Initial Public Offering (IPO): Registration Statement (General Form) — Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1 Registration Statement (General Form) 81 461K
2: EX-3.1 Restated Articles of Incorporation 18 60K
3: EX-3.3 Registrant's Bylaws 39 131K
4: EX-3.4 Certificate of Amendment of the Bylaws 2± 9K
5: EX-10.1 Registrant's 1990 Stock Option Plan 28 95K
9: EX-10.10 Second Amended Investors Rights Agreement 22 86K
10: EX-10.11 Form of Indemnification Agreement 10 50K
11: EX-10.12 Pericom Technology Agreement 28 80K
12: EX-10.13 Harris Agreement 21 126K
6: EX-10.2 Registrant's 1995 Stock Option Plan 9 41K
7: EX-10.3 Registrant's 1997 Employee Stock Purchase Plan 15 62K
8: EX-10.4 Lease Dated November 29, 1993 67± 254K
13: EX-11.1 Computation of Net Income Per Share 1 8K
14: EX-27.1 Financial Data Schedule 2 10K
EXHIBIT 10.4
LEASE
DATED November 29, 1993
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BY AND BETWEEN
ORCHARD INVESTMENT COMPANY NUMBER 510
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as Landlord
and
PERICOM SEMICONDUCTOR CORPORATION
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as Tenant
AFFECTING PREMISES COMMONLY KNOWN AS
2380 Bering Drive
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San Jose, California 95131
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[10/05/92 MULTI TENANT NET INDUSTRIAL LEASE]
SUMMARY OF BASIC LEASE TERMS
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SECTION TERMS
(LEASE REFERENCE)
A. Lease Reference Date: November 29, 1993
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(Introduction)
B. Landlord: ORCHARD INVESTMENT COMPANY NUMBER 510
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(Introduction) a California general partnership
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C. Tenant: PERICOM SEMICONDUCTOR CORPORATION
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(Introduction) a California corporation
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D. Premises: That area consisting of 19,786 square feet
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((S)1.21) of gross leasable area the address of which is
2380 Bering Drive
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San Jose, California , within the
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Building as Shown on Exhibit A.
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E. Project: The land and improvements shown on Exhibit A
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((S)1.22) consisting of six (6) buildings the aggregate
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gross leasable area of which is 166, 928 square
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feet.
F. Building: The building in which the Premises are located
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((S)1.7) known as 2380-2390 Bering Drive
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San Jose, California
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containing 27,488 square feet of gross
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leasable area.
G. Tenant's Share: 71.98 %
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((S)1.29)
H. Tenant's Allocated Parking Stalls: 76 stalls.
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((S)4.5)
I. Scheduled Commencement Date: Approximately seven (7)
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((S)1.26) weeks after the Effective Date of this Lease
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J. Lease Term: 60 calendar months (plus the partial month
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((S)1.18) following the Commencement Date if such date is
not the first day of a month).
K. Base Monthly Rent: Months 1 - 12: $10,090.86
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((S)3.1) Months 13 - 36: $14,839.50
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Months 37 - 60: $16,224.52
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L. Prepaid Rent: $ 10,090.86
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((S)3.3)
M. Security Deposit: $ 16,224.52
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((S)3.5)
N. Permitted Use: Office, marketing, design, test,
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((S)4.1) assembly, storage and distribution of integrated
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circuits.
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O. Permitted Tenant's Alterations Limit: $5,000,00
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((S)5.2)
P. Tenant's Liability Insurance Minimum: $2,000,000.00
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((S)9.1)
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Q. Landlord's Address: 2290 North First Street
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((S)1.3) Suite 300
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San Jose, California 95111
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R. Tenant's Address: 2343 Bering Drive
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((S)1.3): San Jose, California 95111
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S. Retained Real Estate Brokers: None
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((S)15.13) ___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
T. Lease: This Lease includes the summary of the Basic Lease Terms,
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((S)1.17) the Lease, and the following exhibits and addenda: First
Addendum to Lease, Exhibit A (site plan of the Project
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containing description of the Premises), Exhibit B
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(Improvement Agreement), Exhibit C (Approves Specifications),
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Exhibit D (acceptance agreement), Exhibit E (description
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of Private Restrictions), Exhibit F (sign criteria),
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Exhibit G (form of subordination agreement), Exhibit H
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(Hazardous Materials Questionnaire), and: ____________
The foregoing Summary is hereby incorporated into and made a part of this
Lease. Each reference in this Lease to any term of the Summary shall mean the
respective information set forth above and shall be construed to incorporate
all of the terms provided under the particular paragraph pertaining to such
information. In the event of any conflict between the Summary and the Lease, the
Summary shall control.
LANDLORD: TENANT:
ORCHARD INVESTMENT COMPANY
NUMBER 510 PERICOM SEMICONDUCTOR CORPORATION
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a California general partnership
a California corporation
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By: NELO, a California general partnership
By: /s/ David J. Brown By: /s/ Alex Hui
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David J. Brown, a General Partner
ALEX HUI
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By:______________________________ (typed or printed name)
Mark T. Ziemendorf
His Attorney in Fact Title: President
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By: _____________________________
_________________________________
(typed or printed name)
Title: __________________________
Dated: 12-16-93 Dated: 12/1/93
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TABLE OF CONTENTS
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ARTICLE 1 - DEFINITIONS Page
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1.1 General 1
1.2 Additional Rent 1
1.3 Address for Notices 1
1.4 Agents 1
1.5 Agreed Interest Rate 1
1.6 Base Monthly Rate 1
1.7 Building 1
1.8 Commencement Date 1
1.9 Common Area 1
1.10 Common Operating Expense 1
1.11 Consumer Price Index 1
1.12 Effective Date 1
1.13 Event of Tenant's Default 1
1.14 Hazardous Materials 1
1.15 Insured and Uninsured Peril 1
1.16 Law 1
1.17 Lease 1
1.18 Lease Term 1
1.19 Lender 1
1.20 Permitted Use 2
1.21 Premises 2
1.22 Project 2
1.23 Private Restrictions 2
1.24 Real Property Taxes 2
1.25 Scheduled Commencement Date 2
1.26 Security Instrument 2
1.27 Summary 2
1.28 Tenant's Alterations 2
1.29 Tenant's Share 2
1.30 Trade Fixtures 2
ARTICLE 2 - DEMISE, CONSTRUCTION, AND ACCEPTANCE 2
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2.1 Demise of Premises 2
2.2 Commencement Date 2
2.3 Construction of Improvements 2
2.4 Delivery and Acceptance of Possession 2
2.5 Early Occupancy 3
ARTICLE 3 - RENT 3
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3.1 Base Monthly Rent 3
3.2 Additional Rent 3
3.3 Payment of Rent 3
3.4 Late Charge and Interest on Rent in Default 3
3.5 Security Deposit 3
ARTICLE 4 - USE OF PREMISES 3
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4.1 Limitation on Use 3
4.2 Compliance with Regulations 4
4.3 Outside Areas 4
4.4 Signs 4
4.5 Parking 4
4.6 Rules and Regulations 4
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TABLE OF CONTENTS
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ARTICLE 5 - TRADE FIXTURES AND ALTERATIONS 4
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5.1 Trade Fixtures 4
5.2 Tenant's Alterations 4
5.3 Alterations Required by Law 5
5.4 Amortization of Certain Capital Improvements 5
5.5 Mechanic's Liens 5
5.6 Taxes on Tenant's Property 6
ARTICLE 6 - REPAIR AND MAINTENANCE 6
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6.1 Tenant's Obligation to Maintain 6
6.2 Landlord's Obligation to Maintain 6
6.3 Control of Common Area 6
ARTICLE 7 - WASTE DISPOSAL AND UTILITIES 7
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7.1 Waste Disposal 7
7.2 Hazardous Materials 7
7.3 Utilities 8
7.4 Compliance with Governmental Regulations 8
ARTICLE 8 - COMMON OPERATING EXPENSES 8
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8.1 Tenant's Obligation to Reimburse 8
8.2 Common Operating Expenses Defined 8
8.3 Real Property Taxes Defined 9
ARTICLE 9 - INSURANCE 9
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9.1 Tenant's Insurance 9
9.2 Landlord's Insurance 10
9.3 Tenant's Obligation to Reimburse 10
9.4 Release and Waiver of Subrogation 10
ARTICLE 10 - LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY 10
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10.1 Limitation on Landlord's Liability 10
10.2 Limitation on Tenant's Recourse 11
10.3 Indemnification of Landlord 11
ARTICLE 11 - DAMAGE TO PREMISES 11
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11.1 Landlord's Duty to Restore 11
11.2 Landlord's Right to Terminate 11
11.3 Tenant's Right to Terminate 12
11.4 Abatement of Rent 12
ARTICLE 12 - CONDEMNATION 12
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12.1 Landlord's Termination Right 12
12.2 Tenant's Termination Right 12
12.3 Restoration and Abatement of Rent 12
12.4 Temporary Taking 12
12.5 Division of Condemnation Award 12
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TABLE OF CONTENTS
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ARTICLE 13 - DEFAULT AND REMEDIES 13
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13.1 Events of Tenant's Default 13
13.2 Landlord's Remedies 13
13.3 Waiver 14
13.4 Limitation on Exercise of Rights 14
13.5 Waiver by Tenant of Certain Remedies 14
ARTICLE 14 - ASSIGNMENT AND SUBLETTING 14
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14.1 Transfer by Tenant 14
14.2 Transfer by Landlord 16
ARTICLE 15 - GENERAL PROVISIONS 16
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15.1 Landlord's Right to Enter 16
15.2 Surrender of the Premises 17
15.3 Holding Over 17
15.4 Subordination 17
15.5 Mortgagee Protection and Attornment 17
15.6 Estoppel Certificates and Financial Statements 17
15.7 Reasonable Consent 18
15.8 Notices 18
15.9 Attorney's Fees 18
15.10 Corporate Authority 18
15.11 Miscellaneous 18
15.12 Termination by Exercise of Right 18
15.13 Brokerage Commissions 19
15.14 Force Majeure 19
15.15 Entire Agreement 19
EXHIBITS
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Exhibit A - Site plan of the Project containing a
description of the Premises
Exhibit B - Improvement Agreement
Exhibit C - Approved Specifications
Exhibit D - Acceptance Agreement
Exhibit E - Description of Private Restrictions
Exhibit F - Sign Criteria
Exhibit G - Form of Subordination Agreement
Exhibit H - Hazardous Materials Questionnaire
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LEASE
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This Lease is dated as of the lease reference date specified in Section A of
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the Summary and is made by and between the party identified as Landlord in
Section B of the Summary and the party identified as Tenant in Section C of the
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Summary.
ARTICLE 1
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DEFINITIONS
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1.1 General: Any initially capitalized term that is given a special meaning
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by this Article 1, the Summary, or by any other provision of this Lease
(including the exhibits attached hereto) shall have such meaning when used in
this Lease or any addendum or amendment hereto unless otherwise clearly
indicated by the context.
1.2 Additional Rent: The term "Additional Rent" is defined in (P)3.2.
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1.3 Address for Notices: The term "Address for Notices" shall mean the
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addresses set forth in Sections O and R of the Summary; provided, however, that
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after the Commencement Date, Tenant's Address for Notices shall be the address
of the Premises.
1.4 Agents: The term "Agents" shall mean the following: (i) with respect to
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Landlord or Tenant, the agents, employees, contractors, and invitees of such
party; and (ii) in addition with respect to Tenant, Tenant's subtenants and
their respective agents, employees, contractors, and invitees.
1.5 Agreed Interest Rate: The term "Agreed Interest Rate" shall mean that
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interest rate determined as of the time it is to he applied that is equal to the
lesser of (i) 5% in excess of the discount rate established by the Federal
Reserve Bank of San Francisco as it may be adjusted from time to time, or (ii)
the maximum interest rate permitted by Law.
1.6 Base Monthly Rent: The term "Base Monthly Rent" shall mean the fixed
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monthly rent payable by Tenant pursuant to (P)3.1 which is specified in Section
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K of the Summary.
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1.7 Building: The term "Building" shall mean the building in which the
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Premises are located which Building is identified in Section F of the Summary,
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the gross leasable area of which is referred to herein as the "Building Gross
Leasable Area."
1.8 Commencement Date: The term "Commencement Date" is the date the Lease
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Term commences, which term is defined in (P)2.2.
1.9 Common Area: The term "Common Area" shall mean all areas and facilities
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within the Project that are not designated by Landlord for the exclusive use of
Tenant or any other lessee or other occupant of the Project, including the
parking areas, access and perimeter roads, pedestrian sidewalks, landscaped
areas, trash enclosures, recreation areas and the like.
1.10 Common Operating Expenses: The term "Common Operating Expenses" is
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defined in (P)8.2.
1.11 Consumer Price Index: The term "Consumer Price Index" shall refer to
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the Consumer Price Index. All Urban Consumers, subgroup "All Items", for the San
Francisco-Oakland-San Jose metropolitan area (base year 1982-84 equals 100),
which is presently being published monthly by the United States Department of
Labor, Bureau of Labor Statistics. However, if this Consumer Price Index is
changed so that the base year is altered from that used as of the commencement
of the initial term of this Lease, the Consumer Price Index shall be converted
in accordance with the conversion factor published by the United States
Department of Labor, Bureau of Labor Statistics to obtain the same results that
would have been obtained had the base year not been changed. If no conversion
factor is available, or if the Consumer Price Index is otherwise changed,
revised or discontinued for any reason, there shall be substituted in lieu
thereof and the term "Consumer Price Index" shall thereafter refer to the most
nearly comparable official price index of the United States government in order
to obtain substantially the same result as would have been obtained had the
original Consumer Price Index not been discontinued, revised or changed, which
alternative index shall be selected by Landlord and shall be subject to Tenant's
written approval.
1.12 Effective Date: The term "Effective Date" shall mean the date the last
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signatory to this Lease whose execution is required to make it binding on the
parties hereto shall have executed this Lease.
1.13 Event of Tenant's Default: The term "Event of Tenant's Default" is
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defined in (P)13.1.
1.14 Hazardous Materials: The terms "Hazardous Materials" and "Hazardous
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Materials Laws" are defined in (P)7.2E.
1.15 Insured and Uninsured Peril: The terms "Insured Peril" and "Uninsured
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Peril" are defined in (P)11.2E.
1.16 Law: The term "Law" shall mean any judicial decision, statute,
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constitution, ordinance, resolution, regulation, rule, administrative order, or
other requirement of any municipal, county, state, federal or other government
agency or authority having jurisdiction over the parties to this Lease or the
Premises, or both, in effect either at the Effective Date or any time during the
Lease Term.
1.17 Lease: The term "Lease" shall mean the Summary and all elements of this
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Lease identified in Section T of the Summary, all of which are attached hereto
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and incorporated herein by this reference.
1.18 Lease Term: The term "Lease Term" shall mean the term of this Lease
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which shall commence on the Commencement Date and continue for the period
specified in Section J of the Summary.
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1.19 Lender: The term "Lender" shall mean any beneficiary, mortgagee, secured
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party, lessor, or other holder of any Security Instrument.
1.20 Permitted Use: The term "Permitted Use" shall mean the use specified in
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Section N of the Summary.
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LEASE
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1.21 Premises: The term "Premises" shall mean that building area described in
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Section D of the Summary that is within the Building.
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1.22 Project: The term "Project" shall mean that real property and the
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improvements thereon which are specified in Section E of the Summary, the
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aggregate gross leasable area of which is referred to herein as the "Project
Gross Leasable Area."
1.23 Private Restrictions: The term "Private Restrictions" shall mean all
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recorded covenants, conditions and restrictions, private agreements, reciprocal
easement agreements, and any other recorded instruments affecting the use of the
Premises which (i) exist as of the Effective Date, or (ii) are recorded after
the Effective Date and are approved by Tenant.
1.24 Real Property Taxes: The term "Real Property Taxes" is defined in
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(P)8.3.
1.25 Scheduled Commencement Date: The term "Scheduled Commencement Date"
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shall mean the date specified in Section I of the Summary.
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1.26 Security Instrument: The term "Security Instrument" shall mean any
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underlying lease, mortgage or deed of trust which now or hereafter affects the
Project, and any renewal, modification, consolidation, replacement or extension
thereof.
1.27 Summary: The term "Summary" shall mean the Summary of Basic Lease Terms
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executed by Landlord and Tenant that is part of this Lease.
1.28 Tenant's Alterations: The term "Tenant's Alterations" shall mean all
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improvements, additions, alterations, and fixtures installed in the Premises by
tenant at its expense which are not Trade Fixtures.
1.29 Tenant's Share: The term "Tenant's Share" shall mean the percentage
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obtained by dividing Tenant's Gross Leasable Area by the Building Gross Leasable
Area, which as of the Effective Date is the percentage identified in Section G
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of the Summary.
1.30 Trade Fixtures: The term "Trade Futures" shall mean (i) Tenant's
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inventory, furniture, signs, and business equipment, and (ii) anything affixed
to the Premises by Tenant at its expense for purposes of trade, manufacture,
ornament or domestic use (except replacement of similar work or material
originally installed by Landlord) which can be removed without material injury
to the Premises unless such thing has, by the manner in which it is affixed,
become an integral part of the Premises.
ARTICLE 2
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DEMISE, CONSTRUCTION, AND ACCEPTANCE.
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2.1 Demise of Premises: Landlord hereby leases to Tenant, and Tenant leases
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from Landlord, for the Lease Term upon the terms and conditions of this Lease,
the Premises for Tenant's own use in the conduct of Tenant's business together
with (i) the non-exclusive right to use the number of Tenant's Allocated Parking
Stalls within the Common Area (subject to the limitations set forth in (P)4.5),
and (ii) the non-exclusive right to use the Common Area for ingress to and
egress from the Premises. Landlord reserves the use of the exterior walls, the
roof and the area beneath and above the Premises, together with the right to
install, maintain, use, and replace ducts, wires, conduits and pipes leading
through the Premises in locations which shall not materially interfere with
Tenant's use of the Premises.
2.2 Commencement Date: If Landlord is not obligated to construct improvements
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prior to the Commencement Date pursuant to (P)2.3, then on the Scheduled
Commencement Date Landlord shall deliver possession of the Premises to Tenant
and the Lease Term shall commence, and such date shall be referred to herein as
the "Commencement Date". If Landlord is required to construct improvements to
the Premises prior to the Commencement Date, then the Scheduled Commencement
Date shall be only an estimate of the actual Commencement Date, and the term of
this Lease shall begin on the first to occur of the following, which shall be
the "Commencement Date": (i) the date Landlord offers to deliver possession of
the Premises to Tenant following substantial completion of all improvements to
be constructed by Landlord pursuant to (P)2.3 except for punch list items which
do not prevent Tenant from using the Premises for the Permitted Use and such
work as Landlord is required to perform but cannot complete until Tenant
performs necessary portions of construction work it has elected or is required
to do; or (ii) the date Tenant enters into occupancy of the Premises.
2.3 Construction of Improvements: Prior to the Commencement Date, Landlord
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shall construct certain improvements that shall constitute or become part of the
Premises if required by, and then in accordance with, the terms of Exhibit B and
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Exhibit C.
