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LEASE
BY AND BETWEEN
MATHILDA ASSOCIATES LLC,
A CALIFORNIA LIMITED LIABILITY COMPANY
AS LANDLORD
AND
JUNIPER NETWORKS, INC.,
A DELAWARE CORPORATION
AS TENANT
FEBRUARY 1, 2000
<PAGE> 2
LEASE
THIS LEASE, dated February 1, 2000 for reference purposes only, is made
by and between MATHILDA ASSOCIATES LLC, a California limited liability company
("Landlord") and JUNIPER NETWORKS, INC., a Delaware corporation ("Tenant"), to
be effective and binding upon the parties as of the date the last of the
designated signatories to this Lease shall have executed this Lease (the
"Effective Date of this Lease").
ARTICLE 1
REFERENCE
1.1 REFERENCES. All references in this Lease (subject to any further
clarifications contained in this Lease) to the following terms shall have the
following meaning or refer to the respective address, person, date, time period,
amount, percentage, calendar year or fiscal year as below set forth:
Tenant's Address for Notice: Prior to May 1, 2000:
Juniper Networks, Inc.
385 Ravendale Drive
Mountain View, California 94043
After May 1, 2000:
1194 Mathilda Avenue
Sunnyvale, California 94089
Tenant's Representative: General Counsel
Landlord's Address for Notices: c/o Menlo Equities LLC
525 University Avenue
Suite 100
Palo Alto, California 94301
Landlord's Representative: Henry Bullock/Richard Holmstrom
Phone Number: (650) 326-9300
Intended Delivery Date: May 1, 2001
Intended Commencement Date: August 1, 2001
Lease Term: Twelve (12) years
Lease Expiration Date: Twelve (12) Years from the Lease
Commencement Date, unless earlier
terminated in accordance with the
terms of this Lease, or extended by
Tenant pursuant to Article 15.
Options to Renew: Two (2) option(s) to renew, each for
a term of five (5) years.
First Month's Prepaid Rent: $327,888.58 (applied to the first
month in which Base Monthly Rent is
due)
Tenant's Security Deposit: $1,000,000, subject to adjustment
pursuant to Paragraph 3.7
Late Charge Amount: Five Percent (5%) of the Delinquent
Amount
Tenant's Required Liability
Coverage: $3,000,000 Combined Single Limit
Tenant's Broker: Joan Haynes and Steve Gibson of
Colliers International
Landlord's Broker: Don Reimann, Gregg Von Thaden and
Jon Condrey of Colliers
International
Property: That certain real property situated
in the City of Sunnyvale, County of
Santa Clara, State of California, to
be improved with two (2)
building(s), which real property is
shown on the Site Plan attached
hereto as Exhibit "A" and is
commonly known as or otherwise
described as follows: Mathilda
Research Centre.
Building: That certain building on the
Property in which the Leased
Premises are located commonly known
as 1184 Mathilda Avenue (the
"Building"), which Building is shown
outlined on
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<PAGE> 3
Exhibit "A" hereto (designated as
Building B). The other building on
the Property located at 1194
Mathilda Avenue is referred to
herein as the "1194 Building."
Outside Areas: The "Outside Areas" shall mean all
areas which are located outside of
and contiguous to the Building, as
shown the Site Plan attached as
Exhibit A, such as pedestrian
walkways, parking areas, landscaped
area, open areas and enclosed trash
disposal areas.
Leased Premises: All the interior space within the
Building, including stairwells,
connecting walkways, and atriums, to
consist of approximately rentable
122,435 square feet and, for
purposes of this Lease, agreed to
contain said number of square feet.
Tenant's Expense Share: The term "Tenant's Expense Share"
shall mean the percentage obtained
by dividing the rentable square
footage of the Leased Premises at
the time of calculation by the
rentable square footage of the
Building. Such percentage is
currently 100%. In the event that
the rentable square footage of the
Leased Premises is changed, Tenant's
Expense Share shall be recalculated
to equal the percentage described in
the first sentence of this
paragraph, so that the aggregate
Tenant's Expense Share of all
tenants of the Building shall equal
100%.
Tenant's Property Share: The term "Tenant's Property Share"
shall mean the percentage obtained
by dividing the rentable square
footage of the Leased Premises at
the time of calculation by the
rentable square footage of all
buildings currently located or to be
located on the Property. Such
percentage is currently 46%. In the
event that any portion of the
Property is sold by Landlord, or the
rentable square footage of the
Leased Premises or the Property is
otherwise changed, Tenant's Property
Share shall be recalculated to equal
the percentage described in the
first sentence of this paragraph, so
that the aggregate Tenant's Property
Share of all tenants of the Property
shall equal 100%.
Base Monthly Rent: The term "Base Monthly Rent" shall
mean the following:
<TABLE>
<CAPTION>
Period Monthly Amount
------ --------------
<S> <C> <C>
8/1/01-7/31/02 $327,888.58
</TABLE>
At the end of the 12th month after
the actual Lease Commencement Date
and at the end of each 12 month
period thereafter (until the Lease
Expiration Date), Base Monthly Rent
shall be increased at a rate of 3.5%
per annum compounded
annually.
Permitted Use: General Office, research and
development, marketing, sales,
manufacturing, distribution,
warehouse and other related lawful
uses.
Exhibits: The term "Exhibits" shall mean the
Exhibits of this Lease which are
described as follows:
Exhibit "A" -- Site Plan showing the
Property, the Outside Areas and
delineating the Building in which
the Leased Premises are to be
located.
Exhibit "B" -- Work Letter
Exhibit "C" -- Lease Commencement
Date Certificate
Exhibit "D" -- Form of Tenant
Estoppel Certificate
Exhibit "E" -- Form of Letter of
Credit
Exhibit "F" -- Form of Landlord
Waiver
2
<PAGE> 4
ARTICLE 2
LEASED PREMISES, TERM AND POSSESSION
2.1 DEMISE OF LEASED PREMISES. Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord, for the Lease Term and upon the terms and subject
to the conditions of this Lease, that certain interior space described in
Article 1 as the Leased Premises, reserving and excepting to Landlord the right
to fifty percent (50%) of all assignment consideration and excess rentals as
provided in Article 7 below. Tenant's lease of the Leased Premises, together
with the appurtenant right to use the Outside Areas as described in Paragraph
2.2 below, shall be conditioned upon and be subject to the continuing compliance
by Tenant with (i) all the terms and conditions of this Lease, (ii) all Laws
governing the use of the Leased Premises and the Property, (iii) all Private
Restrictions, easements and other matters now of public record respecting the
use of the Leased Premises and Property, and (iv) all reasonable rules and
regulations from time to time established by Landlord.
2.2 RIGHT TO USE OUTSIDE AREAS. As an appurtenant right to Tenant's right to the
use and occupancy of the Leased Premises, Tenant shall have the right to use the
Outside Areas in conjunction with its use of the Leased Premises solely for the
purposes for which they were designated and intended and for no other purposes
whatsoever. Tenant's right to so use the Outside Areas shall be subject to the
limitations on such use as set forth in Article 1 and shall terminate
concurrently with any termination of this Lease.
2.3 LEASE COMMENCEMENT DATE AND LEASE TERM. Subject to Paragraph 2.4 below, the
term of this Lease shall begin, and the Lease Commencement Date shall be deemed
to have occurred on the Intended Commencement Date, subject to Paragraph 2.4
below. The term of this Lease shall in all events end on the Lease Expiration
Date (as set forth in Article 1). The Lease Term shall be that period of time
commencing on the Lease Commencement Date and ending on the Lease Expiration
Date (the "Lease Term"). In the event the actual Lease Commencement Date is
different than the Intended Commencement Date, Landlord and Tenant agree to
execute a Lease Commencement Date Certificate in the form attached as Exhibit C
setting forth the actual Lease Commencement Date and the Lease Expiration Date
(such that the length of the Lease Term is the same as set forth in Article 1)
and an adjustment to the schedule of Base Monthly Rent to reflect the change in
the Lease Commencement Date and Lease Expiration Date.
2.4 DELIVERY OF POSSESSION. Landlord shall deliver to Tenant possession of the
Leased Premises upon Substantial Completion of the Tenant Improvements as that
term is defined in the Work Letter attached hereto as Exhibit B and made a part
of this Lease (the "Work Letter"). The date that the Leased Premises are so
delivered to the Tenant shall be deemed the "Delivery Date." If Landlord is
unable to so deliver possession of the Leased Premises to Tenant in the agreed
condition on or before the Intended Delivery Date, Landlord shall have until the
date that is thirty (30) days after the Intended Delivery Date (the "Delivery
Grace Period") to deliver the Leased Premises. Additionally, the Delivery Grace
Period above set forth shall be extended for such number of days as Landlord may
be delayed in delivering possession of the Leased Premises to Tenant by reason
of Force Majeure or the action or inaction of Tenant. If Landlord is unable to
deliver possession of the Leased Premises in the agreed condition to Tenant
within the Delivery Grace Period (including any extension thereof by reason of
Force Majeure or the actions or inactions of Tenant), then Tenant shall receive
as its sole remedy a credit of two (2) days of free rent for each day that the
Leased Premises are not delivered to Tenant after expiration of the Delivery
Grace Period (including any extension thereof by reason of Force Majeure or the
actions or inactions of Tenant), which free rent shall apply to the first month
in which Base Monthly Rent is due. If Landlord is unable to deliver possession
of the Leased Premises in the agreed condition to Tenant within sixty (60) days
after the expiration of the Delivery Grace Period (including any extension
thereof by reason of Force Majeure or the actions or inactions of Tenant),
Tenant may choose, as its sole remedy, to terminate this Lease, and in the event
of such termination Landlord shall not be liable in damages to Tenant for any
delay. Tenant may not terminate this Lease at any time after the date Landlord
notifies Tenant that the Leased Premises have been put into the agreed condition
and are available for delivery to Tenant, unless Landlord's notice is not given
in good faith. Tenant may occupy the Leased Premises commencing on the Delivery
Date for the Permitted Use, and for purposes of installing furniture, fixtures
and equipment, provided that Tenant shall be responsible for Additional Rent
during such period and Tenant shall comply with all other provisions of this
Lease (other than the payment of Base Monthly Rent).
2.5 PERFORMANCE OF TENANT IMPROVEMENTS; ACCEPTANCE OF POSSESSION. Landlord
shall, pursuant to the Work Letter, perform the work and make the installations
in the Leased Premises substantially as set forth in the Work Letter (such work
and installations hereinafter referred to as the "Tenant Improvements"). It is
agreed that by occupying the Leased Premises, Tenant formally accepts same and
acknowledges that the Leased Premises are in the condition called for hereunder,
subject to reasonable punchlist items and latent defects specified by Tenant to
Landlord in writing within ten (10) days of such occupancy.
2.6 SURRENDER OF POSSESSION. Immediately prior to the expiration or upon the
sooner termination of this Lease, Tenant shall remove all of Tenant's signs from
the exterior of the Building and shall remove all of Tenant's equipment, trade
fixtures, furniture, supplies, wall decorations and other personal property from
within the Leased Premises, the Building and the Outside Areas, and shall vacate
and surrender the Leased Premises, the Building, the Outside Areas and the
Property to Landlord in the same condition, broom clean, as existed at the Lease
Commencement Date, damage by casualty or condemnation (which events shall be
governed by Articles 10 and 11) and reasonable wear and tear excepted. Except
for such reasonable wear and tear, Tenant shall (i) repair all damage to the
Leased Premises, the exterior of the Building and the Outside Areas caused by
Tenant's removal of Tenant's property, (ii) patch and refinish, to Landlord's
reasonable satisfaction, all penetrations made by Tenant or its employees to the
roof, floor, interior or exterior walls or ceiling of the Leased Premises and
the Building, whether
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<PAGE> 5
such penetrations were made with Landlord's approval or not, (iii) repair or
replace all stained or damaged ceiling tiles, wall coverings and floor coverings
to the reasonable satisfaction of Landlord, (iv) repair all damage caused by
Tenant to the exterior surface of the Building and the paved surfaces of the
Outside Areas and, where necessary, replace or resurface same. Additionally, to
the extent that Landlord shall have notified or is deemed to have notified
Tenant in writing at the time the improvements were completed that it desired to
have certain improvements made by Tenant or at the request of Tenant removed at
the expiration or sooner termination of the Lease, Tenant shall, upon the
expiration or sooner termination of the Lease, remove any such improvements
constructed or installed by Landlord or Tenant and repair all damage caused by
such removal; provided however, Tenant shall not be required to remove the
Tenant Improvements installed pursuant to the Work Letter. If the Leased
Premises, the Building, the Outside Areas and the Property are not surrendered
to Landlord in the condition required by this paragraph at the expiration or
sooner termination of this Lease, Landlord may, at Tenant's expense, so remove
Tenant's signs, property and/or improvements not so removed and make such
repairs and replacements not so made or hire, at Tenant's expense, independent
contractors to perform such work. Tenant shall be liable to Landlord for all
costs incurred by Landlord in returning the Leased Premises, the Building and
the Outside Areas to the required condition, together with interest on all costs
so incurred from the date paid by Landlord at the then maximum rate of interest
not prohibited or made usurious by law until paid. Tenant shall pay to Landlord
the amount of all costs so incurred plus such interest thereon, within ten (10)
days of Landlord's billing Tenant for same. Tenant shall indemnify Landlord
against loss or liability resulting from delay by Tenant in surrendering the
Leased Premises, including, without limitation, any claims made by any
succeeding Tenant or any losses to Landlord with respect to lost opportunities
to lease to succeeding tenants.
