THIS SUBLEASE
BETWEEN AMPEX CORPORATION
AND FOGDOG, INC.
This Sublease, as of the Effective Date defined below, is entered into by
and between Ampex Corporation and Fogdog, Inc., on the following terms and
conditions:
1. DEFINITIONS:
The following terms, when capitalized, shall have the meanings set forth in this
Section:
1.1 "Building" and/or "Premises" shall refer to the structure located at 500
Broadway, Redwood City, California 94063, together with the Building Common
Areas and surrounding parking, as provided in Section 17 below.
1.2 "Building Common Areas" shall mean the Building's Elevator (Room 113 and
107), Lobby (Room 101), Main Electrical Closet Room 108, Fire Sprinkler Riser
Room 111, Corridor 126, Conference Room 127, Lunch Room 136, Training Conference
Room 137a and Training Conference Room 137b. All Room numbers refer to the
numbers assigned to the various rooms on the space plan for the Building, which
is attached hereto as Exhibit A, Subject to the provisions of Section 19 hereof,
Sublessee shall have the exclusive use of the Building Common Area described as
Conference Room 127 during the term of the Sublease and any extensions.
1.3 "Consent" shall mean the Consent to Sublease, which sets forth the terms
and conditions upon which Lessor has granted his consent to this Sublease. The
Consent was executed by the Lessor, Sublessor, and Sublessee, and is attached
hereto as Exhibit "B,"
1.4 "Effective Date" shall mean July ___, 1999.
1.5 "Exhibit(s)" shall mean the documents expressly referenced in this
Sublease, copies of which have been attached hereto and are incorporated by this
reference.
1.6 "Lessor" and/or "Landlord' shall refer to Martin/Campus Associates No. 6,
L.P. the successor in interest to Martin/Campus Associates, L.P.
1.7 "Master Lease" shall mean the Lease (Single-Tenant Building on Multi-
Building Project) by and between Martin/Campus Associates, L.P. and Ampex
Corporation, dated January 19, 1996, as modified by the First Amendment to Lease
between Martin/Campus Associates No. 6, L.P. and Ampex Corporation, Dated
September 10, 1998. A copy of the Master Lease is attached hereto as Exhibit
"C."
1.8 "Occupancy Date" shall be August 1, 1999.
1.9 "Sublease" shall mean this agreement, together with all the exhibits and
attachments referenced herein, which are incorporated by this reference.
1.10 "Subleased Premises" shall consist of approximately 31,987plus/or minus
square feet (the initial Premises to be 27,867plus/or minus square feet for
months 1 - 12 with a phase-in to 31,987 square feet
<PAGE>
beginning on the 13th month of the Sublease term), located on the second floor
of the Building, together with the Building Common Areas and Parking as provided
herein.
1.11 "Sublease Rent" shall mean the money to be paid by Sublessee to Sublessor
during the Term, and, unless separately noted, shall include both the "Sublease
Monthly Base Rent" and the "NNN" expenses, as set forth in Section 4.
1.12 "Sublease Term" shall be the duration of this Sublease, as defined in
Section 3 and, where applicable, shall include both the "Initial Term and the
"Extended Term" as those terms are defined in Section 3.
1.13 "Sublessee" shall mean Fogdog, Inc., a California corporation with its
primary place of business at 3031 Tisch Way, 100 Plaza East, San Jose, CA 95128.
1.14 "Sublessor," "Tenant" and/or "Lessee" shall mean Ampex Corporation, a
Delaware corporation with its primary place of business at 500 Broadway, Redwood
City., CA 94063.
2. SUBLEASE TERMS AND CONDITIONS
2.1 Sublessor leases to Sublessee and Sublessee leases from Sublessor the
Subleased Premises upon all of the terms, covenants and conditions contained in
this Sublease as of the Effective Date.
2.2. Except as provided in this Section 2, this Sublease is subject to the
terms and conditions of the Master Lease and the Consent.
2.3 Sublessee hereby assumes and agrees to be bound by and perform all of the
terms, conditions, covenants, and obligations of Lessee under the Master Lease
to the extent said obligations apply to the Subleased Premises and Sublessee's
use of the Building Common Areas, except as specifically set forth herein.
2.4 Sublessor hereby agrees to cause Lessor, under the Master Lease, to perform
all of the obligations of Lessor thereunder to the extent said obligations apply
to the Subleased Premises and Sublessee's use of the common areas.
2.5 Except to the extent waived or consented to in writing by the other party
or parties hereto who are affected thereby, neither of the parties hereto shall,
by renegotiation of the Master Lease, assignment, subletting, default or any
other voluntary action, avoid or seek to avoid the observance or performance of
the terms to be observed or performed hereunder by such party but, will at all
times, in good faith assist in carrying out all the terms of this Sublease and
in taking all such action as may be necessary or appropriate to protect the
rights of the other parties hereto who are affected thereby against impairment.
Nothing contained in this Section 2 or elsewhere in this Sublease shall prevent
or prohibit Sublessor from assigning its interest in this Sublease or subletting
the remainder of the Premises to any other third party, subject to the rights of
Sublessee in the Building Common Areas and parking provided in this Sublease,
and so long as such assignment or subletting is not in conflict with the terms
of this Sublease.
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2.6 The following paragraphs of the Master Lease are modified, superseded or
are not applicable to this Sublease as noted:
Section 1 - Parties (the parties are as set forth above);
Section 2 - Premises (Sublessee's obligations shall only run to the
Subleased Premises);
Section 3 - Definitions (Terms specific to the Sublease shall have the
meanings provided in this Sublease. Any other capitalized terms shall
have the meaning set forth in the Master Lease);
Section 4 - Lease Term (the Sublease has a separately defined Sublease
Term, but, in no event can it extend beyond the Term of the Master
Lease);
Section 5 - Rent (the calculation of the Sublease Rent is defined in
Section 4 below);
Section 7 - Security Deposit (Sublessee's security deposit for the
Sublease shall be as provided in Section 5 below);
Section 9 - Tenant Improvements (not applicable to this Sublease);
Section 10 - Condition of the Premises (in the first sentence, replace
the phrase 44 "completion of the Tenant Improvements" with the phrase
"the Occupancy Date," and the fourth, fifth, sixth and seventh
sentences are not applicable);
Section 35 - Brokers (this provision is superseded by Section 9
below);
Section 37 - Modification for Lender (this provision is not
applicable);
Section 38 - Parking (this provision is modified by the Section 17
below); and
Section 39 - Option to Purchase (this provision is not applicable).