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2.4 Delivery and Acceptance of Possession: If this Lease provides that
-------------------------------------
Landlord must deliver possession of the Premises to Tenant on a certain date,
then if Landlord is unable to deliver possession of the Premises to Tenant on or
before such date for any reason whatsoever, this Lease shall not be void or
voidable for a period of 60 days thereafter, delays by Tenant excepted, and
Landlord shall not be liable to Tenant for any loss or damage resulting
therefrom except to the extent covered by Landlord's gross negligence or willful
misconduct. Tenant shall accept possession and enter into good faith occupancy
of the entire Premises and commence the operation of its business therein within
30 days after the Commencement Date. Tenant acknowledges that it has had an
opportunity to conduct, and has conducted, such inspections of the Premises as
it deems necessary to evaluate its condition. Except as otherwise specifically
provided herein, Tenant agrees to accept possession of the Premises after
completion of the construction of Interior Improvements and resultant "punch
list" inspections, in its then existing condition, "as-is", including all patent
and latent defects. Tenant's taking possession of any part of the Premises shall
be deemed to be an acceptance by Tenant of any work of improvement done by
Landlord in such part as complete and in accordance with the terms of this Lease
except for defects of which Tenant has given Landlord written notice prior to
the time Tenant takes possession. At the time Landlord delivers possession of
the Premises to Tenant, Landlord and Tenant shall together execute an acceptance
agreement in the form attached as
2
LEASE
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Exhibit D, appropriately completed. Landlord shall have no obligation to deliver
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possession, nor shall Tenant be entitled to take occupancy, of the Premises
until such acceptance agreement has been executed, and Tenant's obligation to
pay Base Monthly Rent and Additional Rent shall not be excused or delayed
because of Tenant's failure to execute such acceptance agreement.
2.5 Early Occupancy: If Tenant enters or permits its contractors to enter
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the Premises prior to the Commencement Date with the written permission of
Landlord, it shall do so upon all of the terms of this Lease (including its
obligations regarding indemnity and insurance) except those regarding the
obligation to pay rent, which shall commence on the Commencement Date.
SEE FIRST ADDENDUM TO LEASE PARAGRAPH 2
ARTICLE 3
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RENT
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3.1 Base Monthly Rent: Commencing on the Commencement Date and continuing
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throughout the Lease Term, Tenant shall pay to Landlord the Base Monthly Rent
set forth in Section K of the Summary.
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3.2 Additional Rent: Commencing on the Commencement Date and continuing
---------------
throughout the Lease Term, Tenant shall pay the following as additional rent
(the "Additional Rent"): (i) any late charges or interest due Landlord pursuant
to (P)3.4; (ii) Tenant's Share of Common Operating Expenses as provided in
(P)8.1; (iii) Landlord's share of any Subrent received by Tenant upon certain
assignments and sublettings as required by (P)14.1; (iv) any legal fees and
costs due Landlord pursuant to (P)15.9; and (v) any other charges due Landlord
from Tenant pursuant to this Lease.
3.3 Payment of Rent: Concurrently with the execution of this Lease by both
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parties, Tenant shall pay to Landlord the amount set forth in Section L of the
---------
Summary as prepayment of rent for credit against the first installment(s) of
Base Monthly Rent. All rent required to be paid in monthly installments shall
be paid in advance on the first day of each calendar month during the Lease
Term. If Section K of the Summary provides that the Base Monthly Rent is to be
---------
increased during the Lease Term and if the date of such increase does not fall
on the first day of a calendar month, such increase shall become effective on
the first day of the next calendar month. All rent shall be paid in lawful money
of the United States, without any abatement, deduction or offset whatsoever
(except as specifically provided in (P)11.4 and (P)12.3 or any other provision
of this lease) and without any prior demand therefor. Rent shall be paid to
Landlord at its address set forth in Section P of the Summary, or at such other
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place as Landlord may designate from time to time. Tenant's obligation to pay
Base Monthly Rent and Tenant's Share of Common Operating Expenses shall be
prorated at the commencement and expiration of the Lease Term.
3.4 Late Charge and Interest on Rent in Default: If any Base Monthly Rent
-------------------------------------------
or Additional Rent is not received by Landlord from Tenant within five (5)
business days after Landlord has notified Tenant in writing that payment of such
rent has not been received by Landlord, then Tenant shall immediately pay to
Landlord a late charge equal to 5% of such delinquent rent as liquidated damages
for Tenant's failure to make timely payment. In no event shall this provision
for a late charge be deemed to grant to Tenant a grace period or extension of
time within which to pay any rent or prevent Landlord from exercising any right
or remedy available to Landlord upon Tenant's failure to pay any rent due under
this Lease in a timely fashion, including any right to terminate this Lease
pursuant to (P)13.2B. If any rent remains delinquent for a period in excess of
30 days then, in addition to such late charge, Tenant shall pay to Landlord
interest on any rent that is not paid when due at the Agreed Interest Rate
following the date such amount became due until paid.
3.5 Security Deposit: On the Effective Date, Tenant shall deposit with
----------------
Landlord the amount set forth in Section M of the Summary as security for the
---------
performance by Tenant of its obligations under this Lease, and not as prepayment
of rent (the "Security Deposit"). Landlord may from time to time apply such
portion of the Security Deposit as is reasonably necessary for the following
purposes: (i) to remedy any default by Tenant in the payment of rent; (ii) to
repair damage to the Premises caused by Tenant; (iii) to clean the Premises upon
termination of the Lease if the Premises are not surrendered in the condition
required by this Lease, and (iv) to remedy any other default of Tenant to the
extent permitted by Law and, in this regard, Tenant hereby waives any
restriction on the uses to which the Security Deposit may be put contained in
California Civil Code Section 1950.7. In the event the Security Deposit or any
portion thereof is so used, Tenant agrees to pay to Landlord promptly upon
demand an amount in cash sufficient to restore the Security Deposit to the full
original amount. Landlord shall not be deemed a trustee of the Security Deposit,
may use the Security Deposit in business, and shall not be required to segregate
it from its general accounts. Tenant shall not be entitled to any interest on
the Security Deposit. If Landlord transfers the Premises during the Lease Term,
Landlord may pay the Security Deposit to any transferee of Landlord's interest
in conformity with the provisions of California Civil Code Section 1950.7 and/or
any successor statute, in which event the transferring Landlord will be released
from all liability for the return of the Security Deposit.
ARTICLE 4
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USE OF PREMISES
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4.1 Limitation on Use: Tenant shall use the Premises solely for the Permitted
-----------------
Use specified in Section N of the Summary. Tenant shall not do anything in or
---------
about the Premises which will (i) cause structural injury to the Building, or
(ii) cause damage to any part of the Building except to the extent reasonably
necessary for the installation of Tenant's Trade Fixtures and Tenant's
Alterations, and then only in a manner which has been first approved by Landlord
in writing which approval shall not be unreasonably withheld. Tenant shall not
operate any equipment within the Premises which will (i) materially damage the
Building or the Common Area, (ii) overload existing electrical systems or other
mechanical equipment servicing the Building, (iii) impair the efficient
operation of the sprinkler system or the heating, ventilating or air
3
LEASE
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conditioning ("HVAC") equipment within or servicing the Building, or (iv)
damage, overload or corrode the sanitary sewer system. Tenant shall not attach,
hang or suspend anything of any significant weight from the ceiling, roof, walls
or columns of the Building or set any load on the floor in excess of the load
limits for which such items are designed nor operate hard wheel forklifts within
the Premises. Any dust, fumes, or waste products generated by Tenant's use of
the Premises shall be contained and disposed so that they do not (i) create an
unreasonable fire or health hazard, (ii) damage the Premises, or (iii) result in
the violation of any Law. Except as approved by Landlord, Tenant shall not
change the exterior of the Building or install any equipment or antennas on or
make any penetrations of the exterior or roof of the Building. Tenant shall not
commit any waste in or about the Premises, and Tenant shall keep the Premises in
an neat, clean, attractive and orderly condition, free of any nuisances. If
Landlord designates a standard window covering for use throughout the Building,
Tenant shall use this standard window covering to cover all windows in the
Premises. Tenant shall not conduct on any portion of the Premises or the Project
any sale of any kind, including any public or private auction, fire sale, going-
out-of-business sale, distress sale or other liquidation sale.
4.2 Compliance with Regulations: Tenant shall not use the Premises in any
---------------------------
manner which violates any Laws or Private Restrictions which affect the
Premises. Tenant shall abide by and promptly observe and comply with all Laws
and Private Restrictions. Tenant shall not use the Premises in any manner which
will cause a cancellation of any insurance policy covering Tenant's Alternations
or any improvements installed by Landlord at its expense or which poses an
unreasonable risk of damage or injury to the Premises. Tenant shall not sell, or
permit to be kept, used, or sold in or about the Premises any article which may
be prohibited by the standard form of fire insurance policy. Tenant shall comply
with all reasonable requirements of any insurance company, insurance
underwriter, or Board of Fire Underwriters which are necessary to maintain the
insurance coverage carried by either Landlord or Tenant pursuant to this Lease.
4.3 Outside Areas: No materials, supplies, tanks or containers, equipment,
-------------
finished products or semi-finished products, raw materials, inoperable vehicles
or articles of any nature shall be stored upon or permitted to remain outside of
the Premises except in fully fenced and screened areas outside the Building
which have been designed for such purpose and have been approved in writing by
Landlord for such use by Tenant.
4.4 Signs: Tenant shall not place on any portion of the Premises any sign,
-----
placard, lettering in or on windows, banner, displays or other advertising or
communicative material which is visible from the exterior of the Building
without the prior written approval of Landlord. All such approved signs shall
strictly conform to all Laws, Private Restrictions, and Landlord's sign criteria
attached as Exhibit F, and shall be installed at the expense of Tenant. Tenant
---------
shall maintain such signs in good condition and repair. Tenant shall have the
exclusive use of the existing monument sign in front of the Premises.
4.5 Parking: Tenant is allocated and shall have the non-exclusive right to
-------
use not more than the number of Tenant's Allocated Parking Stalls contained
within the Project described in Section H of the Summary for its use and the use
---------
of Tenant's Agents, the location of which may be designated from time to time by
Landlord. Tenant shall not at any time use more parking spaces than the number
so allocated to Tenant or park its vehicles or the vehicles of others in any
portion of the Project not designated by Landlord as a non-exclusive parking
area. Tenant shall not have the exclusive right to use any specific parking
space. If Landlord grants to any other tenant the exclusive right to use any
particular parking space(s), Tenant shall not use such spaces. Landlord reserves
the right, after having given Tenant reasonable notice, to have any vehicles
owned by Tenant or Tenant's Agents utilizing parking spaces in excess of the
parking spaces allowed for Tenant's use to be towed away at Tenant's cost. All
trucks and delivery vehicles shall be (i) parked at the rear of the Building,
(ii) loaded and unloaded in a manner which does not interfere with the
businesses of other occupants of the Project, and (iii) permitted to remain on
the Project only so long as is reasonably necessary to complete loading and
unloading. In the event Landlord elects or is required by any Law to limit or
control parking in the Project, whether by validation of parking tickets or any
other method of assessment, Tenant agrees to participate in such validation or
assessment program under such reasonable rules and regulations as are from time
to time established by Landlord.
SEE FIRST ADDENDUM TO LEASE PARAGRAPH 3
4.6 Rules and Regulations: Landlord may from time to time promulgate
---------------------
reasonable and nondiscriminatory rules and regulations applicable to all
occupants of the Project for the care and orderly management of the Project and
the safety of its tenants and invitees. Such rules and regulations shall be
binding upon Tenant upon delivery of a copy thereof to Tenant, and Tenant agrees
to abide by such reasonable rules and regulations. If there is a conflict
between the rules and regulations and any of the provisions of this Lease, the
provisions of this Lease shall prevail. Landlord shall not be responsible for
the violation by any other tenant of the Project of any such rules and
regulations.
ARTICLE 5
--------
TRADE FIXTURES AND ALTERATIONS
------------------------------
5.1 Trade Fixtures: Throughout the Lease Term, Tenant may provide and
--------------
install, and shall maintain in good condition, any Trade Fixtures required in
the conduct of its business in the Premises. All Trade Fixtures shall remain
Tenant's property.
5.2 Tenant's Alterations: Construction by Tenant of Tenant's Alterations
--------------------
shall be governed by the following:
A. Tenant shall not construct any Tenant's Alterations or otherwise
alter the Premises without Landlord's prior written approval which approval
shall not be unreasonably withheld. Tenant shall be entitled, without Landlord's
prior approval, to make Tenant's Alterations (i) which do not affect the
structural or exterior parts or water tight character of the Building, and (ii)
the reasonably estimated cost of which, plus the original cost of any part of
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the Premises removed or materially altered in connection with such Tenant's
Alterations, together do not exceed the Permitted Tenant Alterations Limit
specified in Section O of the Summary per work of improvement. In the event
---------
Landlord's approval for any Tenant's Alterations is required, Tenant shall not
construct the Leasehold Improvement until Landlord has approved in writing the
plans and specifications therefor, and such Tenant's Alterations shall be
constructed substantially in compliance with such approved plans and
specifications by a licensed contractor first approved by Landlord. All Tenant's
Alterations constructed by Tenant shall be constructed by a licensed contractor
in accordance with all Laws using new materials of good quality.
B. Tenant shall not commence construction of any Tenant's Alterations
until (i) all required governmental approvals and permits have been obtained,
(ii) all requirements regarding insurance imposed by this Lease have been
satisfied, (iii) Tenant has given Landlord at least five days' prior written
notice of its intention to commence such construction, and (iv) if reasonably
requested by Landlord, Tenant has obtained contingent liability and broad form
builders' risk insurance in an amount reasonably satisfactory to Landlord if
there are any perils relating to the proposed construction not covered by
insurance carried pursuant to Article 9.
C. All Tenant's Alterations shall remain the property of Tenant during
the Lease Term but shall not be altered or removed from the Premises. At the
expiration or sooner termination of the Lease Term, all Tenant's Alterations
shall be surrendered to Landlord as part of the realty and shall then become
Landlord's property, and Landlord shall have no obligation to reimburse Tenant
for all or any portion of the value or cost thereof; provided, however, that if
Landlord requires Tenant to remove any Tenant's Alterations, Tenant shall so
remove such Tenant's Alterations prior to the expiration or sooner termination
of the Lease Term. Notwithstanding the foregoing, Tenant shall not be obligated
to remove any Tenant's Alterations with respect to which the following is true:
(i) Tenant was required, or elected, to obtain the approval of Landlord to the
installation of the Leasehold Improvement in question; (ii) at the time Tenant
requested Landlord's approval, Tenant requested of Landlord in writing that
Landlord inform Tenant of whether or not Landlord would require Tenant to remove
such Leasehold Improvement at the expiration of the Lease Term; and (iii) at the
time Landlord granted its approval, it did not inform Tenant that it would
require Tenant to remove such Leasehold Improvement at the expiration of the
Lease Term.
5.3 Alterations Required by Law: Tenant shall make any alteration, addition
---------------------------
or change of any sort to the Premises that is required by any Law because of (i)
Tenant's particular use or change of use of the Premises: (ii) Tenant's
application for any permit or governmental approval: or (iii) Tenant's
construction or installation of any Tenant's Alterations or Trade Fixtures. Any
other alteration, addition, or change required by Law which is not the
responsibility of Tenant pursuant to the foregoing shall be made by Landlord
(subject to Landlord's right to reimbursement from Tenant specified in (P)5.4.
SEE FIRST ADDENDUM TO LEASE PARAGRAPH 7
5.4 Amortization of Certain Capital Improvements : Tenant shall pay
--------------------------------------------
Additional Rent in the event Landlord reasonably elects or is required to make
any of the following kinds of capital improvements to the Project and the cost
thereof is nonreimbursible as a Common Operating Expense: (i) capital
improvements required to be constructed in order to comply with any Law
(excluding any Hazardous Materials Law) not in effect or applicable to the
Project as of the Effective Date; (ii) modification of existing or construction
of additional capital improvements or building service equipment for the purpose
of reducing the consumption of utility services or Common Operating Expenses of
the Project; (iii) replacement of capital improvements or building service
equipment existing as of the Effective Date when required because of normal
wear and tear; and (iv) restoration of any part of the Project that has been
damaged by any peril to the extent the cost thereof is not covered by insurance
proceeds actually recovered by Landlord up to a maximum amount per occurrence of
10% of the then replacement cost of the Project. The amount of Additional Rent
Tenant is to pay with respect to each such capital improvement shall be
determined as follows:
A. All costs paid by Landlord to construct such improvements (including
financing costs) shall be amortized over the useful life of such improvement (as
reasonably determined by Landlord in accordance with generally accepted
accounting principles) with interest on the unamortized balance at the then
prevailing market rate Landlord would pay if it borrowed funds to construct such
improvements from an institutional lender, and Landlord shall inform Tenant of
the monthly amortization payment required to so amortize such costs, and shall
also provide Tenant with the information upon which such determination is made.
B. As Additional Rent, Tenant shall pay at the same time the Base
Monthly Rent is due an amount equal to Tenant's Share of that portion of such
monthly amortization payment fairly allocable to the Building (as reasonably
determined by Landlord) for each month after such improvements are completed
until the first to occur of (i) the expiration of the Lease Term (as it may be
extended), or (ii) the end of the term over which such costs were amortized.
SEE FIRST ADDENDUM TO LEASE PARAGRAPH 4
5.5 Mechanic's Liens: Tenant shall keep the Project free from any liens and
----------------
shall pay when due all bills arising out of any work performed, materials
furnished, or obligations incurred by Tenant or Tenant's Agents relating to the
Project. If any claim of lien is recorded (except those caused by Landlord or
Landlord's Agents), Tenant shall bond against or discharge the same within 10
days after the same has been recorded against the Project. Should any lien be
filed against the Project or any action be commenced affecting title to the
Project, the party receiving notice of such lien or action shall immediately
give the other party written notice thereto.
5.6 Taxes on Tenant's Property: Tenant shall
--------------------------
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pay before delinquency any and all taxes, assessments, license fees and public
charges levied, assessed or imposed against Tenant or Tenant's estate in this
Lease or the property of Tenant situated within the Premises which become due
during the Lease Term. If any tax or other charge is assessed by any
governmental agency because of the execution of this Lease, such tax shall be
paid by Tenant. On demand by Landlord, Tenant shall furnish Landlord with
satisfactory evidence of these payments.
ARTICLE 6
---------
REPAIR AND MAINTENANCE
----------------------
6.1 Tenant's Obligation to Maintain: Except as otherwise provided in (P)6.2,
-------------------------------
(P)11.1, and (P)12.3, Tenant shall be responsible for the following during the
Lease Term:
A. Tenant shall clean and maintain in good order, condition, and repair
and replace when necessary the Premises and every part thereof, through regular
inspections and servicing, including, but not limited to: (i) all plumbing and
sewage facilities (including all sinks, toilets, faucets and drains), and all
duets, pipes, vents or other parts of the HVAC or plumbing system provided for
the exclusive use of the Tenant; (ii) all fixtures, interior walls, floors,
carpets and ceilings; (iii) all windows, doors, entrances, plate glass,
showcases and skylights (including cleaning both interior and exterior
surfaces); (iv) all electrical facilities and all equipment (including all
lighting fixtures, lamps, bulbs, tubes, fans, vents, exhaust equipment and
systems); and (v) any automatic fire extinguisher equipment in the Premises.