ARTICLE 3
RENT, LATE CHARGES AND SECURITY DEPOSITS
3.1 BASE MONTHLY RENT. Commencing on the Lease Commencement Date (as determined
pursuant to Paragraph 2.3 above) and continuing throughout the Lease Term,
Tenant shall pay to Landlord, without prior demand therefor, in advance on the
first day of each calendar month, the amount set forth as "Base Monthly Rent" in
Article 1 (the "Base Monthly Rent").
3.2 ADDITIONAL RENT. Commencing on the Lease Commencement Date (as determined
pursuant to Paragraph 2.3 above) and continuing throughout the Lease Term, in
addition to the Base Monthly Rent and to the extent not required by Landlord to
be contracted for and paid directly by Tenant, Tenant shall pay to Landlord as
additional rent (the "Additional Rent") the following amounts:
(a)An amount equal to all Property Operating Expenses (as defined in
Article 13) incurred by Landlord. Payment shall be made by whichever of the
following methods (or combination of methods) is (are) from time to time
designated by Landlord:
(i) Landlord may forward invoices or bills for such expenses to
Tenant, and Tenant shall, no later than thirty (30) days following receipt of
any such invoices or bills, pay such invoices or bills and deliver satisfactory
evidence of such payment to Landlord, and/or
(ii) Landlord may bill to Tenant, on a periodic basis not more
frequently than monthly, the amount of such expenses (or group of expenses) as
paid or incurred by Landlord, and Tenant shall pay to Landlord the amount of
such expenses within thirty (30) days after receipt of a written bill therefor
from Landlord, and/or
(iii) Landlord may deliver to Tenant Landlord's reasonable
estimate of any given expense (such as Landlord's Insurance Costs or Real
Property Taxes), or group of expenses, which it anticipates will be paid or
incurred for the ensuing calendar or fiscal year, as Landlord may determine, and
Tenant shall pay to Landlord an amount equal to the estimated amount of such
expenses for such year in equal monthly installments during such year with the
installments of Base Monthly Rent.
Landlord reserves the right to change from time to time the methods of billing
Tenant for any given expense or group of expenses or the periodic basis on which
such expenses are billed.
(b) Landlord's share of the consideration received by Tenant upon
certain assignments and sublettings as required by Article 7.
(c) Any legal fees and costs that Tenant is obligated to pay or
reimburse to Landlord pursuant to Article 13; and
(d) Any other charges or reimbursements due Landlord from Tenant
pursuant to the terms of this Lease.
Notwithstanding the foregoing, Landlord may elect by thirty (30) days prior
written notice to Tenant (provided such written notice is received by Tenant at
least thirty (30) days prior to delinquency) to have Tenant pay Real Property
Taxes or any portion thereof directly to the applicable taxing authority, in
which case Tenant shall make such payments and deliver satisfactory evidence of
payment to Landlord no later than ten (10) days before such Real Property Taxes
become delinquent.
Tenant may cause an audit of Landlord's books and records to determine the
accuracy of Landlord's billings for Property Operating Expenses under this
Lease, provided Tenant commences such audit within sixty (60) days after
Tenant's receipt of the year-end statement described in Section 3.3 above
setting forth the annual reconciliation of
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<PAGE> 6
the Property Operating Expenses or any change in estimated monthly expenses
under Section 3.2(a)(iii) above. If such audit reveals that the actual Property
Operating Expenses for any given year were less than the amount that Tenant paid
for Property Operating Expenses for any such year, then Landlord shall pay to
Tenant the excess. If such audit reveals a discrepancy of more than three (3%)
percent of the actual amount of any Property Operating Expenses charges, then
Landlord shall pay the cost of the audit.
Additionally, Tenant shall have the right, by appropriate proceedings, to
protest or contest any assessment, reassessment or allocation of Real Property
Taxes or any change therein or any application of any Law to the Leased Premises
or Tenant's use thereof. Landlord will reasonably cooperate with Tenant in the
contest or proceedings. If Tenant does not pay the Real Property Taxes when due
which are the subject of such protest or contest, Tenant shall post a bond in
lieu thereof in an amount reasonably determined by Landlord but not less than
one hundred twenty-five percent (125%) of the amount demanded by the taxing
authorities which holds Landlord and the Property harmless from any damage
arising out of the contest and ensuring the payment of any judgment that may be
rendered. With respect to any contest of Real Property Taxes or Laws conducted
by Tenant, Tenant shall hold Landlord and the Property harmless from any damage
arising out of such protest or contest and shall pay any judgment that may be
rendered in connection with such contest or protest. Any protest or contest
conducted by Tenant under this paragraph shall be at Tenant's expense and if
interest or late charges become payable as a result of such contest or protest,
Tenant shall pay the same. Tenant shall receive a proportionate share of any
refund applicable to the Lease Term based on the amount of Real Property Taxes
paid by Tenant as Tenant's Property Share (if the refund is applicable to the
land) or Tenant's Expense Share (if the refund is applicable to the Building or
other improvements in the Outside Areas).
3.3 YEAR-END ADJUSTMENTS. If Landlord shall have elected to bill Tenant for the
Property Operating Expenses (or any group of such expenses) on an estimated
basis in accordance with the provisions of Paragraph 3.2(a)(iii) above, Landlord
shall furnish to Tenant within three months following the end of the applicable
calendar or fiscal year, as the case may be, a statement setting forth (i) the
amount of such expenses paid or incurred during the just ended calendar or
fiscal year, as appropriate, and (ii) the amount that Tenant has paid to
Landlord for credit against such expenses for such period. If Tenant shall have
paid more than its obligation for such expenses for the stated period, Landlord
shall, at its election, either (i) credit the amount of such overpayment toward
the next ensuing payment or payments of Additional Rent that would otherwise be
due or (ii) refund in cash to Tenant the amount of such overpayment within
thirty (30) days after it has been conclusively determined by Landlord that an
overpayment has been made by Tenant. If such year-end statement shall show that
Tenant did not pay its obligation for such expenses in full, then Tenant shall
pay to Landlord the amount of such underpayment within ten days from Landlord's
billing of same to Tenant. The provisions of this Paragraph shall survive the
expiration or sooner termination of this Lease.
3.4 LATE CHARGE, AND INTEREST ON RENT IN DEFAULT. Tenant acknowledges that the
late payment by Tenant of any monthly installment of Base Monthly Rent or any
Additional Rent will cause Landlord to incur certain costs and expenses not
contemplated under this Lease, the exact amounts of which are extremely
difficult or impractical to fix. Such costs and expenses will include without
limitation, administration and collection costs and processing and accounting
expenses. Therefor, if any installment of Base Monthly Rent is not received by
Landlord from Tenant when the same becomes due, Tenant shall immediately pay to
Landlord a late charge in an amount equal to the amount set forth in Article 1
as the "Late Charge Amount," and if any Additional Rent is not received by
Landlord when the same becomes due, Tenant shall immediately pay to Landlord a
late charge in an amount equal to 5% of the Additional Rent not so paid;
provided, however, that once but only once in any twelve (12) month period
during the Lease Term, Tenant shall be entitled to written notice of non-receipt
of Base Monthly Rent or Additional Rent from Landlord, and Tenant shall not be
liable for any Late Charge Amount or other late charge hereunder if such
installment of Base Monthly Rent or Additional Rent is received by Landlord
within ten (10) days after Tenant's receipt of such notice from Landlord.
Landlord and Tenant agree that this late charge represents a reasonable estimate
of such costs and expenses and is fair compensation to Landlord for the
anticipated loss Landlord would suffer by reason of Tenant's failure to make
timely payment. In no event shall this provision for a late charge be deemed to
grant to Tenant a grace period or extension of time within which to pay any
rental installment or prevent Landlord from exercising any right or remedy
available to Landlord upon Tenant's failure to pay each rental installment due
under this Lease when due, including the right to terminate this Lease. If any
rent remains delinquent for a period in excess of 10 calendar days, then, in
addition to such late charge, Tenant shall pay to Landlord interest on any rent
that is not so paid from said tenth day at the then maximum rate of interest not
prohibited or made usurious by Law until paid.
3.5 PAYMENT OF RENT. Except as specifically provided otherwise in this Lease,
all rent shall be paid in lawful money of the United States, without any
abatement, reduction or offset for any reason whatsoever, to Landlord at such
address as Landlord may designate from time to time. Tenant's obligation to pay
Base Monthly Rent and all Additional Rent shall be appropriately prorated at the
commencement and expiration of the Lease Term. The failure by Tenant to pay any
Additional Rent as required pursuant to this Lease when due shall be treated the
same as a failure by Tenant to pay Base Monthly Rent when due, and Landlord
shall have the same rights and remedies against Tenant as Landlord would have
had Tenant failed to pay the Base Monthly Rent when due.
3.6 PREPAID RENT. Tenant shall, within ten (10) days following execution of this
Lease, pay to Landlord the amount set forth in Article 1 as "First Month's
Prepaid Rent" as prepayment of rent for credit against the first payment of Base
Monthly Rent due hereunder.
3.7 SECURITY DEPOSIT.
(a) Tenant, within ten (10) days following execution of this Lease,
shall deposit with Landlord the amount set forth in Article 1 as the "Security
Deposit" as security for the performance by Tenant of the terms of this Lease to
be performed by Tenant, and not as prepayment of rent. Upon the commencement of
the second year of the Lease
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<PAGE> 7
Term, and at the commencement of each subsequent year, provided that Tenant is
not then in default (and has never been in default beyond any applicable notice
and cure periods) in its payment of Base Monthly Rent or Additional Rent, the
amount of the Security Deposit shall be reduced by twenty percent (20%) of the
outstanding amount. In the event (i) Tenant becomes a publicly traded company
and (ii) Tenant reports net profits for three (3) consecutive quarters (as shown
on its quarterly financial statements prepared in accordance with generally
accepted accounting principles), and provided that Tenant is not then in default
(and has never been in default beyond any applicable notice and cure periods) in
its payment of Base Monthly Rent or Additional Rent, the Security Deposit shall
be returned to Tenant and thereafter no Security Deposit will be required. In
the event (1) Tenant becomes a publicly traded company and maintains a market
capitalization of Two Billion Dollars ($2,000,000,000) for two consecutive
quarters and (2) quarterly revenues exceed Twenty Five Million Dollars
($25,000,000) for two consecutive quarters (as shown on its quarterly financial
statements prepared in accordance with generally accepted accounting
principles), and provided that Tenant is not then in default (and has never been
in default beyond any applicable notice and cure periods) in its payment of Base
Monthly Rent or Additional Rent, the Security Deposit shall be reduced by an
amount equal to fifty percent (50%) of the original amount.