2.7. Condition of Premises:
Upon the Occupancy Date, Sublessor shall deliver the Subleased Premises with the
roof, HVAC system, electrical, plumbing and lighting in good working condition.
Attached hereto as Exhibit D is a "Summary Of Building Services," which sets
forth the parties agreement regarding the various Building services and features
that will either be available to Sublessee or shared by the parties, together
with the division of the responsibilities and expenses for those services and
features.
2.8 Sublessee shall be responsible for making and paying for any and all
improvements to the Subleased Premises, subject to the prior written approvals
of both the Landlord and Sublessor. Sublessor's and Landlord's approval to such
improvements shall not be unreasonably withheld. The requirement of consent
shall be subject to and in accordance with the provisions of Section 13 of the
Master Lease.
2.9. Right of First Refusal:
2.9.1 Sublessee shall have a right of first refusal to sublease additional
space that becomes available in the Building, subject to the following terms and
conditions, if at any time during the Sublease Term, Sublessor receives an offer
or proposal from a third party (which offer or proposal is acceptable to
Sublessor) to sublease available space in the Building, then Sublessor shall
give Sublessee written notice of the basic business terms and conditions upon
which such third party is willing to sublease such available space ("Offer
Notice"). Sublessee shall have a right of first refusal to sublease such
available space (which is the subject of the
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<PAGE>
Offer Notice) on either the same terms and conditions as set forth in the Offer
Notice, or the terms and conditions of this Agreement, whichever are more
favorable to Sublessee in its sole discretion. Sublessee must exercise such
right of first refusal, if at all, by giving Sublessor written notice of such
exercise within five (5) business days after the date of Sublessor's delivery of
the Offer Notice to Sublessee. If Sublessee gives Sublessor such written notice
of its exercise of the right of first refusal within such five (5) business day
period, then Sublessor shall prepare a sublease agreement or sublease amendment,
as determined by Sublessor in its sole discretion, that incorporates or
addresses the terms and conditions of the Offer Notice therein. If Sublessee
does not give Sublessor such written notice of its exercise of the right of
first refusal within the five (5) business day period referred to above, or if,
after timely exercising such right of first refusal, Sublessor and Sublessee do
not execute a written sublease agreement or sublease amendment, as determined by
Sublessor in its sole discretion, covering the terms and conditions set forth in
the Offer Notice within five (5) business days following the date Sublessor
presents a draft of such sublease agreement or sublease amendment to Sublessee,
then Sublessee shall be deemed to have waived its right of first refusal to
sublease such available space (which was the subject of the Offer Notice) and
Sublessor may sublease such available space to a third party upon any terms and
conditions desired by Sublessor (whether the same or different than set forth in
the Offer Notice), provided, however, Sublessor may not sublease such available
space to a third party at a rental rate less than ninety percent (90%) of the
rental rate for such available space set forth in the Offer Notice without first
re-offering such space to Sublessee in accordance with the terms of this
Paragraph. If Sublessor subleases the available space to a third party after
Sublessee has rejected Sublessor's offer as stated herein (or after Sublessee
and Sublessor have been unable to enter into a sublease agreement or sublease
amendment within the time period set forth above covering such available space),
then such third party shall accept its interest in the available space free and
clear of Sublessee's rights to sublease the same. Upon the sublease of such
additional space to a third party, Sublessee shall execute and deliver to
Sublessor and/or such prospective third party tenant, any and all documents and
instruments reasonably requested by Sublessor and/or such third party tenant
terminating Sublessee's right to sublease such available space during such
prospective tenant's tenancy. If Sublessee refuses to comply with the provisions
of the immediately preceding sentence, then it shall constitute a material
default by Sublessee under this Sublease.
2.9.2 Anything in this Paragraph 2.9 to the contrary notwithstanding:
a. Sublessee's right to sublease, assign or transfer space pursuant
to this agreement or to exercise its right of first refusal is subject to the
Landlord's right of consent under Section 25 of the Master Lease, and any
sublease, assignment, transfer or exercise of the right of first refusal without
Landlord's consent shall be null and void;
b. If Sublessor determines to extend or renew any then existing
sublease of space in the Building, Sublessor shall not be obligated hereunder to
offer to sublease such space to Sublessee prior to extending or renewing the
term of the then existing sublease; and
c. Sublessor shall not be obligated hereunder to offer to sublease
such space to Sublessee prior to assigning, transferring or subletting such
space to an Affiliate of Sublessor as provided in Section 25.E of the Master
Lease.
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<PAGE>
2.9.3 The right of first refusal described in Paragraph 2.9.1 may be
transferred conveyed or assigned by Sublessee to a wholly owned subsidiary, or
parent corporation, or successor corporation of Sublessee. Otherwise, the right
of first refusal may be conveyed, transferred or assigned to a third party only
in connection with an assignment or sublease of the whole of the Subleased
Premises for the entire remainder of the Sublease Term. Any attempted transfer,
assignment or conveyance of such right of first refusal in contravention of this
provision shall be void and of no force and effect.
2.9.4 Sublessor shall have no obligation to offer to sublease available
space to Sublessee pursuant to the terms of this Paragraph 2.9 and Sublessee
shall have no rights under this Paragraph 2.9 if Sublessee is in default under
this Sublease, and if Sublessor enters into a sublease of such available space
with a third party during such period of Sublessee's default, the tenant under
such sublease shall take possession of such available space free and clear of
Sublessee's rights under this Paragraph 2.9.
3. SUBLEASE TERM:
3.1 Sublease Term:
The Sublease Term shall be for the period commencing on August 1, 1999 (the
originally scheduled Occupancy Date), and continuing through July 31, 2004 (the
"Initial Term"). In no event shall the Sublease Term extend beyond the Term of
the Master Lease.