B. With respect to utility facilities serving the Premises (including
electrical wiring and conduits, gas lines, water pipes, and plumbing and sewage
fixtures and pipes), Tenant shall be responsible for the maintenance and
repair of any such facilities which serve only the Premises, including all such
facilities that are within the walls or floor, or on the roof of the Premises,
and any part of such facility that is not within the Premises, but only up to
the point where such facilities join a main or other junction (e.g., sewer main
or electrical transformer) from which such utility services are distributed to
other parts of the Project as well as to the Premises. Tenant shall replace any
damaged or broken glass in the Premises (including all interior and exterior
doors and windows) with glass of the same kind, size and quality. Tenant shall
repair any damage to the Premises (including exterior doors and windows) caused
by vandalism or any unauthorized entry.
C. Tenant shall (i) maintain, repair and replace when necessary all
HVAC equipment which services only the Premises, and shall keep the same in good
condition through regular inspection and servicing, and (ii) maintain
continuously throughout the Lease Term a service contract for the maintenance of
all such HVAC equipment with a licensed HVAC repair and maintenance contractor
approved by Landlord, which contract provides for the periodic inspection and
servicing of the HVAC equipment at least once every 60 days during the Lease
Term. Notwithstanding the foregoing, Landlord may elect at any time to assume
responsibility for the maintenance, repair and replacement of such HVAC
equipment which serves only the Premises. Tenant shall maintain continuously
throughout the Lease Term a service contract for the washing of all windows
(both interior and exterior surfaces) in the Premises with a contractor approved
by Landlord or by Tenant which contract provides for the periodic washing of all
such windows at least once every 60 days during the Lease Term. Tenant shall
furnish Landlord with copies of all such service contracts, which shall provide
that they may not be cancelled or changed without at least 30 days' prior
written notice to Landlord.
D. All repairs and replacements required of Tenant shall be promptly
made with new materials of like kind and quality. If the work affects the
structural parts of the Building or if the estimated cost of any item of repair
or replacement is in excess of the Permitted Tenant's Alterations Limit, then
Tenant shall first obtain Landlord's written approval of the scope of the work,
plans therefor, materials to be used, and the contractor which approval shall
not be unreasonably withheld.
SEE FIRST ADDENDUM TO LEASE PARAGRAPHS
6.2 Landlord's Obligation to Maintain: Landlord shall repair, maintain and
---------------------------------
operate the Common Area and repair and maintain the roof, exterior and
structural parts of the building(s) located on the Project so that the same are
kept in good order and repair. If there is central HVAC or other building
service equipment and/or utility facilities serving portions of the Common Area
and/or both the Premises and other parts of the Building, Landlord shall
maintain and operate (and replace when necessary) such equipment. Landlord shall
not be responsible for repairs required by an accident, fire or other peril or
for damage caused to any part of the Project by any act or omission of Tenant
or Tenant's Agents except as otherwise required by Article 11. Landlord may
engage contractors of its choice to perform the obligations required of it by
this Article, and the necessity of any expenditure to perform such obligations
shall be at the sole discretion of Landlord.
6.3 Control of Common Area: Landlord shall at all times have exclusive
----------------------
control of the Common Area. Landlord shall have the right, without the same
constituting an actual or constructive eviction and without entitling Tenant
to any abatement of rent, to: (i) close any part of the Common Area to
whatever extent required in the opinion of Landlord's counsel to prevent a
dedication thereof or the accrual of any prescriptive rights therein; (ii)
temporarily close the Common Area to perform maintenance or for any other reason
deemed sufficient by Landlord; (iii) change the shape, size, location and extent
of the Common Area; (iv) eliminate from or add to the Project any land or
improvement, including multi-deck parking structures; (v) make changes to the
Common Area including, without limitation, changes in the location of driveways
entrances, passageways, doors and doorways, elevators, stairs, restrooms, exits,
parking spaces, parking areas, sidewalks or the direction of the flow of traffic
and the site of the Common Area; (vi) remove unauthorized persons from the
Project; and/or (vii) change the name or address of the Building or Project.
Tenant shall keep the Common Area clear of all obstructions created or permitted
by Tenant. If in the opinion of Landlord unauthorized persons are using any of
the Common
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Area by reason of the presence of Tenant in the Building, Tenant, upon demand of
Landlord, shall restrain such unauthorized use by appropriate proceedings. In
exercising any such rights regarding the Common Area, (i) Landlord shall make a
reasonable effort to minimize any disruption to Tenant's business, and (ii)
Landlord shall not exercise its rights to control the Common Area in a manner
that would materially interfere with Tenant's use or access of the Premises
without first obtaining Tenant's consent. Landlord shall have no obligation to
provide guard services or other security measures for the benefit of the
Project. Tenant assumes all responsibility for the protection of Tenant and
Tenant's Agents from acts of third parties; provided, however, that nothing
contained herein shall prevent Landlord, at its sole option, from providing
security measures for the Project.
ARTICLE 7
---------
WASTE DISPOSAL AND UTILITIES
----------------------------
7.1 Waste Disposal: Tenant shall store its waste either inside the Premises
--------------
or within outside trash enclosures provided by Landlord at Landlord's sole cost,
that are fully fenced and screened in compliance with all Private Restrictions,
and designed for such purpose. All entrances to such outside trash enclosures
shall be kept closed, and waste shall be stored in such manner as not to be
visible from the exterior of such outside enclosures. Tenant shall cause all of
its waste to be regularly removed from the Premises at Tenant's sole cost.
Tenant shall keep all fire corridors and mechanical equipment rooms in the
Premises free and clear of all obstructions at all times.
7.2 Hazardous Materials: Landlord and Tenant agree as follows with respect
-------------------
to the existence or use of Hazardous Material on the Project:
A. Any handling, transportation, storage, treatment, disposal or use of
Hazardous Materials by Tenant and Tenant's Agents after the Effective Date in or
about the Project shall strictly comply with all applicable Hazardous Materials
Laws. Tenant shall indemnify, defend upon demand with counsel reasonably
acceptable to Landlord, and hold harmless Landlord from and against any
liabilities, losses, claims, damages, lost profits, consequential damages,
interest, penalties, fines, monetary sanctions, attorneys' fees, experts' fees,
court costs, remediation costs, investigation costs, and other expenses which
result from or arise in any manner whatsoever out of the use, storage,
treatment, transportation, release, or disposal of Hazardous Materials on or
about the Project by Tenant or Tenant's Agents after the Effective Date, except
to the extent caused by the negligence or willful misconduct of Landlord or
Landlord's agents.
B. If the presence of Hazardous Materials on the Project caused or
permitted by Tenant or Tenant's Agents after the Effective Date results in
contamination or deterioration of water or soil resulting in a level of
contamination greater than the levels established as acceptable by any
governmental agency having jurisdiction over such contamination, then Tenant
shall promptly take any and all action necessary to investigate and remediate
such contamination if required by Law or as a condition to the issuance or
continuing effectiveness of any governmental approval which relates to the use
of the Project or any part thereof. Tenant shall further be solely responsible
for, and shall defend, indemnify and hold Landlord and its agents harmless from
and against all claims, costs and liabilities, including attorneys' fees and
costs, arising out of or in connection with any investigation and remediation
required hereunder to return the Project to its condition existing prior to the
appearance of such Hazardous Materials.
C. Landlord and Tenant shall each give written notice to the other as
soon as reasonably practicable of (i) any communication received from any
governmental authority concerning Hazardous Materials which relates to the
Project, and (ii) any contamination of the Project by Hazardous Materials which
constitutes a violation of any Hazardous Materials Law. Tenant may use small
quantities of household chemicals such as adhesives, lubricants, and cleaning
fluids in order to conduct its business at the Premises and such other Hazardous
Materials as are necessary for the operation of Tenant's business of which
Landlord receives notice prior to such Hazardous Materials being brought onto
the Premises and which Landlord consents in writing may be brought onto the
Premises. At any time during the Lease Term, Tenant shall, within fifteen (15)
(unless it constitutes a health or safety risk) days after written reasonable
request therefor received from Landlord, disclose in writing all Hazardous
Materials that are being used by Tenant on the Project, the nature of such use,
and the manner of storage and disposal.
D. Landlord may cause testing wells to be installed on the Project, and
may cause the ground water to be tested to detect the presence of Hazardous
Material by the use of such tests as are then customarily used for such
purposes. If Tenant so requests, Landlord shall supply Tenant with copies of
such test results. The cost of such tests and of the installation, maintenance,
repair and replacement of such wells shall be paid by Tenant if such tests
disclose the existence of facts which give rise to liability of Tenant pursuant
to its indemnity given in (P)7.2A and/or (P)7.2B.
E. As used herein, the term "Hazardous Material," means any hazardous
or toxic substance, material or waste which is or becomes regulated by any local
governmental authority, the State of California or the United States Government.
The term "Hazardous Material" includes, without limitation, petroleum products,
asbestos, PCB's, and any material or substance which is (i) listed under Article
9 or defined as hazardous or extremely hazardous pursuant to Article 11 of Title
22 of the California Administrative Code, Division 4, Chapter 20, (ii) defined
as a "hazardous waste" pursuant to Section 1004 of the Federal Resource
Conservation and Recovery Act, 42 U.S.C. 6901 et seq. (42 U.S.C. 6903), or
(iii) defined as a "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response: Compensation and Liability Act, 42 U.S.C.
9601 et seq. (42 U.S.C. 9601). As used herein, the term "Hazardous Material Law"
shall mean any statute, law, ordinance, or regulation of any governmental body
or agency (including the U.S. Environmental Protection Agency, the California
Regional Water Quality Control Board, and the California Department of Health
Services) which regulates the use, storage, release or disposal of any
Hazardous Material.
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F. The obligations of Landlord and Tenant under this (P)7.2 shall
survive the expiration or earlier termination of the Lease Term. The rights and
obligations of Landlord and Tenant with respect to issues relating to Hazardous
Materials are exclusively established by this (P)7.2. In the event of any
inconsistency between any other part of this Lease and this (P)7.2, the terms of
this (P)7.2 shall control.
7.3 Utilities: Tenant shall promptly pay, as the same become due, all
---------
charges for water, gas, electricity, telephone, sewer service, waste pick-up and
any other utilities, materials or services furnished directly to or used by
Tenant on or about the Premises during the Lease Term, including, without
limitation, (i) meter, use and/or connection fees, hook-up fees, or standby fee
(excluding any connection fees or hook-up fees which relate to making the
existing electrical, gas, and water service available to the Premises as of the
Commencement Date), and (ii) penalties for discontinued or interrupted service.
If any utility service is not separately metered to the Premises, then Tenant
shall pay its pro rata share of the cost of such utility service with all others
served by the service not separately metered. However, if Landlord determines
that Tenant is using a disproportionate amount of any utility service not
separately metered, then Landlord at its election may (i) periodically charge
Tenant, as Additional Rent, a sum equal to Landlord's reasonable estimate of the
cost of Tenant's excess use of such utility service, or (ii) install a separate
meter (at Tenant's expense) to measure the utility service supplied to the
Premises.
7.4 Compliance with Governmental Regulations: Landlord and Tenant shall
----------------------------------------
comply with all rules, regulations and requirements promulgated by national,
state or local governmental agencies or utility suppliers concerning the use of
utility services, including any rationing, limitation or other control. Tenant
shall not be entitled to terminate this Lease nor to any abatement in rent by
reason of such compliance.
ARTICLE 8
---------
COMMON OPERATING EXPENSES
-------------------------
8.1 Tenant's Obligation to Reimburse: As Additional Rent, Tenant shall pay
--------------------------------
Tenant's Share (specified in Section G of the Summary) of all Common Operating
---------
Expenses; provided, however, if the Project contains more than one building,
then Tenant shall pay Tenant's Share of all Common Operating Expenses fairly
allocable to the Building, including (i) all Common Operating Expenses paid with
respect to the maintenance, repair, replacement and use of the Building, and
(ii) a proportionate share (based on the Building Gross Leasable Area as a
percentage of the Project Gross Leasable Area) of all Common Operating Expenses
which relate to the Project in general are not fairly allocable to any one
building that is part of the Project. Tenant shall pay such share of the actual
Common Operating Expenses incurred or paid by Landlord but not theretofore
billed to Tenant within 15 days after receipt of a written bill therefor from
Landlord, on such periodic basis as Landlord shall designate, but in no event
more frequently than once a month. Alternatively, Landlord may from time to time
require that Tenant pay Tenant's Share of Common Operating Expenses in advance
in estimated monthly installments, in accordance with the following: (i)
Landlord shall deliver to Tenant Landlord's reasonable estimate of the Common
Operating expenses it anticipates will be paid or incurred for the Landlord's
fiscal year in question; (ii) during such Landlord's fiscal year Tenant shall
pay such share of the estimated Common Operating Expenses in advance in monthly
installments as required by Landlord due with the installments of Base Monthly
Rent; and (iii) within 90 days after the end of each Landlord's fiscal year,
Landlord shall furnish to Tenant a statement in reasonable detail of the actual
Common Operating Expenses paid or incurred by Landlord during the just ended
Landlord's fiscal year and thereupon there shall be an adjustment between
Landlord and Tenant, with payment to Landlord or credit by Landlord against the
next installment of Base Monthly Rent, as the case may require, within 15 days
after delivery by Landlord to Tenant of said statement, so that Landlord shall
receive the entire amount of Tenant's Share of all Common Operating Expenses for
such Landlord's fiscal year and no more. Tenant shall have the right at its
expense, exercisable upon reasonable prior written notice to Landlord, to
inspect at Landlord's office during normal business hours Landlord's books and
records as they relate to Common Operating Expenses. Such inspection must be
within 90 days of Tenant's receipt of Landlord's annual statement for the same,
and shall be limited to verification of the charges contained in such statement.
Tenant may not withhold payment of such bill pending completion of such
inspection.
8.2 Common Operating Expenses Defined: The term "Common Operating Expenses"
---------------------------------
shall mean the following:
A. All costs and expenses paid or incurred by Landlord in doing the
following (including payments to independent contractors providing services
related to the performance of the following): (i) maintaining, cleaning,
repairing and resurfacing the roof (including repair of leaks) and the exterior
surfaces (including painting) of all buildings located on the Project; (ii)
maintenance of the liability, fire and property damage insurance covering the
Project carried by Landlord pursuant to (P)9.2 (including the prepayment of
premiums for coverage of up to one year); (iii) maintaining, repairing,
operating and replacing when necessary HVAC equipment, utility facilities and
other building service equipment; (iv) providing utilities to the Common Area
(including lighting, trash removal and water for landscaping irrigation); (v)
complying with all applicable Laws and Private Restrictions; (vi) operating,
maintaining, repairing, cleaning, painting, restriping and resurfacing the
Common Area; (vii) replacement or installation of lighting fixtures, directional
or other signs and signals, irrigation systems, trees, shrubs, ground cover and
other plant materials, and all landscaping in the Common Area: and (viii)
providing security;
B. The following costs: (i) Real Property Taxes as defined in (P)8.3;
(ii) the amount of any "deductible" paid by Landlord with respect to damage
caused by any Insured Peril; (iii) the cost to repair damage caused by an
Uninsured Peril up to
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a maximum amount in any 12 month period equal to 2% of the replacement cost of
the buildings or other improvements damaged; and (iv) that portion of all
compensation (including benefits and premiums for workers' compensation and
other insurance) paid to or on behalf of employees of Landlord but only to the
extent they are involved in the performance of the work described by (P)8.2A
that is fairly allocable to the Project;
C. Fees for management services rendered by either Landlord or a third
party manager engaged by Landlord (which may be a party affiliated with
Landlord), except that the total amount charged for management services and
included in Tenant's Share of Common Operating Expenses shall not exceed the
monthly rate of 5% of the Base Monthly Rent.
D. All additional costs and expenses incurred by Landlord with respect
to the operation, protection, maintenance, repair and replacement of the Project
which would be considered a current expense (and not a capital expenditure)
pursuant to generally accepted accounting principles; provided, however, that
Common Operating Expenses shall not include any of the following: (i) payments
on any loans or ground leases affecting the Project; (ii) depreciation of any
buildings or any major systems of building service equipment within the Project;
(iii) leasing commissions; (iv) the cost of tenant improvements installed for
the exclusive use of other tenants of the Project; and (v) any cost incurred in
complying with Hazardous Materials Laws, which subject is governed exclusively
by (P)7.2.
8.3 Real Property Taxes Defined: The term "Real Property Taxes" shall mean
---------------------------
all taxes, assessments, levies and other charges of any kind or nature
whatsoever, general and special, foreseen and unforeseen (including all
installments of principal and interest required to pay any existing or future
general or special assessments for public improvements, services or benefits,
and any increases resulting from reassessments resulting from a change in
ownership, new construction, or any other cause), now or hereafter imposed by
any governmental or quasi-governmental authority or special district having the
direct or indirect power to tax or levy assessments, which are levied or
assessed against, or with respect to the value, occupancy or use of all or any
portion of the Project (as now constructed or as may at any time hereafter be
constructed, altered, or otherwise changed) or Landlord's interest therein, the
fixtures, equipment and other property of Landlord, real or personal, that are
an integral part of and located on the Project, the gross receipts, income, or
rentals from the Project, or the use of parking areas, public utilities, or
energy within the Project, or Landlord's business of leasing the Project. If at
any time during the Lease Term the method of taxation or assessment of the
Project prevailing as of the Effective Date shall be altered so that in lieu of
or in addition to any Real Property Tax described above there shall be levied,
assessed or imposed (whether by reason of a change in the method of taxation or
assessment, creation of a new tax or charge, or any other cause) an alternate or
additional tax or charge (i) on the value, use or occupancy of the Project or
Landlord's interest therein, or (ii) on or measured by the gross receipts,
income or rentals from the Project, on Landlord's business of leasing the
Project, or computed in any manner with respect to the operation of the Project,
then any such tax or charge, however designated, shall be included within the
meaning of the term "Real Property Taxes" for purposes of this Lease. If any
Real Property Tax is based upon property or rents unrelated to the Project, then
only that part of such Real Property Tax that is fairly allocable to the Project
shall be included within the meaning of the term "Real Property Taxes".
Notwithstanding the foregoing, the term "Real Property Taxes" shall not include
estate, inheritance, transfer, gift or franchise taxes of Landlord or the
federal or state net income tax imposed on Landlord's income from all sources.
ARTICLE 9
---------
INSURANCE
---------
9.1 Tenant's Insurance: Tenant shall maintain insurance complying with all
------------------
of the following:
A. Tenant shall procure, pay for and keep in full force and effect the
following:
(1) Commercial general liability insurance, including property
damage, against liability for personal injury, bodily injury, death and damage
to property occurring in or about, or resulting from an occurrence in or about,
the Premises with combined single limit coverage of not less than the amount of
Tenant's Liability Insurance Minimum specified in Section P of the Summary,
---------
which insurance shall contain a "contractual liability" endorsement insuring
Tenant's performance of Tenant's obligation to indemnify Landlord contained in
(p)10.3;
(2) Fire and property damage insurance in so-called "all risk"
form insuring Tenant's Trade Fixtures and Tenant's Alterations for the full
actual replacement cost thereof;
(3) Such other insurance that is either (i) required by any
Lender, or (ii) reasonably required by Landlord and customarily carried by
tenants of similar property in similar businesses.