(b) Landlord may apply such portion or portions of the Security Deposit
as are reasonably necessary for the following purposes: (i) to remedy any
default by Tenant in the payment of Base Monthly Rent or Additional Rent or a
late charge or interest on defaulted rent, or any other monetary payment
obligation of Tenant under this Lease; (ii) to repair damage to the Leased
Premises, the Building or the Outside Areas caused or permitted to occur by
Tenant; (iii) to clean and restore and repair the Leased Premises, the Building
or the Outside Areas following their surrender to Landlord if not surrendered in
the condition required pursuant to the provisions of Article 2, and (iv) to
remedy any other default of Tenant to the extent permitted by Law including,
without limitation, paying in full on Tenant's behalf any sums claimed by
materialmen or contractors of Tenant to be owing to them by Tenant for work done
or improvements made at Tenant's request to the Leased Premises. In this regard,
Tenant hereby waives any restriction on the uses to which the Security Deposit
may be applied as contained in Section 1950.7(c) of the California Civil Code
and/or any successor statute. In the event the Security Deposit or any portion
thereof is so used, Tenant shall pay to Landlord, promptly upon demand, an
amount in cash sufficient to restore the Security Deposit to the full original
sum or shall replenish the letter of credit, if applicable. Landlord shall not
be deemed a trustee of the Security Deposit. Landlord may use the Security
Deposit in Landlord's ordinary business and shall not be required to segregate
it from Landlord's general accounts. Tenant shall not be entitled to any
interest on any cash Security Deposit held by Landlord. If Landlord transfers
the Building or the Property during the Lease Term, Landlord may pay the
Security Deposit to any subsequent owner in conformity with the provisions of
Section 1950.7 of the California Civil Code and/or any successor statute, in
which event the transferring landlord shall be released from all liability for
the return of the Security Deposit. Tenant specifically grants to Landlord (and
Tenant hereby waives the provisions of California Civil Code Section 1950.7 to
the contrary) a period of ninety days following a surrender of the Leased
Premises by Tenant to Landlord within which to inspect the Leased Premises, make
required restorations and repairs, receive and verify workmen's billings
therefor, and prepare a final accounting with respect to the Security Deposit.
In no event shall the Security Deposit or any portion thereof, be considered
prepaid rent. Notwithstanding the foregoing, in lieu of a cash Security Deposit,
Tenant may deliver to Landlord a clean, unconditional, irrevocable, transferable
letter of credit in the full amount of the Security Deposit required pursuant to
Article 1 hereof (the "Letter of Credit") in form and issued by a financial
institution ("Issuer") satisfactory to Landlord in its sole discretion,
substantially in the form attached as Exhibit E. The Letter of Credit shall
permit partial draws, and provide that draws thereunder will be honored upon
receipt by Issuer of a written statement signed by Landlord or its authorized
agent stating that Landlord is entitled to draw down on the Letter of Credit
pursuant to the terms of the Lease. The Letter of Credit shall have an
expiration period of one (1) year but shall automatically renew by its terms
unless affirmatively cancelled by either Issuer or Tenant, in which case Issuer
must provide Landlord 30 days' prior written notice of such expiration or
cancellation. Any amount drawn under the Letter of Credit shall be held or used
by Landlord in accordance with this Section 3.7. If the amount of the Letter of
Credit is reduced in accordance with the terms of this Lease, Tenant shall have
the right to replace the existing Letter of Credit with another Letter of Credit
at the reduced amount. If the Tenant fails to renew or replace the Letter of
Credit as required under this Lease at least thirty (30) days before its stated
expiration date, Landlord may draw upon the entire amount of the Letter of
Credit, provided that if Landlord so draws on the Letter of Credit, so long as
Tenant is not otherwise in default, Landlord shall deliver the amount so drawn
to Tenant upon Tenant's delivery to Landlord of a new Letter of Credit in the
amount then required, provided that Tenant makes such delivery within ten (10)
days of Landlord's draw.
(c) In the event Mathilda Associates LLC transfers or sells its interest
in the Property to person any entity other than an institutional buyer (a
"Non-Institutional Buyer"), Tenant shall have the right to require that the
Security Deposit be held by the lender, if any, providing the financing for such
Non-Institutional Buyer to acquire the Property, or be held in an escrow account
controlled by such Non-Institutional Buyer, which account shall be subject to
escrow instructions specifying that (1) Landlord shall only have the right to
draw on the Letter of Credit to the extent the Landlord is entitled to pursuant
to this Section 3.7, (2) Landlord shall deliver a statement to the escrow holder
prior to any draw down, certifying that Landlord is entitled to draw on the
Letter of Credit pursuant to this Section 3.7, and (3) that within ninety (90)
days after expiration of this Lease, the escrow holder shall release the Letter
to Credit to Tenant consistent with the terms of this Lease. For purposes
hereof, the term "institutional buyer" shall include, without limitation, life
insurance companies, banks, pension funds, pension fund advisors, opportunity
funds, hedge funds, private owners who directly or indirectly own more than
$200,000,000 of real estate, or real estate investment trusts.
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ARTICLE 4
USE OF LEASED PREMISES AND OUTSIDE AREA
4.1 PERMITTED USE. Tenant shall be entitled to use the Leased Premises solely
for the "Permitted Use" as set forth in Article 1 and for no other purpose
whatsoever. Tenant shall have the right to vacate the Leased Premises at any
time during the Term of this Lease, provided Tenant maintains the Leased
Premises in the same condition as if fully occupied and as otherwise required by
the terms of this Lease. Tenant shall have the right to use the Outside Areas in
conjunction with its Permitted Use of the Leased Premises solely for the
purposes for which they were designed and intended and for no other purposes
whatsoever.
4.2 GENERAL LIMITATIONS ON USE. Tenant shall not do or permit anything to be
done in or about the Leased Premises, the Building, the Outside Areas or the
Property which does or could (i) jeopardize the structural integrity of the
Building or (ii) cause damage to any part of the Leased Premises, the Building,
the Outside Areas or the Property. Tenant shall not operate any equipment within
the Leased Premises which does or could (i) injure, vibrate or shake the Leased
Premises or the Building, (ii) damage, overload or impair the efficient
operation of any electrical, plumbing, heating, ventilating or air conditioning
systems within or servicing the Leased Premises or the Building, or (iii) damage
or impair the efficient operation of the sprinkler system (if any) within or
servicing the Leased Premises or the Building. Tenant shall not (i) install any
equipment or antennas on or make any penetrations of the exterior walls or roof
of the Building or (ii) affix any equipment or make any penetrations or cuts in
the floors, ceiling or walls of the Leased Premises, without Landlord's prior
written consent, which consent shall not be unreasonably withheld; provided,
however, that it shall be reasonable for Landlord to withhold its consent if
Tenant's proposed installations or penetrations impact the structural integrity
of the Building. Any installations, penetrations or cuts in the interior or
exterior walls, roof, floor or ceiling of the Building will be subject to
Tenant's restoration obligations set forth in Section 2.6. Tenant shall not
place any loads upon the floors, walls, ceiling or roof systems which could
endanger the structural integrity of the Building or damage its floors,
foundations or supporting structural components. Tenant shall not place any
explosive, flammable or harmful fluids or other waste materials in the drainage
systems of the Leased Premises, the Building, the Outside Areas or the Property.
Tenant shall not drain or discharge any fluids in the landscaped areas or across
the paved areas of the Property. Tenant shall not use any of the Outside Areas
for the storage of its materials, supplies, inventory or equipment and all such
materials, supplies, inventory or equipment shall at all times be stored within
the Leased Premises. Tenant shall not commit nor permit to be committed any
waste in or about the Leased Premises, the Building, the Outside Areas or the
Property.
4.3 NOISE AND EMISSIONS. All noise generated by Tenant in its use of the Leased
Premises shall be confined or muffled so that it does not interfere with the
businesses of or annoy the occupants and/or users of adjacent properties. All
dust, fumes, odors and other emissions generated by Tenant's use of the Leased
Premises shall be sufficiently dissipated in accordance with sound environmental
practice and exhausted from the Leased Premises in such a manner so as not to
interfere with the businesses of or annoy the occupants and/or users of adjacent
properties, or cause any damage to the Leased Premises, the Building, the
Outside Areas or the Property or any component part thereof or the property of
adjacent property owners.
4.4 TRASH DISPOSAL. Tenant shall provide trash bins or other adequate garbage
disposal facilities within the trash enclosure areas provided or permitted by
Landlord outside the Leased Premises sufficient for the interim disposal of all
of its trash, garbage and waste. All such trash, garbage and waste temporarily
stored in such areas shall be stored in such a manner so that it is not visible
from outside of such areas, and Tenant shall cause such trash, garbage and waste
to be regularly removed from the Property. Tenant shall keep the Leased Premises
in a clean, safe and neat condition and keep the Outside Areas (except the trash
enclosure areas) free and clear of all of Tenant's trash, garbage, waste and/or
boxes, pallets and containers containing same at all times.
4.5 PARKING. Tenant shall have the non-exclusive use of its proportionate share
(calculated using the same method as Tenant's Expense Share) of parking spaces
located in the Outside Areas (which, subject to any transportation management
requirements of the City of Sunnyvale, shall be no less than 3.6 spaces per
1,000 rentable square feet in the Leased Premises). During construction of the
1184 Building (as defined in Article 16), Tenant shall have the non-exclusive
use of all parking areas located on the Property, subject to Landlord's use
thereof for construction activities. Notwithstanding the foregoing, Tenant shall
have exclusive use of the thirty (30) parking spaces directly in front of the
front door to the Leased Premises. Tenant shall not, at any time, park or permit
to be parked any recreational vehicles, inoperative vehicles or equipment in the
Outside Areas or on any portion of the Property. Tenant agrees to assume
responsibility for compliance by its employees and invitees with the parking
provisions contained herein. If Tenant or its employees park any vehicle within
the Property in violation of these provisions, then Landlord may, upon prior
written notice to Tenant giving Tenant one (1) day (or any applicable statutory
notice period, if longer than one (1) day) to remove such vehicle(s). Landlord
reserves the right to grant easements and access rights to others for use of the
parking areas on the Property, provided that such grants do not materially
interfere with Tenant's use of the parking areas.
4.6 SIGNS. Other than business identification signs allowed pursuant to this
Section 4.6, Tenant shall not place or install on or within any portion of the
Leased Premises, the exterior of the Building, the Outside Areas or the Property
any sign, advertisement, banner, placard, or picture which is visible from the
exterior of the Leased Premises. Subject to Landlord's prior written consent,
which shall not be unreasonably withheld, and subject to approval by the City of
Sunnyvale, Tenant shall have the right to install an illuminated business
identification sign on the Building. Landlord shall cooperate with Tenant's
efforts to obtain approval from the City of Sunnyvale for an illuminated sign.
Any such sign shall be installed at Tenant's sole cost and expense and only in
strict compliance with Landlord's approval (which shall not be unreasonably
withheld), and all Laws and all requirements of the City of Sunnyvale, using a
person approved by Landlord to install same. Subject to Landlord's prior written
consent,
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which shall not be unreasonably withheld, and subject to approval by the City of
Sunnyvale of the installation of no less than two (2) monument signs for the
Property, Tenant shall have the right to its own business identification
monument sign on the Property, in a location which indicates that such sign
belongs to the Building (or, if Tenant occupies all buildings on the Property,
Tenant shall have the exclusive right to all such monument signs), to be
installed by Landlord at its sole cost and expense. In the event the City of
Sunnyvale only approves the installation of one (1) monument sign for the
Property, Tenant shall have the right to place its business identification
signage on the top of said monument sign, which monument sign shall be installed
by Landlord, at its sole cost and expense. Such monument sign shall comply with
all requirements imposed by the City of Sunnyvale. Landlord may remove any signs
(which have not been approved in writing by Landlord), advertisements, banners,
placards or pictures so placed by Tenant on or within the Leased Premises, the
exterior of the Building, the Outside Areas or the Property and charge to Tenant
the cost of such removal, together with any costs incurred by Landlord to repair
any damage caused thereby, including any cost incurred to restore the surface
(upon which such sign was so affixed) to its original condition. Notwithstanding
anything to the contrary contained herein, Tenant shall remove all of Tenant's
signs, repair any damage caused thereby, and restore the surface upon which the
sign was affixed to its original condition, all to Landlord's reasonable
satisfaction, upon the termination of this Lease.