3.2 Delivery of Possession:
Sublessor shall deliver substantial possession of the Subleased Premises to
Sublessee on or before August 1, 1999, and shall deliver full possession of the
premises and all services as provided in this Sublease within ten days
thereafter. In reliance on delivery of possession on such date, Sublessee has
made or is making arrangements to vacate its existing office space and to
obligate itself to deliver possession of those premises to another on or about
August 1, 1999. If Sublessee, with Sublessor's consent, takes possession prior
to commencement of the Sublease Term, then Sublessee shall do so subject to all
the covenants and conditions hereof and shall pay Sublease Rent for the period
ending with the commencement of the term at the same rental as that prescribed
for the first month of the term, prorated at the rate of 1/30th thereof per day.
3.3. Option to Extend.
a. Grant of Option. Sublessee shall have the option to extend the
Sublease Term for the remainder of the Master Lease term, which expires on
September 23, 2008 (the "Extended Term"), provided that both at the date of
exercise and at the date of commencement of the Extended Term, Subtenant is not
in default under this Sublease (after taking into account any applicable notice
and cure periods).
b. Exercise of Option. If Sublessee decides to extend the Sublease for
the Extended Term, then Sublessee shall give written notice to Sublessor of its
election to extend not less than nine (9) months prior to the expiration of the
Initial Tenn. Sublessee's failure to give timely notice to Sublessor of
Sublessee's election to extend shall be deemed a waiver of Sublessee's right to
extend. The terms and conditions applicable to the Extended Term shall be the
same terms and conditions contained in this Sublease except that Sublessee shall
not be entitled to any
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<PAGE>
further option to extend. The Base Rent for the Extended Term shall be as
determined in accordance with 3.3.c.
c. Determination of Sublease Base Rent During The Extended Term.
Sublessor shall provide Sublessee with the proposed fair market rental value at
least six (6) months prior to the expiration of the Initial Term. Sublessor and
Sublessee shall have thirty (30) days after Sublessor provides the proposed fair
market rental value in which to agree on the Sublease Base Rent during the
Extended Term, which shall be the fair market rental value of the Premises
during the Extended Term. The fair market rental value of the Premises during
the Extended Term shall be based on the uses of the Premises permitted under
this Sublease, the quality, size, design and location of the Premises, and the
rental value for sublease renewals or extensions of comparable size, quality and
location, but in no event shall it be less than the scheduled Base Rent for the
last month of the Initial Term. If Sublessor and Sublessee cannot agree on the
Base Rent for the Extended Term during the thirty (30) day period, Sublessee's
Option to Renew shall expire.
4. SUBLEASE RENT:
4.1 Upon execution of this Agreement, Sublessee shall pay to Sublessor as
Sublease Rent for the Subleased Premises the sum of Sixty-Nine Thousand Six
Hundred Sixty Seven and 50/100 Dollars ($69,667.50), representing the first
month's Base Rent, plus [TBD] Dollars ($.,) for all NNN expenses for the first
month (as defined below) to be billed on or after the Occupancy Date. All
payments required by this Sublease shall be made in U.S. Dollars. Thereafter,
Sublessee shall pay "Sublease Base Monthly Rent" in accordance with the
following schedule:
<TABLE>
<CAPTION>
Months 27,867 Square Feet (Finished) 4,120 Square Feet (Shell) Sublease Base
Amount per Square Foot + NNN Amount per Square Foot + NNN Monthly Rent + NNN
<S>
<C>
<C>
<C>
1-12 $2.50 $69,667.60
13-24 $2.60 $2.10 $81,106.20
25-36 $2.70 $2.20 $84,304.90
37-48 $2.80 $2.30 $87,503.60
49-60 $2.90 $2.40 $90,702.30
</TABLE>
In addition to the Base Monthly Rent, because this is a "triple-net" sublease
("NNN"), Sublessee shall pay to Sublessor monthly in proportion to the pro rata
share of the Subleased Premises to the Premises (Year I = 46.63%; Year 2-5 =
53.53%), and to the extent required to be paid on such Subleased Premises by
Sublessor, (i) the property taxes on the Sublease Premises, (ii) the maintenance
of the Sublease Premises and the Building Common Area, and the expenses
resulting therefrom, (iii) for procuring, maintaining and paying for insurance
on the Sublease Premises as provided in the Master Lease; (iv) for the one (1%)
percent management fee charged by Lessor. For those NNN items paid by
Sublessor, Sublessor shall calculate the amount due from Sublessee based on the
square footage occupied by Sublessee and invoice Sublessee. In addition,
Sublessee shall pay Sublessor for the additional shared Building Services not
referenced above on the basis set forth in Exhibit D, and for Utilities and
Services as provided in Section 14. Sublessee shall pay all invoices Net 30
days from receipt. Sublessee shall have the right to audit the books and
records of Sublessor and may request that Sublessor undertake a similar audit of
the books and records of Landlord on reasonable notice not more than once per
twelve month period concerning the basis and accuracy of any such charges.
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<PAGE>
4.2 The Sublease Rent shall be paid monthly, in advance of the first calendar
day of said month, without deductions, offset, prior notice or demand. If the
commencement date or the termination date of the Sublease occurs on a date other
than the first day or the last day, respectively, of a calendar month, then the
Sublease Rent for such partial month shall be prorated based on a thirty day
month and the prorated rent shall be payable on the Sublease commencement date
or on the first day of the calendar month in which the Sublease termination date
occurs, respectively.
