http://smallbusiness.findlaw.com
|
http://smallbusiness.findlaw.com
|
| Wednesday, Aug. 27, 2008 |
CONFIDENTIAL TREATMENT
REQUESTED
[*] Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this
filing and are filed separately with the Securities and Exchange Commission.
LEASE AGREEMENT
(BUILDING 3)
by and between
M-F DOWNTOWN SUNNYVALE, LLC
("LANDLORD")
and
HANDSPRING, INC.
("TENANT")
DATED AS OF FEBRUARY 14, 2001
<PAGE> 2
EXHIBITS
Exhibit "A" Project Site Plan
Exhibit "A-1" Excluded Space
Exhibit "B" Delivery Date Memorandum
Exhibit "C" Work Letter
Exhibit "D" Rules and Regulations
Exhibit "E" Approved Form of Tenant Estoppel Certificate
Exhibit "F" Approved Form of SNDA
<PAGE> 3
BASIC LEASE INFORMATION
Lease Date: February 14, 2001
Landlord: M-F Downtown Sunnyvale, LLC,
a Delaware limited liability company
Managing Agent: The Mozart Development Company
Landlord's and Managing
Agent's Address: c/o The Mozart Development Company
1068 East Meadow Circle
Palo Alto, CA 94303
Facsimile: (650) 493-9050
Attn: James Freitas & John Mozart
Tenant: Handspring, Inc., a Delaware corporation
TENANT'S ADDRESS: FOR NOTICE AND BILLING:
Handspring, Inc.
189 Bernardo Avenue
Mountain View, CA 94043-5203
Facsimile (650) 230-5139
Attn: Bernard J. Whitney
Chief Financial Officer
WITH A COPY TO (FOR NOTICE ONLY):
Handspring, Inc.
189 Bernardo Avenue
Mountain View, CA 94043-5203
Facsimile (650) 230-5139
Attn: David Pine
Vice President, General Counsel
Land: The real property outlined on Exhibit "A" attached
hereto.
Building: A six-story building at the corner of Evelyn and
Mathilda Avenues in Sunnyvale, currently in the
planning and design stage, to be constructed on a
portion of the Land in the general location and
configuration designated as "Building 3" on Exhibit
"A." A portion of the Project Garage (as defined in
Paragraph 1(c)) will be located under the Building
but will not be included in the definition of
"Building" for purposes of this Lease.
Premises: All of the Rentable Area located in the Building,
exclusive of approximately 7,000 square feet of
space that will be located on the ground floor and
be designated specifically on Landlord's Plans (the
"Excluded Space"). Landlord currently anticipates
that the Excluded Space will be located in an area
generally outlined on the floor plan attached
hereto as Exhibit "A-1", although this area may be
changed, in Landlord's sole discretion, prior to
completion of the Landlord's Plans.
i
<PAGE> 4
Project: The Land, the Building, two additional buildings and
the Project Garage (as defined below) to be
constructed on the Land, and such additional
buildings, parking structures and improvements as
Landlord may elect to construct on the Land or such
additional land as may be acquired by Landlord (or
one or more affiliates of Landlord) that Landlord
designates as being included in the Project.
Rentable Area of the Approximately 205,795 rentable square feet. The
Premises: Premises will be measured by Landlord's architect
upon completion of the Base Building for the
purposes of rentable square footage to the exterior
surface of the outside walls or exterior glass
lines, with no deductions for vertical penetrations
or architectural details. Within thirty (30) days
after substantial completion of the Base Building,
Landlord will provide to Tenant a certification of
Landlord's architect with respect to its
calculations of the actual Rentable Area of the
Premises, and the Rentable Area shown in such
certification shall be conclusive and binding on the
parties for purposes of calculating Monthly Base
Rent and Tenant's Share hereunder and not subject to
remeasurement.
Tenant's Use of the General office, sales, Subcontractor research and
Premises: development, and temporary storage of equipment
components (excluding uses that involve the use of
Hazardous Substances, as defined in Paragraph 39,
beyond levels typical for office use).
Lease Term: Twelve (12) years (the "Initial Term"), with
the right to extend for one (1) additional six (6)
year term (the "Extension Term") in accordance with
Paragraph 41. The Initial Term and Extension Term
(if any) shall collectively be defined as the
"Term".
Parking Spaces: 594 parking spaces will be available to Tenant in
accordance with Paragraph 33.
Scheduled Delivery Date: September 1, 2002
Scheduled Commencement Ninety (90) days after the Delivery Date; provided
Date: that such ninety (90) day period shall be extended
one day for each day of Contractor Delay or Landlord
Delay (both as defined in the Work Letter).
Monthly Base Rent: Initially, $4.90 per rentable square foot of the
Rentable Area of the Premises.
Monthly Base Rent On each anniversary of the Commencement
Adjustment: Date, the Monthly Base Rent shall increase in the
manner set forth in Paragraph 3(b).
Tenant's Share: 96.7%
Security Deposit: Tenant shall provide and maintain a letter
of credit in the Required Amount as more
specifically provided in Paragraph 43, which amount
may be adjusted during the Term in accordance with
such paragraph.
Landlord's Broker: Dennis Chambers and Steve Horton of CPS
Tenant's Broker: Thomas Snider of BT Commercial
Broker's Fee or Commission, if any, paid by: Landlord, pursuant to separate
agreement
The foregoing Basic Lease Information is hereby incorporated into and made a
part of this Lease. Each reference in this Lease to any of the Basic Lease
Information shall mean the respective information hereinabove set forth and
shall be construed to incorporate all of the terms provided under the particular
paragraph pertaining to such
ii
<PAGE> 5
information. In the event of any conflict between any Basic Lease Information
and the Lease, the latter shall control.
LANDLORD:
M-F Downtown Sunnyvale, LLC,
a Delaware limited liability company
By: M-D Ventures, Inc., a California
Corporation, its Manager
By: /s/ John Mozart
-----------------------------
John Mozart, its President
TENANT:
HANDSPRING, INC.,
a Delaware corporation
By: /s/ Donna Dubinsky
--------------------------
Its: Chief Executive Officer
--------------------------
By: /s/ Jeff Hawkins
--------------------------
Its: Chief Product Officer
--------------------------
iii
<PAGE> 6
LEASE AGREEMENT
THIS LEASE AGREEMENT (the "Lease") is made and entered into as of
February 14, 2001, by and between M-F DOWNTOWN SUNNYVALE, LLC, a Delaware
limited liability company (herein called "Landlord"), and HANDSPRING, INC., a
California corporation (herein called "Tenant").
1. PREMISES AND PROJECT.
(a) PREMISES. Upon and subject to the terms, covenants and
conditions hereinafter set forth, Landlord hereby leases to Tenant and Tenant
hereby hires from Landlord, the "Premises" (as defined in the Basic Lease
Information).
(b) BUILDING 2 LEASE. Landlord and Tenant have entered into a
separate lease (the "Building 2 Lease") of an additional building ("Building 2")
to be constructed on the Land in the general location and configuration
designated as "Building 2" on Exhibit "A."
(c) PROJECT. The term "Project" shall mean the Land, the
Building, Building 2, an underground parking garage located under the Building
and the other buildings to be constructed on the Land (the "Project Garage"), an
additional building designated as "Building 1" on "Exhibit "A," and any other
buildings, parking structures and improvements constructed on the Land now or in
the future. In addition, Landlord may expand the land and improvements that are
included in the "Project" to include any other property acquired by Landlord or
its affiliates (as such term is defined at any given time), regardless of
whether any such other property is leased to Tenant or leased to, sold to or
occupied by a third party or third parties, provided that Tenant's costs related
to Project Common Area Expenses shall not materially increase (after taking into
account any additional benefits, rights and/or cost savings to Tenant) as a
result solely of such Project expansion unless Tenant consents to such expansion
in writing in advance, which consent shall not be unreasonably withheld,
conditioned or delayed. Landlord shall deliver written notice to Tenant of
Landlord's intent to expand the Project, identifying the property and
improvements which will be added to the Project and including a new Exhibit "A"
reflecting the addition to the Project, and specifying whether Tenant's consent
to such expansion is required under this Paragraph 1(c) (and, if it is required,
requesting such consent). Failure by Tenant to respond to any written request by
Landlord for such consent within ten (10) business days after receipt of
Landlord's request shall be deemed consent by Tenant to the expansion described
in such notice. Any such Project expansion shall be effective on the date
designated by Landlord in its notice to Tenant.
(d) DISPOSITION AND DEVELOPMENT AGREEMENT. Landlord has acquired
the Land pursuant to a Disposition and Development Agreement (the "DDA") with
the Sunnyvale Redevelopment Agency ("City"). Tenant acknowledges that Landlord
has not constructed the Building, the Project Garage, Building 1 or Building 2
as of the date of this Lease. Pursuant to the DDA, Landlord is obligated to
build an underground public parking facility (the "City Garage") under certain
adjacent land owned by the City, which underground parking facility will be
connected physically to the Project Garage, and in addition is obligated to
grant the City the right, pursuant to that certain Declaration of Covenants,
Conditions, and Restrictions and Reciprocal Easement Agreement (Downtown
Sunnyvale Parking Structures) dated as of November 15, 2000 and recorded
November 22, 2000, as Instrument Number 15470449 in the Official Records of
Santa Clara County, California (such document being defined as the "Parking
REA"), to use the Project Garage for parking in up to 320 parking stalls in
evening and weekend hours as specified in the DDA, and also to use the entire
Project Garage for "special events" parking in evening and weekend hours up to
eight times per year as specified by the City (such rights, and any other
similar parking rights granted to the City pursuant to the DDA or the Parking
REA, or pursuant to rules and regulations adopted in connection therewith, are
defined collectively herein as the "City Parking Rights"). The Parking REA also
provides for the allocation of certain shared costs between the City Garage and
the Project Garage. All parking rights of Tenant hereunder, and of the other
tenants in the Project, are subject to the City Parking Rights. Landlord shall
have the right to make reasonable modifications to the Parking Rights, or to
create, accept or adopt additional Parking Rights, provided that (except for
modifications and additional Parking Rights that are required by the City or by
applicable governmental authority, quasi-governmental authority or Laws, which
shall not require Tenant's
1
<PAGE> 7
consent) so long as Tenant occupies not less than fifty percent (50%) of the
Building, Landlord shall obtain the prior written consent of Tenant to such
modifications or additional Parking Rights, which consent shall not be
unreasonably withheld, conditioned or delayed so long as they do not materially
adversely affect Tenant's Permitted Use of the Premises, Minimum Parking as
provided in Paragraph 33, or access to the Premises, and do not materially alter
the allocation of Project Costs to the Building or result in Tenant's cost of
occupancy of the Premises being materially increased and/or Tenant's rights
under this Lease being materially diminished. Failure by Tenant to respond to
any written request by Landlord for such consent (which request shall include a
copy or description of the proposed modification and/or additional Parking
Rights) within ten (10) business days after receipt of Landlord's request shall
be deemed consent by Tenant to the proposed modification to the Parking Rights
or additional Parking Rights described in such request. The development of the
Project as contemplated or required by the DDA shall be defined in this Lease as
the "Initial Development", and shall include, without limitation, (i) the
acquisition of the Land, (ii) construction of the Building, the Project Garage,
and all other buildings and improvements (including any necessary demolition) to
be constructed on the Land, (iii) creation, filing and recordation of the
Initial Parcel Map (as defined below), the Parking REA, the Initial CC&Rs (as
defined below), and any other Encumbrances contemplated by the DDA and any
necessary modifications or amendments thereto, and (iv) any and all other
activities, actions, requirements, assessments, approvals, documents,
instruments and similar items that are, in Landlord's reasonable discretion,
necessary or desirable in connection therewith.