B. Where applicable and required by Landlord, each policy of insurance
required to be carried by Tenant pursuant to this (P)9.1: (i) shall name
Landlord and such other parties in interest as Landlord reasonably designates as
additional insured; (ii) shall be primary insurance which provides that the
insurer shall be liable for the full amount of the loss up to and including the
total amount of liability set forth in the declarations without the right of
contribution from any other insurance coverage of Landlord; (iii) shall be in a
form satisfactory to Landlord; (iv) shall be carried with companies reasonably
acceptable to Landlord; (v) shall provide that such policy shall not be subject
to cancellation, lapse or change except after at least 30 days prior written
notice to Landlord so long as such provision of 30 days notice is reasonably
obtainable, but in any event not less than 10 days prior written notice; (vi)
shall not have a "deductible" in excess of such amount as is approved by
Landlord; (vii) shall contain a cross liability endorsement; and (viii) shall
contain a "severability" clause. If Tenant has in full force and effect a
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blanket policy of liability insurance with the same coverage for the Premises
as described above, as well as other coverage of other premises and properties
of Tenant, or in which Tenant has some interest, such blanket insurance shall
satisfy the requirements of this (P)9.1.
C. A copy of each certificate of insurance evidencing the insurance
required to be carried by Tenant pursuant to this (P)9.1 (appropriately
authenticated by the insurer) or a certificate of the insurer, certifying that
such policy has been issued, providing the coverage required by this (P)9.1, and
containing the provisions specified herein, shall be delivered to Landlord prior
to the time Tenant or any of its Agents enters the Premises and upon renewal of
such policies, but not less than 5 days prior to the expiration of the term of
such coverage, Landlord may, at any time, and from time to time, inspect and/or
copy any and all insurance policies required to be procured by Tenant pursuant
to this (P)9.1. If any Lender or insurance advisor reasonably determines at any
time that the amount of coverage required for any policy of insurance Tenant is
to obtain pursuant to this (P)9.1 is not adequate, then Tenant shall increase
such coverage for such insurance to such amount as such Lender or insurance
advisor reasonably deems adequate, not to exceed the level of coverage for such
insurance commonly carried by comparable businesses similarly situated.
9.2 Landlord's Insurance: Landlord shall have the following obligations and
--------------------
options regarding insurance:
A. Landlord shall maintain a policy or policies of fire and property
damage insurance in so-called "all risk" form insuring Landlord (and such others
as Landlord may designate) against loss of rents for a period of not less than
12 months and from physical damage to the Project with coverage of not less than
the full replacement cost thereof. Landlord may so insure the Project
separately, or may insure the Project with other property owned by Landlord
which Landlord elects to insure together under the same policy or policies. Such
fire and property damage insurance (i) may be endorsed to cover loss caused by
such additional perils against which Landlord may elect to insure, including
earthquake and/or flood, and to provide such additional coverage as Landlord
reasonably requires, and (ii) shall contain reasonable "deductibles" which, in
the case of earthquake and flood insurance, may be up to 10% of the replacement
value of the property insured or such higher amount as is then commercially
reasonable. Landlord shall not be required to cause such insurance to cover any
Trade Fixtures or Tenant's Alterations of Tenant.
B. Landlord may maintain a policy or policies of commercial general
liability insurance insuring Landlord (and such others as are designated by
Landlord) against liability for personal injury, bodily injury, death and damage
to property occurring or resulting from an occurrence in, on or about the
Project, with combined single limit coverage in such amount as Landlord from
time to time determines is reasonably necessary for its protection.
9.3 Tenant's Obligation to Reimburse: If Landlord's insurance rates for the
--------------------------------
Building are increased at any time during the Lease Term as a result of the
nature of Tenant's use of the Premises, Tenant shall reimburse Landlord for the
full amount of such increase immediately upon receipt of a bill from Landlord
therefor.
9.4 Release and Waiver of Subrogation: The parties hereto release each
---------------------------------
other, and their respective agents and employees, from any liability for injury
to any person or damage to property that is caused by or results from any risk
insured against under any valid and collectible insurance policy carried by
either of the parties which contains a waiver of subrogation by the insurer and
is in force at the time of such injury or damage; subject to the following
limitations: (i) the foregoing provision shall not apply to the commercial
general liability insurance described by subparagraphs (P)9.1A and (P)9.2B; (ii)
such release shall apply to liability resulting from any risk insured against or
covered by self-insurance maintained or provided by Tenant to satisfy the
requirements of (P)9.1 to the extent permitted by this Lease; and (iii) Tenant
shall not be released from any such liability to the extent any damages
resulting from such injury or damage are not covered by the recovery obtained by
Landlord from such insurance, but only if the insurance in question permits such
partial release in connection with obtaining a waiver of subrogation from the
insurer. This release shall be in effect only so long as the applicable
insurance policy contains a clause to the effect that this release shall not
affect the right of the insured to recover under such policy. Each party shall
use reasonable efforts to cause each insurance policy obtained by it to provide
that the insurer waives all right of recovery by way of subrogation against the
other party and its agents and employees in connection with any injury or damage
covered by such policy. However, if any insurance policy cannot be obtained with
such a waiver of subrogation, or if such waiver of subrogation is only available
at additional cost and the party for whose benefit the waiver is to be obtained
does not pay such additional cost, then the party obtaining such insurance shall
notify the other party of that fact and thereupon shall be relieved of the
obligation to obtain such waiver of subrogation rights from the insurer with
respect to the particular insurance involved.
ARTICLE 10
----------
LIMITATION ON LANDLORD'S
------------------------
LIABILITY AND INDEMNITY
-----------------------
10.1 Limitation on Landlord's Liability: Landlord shall not be liable to
----------------------------------
Tenant, nor shall Tenant be entitled to terminate this Lease or to any abatement
of rent (except as expressly provided otherwise herein), for any injury to
Tenant or Tenant's Agents, damage to the property of Tenant or Tenant's Agents,
or loss to Tenant's business resulting from any cause, including without
limitation any: (i) failure, interruption or installation of any HVAC or other
utility system or service; (ii) failure to furnish or delay in furnishing any
utilities or services when such failure or delay is caused by fire or other
peril, the elements, labor disturbances of any character, or any other accidents
or other conditions beyond the reasonable control of
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Landlord: (iii) limitation, curtailment, rationing or restriction on the use of
water or electricity, gas or any other form of energy or any services or utility
serving the Project: (iv) vandalism or forcible entry by unauthorized persons or
the criminal act of any person: or (v) penetration of water into or onto any
portion of the Premises or the Building through roof leaks or otherwise.
Notwithstanding the foregoing but subject to (P)9.4, Landlord shall be liable
for any such injury, damage or loss which is proximately caused by Landlord's
willful misconduct or gross negligence of which Landlord has actual notice and a
reasonable opportunity to cure but which it fails to so cure.
10.2 Limitation on Tenant's Recourse: If Landlord is a corporation, trust,
-------------------------------
partnership, joint venture, unincorporated association or other form of business
entity: (i) the obligations of Landlord shall not constitute personal
obligations of the officers, directors, trustees, partners, joint venturers,
members, owners, stockholders, or other principals or representatives of such
business entity; and (ii) Tenant shall not have recourse to the assets of such
officers, directors, trustees, partners, joint venturers, members, owners,
stockholders, principals or representatives except to the extent of their
interest in the Project. Tenant shall have recourse only to the interest of
Landlord in the Project for the satisfaction of the obligations of Landlord and
shall not have recourse to any other assets of Landlord for the satisfaction of
such obligations.
10.3 Indemnification of Landlord: Tenant shall hold harmless, indemnify and
---------------------------
defend Landlord, and its employees, agents and contractors, with competent
counsel reasonably satisfactory to Landlord (and Landlord agrees to accept
counsel that any insurer requires be used), from all liability, penalties,
losses, damages, costs, expenses, causes of action, claims and/or judgments
arising by reason of any death, bodily injury, personal injury or property
damage resulting from (i) any cause or causes whatsoever (other than the willful
misconduct or gross negligence of Landlord of which Landlord has had notice and
a reasonable time to cure, but which Landlord has failed to cure) occurring in
or about or resulting from an occurrence in or about the Premises during the
Lease Term, (ii) the negligence or willful misconduct of Tenant or its agents,
employees and contractors, wherever the same may occur, or (iii) an Event of
Tenant's Default. The provisions of this (P)10.3 shall survive the expiration or
sooner termination of this Lease.
ARTICLE 11
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DAMAGE TO PREMISES
------------------
11.1 Landlord's Duty to Restore: If the Premises are damaged by any peril
--------------------------
after the Effective Date, Landlord shall restore the Premises unless the Lease
is terminated by Landlord pursuant to (P)11.2 or by Tenant pursuant to (P)11.3.
All insurance proceeds available from the fire and property damage insurance
carried by Landlord pursuant to (P)9.2 shall be paid to and become the property
of Landlord. If this Lease is terminated pursuant to either (P)11.2 or (P)11.3,
then all insurance proceeds available from insurance carried by Tenant which
covers loss to property that is Landlord's property or would become Landlord's
property on termination of this Lease shall be paid to and become the property
of Landlord. If this Lease is not so terminated, then upon receipt of the
insurance proceeds if the loss is covered by insurance, and the issuance of all
necessary governmental permits. Landlord shall commence and diligently prosecute
to completion the restoration of the Premises, to the extent then allowed by
Law, to substantially the same condition in which the Premises were immediately
prior to such damage. Landlord's obligation to restore shall be limited to the
Premises and interior improvements constructed by Landlord as they existed as of
the Commencement Date, excluding any Trade Fixtures and/or personal property
constructed or installed by Tenant in the Premises. Tenant shall forthwith
replace or fully repair all Tenant's Alterations and Trade Fixtures installed by
Tenant and existing at the time of such damage or destruction, and all insurance
proceeds received by Tenant from the insurance carried by it pursuant to
(P)9.A(2) shall be used for such purpose.
11.2 Landlord's Right to Terminate: Landlord shall have the right to
-----------------------------
terminate this Lease in the event any of the following occurs, which right may
be exercised only by delivery to Tenant of a written notice of election to
terminate within 30 days after the date of such damage:
A. Either the Project or the Building is damaged by an Insured Peril to
such an extent that the estimated cost to restore exceeds 33% of the then actual
replacement cost thereof;
B. Either the Project or the Building is damaged by an Uninsured Peril
to such an extent that the estimated cost to restore exceeds 2% of the then
actual replacement cost thereof; provided, however, that Landlord may not
terminate this Lease pursuant to this (P)11.2B if one or more tenants of the
Project agree in writing to pay the amount by which the cost to restore the
damage exceeds such amount and subsequently deposit such amount with Landlord
within 30 days after Landlord has notified Tenant of its election to terminate
this Lease;
C. The Premises are damaged by any peril within 12 months of the last
day of the Lease Term to such an extent that the estimated cost to restore
equals or exceeds an amount equal to six times the Base Monthly Rent then due;
provided, however, that Landlord may not terminate this Lease pursuant to this
(P)11.2C if Tenant, at the time of such damage, has a then valid express written
option to extend the Lease Term and Tenant exercises such option to extend the
Lease Term within 15 days following the date of such damage; or
D. Either the Project or the Building is damaged by any peril and,
because of the Laws then in force, (i) cannot be restored at reasonable cost to
substantially the same condition in which it was prior to such damage, or (ii)
cannot be used for the same use being made thereof before such damage if
restored as required by this Article.
E. As used herein, the following terms shall have the following
meanings: (i) the term "Insured Peril" shall mean a peril actually insured
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against for which the insurance proceeds actually received by Landlord are
sufficient (except for any "deductible" amount specified by such insurance)
to restore the Project under then existing building codes to the condition
existing immediately prior to the damage; and (ii) the term "Uninsured Peril"
shall mean any peril which is not an Insured Peril. Notwithstanding the
foregoing, if the "deductible" for earthquake or flood insurance exceeds 2% of
the replacement cost of the improvements insured, such peril shall be deemed an
"Uninsured Peril."
11.3 Tenant's Right to Terminate: If the Premises are damaged by any
---------------------------
peril and Landlord does not elect to terminate this Lease or is not entitled to
terminate this Lease pursuant to (P)11.2 then as soon as reasonably
practicable, Landlord shall furnish Tenant with the written opinion of
Landlord's architect or construction consultant as to when the restoration work
required of Landlord may be completed. Tenant shall have the right to terminate
this Lease in the event any of the following occurs, which right may be
exercised only by delivery to Landlord of a written notice of election to
terminate within 21 days after Tenant receives from Landlord the estimate of the
time needed to complete such restoration.
A. The Premises are damaged by any peril and, in the reasonable
opinion of Landlord's architect or construction consultant, the restoration of
the Premises cannot be substantially completed within 180 days after the date of
such damage; or
B. The Premises are damaged by any peril within 12 months of the
last day of the Lease Term and, in the reasonable opinion of Landlord's
architect or construction consultant, the restoration of the Premises cannot be
substantially completed within 90 days after the date of such damage and such
damage renders unusable more than 30% of the Premises.
11.4 Abatement of Rent: In the event of damage to the Premises which does
-----------------
not result in the termination of this Lease, the Base Monthly Rent and the
Additional Rent shall be temporarily abated during the period of restoration in
proportion to the degree to which Tenant's use of the Premises is impaired by
such damage. Tenant shall not be entitled to any compensation or damages from
Landlord for loss of Tenant's business or property or for any inconvenience or
annoyance caused by such damage or restoration. Tenant hereby waives the
provisions of California Civil Code Sections 1932(2) and 1933(4) and the
provisions of any similar law hereinafter enacted.
ARTICLE 12
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CONDEMNATION
------------
12.1 Landlord's Termination Right: Landlord shall have the right to
----------------------------
terminate this Lease if, as a result of a taking by means of the exercise of the
power of eminent domain; (including a voluntary sale or transfer by Landlord to
a condemnor under threat of condemnation), (i) all or any part of the Premises
is so taken, (ii) more than 10% of the Building Leasable Area is so taken, or
(iii) more than 50% of the Common Area is so taken. Any such right to terminate
by Landlord must he exercised within a reasonable period of time, to be
effective as of the date possession is taken by the condemnor.
12.2 Tenant's Termination Right: Tenant shall have the right to terminate
--------------------------
this Lease if, as a result of any taking by means of the exercise of the power
of eminent domain (including any voluntary sale or transfer by Landlord to any
condemnor under threat of condemnation), (i) 10% or more of the Premises is so
taken and that part of the Premises that remains cannot be restored within a
reasonable period of time and thereby made reasonably suitable for the continued
operation of the Tenant's business, or (ii) there is a taking affecting the
Common Area and, as a result of such taking Landlord cannot provide parking
spaces within reasonable walking distance of the Premises equal in number to at
least 80% of the number of spaces allocated to Tenant by (P)2.1, whether by
rearrangement of the remaining parking areas in the Common Area (including
construction of multi-deck parking structures or restriping for compact cars
where permitted by Law) or by alternative parking facilities on other land.
Tenant must exercise such right within a reasonable period of time, to be
effective on the date that possession of that portion of the Premises or Common
Area that is condemned is taken by the condemnor.
12.3 Restoration and Abatement of Rent: If any part of the Premises or
---------------------------------
the Common Area is taken by condemnation and this Lease is not terminated, then
Landlord shall restore the remaining portion of the Premises and Common Area and
interior improvements constructed by Landlord as they existed as of the
Commencement Date, excluding any, Trade Fixtures and/or personal property
constructed or installed by Tenant. Thereafter, except in the case of a
temporary taking, as of the date possession is taken the Base Monthly Rent shall
be reduced in the same proportion that the floor area of that part of the
Premises so taken (less any addition thereto by reason of any reconstruction)
bears to the original floor area of the Premises.
12.4 Temporary Taking: If any portion of the Premises is temporarily
----------------
taken for one year or less, this Lease shall remain in effect. If any portion of
the Premises is temporarily taken by condemnation for a period which exceeds one
year or which extends beyond the natural expiration of the Lease Term, and such
taking materially and adversely affects Tenant's ability to use the Premises for
the Permitted Use, then Tenant shall have the right to terminate this Lease,
effective on the date possession is taken by the condemnor.
12.5 Division of Condemnation Award: Any award made as a result of any
------------------------------
condemnation of the Premises or the Common Area shall belong to and be paid to
Landlord, and Tenant hereby assigns to Landlord all of its right, title and
interest in any such award; provided, however, that Tenant shall be entitled to
receive any condemnation award that is made directly to Tenant for the following
so long as the award made to Landlord is not thereby reduced: (i) for the taking
of personal property or Trade Fixtures belonging to Tenant, (ii) for the
interruption of Tenant's business or its moving costs, (iii) for loss of
Tenant's goodwill; or (iv) for
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any temporary taking where this Lease is not terminated as a result of such
taking. The rights of Landlord and Tenant regarding any condemnation shall be
determined as provided in this Article. and each party hereby waives the
provisions of California Code of Civil Procedure Section 1265.130 and the
provisions of any similar law hereinafter enacted allowing either party to
petition the Superior Court to terminate this Lease in the event of a partial
taking of the Premises.
ARTICLE 13
----------
DEFAULT AND REMEDIES
--------------------
13.1 Events of Tenant's Default: Tenant shall be in default of its
--------------------------
obligations under this Lease if any of the following events occurs (an Event of
Tenant's Default"):
A. Tenant shall have failed to pay Base Monthly Rent or Additional
Rent when due, and such failure is not cured within 5 days after delivery of
written notice from Landlord specifying such failure to pay; or
B. Tenant shall have failed to perform any term, covenant, or
condition of this Lease except those requiring the payment of Base Monthly Rent
or Additional Rent, and Tenant shall have failed to cure such breach within 30
days after written notice from Landlord specifying the nature of such breach
where such breach could reasonably be cured within said 30 day period, or if
such breach could not be reasonably cured within said 30 day period, Tenant
shall have failed to commence such cure within said 30 day period and thereafter
continue with due diligence to prosecute such cure to completion within such
time period as is reasonably needed but not to exceed 90 days from the date of
Landlord's notice; or
C. Tenant shall have sublet the Premises or assigned its interest in
the Lease in violation of the provisions contained in Article 14; or
D. Tenant shall have abandoned the Premises or left the Premises
substantially vacant; or
E. The occurrence of the following: (i) the making by Tenant of any
general arrangements or assignments for the benefit of creditors; (ii) Tenant
becomes a "debtor" as defined in 11 USC (S)101 or any successor statute thereto
(unless, in the ease of a petition filed against Tenant, the same is dismissed
within 60 days); (iii) the appointment of a trustee or receiver to take
possession of substantially all of Tenant's assets located at the Premises or of
Tenant's interest in this Lease, where possession is not restored to Tenant
within 30 days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where such seizure is not discharged within 30 days;
provided, however, in the event that any provision of this Section 13.1E is
contrary to any applicable Law, such provision shall be of no force or effect;
or
F. Tenant shall have failed to deliver documents required of it
pursuant to (P)154 or (P)915.6 within the time periods specified therein.