5. SECURITY DEPOSIT:
Upon execution of this Agreement, Sublessee shall pay to Sublessor Three Hundred
Thousand and 00/100 Dollars ($300,000.00) as a noninterest bearing Security
Deposit. In the event Sublessee has performed all of the terms and conditions
of this Sublease during the Sublease Term, Sublessor shall return to Sublessee,
within ten (10) days after Sublessee has vacated the Subleased Premises, the
Security Deposit less any sums due and owing to Sublessor. At Sublessee's
option, the Security Deposit may consist of the following: (i) payment of One
Hundred Fifty Thousand Dollars ($150,000.00) to Sublessor by certified check as
a noninterest beating Security Deposit (the "Cash Deposit"), and (ii) an
irrevocable standby letter of credit ("L-C") upon terms reasonably satisfactory
to Sublessor in the additional amount of One Hundred Fifty Thousand Dollars
($150,000.00), At any time following the commencement of the twenty-fifth (25th)
calendar month of the Term, Sublessor shall refund to Sublessee Fifty Thousand
Dollars ($50,000) of the Cash Deposit, provided that the following conditions
have been met:
a. Sublessee is neither in default nor has it ever been in default under
the Sublease; and
b. Sublessee's consolidated financial statements for the preceding year,
using Generally Accepted Accounting Principles (GAAP), demonstrate an operating
profit before taxes; and
c. Sublessee has made a written request for such a refund, supported by
the necessary documentation described above; and
d. Sublessee shall only make one such request in any twelve-month period.
6. RIGHTS OF ACCESS AND USE:
6.1 Sublessee shall use the Subleased Premises for general offices,
administrative, marketing and sale, receiving, storage, distribution, shipping,
internet software development and e-commerce and any other legal uses permitted
in the Master Lease. Sublessor and Master Lessor must consent in writing to
other uses prior to the commencement thereof.
6.2 Both Lessor and Sublessor shall have reasonable access to the Subleased
Premises as provided in Section 17 and 19 of the Master Lease, and Sublessee
shall provide Lessor and Sublessor with copies of all keys or codes for security
systems installed by Sublessee.
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7. NOTICES:
All notices, demands, consents and approvals which may or are required to be
given by either party to the other hereunder shall be given in the manner
provided in the Master Lease at the addresses shown below. Sublessor shall
notify Sublessee of any notice of default under the Master Lease, or of any
other event of which Sublessor has actual knowledge which will impair
Sublessee's ability to conduct its normal business at the Subleased Premises, as
soon as reasonably practicable following Sublessor's receipt of notice from the
Lessor or actual knowledge of such impairment. If Sublessor elects to terminate
the Master Lease, Sublessor shall so notify Sublessee by giving at least 30 days
notice prior to the effective date of such termination.
Sublessor's Address: Sublessee's Address:
Ampex Corporation Fogdog, Inc.
500 Broadway 500 Broadway
MS 1203 Redwood City, CA 94063
Redwood City, CA 94063 Attn: Marcy Von Lossberg
Attn: Richard Jacquet Chief Financial Officer
Phone Number: (415) 367-3520 Phone Number: (408) 615-3522
cc: General Counsel cc: General Counsel
Ampex Corporation Fogdog, Inc.
500 Broadway, MS I 10 1 500 Broadway
Redwood City, CA 94063 Redwood City, CA 94063
8. BROKER FEE:
Upon execution of the Sublease, Sublessor shall pay Cornish & Carey Commercial,
a licensed real estate broker, the fees set forth in a separate written
agreement between Sublessor and Broker for brokerage services rendered by Broker
to Sublessor in this transaction.
9. BROKER REPRESENTATION:
The only Brokers involved in this Sublease are Cornish & Carey Commercial,
representing the Sublessor and Sublessee. Cornish & Carey Commercial represents
both parties and the Sublessor and Sublessee consent to such dual representation
and waive any conflict of interest arising out of such dual agency.
10. COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT:
Sublessee shall be responsible for the installation and cost of any and all
improvements, alterations or other work required on or to the Subleased Premises
or to any other portion of the Building of which the Subleased Premises are a
part, required or reasonably necessary solely because of: (1) Sublessee's use of
the Subleased Premises or any portion thereof; (2) the use by any successor
sublessee by reason of assignment or sublease by Sublessee; or (3) both,
including any improvements, alterations or other work required under the
Americans With Disabilities Act of 1990. In no event shall Sublessee be
required to make any such improvements, alterations or other work the cause of
which preceded Sublessee's occupancy of the Subleased Premises, or thereafter
which is not directly caused by or resulting from either a change in law after
the Occupancy Date or Sublessee's use of the Subleased Premises or that of its
successors, assigns, or sublessees. Compliance with the provisions of this
Section 12 shall be a condition of
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<PAGE>
Sublessor granting its consent to any assignment or sublease of all or a portion
of this Sublease and the Subleased Premises described in this Sublease.
11. COMPLIANCE WITH NONDISCRIMINATION REGULATIONS:
It is understood that it is illegal for either party to discriminate in the
operation of their businesses in the Building or in any sublease the Subleased
Premises or in the assignment, surrender or sale of the Subleased Premises to
any person because of race, color, religion, national origin, sex, sexual
orientation, marital status or disability.
12. TOXIC CONTAMINATION DISCLOSURE:
Sublessor and Sublessee each acknowledge that they have been advised that
numerous federal, state, and/or local laws, ordinances and regulations (Laws)
affect the existence and removal, storage, disposal, leakage of and
contamination by materials designated as hazardous or toxic (Hazardous
Materials). Many materials, some utilized in everyday business activities and
property maintenance, are designated as hazardous or toxic. Sublessor and
Sublessee each acknowledge that they have reviewed and understand the provisions
of Section 11 of the Master Lease. Sublessee represents and warrants as
follows: (i) that Sublessee does not use any Hazardous Materials other than
routine quantities of ordinary office supplies in the operation of its business,
(ii) that Sublessee shall provide Lessor and Sublessor with prior written notice
prior to bringing any Hazardous Materials on to the Subleased Premises, (iii)
Sublessee shall, after the Occupancy date, be responsible for the safe storage
and handling of any Hazardous Material which it brings upon or permits to be
brought upon the Subleased Premises, and (iv) Sublessee shall be responsible for
any Remediation efforts that may be required because of Sublessee's occupancy of
the Subleased Premises. Nothing herein shall be construed to impose upon
Sublessee any obligation to perform any remediation or clean-up of toxic waste
or materials unless the same was caused or required solely by materials used by
or permitted to be brought upon the Premises by Sublessee.