4.7 COMPLIANCE WITH LAWS AND PRIVATE RESTRICTIONS. Tenant shall abide by and
shall promptly observe and comply with, at its sole cost and expense, all Laws
and Private Restrictions respecting the use and occupancy of the Leased
Premises, the Building, the Outside Areas or the Property including, without
limitation, all Laws governing the use and/or disposal of Hazardous Materials
(except that Tenant shall not be responsible for any Hazardous Materials at the
Leased Premises, the Building, the Outside Areas or the Property prior to the
Delivery Date), and shall defend with competent counsel, indemnify and hold
Landlord harmless from any claims, damages or liability resulting from Tenant's
failure to so abide, observe, or comply. Tenant's obligations hereunder shall
survive the expiration or sooner termination of this Lease.
4.8 COMPLIANCE WITH INSURANCE REQUIREMENTS. With respect to any insurance
policies required or permitted to be carried by Landlord in accordance with the
provision of this Lease, copies of which have been or will, upon Tenant's
written request therefor, be provided to Tenant, Tenant shall not conduct nor
permit any other person to conduct any activities nor keep, store or use (or
allow any other person to keep, store or use) any item or thing within the
Leased Premises, the Building, the Outside Areas or the Property which (i) is
prohibited under the terms of any such policies, (ii) could result in the
termination of the coverage afforded under any of such policies, (iii) could
give to the insurance carrier the right to cancel any of such policies, or (iv)
could cause an increase in the rates (over standard rates) charged for the
coverage afforded under any of such policies. Tenant shall comply with all
requirements of any insurance company, insurance underwriter, or Board of Fire
Underwriters which are necessary to maintain, at standard rates, the insurance
coverages carried by either Landlord or Tenant pursuant to this Lease.
4.9 LANDLORD'S RIGHT TO ENTER. Landlord and its agents shall have the right to
enter the Leased Premises during normal business hours after giving Tenant
reasonable notice and subject to Tenant's reasonable security measures for the
purpose of (i) inspecting the same; (ii) showing the Leased Premises to
prospective purchasers, mortgagees or tenants; (iii) making necessary
alterations, additions or repairs; and (iv) performing any of Tenant's
obligations when Tenant has failed to do so. Landlord shall have the right to
enter the Leased Premises during normal business hours (or as otherwise agreed),
subject to Tenant's reasonable security measures, for purposes of supplying any
maintenance or services agreed to be supplied by Landlord. Landlord shall have
the right to enter the Outside Areas during normal business hours for purposes
of (i) inspecting the exterior of the Building and the Outside Areas; (ii)
posting notices of nonresponsibility (and for such purposes Tenant shall provide
Landlord at least thirty days' prior written notice of any work to be performed
on the Leased Premises); and (iii) supplying any services to be provided by
Landlord. Any entry into the Leased Premises or the Outside Areas obtained by
Landlord in accordance with this paragraph shall not under any circumstances be
construed or deemed to be a forcible or unlawful entry into, or a detainer of,
the Leased Premises, or an eviction, actual or constructive of Tenant from the
Leased Premises or any portion thereof. In exercising its rights under this
Section 4.9, Landlord shall use commercially reasonable efforts to minimize
interference with Tenant's use of the Leased Premises and the Outside Areas.
4.10 USE OF OUTSIDE AREAS. Tenant, in its use of the Outside Areas, shall at all
times keep the Outside Areas in a safe condition free and clear of all
materials, equipment, debris, trash (except within existing enclosed trash
areas), inoperable vehicles, and other items which are not specifically
permitted by Landlord to be stored or located thereon by Tenant. If, in the
opinion of Landlord, unauthorized persons are using any of the Outside Areas by
reason of, or under claim of, the express or implied authority or consent of
Tenant, then Tenant, upon demand of Landlord, shall restrain, to the fullest
extent then allowed by Law, such unauthorized use, and shall initiate such
appropriate proceedings as may be required to so restrain such use. Landlord
reserves the right to grant easements and access rights to others for use of the
Outside Areas and shall not be liable to Tenant for any diminution in Tenant's
right to use the Outside Areas as a result; provided, however, that other than
for construction of the 1184 Building and other requirements under the Use
Permit, of which the Tenant has knowledge and which the Tenant recognizes will
be taking place during the Lease Term, Landlord shall not exercise its rights
pursuant to this Section 4.10 in a manner which materially and adversely affects
Tenant's ability to use the Leased Premises and the Outside Areas for the
Permitted Use or materially and adversely affects Tenant's parking rights.
4.11 ENVIRONMENTAL PROTECTION. Tenant's obligations under this Section 4.11
shall survive the expiration or termination of this Lease.
(a) As used herein, the term "Hazardous Materials" shall mean any toxic
or hazardous substance, material or waste or any pollutant or infectious or
radioactive material, including but not limited to those substances, materials
or wastes regulated now or in the future under any of the following statutes or
regulations and any and all of those substances included within the definitions
of "hazardous substances," "hazardous materials," "hazardous waste," "hazardous
chemical substance or mixture," "imminently hazardous chemical substance or
mixture," "toxic
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substances," "hazardous air pollutant," "toxic pollutant," or "solid waste" in
the (a) Comprehensive Environmental Response, Compensation and Liability Act of
1990 ("CERCLA" or "Superfund"), as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), 42 U.S.C. Section 9601 et seq., (b)
Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. Section 6901
et seq., (c) Federal Water Pollution Control Act ("FSPCA"), 33 U.S.C. Section
1251 et seq., (d) Clean Air Act ("CAA"), 42 U.S.C. Section 7401 et seq., (e)
Toxic Substances Control Act ("TSCA"), 14 U.S.C. Section 2601 et seq., (f)
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., (g)
Carpenter-Presley-Tanner Hazardous Substance Account Act ("California
Superfund"), Cal. Health & Safety Code Section 25300 et seq., (h) California
Hazardous Waste Control Act, Cal. Health & Safety code Section 25100 et seq.,
(i) Porter-Cologne Water Quality Control Act ("Porter-Cologne Act"), Cal. Water
Code Section 13000 et seq., (j) Hazardous Waste Disposal Land Use Law, Cal.
Health & Safety codes Section 25220 et seq., (k) Safe Drinking Water and Toxic
Enforcement Act of 1986 ("Proposition 65"), Cal. Health & Safety code Section
25249.5 et seq., (l) Hazardous Substances Underground Storage Tank Law, Cal.
Health & Safety code Section 25280 et seq., (m) Air Resources Law, Cal. Health &
Safety Code Section 39000 et seq., and (n) regulations promulgated pursuant to
said laws or any replacement thereof, or as similar terms are defined in the
federal, state and local laws, statutes, regulations, orders or rules. Hazardous
Materials shall also mean any and all other biohazardous wastes and substances,
materials and wastes which are, or in the future become, regulated under
applicable Laws for the protection of health or the environment, or which are
classified as hazardous or toxic substances, materials or wastes, pollutants or
contaminants, as defined, listed or regulated by any federal, state or local
law, regulation or order or by common law decision, including, without
limitation, (i) trichloroethylene, tetrachloroethylene, perchloroethylene and
other chlorinated solvents, (ii) any petroleum products or fractions thereof,
(iii) asbestos, (iv) polychlorinted biphenyls, (v) flammable explosives, (vi)
urea formaldehyde, (vii) radioactive materials and waste, and (viii) materials
and wastes that are harmful to or may threaten human health, ecology or the
environment.
(b) Notwithstanding anything to the contrary in this Lease, Tenant, at
its sole cost, shall comply with all Laws relating to the storage, use and
disposal of Hazardous Materials by Tenant, its subtenants, their respective
agents, employees, contractors or invitees (collectively, the "Tenant Parties").
Tenant shall not store, use or dispose of any Hazardous Materials except for
those Hazardous Materials listed in a Hazardous Materials management plan
("HMMP") which Tenant shall deliver to Landlord upon execution of this Lease and
update at least annually with Landlord ("Permitted Materials") which may be
used, stored and disposed of provided (i) such Permitted Materials are used,
stored, transported, and disposed of in strict compliance with applicable laws,
(ii) such Permitted Materials shall be limited to the materials listed on and
may be used only in the quantities specified in the HMMP, and (iii) Tenant shall
provide Landlord with copies of all material safety data sheets and other
documentation required under applicable Laws in connection with Tenant's use of
Permitted Materials as and when such documentation is provided to any regulatory
authority having jurisdiction, in no event shall Tenant cause or permit to be
discharged into the plumbing or sewage system of the Building or onto the land
underlying or adjacent to the Building any Hazardous Materials. Tenant shall be
solely responsible for and shall defend, indemnify, and hold Landlord and its
agents harmless from and against all claims, costs and liabilities, including
attorneys' fees and costs, arising out of or in connection with Tenant's
storage, use and/or disposal of Hazardous Materials. If the presence of
Hazardous Materials on the Leased Premises caused or permitted by Tenant results
in contamination or deterioration of water or soil, then Tenant shall promptly
take any and all action necessary to clean up such contamination as required by
Law, but the foregoing shall in no event be deemed to constitute permission by
Landlord to allow the presence of such Hazardous Materials. At any time prior to
the expiration of the Lease Term if Tenant has a reasonable basis to suspect
that there has been any release or the presence of Hazardous Materials in the
ground or ground water on the Leased Premises which did not exist upon
commencement of the Lease Term, Tenant shall have the right to conduct
appropriate tests of water and soil and to deliver to Landlord the results of
such tests to demonstrate that no contamination in excess of permitted levels
has occurred as a result of Tenant's use of the Leased Premises. Tenant shall
further be solely responsible for, and shall defend, indemnify, and hold
Landlord and its agents harmless from and against all claims, costs and
liabilities, including attorneys' fees and costs, arising out of or in
connection with any removal, cleanup and restoration work and materials required
hereunder to return the Leased Premises and any other property of whatever
nature to their condition existing prior to the appearance of the Hazardous
Materials, to the extent such removal, cleanup and restoration work is required
by Law.
(c) Upon termination or expiration of the Lease, Tenant at its sole
expense shall cause all Hazardous Materials placed in or about the Leased
Premises, the Building and/or the Property by any Tenant Parties, and all
installations (whether interior or exterior) made by or on behalf of Tenant
relating to the storage, use, disposal or transportation of Hazardous Materials
to be removed from the property and transported for use, storage or disposal in
accordance and compliance with all Laws and other requirements respecting
Hazardous Materials used or permitted to be used by Tenant. Tenant shall apply
for and shall obtain from all appropriate regulatory authorities (including any
applicable fire department or regional water quality control board) all permits,
approvals and clearances necessary for the closure of the Property and shall
take all other actions as may be required to complete the closure of the
Building and the Property. In addition, prior to vacating the Leased Premises,
Tenant shall undertake and submit to Landlord an environmental site assessment
from an environmental consulting company reasonably acceptable to Landlord which
site assessment shall evidence Tenant's compliance with this Paragraph 4.11.
(d) At any time prior to expiration of the Lease term, subject to
reasonable prior notice (not less than forty-eight (48) hours) and Tenant's
reasonable security requirements and provided such activities do not
unreasonably interfere with the conduct of Tenant's business at the Leased
Premises, Landlord shall have the right to enter in and upon the Property,
Building and Leased Premises in order to conduct appropriate tests of water and
soil to determine whether levels of any Hazardous Materials in excess of legally
permissible levels has occurred as a result of any Tenant Parties' use thereof.
Landlord shall furnish copies of all such test results and reports to Tenant
and, at Tenant's option and cost, shall permit split sampling for testing and
analysis by Tenant. Such testing shall be at Tenant's expense if Landlord has a
reasonable basis for suspecting and confirms the presence of Hazardous
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Materials in the soil or surface or ground water in, on, under, or about the
Property, the Building or the Leased Premises, which has been caused by or
resulted from the activities of any Tenant Parties.
(e) Landlord may voluntarily cooperate in a reasonable manner with the
efforts of all governmental agencies in reducing actual or potential
environmental damage. Tenant shall not be entitled to terminate this Lease or to
any reduction in or abatement of rent by reason of such compliance or
cooperation. Tenant agrees at all times to cooperate fully with the requirements
and recommendations of governmental agencies regulating, or otherwise involved
in, the protection of the environment.