13.2 Landlord's Remedies: If an Event of Tenant's Default occurs,
-------------------
Landlord shall have the following remedies, in addition to all other rights and
remedies provided by any Law or otherwise provided in this Lease, to which
Landlord may resort cumulatively or in the alternative:
A. Landlord may keep this Lease in effect and enforce an action at
law or in equity all of its rights and remedies under this Lease including (i)
the right to recover the rent and other sums as they become due by appropriate
legal action, (ii) the right to make payments required of Tenant or perform
Tenant's obligations and be reimbursed by Tenant for the cost thereof with
interest at the Agreed Interest Rate from the date the sum is paid by Landlord
until Landlord is reimbursed by Tenant, and (iii) the remedies of injunctive
relief and specific performance to compel Tenant to perform its obligations
under this Lease. Notwithstanding anything contained in this Lease, in the event
of a breach of an obligation by Tenant which results in a condition which poses
an imminent danger to safety of persons or damage to property, an unsightly
condition visible from the exterior of the Building, or a threat to insurance
coverage, then if Tenant does not cure such breach within 3 days after delivery
to it of written notice from Landlord identifying the breach, Landlord may cure
the breach of Tenant and be reimbursed by Tenant for the cost thereof with
interest at the Agreed Interest Rate from the date the sum is paid by Landlord
until Landlord is reimbursed by Tenant.
B. Landlord may enter the Premises and release them to third parties
for Tenant's account for any period, whether shorter or longer than the
remaining Lease Term. Tenant shall be liable immediately to Landlord for all
costs Landlord incurs in releasing the Premises, including brokers' commissions
expenses of altering and preparing the Premises required by the releasing.
Tenant shall pay to Landlord the rent and other sums due under this Lease on the
date the rent is due, less the rent and other sums Landlord received from any
releasing. No act by Landlord allowed by this subparagraph shall terminate this
Lease unless Landlord notifies Tenant in writing that Landlord elects to
terminate this Lease. Notwithstanding any releasing without termination,
Landlord may later elect to terminate this Lease because of the default by
Tenant.
C. Landlord may terminate this Lease by giving Tenant written notice
of termination, in which event this Lease shall terminate on the date set forth
for termination in such notice. Any termination under this (P)13.2C shall not
relieve Tenant from its obligation to pay sums then due Landlord or from any
claim against Tenant for damages or rent previously accrued or then accruing. In
no event shall any one or more of the following actions by Landlord, in the
absence of a written election by Landlord to terminate this Lease, constitute
a termination of this Lease: (i) appointment of a receiver or keeper in order to
protect Landlord's interest hereunder; (ii) consent to any subletting of the
Premises or assignment of this Lease by Tenant, whether pursuant to the
provisions hereof or otherwise; or (iii) any other action by Landlord or
Landlord's Agents intended
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to mitigate the adverse effects of any breach of this Lease by Tenant, including
without limitation any action taken to maintain and preserve the Premises, or
any action taken to relet the Premises or any portions thereof to the extent
such actions do not affect a termination of Tenant's right to possession of the
Premises.
D. In the event Tenant breaches this Lease and abandons the
Premises, this Lease shall not terminate unless Landlord gives Tenant written
notice of its election to so terminate this Lease. No act by or on behalf of
Landlord intended to mitigate the adverse effect of such breach, including those
described by (P)13.C, shall constitute a termination of Tenant's right to
possession unless Landlord gives Tenant written notice of termination. Should
Landlord not terminate this Lease by giving Tenant written notice, Landlord may
enforce all its rights and remedies under this Lease, including the right to
recover the rent as it becomes due under the Lease as provided in California
Civil Code Section 1951.4.
E. In the event Landlord terminates this Lease, Landlord shall be
entitled, at Landlord's election, to damages in an amount as set forth in
California Civil Code Section 19512 as in effect on the Effective Date. For
purposes of computing damages pursuant to California Civil Code Section 1951.2,
(i) an interest rate equal to the Agreed Interest Rate shall be used where
permitted, and (ii) the term "rent" includes Base Monthly Rent and Additional
Rent. Such damages shall include:
(1) The worth at the time of award of the amount by which
the unpaid rent for the balance of the term after the time of award exceeds the
amount of such rental loss that Tenant proves could be reasonably avoided,
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%); and
(2) Any other amount necessary to compensate Landlord for
all detriment proximately caused by Tenant's failure to perform Tenant's
obligations under this Lease, or which in the ordinary course of things would be
likely to result therefrom, including to the extent reasonable the following:
(i) expenses for cleaning, repairing or restoring the Premises; (ii) expenses
for altering, remodeling or otherwise improving the Premises for the purpose of
reletting, including installation of leasehold improvements (whether such
installation be funded by a reduction of rent, direct payment or allowance to a
new tenant, or otherwise); (iii) broker's fees, advertising costs and other
expenses of reletting the Premises; (iv) costs of carrying the Premises, such as
taxes, insurance premiums, utilities and security precautions; (v) expenses in
retaking possession of the Premises; and (vi) attorneys' fees and court costs
incurred by Landlord in retaking possession of the Premises and in releasing the
Premises or otherwise incurred as a result of Tenant's default.
F. Nothing in this (P)13.2 shall limit Landlord's right to
indemnification from Tenant as provided in (P)7.2 and (P)10.3. Any notice given
by Landlord in order to satisfy the requirements of (P)13.1A or (P)l3.1B above
shall also satisfy the notice requirements of California Code of Civil Procedure
Section 116l regarding unlawful detainer proceedings.
13.3 Waiver: One party's consent to or approval of any act by the other
------
party requiring the first party's consent or approval shall not be deemed to
waive or render unnecessary the first party's consent to or approval of any
subsequent similar act by the other party. The receipt by Landlord of any
rent or payment with or without knowledge of the breach of any other provision
hereof shall not be deemed a waiver of any such breach unless such waiver is in
writing and signed by Landlord. No delay or omission in the exercise of any
right or remedy accruing to either party upon any breach by the other party
under this Lease shall impair such right or remedy or be construed as a waiver
of any such breach theretofore or thereafter occurring. The waiver by either
party of any breach of any provision of this Lease shall not be deemed to be a
waiver of any subsequent breach of the same or of any other provisions herein
contained.
13.4 Limitation On Exercise of Rights: At any time that an Event of
--------------------------------
Tenant's Default has occurred and remains uncured, (i) it shall not be
unreasonable for Landlord to deny or withhold any consent or approval requested
of it by Tenant which Landlord would otherwise be obligated to give, and (ii)
Tenant may not exercise any option to extend, right to terminate this Lease, or
other right granted to it by this Lease which would otherwise be available to
it.
l3.5 Waiver by Tenant of Certain Remedies: Tenant waives the provisions
------------------------------------
of Sections 1932(1), 1941 and 1942 of the California Civil Code and any similar
or successor law regarding Tenant's right to terminate this Lease or to make
repairs and deduct the expenses of such repairs from the rent due under this
Lease. Tenant hereby waives any right of redemption or relief from forfeiture
under the laws of the State of California, or under any other present or future
law, including the provisions of Sections 1174 and L179 of the Califorina. Code
of Civil Procedure.
ARTICLE 14
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ASSIGNMENT AND SUBLETTING
-------------------------
14.1 Transfer By Tenant: The following provisions shall apply to any
------------------
assignment subletting or other transfer by Tenant or any subtenant or assignee
or other successor in interest of the original Tenant (collectively referred to
this (P)14.1 as "Tenant"):
A. Subject to subparagraph F below,Tenant shall not do any of the
following (collectively referred to herein as a Transfer), whether voluntarily,
involuntarily or by operation of law, without the prior written consent of
Landlord, which consent shall not be unreasonably withheld or delayed: (i)
sublet all or any part of the Premises or allow it to be sublet, occupied or
used by any person or entity other than Tenant; (ii) assign its interest in this
Lease; (iii) mortgage or encumber the Lease (or otherwise use the Lease as a
security device) in any manner; or (iv) material amend or modify an assignment,
sublease or other transfer that has been previously approved by Landlord. Tenant
shall reimburse Landlord for all reasonable
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costs and attorneys' fees not to exceed $500,000 per indifference unless Tenant
challenges Landlords review decision incurred by Landlord in connection with the
evaluation, processing, and/or documentation of any requested Transfer, whether
or not Landlord's consent is granted. Landlord's reasonable costs shall include
the cost of any review or investigation performed by Landlord or consultant
acting on Landlord's behalf of (i) Hazardous Materials (as defined in Section
7.2E of this Lease) used, stored, released, or disposed of by the potential
Subtenant or Assignee, and/or (ii) violations of Hazardous Materials Law (as
defined in Section 7.2E of this lease) by the Tenant or the proposed Subtenant
or Assignee. Any Transfer so approved by Landlord shall not be effective until
Tenant has delivered to Landlord an executed counterpart of the document
evidencing the Transfer which (i) is in a form reasonably approved by Landlord,
(ii) contains substantially the same terms and conditions as stated in Tenant's
notice given to Landlord pursuant to (P)14.1B, and (iii) in the case of an
assignment of the Lease, contains the agreement of the proposed transferee to
assume all obligations of Tenant under this Lease arising after the effective
date of such Transfer and to remain jointly and severally liable therefor with
Tenant. Any attempted Transfer without Landlord's consent shall constitute an
Event of Tenant's Default and shall be voidable at Landlord's option. Landlord's
consent to any one Transfer shall not constitute a waiver of the provisions of
this (P)14.1 as to any subsequent Transfer or a consent to any subsequent
Transfer. No Transfer, even with the consent of Landlord, shall relieve Tenant
of its personal and primary obligation to pay the rent and to perform all of the
other obligations to be performed by Tenant hereunder. The acceptance of rent by
Landlord from any person shall not be deemed to be a waiver by Landlord of any
provision of this Lease nor to be a consent to any Transfer.
B. At least 15 days before a proposed Transfer is to become
effective, Tenant shall give Landlord written notice of the proposed terms of
such Transfer and request Landlord's approval, which notice shall include the
following: (i) the name and legal composition of the proposed transferee; (ii) a
current financial statement of the transferee, financial statements of the
transferee covering the preceding three years if the same exist, and (if
available) an audited financial statement of the transferee for a period ending
not more than one year prior to the proposed effective date of the Transfer, all
of which statements are prepared, to the extent reasonable in accordance with
generally accepted accounting principles; (iii) the nature of the proposed
transferee's business to be carried on in the Premises; (iv) all consideration
to be given on account of the Transfer; (v) a current financial statement of
Tenant; and (vi) an accurately filled out response to Landlord's standard
Hazardous Materials Questionnaire. Tenant shall provide to Landlord such other
information as may be reasonably requested by Landlord within seven days after
Landlord's receipt of such notice from Tenant. Landlord shall respond in writing
to Tenant's request for Landlord's consent to a Transfer within the later of (i)
10 days of receipt of such request together with the required accompanying
documentation, or (ii) seven days after Landlord's receipt of all information
which Landlord reasonably requests within seven days after it receives Tenants
first notice regarding the Transfer in question. If Landlord fails to respond in
writing within said period, Landlord will be deemed to have withheld consent to
such Transfer. Tenant shall immediately notify Landlord if any material
modification to the proposed terms of such Transfer.
C. In the event that Tenant seeks to make any Transfer for the
balance of the Lease Term, Landlord shall have the right to terminate this Lease
or, in the case of a sublease of less than all of the Premises, terminate this
Lease as to that part of the Premises proposed to be so sublet, either (i) on
the condition that the proposed transferee immediately enter into a direct lease
of the Premises with Landlord (or, in the case of a partial sublease, a lease
for the portion proposed to be so sublet) on the same terms and conditions
contained in Tenant's notice, or (ii) so that Landlord is thereafter free to
lease the Premises (or, in the case of a partial sublease, the portion proposed
to be so sublet) to whomever it pleases on whatever terms are acceptable to
Landlord. In the event Landlord elects to so terminate this Lease, then (i) if
such termination is conditioned upon the execution of a lease between Landlord
and the proposed transferee, Tenant's obligations under this Lease shall not be
terminated until such transferee executes a new lease with Landlord, enters into
possession and commences the payment of rent, and (ii) if Landlord elects simply
to terminate this Lease (or, in the case of a partial sublease, terminate this
Lease as to the portion to be so sublet), the Lease shall so terminate in its
entirety (or as to the space to be so sublet) fifteen (15) days after Landlord
has notified Tenant in writing of such election. Upon such termination, Tenant
shall be released from any further obligation under this Lease if it is
terminated in its entirety, or shall be released from any further obligation
under the Lease with respect to the space proposed to be sublet in the case of a
proposed partial sublease. In the case of a partial termination of the Lease,
the Base Monthly Rent and Tenant's share shall be reduced to an amount which
bears the same relationship to the original amount thereof as the area of that
part of the Premises which remains subject to the Lease bears to the original
area of the Premises. Landlord and Tenant shall execute a cancellation and
release with respect to the Lease to effect such termination.
D. If Landlord consents to a Transfer proposed by Tenant, Tenant may
enter into such Transfer, and if Tenant does so, the following shall apply:
(1) Unless Otherwise mutually agreed upon in writing by
Landlord and Tenant, Tenant shall not be released of its liability for the
performance of all of its obligations under the Lease.
(2) If Tenant assigns its interest in this Lease, then
Tenant shall pay to Landlord 50% of all Subrent (as defined in (P)14.1D(5))
received by Tenant over and above (i) the assignee's agreement to assume the
obligations of Tenant under this Lease, and (ii) all Permitted Transfer Costs
related to such assignment. In the case of assignment, the amount of Subrent
owed to Landlord shall be paid to Landlord on the same basis, whether periodic
or in lump sum, that such Subrent is paid to Tenant by the assignee.
(3) If Tenant sublets any part of the Premises, then with
respect to the space so
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subleased, Tenant shall pay to Landlord 5O% of the positive difference, if any,
between (i) all Subrent paid by the subtenant to Tenant, less (ii) the sum of
all Base Monthly Rent and Additional Rent allocable to the space sublet and all
Permitted Transfer Costs related to such sublease. Such amount shall be paid to
Landlord on the same basis, whether periodic or in lump sum, that such Subrent
is paid to Tenant by its subtenant. In calculating Landlord's share of any
periodic payments, all Permitted Transfer Costs shall be first recovered by
Tenant.
(4) Tenant's obligations under this (P)14.1D shall survive
any Transfer, and Tenant's failure to perform its obligations hereunder shall be
an Event of Tenant's Default. At the time Tenant makes any payment to Landlord
required by this (P)14.1D, Tenant shall deliver an itemized statement of the
method by which the amount to which Landlord is entitled was calculated,
certified by Tenant as true and correct. Landlord shall have the right at
reasonable intervals to inspect Tenant's books and records relating to the
payments due hereunder. Upon request therefor, Tenant shall deliver to Landlord
copies of all bills, invoices or other documents upon which its calculations are
based. Landlord may condition its approval of any Transfer upon obtaining a
certification from both Tenant and the proposed transferee of all Subrent and
other amounts that are to be paid to Tenant in connection with such Transfer.
(5) As used in this (P)14.1D, the term "Subrent" shall
mean any consideration of any kind received, or to be received, by Tenant as a
result of the Transfer, if such sums are related to Tenant's interest in this
Lease or in the Premises, including payments from or on behalf of the transferee
(in excess of the book value thereof) for Tenant's assets, fixtures, leasehold
improvements, inventory, accounts, goodwill, equipment, furniture, and general
intangibles. As used in this (P)14.1D, the term "Permitted Transfer Costs" shall
mean (i) all reasonable leasing commissions paid to third parties not affiliated
with Tenant in order to obtain the Transfer in question, and (ii) all reasonable
attorneys' fees incurred by Tenant with respect to the Transfer in question.
E. If Tenant is a corporation, the following shall be deemed a
voluntary assignment of Tenant's interest in this Lease: (i) any dissolution,
merger, consolidation, or other reorganization of or affecting Tenant, whether
or not Tenant is the surviving corporation; and (ii) if the capital stock of
Tenant is not publicly traded, the sale or transfer to one person or entity (or
to any group of related persons or entities) stock possessing more than 50% of
the total combined voting power of all classes of Tenant's capital stock issued,
outstanding and entitled to vote for the election of directors. If Tenant is a
partnership, any withdrawal or substitution (whether voluntary, involuntary or
by operation of law, and whether occurring at one time or over a period of
time) of any partner owning 25% or more (cumulatively) of any interest in the
capital or profits of the partnership, or the dissolution of the partnership,
shall be deemed a voluntary assignment of Tenant's interest in this Lease.
F. Notwithstanding anything contained in (P)14.1, so long as Tenant
otherwise complies with the provisions of (P)14.1 Tenant may enter into any of
the following transfers (a "Permitted Transfer") without Landlord's prior
written consent, and Landlord shall not be entitled to terminate the Lease
pursuant to (P)14.1C or to receive any part of any Subrent resulting therefrom
that would otherwise be due it pursuant to (P)14.1D:
(1) Tenant may sublease all or part of the Premises or
assign its interest in this Lease to any corporation which controls, is
controlled by, or is under common control with the original Tenant to this Lease
by means of an ownership interest of more than 50%;
(2) Tenant may assign its interest in the Lease to a
corporation which results from a merger, consolidation or other reorganization
in which Tenant is not the surviving corporation, so long as the surviving
corporation has a net worth at the time of such assignment that is equal to or
greater than the net worth of Tenant immediately prior to such transaction; and
(3) Tenant may assign this Lease to a corporation which
purchases or otherwise acquires all or substantially all of the assets of
Tenant, so long as such acquiring corporation has a net worth at the time of
such assignment that is equal to or greater than the net worth of Tenant
immediately prior to such transaction.
14.2 Transfer By Landlord: Landlord and its successors in interest shall
--------------------
have the right to transfer their interest in this Lease and the Project at any
time and to any person or entity. In the event of any such transfer, the
Landlord originally named herein (and, in the case of any subsequent transfer,
the transferror) from the date of such transfer, shall be automatically
relieved, without any further act by any person or entity, of all liability for
the performance of the obligations of the Landlord hereunder which may accrue
after the date of such transfer. After the date of any such transfer, the term
"Landlord" as used herein shall mean the transferee of such interest in the
Premises.
ARTICLE 15
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GENERAL PROVISIONS
------------------
15.1 Landlord's Right to Enter: Landlord and its agents may enter the
-------------------------
Premises at any reasonable time after giving at least 24 hours' prior notice to
Tenant (and immediately in the case of emergency) for the purpose of: (i)
inspecting the same; (ii) posting notices of non-responsibility; (iii) supplying
any service to be provided by Landlord to Tenant; (iv) showing the Premises to
prospective purchasers, mortgagees or during the last sixty (60) days of the
Lease Term, tenants; (v) making necessary alterations, additions or repairs;
(vi) performing Tenant's obligations when Tenant has failed to do so after
written notice from Landlord; (vii) placing upon the Premises ordinary "for
lease" signs or "for sale" signs; and (viii) responding to an emergency.
Landlord shall have the right to use any and all means Landlord may reasonably
deem necessary and proper to enter the Premises in an emergency. Any entry into
the Premises obtained by Landlord in accordance with this (P)15.1 shall not be a
forcible or unlawful
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entry into, or a detainer of, the Premises, or an eviction, actual or
constructive, of Tenant from the Premises.