Sublessor represents that it is informed and believes that there are no known
Remediation issues concerning Hazardous Materials on or about the Premises,
except as follows:
a. The California Regional Water Quality Control Board noted in a November
16, 1995 Letter (the "Clearance Letter") that "chlorinated VOCs have migrated
beneath the site from one or more off-site sources," but concluded both that
these plumes were not attributable to site operations by Sublessor and that no
further actions by Sublessor were required. A copy of the Clearance Letter is
attached hereto as Exhibit E.
b. Sublessor is currently storing four low-level radioactive sources on
the Premises that were used in Sublessor's tape manufacturing business.
Sublessor makes the following representations regarding these sources: (i) that
these source have been packaged and are being stored in compliance with all
current governmental regulations, (ii) that Sublessor plans to ship these
sources to a permanent disposal facility as soon as the appropriate government
permits have been issued, and (iii) that Sublessor is solely responsible for the
storage and disposal of these sources.
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Sublessee represents that it has provided true and correct information on
Landlord's "Pre-Lease Hazardous Materials Questionnaire, a copy of which is
attached hereto as Exhibit F and is incorporated by this reference.
13. RENT ABATEMENT AND DAMAGES TO PERSONAL PROPERTY:
If Sublessor, pursuant to the Master Lease, is entitled to and receives a rent
abatement, then, to the extent such rent abatement affects the Subleased
Premises, Sublessee shall be entitled to a rent abatement by Sublessor in an
amount that the net rentable area of the Subleased Premises bears to the total
net rentable area of the Master Lease, and only to the extent any such abatement
applies to the Sublease Premises. In addition, if Sublessor is paid or credited
any amounts pursuant to the Master Lease for damage to personal property, then
Sublessor shall pass through a portion of such credit based on the same formula
set forth above. However, the amount of such credit to Sublessee shall, in no
event, exceed the amount of damage actually incurred by Sublessee.
14. UTILITIES AND SERVICES:
Sublessee shall be responsible for providing and paying for all utilities and
services for the Subleased Premises. Sublessor shall continue to be the billing
customer for the Building, and will occupy plus/or minus 7,247 square feet
(includes the legal offices, lab and common area on the first floor). Sublessor
shall deduct from the monthly PG&E and water bills a flat fee of $1,431.00 per
month (based on its present use of and charges for the utilities and services)
(the "Flat Fee") and pass through the remainder of the monthly charges to
Sublessee for payment. Sublessor's base year utility charges shall increase in
proportion to any increases passed-through by the utility companies. If there
should be a substantial change in the occupants of the building, or if Room 124
should ever be built-out, or if there is any valid, additional assignment,
sublease or transfer of any portion of the Building, then the parties shall
renegotiate in good faith the arrangements for sharing of the expenses of the
utilities and services. The Flat Fee is based on the actual bills paid by
Sublessor for the entire Premises from November 1998 through April 1999.
Sublessor shall recalculate the Flat Fee as of the Occupancy Date, taking into
account all the monthly charges incurred prior to the Occupancy Date, and the
adjusted Flat Fee shall apply for the first 6 months of the Sublease Term.
Sublessor and Sublessee agree to reevaluate in good faith the apportionment of
the charges for all utilities and services after six months of occupancy, after
twelve months of occupancy, and every twelve months thereafter.
15. SIGNAGE:
Sublessee shall be allowed to install, at its own expense, exterior signage
solely on to the west and north sides of the Building (facing Highway 101),
subject to written consent and approvals from Lessor, Sublessor and the City of
Redwood City. In addition, with the prior written approval of both Sublessor
and Lessor, Sublessee shall also be given a prorata portion of the monument sign
in front of the main lobby. Sublessee shall also be allowed to place an
interior sign in the Lobby of the Building at a location to be mutually
determined in writing prior to the Occupancy Date. Sublessor shall not
unreasonably withhold the approvals required by this Section.
16. ASSIGNMENT AND SUBLEASING:
Any assignment and subleasing of the Premises by Sublessee shall be subject to
the provisions of the Master Lease ("Sublet"), subject to the prior written
approval of both Lessor and Sublessor,
10
<PAGE>
and such right shall be personal to Sublessee. If Sublessee should desire to
assign its entire interest in the Sublease Premises to a third party, then
Sublessee shall give Sublessor notice in writing of its desire to do so. Within
thirty (30) days from receipt of that notice, Sublessor may elect to terminate
the Sublease. In such event, the parties shall negotiate in good faith the date
of such termination, and Sublessee shall be released from all further liability
under either the Master Lease or the Sublease (except to the extent that any
provisions thereof expressly survive termination). If Lessor and Sublessor
consent to the Sublet, Sublessee may thereafter enter into a valid Sublet of the
Sublease Premises or a portion thereof, upon the terms and conditions and with
the proposed Subtenant set forth in the information furnished by Sublessee to
Lessor and Sublessor, subject, however, to the condition that fifty (50%) of any
excess of the Subrent over the Sublease Rent required to be paid by Sublessee
under this Sublease, less reasonable attorneys' fees, leasing commissions,
tenant improvements and other reasonable subletting costs paid by Tenant on the
Sublet, shall be paid to Sublessor.
17. PARKING:
Sublessee shall be entitled to fifty (50%) percent of the parking spaces
allocated to Sublessor for the Building.
18. ESTOPPEL CERTIFICATES:
Subtenant shall, upon written request from either Sublessor or Lessor, provide
the estoppel certificates and financial statement required by Section 30 of the
Master Lease, upon the terms and conditions provided therein. The failure to
provide such documents in a timely manner shall have the consequences set forth
in the Master Lease.
19. RESERVATION OF RIGHTS BY SUBLESSOR:
Notwithstanding anything else in this Agreement, Sublessor may by written notice
to Sublessee, elect in its sole discretion to increase or decrease the Building
Common Area from time to time during the Term for any reason whatsoever, so long
as Sublessor does not unreasonably interfere with Sublessee's ingress to or
egress from the Building. If Sublessor should remove the Lunch Room 136 from
the Common Area, then Sublessor shall provide sixty (60) days prior written
notice, and shall provide Sublessee with a onetime $10,000 rent credit.