(e) RECONFIGURATION/PARCEL MAP. In connection with the Initial
Development, Landlord has filed a parcel map that causes the airspace to be
occupied by the Building to consist of one legal parcel, and the airspace to be
occupied by each additional building in the Project to consist of a separate
legal parcel, and the Project Garage and Project Common Area collectively to
consist of a separate legal parcel (such parcel map being defined as the
"Initial Parcel Map"). Landlord reserves the right, without incurring any
liability to Tenant and without constituting an eviction (constructive or
otherwise), and without entitling Tenant to any abatement of Rent or to
terminate this Lease or otherwise releasing Tenant from any of Tenant's
obligations under this Lease, to amend the Initial Parcel Map to reconfigure the
parcels, even if such map would cause a reduction in the size of the Land, so
long as the size of the building envelope in which the Building is or will be
located is not materially affected by such action, the Project continues to be
in compliance with all applicable Laws (including, without limitation, city
parking requirements and other development approvals and land use regulatory
requirements), Tenant's Permitted Use of the Premises as allowed by this Lease
is not materially impaired thereby, and the Minimum Parking continues to be
available to Tenant as provided in Paragraph 33. Tenant shall cooperate with
Landlord in connection with any amendment to the Initial Parcel Map and/or any
other subdivision or lot line adjustment process with respect to the Land or
Project generally, provided that Tenant shall not be obligated to incur material
costs in connection with such cooperation. In addition, at any time during the
Term, Landlord may reduce the land and improvements that are included in the
Project, subdivide the Project, or otherwise reconfigure the Project in any way,
so long as in connection with such reconfiguration (other than in connection
with the Initial Development) the size of the building envelope in which the
Building is or will be located is not materially affected by such action, the
Project continues to be in compliance with all applicable Laws (including,
without limitation, city parking requirements and other development approvals
and land use regulatory requirements), Tenant's Permitted Use of the Premises as
allowed by this Lease is not impaired thereby, and the Minimum Parking continues
to be available to Tenant as provided by Paragraph 33, and Tenant's access to
the Premises is not materially impaired. Upon Landlord's request, Tenant shall
execute and deliver any documents or instruments reasonably required in
connection with any amendment to the Initial Parcel Map and/or any other
subdivision or lot line adjustment process in connection with this Paragraph
1(e).
(f) CONSTRUCTION OF FUTURE PHASES. Landlord shall construct the
other buildings shown on Exhibit "A" and all other on-site and off-site
improvements that are expressly required by the terms and conditions of the DDA,
the Parking REA and/or the CC&Rs, as such documents may be amended from time to
time. In addition, Landlord may construct additional buildings and improvements
on the Land in such locations as Landlord may determine, in its sole discretion.
Tenant acknowledges that during any such construction and development, Landlord,
its tenants, and their respective employees, contractors and agents will require
access across and through the Project Common Area for purposes of construction
and development of additional buildings and improvements in the Project (as it
may exist from time to time) and use of portions of the Project Common Area for
construction staging in connection with such construction and development,
including, without limitation, for the storage of all
2
<PAGE> 8
necessary materials, tools and equipment. Landlord shall not be liable to Tenant
for any interference with Tenant's use of the Project Common Area with respect
to such construction and development activities or any noise, vibration, or
other disturbance to Tenant's business at the Premises which may result from
such activities, so long as the Building's structural components and Building
Systems are not materially adversely affected by such activities, the Project
continues to be in compliance with all applicable Laws, Tenant at all times has
reasonable access to the Building and use of the Minimum Parking as provided in
Paragraph 33, and Landlord takes commercially reasonable steps to minimize any
material adverse effect on Tenant's Permitted Use of the Premises arising from
such activities. Tenant shall cooperate with Landlord in connection with any
construction or development activities with respect to any such construction of
buildings or improvements, including, without limitation, by cooperating in any
parking restrictions and limitations during such activities.
(g) COMMON AREA. The term "Common Area" or "Project Common Area"
shall mean all areas and facilities within the Project that are not designated
by Landlord, from time to time, for the exclusive use of Tenant or any other
tenant or other occupant of the Project, that are located outside the building
envelopes of the Building and of any other buildings now or hereafter located in
the Project. Project Common Areas shall include, without limitation, the Project
Garage, facilities and equipment servicing the Project as a whole or the Project
Garage, access and perimeter roads and ramps, pedestrian sidewalks, landscaped
areas, plaza areas, trash enclosures, recreation areas and the like.
(h) CC&RS. The operation of the Project Common Area (including
the Project Garage), and access to, from and between various portions of the
Project Common Area, are and shall be governed by that certain Declaration of
Covenants, Conditions and Restrictions and Reciprocal Easement Agreement, dated
as of November 22, 2000, and recorded November 22, 2000 as Instrument Number
15470450 in the Official Records of Santa Clara County, and such additional
conditions, covenants and restrictions and/or reciprocal easements and/or
reciprocal licenses (any of the foregoing being defined herein collectively as
"CC&Rs"), as are required by or pursuant to the DDA, in connection with the
Initial Parcel Map, or as Landlord may otherwise determine in its discretion are
necessary or desirable in connection with the Initial Development (such CC&Rs in
connection with the DDA or Initial Development being defined herein collectively
as the "Initial CC&Rs") between the owners of portions of the Project,
including, without limitation, in order to provide necessary or appropriate
access over, across and from the Common Area (including any ramps between the
parking structures, roadways and drive aisles located thereon) to other portions
of the Common Area and/or to any other property which is included in the
Project, and/or that encumber portions of the Project for the benefit of other
portions of the Project or the adjacent City property (or reciprocally benefit
each other), and/or in order to provide sufficient parking for any portion of
the Project or in connection with the City Parking Rights, and/or that allocate
costs of the operation, maintenance, repair Project and/or Project Common Area
among the owners of portions of the Project in a reasonable and customary
manner. Without limiting the foregoing, the Initial CC&Rs provide for elevator
and stairwell access from the portion of the Project Garage located under each
building in the Project to the exterior Project Common Area through a corridor
located on the ground floor of each such building from the elevator and
stairwell to the exterior Project Common Area in a location and configuration
designated by Landlord, which access right shall burden the applicable building
for the benefit of the remaining portions of the Project; provided that with
respect to such access corridor located on the ground floor of the Building
(defined herein as the "Dedicated Garage Exit Area"), (i) the Dedicated Garage
Exit Area will be shown on Landlord's Plans (as defined in the Work Letter), and
(ii) the Dedicated Garage Exit Area will be physically partitioned from the
remainder of the Premises such that Tenant shall have the right to limit,
prevent or lock any direct access to the remainder of the Premises from the
Dedicated Garage Exit Area. The Initial CC&Rs and all provisions thereof will at
all times be superior in priority to this Lease. Landlord shall have the right
to make reasonable modifications to the Initial CC&Rs during the Term, or to
create additional CC&Rs affecting all or portions of the Project, provided that
(except for modifications and/or additional CC&Rs that are required by
applicable governmental authority, quasi-governmental authority, or Laws, which
shall not require Tenant's consent), so long as Tenant occupies not less than
fifty percent (50%) of the Building, Landlord shall obtain the prior written
consent of Tenant to such modifications or additional CC&Rs, which consent shall
not be unreasonably withheld, conditioned or delayed so long as such
modifications or additional CC&Rs do not materially adversely affect Tenant's
Permitted Use of the Premises, Minimum Parking as provided in Paragraph 33 or
access to the Premises; and do not materially alter the allocation of Project
Costs to the Building or materially affect Common Areas located within the
Building (if any), or result in Tenant's cost of occupancy of the Premises being
materially
3
<PAGE> 9
increased and/or Tenant's rights under this Lease being materially diminished.
Failure by Tenant to respond to any written request by Landlord for such consent
(which request shall include a copy of the proposed modification and/or
additional CC&Rs) within ten (10) business days after receipt of Landlord's
request shall be deemed consent by Tenant to the proposed modification to the
Initial CC&Rs or additional CC&Rs described in such request.
(i) USE OF THE PREMISES AND COMMON AREA. Tenant may use and
occupy the Premises for the purposes specified in the Basic Lease Information
("Permitted Use"), subject to the terms and conditions of this Lease, and for no
other use or purpose without the prior written consent of Landlord. Landlord
shall have the right to grant or withhold consent to a use other than the
Permitted Use in its sole discretion. Tenant shall be entitled to the
nonexclusive use of the Common Area with Landlord and other occupants (if any)
of the Project in accordance with the limitations and restrictions in this Lease
and the Rules and Regulations established by Landlord from time to time;
provided, however, that if Landlord reconfigures the Project or sells a portion
of the Project (including, without limitation, if the Project Garage is owned by
an entity other than Landlord), Landlord shall assure to Tenant that Tenant
shall continue to have reasonable access to the Premises and Tenant's Minimum
Parking as provided in Paragraph 33 through the Initial CC&Rs or subsequent
CC&Rs or other like mechanism. Notwithstanding anything to the contrary in the
Basic Lease Information or in this Lease, Tenant understands and agrees that (a)
the Parking REA, the Initial CC&Rs and such additional CC&Rs as Landlord may
elect to record against the Project as provided in Paragraph 1(h) , and/or (b) a
ground lease, and /or (c) certain other easements, licenses, access agreements
and other encumbrances recorded in the official records of Santa Clara County
(collectively, the Parking REA, the Initial CC&Rs, any additional CC&Rs, any
ground lease and any such encumbrances are sometimes collectively referred to
herein as the "Encumbrances") may encumber the Land and/or Project now or in the
future, and that Tenant's occupancy and use of the Premises and use of the
Project Common Area may be restricted by such Encumbrances. If necessary, Tenant
shall execute such documents as are reasonably necessary to cause this Lease to
become subordinate to any such Encumbrances, provided that Tenant shall have
been provided with a true, correct and complete copy thereof prior to the date
hereof or, with respect to future CC&Rs, ground lease or Encumbrance, prior to
its effective date, and any approval given by Landlord hereunder shall be
limited to the matters covered by such approval with respect to this Lease only
and shall not be interpreted to include any approval or consent in respect of
the CC&Rs, ground lease or Encumbrance. Landlord agrees to use commercially
reasonable efforts to enforce specific provisions of the CC&Rs and/or Parking
REA for the benefit of the Premises upon receipt of written request from Tenant
specifying the specific relevant provisions to be enforced and specific
enforcement efforts that Tenant requests Landlord to take.
2. TERMS AND POSSESSION.
(a) TERM. The term of this Lease (the "Term") shall commence on
the Commencement Date (as defined below) and, unless sooner terminated pursuant
to the express provisions of this Lease, shall expire on the date that is one
day prior to the twelfth anniversary of the Commencement Date (subject to
extension in accordance with Paragraph 42 to the date that is one day prior to
the sixth anniversary of the Extension Term, if any) (such date being the
"Expiration Date"). The "Commencement Date" shall be the earlier to occur of the
following: (i) the date that is ninety (90) days after the Delivery Date (as
defined in Paragraph 2(b)); provided that such ninety (90) day period shall be
extended one day for each day of Contractor Delay (as defined in the Work
Letter) or Landlord Delay (as defined in the Work Letter); (ii) the date on
which Tenant has substantially completed the Tenant Improvements (as defined in
the Work Letter) in accordance with the Work Letter; or (iii) the date upon
which Tenant actually commences business in any portion of the Premises.
(b) DELIVERY DATE. The "Delivery Date" shall be the date on which
Landlord has (i) completed the construction components of the Base Building
required to be completed by Landlord in order for the "Initial Tenant Work Date"
(as defined in the Work Letter) to occur, and (ii) tendered possession of the
Premises to Tenant subject to Landlord's continuing right to access the Premises
and take all steps required to complete the Base Building; provided, however,
that the Delivery Date shall not occur earlier than the Scheduled Delivery Date
shown in the Basic Lease Information without Tenant's prior written consent. All
of the rights and obligations of the parties under this Lease (other than
Tenant's obligation to pay Monthly Base Rent and Additional Charges for Expenses
and Taxes) shall commence on the Delivery Date. Tenant shall be deemed to occupy
the Premises from and after the Delivery Date. Within five (5) business days
after the Delivery Date, the parties shall execute a letter
4
<PAGE> 10
confirming the Delivery Date and certifying that Tenant has accepted delivery of
the Premises, in the form attached hereto as Exhibit "B" (the "Delivery Date
Memorandum"). Either party's failure to request execution of, or to execute, the
Delivery Date Memorandum shall not in any way alter the Delivery Date.
(c) CONSTRUCTION OF IMPROVEMENTS. Completion of the Base Building
(as defined in the Work Letter) by Landlord and the Tenant Improvements by
Tenant shall be governed by the terms and conditions of the Work Letter which is
attached hereto as Exhibit "C". Tenant's obligation to construct the Tenant
Improvements pursuant to the Work Letter is independent of, and in addition to,
Tenant's obligation to pay Rent and Tenant's other obligations under this Lease.
Tenant acknowledges that Landlord has not made any representation or warranty
with respect to the construction of the Base Building or the condition of the
Premises or the Project Common Area (except as may be expressly provided
herein), or with respect to the suitability or fitness of any of the foregoing
for the conduct of Tenant's permitted use or for any other purpose. By occupying
the Premises, Tenant shall be deemed to have accepted the same as suitable for
the purpose herein intended, subject to completion of items on Landlord's
architect's punch list (which shall be approved by Tenant as provided in
Paragraph 8 of the Work Letter, in Tenant's reasonable discretion) with respect
to the Base Building and subject to Landlord's obligations pursuant to Paragraph
7(a). Upon Tenant's request, Landlord shall use reasonable efforts to enforce
any construction warranties Landlord obtains with respect to the Base Building.
