may, but shall not be obligated to, take such
actions and make such alterations and improvements and may recover all of the
costs and expenses of such actions, alterations and improvements from Tenant as
Additional Rent. Tenant shall be entitled to utilize the Tenant Improvements
Allowance to pay for the cost of any improvements required by ADA that are
triggered by the construction of the Tenant Improvements.
(iii) General. Notwithstanding anything in this
Lease contained to the contrary, no act or omission of either party, including
any approval, consent or acceptance by it
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or its agents, employees or other representatives, shall be deemed an agreement,
acknowledgment, warranty, or other representation by it that the other party has
complied with the ADA as provided under Paragraphs 11.C.(i) or 11.c.(ii) or that
any action, alteration or improvement by it complies or will comply with the ADA
as provided under Paragraphs 11.c.(i) or 11.c.(ii) or constitutes a waiver by it
of the other party's obligations to comply with the ADA under Paragraphs
11.c.(i) or 11.c.(ii) of this Lease or otherwise. Any failure of either party to
comply with its obligations of the ADA under Paragraphs 11.c.(i) or 11.c.(ii)
shall not relieve such party from any obligations under this Lease or in the
case of Landlord's failure to comply under Paragraph 11.c.(i), constitute or be
construed as a constructive or other eviction of Tenant or disturbance of
Tenant's use and possession of the Premises.
D. Use and Maintenance of Common Area. Tenant and its
employees and invitees shall have the non-exclusive right to use the Common Area
in common with other persons during the Term of this Lease, subject to the CC&Rs
and such reasonable rules and regulations as may from time to time be deemed
necessary or advisable in Landlord's reasonable discretion for the proper and
efficient operation and maintenance of the Common Area. Such rules and
regulations may include, among other things, the hours during which the Common
Area shall be open for use. Landlord shall maintain and operate the Common Area
from time to time owned by Landlord in good condition, provided that any damage
thereto, other than normal wear and tear, occasioned by the act of Tenant or its
employees or invitees shall be paid by Tenant upon demand by Landlord.
12. Quiet Enjoyment.
Landlord covenants that Tenant, upon performing the terms,
conditions and covenants of this Lease, shall have quiet and peaceful possession
of the Premises as against any person claiming the same by, through or under
Landlord.
13. Alterations.
A. Alteration Rights. After the Commencement Date, Tenant
shall not make or permit any Alterations in, on or about the Premises, except
for nonstructural Alterations (which shall not include any modifications to the
mechanical or electrical systems of the Building, nor any penetration of the
Building's roof) not exceeding Ten Thousand Dollars ($10,000.00) in aggregate
cost during any period of twelve (12) consecutive months, without the prior
written consent of Landlord, and according to plans and specifications approved
in writing by Landlord, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing Tenant shall not, without the prior written
consent of Landlord, make any:
(i) Alterations to the exterior of the Building;
(ii) Alterations to the roof of the Building; and
(iii) Alterations visible from outside the Building,
to which Landlord may withhold Landlord's consent on wholly aesthetic grounds.
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B. Performance of Alterations. All Alterations shall be
installed at Tenant's sole expense, in compliance with all applicable laws, by a
licensed contractor, shall be done in a good and workmanlike manner conforming
in quality and design with the Premises existing as of the Commencement Date,
and shall not diminish the value of either the Building or the Premises. All
Alterations made by Tenant shall be and become the property of Landlord upon
installation and shall not be deemed Tenant's Personal Property, and Tenant
shall not remove any Alterations from the Premises unless Tenant has first
obtained Landlord's written consent to such removal. Landlord may require Tenant
to remove, at Tenant's expense, any Alterations from the Premises at the
expiration or earlier termination of this Lease; provided, however, that at the
time any Alterations are constructed, Tenant shall have the right to request
Landlord's written approval (which shall not be unreasonably withheld or
delayed) that Landlord will not require the removal of such Alterations at the
expiration or earlier termination of this Lease. Notwithstanding Alterations
made by it to the Premises. Tenant shall give Landlord written notice of
Tenant's intention to perform work on the Premises at least ten (10) days prior
to the commencement of such work to enable Landlord to post and record a Notice
of Nonresponsibility or other notice deemed proper before the commencement of
any such work.
C. Trade Fixtures. Landlord acknowledges that Tenant may lease
from or finance with a third party (collectively, a "Trade Fixture Lessor") all
or a portion of Tenant's Personal Property. Landlord shall duly execute and
properly deliver any waivers or consents which may reasonably be required by any
proposed Trade Fixture Lessor in connection with the leasing or financing of
such Tenant's Personal Property, so long as such waivers and consents shall
include the following: (i) the Trade Fixture Lessor shall agree to repair any
damage to the Premises caused by the Trade Fixtures Lessor's removal of Tenant's
Personal Property from the Premises, and (ii) Landlord's waiver and consent
shall be of no force or effect after the thirtieth (30th) day following the end
of the Term or earlier termination of this Lease.