11
<PAGE>
20. SUBORDINATION AND ATTORNMENT
Sublessor shall provide a copy of any request received by Sublessor pursuant to
Section 27 of the Master Lease requiring Sublessor to execute an agreement
providing for the subordination of the Master Lease. Sublessee acknowledges
that Sublessor has executed a certain Subordination, Nondisturbance and
Attornment Agreement dated December 16, 1997 whereby Sublessor has agreed to
subordinate the Master Lease to the lien of the deed of trust granted in favor
of Guaranty Federal Bank.
Sublessor: Ampex Corporation
By: /s/ Richard J. Jacquet Date:
------------------------------------------------- ------------------
Richard J. Jacquet, Vice President Administration
Sublessee: Fogdog, Inc.
By: /s/ Marcy von Lossberg Date:
------------------------------------------------- ------------------
Marcy Von Lossberg, CIO
12
<PAGE>
EXHIBIT C -- PART ONE
LEASE
-----
(SINGLE-TENANT BUILDING ON MULTI-BUILDING PROJECT)
by and between
MARTIN/CAMPUS ASSOCIATES, L.P.
("Landlord")
and
AMPEX CORPORATION
("Tenant")
For the approximately 60,000 SF Premises
to be constructed on Broadway, in Redwood City, CA
<PAGE>
LEASE SUMMARY
-------------
Lease Date: January 19, 1996
Landlord: Martin/Campus Associates, L.P.
Address of Landlord: c/o The Martin Group
100 Bush Street, 26th Floor
San Francisco, CA 94104
Tenant: Ampex Corporation
Address of Tenant: 401 Broadway, MS 1-40
Redwood City, CA 94063
Contact: John Dods
Director of Facilities & Administration
Telephone: (415)367-2115
Building Location: Broadway, Redwood City, CA
Approximate Building Area: 60,000 square feet
Term: Ten (10) years
Monthly Rent (net): (see paragraph 5.A.)
Security Deposit: (see paragraph 7)
<PAGE>
TABLE OF CONTENTS
-----------------
1. Parties 1
2. Premises 1
3. Definitions 3
5. Rent 5
6. Late payment Charges 6
7. Security Deposit 7
8. Holding Over 9
9. Tenant Improvements 9
10. Condition of Premises 9
11. Use of the Premises 10
12. Quiet Enjoyment 13
13. Alterations 14
14. Surrender of the Premises 14
15. Real Property Taxes 15
16. Utilities and Services 16
17. Repair and Maintenance 16
18. Liens 18
19. Landlord's Right to Enter the Premises 18
20. Signs 18
21. Insurance 19
22. Waiver of Subrogation 22
23. Damage or Destruction 22
24. Condemnation 24
<PAGE>
25. Assignment and Subletting 25
26. Default 26
27. Subordination 28
28. Notices 29
29. Attorneys' Fees 29
30. Estoppel Certificates 29
31. Transfer of the Premises by Landlord 30
32. Landlord's Right to Perform Tenant's Covenants 30
33. Tenant's Remedy 30
34. Mortgagee Protection 31
35. Brokers 31
36. Acceptance 31
37. Modifications for Lender 31
38. Parking 31
39. Option to purchase 32
40. General 33
<PAGE>
TABLE OF EXHIBITS
-----------------
EXHIBIT A The Premises and the Property
EXHIBIT A-1 The Project
EXHIBIT B Work Letter Agreement
EXHIBIT C Commencement Date Memorandum
EXHIBIT D Financial Tests Calculations
EXHIBIT E Form of Letter of Credit Form of Confidentiality Agreement
EXHIBIT F
<PAGE>
LEASE
-----
(SINGLE-TENANT BUILDING ON MULTI-BUILDING PROJECT)
1. Parties.
-------
THIS LEASE (the "Lease") dated January 19, 1996, is entered into by and
between Martin/Campus Associates, L.P., a California limited partnership
("Landlord), whose address is c/o The Martin Group, 100 Bush Street, San
Francisco, CA 94104, and Ampex Corporation, a Delaware corporation ("Tenant"),
whose address is 401 Broadway, Redwood City, CA 94063.
2. Premises.
--------
A. Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord that certain building to be constructed by Landlord, consisting of
approximately 60,000 square feet (the "Building'"), in the City of Redwood City,
San Mateo County, California, at the approximate location shown on EXHIBIT A,
---------
together with the exclusive use of the Outside Area described in paragraph 3.H.,
as more particularly shown on EXHIBIT A (collectively, the "Premises'). The
---------
exact location of the Building shall be agreed upon by Landlord and Tenant
within thirty (30) days after the date that the conditions set forth in
paragraph 2.C. have been satisfied. If, however, Landlord constructs any
buildings on the Property for occupancy by any tenant(s) other than Tenant, upon
completion of such building(s) the Outside Area shall be converted to common
area, available for the non-exclusive use by Tenant and any other tenant(s) of
the Property. In such event, Landlord shall have exclusive control of the
Outside Area and may at any time temporarily close any part thereof, exclude and
restrain anyone from any part thereof, except the bona fide customers, employees
and invitees of Tenant who use the Outside Area in accordance with the
reasonable rules and regulations as Landlord may from time to time promulgate,
and may, at Landlord's election, renovate, reconstruct and/or improve the
Outside Area and change the configuration or location of the Outside Area. In
exercising any such rights, Landlord shall not unreasonably disrupt Tenant's
business. As used herein, the term "Property" shall mean the real property
shown on EXHIBIT A consisting of approximately nine and 31/100ths (9.3 1) acres,
---------
upon which are located, as of the date of this Lease, three (3) buildings
consisting of a total building area of approximately 132,150 square feet.