If Tenant is not satisfied, in Tenant's reasonable discretion, with Landlord's
actions in enforcing such warranties, Tenant may upon written notice to Landlord
take any actions necessary in Tenant's reasonable judgment to enforce such
warranties directly, and Landlord shall take all commercially reasonable action
to cooperate with Tenant, including assigning to Tenant Landlord's rights with
respect to such warranties.
(d) CERTIFICATE OF OCCUPANCY. After substantial completion of the
Tenant Improvements, Tenant shall immediately apply for, and use best efforts to
obtain within fifteen (15) business days, a certificate of occupancy (or
equivalent documentation) for the Premises, which may be in the form of a
temporary certificate of occupancy provided that a permanent certificate of
occupancy is issued by the City of Sunnyvale and delivered to Landlord by Tenant
prior to expiration of the temporary certificate of occupancy. Tenant shall
promptly deliver to Landlord copies of the certificate of occupancy, and all
other permits, consents and approvals from the appropriate governmental agencies
which are necessary for occupancy and operation of the Premises as contemplated
by this Lease to the extent they are requested by Landlord. Tenant shall, no
later than ninety (90) days after the date of issuance by the City of Sunnyvale
of a certificate of occupancy or its equivalent concerning the Premises, occupy
a portion of the Premises. This Paragraph 2(d) shall not be construed as an
obligation of Tenant to continuously occupy the Premises.
3. RENT; RENT ADJUSTMENTS; ADDITIONAL CHARGES FOR EXPENSES AND TAXES.
(a) MONTHLY BASE RENT AND ADDITIONAL CHARGES. Tenant's obligation
to pay Monthly Base Rent and Additional Charges for Expenses and Taxes hereunder
shall commence on the Commencement Date. Commencing on the Commencement Date and
throughout the Term of this Lease, Tenant shall pay the monthly base rent
specified in the Basic Lease Information, as adjusted pursuant to Paragraph 3(b)
(as so adjusted from time to time, "Monthly Base Rent"), on the first day of
each month, in advance, in lawful money of the United States (without any prior
demand therefor and without deduction or offset whatsoever, except as expressly
provided in this Lease) to Landlord or its Managing Agent at the address
specified in the Basic Lease Information or to such other firm or to such other
place as Landlord or its Managing Agent may from time to time designate in
writing. In addition, Tenant shall pay to Landlord all charges and other amounts
whatsoever as provided in this Lease ("Additional Charges") at the place where
the Monthly Base Rent is payable, and Landlord shall have the same remedies for
a Default in the payment of Additional Charges as for a Default in the payment
of Monthly Base Rent. As used herein, the term "Rent" shall include all Monthly
Base Rent and Additional Charges (including, without limitation, Additional
Charges for Real Estate Taxes and Expenses pursuant to Paragraph 3(c) below, and
Additional Charges pursuant to Paragraphs 5(b), 6, 7(e), 8, 10(d) and (f), 20(c)
and 23). If the Commencement Date occurs on a day other than the first day of a
calendar month, or the Expiration Date occurs on a day other than the last day
of a calendar month, then the Monthly Base Rent and Additional Charges for such
fractional month shall be prorated on a daily basis. If any issues used to
determine the Commencement Date (including issues used to determine the Delivery
Date) are either in dispute or cannot be determined with certainty as of the
date Landlord believes should
5
<PAGE> 11
be the Commencement Date (including, without limitation, as a result of any
actual or alleged Tenant Delay, Landlord Delay or Contractor Delay), Tenant
shall commence to pay Monthly Base Rent and Additional Charges from and after
the Commencement Date as determined by Landlord in Landlord's reasonable
discretion; provided, however, that such payment shall be without prejudice to
the ultimate determination of any issues that are undetermined or in dispute as
of such date, and future Rent payments shall be adjusted by Landlord as
reasonably appropriate after the Commencement Date has been finally determined,
to take into account the actual Commencement Date and any resulting overpayment
or underpayment of Rent.
(b) ANNUAL ADJUSTMENTS IN MONTHLY BASE RENT. The Monthly Base
Rent under Paragraph 3(a) shall be adjusted on each anniversary of the
Commencement Date throughout the Term, including the Extension Term, if any,
(each such date, an "Adjustment Date") as follows.
(i) FIRST ANNIVERSARY: On the Adjustment Date occurring on
the first anniversary of the Commencement Date (the "First Adjustment
Date"), the Monthly Base Rent shall be determined by multiplying the
Rentable Area by the sum of (A) $5.05, plus (B) an amount determined by
multiplying the CPI Increase (as defined below) for the First Adjustment
Date by $5.00 (such amount being the "Year One Adjustment"); provided,
however, that in no event shall the Monthly Base Rent be adjusted on the
First Adjustment Date to an amount that is less than one hundred three
and five/tenths percent (103.5%) of the amount obtained by multiplying
$5.00 by the Rentable Area, nor to an amount that is more than one
hundred five and five/tenths percent (105.5%) of the amount obtained by
multiplying $5.00 by the Rentable Area.
(ii) SECOND ANNIVERSARY: On the Adjustment Date occurring
on the second anniversary of the Commencement Date (the "Second
Adjustment Date"), the Monthly Base Rent shall be determined by
multiplying the Rentable Area by the sum of (A) $5.00, plus (B) the Year
One Adjustment, plus (C) an amount determined by multiplying the CPI
Increase for the Second Adjustment Date by the sum of (A) and (B) (such
amount being the "Year Two Adjustment"), plus (D) $.05; provided,
however, that in no event shall the Monthly Base Rent be adjusted on the
Second Adjustment Date to an amount that is less than one hundred three
and five/tenths percent (103.5%) of the amount obtained by multiplying
the Rentable Area by the sum of $5.00 plus the Year One Adjustment, nor
to an amount that is more than one hundred five and five/tenths percent
(105.5%) of the amount obtained by multiplying the Rentable Area by the
sum of $5.00 plus the Year One Adjustment.
(iii) THIRD ANNIVERSARY: On the Adjustment Date occurring
on the third anniversary of the Commencement Date (the "Third Adjustment
Date"), the Monthly Base Rent shall be determined by multiplying the
Rentable Area by the sum of (A) $5.00, plus (B) the Year One Adjustment,
plus (C) the Year Two Adjustment, plus (D) an amount determined by
multiplying the CPI Increase for the Third Adjustment Date by the sum of
(A), (B) and (C); provided , however, that in no event shall the Monthly
Base Rent be adjusted on the Third Adjustment Date to an amount that is
less than one hundred three and five/tenths percent (103.5%) of the
amount obtained by multiplying the Rentable Area by the sum of $5.00
plus the Year One Adjustment plus the Year Two Adjustment, nor to an
amount that is more than one hundred five and five/tenths percent
(105.5%) of the amount obtained by multiplying the Rentable Area by the
sum of $5.00 plus the Year One Adjustment plus the Year Two Adjustment.
(iv) SUBSEQUENT ADJUSTMENT DATES: On the Adjustment Date
occurring on the fourth anniversary of the Commencement Date, and on
each Adjustment Date, the Monthly Base Rent shall be increased from the
Monthly Base Rent as of the date immediately preceding the applicable
Adjustment Date (with respect to each Adjustment Date, such
then-existing Monthly Base Rent being defined as the "Existing Rent") by
adding to the Existing Rent the product obtained by multiplying the
applicable CPI Increase by the Existing Rent; provided, however, that in
no event shall the Monthly Base Rent on any such Adjustment Date be
adjusted to an amount that is less than one hundred three and
five/tenths percent (103.5%) of the Existing Rent, nor to an amount that
is more than one hundred five and five/tenths percent (105.5%) of the
Existing Rent.
6
<PAGE> 12
The "CPI Increase" shall be calculated on each Adjustment Date by comparing the
Consumer Price Index for the San Francisco Bay Area, All Urban Consumers, All
Items, San Francisco/Oakland/San Jose, California (Base Years 1982-84=100) (the
"CPI") for the closest calendar month prior to the immediately preceding
Adjustment Date (or, with respect to the First Adjustment Date, prior to the
Commencement Date) for which the CPI is published, to the CPI for the closest
calendar month prior to the applicable Adjustment Date for which the CPI is
published. The increase in the CPI indicated by such comparison, stated as a
percentage, shall be defined herein with respect to each Adjustment Date as the
"CPI Increase". If, during the Term, the CPI is no longer published, Landlord
shall, for the purposes of computation of any adjustments in Monthly Base Rent,
substitute such other Index as is then generally recognized as most comparable
to the CPI and accepted for similar determinations. If sufficient data is
unavailable for Landlord to make the determination specified in this Paragraph
3(b) on any Adjustment Date, Tenant shall continue to pay the Monthly Base Rent
payable immediately prior to such Adjustment Date. As soon as the necessary data
becomes available, Landlord shall determine the Monthly Base Rent payable from
and after such Adjustment Date and notify Tenant of the adjustment in writing,
and within fifteen days after such notice Tenant shall pay to Landlord the
amount by which the Monthly Base Rent for the period following such Adjustment
Date exceeds the amount previously paid by Tenant as Monthly Base Rent for such
period.
(c) ADDITIONAL CHARGES FOR EXPENSES AND TAXES.
(i) DEFINITIONS OF ADDITIONAL CHARGES: For purposes of
this Paragraph 3(c), the following terms shall have the meanings
hereinafter set forth:
(A) "TAX YEAR" shall mean each twelve (12)
consecutive month period commencing January 1st of the calendar
year during which the Commencement Date of this Lease occurs,
provided that Landlord, upon notice to Tenant, may change the Tax
Year from time to time to any other twelve (12) consecutive month
period and, in the event of any such change, Tenant's Share of
Real Estate Taxes (as hereinafter defined) shall be equitably
adjusted for the Tax Years involved in any such change.
(B) "TENANT'S SHARE" shall mean the Rentable Area
of the Premises divided by the total rentable area of the
Building. Initially, Tenant's Share is estimated to be the
percentage figure specified in the Basic Lease Information
(subject to change based on measurement of the actual Rentable
Area and rentable area of the Building as provided in the Basic
Lease Information).
(C) "REAL ESTATE TAXES" shall mean (i) to the
extent the Building is assessed separately from any other real
property, all taxes, assessments and charges levied upon or with
respect to the Building, plus the Building Share of all taxes,
assessments and charges levied with respect to the Project Common
Area not included with the Building assessment or any personal
property of Landlord used in the operation thereof, or (ii) to
the extent the Project is assessed as a whole, the Building Share
of all taxes, assessments and charges levied upon or with respect
to the Project or any personal property of Landlord used in the
operation thereof, or Landlord's interest in the Project or such
personal property. Real Estate Taxes shall include, without
limitation, all general real property taxes and general and
special assessments, charges, fees or assessments for transit
and/or parking (including in connection with inclusion of the
Building or Project in a parking or transit district), housing,
police, fire or other governmental services or purported benefits
to the Building or Project, service payments in lieu of taxes,
and any tax, fee or excise on the act of entering into this
Lease, or any other lease of space in the Project, or on the use
or occupancy of the Project or any part thereof, or on the rent
payable under any lease or in connection with the business of
renting space in the Project, that are now or hereafter levied or
assessed against Landlord by the United States of America, the
State of California, or any political subdivision, public
corporation, district or any other political or public entity,
and shall also include any other tax, fee or other excise,
however described, that may be levied or assessed as a substitute
for, or as an addition to, in whole or in part, any other Real
Estate Taxes, whether or not now customary or in the
contemplation of the parties on the date of this Lease.