4.12 RULES AND REGULATIONS. In the event Juniper Networks, Inc. is no longer the
sole tenant of the Building, Landlord shall have the right from time to time to
establish reasonable rules and regulations and/or amendments or additions
thereto respecting the use of the Leased Premises and the Outside Areas for the
care and orderly management of the Property. Upon delivery to Tenant of a copy
of such rules and regulations or any amendments or additions thereto, Tenant
shall comply with such rules and regulations. A violation by Tenant of any of
such rules and regulations shall constitute a default by Tenant under this
Lease. If there is a conflict between the rules and regulations and any of the
provisions of this Lease, the provisions of this Lease shall prevail. Landlord
shall not be responsible or liable to Tenant for the violation of such rules and
regulations by any other tenant of the Property.
4.13 RESERVATIONS. Landlord reserves the right from time to time to grant,
without the consent or joinder of Tenant, such easements, rights of way and
dedications that Landlord deems necessary, and to cause the recordation of
parcel maps and covenants, conditions and restrictions, so long as such
easements, rights of way, dedications and covenants, conditions and restrictions
do not materially and adversely affect the use of the Leased Premises by Tenant,
materially and adversely affect Tenant's parking rights, and do not prohibit any
Permitted Use. Tenant agrees to execute any documents reasonably request by
Landlord to effectuate any such easement rights, dedications, maps or covenants,
conditions and restrictions.
ARTICLE 5
REPAIRS, MAINTENANCE, SERVICES AND UTILITIES
5.1 REPAIR AND MAINTENANCE. Except in the case of damage to or destruction of
the Leased Premises, the Building, the Outside Areas or the Property caused by
an act of God or other peril, in which case the provisions of Article 10 shall
control, the parties shall have the following obligations and responsibilities
with respect to the repair and maintenance of the Leased Premises, the Building,
the Outside Areas, and the Property.
(a) TENANT'S OBLIGATIONS. Tenant shall, at all times during the Lease
Term and at its sole cost and expense, regularly clean and continuously keep and
maintain in good order, condition and repair the Leased Premises and every part
thereof including, without limiting the generality of the foregoing, (i) all
interior walls, floors and ceilings, (ii) all windows, doors and skylights,
(iii) all electrical wiring, conduits, connectors and fixtures, (iv) all
plumbing, pipes, sinks, toilets, faucets and drains, (v) all lighting fixtures,
bulbs and lamps and all heating, ventilating and air conditioning equipment, and
(vi) all entranceways to the Leased Premises. Tenant shall hire, at Tenant's
sole cost and expense, a licensed heating, ventilating and air conditioning
contractor to regularly and periodically (not less frequently than every three
months) inspect and perform required maintenance on the heating, ventilating and
air conditioning equipment and systems serving the Leased Premises. Tenant shall
hire, at Tenant's sole cost and expense, a licensed roofing contractor to
regularly and periodically (not less frequently than semi-annually) inspect and
perform required maintenance on the roof of the Building. If Tenant shall be in
default of its obligations to maintain the heating, ventilating and air
conditioning equipment and systems or roof, Landlord may, at its election,
contract in its own name for such regular and periodic inspections and
maintenance of the heating, ventilating and air conditioning equipment and
systems and/or roof, and charge to Tenant, as Additional Rent, the cost thereof.
Tenant shall, at its sole cost and expense, repair all damage to the Leased
Premises, the Building, the Outside Areas or the Property caused by the
activities of Tenant, its employees, invitees or contractors promptly following
written notice from Landlord to so repair such damages (subject to Section 9.3
of this Lease). If Tenant shall fail to perform the required maintenance or fail
to make repairs required of it pursuant to this paragraph within a reasonable
period of time following notice from Landlord to do so, then Landlord may, at
its election and without waiving any other remedy it may otherwise have under
this Lease or at law, perform such maintenance or make such repairs and charge
to Tenant, as Additional Rent, the costs so incurred by Landlord for same. All
glass within or a part of the Leased Premises, both interior and exterior, is at
the sole risk of Tenant and any broken glass shall promptly be replaced by
Tenant at Tenant's expense with glass of the same kind, size and quality.
Notwithstanding the foregoing, in the event that, due to normal wear and tear
(and not due to other factors, including, without limitation, Tenant's misuse,
overuse or Tenant's alterations, improvements or modifications to the Leased
Premises, the Outside Areas or the Building), Tenant would be required by this
Section 5.1(a) to make a repair or replacement that would be considered a
"capital improvement" as determined in accordance with generally accepted
accounting principles, Landlord shall make such repair or replacement and charge
to Tenant, as Additional Rent, the cost thereof (provided that the cost of such
repair or replacement shall be amortized over its useful life and only the
amortizing portion of such cost shall be included in Additional Rent on a
monthly basis).
(b) LANDLORD'S OBLIGATION. Landlord shall at its sole cost and expense,
at all times during the Lease Term, maintain in good condition and repair the
foundation, the footings, the roof screen, the roof screen penetrations, the
roof structure, load-bearing and exterior walls of the Building. Landlord shall,
at all times during the Lease Term, regularly and continuously keep and maintain
in good order and repair and in a clean and safe condition the Outside Areas,
and charge to Tenant, as Additional Rent, the cost thereof. Landlord shall
regularly and periodically sweep and clean the driveways and parking areas, and
charge to Tenant, as Additional Rent, the cost thereof.
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5.2 UTILITIES. Tenant shall arrange at its sole cost and expense and in its own
name, for the supply of gas and electricity to the Leased Premises. In the event
that such services are not separately metered, Tenant shall, at its sole
expense, cause such meters to be installed. Landlord shall maintain the water
meter(s) in its own name; provided, however, that if at any time during the
Lease Term Landlord shall require Tenant to put the water service in Tenant's
name, Tenant shall do so at Tenant's sole cost. Tenant shall be responsible for
determining if the local supplier of water, gas and electricity can supply the
needs of Tenant and whether or not the existing water, gas and electrical
distribution systems within the Building and the Leased Premises are adequate
for Tenant's needs. Tenant shall be responsible for determining if the existing
sanitary and storm sewer systems now servicing the Leased Premises and the
Property are adequate for Tenant's needs. Tenant shall pay all charges for
water, gas, electricity and storm and sanitary sewer services as so supplied to
the Leased Premises, irrespective of whether or not the services are maintained
in Landlord's or Tenant's name.
5.3 SECURITY. Tenant acknowledges that Landlord has not undertaken any duty
whatsoever to provide security for the Leased Premises, the Building, the
Outside Areas or the Property and, accordingly, Landlord is not responsible for
the security of same or the protection of Tenant's property or Tenant's
employees, invitees or contractors. To the extent Tenant determines that such
security or protection services are advisable or necessary, Tenant shall arrange
for and pay the costs of providing same.
5.4 ENERGY AND RESOURCE CONSUMPTION. Landlord may voluntarily cooperate in a
reasonable manner with the efforts of governmental agencies and/or utility
suppliers in reducing energy or other resource consumption within the Property.
Tenant shall not be entitled to terminate this Lease or to any reduction in or
abatement of rent by reason of such compliance or cooperation. Tenant agrees at
all times to cooperate fully with Landlord and to abide by all reasonable rules
established by Landlord (i) in order to maximize the efficient operation of the
electrical, heating, ventilating and air conditioning systems and all other
energy or other resource consumption systems with the Property and/or (ii) in
order to comply with the requirements and recommendations of utility suppliers
and governmental agencies regulating the consumption of energy and/or other
resources.
5.5 LIMITATION OF LANDLORD'S LIABILITY. Landlord shall not be liable to Tenant
for injury to Tenant, its employees, agents, invitees or contractors, damage to
Tenant's property or loss of Tenant's business or profits, nor shall Tenant be
entitled to terminate this Lease or to any reduction in or abatement of rent by
reason of (i) Landlord's failure to provide security services or systems within
the Property for the protection of the Leased Premises, the Building or the
Outside Areas, or the protection of Tenant's property or Tenant's employees,
invitees, agents or contractors, or (ii) Landlord's failure to perform any
maintenance or repairs to the Leased Premises, the Building, the Outside Areas
or the Property until Tenant shall have first notified Landlord, in writing, of
the need for such maintenance or repairs, and then only after Landlord shall
have had a reasonable period of time following its receipt of such notice within
which to perform such maintenance or repairs, or (iii) any failure,
interruption, rationing or other curtailment in the supply of water, electric
current, gas or other utility service to the Leased Premises, the Building, the
Outside Areas or the Property from whatever cause (other than to the extent
caused by Landlord's active negligence or willful misconduct), or (iv) the
unauthorized intrusion or entry into the Leased Premises by third parties (other
than Landlord).
ARTICLE 6
ALTERATIONS AND IMPROVEMENTS
6.1 BY TENANT. Tenant shall not make any alterations to or modifications of the
Leased Premises or construct any improvements within the Leased Premises until
Landlord shall have first approved, in writing, the plans and specifications
therefor, which approval shall not be unreasonably withheld or delayed.
Landlord's approval shall be deemed given if not denied by Landlord in a written
notice to Tenant delivered within fifteen (15) days following receipt of
Tenant's written request. Tenant's written request shall also contain a request
for Landlord to elect whether or not it will require Tenant to remove the
subject alterations, modifications or improvements at the expiration or earlier
termination of this Lease. If such additional request is not included, Landlord
may make such election at the expiration or earlier termination of this Lease
(and for purposes of Tenant's removal obligations set forth in Section 2.6
above, Landlord shall be deemed to have made the election at the time the
alterations, modifications or improvements were completed). Notwithstanding the
foregoing, Tenant shall have the right, at its sole cost and expense, subject to
the prior written approval of Landlord (which approval shall not be unreasonably
withheld or delayed) to construct a covered open walkway between the Building
and the 1194 Building and Tenant shall not be required to remove such walkway
upon the termination of this Lease. All modifications, alterations or
improvements, once approved by Landlord, shall be made, constructed or installed
by Tenant at Tenant's expense (including all permit fees and governmental
charges related thereto), using a licensed contractor first approved by
Landlord, in substantial compliance with the Landlord-approved plans and
specifications therefor. All work undertaken by Tenant shall be done in
accordance with all Laws and in a good and workmanlike manner using new
materials of good quality. Tenant shall not commence the making of any such
modifications or alterations or the construction of any such improvements until
(i) all required governmental approvals and permits shall have been obtained,
(ii) all requirements regarding insurance imposed by this Lease have been
satisfied, (iii) Tenant shall have given Landlord at least five business days
prior written notice of its intention to commence such work so that Landlord may
post and file notices of non-responsibility, and (iv) if requested by Landlord,
Tenant shall have obtained contingent liability and broad form builder's risk
insurance in an amount satisfactory to Landlord in its reasonable discretion to
cover any perils relating to the proposed work not covered by insurance carried
by Tenant pursuant to Article 9. In no event shall Tenant make any modification,
alterations or improvements whatsoever to the Outside Areas or the exterior or
structural components of the Building including, without limitation, any cuts or
penetrations in the floor, roof or exterior walls of the Leased Premises (except
to the extent Tenant has obtained Landlord's approval pursuant to Section 4.2).
As used in this Article, the term "modifications, alterations and/or
improvements" shall include, without limitation, the installation of additional
electrical outlets, overhead lighting
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fixtures, drains, sinks, partitions, doorways, or the like. Notwithstanding the
foregoing, Tenant, without Landlord's prior written consent, shall be permitted
to make non-structural alterations to the Building, provided that: (a) such
alterations do not exceed $20,000 individually, (b) Tenant shall timely provide
Landlord the notice required pursuant to Paragraph 4.9 above, (c) Tenant shall
notify Landlord in writing within thirty (30) days of completion of the
alteration and deliver to Landlord a set of the plans and specifications
therefor, either "as built" or marked to show construction changes made, and (d)
Tenant shall, upon Landlord's request, remove the alteration at the termination
of the Lease and restore the Leased Premises to their condition prior to such
alteration.