B. Landlord shall notify Tenant of Landlord's intent to proceed with
the preparation of plans and specifications for the Building Shell no sooner
than January 1, 1997 but no later than forty-eight (48) months from the date
that close of escrow occurs for the purchase of the Project (defined in
paragraph 3.I.) by Landlord from Tenant ("Close of Escrow"). Subject to
satisfaction of the conditions set forth in paragraph 2.C., Tenant may require
Landlord to commence preparation of plans and specifications for the Building
Shell no sooner than the date the financial conditions set forth in paragraph 7
of the Premises 1 Lease have been satisfied by Tenant but no later than forty-
eight (48) months from the Close of Escrow. Within sixty (60) days after the
date notice is delivered by Landlord or Tenant as provided herein, Landlord
shall provide Tenant with 4 schedule specifying Landlord's projected dates for
securing financing, obtaining necessary permits and approvals, preparing plans
for the Building Shell and the Tenant Improvements, obtaining construction bids,
commencing construction of the Building Shell and
<PAGE>
the Tenant Improvements, and completing construction of the Building Shell and
the Tenant Improvements. The schedule shall provide for commencement of
construction of the Building Shell within nine (9) months from the date notice
is delivered by Landlord or Tenant as provided herein, and completion of the
Building Shell and the Tenant Improvements within twelve (12) months from
commencement of construction of the Building Shell, which dates the parties
agree shall be subject to extension for delays caused by force majeure. Upon
satisfaction of the conditions set forth in paragraphs 2.C.(i) through 2.C.(iv),
Landlord shall complete the plans and specifications for the Building Shell and
the Tenant Improvements, diligently pursue all necessary building permits for
construction, commence construction of the Building Shell and the Tenant
Improvements and diligently pursue construction of the Building Shell and the
Tenant Improvements to completion. If, however, after notice by Landlord or
Tenant as permitted herein, either of the conditions set forth in paragraph
2.C.(i) or 2.C.(ii) are not satisfied by Tenant, this Lease and all obligations
of Landlord and Tenant hereunder shall terminate and Landlord shall refund to
Tenant the Monthly Rent and the Security Deposit if previously paid to Landlord
by Tenant.
C. Landlord's obligation to construct the Building shall be subject
to the satisfaction of all-the following conditions:
(i) Tenant is not in default under the lease between Landlord
and Tenant dated January 16, 1996 for the premises located at 1228 Douglas
Avenue, 1250 Douglas Avenue and 550 Broadway, Redwood City, California (the
"Premises 1 Lease") or under the lease between Landlord and Tenant dated January
16, 1996 for the premises located at 2945 Bay Road, Redwood City, California
(the "Premises 2 Lease"), either as of the date that notice is delivered
pursuant to paragraph 2.B, or as of the date Landlord is scheduled to commence
construction of the Building;
(ii) Tenant deposits with Landlord in cash, no later than thirty
(30) days after the date that notice is delivered by Landlord or Tenant pursuant
to paragraph 2.B., the estimated Monthly Rent due for the first month of the
Term plus the estimated Security Deposit required pursuant to paragraph 7, At
Tenant's election, the Security Deposit may be delivered to Landlord in the form
of an L-C (defined below) provided that the L-C satisfies, the requirements of
paragraph 7;
(iii) Landlord obtains all necessary permits and approvals from
the City of Redwood City and any other governmental agency with jurisdiction on
terms and conditions acceptable to Landlord in Landlord's reasonable discretion.
Without limiting Landlord's other reasonable grounds for declining to obtain any
necessary permits and approvals, it shall be deemed reasonable for Landlord not
to obtain permits and approvals because of conditions imposed by the applicable
governmental agency which require Landlord to improve or modify property outside
of the Premises, to pay any material traffic mitigation fees or pay for any
material traffic mitigation measures, or to pay any governmental fees or
surcharges not currently in effect and materially in excess of the fees or
charges in effect as of the date of this Lease, provided that Tenant may agree
to pay any such excess costs, in which case Landlord shall not be permitted to
decline to obtain such permits because of such extra costs; and
2
<PAGE>
(iv) Landlord obtains one hundred percent (100%) construction
financing at commercially viable rates with no requirement for personal or
corporate guaranties of any kind; and
(v) the Total Development Cost (defined below) shall not exceed
$90.00 per square foot (adjusted for inflation based upon increases in the Index
from the date of this Lease until the date notice is provided by Landlord or
Tenant pursuant to paragraph 2.B.) unless otherwise approved by Tenant in
writing, nor shall the Total Development Cost exceed $100.00 per square foot
(adjusted for inflation based upon increases in the Index from the date of this
Lease until the date notice is provided by Landlord or Tenant pursuant to
paragraph 2.B.) unless otherwise approved by Landlord and Tenant in writing.
Landlord acknowledges that Tenant has an interest in proceeding to construction
as expeditiously as possible and Landlord shall use diligent efforts to satisfy
the conditions set forth in paragraphs 2.C.(iii) and 2.C.(iv).
3. Definitions.
-----------
The following terms shall have the following meanings in this Lease:
A. Alterations. Any alterations, additions or improvements made in,
-----------
on or about the Premises after the Commencement Date, including, but not limited
to, lighting, heating, ventilating, air conditioning, electrical, hard wall
partitioning; drapery and carpentry installations.
B. Commencement Date. The Commencement Date of this Lease shall be
-----------------
the first day of the Term determined in accordance with paragraph 4.
C. HVAC. Heating, ventilating and air conditioning.
----
D. Imputed Rent. The monthly rent due under the Premises I Lease
------------
before, deduction of any improvement credits and/or interest credits to which
Tenant may be entitled under paragraph 5.C, of the Premises 1 Lease.
E. Interest Rate. Twelve percent (12%) per annum, however, in no
-------------
event to exceed the maximum rate of interest permitted by law.
F. Landlord's Agents. Landlord's authorized agents, partners,
-----------------
subsidiaries, directors, officers, and employees.
G. Monthly Rent. The rent payable pursuant to paragraph 5A., as
------------
adjusted from time to time pursuant to the terms of this Lease.