7
<PAGE> 13
Real Estate Taxes shall not include franchise, transfer,
inheritance or capital stock taxes or income taxes measured by
the net income of Landlord from all sources unless, due to a
change in the method of taxation, any of such taxes is levied or
assessed against Landlord as a substitute for, in whole or in
part, any other tax that would otherwise constitute a Real Estate
Tax. Additionally, Real Estate Taxes shall not include any
assessments or like charges to pay for any remediation of
contamination from any Hazardous Substance (defined in Paragraph
39 hereof) existing as of the Commencement Date unless introduced
in, on, under or about the Premises by Tenant or Tenant's
employees, agents, contractors or invitees. Real Estate Taxes
also shall not include any taxes attributable to any new
construction on the Project (other than the Building) that
increases the rentable area of the Project, or any increase in
any Real Estate Taxes directly attributable to such new buildings
or improvements, until such time as such new buildings or
improvements are leased and occupied by tenants paying such
building's share of Real Estate Taxes assessed against the
Project; provided, however, that Real Estate Taxes shall include
the Building Share of any new taxes or increases in Real Estate
Taxes attributable to the Project Garage, the City Garage or
Parking REA, or similar new construction, buildings or
improvements that are used for parking or other Common Area uses
(or the proportionate amount of any such new taxes or increase
attributable to the portion of any new construction, buildings or
improvements used for parking or other Common Area uses). Real
Estate Taxes shall also include reasonable legal fees, costs and
disbursements incurred in connection with proceedings to contest,
determine or reduce Real Estate Taxes; provided that such fees,
costs and disbursements do not exceed the actual savings in Real
Estate Taxes obtained by Tenant over the Term of the Lease. If
any assessments are levied on the Building or Project, Tenant
shall have no obligation to pay more than that amount of annual
installments of principal and interest that would become due
during the Term had Landlord elected to pay the assessment in
installment payments, even if Landlord pays the assessment in
full.
(D) "BUILDING SHARE" shall mean the Rentable Area
in the Building divided by the total rentable area in the
Project, as determined by Landlord, in its reasonable discretion,
based on the same measurement methodology as is used to measure
the Rentable Area of the Premises as specified in the Basic Lease
Information.
(E) "EXPENSES" shall mean the total costs and
expenses paid or incurred by Landlord in connection with the
management, operation, maintenance and repair of the Building and
the Project Common Area, including, without limitation (i) the
cost of air conditioning, electricity, steam, heating,
mechanical, ventilating, elevator systems and all other
utilities, to the extent provided by Landlord, and the cost of
supplies and equipment and maintenance and service contracts in
connection therewith; (ii) the cost of repairs and general
maintenance and cleaning; (iii) the Building Share of the cost of
fire, extended coverage, boiler, sprinkler, public liability,
property damage, rent, earthquake and flood (in each case if
Landlord elects to obtain it) and other insurance for the Project
obtained by Landlord, or otherwise obtained by Landlord in
connection with the Project, all including, without limitation,
insurance premiums and any deductible amounts paid by Landlord,
including, without limitation, the insurance required by
Paragraph 10(f); (iv) fees, charges and other costs directly
related to the operation of the Project (as distinct from the
operation of the partnership which owns the Project), including
management fees, consulting fees, legal fees and accounting fees,
fees of all independent contractors engaged by Landlord directly
related to the operation of the Project or reasonably charged by
Landlord if Landlord performs management services in connection
with the Project, (though the management fee shall not exceed the
cap noted in the following paragraph); (v) the cost of any
capital improvements made to the Building, and the Building Share
of the cost of any capital improvements made to the Project
Common Area, after the Commencement Date (a) as a labor saving
device or to effect other economies in the operation or
maintenance of the Building or the Project Common Area (from
which a reasonable person would anticipate that savings would
actually result), (b) to repair or replace capital items which
are no longer capable of providing the services required of them
(other than in connection with a casualty which is addressed by
Paragraph 20), or (c) that are made to the Building or the
Project Common Area after the date of this Lease and are required
under any Laws
8
<PAGE> 14
(as defined in Paragraph 5) (excluding, however, any capital
improvements required by Laws that are Tenant's responsibility
under Paragraph 5 which shall be paid directly by Tenant pursuant
to Paragraph 5, where such capital improvements were not required
under any such Laws to be completed with respect to the Project
prior to the date the Lease was executed; and the costs of
capital improvements incurred by Landlord which are the
responsibility of Tenant pursuant to this Lease shall be
amortized over the useful life of the capital item in question as
determined in accordance with generally accepted accounting
principles ("GAAP"), together with interest on the unamortized
balance at the greater of (x) the rate paid by Landlord on funds
borrowed from an institutional lender for the purpose of
constructing such capital improvements; or (y) 10% per annum;
provided, however, the amount of the cost of capital improvements
which may be included within Expenses pursuant to this clause (v)
shall be the greater of (I) the amount that would be payable
pursuant to the foregoing amortization or (II) $.02 per square
foot of the Rentable Area of the Premises per month (and to the
extent the amount under this clause (II) exceeds the amount that
would be payable under clause (I), such excess shall be credited
against the unamortized balance of the cost of capital
improvements in the inverse order in which they would be payable
by Tenant under clause (i)); and (vi) any other reasonable
expenses of any other kind whatsoever reasonably incurred in
managing, operating, maintaining and repairing the Building,
including, but not limited to, costs incurred or assessed
pursuant to the Parking REA, the Initial CC&Rs, any other CC&Rs,
any ground lease or any Encumbrances, and the Building's Share of
Project Common Expenses. "Project Common Expenses" shall mean any
expenses paid or incurred by Landlord in connection with the
management, operation, maintenance and repair of the Project
Common Area and any other Expenses paid or incurred by Landlord
for the benefit of the Project as a whole, including, but not
limited to, the cost of maintaining any traffic improvements,
surface parking lots and facilities located in the Project Common
Area, landscaping, the cost of any security Landlord elects to
provide for all or any portions of the Project Common Area, and
any costs allocated to the Project Common Area (or the Project as
a whole) pursuant to the Parking REA. Any "deductible" amounts
relating to capital improvements required to be paid by Tenant
hereunder in connection with any property or earthquake insurance
policy carried by Landlord shall be amortized over the useful
life of the restoration work to which such deductible amount
relates in accordance with GAAP, in the same manner as other
capital improvements that are included in Expenses as provided
above.
Notwithstanding anything to the contrary herein contained, Expenses shall not
include, and in no event shall Tenant have any obligation to pay for pursuant to
this Paragraph 3 or Paragraph 7(b), (aa) the acquisition cost of the Land and
the initial construction cost of the Project Garage and of any new buildings or
improvements on the Project that increase the rentable area of the Project (or
any additional operating expenses incurred during the course of construction and
as a direct result of such construction) including, without limitation, any of
the foregoing costs incurred in connection with an expansion of the Project
pursuant to Paragraph 1(c), other than costs in connection with construction of
the Building or other portions of the Project that are otherwise payable by
Tenant hereunder; (bb) the cost of providing tenant improvements to Tenant or
any other tenant and costs of preparing any other premises in the Project for
occupancy by any other tenant, including brokerage commissions, attorneys fees
and other fees incurred in connection with the leasing thereof; (cc) any rent
payable pursuant to a ground lease, and debt service (including, but without
limitation, interest, principal and any impound payments) required to be made on
any mortgage or deed of trust recorded with respect to all or any portion of the
Project other than debt service and financing charges imposed pursuant to
Paragraph 3(c)(1)(E)(v) above; (dd) the cost of special services, goods or
materials provided to any tenant; (ee) depreciation; (ff) the portion of a
management fee in excess of two and five/tenths percent (2.5%) of Monthly Base
Rent and Additional Charges for Expenses and Taxes (excluding the management
fee); (gg) penalties resulting from Landlord's failure to comply with applicable
Laws, to the extent that such compliance is expressly Landlord's responsibility
under this Lease; (hh) costs for which Landlord has a right of and has received
reimbursement from others; (ii) costs to correct any construction or design
defects in the original construction of the Base Building; (jj) repairs,
replacement and upgrades to the structural elements of the Base Building (e.g..
steel frame and slab) and structural components of the roof (not including the
roof membrane above the concrete over metal deck), other than capital
improvements pursuant to Paragraph 3(c)(1)(E)(v) above; (kk) environmental
pollution remediation related costs for which Landlord has indemnified Tenant
pursuant to Paragraph
9
<PAGE> 15
39(c); (ll) advertising or promotional expenditures; (mm) leasing or sales
commissions; (nn) repairs, restoration or other work occasioned by condemnation,
or by fire, wind, the elements or other casualty, to the extent of amounts paid
or payable under any insurance policy maintained by Landlord covering the
Project or any portion thereof; (oo) compensation paid to any employee of
Landlord other than maintenance and property management personnel below the
level of project manager, directly associated with the operation and maintenance
of the Building or Project (it being agreed that the salaries of such management
personnel at or above the level of project manager are covered by the management
fee); (pp) repairs, alterations, additions, improvements or replacements made to
rectify or correct any condition with respect to the Project that is in
violation of applicable Laws on the date of execution of this Lease by Landlord
and Tenant; (qq) Landlord's general overhead expenses in excess of the property
management fee; (rr) legal fees, accountants' fees and other expenses incurred
in connection with disputes with Tenant (except to the extent such expenses are
Tenant's responsibility pursuant to this Lease) or associated with the defense
of Landlord's title to or Landlord's interest in the Project or any part
thereof; (ss) charitable or political contributions of Landlord; (tt) interest,
penalties or other costs arising out of Landlord's failure to make timely
payments of its obligations, to the extent not caused by Tenant's failure to
make such payments when due under this Lease; and (uu) reserves for Expenses or
Real Estate Taxes, except as expressly provided herein. All costs and expenses
shall be determined in accordance with GAAP which shall be consistently applied
(with accruals appropriate to Landlord's business).
(F) "EXPENSE YEAR" shall mean each twelve (12)
consecutive month period commencing January 1 of the calendar
year during which the Commencement Date of the Lease occurs,
provided that Landlord, upon notice to Tenant, may change the
Expense Year from time to time to any other twelve (12)
consecutive month period, and, in the event of any such change,
Tenant's Share of Expenses shall be equitably adjusted for the
Expense Years involved in any such change.
(ii) PAYMENT OF REAL ESTATE TAXES: Commencing on the
Commencement Date, Tenant shall pay to Landlord as Additional Charges
one-twelfth (1/12th) of Tenant's Share of Real Estate Taxes for each Tax
Year on or before the first day of each month during such Tax Year, in
advance, in an amount reasonably estimated by Landlord and billed by
Landlord to Tenant, and Landlord shall have the right initially to
determine monthly estimates and to revise such estimates from time to
time. With reasonable promptness after Landlord has received the tax
bills for any Tax Year, Landlord shall furnish Tenant with a statement
(herein called "Landlord's Tax Statement") setting forth the amount of
Real Estate Taxes for such Tax Year and Tenant's Share thereof. If the
actual Tenant's Share of Real Estate Taxes for such Tax Year exceed the
estimated Tenant's Share of Real Estate Taxes paid by Tenant for such
Tax Year, Tenant shall pay to Landlord the difference between the amount
paid by Tenant and the actual Tenant's Share of Real Estate Taxes on or
before the earlier of thirty (30) days after the receipt of Landlord's
Tax Statement or fifteen (15) days prior to the delinquency date for the
Real Estate Tax payment reflected in the applicable Landlord's Tax
Statement, and if the total amount paid by Tenant for any such Tax Year
shall exceed the actual Tenant's Share of Real Estate Taxes for such Tax
Year, such excess shall be credited against the next installment of Real
Estate Taxes due from Tenant to Landlord hereunder or if the Term has
ended it shall be returned to Tenant within thirty (30) days. If it has
been determined that Tenant has overpaid Real Estate Taxes during the
last year of the Lease Term, then Landlord shall reimburse Tenant for
such overage on or before the thirtieth (30th) day following the
Expiration Date. No delay by Landlord in providing Landlord's Tax
Statement shall be deemed a default by Landlord or a waiver of
Landlord's right to require payment of the actual or estimated sums of
Tenant's Share of Real Estate Taxes, provided that Landlord may not
require payment of Tenant's Share of Real Estate Taxes with respect to
any Real Estate Taxes later than twelve (12) months after the end of the
calendar year in which such Real Estate Taxes were paid or incurred by
Landlord. To the extent that Landlord receives refunds of any portion of
Real Estate Taxes paid by Tenant during the Term, such refunds shall be
credited against Tenant's further obligation to pay Real Estate Taxes
during the Term or refunded to Tenant if received by Landlord within one
year after the Expiration Date.