6.2 OWNERSHIP OF IMPROVEMENTS. All modifications, alterations and improvements
made or added to the Leased Premises by Tenant (other than Tenant's inventory,
equipment, movable furniture, wall decorations and trade fixtures) shall be
deemed real property and a part of the Leased Premises, but shall remain the
property of Tenant during the Lease. Any such modifications, alterations or
improvements, once completed, shall not be altered or removed from the Leased
Premises during the Lease Term without Landlord's written approval first
obtained in accordance with the provisions of Paragraph 6.1 above. At the
expiration or sooner termination of this Lease, all such modifications,
alterations and improvements other than Tenant's inventory, equipment, movable
furniture, wall decorations and trade fixtures, shall automatically become the
property of Landlord and shall be surrendered to Landlord as part of the Leased
Premises as required pursuant to Article 2, unless Landlord shall require Tenant
to remove any of such modifications, alterations or improvements in accordance
with the provisions of Article 2, in which case Tenant shall so remove same.
Landlord shall have no obligations to reimburse Tenant for all or any portion of
the cost or value of any such modifications, alterations or improvements so
surrendered to Landlord. All modifications, alterations or improvements which
are installed or constructed on or attached to the Leased Premises by Landlord
and/or at Landlord's expense shall be deemed real property and a part of the
Leased Premises and shall be property of Landlord. All lighting, plumbing,
electrical, heating, ventilating and air conditioning fixtures, partitioning,
window coverings, wall coverings and floor coverings installed by Tenant shall
be deemed improvements to the Leased Premises and not trade fixtures of Tenant.
Landlord shall have no lien or interest whatsoever in any of Tenant's property
or equipment located in the Leased Premises or elsewhere, and Landlord waives
any such liens and interests and Landlord hereby agrees to execute a Landlord
Waiver with respect thereto in favor of any lender or equipment lessor of Tenant
strictly in the form attached as Exhibit F.
6.3 ALTERATIONS REQUIRED BY LAW. Tenant shall make all modifications,
alterations and improvements to the Leased Premises, at its sole cost, that are
required by any Law because of (i) Tenant's use or occupancy of the Leased
Premises, the Building, the Outside Areas or the Property, (ii) Tenant's
application for any permit or governmental approval, or (iii) Tenant's making of
any modifications, alterations or improvements to or within the Leased Premises.
If Landlord shall, at any time during the Lease Term, be required by any
governmental authority to make any modifications, alterations or improvements to
the Building or the Property, the cost incurred by Landlord in making such
modifications, alterations or improvements, including interest at a rate equal
to the greater of (a) 12%, or (b) the sum of that rate quoted by Wells Fargo
Bank, N.T. & S.A. from time to time as its prime rate, plus two percent (2%)
("Wells Prime Plus Two") (but in no event more than the maximum interest rate
permitted by law), shall be amortized by Landlord over the useful life of such
modifications, alterations or improvements, as determined in accordance with
generally accepted accounting principles, and the monthly amortized cost of such
modifications, alterations and improvements as so amortized shall be considered
a Property Maintenance Cost.
6.4 LIENS. Tenant shall keep the Property and every part thereof free from any
lien, and shall pay when due all bills arising out of any work performed,
materials furnished, or obligations incurred by Tenant, its agents, employees or
contractors relating to the Property. If any such claim of lien is recorded
against Tenant's interest in this Lease, the Property or any part thereof,
Tenant shall bond against, discharge or otherwise cause such lien to be entirely
released within ten days after the same has been recorded. Tenant's failure to
do so shall be conclusively deemed a material default under the terms of this
Lease.
ARTICLE 7
ASSIGNMENT AND SUBLETTING BY TENANT
7.1 BY TENANT. Tenant shall not sublet the Leased Premises or any portion
thereof or assign its interest in this Lease, whether voluntarily or by
operation of Law, without Landlord's prior written consent which shall not be
unreasonably withheld. Any attempted subletting or assignment without Landlord's
prior written consent, at Landlord's election, shall constitute a default by
Tenant under the terms of this Lease. The acceptance of rent by Landlord from
any person or entity other than Tenant, or the acceptance of rent by Landlord
from Tenant with knowledge of a violation of the provisions of this paragraph,
shall not be deemed to be a waiver by Landlord of any provision of this Article
or this Lease or to be a consent to any subletting by Tenant or any assignment
of Tenant's interest in this Lease. Without limiting the circumstances in which
it may be reasonable for Landlord to withhold its consent to an assignment or
subletting, Landlord and Tenant acknowledge that it shall be reasonable for
Landlord to withhold its consent in the following instances:
(a) the proposed assignee or sublessee is a governmental agency;
(b) in Landlord's reasonable judgment, the use of the Leased Premises by
the proposed assignee or sublessee would involve occupancy by other than a
Permitted Use as set forth in Article 1, would entail any alterations which
would lessen the value of the leasehold improvements in the Leased Premises, or
would require increased services by Landlord;
(c) in Landlord's reasonable judgment, the financial worth of the
proposed assignee is less than that of Tenant or does not meet the credit
standards applied by Landlord at the time of the proposed assignment;
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(d) the proposed assignee or sublessee (or any of its affiliates) has
been in material default under a lease, has been in litigation with a previous
landlord due to a default under a lease, or in the ten years prior to the
assignment or sublease has filed for bankruptcy protection, has been the subject
of an involuntary bankruptcy, or has been adjudged insolvent;
(e) Landlord has experienced a previous default by or is in litigation
with the proposed assignee or sublessee;
(f) in Landlord's reasonable judgment, the Leased Premises, or the
relevant part thereof, will be used in a manner that will violate any negative
covenant as to use contained in this Lease;
(g) the use of the Leased Premises by the proposed assignee or sublessee
will violate any applicable law, ordinance or regulation;
(h) the proposed assignment or sublease fails to include all of the
terms and provisions required to be included therein pursuant to this Article 7;
(i) Tenant is in default of any obligation of Tenant under this Lease,
or Tenant has defaulted on any of its payment obligations under this Lease on
three or more occasions during the 12 months preceding the date that Tenant
shall request consent; or
(j) in the case of a subletting of less than the entire Leased Premises,
if the subletting would result in the division of any floor of the Building into
more than two subleased parcels or would require improvements to be made outside
of the Leased Premises.
7.2 MERGER, REORGANIZATION, OR SALE OF ASSETS. Each of the following shall be
deemed a voluntary assignment of Tenant's interest in this Lease: (a)
dissolution, merger, consolidation or other reorganization of Tenant; or (b) at
any time that the capital stock of Tenant is not publicly traded on a recognized
exchange, the sale or transfer in one or more transactions to one or more
related parties of a controlling percentage of the capital stock of Tenant; or
(c) or the sale or transfer of all or substantially all of the assets of Tenant.
The phrase "controlling percentage" means the ownership of and the right to vote
stock possessing more than fifty percent of the total combined voting power of
all classes of Tenant's capital stock issued, outstanding and entitled to vote
for the election of directors. If Tenant is a partnership, a withdrawal or
change, voluntary, involuntary or by operation of Law, of any general partner,
or the dissolution of the partnership, shall be deemed a voluntary assignment of
Tenant's interest in this Lease. Notwithstanding the foregoing, Tenant (or any
Permitted Assignee, as defined herein) may, without Landlord's prior written
consent and without being subject to any of the provisions of this Article 7,
including without limitation, Landlord's right to recapture any portion of the
Leased Premises, sublet the Leased Premises or assign this Lease to
(individually, a "Permitted Assignee," collectively, "Permitted Assignees"): (i)
a subsidiary, affiliate, division, corporation or joint venture controlling,
controlled by or under common control with Tenant; or (ii) a successor
corporation related to Tenant by merger, consolidation, nonbankruptcy
reorganization, or government action; or (iii) a purchaser of all or
substantially all of the assets of Tenant; provided that either (1) Tenant shall
remain primarily liable under the Lease (except in the event it is not the
surviving entity in the merger) or (2) that any Permitted Assignee under (i),
(ii) or (iii) above has a net worth equal to or greater than Tenant and does not
have any contingent or off-balance sheet liabilities that make it less credit
worthy than Tenant. In the event any proposed assignee or subtenant under (i),
(ii) or (iii) above has a net worth less than Tenant or has contingent or
off-balance sheet liabilities that make it less credit worthy than Tenant,
Landlord's consent (pursuant to Section 7.1 above) shall be required and all of
the terms and conditions of this Article 7 shall apply, except that Landlord
shall not be entitled to terminate this Lease pursuant to Section 7.3, and
Landlord shall not be entitled to any assignment consideration or excess rentals
pursuant to Section 7.5 of this Lease. If any proposed assignee or subtenant
under (i), (ii) or (iii) above does not qualify as a Permitted Assignee because
it has a net worth which is less than Tenant or has contingent or off-balance
sheet liabilities that make it less creditworthy than Tenant, then in the event
Landlord nevertheless consents (pursuant to the provisions of Section 7.1 above)
to such proposed assignee or subtenant, such proposed assignee or subtenant
shall constitute a Permitted Assignee under this Lease.
7.3 LANDLORD'S ELECTION. If Tenant shall desire to assign its interest under the
Lease or to sublet the Leased Premises, Tenant must first notify Landlord, in
writing, of its intent to so assign or sublet, at least thirty (30) days in
advance of the date it intends to so assign its interest in this Lease or sublet
the Leased Premises but not sooner than one hundred eighty days in advance of
such date, specifying in detail the terms of such proposed assignment or
subletting, including the name of the proposed assignee or sublessee, the
property assignee's or sublessee's intended use of the Leased Premises, current
financial statements (including a balance sheet, income statement and statement
of cash flow, all prepared in accordance with generally accepted accounting
principles) of such proposed assignee or sublessee, the form of documents to be
used in effectuating such assignment or subletting and such other information as
Landlord may reasonably request. Landlord shall have a period of ten (10)
business days following receipt of such notice and the required information
within which to do one of the following: (i) consent to such requested
assignment or subletting subject to Tenant's compliance with the conditions set
forth in Paragraph 7.4 below, or (ii) refuse to so consent to such requested
assignment or subletting, provided that such consent shall not be unreasonably
refused, or (iii) in the case of an assignment of this Lease or sublet of 100%
of the Leased Premises, terminate this Lease. During such ten (10) business day
period, Tenant covenants and agrees to supply to Landlord, upon request, all
necessary or relevant information which Landlord may reasonably request
respecting such proposed assignment or subletting and/or the proposed assignee
or sublessee. Notwithstanding the foregoing, if Landlord elects to terminate the
Lease as provided herein, Landlord shall notify Tenant thereof during such ten
(10) business day period and Tenant shall have ten (10) business days thereafter
to either (i) accept Landlord's termination or (ii) rescind its request for
consent to the assignment or subletting, in which case the Lease shall continue
in full force and effect between Tenant and Landlord.
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7.4 CONDITIONS TO LANDLORD'S CONSENT. If Landlord elects to consent, or shall
have been ordered to so consent by a court of competent jurisdiction, to such
requested assignment or subletting, such consent shall be expressly conditioned
upon the occurrence of each of the conditions below set forth, and any purported
assignment or subletting made or ordered prior to the full and complete
satisfaction of each of the following conditions shall be void and, at the
election of Landlord, which election may be exercised at any time following such
a purported assignment or subletting but prior to the satisfaction of each of
the stated conditions, shall constitute a material default by Tenant under this
Lease until cured by satisfying in full each such condition by the assignee or
sublessee. The conditions are as follows:
(a) Landlord having approved in form and substance the assignment or
sublease agreement and any ancillary documents, which approval shall not be
unreasonably withheld by Landlord if the requirements of this Article 7 are
otherwise complied with.
(b) Each such sublessee or assignee having agreed, in writing
satisfactory to Landlord and its counsel and for the benefit of Landlord, to
assume, to be bound by, and to perform the obligations of this Lease to be
performed by Tenant which relate to space being subleased.
(c) Tenant having fully and completely performed all of its obligations
under the terms of this Lease through and including the date of such assignment
or subletting.
(d) Tenant having reimbursed to Landlord all reasonable costs and
reasonable attorneys' fees incurred by Landlord in conjunction with the
processing and documentation of any such requested subletting or assignment.
(e) Tenant having delivered to Landlord a complete and fully-executed
duplicate original of such sublease agreement or assignment agreement (as
applicable) and all related agreements.