15.2 Surrender of the Premises: Upon the expiration or sooner termination
-------------------------
to this Lease, Tenant shall vacate and surrender the Premises to Landlord in the
same condition as existed at the Commencement Date, except for (i) reasonable
wear and tear, (ii) damage caused by any peril or condemnation, and (iii)
contamination by Hazardous Materials for which Tenant is not responsible
pursuant to (P)7.2A or (P)7.2B. In this regard, normal wear and tear shall be
construed to mean wear and tear caused to the Premises by the natural aging
process which occurs in spite of prudent application of commercially reasonable
standards for maintenance, repair and janitorial practices, and does not include
items of neglected or deferred maintenance, that Tenant was required to maintain
during the Lease Term In any event, Tenant shall cause the following to be done
prior to the expiration or the sooner termination of this Lease: (i) all
interior walls shall be cleaned; (ii) all tiled floors shall be cleaned and
waxed; (iii) all carpets shall be cleaned and shampooed; (iv) all broken,
marred, stained or nonconforming acoustical ceiling tiles shall be replaced; (v)
all windows shall be washed; (vi) the HVAC system shall be serviced by a
reputable and licensed service firm or trained in-house employee and left in
good operating condition and repair as so certified by such firm; and (vii) the
plumbing and electrical systems and lighting shall be placed in good order and
repair (including replacement of any burned out, discolored or broken light
bulbs, ballast's, or lenses). If Landlord so requests, Tenant shall, prior to
the expiration or sooner termination of this Lease, (i) remove any Tenant's
Alterations which Tenant is required to remove pursuant to (P)5.2 and repair
all damage caused by such removal, and (ii) return the Premises or any part
thereof to its original configuration existing as of the time the Premises were
delivered to Tenant. If the Premises are not so surrendered at the termination
of this Lease, Tenant shall be liable to Landlord for all costs incurred by
Landlord in returning the Premises to the required condition, plus interest on
all costs incurred at the Agreed Interest Rate. Tenant shall indemnify Landlord
against loss or liability resulting from delay by Tenant in so surrendering the
Premises, including, without limitation, any claims made by any succeeding
tenant or losses to Landlord due to lost opportunities to lease to succeeding
tenants.
15.3 Holding Over: This Lease shall terminate without further notice at the
------------
expiration of the Lease Term. Any holding over by Tenant after expiration of the
Lease Term shall not constitute a renewal or extension of the Lease or give
Tenant any rights in or to the Premises except as expressly provided in this
Lease. Any holding over after such expiration with the written consent of
Landlord shall be construed to be a tenancy from month to month on the same
terms and conditions herein specified insofar as applicable except that Base
Monthly Rent shall be increased to an amount equal 125% of the Base Monthly
Rent payable during the last full calendar month of the Lease Term.
15.4 Subordination: The following provisions shall govern the relationship
-------------
of this Lease to any Security Instrument:
A. The Lease is subject and subordinate to all Security instruments
existing as of the Effective Date. However, if any Lender so requires, this
Lease shall become prior and superior to any such Security Instrument.
B. At Landlord's election, this Lease shall become subject and
subordinate to any Security Instrument created after the Effective Date.
Notwithstanding such subordination, Tenant's right to quiet possession of the
Premises shall not be disturbed so long as Tenant is not in default and performs
all of its obligations under this Lease, unless this Lease is otherwise
terminated pursuant to its terms.
C. Tenant shall upon request execute any document or instrument
reasonably required by any Lender to make this Lease either prior or subordinate
to a Security Instrument, which may include such other matters as the Lender
customarily and reasonably requires in connection with such agreements,
including provisions that the Lender not be liable for (i) the return of any
security deposit unless the Lender receives it from Landlord, and (ii) any
defaults on the part of Landlord occurring prior to the time the Lender takes
possession of the Project in connection with the enforcement of its Security
Instrument. Tenant's failure to execute any such document or instrument within
10 days after written demand therefor shall constitute an Event of Tenant's
Default. Tenant approves as reasonable the form of subordination agreement
attached to this Lease as Exhibit G.
---------
15.5 Mortgagee Protection and Attornment: In the event of any default on the
------------------------------------
part of the Landlord, Tenant will use reasonable efforts to give notice by
registered mail to any Lender whose name has been provided to Tenant and shall
offer such Lender a reasonable opportunity to cure the default, including time
to obtain possession of the Premises by power of sale or judicial foreclosure or
other appropriate legal proceedings, if such should prove necessary to effect a
cure. Tenant shall attorn to any purchaser of the Premises at any foreclosure
sale or private sale conducted pursuant to any Security Instrument encumbering
the Premises, or to any grantee or transferee designated in any deed given in
lieu of foreclosure.
15.6 Estoppel Certificates and Financial Statements: At all times during the
----------------------------------------------
Lease Term, each party agrees, following any request by the other party,
promptly to execute and deliver to the requesting party within 15 days following
delivery of such request an estoppel certificate: (i) certifying that this Lease
is unmodified and in full force and effect or, if modified, stating the nature
of such modification and certifying that this Lease, as so modified, is in full
force and effect, (ii) stating the date to which the rent and other charges are
paid in advance, if any, (iii) acknowledging that there are not, to the
certifying party's knowledge, any uncured defaults on the part of any party
hereunder or, if there are uncured defaults, specifying the nature of such
defaults, and (iv) certifying such other information about the Lease as may be
reasonably required by the requesting party. A failure to
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deliver an estoppel certificate within 15 days after delivery of a request
therefor shall be a conclusive admission that, as of the date of the request for
such statement: (i) this Lease is unmodified except as may be represented by the
requesting party in said request and is in full force and effect; (ii) there are
no uncured defaults in the requesting party's performance, and (iii) no rent has
been paid more than 30 days in advance. At any time during the Lease Term Tenant
shall, upon 15 days' prior written notice from Landlord, provide Tenant's most
recent financial statement and financial statements covering the 24 month period
prior to the date of such most recent financial statement to any existing Lender
or to any potential Lender or buyer of the Premises to the extent available, and
Landlord signs a confidentiality statement. Such statements shall be prepared in
accordance with generally accepted accounting principles and, if such is the
normal practice of Tenant, shall be audited by an independent certified public
accountant.
15.7 Reasonable Consent: Whenever any party's approval or consent is required
------------------
by this Lease before an action may be taken by the other party, such approval or
consent shall not be unreasonably withheld or delayed.
15.8 Notices: Any notice required or desired to be given regarding this Lease
-------
shall be in writing and may be given by personal delivery, by facsimile
telecopy, by courier service, or by mail. A notice shall be deemed to have
been given (i) on the third business day after mailing if such notice was
deposited in the United States mail, certified or registered, postage prepaid,
addressed to the party to be served at its Address for Notices specified in
Section Q and Section R of the Summary (as applicable), (ii) when delivered if
--------- ---------
given by personal delivery, and (iii) in all other cases when actually received
at the party's Address for Notices. Either party may change its address by
giving notice of the same in accordance with this (p)15.8
15.9 Attorneys' Fees: In the event either Landlord or Tenant shall bring any
---------------
action or legal proceeding for an alleged breach of any provision of this Lease,
to recover rent to terminate this Lease or otherwise to enforce, protect or
establish any term or covenant of this Lease, the prevailing party shall be
entitled to recover as a part of such action or proceeding, or in a separate
action brought for that purpose, reasonable attorneys' fees, court costs, and
experts' fees as may be fixed by the court.
15.10 Corporate Authority If Tenant is a corporation (or partnership), each
-------------------
individual executing this Lease on behalf of Tenant represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of such
corporation in accordance with the by-laws of such corporation (or partnership
in accordance with the partnership agreement of such partnership) and that this
Lease is binding upon such corporation (or partnership) in accordance with its
terms. Each of the persons executing this Lease on behalf of a corporation does
hereby covenant and warrant that the party for whom it is executing this Lease
is a duly authorized and existing corporation, that it is qualified to do
business in California and that the corporation his full right and authority to
enter into this Lease.
15.11 Miscellaneous: Should any provision of this Lease prove to be invalid
-------------
or illegal, such invalidity or illegality shall in no way affect, impair or
invalidate any other provision hereof, any such remaining provisions shall
remain in full force and effect. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor. The captions used in this Lease are for convenience only and shall not
be considered in the construction or interpretation of any provision hereof. Any
executed copy of this Lease shall be deemed an original for all purposes. This
Lease shall, subject to the provisions regarding assignment, apply to and bind
the respective heirs, successors, executors, administrators and assigns of
Landlord and Tenant. "Party" shall mean Landlord or Tenant, as the context
implies. If Tenant consists of more than one person or entity, then all members
of Tenant shall be jointly and severally liable hereunder. This Lease shall be
construed and enforced in accordance with the laws of the State of California.
The language in all parts of this Lease shall in all cases be construed as a
whole according to its fair meaning, and not strictly for or against either
Landlord or Tenant. When the context of this Lease requires, the neuter gender
includes the masculine, the feminine, a partnership or corporation or joint
venture, and the singular includes the plural. The terms "shall", "will" and
"agree" are mandatory. The term "may" is permissive. When a party is required to
do something by this Lease, it shall do so at its sole cost and expense without
right of reimbursement from the other party unless a provision of this Lease
expressly requires reimbursement. Landlord and Tenant agree that (i) the gross
leasable area of the Premises includes any atriums, depressed loading docks,
covered entrances or egresses, and covered loading areas, (ii) each has had an
opportunity to determine to its satisfaction the actual area of the project and
the Premises, (iii) all measurements of area contained in this Lease are
conclusively agreed to be correct and binding upon the parties, even if a
subsequent measurement of any one of these areas determines that it is more or
less than the amount of area reflected in this Lease, and (iv) any such
subsequent determination that the area is more or less than shown in this Lease
shall not result in a change in any of the computations of rent, improvement
allowances, or other matters described in this Lease where area is a factor.
Where a party hereto is obligated not to perform any act, such party is also
obligated to restrain any others within its control from performing said act,
including the Agents of such party. Landlord shall not become or be deemed a
partner or a joint venturer with Tenant by reason of the provisions of this
Lease.
15.12 Termination by Exercise of Right: If this Lease is terminated pursuant
--------------------------------
to its terms by the proper exercise of a right to terminate specifically granted
to Landlord or Tenant by this Lease, then this Lease shall terminate 30 days
after the date the right to terminate is properly exercised (unless another date
is specified in that part of the Lease creating the right, in which event the
date so specified for termination shall prevail), the rent and all other charges
due hereunder shall be prorated as of the date of termination, and neither
Landlord nor Tenant shall have any further rights or obligations under this
Lease except for those that have accrued
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prior to the date of termination or those obligations which this Lease
specifically provides are to survive termination. This (P)15.12 does not apply
to a termination to this Lease by Landlord as a result of an Event of Tenants
Default.
15.13 Brokerage Commissions: Each party hereto (i) represents and warrants to
---------------------
the other that it has not had any dealings with any real estate brokers, leasing
agents or salesmen, or incurred any obligations for the payment of real estate
brokerage commissions or finder's fees which would be earned or due and payable
by reason of the execution of this Lease, other than to the Retained Real Estate
Brokers described in Section S of the Summary, and (ii) agrees to indemnify,
---------
defend, and hold harmless the other party from any claim for any such commission
or fees which result from the actions of the indemnifying party. Landlord shall
be responsible for the payment of any commission owed to the Retained Real
Estate Brokers for the payment of a commission as a result of the execution of
this Lease.
15.14 Force Majeure: Any prevention, delay or stoppage due to strikes,
-------------
lock-outs, inclement weather, labor disputes, inability to obtain labor,
materials, fuels or reasonable substitutes therefor, governmental restrictions,
regulations, controls, action or inaction, civil commotion, fire or other acts
of God, and other causes beyond the reasonable control of the party obligated to
perform (except financial inability) shall excuse the performance, for a period
equal to the period of any said prevention, delay or stoppage, of any obligation
hereunder except the obligation of Tenant to pay rent or any other sums due
hereunder.
15.15 Entire Agreement: This Lease constitutes the entire agreement between
----------------
the parties, and there are no binding agreements or representations between the
parties except as expressed herein. Tenant acknowledges that neither Landlord
nor Landlord's Agents has made any legally binding representation or warranty as
to any matter except those expressly set forth herein, including any warranty as
to (i) whether the Premises may be used for Tenant's intended use under existing
Law, (ii) the suitability of the Premises or the Project for the conduct of
Tenant's business, or (iii) the condition of any improvements. There are no oral
agreements between Landlord and Tenant affecting this Lease, and this Lease
supersedes and cancels any and all previous negotiations, arrangements,
brochures, agreements and understandings, if any, between Landlord and Tenant or
displayed by Landlord to Tenant with respect to the subject matter of this
Lease. This instrument shall not be legally binding until it is executed by both
Landlord and Tenant. No subsequent change or addition to this Lease shall be
binding unless in writing and signed by Landlord and Tenant.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease with the
intent to be legally bound thereby, to be effective as to the Effective Date.
LANDLORD:
ORCHARD INVESTMENT COMPANY NO. 510,
a California general partnership
By: NELO, a California general partnership
By: /s/ David J. Brown
-----------------------------------
David J. Brown, a General Partner
By:________________________________
Mark T. Ziemendorf
His Attorney in Fact
Dated: 12-16-93
---------------------------------
TENANT:
PERICOM SEMICONDUCTOR CORPORATION
---------------------------------------
a California corporation
---------------------------------------
By: /s/ Alex Hui
-----------------------------------
Alex Hui
---------------------------------------
typed or printed name
Title: President
---------------------------------
By: ___________________________________
_______________________________________
typed or printed name
Title: ________________________________
Dated: 12/1/93
---------------------------------
19
FIRST ADDENDUM TO LEASE
THIS FIRST ADDENDUM is dated for reference purposes as November 29, 1993,
and is made a part of that Lease Agreement (the "Lease") dated November 29,
1993, by and between ORCHARD INVESTMENT COMPANY NUMBER 510, a California general
partnership ("Landlord") and PERICOM SEMICONDUCTOR CORPORATION, a California
corporation ("Tenant") affecting certain real property commonly known as 2380
Bering Drive, San Jose, California 95131, with reference to the following facts:
1. Option to Extend Lease Term: Landlord hereby grants to Tenant one
---------------------------
option to extend the Lease Term for a three (3) year term on the following terms
and conditions:
A. Tenant must give Landlord notice in writing of its exercise of
the option in question no earlier than one hundred eighty (180) days and no
later than one hundred twenty (120) days before the date the Lease Term would
end but for said exercise.
B. Tenant may not extend the Lease Term pursuant to any option
granted by this paragraph if Tenant is materially in default beyond any
applicable cure period as of the date of exercise of the option in question or
as of the date this Lease would have been terminated but for said exercise.
C. All terms and conditions of this Lease shall apply during the
Option Period, except that the Base Monthly Rent for the Option Period shall be
determined as provided in Paragraph D.
D. The Base Monthly Rent for the Option Period shall be the greater
of (i) one hundred percent (100%) of the Base Monthly Rent due the last month of
the previous Lease Term, or (ii) one hundred percent (100%) of the then fair
market monthly rent determined as of the commencement of the Option Period in
question based upon like buildings with like Improvements in the San Jose area
within the boundaries of Highways 237, 101 and 880. If the parties are unable to
agree upon the fair market monthly rent for the Premises for the Option Period
in question at least seventy-five (75) days prior to the commencement of the
Option Period in question, then the fair market monthly rent shall be determined
by appraisal conducted pursuant to subparagraph E.
E. In the event it becomes necessary to determine by appraisal the
fair market rent of the Premises for the purpose of establishing the Base
Monthly Rent during the Option Period, then such fair market monthly rent shall
be determined by three (3) real estate appraisers, all of whom shall be members
of the American Institute of Real Estate Appraisers with not less than five (5)
years experience appraising real property (other than residential or
agricultural property) located in Santa Clara County, California, in accordance
with the following procedures:
(1) The party demanding an appraisal (the "'Notifying Party")
shall notify the other party (the "Non-Notifying Party") thereof by delivering a
written demand for appraisal, which demand, to be effective, must give the name,
address, and qualifications of an appraiser selected by the Notifying Party.
Within ten (10) days of receipt of said demand, the Non-Notifying Party shall
select its appraiser and notify the Notifying Party, in writing, of the name,
address, and qualifications of an appraiser selected by it. Failure by the Non-
Notifying Party to select a qualified appraiser within said ten (10) day period
shall be deemed a waiver of its right to select a second appraiser on its own
behalf and the Notifying Party shall select a second appraiser on behalf of the
Non-Notifying Party within five (5) days after the expiration of said ten (10)
day period. Within ten (10) days from the date the second appraiser shall have
been appointed, the two (2) appraisers so selected shall appoint a third
appraiser. If the two appraisers fail to select a third qualified appraiser, the
third appraiser shall be selected by the American Arbitrations Association or
if it shall refuse to perform this function, then at the request of either
Landlord or Tenant, such third appraiser shall be promptly appointed by the then
Presiding Judge of the Superior Court of the State of California for the County
of Santa Clara.
Page Two
(2) The three (3) appraisers so selected shall meet in San Jose,
California, not later than twenty (20) days following the selection of the third
appraiser. At said meeting the appraisers so selected shall attempt to
determine the fair market monthly rent of the Premises for the Option Period in
question (including the timing and amount of periodic increases).
(3) If the appraisers so selected are unable to complete their
determination in one meeting, they may continue to consult at such times as
they deem necessary for a fifteen (15) day period from the date of the first
meeting, in an attempt to have at least two (2) of them agree. If, at the
initial meeting or at any time during said fifteen (15) day period, two (2) or
more of the appraisers so selected agree on the fair market rent of the Leased
Premises, such agreement shall be determinative and binding on the parties
hereto, and the agreeing appraisers shall, in simple letter form executed by the
agreeing appraisers, forthwith notify both Landlord and Tenant of the amount set
by such agreement.
(4) If two (2) or more appraisers do not so agree within said
fifteen (15) day period, then each appraiser shall, within five (5) days after
the expiration of said fifteen (15) day period, submit his independent appraisal
in simple letter form to Landlord and Tenant stating his determination of the
fair market rent of the Premises for the Option Period in question. The parties
shall then determine the fair market rent for the Premises by determining the
average of the fair market rent set by each of the appraisers. However, if the
lowest appraisal is less than eighty-five percent (85%) of the middle appraisal
then such lowest appraisal shall be disregarded and/or if the highest appraisal
is greater than one hundred fifteen percent (115%) of the middle appraisal then
such highest appraisal shall be disregarded. If the fair market rent set by any
appraisal is so disregarded, then the average shall be determined by computing
the average set by the other appraisals that have not been disregarded.
(5) Nothing contained herein shall prevent Landlord and Tenant
from jointly selecting a single appraiser to determine the fair market rent of
the Premises, in which event the determination of such appraisal shall be
conclusively deemed the fair market rent of the Premises.
(6) Each party shall bear the fees and expenses of the appraiser
selected by or for it, and the fees and expenses of the third appraiser (or the
joint appraiser if one joint appraiser is used) shall be borne fifty percent
(50%) by Landlord and fifty percent (50%) by Tenant.
2. Early Occupancy:
---------------
A. As consideration for Tenant's performance of all obligations to
be performed by Tenant under the Lease, and upon receipt of the first month's
Base Monthly Rent, and Security Deposit totaling $26,315.38, Landlord shall
permit Tenant to use the Premises commencing with the Effective Date of This
Lease until the Interior Improvements have been completed (the "Early Occupancy
Period"). Such occupancy during the Early Occupancy Period shall be subject to
all of the terms, covenants and conditions of the Lease provided, however, that
the rent payable during the Early Occupancy Period shall be waived.
B. In the event either party shall bring any action or legal
proceeding for damages for alleged breach of any provision of this agreement, to
recover rent, to terminate tenancy of the Premises, or to enforce, protect or
establish any term or covenant of this agreement or the Lease or right of remedy
of either party, the prevailing party shall be entitled to recover as a part of
such action or proceeding, reasonable attorney's fees and court costs as may be
fixed by the court or jury.