14. Surrender of the Premises.
Upon the expiration or earlier termination of the Term, Tenant
shall surrender the Premises to Landlord in its condition existing as of the
date of substantial completion of the Improvements, normal wear and tear and
fire or other casualty excepted, with all interior walls repaired if damaged,
all broken, marred or nonconforming acoustical ceiling tiles replaced, all
windows washed, the plumbing and electrical systems and lighting in good order
and repair, including replacement of any burned out or broken light bulbs or
ballasts, the HVAC equipment serviced and repaired by a reputable and licensed
service firm, and all floors cleaned, all to the reasonable satisfaction of
Landlord. Tenant shall remove from the Premises all of Tenant's Alterations
required to be removed pursuant to Paragraph 13, and all Tenant's Personal
Property, and repair any damage and perform any restoration work caused by such
removal. If Tenant fails to remove such Alterations and Tenant's Personal
Property, and such failure continues after the expiration or earlier termination
of this Lease, Landlord may retain such Alterations and Tenant's Property and
all rights of Tenant with respect to it shall cease, or Landlord may place all
or any portion of such Alterations and Tenant's Property in public storage for
Tenant's account. Tenant shall be liable to Landlord for costs of removal of any
such Alterations and Tenant's Personal Property and storage and transportation
costs of same, and the cost of repairing and restoring the Premises, together
with interest at the Interest Rate from the date of expenditure by Landlord. If
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the Premises are not so surrendered at the expiration or earlier termination of
this Lease, Tenant shall indemnify Landlord and Landlord's Agents against all
loss or liability, including reasonable attorneys' fees and costs, resulting
from delay by Tenant in so surrendering the Premises.
Normal wear and tear, for the purposes of this Lease, shall be
construed to mean wear and tear caused to the Premises by a natural aging
process which occurs in spite of prudent application of the best standards for
maintenance, repair and janitorial practices. It is not intended, nor shall it
be construed, to include items of neglected or deferred maintenance which would
have or should have been attended to during the Term of the Lease if the best
standards had been applied to properly maintain and keep the Premises at all
times in good condition and repair.
15. Impositions and Real Property Taxes.
A. Payment by Tenant. Tenant shall pay all Impositions prior
to delinquency. If billed directly, Tenant shall pay such Impositions and
concurrently present to Landlord satisfactory evidence of such payments. If any
Impositions are billed to Landlord or included in bills to Landlord for Real
Property Taxes, then Tenant shall pay to Landlord all such amounts within
fifteen (15) days after receipt of Landlord's invoice therefor. If applicable
law prohibits Tenant from reimbursing Landlord for an Imposition, but Landlord
may lawfully increase the Monthly Rent to account for Landlord's payment of such
Imposition, the Monthly Rent payable to Landlord shall be increased so that the
amount of such increased Monthly Rent, together with any accompanying increases
in the Real Property Taxes payable by Tenant with respect to such Imposition,
are sufficient to net to Landlord the same return without reimbursement of such
Imposition as would have been received by Landlord with reimbursement of such
Imposition. In addition, on or before April 10 and December 10 of each year of
the Term, Tenant shall pay directly to the San Mateo County assessor the Real
Property Taxes for the Premises as set forth on the assessors tax bill for the
Premises. If, however, the Premises are not a separate parcel for tax purposes
but constitute a portion of a larger tax parcel or parcels, the Real Property
Taxes payable by Tenant under this Lease shall be a percentage of the Real
Property Taxes payable for such parcel or parcels, which percentage shall be
determined by dividing the Rentable Area of the Building by the total Rentable
Area of all buildings on such parcel or parcels and multiplying the result by
100, which Real Property Taxes shall be payable by Tenant to Landlord monthly as
part of the Common Area Maintenance Costs.
(i) Tax Parcels. If Landlord determines in its
reasonable discretion that the configuration of tax parcels within the Project
(including without limitation the tax parcel on which the Premises is situated)
causes the allocation of Real Property Taxes between the affected tax parcels to
be unfair or inequitable, Landlord reserves the right to internally reallocate
the Real Property Taxes assessed against such affected tax parcels in a manner
that reasonably addresses such unfairness or inequity. If Landlord effects any
such reallocation, then the Real Property Taxes payable by Tenant under this
Lease shall be those Real Property Taxes allocated to the Premises pursuant to
this Paragraph 15.A.(i).
(ii) Payment. Promptly following payment of the Real
Property Taxes, Tenant shall provide Landlord with copies of paid receipts or
other documentary evidence that
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the Real Property Taxes have been paid by Tenant. If Tenant fails to pay the
Real Property Taxes on or before April 10 and December 10, respectively, or if
Tenant fails to pay its share of Real Property Taxes as part of the Common Area
Maintenance Costs, Tenant shall pay to Landlord any penalty incurred by such
late payment. In addition, Tenant shall pay any Real Property Tax not included
within the county tax assessor's tax bill within ten (10) days after being
billed for same by Landlord. The foregoing dates are based on the dates
established by the county as the dates on which Real Property Taxes become
delinquent if not paid. If such delinquency dates change, the dates on which
Tenant must pay the Real Property Taxes for the Premises shall be at least ten
(10) days prior to the new delinquency dates. Assessments, taxes, fees, levies
and charges may be imposed by governmental agencies for such purposes as fire
protection, street, sidewalk, road, utility construction and maintenance, refuse
removal and for other governmental services which may formerly have been
provided without charge to property owners or occupants. It is the intention of
the parties that all new and increased assessments, taxes, fees, levies and
charges are to be included within the definition of Real Property Taxes for the
purposes of this Lease.