(f) Tenant having paid, or having agreed in writing to pay as to future
payments, to Landlord fifty percent (50%) of all assignment consideration or
excess rentals to be paid to Tenant or to any other on Tenant's behalf or for
Tenant's benefit for such assignment or subletting as follows:
(i) If Tenant assigns its interest under this Lease and if all
or a portion of the consideration for such assignment is to be paid by the
assignee at the time of the assignment, that Tenant shall have paid to Landlord
and Landlord shall have received an amount equal to fifty percent (50%) of the
assignment consideration so paid or to be paid (whichever is the greater) at the
time of the assignment by the assignee; or
(ii) If Tenant assigns its interest under this Lease and if
Tenant is to receive all or a portion of the consideration for such assignment
in future installments, that Tenant and Tenant's assignee shall have entered
into a written agreement with and for the benefit of Landlord satisfactory to
Landlord and its counsel whereby Tenant and Tenant's assignee jointly agree to
pay to Landlord an amount equal to fifty percent (50%) of all such future
assignment consideration installments to be paid by such assignee as and when
such assignment consideration is so paid.
(iii) If Tenant subleases the Leased Premises, that Tenant and
Tenant's sublessee shall have entered into a written agreement with and for the
benefit of Landlord satisfactory to Landlord and its counsel whereby Tenant and
Tenant's sublessee jointly agree to pay to Landlord fifty percent (50%) of all
excess rentals to be paid by such sublessee as and when such excess rentals are
so paid.
7.5 ASSIGNMENT CONSIDERATION AND EXCESS RENTALS DEFINED. For purposes of this
Article, including any amendment to this Article by way of addendum or other
writing, the term "assignment consideration" shall mean all consideration to be
paid by the assignee to Tenant or to any other party on Tenant's behalf or for
Tenant's benefit as consideration for such assignment, after deduction for
reasonable leasing commissions and reasonable legal fees incurred by Tenant in
connection with such assignment and, during the first six (6) years of the Lease
Term, the cost of tenant improvements made by Tenant at Tenant's sole cost and
expense to prepare the Leased Premises for the assignee, but without deduction
for any other costs or expenses, and the term "excess rentals" shall mean all
consideration to be paid by the sublessee to Tenant or to any other party on
Tenant's behalf or for Tenant's benefit for the sublease of the Leased Premises
in excess of the rent due to Landlord under the terms of this Lease for the same
period, after deduction for reasonable leasing commissions and reasonable legal
fees incurred by Tenant in connection with such sublease and, during the first
six (6) years of the Lease Term, the cost of tenant improvements made by Tenant
at Tenant's sole cost and expense to prepare the Leased Premises for the
subtenant, but without deduction for any other costs or expenses. Tenant agrees
that the portion of any assignment consideration and/or excess rentals arising
from any assignment or subletting by Tenant which is to be paid to Landlord
pursuant to this Article now is and shall then be the property of Landlord and
not the property of Tenant.
7.6 PAYMENTS. All payments required by this Article to be made to Landlord shall
be made in cash in full as and when they become due. At the time Tenant,
Tenant's assignee or sublessee makes each such payment to Landlord, Tenant or
Tenant's assignee or sublessee, as the case may be, shall deliver to Landlord an
itemized statement in reasonable detail showing the method by which the amount
due Landlord was calculated and certified by the party making such payment as
true and correct.
7.7 GOOD FAITH. The rights granted to Tenant by this Article are granted in
consideration of Tenant's express covenant that all pertinent allocations which
are made by Tenant between the rental value of the Leased Premises and the value
of any of Tenant's personal property which may be conveyed or leased generally
concurrently with and which may reasonably be considered a part of the same
transaction as the permitted assignment or subletting
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shall be made fairly, honestly and in good faith. If Tenant shall breach this
covenant, Landlord may immediately declare Tenant to be in default under the
terms of this Lease and terminate this Lease and/or exercise any other rights
and remedies Landlord would have under the terms of this Lease in the case of a
material default by Tenant under this Lease.
7.8 EFFECT OF LANDLORD'S CONSENT. No subletting or assignment, even with the
consent of Landlord, shall relieve Tenant of its personal and primary obligation
to pay rent and to perform all of the other obligations to be performed by
Tenant hereunder. Consent by Landlord to one or more assignments of Tenant's
interest in this Lease or to one or more sublettings of the Leased Premises
shall not be deemed to be a consent to any subsequent assignment or subletting.
If Landlord shall have been ordered by a court of competent jurisdiction to
consent to a requested assignment or subletting, or such an assignment or
subletting shall have been ordered by a court of competent jurisdiction over the
objection of Landlord, such assignment or subletting shall not be binding
between the assignee (or sublessee) and Landlord until such time as all
conditions set forth in Paragraph 7.4 above have been fully satisfied (to the
extent not then satisfied) by the assignee or sublessee, including, without
limitation, the payment to Landlord of all agreed assignment considerations
and/or excess rentals then due Landlord.
ARTICLE 8
LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY
8.1 LIMITATION ON LANDLORD'S LIABILITY AND RELEASE. Landlord shall not be liable
to Tenant for, and Tenant hereby releases Landlord and its partners, principals,
members, officers, agents, employees, lenders, attorneys, and consultants from,
any and all liability, whether in contract, tort or on any other basis, for any
injury to or any damage sustained by Tenant, Tenant's agents, employees,
contractors or invitees, any damage to Tenant's property, or any loss to
Tenant's business, loss of Tenant's profits or other financial loss of Tenant
resulting from or attributable to the condition of, the management of, the
repair or maintenance of, the protection of, the supply of services or utilities
to, the damage in or destruction of the Leased Premises, the Building, the
Property or the Outside Areas, including without limitation (i) the failure,
interruption, rationing or other curtailment or cessation in the supply of
electricity, water, gas or other utility service to the Property, the Building
or the Leased Premises; (ii) the vandalism or forcible entry into the Building
or the Leased Premises; (iii) the penetration of water into or onto any portion
of the Leased Premises; (iv) the failure to provide security and/or adequate
lighting in or about the Property, the Building or the Leased Premises, (v) the
existence of any design or construction defects within the Property, the
Building or the Leased Premises; (vi) the failure of any mechanical systems to
function properly (such as the HVAC systems); (vii) the blockage of access to
any portion of the Property, the Building or the Leased Premises, except that
Tenant does not so release Landlord from such liability to the extent such
damage was proximately caused by Landlord's active negligence, willful
misconduct, or Landlord's failure to perform an obligation expressly undertaken
pursuant to this Lease after a reasonable period of time shall have lapsed
following receipt of written notice from Tenant to so perform such obligation.
In this regard, Tenant acknowledges that it is fully apprised of the provisions
of Law relating to releases, and particularly to those provisions contained in
Section 1542 of the California Civil Code which reads as follows:
"A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor."
Notwithstanding such statutory provision, and for the purpose of implementing a
full and complete release and discharge, Tenant hereby (i) waives the benefit of
such statutory provision and (ii) acknowledges that, subject to the exceptions
specifically set forth herein, the release and discharge set forth in this
paragraph is a full and complete settlement and release and discharge of all
claims and is intended to include in its effect, without limitation, all claims
which Tenant, as of the date hereof, does not know of or suspect to exist in its
favor.
8.2 TENANT'S INDEMNIFICATION OF LANDLORD. Tenant shall defend with competent
counsel satisfactory to Landlord any claims made or legal actions filed or
threatened against Landlord with respect to the violation of any Law, or the
death, bodily injury, personal injury, property damage, or interference with
contractual or property rights suffered by any third party, occurring within the
Leased Premises or resulting from Tenant's use or occupancy of the Leased
Premises, the Building or the Outside Areas, or resulting from Tenant's
activities in or about the Leased Premises, the Building, the Outside Areas or
the Property, and Tenant shall indemnify and hold Landlord, Landlord's partners,
principals, members, employees, agents and contractors harmless from any loss
liability, penalties, or expense whatsoever (including any loss attributable to
vacant space which otherwise would have been leased, but for such activities)
resulting therefrom, except to the extent proximately caused by the active
negligence or willful misconduct of Landlord or Landlord's failure to perform an
obligation expressly undertaken pursuant to this Lease after a reasonable period
of time shall have lapsed following receipt of written notice from Tenant to so
perform such obligation. This indemnity agreement shall survive the expiration
or sooner termination of this Lease.
ARTICLE 9
INSURANCE
9.1 TENANT'S INSURANCE. Tenant shall maintain insurance complying with all of
the following:
(a) Tenant shall procure, pay for and keep in full force and effect, at
all times during the Lease Term, the following:
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(i) Comprehensive general liability insurance insuring Tenant
against liability for personal injury, bodily injury, death and damage to
property occurring within the Leased Premises, or resulting from Tenant's use or
occupancy of the Leased Premises, the Building, the Outside Areas or the
Property, or resulting from Tenant's activities in or about the Leased Premises
or the Property, with coverage in an amount equal to Tenant's Required Liability
Coverage (as set forth in Article 1), which insurance shall contain a "broad
form liability" endorsement insuring Tenant's performance of Tenant's
obligations to indemnify Landlord as contained in this Lease.
(ii) Fire and property damage insurance in so-called "fire and
extended coverage" form insuring Tenant against loss from physical damage to
Tenant's personal property, inventory, trade fixtures and improvements within
the Leased Premises with coverage for the full actual replacement cost thereof;
(iii) Plate glass insurance, at actual replacement cost;
(iv) Pressure vessel insurance, if applicable;
(v) Workers' compensation insurance and any other employee
benefit insurance sufficient to comply with all laws; and
(vi) With respect to making of alterations or the construction
of improvements or the like undertaken by Tenant, contingent liability and
builder's risk insurance, in an amount and with coverage reasonably satisfactory
to Landlord.
(b) Each policy of liability insurance required to be carried by Tenant
pursuant to this paragraph or actually carried by Tenant with respect to the
Leased Premises or the Property: (i) shall, except with respect to insurance
required by subparagraph (a)(vi) above, name Landlord, and such others as are
designated by Landlord, as additional insureds; (ii) shall be primary insurance
providing that the insurer shall be liable for the full amount of the loss, up
to and including the total amount of liability set forth in the declaration of
coverage, without the right of contribution from or prior payment by any other
insurance coverage of Landlord; (iii) shall be in a form satisfactory to
Landlord; (iv) shall be carried with companies reasonably acceptable to Landlord
with Best's ratings of at least A and XI; (v) shall provide that such policy
shall not be subject to cancellation, lapse or change except after at least
thirty days prior written notice to Landlord, and (vi) shall contain a so-called
"severability" or "cross liability" endorsement. Each policy of property
insurance maintained by Tenant with respect to the Leased Premises or the
Property or any property therein (i) shall provide that such policy shall not be
subject to cancellation, lapse or change except after at least thirty days prior
written notice to Landlord and (ii) shall contain a waiver and/or a permission
to waive by the insurer of any right of subrogation against Landlord, its
partners, principals, members, officers, employees, agents and contractors,
which might arise by reason of any payment under such policy or by reason of any
act or omission of Landlord, its partners, principals, members, officers,
employees, agents and contractors.
(c) Prior to the time Tenant or any of its contractors enters the Leased
Premises, Tenant shall deliver to Landlord, with respect to each policy of
insurance required to be carried by Tenant pursuant to this Article, a copy of
such policy (appropriately authenticated by the insurer as having been issued,
premium paid) or a certificate of the insurer certifying in form satisfactory to
Landlord that a policy has been issued, premium paid, providing the coverage
required by this Paragraph and containing the provisions specified herein. With
respect to each renewal or replacement of any such insurance, the requirements
of this Paragraph must be complied with not less than thirty days prior to the
expiration or cancellation of the policies being renewed or replaced. Landlord
may, at any time and from time to time, inspect and/or copy any and all
insurance policies required to be carried by Tenant pursuant to this Article. If
Landlord's Lender, insurance broker, advisor or counsel reasonably determines at
any time that the amount of coverage set forth in Paragraph 9.1(a) for any
policy of insurance Tenant is required to carry pursuant to this Article is not
adequate, then Tenant shall increase the amount of coverage for such insurance
to such greater amount as Landlord's Lender, insurance broker, advisor or
counsel reasonably deems adequate.