C. In consideration of executing this Early Occupancy Agreement.
Tenant agrees to indemnify and save Landlord harmless of and from any and all
liability, damage, expense, cause of action, suits or claims or judgments
resulting from injury to person or property arising from the use of the Premises
by Tenant during the Early Occupancy Period, including loss or damage to Tenant,
its equipment, materials or supplies.
Page Three
D. Tenant agrees to cooperate with construction personnel completing
the Interior Improvements in the Premises and not cause any delay in the
completion of these improvements. It is the intent of Landlord and Tenant that
Tenant's obligation to pay the Base Monthly Rent and all Additional Rent not be
delayed by any cause or other act of Tenant and, if it is so delayed, and
provided that Landlord promptly notifies Tenant in writing of each separate
delay and the estimated period of delay, then Tenant's obligation to pay the
Base Monthly Rent and all Additional Rent shall commence as of the date it would
have commenced absent said delay caused by Tenant.
E. If Tenant conducts any of its business within the Leased Premises
during the Early Occupancy Period, Tenant shall arrange to have all utility
services, including but not limited to gas, electric, water and trash, billed
directly to Tenant for payment commencing the date upon which Tenant starts
conducting business.
3. Parking: Notwithstanding the provisions of Article 4.5 of the Lease,
-------
Tenant may markup to five (5) of its Allocated Parking Spaces for its exclusive
use at the immediate entrance to the Premises.
4. Amortization of Certain Capital Improvements: Landlord warrants that
--------------------------------------------
the interior improvements to the Premises have been constructed to code and that
the roof is in good working condition as of the Commencement Date.
5. Repair and Maintenance: Landlord, at Landlord's cost, shall repair or
----------------------
replace any failure to the electrical plumbing or HVAC systems during the first
sixty (60) days of the Lease Term. Landlord's obligation shall be limited to
those repairs or replacements in excess of $250.00 for the HVAC system.
6. Tenant's Right of First Negotiation for Additional Space:
--------------------------------------------------------
A. Landlord hereby grants to Tenant a right of first negotiation
regarding the leasing of the contiguous space to the Premises commonly known as
2390 Bering Drive, San Jose, consisting of 7,702 square feet as shown on Exhibit
"A (the Expansion Space"), on the terms contained in this Paragraph.
B. If Landlord proposes to lease the Expansion Space; (i) Landlord
shall notify Tenant in writing of the following basic business terms upon which
Landlord would be willing to lease the Expansion Space: (a) the description of
the Expansion Space; (b) the term of the lease; (c) the tenant improvements
Landlord is willing to construct or that it will require be constructed and the
contribution Landlord is willing to make to pay for such tenant improvements;
(d) the rent for the term of the lease or the formula to be used to determine
such rent; and, (e) any other material business terms Landlord elects to
specify; (ii) Tenant shall have ten (10) days (the "Negotiation Notice Period")
from receipt of Landlord's notice within which to agree to enter into good faith
negotiations with Landlord regarding Tenant's leasing of the Expansion Space,
whether on the terms set forth in Landlord's notice or otherwise. Promptly upon
Landlord's receipt of Tenant's notice, the parties shall enter into good faith
negotiations regarding Tenant leasing the Expansion Space, which negotiations
shall be completed with ten (10) days after the commencement of such
negotiations.
C. If Tenant does not indicate in writing its agreement to lease the
Expansion Space as provided for in Paragraph B above within ten (10) business
days of the commencement of such negotiations, landlord thereafter shall have
the right to offer such space to any third party, on such terms and conditions
as Landlord may elect.
D. The right granted to Tenant in this paragraph is personal to
Tenant, and may not be exercised by any assignee or sublessee of Tenant, other
than an affiliate of Tenant (i.e., subsidiaries of Tenant) and shall terminate
upon; (i) the expiration or earlier termination of the Lease; or, (ii) any
assignment y Tenant of its interest in this Lease or subletting by Tenant of
substantially all of the Premises for substantially all of the remainder of the
Lease Term other than to any affiliate of Tenant (as defined above).
Page Four
E The right granted to Tenant by this paragraph shall not be deemed
to arise on account of or in connections with the renewal or extension of the
term of any then existing lease affecting all or any portion of the Expansion
Space.
7. Alterations Required by Law: Landlord warrants the Interior
---------------------------
Improvements to the Premises comply with all applicable building codes as of the
Commencement Date of this Lease
LANDLORD: TENANT:
ORCHARD INVESTMENT COMPANY PERICOM SEMICONDUCTOR
NUMBER 510, CORPORATION
a California general partnership a California corporation
By: NELO, a California general partnership
By: /s/ David J. Brown By:/s/ Alex Hui
--------------------------------- --------------------------------
David J. Brown, General Partner Alex Hui, President
By: _________________________________
Mark T. Ziemendorf,
His Attorney in Fact
Date: 12-16-93 Date: 12/1/93
------------------------------------ -------------------------------
[LEASE FOR BUILDING C APPEARS HERE]
EXHIBIT A
EXHIBIT B
INTERIOR IMPROVEMENT AGREEMENT
------------------------------
THIS IMPROVEMENT AGREEMENT is made part of that Lease dated November 12,
1993, (the "Lease") by and between ORCHARD INVESTMENT COMPANY NUMBER 510,
("Landlord"), and PERICOM SEMICONDUCTOR CORPORATION ("Tenant") Landlord and
Tenant agree that the following terms are part of the Lease:
1. Purpose of Improvement Agreement: The purpose of this Improvement
--------------------------------
Agreement is to set forth the rights and obligations of Landlord and Tenant with
respect to the construction of Interior Improvements within the Premises prior
to the Commencement Date.
2. Definitions: As used in this Interior Improvement Agreement, the
-----------
following terms shall have the following meanings, and terms which are not
defined below, but which are defined in the Lease and which are used in this
Interior Improvement Agreement, shall have the meanings ascribed to them by the
Lease:
A. Approved Specifications: The term "Approved Specifications" shall
-----------------------
mean those specifications for the Interior Improvements to be constructed by
Landlord which are described by Exhibit "C" to the Lease.
-----------
B. Interior Improvements: The term "Interior Improvements" shall
---------------------
mean all interior improvements to be constructed by Landlord in accordance with
the Approved Specifications (e.g., HVAC equipment and distribution, transformer
and power distribution, partitions, floor, wall, and window covering, lighting
fixtures).
C. Interior Improvement Costs: The term "Interior Improvement Costs"
--------------------------
shall mean the following: (i) the total amount due pursuant to the general
construction contract entered into by Landlord to construct the Interior
Improvements; (ii) the cost of all governmental approvals required as a
condition to the construction of the Interior Improvements (including all
construction taxes imposed by the City of San Jose) in connection with the
issuance of a building permit for the Interior Improvements; (iii) all utility
connection or use fees; (iv) fees of architects or engineers for services
rendered in connection with the design and construction of the Interior
Improvements; and (v) the cost of payment and performance bonds obtained by
Landlord or Prime Contractor to assure completion of the Interior Improvement.
The parties acknowledge that the City of San Jose imposes certain taxes as a
condition to the issuance of building permits in certain circumstances,
including the "Building and Structure Construction Tax" imposed by Chapter 4.46
of the City of San Jose Municipal Code (the "BSC Tax") and the "Commercial-
Residential-Mobile Home Park Building Tax" imposed by Chapter 4.47 of the City
of San Jose Municipal Code (the "CRM Tax"). The parties further acknowledge that
the rate for these two taxes is higher for a structure designed or intended to
be used for "industrial purposes". However, the parties acknowledge and agree
that (i) an additional BSC Tax will be due upon the issuance of a building
permit for all Interior Improvements if the City of San Jose determines that the
Interior Improvements are intended for "industrial purposes" or (ii) a BSC Tax
and a CRM Tax based on the value of the Interior Improvements, plus an
additional BSC Tax and a CRM Tax based on the value of the shell, will be due if
the City of San Jose determines that the Building is intended for "commercial
purposes", and (iii) any of such taxes that must be paid in order to obtain
building permits for the Interior Improvements shall be "Interior Improvement
Costs".
D. Substantial Completion and Substantially Complete: The terms
-------------------------------------------------
"Substantial Completion" and "Substantially Complete" shall each mean the date
when all of the following have occurred with respect to the Interior
Improvements in question: (i) the construction of the Interior Improvements in
question has been substantially completed in accordance with the requirements of
this Lease; (ii) the architect responsible for preparing the plans shall have
executed a certificate or statement representing that the Interior Improvements
in question have been substantially completed in accordance with the plans and
specifications therefor; and (iii) the Building Department of the City of San
Jose has completed its final inspection of such improvements and has "signed
off" the building inspection card approving such work as complete.
Page Two
3. Construction of Interior Improvements: Tenant desires to cause certain
-------------------------------------
Interior Improvements to be constructed in the Premises and Landlord agrees to
construct such Interior Improvements in the Premises in conformance with the
Approved Specifications attached to the Lease as Exhibit C, provided, however,
---------
that Landlord shall not be required to approve or construct any Interior
Improvements that: (i) do not conform to applicable government regulations
or are disapproved by any governmental agency having jurisdiction; (ii) overload
the floors of the Premises or the Building; or (iii) are, in Landlord's
reasonable judgment, of a nature or quality inconsistent with the nature and
quality of the remainder of the Premises or the Building. Such Interior
Improvements will be constructed by Landlord in accordance with the following:
A. Improvements and Plans: On or before the Effective Date, Tenant
----------------------
shall deliver to Landlord all preliminary plans, specifications, and other
information needed by Landlord to prepare final plans, specifications, and
working drawings for the Interior Improvements Tenant desires to be constructed
in the Premises. As soon as Landlord receives such information from Tenant for
the Interior Improvements, Landlord shall cause to be prepared, as quickly as
possible, final plans, specifications and working drawings which are acceptable
to Landlord and conform to the information provided by Tenant. As soon as such
final plans, specifications and working drawings are completed, Landlord shall
deliver a copy of them to Tenant. Tenant shall not disapprove any change made by
Landlord in such final plans to the information initially submitted by Tenant
unless Tenant's use of the Leased Premises would be significantly impaired
thereby. Landlord shall not unreasonably withhold its approval of any specific
written changes submitted by Tenant to the final plans. As soon as approved by
Landlord and Tenant, which approval shall not be unreasonably withheld or
delayed, Landlord shall submit such final plans, specifications and working
drawings to all appropriate governmental agencies for approval. Immediately
after all such governmental approvals have been obtained, four (4) copies of
such plans, specifications and working drawings shall be initialed and dated by
Landlord and Tenant. The final plans, specifications and working drawings so
approved, and all change orders specifically permitted by the Lease, shall be
referred to herein as the "Approved Specifications". Tenant acknowledges that
the commencement of the Lease Term depends upon when the Interior Improvements
are Substantially Completed and that such completion depends upon Tenant's
initial submission of its requirements for such improvements and its response to
approving plans prepared by Landlord. Tenant agrees to use its best efforts to
process the preparation approval of plans for the Interior Improvements within
the schedule set forth herein.
B. Construction Contract: Landlord and Tenant agree that the
---------------------
Interior Improvements per Exhibit C shall be constructed by a general contractor
---------
selected by Landlord (hereinafter the "Prime Contractor").
C. Commencement and Completion for the Interior Improvements: As
---------------------------------------------------------
soon as the Approved Specifications have been developed as provided above, all
necessary governmental approvals have been obtained and Landlord has entered
into a general construction contract with Prime Contractor, then Landlord shall
thereafter commence construction of the Interior Improvements and shall
diligently prosecute such construction to completion, using its best efforts so
that the Interior Improvements may be Substantially Completed within seven (7)
weeks after the Effective Date (the "Scheduled Commencement Date"), but without
any representation or warranty by Landlord as to when such improvements will be
completed.
Page Three
4. Changes to Approved Specifications: Once the Approved Specifications
----------------------------------
have been approved by Landlord and Tenant, neither shall have the right to order
extra work or change orders with respect to the construction of the Interior
Improvements without the prior written consent of the other. All extra work or
change orders requested by either Landlord or Tenant shall be made in writing,
shall specify any added or reduced cost and/or construction time resulting
therefrom, and shall become effective and a part of the Approved Specifications
once approved in writing by both parties. If a change order requested by Tenant
results in an increase in the Interior Improvements Costs, Tenant shall pay the
amount of such increase caused by the change order requested by Tenant at the
time the change order is approved by both Landlord and Tenant. If a change order
results in an increase in the amount of construction time needed by Landlord to
complete the Interior Improvements, paragraph 5 hereof may apply.
5. Delay in Completion Caused by Tenant: The parties hereto acknowledge
------------------------------------
that the date on which Tenant's obligation to pay the Base Monthly Rent and the
Additional Rent would otherwise commence may be delayed because of (i) Tenant's
failure to submit necessary information to Landlord when required, (ii) Tenant's
failure to promptly review and approve the plans for the Interior Improvements,
(iii) any act by Tenant which interferes with or delays the completion of the
plans for the Interior Improvements or Landlord's construction work, (iv) change
orders requested by Tenant and approved by Landlord, or (v) special materials or
equipment ordered or specified by Tenant that cannot be obtained by Landlord at
normal cost within a reasonable period of time because of limited availability.
It is the intent of the parties hereto that the commencement of Tenant's
obligation to pay the Base Monthly Rent and all Additional Rent not be delayed
by any of such causes or by any other act of Tenant, and in the event it is so
delayed, Tenant's obligation to pay the base Monthly Rent and all Additional
Rent shall commence as of the date it would otherwise have commenced absent
delay caused by Tenant, provided that within a reasonable period of time after
learning of the occurrence of the cause of any such delay, Landlord notifies
Tenant in writing of the fact that such delay has occurred and the known or
anticipated extent of any such delay.
6. Delivery of Possession, Punch List and Acceptance Agreement: As soon
-----------------------------------------------------------
as the Interior Improvements are Substantially Completed, Landlord and Tenant
shall together walk through the Premises and inspect all Interior Improvements
so completed, using reasonable efforts to discover all uncompleted or defective
construction in the Interior Improvements. After such inspection has been
completed, each party shall sign an acceptance agreement in the form attached to
the Lease as Exhibit "D", which shall (i) include a list of all "punch list"
-----------
items which the parties agree are to be corrected by Landlord and (ii) shall
state the Commencement Date and the Base Monthly Rent. As soon as such
inspection has been completed and such acceptance agreement executed, Landlord
shall deliver possession of the Premises to Tenant. Landlord shall use
reasonable efforts to complete and/or repair such "punch list" items within
thirty (30) days after executing the acceptance agreement. Landlord shall have
no obligation to deliver possession of the Premises to Tenant until such
procedures regarding the preparation of a punch list and the execution of the
acceptance agreement have been completed. Tenant's taking possession of any part
of the Premises shall be deemed to be an acceptance by Tenant of Landlord's work
of improvement in such part as complete and in accordance with the terms of the
Lease except for the punch list items noted and latent defects that could not
reasonable have been discovered by Tenant during its inspection of the Interior
Improvements prior to completion of the acceptance agreement. Notwithstanding
anything contained herein, Tenant's obligation to pay the Base Monthly Rent and
Additional Rent shall commence as provided in the Lease, regardless of whether
Tenant completes such inspection or executes such acceptance agreement.
7. Standard of Construction and Warranty: Landlord hereby warrants that
-------------------------------------
the Interior Improvements shall be constructed substantially in accordance with
the Approved Specifications (as modified by change orders approved by Landlord
and Tenant), all Private Restrictions and all Laws, in a good and workmanlike
manner, and all materials and equipment furnished shall conform to such final
plans and shall be new and otherwise of good quality. The foregoing warranty
shall be subject to, and limited by, the following:
Page Four
A. Once Landlord is notified in writing of any breach of the above-
described warranty, Landlord shall promptly commence the cure of such breach and
complete such cure with diligence at Landlord's sole cost and expense.
B. Landlord's liability pursuant to such warranty shall be limited
to the cost of correcting the defect or other matter in question. In no event
shall Landlord be liable to Tenant for any damages or liability incurred by
Tenant as a result of such defect or other matter, including without limitation
damages resulting from any loss of business by Tenant or other consequential
damages.
C. Notwithstanding anything contained herein, Landlord shall not be
liable for any defect in design, construction, or equipment furnished which is
discovered and of which Landlord receives written notice from Tenant after the
first (1st) anniversary of the recordation of a notice of completion for the
work of improvement affected by the defect.
D. With respect to defects for which Landlord is not responsible
pursuant to subparagraph 7C, Tenant shall have the benefit of any construction
or equipment warranties existing in favor of Landlord that would assist Tenant
in correcting such defect and in discharging its obligations regarding the
repair and maintenance of the Premises. Upon request by Tenant, Landlord shall
inform Tenant of all written construction and equipment warranties existing in
favor of Landlord which affect the Interior Improvements. Landlord shall
cooperate with Tenant in enforcing such warranties and in bringing any suit that
may be necessary to enforce liability with regard to any defect for which
Landlord is not responsible pursuant to this paragraph so long as Tenant pays
all costs reasonably incurred by Landlord in so acting.
E. Landlord makes no other express or implied warranty with respect
to the design, construction or operation of the Interior Improvements except as
set forth in this paragraph.
8. Condition to Landlord's Performance: Landlord's obligations under the
-----------------------------------
Lease are subject to the satisfaction or waiver of the condition that Landlord
obtain all building permits and other governmental approvals required in order
to commence construction of the Interior Improvements by the due dates specified
in the Schedule of Performance. If such condition is not satisfied or waived
within the applicable time period, Landlord shall have the option of terminating
the Lease; provided, however, that Landlord shall have the option to extend the
time period for the satisfaction of such condition for a period of up to sixty
(60) days to enable Landlord to continue its efforts to cause such condition to
be satisfied. If any such option to extend the time for satisfaction of this
condition is exercised, (i) Landlord shall continue to use reasonable efforts to
cause the condition to be satisfied; (ii) all other time periods contained in
the Schedule of Performance which are impacted by such extension shall be
appropriately adjusted; and (iii) such extension shall not constitute a delay
caused by Tenant pursuant to paragraph 5 hereof, nor shall Landlord in any way
be penalized for exercising such option to obtain additional time to cause the
condition to be satisfied. If Landlord becomes entitled to and elects to so
terminate the Lease, the Lease shall terminate on the dated notice is so given
to Tenant. Landlord shall be under an obligation of good faith to use all
reasonable efforts to cause the condition to be satisfied.
Page Five
9. Effect of Agreement: In the event of any inconsistency between this
-------------------
Improvement Agreement and the Lease, the terms of this Improvement Agreement
shall prevail
LANDLORD: TENANT:
ORCHARD INVESTMENT COMPANY PERICOM SEMICONDUCTOR
NUMBER 510, CORPORATION
a California general partnership a California corporation
By: NELO, a California general
partnership
By: /s/ David J. Brown By: /s/ Alex Hui
--------------------------------- --------------------------------
David J. Brown, General Partner Alex Hui, President
By: _________________________________
Mark T. Ziemendorf,
His Attorney in Fact
Date: 12-16-93 Date: 12/1/93
---------------------------------- --------------------------------
SECOND AMENDMENT TO LEASE
-------------------------
THIS SECOND AMENDMENT TO LEASE (this "Amendment") is dated for reference
purposes only as July 31, 1997, by and between CARRAMERICA REALTY CORPORATION, a
Maryland corporation ("Landlord"), and PERICOM SEMICONDUCTOR CORPORATION, a
California corporation ("Tenant").