B. Taxes on Tenant Improvements and Personal Property. Tenant
shall pay any increase in Real Property Taxes resulting from any and all
Alterations and Tenant Improvements of any kind whatsoever placed in, on or
about the Premises for the benefit of, at the request of, or by Tenant. Tenant
shall pay prior to delinquency all taxes assessed or levied against Tenant's
Personal Property in, on or about the Premises or elsewhere. When possible,
Tenant shall cause its Personal Property to be assessed and billed separately
from the Premises and the real property or Personal Property of Landlord.
C. Proration. Tenant's liability to pay Real Property Taxes
shall be prorated on the basis of a 360-day year to account for any fractional
portion of a fiscal tax year included at the commencement or expiration of the
Term. With respect to any assessments which may be levied against or upon the
Premises on all or any portion of the Project, or which under the laws then in
force may be evidenced by improvements or other bonds or may be paid in annual
installments, only the amount of such annual installment (with appropriate
proration for any partial year) and interest due thereon shall be included
within the computation of the annual Real Property Taxes levied against the
Premises or such portion of the Project, as applicable.
16. Utilities and Services.
Tenant shall be responsible for and shall pay promptly all
charges for water, gas, electricity, telephone, refuse pick-up, janitorial
service and all other utilities, materials and services furnished directly to or
used by Tenant in, on or about the Premises during the Term, together with any
taxes thereon. If any utility, material or service is not separately charged or
metered to any portion of the Premises, Tenant shall pay to Landlord, within ten
(10) days after written demand therefor, Tenant's pro rata share of the total
cost thereof as may be determined by Landlord. Landlord shall not be liable in
damages or otherwise for any failure or interruption of any utility service or
other service furnished to the Premises, except that resulting from the gross
negligence or willful misconduct of Landlord. Tenant shall have the right to
contract directly with vendors for janitorial and maintenance services, provided
such vendors must be approved in advance by Landlord, which approval shall not
be unreasonably withheld; and provided further,
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that Tenant shall have no right to contract with any vendor to maintain the
Building's HVAC system, which shall be the sole responsibility of Landlord as
set forth in Paragraph 17.A.
17. Repair and Maintenance.
A. Landlord's Obligations. Landlord shall keep in good order,
condition and repair the structural parts of the Building, which structural
parts consist only of the foundation, subflooring, exterior walls (excluding the
interior of all walls and the exterior and interior of all windows, doors,
ceilings, and plate glass), and roof of the Building, and all plumbing and
electrical facilities leading up to (but not situated within) the Building,
except for any damage thereto caused by the negligence or willful acts or
omissions of Tenant or of Tenant's agents, employees or invitees, or by reason
of the failure of Tenant to perform or comply with any terms of this Lease, or
caused by Alterations made by Tenant or by Tenant's agents, employees or
contractors. It is an express condition precedent to all obligations of Landlord
to repair and maintain that Tenant shall have notified Landlord of the need for
such repairs or maintenance. Tenant waives the provisions of Sections 1941 and
1942 of the California Civil Code and any similar or successor law regarding
Tenant's right to make repairs and deduct the expenses of such repairs from the
Rent due under this Lease. Landlord shall keep in good order, condition, repair
and maintenance the Building's HVAC system and roof, and shall maintain an HVAC
system preventive maintenance service contract from a qualified vendor for the
purpose of maintaining the Building's HVAC system, and a roof maintenance
service contract from a qualified vendor for the purpose of maintaining the
Building's roof. Landlord shall determine in its sole discretion whether any
such vendor is qualified. Any and all costs of any maintenance or repair of the
HVAC system or the roof (including without limitation the cost of maintaining
HVAC system preventative maintenance contracts and roof maintenance service
contracts) shall be included in the Common Area Maintenance Costs payable solely
by Tenant for the year in which such cost is incurred. Landlord may elect, in
its sole discretion, to paint the exterior of the Building and/or to replace or
perform capital improvements to any area or aspect of the Building which
Landlord is required keep in good order, condition and repair. If Landlord
decides, in its sole discretion, to replace the roof of the Building during the
Term, then the cost of so replacing the roof, together with interest at the
Interest Rate, shall be amortized on a straight-line basis over the useful life
of the roof (as determined by Landlord in its sole discretion) (the "Useful
Life"), and the entire amount of such amortized costs and interest shall be
included in the monthly Common Area Maintenance Costs payable solely by Tenant
during the e