9.2 LANDLORD'S INSURANCE. With respect to insurance maintained by Landlord:
(a) Landlord shall maintain, as the minimum coverage required of it by
this Lease, fire and property damage insurance in so-called "fire and extended
coverage" form insuring Landlord (and such others as Landlord may designate)
against loss from physical damage to the Building with coverage of not less than
one hundred percent (100%) of the full actual replacement cost thereof and
against loss of rents for a period of not less than six months. Such fire and
property damage insurance, at Landlord's election but without any requirements
on Landlord's behalf to do so, (i) may be written in so-called "all risk" form,
excluding only those perils commonly excluded from such coverage by Landlord's
then property damage insurer; (ii) may provide coverage for physical damage to
the improvements so insured for up to the entire full actual replacement cost
thereof; (iii) may be endorsed to cover loss or damage caused by any additional
perils against which Landlord may elect to insure, including earthquake and/or
flood; and/or (iv) may provide coverage for loss of rents for a period of up to
twelve months. Landlord shall not be required to cause such insurance to cover
any of Tenant's personal property, inventory, and trade fixtures, or any
modifications, alterations or improvements made or constructed by Tenant to or
within the Leased Premises. Landlord shall use commercially reasonable efforts
to obtain such insurance at competitive rates.
(b) Landlord shall maintain comprehensive general liability insurance
insuring Landlord (and such others as are designated by Landlord) against
liability for personal injury, bodily injury, death, and damage to property
occurring in, on or about, or resulting from the use or occupancy of the
Property, or any portion thereof, with combined single limit coverage of at
least Three Million Dollars ($3,000,000). Landlord may carry such greater
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coverage as Landlord or Landlord's Lender, insurance broker, advisor or counsel
may from time to time determine is reasonably necessary for the adequate
protection of Landlord and the Property.
(c) Landlord may maintain any other insurance which in the opinion of
its insurance broker, advisor or legal counsel is prudent in carry under the
given circumstances, provided such insurance is commonly carried by owners of
property similarly situated and operating under similar circumstances.
9.3 MUTUAL WAIVER OF SUBROGATION. Landlord hereby releases Tenant, and Tenant
hereby releases Landlord and its respective partners, principals, members,
officers, agents, employees and servants, from any and all liability for loss,
damage or injury to the property of the other in or about the Leased Premises or
the Property which is caused by or results from a peril or event or happening
which is covered by insurance actually carried and in force at the time of the
loss by the party sustaining such loss; provided, however, that such waiver
shall be effective only to the extent permitted by the insurance covering such
loss and to the extent such insurance is not prejudiced thereby.
ARTICLE 10
DAMAGE TO LEASED PREMISES
10.1 LANDLORD'S DUTY TO RESTORE. If the Leased Premises, the Building or the
Outside Area are damaged by any peril after the Effective Date of this Lease,
Landlord shall restore the same, as and when required by this paragraph, unless
this Lease is terminated by Landlord pursuant to Paragraph 10.3 or by Tenant
pursuant to Paragraph 10.4. If this Lease is not so terminated, then upon the
issuance of all necessary governmental permits, Landlord shall commence and
diligently prosecute to completion the restoration of the Leased Premises, the
Building or the Outside Area, as the case may be, to the extent then allowed by
law, to substantially the same condition in which it existed as of the Lease
Commencement Date. Landlord's obligation to restore shall be limited to the
improvements constructed by Landlord. Landlord shall have no obligation to
restore any Improvements made by Tenant to the Leased Premises or any of
Tenant's personal property, inventory or trade fixtures. Upon completion of the
restoration by Landlord, Tenant shall forthwith replace or fully repair all of
Tenant's personal property, inventory, trade fixtures and other improvements
constructed by Tenant to like or similar conditions as existed at the time
immediately prior to such damage or destruction.
10.2 INSURANCE PROCEEDS. All insurance proceeds available from the fire and
property damage insurance carried by Landlord shall be paid to and become the
property of Landlord. If this Lease is terminated pursuant to either Paragraph
10.3 or 10.4, all insurance proceeds available from insurance carried by Tenant
which cover loss of property that is Landlord's property or would become
Landlord's property on termination of this Lease shall be paid to and become the
property of Landlord, and the remainder of such proceeds shall be paid to and
become the property of Tenant. If this Lease is not terminated pursuant to
either Paragraph 10.3 or 10.4, all insurance proceeds available from insurance
carried by Tenant which cover loss to property that is Landlord's property shall
be paid to and become the property of Landlord, and all proceeds available from
such insurance which cover loss to property which would only become the property
of Landlord upon the termination of this Lease shall be paid to and remain the
property of Tenant. The determination of Landlord's property and Tenant's
property shall be made pursuant to Paragraph 6.2.
10.3 LANDLORD'S RIGHT TO TERMINATE. Landlord shall have the option to terminate
this Lease in the event any of the following occurs, which option may be
exercised only by delivery to Tenant of a written notice of election to
terminate within thirty days after the date of such damage or destruction:
(a) The Building is damaged by any peril covered by valid and
collectible insurance actually carried by Landlord and in force at the time of
such damage or destruction or by any peril which would have been covered by the
insurance Landlord is required to maintain pursuant to Section 9.2 (an "Insured
Peril") to such an extent that the estimated cost to restore the Building
exceeds the lesser of (i) the insurance proceeds available from insurance
actually carried by Landlord (or which Landlord was required to carry pursuant
to Section 9.2(a) hereof) plus the amount of any deductible (up to a maximum
amount of five percent (5%) of the replacement cost of the Building), plus any
amount that the Tenant agrees in writing to contribute towards restoration, or
(ii) fifty percent of the then actual replacement cost of the Building;
(b) The Building is damaged by an uninsured peril, which peril Landlord
was not required to insure against pursuant to the provisions of Article 9 of
this Lease, provided, however, that, subject to the requirements of the holder
of any deed of trust encumbering the Property, Landlord shall not have the right
to terminate this Lease if Tenant notifies Landlord, within thirty (30) days
after Tenant receives Landlord's written notice of termination pursuant to this
Section 10.3, that Tenant will pay for the cost of restoration of the Leased
Premises, in excess of any insurance proceeds to be received by Landlord.
(c) The Building is damaged by any peril and, because of the laws then
in force, the Building (i) cannot be restored at reasonable cost or (ii) if
restored, cannot be used for the same use being made thereof before such damage.
10.4 TENANT'S RIGHT TO TERMINATE. If the Leased Premises, the Building or the
Outside Area are damaged by any peril and Landlord does not elect to terminate
this Lease or is not entitled to terminate this Lease pursuant to this Article,
then as soon as reasonably practicable, Landlord shall furnish Tenant with the
written opinion of Landlord's architect or construction consultant as to when
the restoration work required of Landlord may be complete. Tenant shall have the
option to terminate this Lease in the event any of the following occurs, which
option may be exercised only by delivery to Landlord of a written notice of
election to terminate within seven days after Tenant receives from Landlord the
estimate of the time needed to complete such restoration:
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(a) If the time estimated to substantially complete the restoration
exceeds nine (9) months from and after the date the architect's or construction
consultant's written opinion is delivered; or
(b) If the damage occurred within twelve months of the last day of the
Lease Term and the time estimated to substantially complete the restoration
exceeds one hundred eighty days from and after the date such restoration is
commenced.
10.5 TENANT'S WAIVER. Landlord and Tenant agree that the provisions of Paragraph
10.4 above, captioned "Tenant's Right To Terminate", are intended to supersede
and replace the provisions contained in California Civil Code, Section 1932,
Subdivision 2, and California Civil Code, Section 1934, and accordingly, Tenant
hereby waives the provisions of such Civil Code Sections and the provisions of
any successor Civil Code Sections or similar laws hereinafter enacted.
10.6 ABATEMENT OF RENT. In the event of damage to the Leased Premises which does
not result in the termination of this Lease, the Base Monthly Rent (and any
Additional Rent) shall be temporarily abated during the period of restoration in
proportion in the degree to which Tenant's use of the Leased Premises is
impaired by such damage.
ARTICLE 11
CONDEMNATION
11.1 TENANT'S RIGHT TO TERMINATE. Except as otherwise provided in Paragraph 11.4
below regarding temporary takings, Tenant shall have the option to terminate
this Lease if, as a result of any taking, (i) all of the Leased Premises is
taken, or (ii) twenty-five percent (25%) or more of the Leased Premises is taken
and the part of the Leased Premises that remains cannot, within a reasonable
period of time, be made reasonably suitable for the continued operation of
Tenant's business, or (iii) or a portion of the Outside Area is taken such that
the parking available to Tenant is reduced by more than twenty percent (20%),
and the Landlord does not, within a reasonable period of time, provide
alternative parking arrangements within a reasonable walking distance of the
Leased Premises. Tenant must exercise such option within a reasonable period of
time, to be effective on the later to occur of (i) the date that possession of
that portion of the Leased Premises that is condemned is taken by the condemnor
or (ii) the date Tenant vacated the Leased Premises.
11.2 LANDLORD'S RIGHT TO TERMINATE. Except as otherwise provided in Paragraph
11.4 below regarding temporary takings, Landlord shall have the option to
terminate this Lease if, as a result of any taking, (i) all of the Leased
Premises is taken, (ii) twenty-five percent (25%) or more of the Leased Premises
is taken and the part of the Leased Premises that remains cannot, within a
reasonable period of time, be made reasonably suitable for the continued
operation of Tenant's business, or (iii) because of the laws then in force, the
Leased Premises may not be used for the same use being made before such taking,
whether or not restored as required by Paragraph 11.3 below. Any such option to
terminate by Landlord must be exercised within a reasonable period of time, to
be effective as of the date possession is taken by the condemnor.
11.3 RESTORATION. If any part of the Leased Premises or the Building is taken
and this Lease is not terminated, then Landlord shall, to the extent not
prohibited by laws then in force, repair any damage occasioned thereby to the
remainder thereof to a condition reasonably suitable for Tenant's continued
operations and otherwise, to the extent practicable, in the manner and to the
extent provided in Paragraph 10.1.
11.4 TEMPORARY TAKING. If a portion of the Leased Premises is temporarily taken
for a period of one year or less and such period does not extend beyond the
Lease Expiration Date, this Lease shall remain in effect. If any portion of the
Leased Premises is temporarily taken for a period which exceeds one year or
which extends beyond the Lease Expiration Date, then the rights of Landlord and
Tenant shall be determined in accordance with Paragraphs 11.1 and 11.2 above.
11.5 DIVISION OF CONDEMNATION AWARD. Any award made for any taking of the
Property, the Building, or the Leased Premises, or any portion thereof, shall
belong to and be paid to Landlord, and Tenant hereby assigns to Landlord all of
its right, title and interest in any such award; provided, however, that Tenant
shall be entitled to receive any portion of the award that is made specifically
(i) for the taking of personal property, inventory or trade fixtures belonging
to Tenant, (ii) for the interruption of Tenant's business or its moving costs,
or (iii) for the value of any leasehold improvements installed and paid for by
Tenant. The rights of Landlord and Tenant regarding any condemnation shall be
determined as provided in this Article, and each party hereby waives the
provisions of Section 1265.130 of the California Code of Civil Procedure, and
the provisions of any similar law hereinafter enacted, allowing either party to
petition the Supreme Court to terminate this Lease and/or otherwise allocate
condemnation awards between Landlord and Tenant in the event of a taking of the
Leased Premises.
11.6 ABATEMENT OF RENT. In the event of a taking of the Leased Premises which
does not result in a termination of this Lease (other than a temporary taking),
then, as of the date possession is taken by the condemning authority, the Base
Monthly Rent shall be reduced in the same proportion that the area of that part
of the Leased Premises so taken (less any addition to the area of the Leased
Premises by reason of any reconstruction) bears to the area of the Leased
Premises immediately prior to such taking.
11.7 TAKING DEFINED. The term "taking" or "taken" as used in this Article 11
shall mean any transfer or conveyance of all or any portion of the Property to a
public or quasi-public agency or other entity having the power of eminent domain
pursuant to or as a result of the exercise of such power by such an agency,
including any inverse
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condemnation and/or any sale or transfer by Landlord of all or any portion of
the Property to such an agency under threat of condemnation or the exercise of
such power.
ARTICLE 12
DEFAULT AND REMEDIES
12.1 EVENTS OF TENANT'S DEFAULT. Tenant shall be in default of its obligations
under this Lease if any of the following events occur:
(a) Tenant shall have failed to pay Base Monthly Rent or any Additional
Rent within three (3) days after notice from Landlord that such rent is past due
provided, however, that such notice shall be concurrent with, and not in
addition to, any notice r