RECITALS
--------
A. Orchard Investment Company Number 510, a California general
partnership ("Orchard"), Landlord's predecessor in interest, as landlord, and
Tenant, as tenant, entered into that certain Lease (and First Addendum thereto)
dated November 29, 1993 (collectively, the "Original Lease"), in which Orchard
leased to Tenant and Tenant leased from Orchard, approximately 19,786 square
feet within that certain building which contains approximately 27,488 square
feet commonly known as 2380-2390 Bering Drive, San Jose, California ("Building
C"), as more particularly described on Exhibit A, attached to the Original Lease
---------
(the "Original Premises"). Orchard and Tenant also entered into that certain
Acceptance Agreement dated as of January 28, 1994 regarding the Original
Premises.
B. Orchard and Tenant entered into that certain First Amendment to
Lease ("First Amendment") dated February 5, 1996 pursuant to which the size of
the Original Premises was increased by 7,000 rentable square feet (the "First
Expansion Space") and the Lease Term was extended. The First Expansion Space is
located in the building containing approximately 25,888 square feet commonly
known as 2340-2350 Bering Drive, San Jose, California ("Building E"). Orchard
and Tenant also entered into that certain Interior Improvement Agreement and
Acceptance Agreement regarding the First Expansion Space, each dated February 5,
1996.
C. All of Orchard's right, title and interest in the Original Lease has
been assigned to Landlord in connection with Landlord's acquisition of the
Project.
D. Landlord intends to execute simultaneously with this amendment, a
lease termination agreement with Praegitzer Industries, Inc., an Oregon
corporation ("Praegitzer"), regarding approximately 7,702 square feet of space
(the "Second Expansion Space") in Building C (the "Praegitzer Lease Termination
Agreement"). The Second Expansion Space is described in Exhibit A attached
---------
hereto.
E. Subject to the terms and conditions set forth herein, Landlord and
Tenant now desire to amend to further amend the Original Lease to, among other
things, further increase the size of the Original Premises. The Original Lease
and the two Acceptance Agreements described above, as amended by the First
Amendment and this Amendment, are collectively hereinafter referred to as the
"Lease". Capitalized terms used in this Amendment not otherwise defined herein
shall have the meaning given such terms in the Lease.
NOW, THEREFORE, for good and valuable consideration, the adequacy of
which is hereby acknowledged, the parties hereby mutually promise, covenant and
agree as follows:
1. Effectiveness of Amendment. Notwithstanding any provision herein to the
--------------------------
contrary, the effectiveness of this Amendment shall be subject to and
conditioned upon (a) the execution of Praegitzer Lease Termination
Agreement by Praegitzer, (b) the delivery of possession of the
1
Second Expansion Space by Praegitzer to Landlord prior to the
Effective Date hereunder (as defined in Section 2 below), and (c)
Landlord's receipt and approval of Tenant's most recent audited
financial statements.
2. Premises. As of December 1, 1997 (the "Effective Date"), Section D of
--------
the Summary of Basic Lease Terms to the Lease is amended to revise the
definition of "Premises" to include the (i) Original Premises
(approximately 19,786 square feet in Building C), (ii) the First
Expansion Space (approximately 7,000 square feet in Building E), and
(iii) the Second Expansion Space (approximately 7,702 square feet in
Building C), for a total of 34,488 square feet.
3. Building. As of the Effective Date, Section F of the Summary of Basic
--------
Lease Terms to the Lease is amended to include both Building C
(approximately 27,488 square feet), and Building E (approximately
25,888 square feet).
4. Tenant's Share. As of he Effective Date, Section G of the Summary of
--------------
Basic Lease Terms to the Lease is hereby amended in its entirety to
read: 100% of Building C and 27.04% of Building E.
5. Tenant's Allocated Parking Stalls. As of the Effective Date, Section H
---------------------------------
of the Summary of Basic Lease Terms to the Lease is amended in its
entirety to read as follows: 120 parking stalls (of which Tenant may
use two (2) stalls for the installation of its generator and one (1)
stall for the new door access at the 2350 Bering portion of the
Premises.
6. Term. Section J of the Summary of basic Lease Terms to the Lease is
----
amended to provide that the of this Lease for the Second Expansion
Space shall commence on the Effective Date, and shall expire on April
30, 2001 (i.e., he same expiration date as the Original Premises and
First Expansion Space), unless sooner terminated according to the
terms of the Lease or by mutual written agreement of the parties.
7. Rent. Section K of the Summary of Basic Lease Terms to the Lease is
----
amended to add the following at the end thereof:
Commencing on the Effective Date and continuing throughout the
Lease Term, the Base Monthly Rent payable by Tenant under
Section 3 of the Lease shall be increased by the amounts set
forth below (the "Second Expansion Base Monthly Rent"):
Second Expansion Space
Period Monthly Base Rent:
------ -----------------
December 1, 1997 through November 30, 1998 $11,321.94 per month
December 1, 1997 through November 30, 1999 $11,707.04 per month
December 1, 1997 through November 30, 2000 $12,092.14 per month
December 1, 1997 through April 30, 2001 $12,477.24 per month
In addition, as of the Effective Date and throughout the remainder of
the Term, Tenant shall pay Additional Rent for the Second Expansion
Space. The Second Expansion Space Base Monthly Rent and Additional
Rent on the Second Expansion Space shall be paid at the same time
and in the same manner as the Base Monthly Rent and Additional Rent
payable in connection with the Original Premises and the First
Expansion Space.
2
8. Security Deposit. As of the Effective Date, Section M of the Lease is
----------------
amended to provide for an increase in the amount of the Security Deposit
by Tenant by $12,477 which will make the total amount of Security Deposit
held by Landlord hereunder equal to $35,945.52. Tenant shall deliver the
check for the additional $12,477 in Security Deposit along with Tenant's
delivery to Landlord of this Amendment executed by Tenant.
9. Amendment of Section 2 of First Addendum. Section 2 of the First Addendum
----------------------------------------
regarding Tenant's Early Occupancy rights is hereby amended in its
entirety to read as follows:
Commencing on October 1, 1997 and ending on the Effective Date
(the "Early Occupancy Period"), Tenant may enter the Second
Expansion Space for the express purpose of constructing the
"Interior Improvements" described in Section 12 below).
Tenant's use of the Second Expansion Space during the Early
Occupancy Period shall be subject to all of the terms and
conditions set forth in this Lease (including its obligations
regarding indemnity and insurance), except that Tenant shall
not be obligated to pay the Second Expansion Space Base
Monthly Rent or the Additional Rent payable in connection with
Second Expansion Space until the Effective Date.
10. Deletion of Section 6 of First Addendum. Section 6 of the First Addendum
---------------------------------------
regarding Tenant's Right of First Negotiation for the Second Expansion
Space is hereby deleted in its entirety.
11. Tenant Improvements. Tenant agrees and acknowledges that Landlord shall
-------------------
provide the Second Expansion Space in its "as-is" condition with existing
paint and carpet and that Tenant shall be obligated to construct all
interior improvements within the Second Expansion Space in accordance
with the terms of Exhibit B attached hereto. Landlord's only obligations
in connection with the Second Expansion Space shall be to (i) provide the
"Expansion Space Tenant Improvement Allowance" in the manner described
below, and (ii) provide the electrical, plumbing, HVAC and roof systems
for the Second Expansion Space in good working condition as of the
Effective Date. During the period commencing on October 1, 1997, and
ending on February 28, 1998, Landlord agrees to make available to Tenant
the Expansion Space Tenant Improvement Allowance in the amount of $38,510
for the construction of additional interiors (including compliance with
the Americans With Disabilities Act ("ADA"), cabling, electrical, and
security system) within the Second Expansion Space and any exterior costs
(including ADA compliance) in accordance with the provisions of Exhibit
B to this Amendment. No portion of any unused Tenant Improvement
Allowance shall not be credited against Rent payable by Tenant hereunder.
12. Repairs and Maintenance. Landlord, at Landlord's sole cost and expense,
-----------------------
shall repair or replace any damage or failure to the electrical,
plumbing, HVAC and roof systems of the Second Expansion Space for the
first three (3) months following the Effective Date; provided that such
damage was not caused by Tenant, its agents, employees or contractors or
by Tenant's failure to properly and timely perform its maintenance
obligations under this Lease.
13. Brokers. Landlord and Tenant each represents and warrants to the other
-------
that it has not dealt with any broker respecting the amendment of the
Lease. Landlord and Tenant each agrees to indemnify and hold the other
harmless from any and all claims by any broker, agent or person
claiming a commission or other form of compensation by virtue of this
Amendment as a result of such party's dealings with the party from
whom indemnification is sought.
14. Notice. Landord's new address for receipt of notices under the Lease
------
is as follows:
CarrAmerica Realty Corporation
4410 Rosewood Drive, Suite 1100
Pleasanton, California 94588
Attention: Vice President - Market Officer
with a copy to: CarrAmerica Realty Corporation
1700 Pennsylvania Ave., N.W.
Washington, D.C. 20006
Attention: Lease Adminstrator
15. Time. Time is of the essence for each and every provision of this
----
Amendment.
16. Confirmation of Lease. Except as amended by this Amendment, the
---------------------
parties hereby agree and confirm that the Lease is in full force and
effect.
IN WITNESS HEREOF, th parties hereto have executed this Amendment as
of the date first written above.
"Tenant"
PERICOM SEMICONDUCTOR CORPORATION,
a California corporation
By: /s/ Patrick B. Brennan
------------------------------------------------
Its: Vice President, Finance & Administration
--------------------------------------------
Name: Patrick B. Brennan
-------------------------------------------
"Landlord"
CARRAMERICA REALTY CORPORATION,
a Maryland corporation
By: /s/ Brian K. Fields
------------------------------------------------
Its: CFO
Name: Brian K. Fields
4
EXHIBIT A
For Lease
Building C
[MAP OF BUILDING C]
[FLOOR PLAN OF BUILDING C]
EXHIBIT A
---------
TENANT IMPROVEMENTS CONSTRUCTION AGREEMENT
------------------------------------------
This Tenant Improvements Construction Agreement ("Agreement") is part of the
Second Amendment to Lease ("Amendment") relating to certain premises
("Premises") which are more particularly described in Exhibit A of the
---------
Amendment. Capitalized terms used in this Agreement not otherwise defined
herein shall have the meaning given such terms in the Amendment. Landlord and
Tenant agree as follows with respect to the Tenant Improvements, if any, to be
installed in the Premises:
1. PLANS AND SPECIFICATIONS
------------------------
A. Preliminary Plans. Preliminary plans and specifications for
-----------------
construction of the Tenant Improvements o be installed in the
Premises shall be approved in written by Landlord prior to
commencement of construction of the Tenant Improvements. Tenant
shall deliver to Landlord plans and specifications prepared by
Tenant's architect, which architect shall be reasonably accepted
to Landlord ("Architect"). Within ten (10) business days after the
plans and specifications are received by Landlord, Landlord shall
approve or disapprove the plans and specifications. The plans and
specifications which have been approved by Landlord and Tenant are
hereinafter referred to as the "Approved Plans." Landlord's
approval of the Approved Plans shall be solely for the purposes of
authorizing construction of the Tenant Improvements, and shall not
be deemed to be an approval of the technical merits of the Approved
Plans nor a verification that such Approved Plans comply with
applicable laws, codes or regulations.
B. Termination. If this Agreement and the Lease are terminated by
-----------
Landlord pursuant to any of the provisions of this Agreement, the
parties' rights and obligations hereunder shall be discharged.
2. CONSTRUCTION OF TENANT IMPROVEMENTS.
-----------------------------------
A. Construction by Tenant. Tenant shall be responsible for the
----------------------
construction of any Tenant Improvements within the Building.
Tenant shall construct the Tenant Improvements in accordance
with the Approved Plans and in accordance with all rules,
regulation, codes, statutes, ordinances and laws of all of the
government and quasi-governmental authorities and in a good and
workmanlike manner. Landlord's sole obligation with respect to the
Tenant Improvements shall be to provide the Expansion Space Tenant
Improvements Allowance as described herein, and landlord shall
have no responsibility for the construction of the Tenant
Improvements. The Tenant Improvements also shall be constructed
with new materials of good quality and with adequately trained and
supervised labor using currently approved methods of their
particular trade.
B. Contractor. Prior to commencement of construction, Tenant shall
----------
select a general contractor which his reasonably acceptable to
Landlord ("Contractor") to construct the Tenant Improvements. The
Contractor shall be licensed by the State of California and
1
bondable. The construction contract ("Construction Contract")
for the Tenant Improvements shall be between Tenant (not
Landlord) and Contractor.
C. Construction Process. Tenant shall not commence the
--------------------
construction of any Tenant Improvements until after Landlord
and Tenant have agreed on the Approved Plans and Contractor.
Thereafter, Tenant shall be responsible for completing the
construction of the Tenant Improvements in accordance with the
Approved Plans.
D. Insurance. Prior to Contractor's entry onto the Premises to
---------
commence construction of the Tenant Improvements, Tenant shall
furnish Landlord with sufficient evidence that Tenant and
Contractor are carrying worker's compensation insurance in
statutory required amounts and general liability insurance in
an amount reasonably acceptable to Landlord naming Landlord
and Landlord's Contract Manager as additional insureds.
E. Compliance. The Tenant Improvements and all materials
----------
incorporated therein shall comply with the Approved Plans, as
may be revised from time to time pursuant to the terms of this
Agreement, and shall be free from all design, material and
workmanship defects. Tenant and Contractor shall comply with
all applicable laws, regulations, permits and other approvals
applicable to construction of the Tenant Improvements.
F. Liens. Tenant shall defend and indemnify Landlord and hold it
-----
harmless from any and all cliams, losses, demands, judgments,
settlements, costs and expenses, including reasonable
attorneys' fees, resulting from any act or omission of Tenant
or anyone claiming by, through, or under Tenant, in connection
with construction of the Tenant Improvements, for any
mechanics' lien or other lien filed against the Premises or
the Building or against other property of Landlord (whether or
not the lien is valid or enforceable). Tenant shall, at its
own expense, (i) cause any such liens to be discharged of
record, or (ii) cause to be recorded a bond in compliance with
CC section 3143, within a reasonable time, not to exceed
thirty (30) days, after the later of (a) Tenant's actual
notice of the lien or (b) the date of filing.
G. Indemnity. Tenant shall indemnify, defend (with counsel
---------
reasonably satisfactory to Landlord) and hold Landlord
harmless from and against any and all suits, claims, actions,
loss, cost or expense (including claims for workers'
compensation, attorneys' fees and costs) based on personal
injury or property damage caused in, or contract claims
(including, but not limited to claims for breach of warranty)
arising from, construction of the Tenant's Improvements,
except to the extent caused by Landlord's acts or omissions.
Tenant shall repair or replace (or, at Landlord's election,
reimburse Landlord for the cost of repairing or replacing) any
portion of the Building or item of Landlord's equipment or any
of Landlord's real or personal property damaged, lost or
destroyed in construction of the Tenant Improvements, except
to the extent the damage, loss or destruction is the result of
Landlord's acts or omissions.
3. TENANT IMPROVEMENT ALLOWANCE AND COSTS
--------------------------------------
Landlord agrees to make a available to Tenant the Expansion
Space Tenant Improvement Allowance described in the Amendment
in accordance with and subject to the following
provisions. Tenant shall submit invoices to Landlord for payment together
with evidence satisfactory to Landlord in its reasonable discretion that
the portion of the Tenant Improvements for which the invoice has been
submitted have been completed in the manner required under this
Agreement. Following Landlord's reasonable review and approval thereof,
Landlord shall reimburse Tenant for the amount of such invoice; provided
in no event shall Landlord be obligation to pay Tenant more than the
Expansion Space Tenant Improvement Allowance. Any expenses incurred by
Tenant in excess of the Expansion Space Tenant Improvement Allowance
shall be at Tenant's sole cost and expense. The Expansion Space Tenant
Improvement Allowance shall be utilized for improvements constructed
solely within the Second Expansion Space. Landlord shall not disburse to
Tenant and Tenant shall not be entitled to any remaining portion of the
Expansion Space Tenant Improvement Allowance for invoices which are
received by Landlord after February 28, 1998.
Landlord and Tenant acknowledge that the City of San Jose imposes certain
taxes as a condition to issuing building permits in certain
circumstances, including the "Building and Structure Construction Tax"
imposed by Chapter 4.46 if the City of San Jose Municipal Code (the "BSC
Tax") and the "Commercial-Residential-Mobile Home Park Building Tax"
imposed by Chapter 4.47 of the City of San Jose Municipal Code (the "CRM
Tax"). Landlord and Tenant further agree and acknowledge that the rate
for these two taxes is higher for a structure designed or intended to be
used for "industrial purposes". However, the parties acknowledge and
agree that (i) an additional BSC Tax will be due upon the issuance of a
building permit for all Tenant Improvements if the City of San Jose
determines that the Tenant Improvements are intended for "industrial
purposes", or (ii) a BSC Tax and a CRM Tax based on the value of the
Tenant Improvements, plus an additional BSC Tax and a CRM Tax based on
the value of the shell, will be due if the City of San Jose determines
that the Building is intended for "commercial purposes", and (iii) any of
such taxes that must be paid in order to obtain building permits for the
Tenant Improvements shall be paid by Tenant.
4. CHANGE REQUESTS. No material changes to the Approved Plans requested by
---------------
Tenant shall be made without Landlord's prior approval, which approval
shall not be unreasonably withheld; provided, however, that no change
request shall affect the structure of the Building. Landlord shall
approve or disapprove any change requests within five (5) business days
of receipt of a signed request from Tenant. Any material changes to the
Approved Plans shall be in writing and shall be signed by both Landlord
and Tenant prior to the change being made. Notwithstanding Landlord's
approval of any changes to the Approved Plans, The Expansion Space Tenant
Improvement Allowance shall not be increased.
5. NOTICE. Tenant shall notify Landlord at least five (5) business days
------
prior to the commencement of construction of any Tenant Improvements and
permit Landlord to post on the Premises such notices of nonresponsibility
as may be required or otherwise available to Landlord.
6. AMENDMENT COMMENCEMENT DATE. Tenant shall be responsible (and Landlord
---------------------------
shall have no responsibility) for construction of the Tenant
Improvements. The Effective Date (and Tenant's obligation to commence
paying Base Monthly Rent and Additional Rent for the Second Expansion
Space) shall not be affected or delayed by any delays in constructing the
Tenant Improvements.
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7. AS-BUILTS. Upon completion of the Tenant Improvements, Tenant shall
---------
deliver to Landlord "as-built" drawings for the completed Tenant
Improvements.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
PERICOM SEMICONDUCTOR CORPORATION,
a California corporation
By: /s/ Patrick Brennan
------------------------------------------------
Its: Vice President Finance & Administration
--------------------------------------------
Name: Patrick B. Brennan
-------------------------------------------
CARRAMERICA REALTY CORPORATION,
a Maryland corporation
By: /s/ Brian K. Fields
------------------------------------------------
Its: CFO
Name: Brian K. Fields
4
Dates Referenced Herein and Documents Incorporated by Reference
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