(iii) PAYMENT OF EXPENSES: Commencing on the Commencement
Date, Tenant shall pay to Landlord as Additional Charges one-twelfth
(1/12th) of Tenant's Share of the Expenses for each Expense Year on or
before the first day of each month of such Expense Year, in advance, in
an amount
10
<PAGE> 16
reasonably estimated by Landlord and billed by Landlord to Tenant, and
Landlord shall have the right initially to determine monthly estimates
and to revise such estimates from time to time. With reasonable
promptness after the expiration of each Expense Year, Landlord shall
furnish Tenant with a statement (herein called "Landlord's Expense
Statement"), setting forth in reasonable detail the Expenses for such
Expense Year and Tenant's Share thereof. If the actual Tenant's Share of
Expenses for such Expense Year exceed the estimated Tenant's Share of
Expenses paid by Tenant for such Expense Year, Tenant shall pay to
Landlord the difference between the amount paid by Tenant and the actual
Tenant's Share of Expenses within thirty (30) days after the receipt of
Landlord's Expense Statement, and if the total amount paid by Tenant for
any such Expense Year shall exceed the actual Tenant's Share of Expenses
for such Expense Year, such excess shall be credited against the next
installment of the estimated Expenses due from Tenant to Landlord
hereunder or if the Term has ended it shall be returned to Tenant within
thirty (30) days. Any utility rebates for the Project which Landlord
receives for payments made by Tenant shall be forwarded to Tenant so
long as such rebate is received within one year following the Expiration
Date or sooner termination of the Lease. If it has been determined that
Tenant has overpaid Expenses during the last year of the Lease Term
(including rebates of utilities applicable to Tenant), then Landlord
shall reimburse Tenant for such overage on or before the thirtieth
(30th) day following the Expiration Date.
(iv) OTHER: To the extent any item of Real Estate Taxes or
Expenses is payable by Landlord in advance of the period to which it is
applicable (e.g. insurance and tax escrows required by Landlord's
Lender), or to the extent that prepayment is customary for the service
or matter, Landlord may (i) include such items in Landlord's estimate
for periods prior to the date such item is to be paid by Landlord and
(ii) to the extent Landlord has not collected the full amount of such
item prior to the date such item is to be paid by Landlord, Landlord may
include the balance of such full amount in a revised monthly estimate
for Additional Charges. If the Commencement Date or Expiration Date
shall occur on a date other than the first day of a Tax Year and/or
Expense Year, Tenant's Share of Real Estate Taxes and Expenses, for the
Tax Year and/or Expense Year in which the Commencement Date occurs shall
be prorated.
(v) AUDIT: Within ninety (90) days after receipt of any
Expense Statement or Tax Statement from Landlord, Tenant shall have the
right to examine and copy Landlord's books and records relating to such
Expense Statements and Tax Statements, and/or commence to cause an
independent audit thereof to be conducted by an accounting firm to be
selected by Tenant and subject to the reasonable approval of Landlord.
If the audit indicates that Tenant has overpaid either Expenses or Real
Estate Taxes, Tenant shall notify Landlord within one hundred twenty
(120) days after the date the applicable Expense Statement or Tax
Statement was received by Tenant. If Landlord disputes the results of
such audit, Landlord and Tenant shall work together in good faith to
resolve the discrepancy between the applicable Expense Statement and/or
Tax Statement and Tenant's audit. If it is finally determined that
Tenant has overpaid either Expenses or Real Estate Taxes, then Landlord
shall reimburse Tenant for such overage within thirty (30) days after
receipt of such notice, provided that if such overage exceeds five
percent (5%) of the actual amount of Expenses or Real Estate Taxes paid
by Landlord for the Tax or Expense Year covered by such audit, then
Landlord shall bear the reasonable cost of such audit, up to a maximum
cost of $5,000 (adjusted annually by the CPI Increase). If Tenant fails
to object to any such Expense Statement or Tax Statement, or to request
and commence an independent audit thereof, within ninety (90) days after
receipt of the applicable statement, or if Tenant objects to any
statement or requests an audit but then fails to complete the audit
within one hundred twenty (120) days after receipt of the applicable
statement, such Expense Statement and/or Tax Statement shall be final
and shall not be subject to any audit, challenge or adjustment. All of
the information obtained through any audit by Tenant and any compromise,
settlement or adjustment reached between Landlord and Tenant relative to
the results of such audit shall be held in strict confidence by the
Tenant, except to the extent disclosure is required or reasonably
necessary in connection with litigation with respect to such audit or as
required by Law as a result of Tenant's status as a publicly-traded
corporation. Tenant shall continue to make all Rent payments hereunder
(including without limitation payments of Additional Charges for
Expenses and Real Estate Taxes) during any such audit period and pending
resolution of any dispute between Landlord and Tenant.
11
<PAGE> 17
(d) LATE CHARGES. Tenant recognizes that late payment of any
Monthly Base Rent and/or Additional Charges will result in administrative
expenses to Landlord, the extent of which additional expense is extremely
difficult and economically impractical to ascertain. Tenant therefore agrees
that if Tenant is in Default in the payment of any Monthly Base Rent and/or
Additional Charges, the amount of such unpaid Monthly Base Rent and/or
Additional Charges shall be increased by a late charge to be paid to Landlord by
Tenant in an amount equal to four percent (4%) of the amount of the delinquent
Monthly Base Rent and/or Additional Charges. In addition, any outstanding
Monthly Base Rent, Additional Charges, late charges and other outstanding Rent
amounts shall accrue interest at an annualized rate of the lesser of (i) the
greater of 10% or The Federal Reserve Discount Rate plus 5% until paid to
Landlord, or (ii) the maximum rate permitted by law (the "Default Rate"). Tenant
agrees that such amount is a reasonable estimate of the loss and expense to be
suffered by Landlord as a result of such late payment by Tenant and may be
charged by Landlord to defray such loss and expense. The provisions of this
Paragraph 3(d) in no way relieve Tenant of the obligation to pay Monthly Base
Rent or Additional Charges on or before the date on which they are due, nor do
the terms of this Paragraph 3(d) in any way affect Landlord's remedies pursuant
to Paragraph 19 in the event any Monthly Base Rent or Additional Charges are
unpaid after the date due.
4. RESTRICTIONS ON USE.
(a) NO INTERFERENCE OR WASTE. Tenant shall not do or permit
anything to be done in or about the Premises which will obstruct, or materially
or unreasonably interfere with, the rights of other tenants or occupants of the
Building or the Project, or injure or annoy them, nor use or allow the Premises
to be used for any unlawful purpose, nor shall Tenant cause or maintain or
permit any nuisance in, on or about the Premises or Project. Tenant shall not
commit or suffer the commission of any waste in, on or about the Premises.
(b) USE OF COURTYARD. Tenant shall have the right to use the
courtyard areas of the Project Common Areas for Tenant's social and/or business
functions with no additional rent for such use payable by Tenant, on the terms
and conditions set forth in this Paragraph 4(b). Tenant shall deliver written
notice to Landlord requesting to reserve particular space in the Project Common
Areas for such functions at least five (5) days, and no earlier than thirty (30)
days, prior to such proposed function. Landlord may grant similar rights to
other tenants and occupants of the Project, and Tenant's rights under this
paragraph shall be subject to the rights of such other tenants and occupants and
any reasonable, non-discriminatory system Landlord incorporates to address
conflicting reservations of the same space by more than one tenant or occupant
of the Project. Tenant's use of the courtyard areas pursuant to this paragraph
shall be on the following terms and conditions: (i) Tenant may conduct up to
twelve (12) such functions within any calendar year; (ii) such functions shall
be limited to a reasonable number of people consistent with applicable fire,
health and safety laws, and shall comply with any applicable requirements of the
DDA, REA, CC&Rs and/or other Encumbrances; (iii) the insurance, indemnity and
nonliability obligations and provisions contained herein and in the Rules and
Regulations, respectively (including Tenant's obligations to carry liquor law
liability insurance if alcoholic beverages are served or consumed during such
functions), shall apply to and govern any claims, liabilities, costs or expenses
arising from any such function, (iv) no such proposed functions shall, in
Landlord's reasonable determination, unreasonably disrupt either other tenants
of the Project, or the operation or maintenance of the Common Areas, (v) Tenant
shall comply with the obligations of the Rules and Regulations of Exhibit "D"
attached hereto relating to such use, and (v) Tenant shall pay any and all of
Landlord's reasonable costs of preparation for, supervision of and/or clean-up
in connection with, such functions.
5. COMPLIANCE WITH LAWS.
(a) TENANT'S COMPLIANCE OBLIGATIONS. Tenant shall not use the
Project or permit anything to be done in or about the Project which will in any
way conflict with any present and future laws, statutes, ordinances,
resolutions, regulations, proclamations, orders or decrees of any municipal,
county, state or federal government or other governmental or regulatory
authority with jurisdiction over the Project, or any portion thereof, whether
currently in effect or adopted in the future and whether or not in the
contemplation of the parties hereto (collectively, "Laws"), and Tenant shall
promptly, at its sole expense, maintain the Premises, any Alterations (as
defined in Paragraph 6 below) permitted hereunder and Tenant's use and
operations thereon in strict compliance at all times with all Laws. "Laws" shall
include, without limitation, all Laws relating to health and safety (including,
without limitation, the California Occupational Safety and Health Act of 1973
and the California Safe Drinking
12
<PAGE> 18
Water and Toxic Enforcement Act of 1986, including posting and delivery of
notices required by such Laws with respect to the Premises), disabled
accessibility (including, without limitation, the Americans with Disabilities
Act, 42 U.S.C. section 12101 et seq.), Hazardous Substances, and all present and
future life safety, fire, sprinkler, seismic retrofit, transportation demand
management plan, building code and municipal code requirements; provided
however, that Tenant's obligation to comply with Laws relating to Hazardous
Substances is subject to the terms and conditions of Paragraph 39, and Tenant
shall not be responsible for compliance with clean-up provisions of any Laws
with respect to Hazardous Substances except to the extent of any release caused
by the Tenant or any of its servants, employees, contractors, agents, licensees
or invitees (collectively, including Tenant, the "Tenant Parties") or otherwise
included in Tenant's indemnity contained in Paragraph 39. Notwithstanding the
foregoing, Landlord, and not Tenant, shall be responsible for correcting any
condition with respect to the Common Area, or the exterior or structural
portions of the Building (but not with respect to the interior of the Premises),
which is in violation of applicable Laws (subject to Tenant's obligation to pay
such costs to the extent they are included as Expenses under Paragraph
3(c)(i)(E), except (subject to Paragraph 11 hereof) to the extent such condition
is caused by the negligent or intentional acts or omissions of the Tenant
Parties, or such violation results from Tenant's particular use of the Premises,
or such condition is caused by, or will be or has been altered in connection
with, the installation of the Tenant Improvements or any Alterations. Tenant
shall be responsible for compliance of the Tenant Improvements with all Laws.
Notwithstanding the first sentence of this Paragraph 5(a), Tenant shall not be
required to make any structural alterations to the Premises in order to comply
with Laws unless the requirement that such alterations be made is triggered by
any of the following (or, if such requirement results from the cumulative effect
of any of the following when added to other negligent or intentional acts,
omissions or events attributable to the Tenant Parties, to the extent such
alterations are required by any of the following): (i) the installation, use or
operation of the Tenant Improvements, any Alterations, or any of Tenant's trade
fixtures or personal property; (ii) the negligent or intentional acts or
omissions of any of the Tenant Parties; or (iii) the particular use or
particular occupancy or manner of use or occupancy of the Premises by the Tenant
Parties. Any alterations that are Tenant's responsibility pursuant to this
Paragraph 5 shall be made in accordance with Paragraph 6 below, at Tenant's sole
cost. The parties acknowledge and agree that Tenant's obligation to comply with
all Laws as provided in this paragraph (subject to the limitations contained
herein) is a material part of the bargained-for consideration under this Lease.
Tenant's obligations under this Paragraph and under Paragraph 7(c) below shall
include, without limitation, the responsibility of Tenant to make substantial or
structural repairs and alterations to the Premises to the extent provided above,
regardless of, among other factors, the relationship of the cost of curative
action to the Rent under this Lease, the length of the then remaining Term
hereof, the relative benefit of the repairs to Tenant or Landlord, the degree to
which the curative action may interfere with Tenant's use or enjoyment of the
Premises, and the likelihood that the parties contemplated the particular Law
involved.
(b) TRAFFIC MITIGATION. As a condition to approval of the Initial
Development, the City and/or other governmental agencies or quasi-governmental
agencies will require the implementation of a transportation demand management
plan and/or one or more similar programs to reduce the traffic generated by the
Project and to facilitate the use of public transportation (any such program, a
"TDM"). A TDM may apply to (and measure required alternative transportation use
based on) the Project as a whole, or be based on each building included in the
Project, or be based on the Premises occupied by each or certain tenant(s) in
the Project. Tenant hereby agrees to designate one of its employees to act as a
liaison with Landlord or with the City or other entity enforcing the TDM, as
appropriate, to facilitate and coordinate any TDM. Tenant shall comply with the
requirements of any TDM that applies in whole or in part to the Premises, at
Tenant's cost with respect to both compliance costs and any penalties resulting
from Tenant's failure to comply with program requirements. If any TDM applies to
the Project as a whole, or to a portion of the Project that includes more than
the Premises, (i) Tenant shall pay as Expenses the Tenant's Share of the
Building Share of any compliance costs with respect to such TDM, and (ii) Tenant
shall pay Landlord on demand, as an Additional Charge, any penalties that are
imposed under any such TDM to the extent such penalties result from Tenant's
failure to comply with the requirements of such TDM, including, without
limitation, by failure to timely comply with any reporting requirements or by
failure of Tenant to meet any thresholds or other standards imposed by such TDM
with respect to traffic, public transportation or other similar matters included
in such TDM. If any TDM is imposed that applies only to Tenant or only to the
Premises, Tenant shall be solely responsible for compliance with such TDM,
including, without limitation, by satisfying any survey or reporting
requirements thereunder directly to the entity enforcing such TDM, and by paying
any penalties or costs imposed thereunder directly to the entity enforcing such
TDM, and Tenant shall indemnify, defend and hold
13
<PAGE> 19
harmless Landlord against any claims, suits, costs (including reasonable
attorneys' fees), damage, liability, and losses, whether foreseeable or
unforeseeable, by reason of Tenant's failure to comply with, or violation of,
any such TDM that applies solely to Tenant or the Premises.
(c) INSURANCE REQUIREMENTS. Tenant shall not do or permit
anything to be done in or about the Premises or bring or keep anything therein
which will in any way increase the rate of any insurance upon the Project or any
of its contents (unless Tenant agrees to pay for such increase) or cause a
cancellation of any insurance on the Project or otherwise violate any
requirements, guidelines, conditions, rules or orders with respect to such
insurance. Tenant shall at its sole cost and expense promptly comply with the
requirements of the Insurance Services Office (ISO), board of fire underwriters,
or other similar body now or hereafter constituted relating to or affecting
Tenant's use or occupancy of the Project (other than in situations where
compliance involves repair, maintenance or replacement of items that Landlord is
expressly required to repair, maintain or replace under this Lease).
(d) NO LIMITATION ON OBLIGATIONS. The provisions of this
Paragraph 5 shall in no way limit Tenant's maintenance, repair and replacement
obligations under Paragraph 7 or Tenant's obligation to pay Expenses under
Paragraph 3(c). The judgment of any court of competent jurisdiction or the
admission of Tenant in an action against Tenant, whether Landlord is a party
thereto or not, that Tenant has so violated any such Law shall be conclusive of
such violation as between Landlord and Tenant.
6. ALTERATIONS.
(a) LANDLORD CONSENT. After completion of the Warm Shell
Improvements and the Tenant Improvements (which shall be governed by the Work
Letter), Tenant shall not make or suffer to be made any additional alterations,
additions or improvements (herein referred to individually as an "Alteration,"
and collectively as the "Alterations") in, on or to the Premises or any part
thereof without the prior written consent of Landlord. Tenant's request for
approval of any such proposed Alterations shall be accompanied by a full set of
complete plans and specifications for such proposed Alterations for Landlord's
review. If Landlord fails to approve or disapprove any proposed Alterations
within ten (10) business days after receipt of Tenant's written request for
approval, Tenant shall deliver to Landlord a second request for Landlord's
consent to such Alterations, and failure of Landlord to give its disapproval
within five (5) business days after receipt of Tenant's second written request
for approval shall constitute approval by Landlord of such Alterations so long
as Tenant's request includes the following statement in capitalized and
boldfaced letters: BY FAILING TO RESPOND TO THIS REQUEST, YOU WILL BE DEEMED TO
HAVE APPROVED THE ALTERATIONS DESCRIBED HEREIN. Alterations in, on or to the
Premises, except for Tenant's trade fixtures and movable furniture and
equipment, shall be the property of Tenant during the Term and shall become
Landlord's property at the end of the Term without compensation to Tenant.
Landlord shall exercise good faith business judgment in reviewing any request by
Tenant for Landlord's consent to Alterations, and shall not unreasonably
withhold or delay its consent to Alterations that (i) do not materially affect
the structure of the Building or its electrical, plumbing, HVAC, security or
other systems, (ii) are not visible from the exterior of the Premises and do not
otherwise affect the exterior appearance of the Building, (iii) are consistent
with Tenant's Permitted Use hereunder; (iv) do not require any application to a
political jurisdiction for rezoning, general plan amendment, variance,
conditional use permit or architectural review approval, (v) will not interfere
with the use and occupancy of any other portion of the Project by Landlord or by
any other tenants or occupants or their invitees, or by any other party with the
right to use any portion of the Project, (vi) comply with any ground lease, the
Parking REA, the Initial CC&Rs, any other CC&Rs, any other Encumbrances, and any
Mortgages, and (vii) do not adversely affect the value or marketability of
Landlord's reversionary interest upon termination or expiration of this Lease.
(b) PERMITTED ALTERATIONS. Notwithstanding Paragraph 6(a), Tenant
may make Alterations to the Premises without Landlord's prior consent so long as
(x) such Alterations comply with items (i) through (vii) in Paragraph 6(a), and
(y) the cost of each such Alteration (or group of Alterations, if occurring
substantially at the same time and as part of a single project) does not exceed
One Hundred Thousand Dollars ($100,000) (any such Alterations being defined
herein as "Permitted Alterations"). Tenant shall be required to notify Landlord
in writing
14
<PAGE> 20
before making any Permitted Alterations and within thirty (30) days after
completion of such Permitted Alterations, and at Landlord's request shall
provide Landlord with accurate as-built drawings of any Permitted Alterations.
(c) CONSTRUCTION OF ALTERATIONS. Any Alterations consented to by
Landlord pursuant to Paragraph 6(a), and any Permitted Alterations, shall be
made by Tenant, at Tenant's sole cost and expense, in accordance with plans and
specifications reasonably approved by Landlord, and any contractor or person
selected by Tenant to make the same must first be reasonably approved in writing
by Landlord. With respect to any Alterations that affect the structure of the
Building, the Building Systems, or any portion of the Project outside the
Premises, at Landlord's option the Alterations shall be made by Landlord, or by
a contractor specified by Landlord, for Tenant's account and Tenant shall
reimburse Landlord for actual third-party costs incurred by Landlord in
connection therewith as an Additional Charge, within twenty (20) days after
receipt of a statement from Landlord therefor.
(d) LANDLORD REVIEW. Tenant shall reimburse Landlord upon demand
for any reasonable out-of-pocket expenses incurred by Landlord in the review of
any Alterations made by Tenant, including fees charged by Landlord's contractors
or consultants to review plans and specifications, and such obligation shall be
an Additional Charge. Landlord's consent to any Alterations shall not obligate
Landlord to repair, maintain, insure or otherwise assume any responsibility or
liability with respect to any such Alteration. In addition, notwithstanding
Landlord's review, Tenant and not Landlord shall be responsible for compliance
of the Alterations, and plans and specifications therefor, with all applicable
Laws, and Landlord shall not be responsible for any omissions or errors therein.
(e) REMOVAL OF ALTERATIONS. Upon the expiration or sooner
termination of the Term, Tenant shall upon demand by Landlord do either of the
following, at Landlord's sole election: (i) at Tenant's sole cost and expense,
forthwith and with all due diligence remove any Alterations made by or for the
account of Tenant, designated by Landlord to be removed (provided, however, that
upon the written request of Tenant prior to installation of such Alterations,
Landlord shall advise Tenant at that time whether or not such specific
Alterations must be removed upon the expiration or sooner termination of this
Lease, and to the extent Landlord has so agreed to allow any specific
Alterations to remain in the Premises, Tenant shall not be obligated to remove
such Alterations or to pay Landlord the cost of removal of such Alterations
pursuant to this Paragraph 6(e)), and restore the Premises to substantially its
original condition as of the Commencement Date (but including Tenant
Modifications, Warm Shell Improvements and/or Tenant Improvements that are not
removed pursuant to Paragraph 24), subject to normal wear and tear and the
rights and obligations of Tenant concerning casualty damage pursuant to
Paragraph 20, or (ii) pay Landlord the reasonable estimated cost thereof.
(f) FIXTURES. All wiring, conduit and fiberoptic cabling and
similar infrastructure related to telephone, telecommunications, or similar
communications systems, and all other wiring, circuit breakers, transformers,
cabling, plumbing, heating and sprinkling systems, fixtures and outlets, vaults,
paneling, molding, shelving, radiator enclosures, flooring, HVAC equipment and
HVAC ducts, shall be deemed to be real estate fixtures and at all times after
installation be and remain Landlord's property, whether or not attached to or
built into the Premises. Any trade fixtures, furniture and trade equipment
installed by the Tenant which may be removed from the Premises without injury
thereto (including, without limitation, demountable partitions, refrigerators
and other kitchen appliances, computer racking and similar demountable fixtures)
(collectively, "Trade Fixtures") shall remain the property of the Tenant and
shall be removed by the Tenant, at the Tenant's sole cost and expense, from the
Premises upon the expiration or earlier termination of this Lease.
7. REPAIR AND MAINTENANCE.
(a) LANDLORD'S OBLIGATIONS. Landlord shall maintain, repair and
replace, to the extent necessary to maintain the Building and Project in good
operating order and first-class condition, the following:
(i) Landlord shall maintain, repair and replace, at its
sole cost and expense, except as provided in Paragraph 7(c), the
exterior, roof structure (but not the roof membrane) and structural
portions of the Building (including load bearing walls and foundations).
15
<PAGE> 21
(ii) Landlord shall maintain, repair and replace the
parking areas, courtyards, sidewalks, entryways, lawns, fountains,
landscaping and other similar facilities located in the Project Common
Area, including, without limitation, such maintenance, repair and
replacement with respect to the Project Common Area as may be expressly
required by the terms and conditions of the DDA, the Parking REA and/or
the CC&Rs.
All costs incurred by Landlord in connection with the foregoing obligations
shall be payable by Tenant as Additional Charges in accordance with Paragraph
3(c) to the extent they are properly included in Expenses thereunder. Landlord
shall use commercially reasonable efforts to minimize any material interference
with Tenant's business conducted at the Premises resulting from the performance
of Landlord's obligations under this Paragraph 7(a). Landlord's obligations
under this Paragraph 7(a) with respect to any particular repair, replacement or
maintenance requirement, shall not commence until Tenant notifies Landlord in
writing of any circumstances which Tenant believes may trigger Landlord's
obligations. If Landlord fails after thirty (30) days' written notice by Tenant
(or such lesser period as may be reasonable if such failure materially
interferes with Tenant's use or occupancy of the Premises or threatens material
damage to Tenant's property or material harm to Tenant's employees, even if such
shorter period of time is less than the cure period provided in Paragraph 19(c)
before such failure would be a "default" by Landlord under this Lease) to
proceed with due diligence to make repairs required to be made by Landlord under
this Paragraph 7(a), the same may be made by Tenant at the expense of Landlord,
so long as Tenant first provides Landlord with an additional notice and an
additional five (5) business days (or, in the event of an emergency that
threatens material damage to Tenant's property or material harm to Tenant's
employees, one (1) business day) to either (i) dispute Landlord's obligation and
submit such dispute to arbitration pursuant to Paragraph 44, (ii) commence cure,
or (iii) by written notice to Tenant within such five (5) business day period
after receipt of such notice, designate the contractor Tenant shall use in
connection with any such repair by Tenant in which event Tenant shall only make
such repairs using such designated contractor. If Landlord fails to dispute such
obligation, commence cure or to so designate a contractor, Tenant may proceed
with an experienced, duly licensed and adequately insured contractor selected by
Tenant. Any expenses incurred by Tenant in connection with the preceding
sentence shall be reimbursed (with interest at the rate of 8.5% from the date on
which Tenant incurs such costs) within thirty (30) days after submission of a
bill or statement therefor to Landlord. Tenant shall have no right to offset any
such amounts against Rent hereunder. If Landlord disputes Tenant's right to cure
Landlord's default or the reasonableness of the costs incurred by Tenant,
Landlord shall submit such dispute to binding arbitration pursuant to Paragraph
44 below within thirty (30) business days after Tenant's demand. If Landlord
fails to either reimburse Tenant or dispute Tenant's demand pursuant to the
previous sentence within thirty (30) business days after Tenant's demand, Tenant
may submit such dispute to binding arbitration pursuant to Paragraph 44.
(b) TENANT'S OBLIGATIONS. Tenant shall maintain, repair and
replace, to the extent necessary to maintain the Building in good operating
order and first-class condition, at its sole cost and expense, all portions of
the Premises which are not Landlord's obligations under Paragraph 7(a),
including, without limitation, (i) the roof membrane; (ii) the building systems
serving the Premises for electrical, mechanical, HVAC and plumbing and all
controls appurtenant thereto, and any elevators in the Building (collectively,
including elevators, "Building Systems"); and (iii) the interior portion of the
Building (other than the Excluded Space), the Warm Shell Improvements, the
Tenant Improvements, the Alterations, and any additional tenant improvements,
alterations or additions installed by or on behalf of Tenant within the
Premises. If Tenant exercises its right to extend the Term for the Extension
Term, at Tenant's election Tenant may, by written notice to Landlord delivered
at any time at least thirty (30) days prior to expiration of the Initial Term,
cause Landlord to assume Tenant's maintenance obligations with respect to the
Building Systems under clause (ii) above, which assumption by Landlord shall be
effective during the Extension Term. If Landlord assumes such obligations, all
costs incurred by Landlord in connection therewith shall be deemed Additional
Charges payable by Tenant in accordance with Paragraph 3(c). Tenant shall be
responsible for the expense of installation, operation, and maintenance of its
telephone and other communications cabling from the public right-of-way to the
point of entry into the Building (except that Landlord shall install two
underground telephone conduits from the public right-of-way to the Project
Garage as part of the Base Building, as provided in the Work Letter) and
throughout the Premises; although Landlord shall have the right, at Landlord's
sole election, to perform such work on behalf of Tenant in Common Areas,
provided Landlord performs such work in coordination with Tenant and its
contractors in such a manner as will accommodate Tenant's reasonable objectives
with respect thereto. The Premises shall at all times be maintained by Tenant in
the condition of a first-class office
16
<PAGE> 22
building. Tenant's obligations under this Paragraph 7 include, without
limitation, the replacement, at Tenant's sole cost and expense, of any portions
of the Premises or Building Systems which are not Landlord's express
responsibility under Paragraph 7(a), if it would be commercially prudent to
replace, rather than repair, such portions of the Premises, regardless of
whether such replacement would be considered a capital expenditure; provided,
however, that if Landlord has assumed Tenant's maintenance obligations for
Building Systems pursuant to this Paragraph 7(b), (x) any replacement of any
portion of the Building Systems which would be considered a capital expenditure
and which is made at least one (1) year after Landlord assumes such obligations
shall be amortized in accordance with Paragraph 3(c)(i)(E)(v) ; and (y) with
respect to replacement of any components of the Building's HVAC system during
such one year period after Landlord assumes such obligations, so long as (I)
Tenant has complied with the provisions of Paragraph 7(d) below throughout the
Term, and (II) Landlord is able to obtain a maintenance service contract during
such one year period, on customary terms and conditions and from a contractor
reasonably acceptable to Landlord, Tenant shall pay both the amortized portion
of such replacement (pursuant to Paragraph 3(c)(i)(E)(v)) attributable to the
remaining Term (including the Extension Term, if Tenant exercises its option to
extend) plus an additional three years' amortization payable within twenty (20)
days after receipt of invoice from Landlord (to give Landlord the benefit of the
expected fifteen year useful life of the original HVAC System). Tenant hereby
waives and releases its right to make repairs at Landlord's expense under
Sections 1941 and 1942 of the California Civil Code or under any similar law,
statute or ordinance now or hereafter in effect. In addition, Tenant hereby
waives and releases its right to terminate this Lease under Section 1932(1) of
the California Civil Code or under any similar law, statute or ordinance now or
hereafter in effect.
(c) ADDITIONAL OBLIGATIONS OF TENANT. The purpose of Paragraph
7(a) and 7(b) is to define the obligations of Landlord and Tenant to perform
various repair and maintenance functions; the allocation of the costs therefor
are covered under this Paragraph 7(c) and Paragraph 3. Tenant shall bear the
full cost of repairs or maintenance, interior or exterior, structural or
otherwise, to preserve the Premises and the Building in good working order and
first-class condition, arising out of (i) the existence, installation, use or
operation of any Tenant Improvements, Alterations, or any of Tenant's Trade
Fixtures or personal property; (ii) the moving of Tenant's property or fixtures
in or out of the Building or Project or in and about the Premises; (iii) the
particular use or particular occupancy or manner of use or occupancy of the
Premises by any Tenant Party; or (iv) except to the extent any claims arising
from any of the foregoing are reimbursed by insurance carried by Landlord, are
covered by the waiver of subrogation in Paragraph 11 or are otherwise provided
for in Paragraph 20, the acts, omissions or negligence of any Tenant Parties.
(d) MAINTENANCE SERVICE CONTRACTS. In connection with Tenant's
maintenance and repair obligations contained in this Paragraph 7, Tenant shall,
at its own cost and expense, enter into regularly scheduled preventive
maintenance service contracts with maintenance contractors approved by Landlord,
in its reasonable discretion, for servicing the HVAC system serving the Premises
and the elevators within the Building, and shall provide copies of such
contracts and periodic maintenance reports to Landlord. At Landlord's option at
any time in which Tenant is in Default hereunder, maintenance service contracts
shall be prepaid on an annual basis. Each maintenance service contract shall
specifically name Landlord as a third party beneficiary, with the right to
receive copies of all notices delivered under such contract and the ability to
exercise Tenant's rights thereunder, at Landlord's election, in connection with
any cure of Tenant's default by Landlord, or any assumption by Landlord of
Tenant's maintenance obligations with respect to Building Systems, pursuant to
Paragraph 7(b), 7(e) or 9(d)(v).
(e) CURE RIGHTS. Tenant shall be in Default hereunder if Tenant
fails, within a period of thirty (30) days from the date of written notice from
Landlord, to cure any failure to fulfill any of its obligations under this
Paragraph 7; provided, however, that if such failure is curable but cannot be
cured within such thirty (30) day period, Tenant shall have such additional time
as may be reasonably required to cure (not to exceed sixty (60) additional days)
before such failure becomes a Default hereunder, so long as Tenant commences
such cure within such (30) day period and diligently prosecutes such cure to
completion. In addition, Landlord may elect, by delivery of written notice to
Tenant, to assume Tenant's maintenance obligations with respect to the Building
Systems under Paragraph 7(b)(ii) if Tenant Defaults with respect to any of its
obligations under this Paragraph 7, or if Tenant has failed to perform any of
its obligations under this Paragraph 7 more than once in any twelve month period
(without benefit of cure periods) upon the second such failure. If Landlord
assumes such obligations, all costs incurred by Landlord in connection therewith
shall be included in Expenses payable by Tenant as Additional Charges in
17
<PAGE> 23
accordance with Paragraph 4(c). In addition to Landlord's rights set forth in
this Paragraph 7(e), Landlord shall have the rights set forth in Paragraph 23
with respect to any failure of Tenant to perform its obligations under Paragraph
7(b), (c) or (d). The remedies described in this paragraph are cumulative and in
addition to any other remedies Landlord may have at law or under this Lease.
(f) NO ABATEMENT. Except to the extent any claims arising from
any of the foregoing are reimbursed by rental abatement insurance proceeds
actually received by Landlord and/or any Mortgagee, are covered by the waiver of
subrogation in Paragraph 11 or are otherwise provided for in Paragraph 20, there
shall be no abatement of Rent with respect to, and except for Landlord's active
negligence or willful misconduct Landlord shall not be liable for, any injury to
or interference with Tenant's business arising from, any repairs, maintenance,
alteration or improvement in or to any portion of the Project, including the
Premises, or in or to the fixtures, appurtenances and equipment therein.
8. LIENS. Tenant shall keep the Premises and Project free from any liens
arising out of any work performed, material furnished or obligations incurred by
Tenant. In the event that Tenant shall not, within ten (10) days following the
imposition of any such lien, cause the same to be released of record by payment
or posting of a proper bond, Landlord shall have, in addition to all other
remedies provided herein and by law, the right, but not the obligation, to cause
the same to be released by such means as it shall deem proper, including without
limitation by the payment of the claim giving rise to such lien or by the
posting of a bond. All such sums paid by Landlord and all expenses incurred by
Landlord in connection therewith shall be considered Additional Charges and
shall be payable to Landlord by Tenant on demand with interest from the date
incurred by Landlord at the Default Rate. Landlord shall have the right at all
times to post and keep posted on the Premises any notices permitted or required
by law, or which Landlord shall deem proper, for the protection of Landlord, the
Premises, the Project and any other party having an interest therein, from
mechanics' and materialmen's liens, and Tenant shall give written notice to
Landlord at least fifteen (15) business days' prior to commencement of any
construction on the Premises.
9. ASSIGNMENT AND SUBLETTING.
(a) LANDLORD'S CONSENT REQUIRED. Except as otherwise provided in
this Paragraph 9, Tenant shall not directly or indirectly, voluntarily or by
operation of law, sell, assign, encumber, pledge or otherwise transfer or
hypothecate all or any part of the Premises or Tenant's leasehold estate
hereunder (collectively, "Assignment"), or permit the Premises to be occupied by
anyone other than Tenant or sublet the Premises or any portion thereof (the
foregoing, including without limitation any license or use agreement, any
sub-sublease or subsequent subletting by any subtenant, sub-subtenant or other
occupant of any portion of the Premises, and similar occupancy rights,
collectively, "Sublease"), without Landlord's prior written consent in each
instance, which consent shall not be unreasonably withheld. Without otherwise
limiting the criteria upon which Landlord may withhold its consent to any
proposed Sublease or Assignment, if Landlord withholds its consent where either
(i) the creditworthiness of the proposed Sublessee or Assignee is not acceptable
to Landlord, in Landlord's reasonable discretion, or to any Mortgagee, or (ii)
the proposed Sublessee's or Assignee's use of the Premises is not in compliance
with the Permitted Use as described in the Basic Lease Information, such
withholding of consent shall be presumptively reasonable. If Landlord consents
to the Sublease or Assignment, Tenant may thereafter enter into a valid Sublease
or Assignment upon the terms and conditions set forth in this Paragraph 9.
(b) REQUEST FOR CONSENT. If Tenant desires at any time to enter
into an Assignment of this Lease or a Sublease of the Premises or any portion
thereof for which Landlord's consent is required, it shall first give written
notice to Landlord of its desire to do so, which notice shall contain (i) the
name of the proposed assignee, subtenant or occupant; (ii) the name of the
proposed assignee's, subtenant's, or occupant's business to be carried on in the
Premises; (iii) the terms and provisions of the proposed Assignment or Sublease;
and (iv) such financial information as Landlord may reasonably request
concerning the proposed assignee, subtenant or occupant. In any Sublease
undertaken by Tenant that is not subject to Landlord's termination right
pursuant to Paragraph 9(c) (including, without limitation, any Sublease entered
into after delivery of an Availability Notice), Tenant shall diligently seek to
obtain not less than fair market rent for the space so sublet (taking into
account the affect, if any, that the lack of a recognition and/or
non-disturbance agreement from Landlord [as provided in Paragraph 9(i)] would
have on the fair market rent for such Sublease), and Landlord may consider such
market factors in its
18
<PAGE> 24
determination of whether to consent to such proposed Sublease. Any improvements,
additions, or alterations to the Building or the Project that are required by
applicable Laws or are deemed necessary or appropriate by Landlord, in
Landlord's reasonable judgment, as a result of any such Sublease or Assignment,
shall be installed and provided by Tenant (or, at Landlord's sole option, by
Landlord but at Tenant's expense), without cost or expense to Landlord, and
without effect on the Bonus Rent received by Landlord except to the extent
provided in Paragraph 9(f)(2), and Landlord may condition its consent to any
proposed Sublease or Assignment on the construction of improvements required by
applicable Laws or deemed necessary or appropriate by Landlord in its reasonable
discretion, by reason of the Sublease or Assignment.
(c) LANDLORD'S RESPONSE. At any time within fifteen (15) days
after Landlord's receipt of the notice specified in Paragraph 9(b), Landlord may
by written notice to Tenant elect to (i) consent to the Sublease or Assignment;
or (ii) disapprove the Sublease or Assignment. In addition, Landlord may elect
to terminate this Lease as to the portion of the Premises that is specified in
such notice, with a proportionate abatement in Monthly Base Rent and Additional
Charges for Expenses and Taxes, if such notice is with respect to (x) any
proposed Assignment, except in conjunction with a Permitted Transfer, or (y) any
proposed Sublease and either (I) the term of the Sublease commences on or after
the sixth (6th) anniversary of the Commencement Date, and after giving effect to
such Sublease the original Tenant will occupy less than fifty percent (50%) of
the Rentable Area of the Premises, or (II) such Sublease has a term (including
any renewal or extension options) that either is coterminous with the Initial
Term (or Extension Term if the Exercise Notice has been delivered prior to the
commencement of such Sublease) or expires within the last eighteen (18) months
of the Initial Term (or Extension Term if the Exercise Notice has been delivered
prior to the commencement of such Sublease). Failure by Landlord to either
consent to or disapprove a proposed Assignment or Sublease within the fifteen
(15) day time period specified above shall be deemed to be Landlord's
disapproval thereof.
(d) RECAPTURE. If Landlord elects to terminate the Lease as to a
portion of the Premises pursuant to Paragraph 9(c), the following terms and
conditions shall apply:
(i) Tenant shall at all times provide reasonable and
appropriate access to such portion of the Premises and use of any common
facilities within the Building (including, at Landlord's election and as
reasonable under the circumstances, by the designation of "building
common areas" as appropriate for the use of and access to the recaptured
space, including provision of any utilities and services for such
recaptured space).
(ii) Tenant's Share shall be modified based on the
remaining Rentable Area of the Premises divided by the total rentable
area in the Building, as determined by Landlord in its reasonable
discretion.
(iii) Tenant's Minimum Parking shall be reduced by
multiplying the number of parking spaces included in Tenant's Minimum
Parking by a fraction, the numerator of which shall be the remaining
Rentable Area of the Premises and the denominator of which shall be the
Rentable Area of the entire Premises as of the Delivery Date (determined
as provided in the Basic Lease Information),
(iv) If after giving effect to such termination Tenant
continues to lease seventy-five percent (75%) or less of the Building,
Tenant's rights with respect to any monument or other Project signage
and the roof space (for Satellite Antennae) shall be reduced in the same
proportion as the Minimum Parking.
(v) At any time after Landlord elects to recapture any portion of the
Premises, Landlord may elect, by delivery of written notice to Tenant,
to assume Tenant's maintenance obligations for the Building Systems
under Paragraph 7(b)(ii). In addition, at any time after Landlord has
elected to recapture, in the aggregate, more than fifty percent (50%) of
the Premises, Tenant may elect, by delivery of written notice to
Landlord, to cause Landlord to assume Tenant's maintenance obligations
for the Building Systems under Paragraph 7(b)(ii). If Landlord assumes
Tenant's maintenance obligations for the Building
19
<PAGE> 25
Systems pursuant to this clause (v), all costs incurred by Landlord in
connection therewith shall be deemed Additional Charges payable by
Tenant in accordance with Paragraph 3(c). If Landlord does not elect to
assume Tenant's maintenance obligations for the Building Systems, and
Tenant does not elect to cause Landlord to assume Tenant's maintenance
obligations for the Building Systems, during any period of time after
Landlord has recaptured any portion of the Premises, Landlord shall pay
to Tenant "Landlord's Share" (as defined below) of any costs incurred by
Tenant with respect to Tenant's maintenance obligations for Building
Systems under Paragraph 7(b)(ii) as such costs are incurred by Tenant,
within thirty (30) days after receipt of an invoice and such back-up
documentation of such costs as Landlord may reasonably request.
"Landlord's Share" shall mean the rentable area of the portion of the
Premises recaptured by Landlord at any given time, divided by the total
Rentable Area of the Premises as it exists on the Commencement Date.
Promptly after request from Landlord, Tenant shall enter into any amendment to
this Lease or other documentation reasonably requested by Landlord in connection
with any such termination of this Lease as to a portion of the Premises (which
may include, without limitation, provisions regarding the modifications set
forth in this Paragraph 9(d)).
(e) AVAILABILITY NOTICE. At Tenant's option, Tenant may notify
Landlord in writing if Tenant wishes to Assign or Sublease any portion of the
Premises, prior to commencing negotiations for an Assignment or Sublease with
another party, if such Assignment or Sublease would be subject to Landlord's
termination right provided in Paragraph 9(c) (such notice being the
"Availability Notice"), and Landlord shall have the option, by written notice to
Tenant within fifteen (15) days after receiving any Availability Notice, to
terminate this Lease with respect to the portion of the Premises specified in
the Availability Notice in accordance with Paragraph 9(c) and (d). If Landlord
declines or fails timely to elect to terminate this Lease with respect to such
portion of the Premises, Tenant shall have the right, within one hundred twenty
(120) days after the expiration of such fifteen (15) day period, to enter into
an Assignment or Sublease with respect to the portion of the Premises designated
in the Availability Notice, subject to Landlord's consent and the other
provisions of this Paragraph 9 (including, without limitation, the provisions
with respect to payment of Landlord's Share of Bonus Rent pursuant to Paragraph
9(f)), except that Landlord shall not have the further right to terminate with
respect to such Assignment or Sublease. If Tenant fails to enter into an
Assignment or Sublease within such one hundred twenty (120) day period, or upon
expiration of any Sublease entered into within such one hundred twenty (120) day
period, Landlord's rights under this Paragraph 9 to terminate the Lease with
respect to the portion of the Premises upon any future proposed Sublease or
Assignment shall revive.
(f) BONUS RENT. If Landlord consents to the Sublease or
Assignment within fifteen (15) days after receipt of Tenant's notice pursuant to
Paragraph 9(b), Tenant may thereafter within one hundred twenty (120) days after
Landlord's consent, but not later than the expiration of said one hundred twenty
(120) days, enter into such Assignment or Sublease of the Premises or portion
thereof upon the terms and conditions set forth in the notice furnished by
Tenant to Landlord pursuant to Paragraph 9(b). However, Tenant shall pay to
Landlord seventy percent (70%) of the "Bonus Rent" (as defined below)
attributable to such Sublease or Assignment. Tenant shall pay Bonus Rent to
Landlord as and when it is received by Tenant, regardless of the time period to
which it is attributable. "Bonus Rent" shall mean any rent or other
consideration realized by Tenant under any and all Subleases and/or Assignments
that is in excess of the Monthly Base Rent and Additional Charges payable
hereunder (or the amount thereof proportionate to the portion of the Premises
subject to such Sublease(s) and/or Assignment(s)), including, without
limitation, any sums paid for the sale or rental of the Warm Shell Improvements
and/or the Tenant Improvements, after first deducting from such excess the
following:
(i) the unamortized costs of the lesser of (A) the portion
of the Warm Shell Improvements and/or Tenant Improvements that are
installed in the portion of the Premises subject to such Sublease(s) or
Assignment(s), and (B) the total cost of Tenant Improvements and Warm
Shell Improvements made to the entire Premises by Tenant multiplied by a
fraction, the numerator of which is the rentable square feet included in
the portion of the Premises subject to Sublease(s) and/or Assignment(s),
and the denominator of which is the rentable square feet included in the
Rentable Area of the entire Premises as of the Commencement Date, which
costs in either case shall be amortized on a straight line
20
<PAGE> 26
basis (without interest) over the period of time prescribed by the
Internal Revenue Service in equal monthly installments; and
(ii) costs reasonably incurred for tenant improvements
and/or alterations installed by Tenant (commensurate with a standard
office build-out, and including without limitation any improvements,
additions or alterations required by Laws or by Landlord as provided in
Paragraph 9(b)) to obtain the Sublease(s) and/or Assignment(s), which
costs shall not exceed ten dollars per rentable square foot (adjusted by
the CPI Increase) of the portion of the Premises being sublet or
assigned, and which costs shall be amortized on a straight line basis
(without interest) over the term of the applicable Sublease or
Assignment in equal monthly installments; and
(iii) any costs payable by Tenant to Landlord pursuant to
express provisions of this Lease in connection with Landlord's review of
Tenant's request for consent to such Sublease(s) or Assignment(s), any
reasonable legal fees and costs (up to a maximum of $10,000, adjusted by
the CPI Increase), and any customary brokers' commissions that Tenant
has incurred in connection with such Sublease or Assignment, all
amortized on a straight line basis (without interest) over the term of
the Sublease or Assignment in equal monthly installments.
(g) NO RELEASE OR DEEMED APPROVAL. No consent by Landlord to any
Assignment or Sublease by Tenant shall relieve Tenant of any obligation to be
performed by Tenant under this Lease, whether arising before or after the
Assignment or Sublease. The consent by Landlord to any Assignment or Sublease
shall not relieve Tenant from the obligation to obtain Landlord's express
written consent to any other Assignment or Sublease. Any Assignment or Sublease
that is not in compliance with this Paragraph 9 shall be void and, at the option
of Landlord, shall constitute a material Default by Tenant under this Lease. The
acceptance of Monthly Base Rent or Additional Charges by Landlord from a
proposed assignee or sublessee shall not constitute the consent to such
Assignment or Sublease by Landlord.
(h) REORGANIZATION; PERMITTED TRANSFERS. The following shall be
deemed a voluntary assignment of Tenant's interest in this Lease: (i) any
dissolution, merger, consolidation, or other reorganization of Tenant; and (ii)
if the capital stock of Tenant is not publicly traded, the sale or transfer to
one person or entity stock possessing more than fifty percent (50%) of the total
combined voting power of all classes of Tenant's stock issued, outstanding and
entitled to vote for the election of directors. Notwithstanding anything to the
contrary contained in this Paragraph 9, Tenant may enter into any of the
following transfers (a "Permitted Transfer") without Landlord's prior written
consent: (1) Tenant may assign its interest in the Lease to a corporation,
partnership, professional corporation, limited liability company, or limited
liability partnership ("Transfer Entity") which results from a stock sale,
merger, consolidation or other reorganization, so long as the surviving Transfer
Entity has a net worth immediately following such transaction that is equal to
or greater than the net worth of Tenant as of the date immediately prior to such
transaction; and (2) Tenant may assign this Lease to a Transfer Entity which
purchases or otherwise acquires all or substantially all of the assets of
Tenant, so long as such acquiring Transfer Entity has a net worth immediately
following such transaction that is equal to or greater than the net worth of
Tenant as of the date immediately prior to such transaction.
(i) ASSUMPTION BY ASSIGNEE. Each assignee pursuant to an
Assignment as provided in this Paragraph 9 shall assume all obligations of
Tenant under this Lease that arise or accrue from and after the effective date
of such Assignment, and shall be and remain liable jointly and severally with
Tenant for the payment of Monthly Base Rent and Additional Charges, and for the
performance of all the terms, covenants, conditions and agreements herein
contained on Tenant's part to be performed for the Term. No Assignment shall be
binding on Landlord unless the assignee or Tenant shall deliver to Landlord a
counterpart of the Assignment and an instrument in recordable form that contains
a covenant of assumption by the assignee satisfactory in substance and form to
Landlord, consistent with the requirements of this Paragraph 9(i), but the
failure or refusal of the assignee to execute such instrument of assumption
shall not release or discharge the assignee from its liability as set forth
above. Notwithstanding anything to the contrary in this Lease, no Sublease shall
be binding on Landlord unless and until Landlord shall agree in writing
following termination of this Lease to recognize such sublessee and such
sublessee agrees in writing to attorn to Landlord on the terms and conditions of
the sublease (including the obligations under
21
<PAGE> 27
this Lease to the extent that they relate to the portion of the Premises
subleased), and any Sublease entered into by Tenant hereunder shall include an
obligation by the sublessee to so attorn to Landlord if Landlord, in Landlord's
sole discretion, elects to recognize such Sublease upon any termination of this
Lease and agrees to not disturb subtenant's rights or possession under the
Sublease being recognized.
(j) AFFILIATE TRANSFERS. Tenant shall have the right, without
Landlord's consent and without triggering Landlord's rights under Paragraph
9(c), (d) and (f), but with written notice to Landlord at least ten (10) days
prior thereto, to enter into an Assignment of Tenant's interest in the Lease or
a Sublease of all or any portion of the Premises to an Affiliate (as defined
below) of Tenant, provided that (i) in connection with an Assignment that is not
a Sublease, the Affiliate delivers to Landlord concurrent with such Assignment a
written notice of the Assignment and an assumption agreement whereby the
Affiliate assumes and agrees to perform, observe and abide by the terms,
conditions, obligations, and provisions of this Lease arising from and after the
effective date of the assignment; and (ii) the assignee or sublessee remains an
Affiliate throughout the term of this Lease (and, in connection with an
Assignment that is not a Sublease, the assumption agreement shall contain
provisions consistent with the provisions of this subparagraph allowing Landlord
to terminate this Lease at such time as the entity is no longer an Affiliate of
the original Tenant). If this Lease is assigned or sublet to an Affiliate and
thereafter any circumstance occurs which causes such assignee or sublessee to no
longer be an Affiliate of the assigning or subleasing Tenant, Tenant shall give
written notice thereof to Landlord, which notice, to become effective, shall
refer to Landlord's right to terminate this Lease pursuant to this subparagraph,
in the event of an Assignment, or to cause Tenant to terminate the Sublease, in
the event of a Sublease ("Affiliation Termination Notice"). Following occurrence
of the circumstance giving rise to the discontinuation of s