H. Outside Area. All areas and facilities within the Property,
------------
exclusive of the Building and the buildings located at 1228 Douglas Avenue, 1250
Douglas Avenue and 550 Broadway, including without limitation, sidewalks,
landscaped areas, service areas, trash disposal facilities, and similar areas
and facilities, subject to the reasonable rules and regulations
3
<PAGE>
and changes therein from time to time promulgated by Landlord governing the use
of the Outside Area.
I. Project. That certain real property shown on EXHIBIT A-1
------- -----------
consisting of approximately 32.86 acres, upon which, as of the date of this
Lease, are located ten (10) buildings consisting of a total building square
footage of approximately 545,658 square feet.
J. Real Property Taxes. Any form of assessment, license, fee, rent
-------------------
tax, levy, penalty (if a result of Tenant's delinquency), or tax (other than net
income, estate, successions inheritance, transfer or franchise taxes), imposed
by any authority having the direct or indirect power to tax, or by any city,
county, state or federal government or any improvement or other district or
division thereof, whether such tax is: (i) determined by the area of the
Property or any part thereof or the rent and other sums payable hereunder by
Tenant or by other tenants, including, but not limited to, any gross income or
excise tax levied by any of the foregoing authorities with respect to receipt of
such rent or other sums due under this Lease; (ii) upon any legal or equitable
interest of Landlord in the Property or any part thereof; (iii) upon this
transaction or any document to which Tenant is a party creating or transferring
any interest in the Property; (iv) levied or assessed in lieu of, in
substitution for, or in addition to, existing or additional taxes against the
Property whether or not now customary or within the contemplation of the
parties; or (v) surcharged against the parking area.
K. Rent. Monthly Rent defined in paragraph 3.G. plus the Additional
----
Rent defined in paragraph 5.D.
L. Security Deposit. That amount paid by Tenant pursuant to
----------------
paragraph 7.
M. Sublet. Any transfer, sublet, assignment, license or concession
------
agreement, change of ownership, mortgage, or hypothecation of this Lease or the
Tenant's interest in the Lease or in and to all or a portion of the Premises.
N. Subrent. Any consideration of any kind received, or to be
-------
received, by Tenant from a subtenant if such sums are related to Tenant's
interest in, this Lease or in the Premises, including, but not limited to, bonus
money and payments (in excess of book value) for Tenant's assets including its
trade fixtures, equipment and other personal property, goodwill, general
intangibles, and any capital stock or other equity ownership of Tenant.
O. Subtenant. The person or entity with whom a Sublet agreement is
---------
proposed to be or is made.
P. Tenant Improvements. Those certain improvements to the Premises
-------------------
to be constructed by Landlord pursuant to EXHIBIT B.
---------
Q. Tenant's Personal Property. Tenant's trade fixtures, furniture,
--------------------------
equipment and other personal property in the Premises.
R. Term. The term of this Lease set forth in paragraph 4.
----
4
<PAGE>
4. Lease Term. The Term shall be a period of approximately eight (8) to
----------
ten (10) years, commencing on the date (the "Commencement Date") that both the
Building Shell and the Tenant Improvements described in EXHIBIT B have been
---------
substantially completed in accordance with their respective plans and
specifications and the building inspector for the City of Redwood City has
signed off on the building permits issued for such improvements. The actual Term
of this Lease shall be determined as follows: if the Term of this Lease
commences in 1997, 1998 or 1999, the Term shall be ten (10) years. If the Term
of this Lease commences in 2000, the Term shall be nine (9) years; and if the
Term of this Lease commences in 2001, the Term shall be eight (8) years. Upon
establishment of the actual Commencement Date, Landlord and Tenant shall execute
a memorandum, in the form set forth in EXHIBIT C, confirming the Commencement
---------
Date and the actual Term of this Lease and stating the actual square footage of
the Building based on the measurements provided by Landlord's architect.
5. Rent.
----
A. Monthly Rent. Tenant shall pay to Landlord, in lawful money of
------------
the United States, for each calendar month of the Term, Monthly Rent in an
amount to be determined as set forth in paragraph 5.B., subject to adjustment as
provided in paragraph 5.C. below and paragraph 5 of the Work Letter Agreement.
Monthly Rent shall be paid in advance, on the first day of each calendar month,
without abatement, deduction, claim, offset, prior notice or demand, except that
the estimated Monthly Rent due for the first month of the Term shall be paid by
Tenant as provided in paragraph 2.C. Once the actual Monthly Rent has been
determined, the parties shall amend this Lease to set forth the Monthly Rent due
hereunder for the first twelve (12) months of the Term and if the actual Monthly
Rent exceeds the estimated Monthly Rent paid by Tenant for the first month of
the Term, Tenant shall pay the difference to Landlord together with the Monthly
Rent due for the second month of Term. If the actual Monthly Rent is less than
the estimated Monthly Rent paid by Tenant, the excess shall be credited against
the Monthly Rent due for the second month of the Term or, at Tenant's option,
reimbursed to Tenant by Landlord within ten (10) business days after
determination of the actual Monthly Rent. In addition to the Monthly Rent,
Tenant shall pay Landlord monthly the management fee described in paragraph 5.D.
and the monthly cost of insurance premiums required pursuant to paragraph 21.C.
B. Calculation of Monthly Rent. The Monthly Rent payable by Tenant
---------------------------
hereunder for the first twelve (12) months of the Term shall be calculated by
applying a fourteen percent (14%) return to the Total Development Cost for the
Building. For example, if the Total Development Cost were $90.00 per square
foot, and the area of the Building were 60,000 square feet, the Total
Development Cost would be $5,400,000.00. Applying a fourteen percent (14%)
return to this amount would result in an annual net rent of $756,000.00, payable
in monthly installments of $63,000 each. As used herein, the term "Total
Development Cost" shall mean all costs of construction for the Building Shell
and the Tenant improvements and all indirect costs (including, but not limited
to, architectural and engineering fees and costs, governmental and permit fees,
all financing costs including loan fees, leasing commission, transaction costs
and interest during construction, and a five percent (5%) fee to Landlord as
developer on development costs). The Total Development Cost shall not include,
however, Landlord's cost of acquiring the land or the value of the land or any
Tenant Improvement costs paid for with the
5
<PAGE>
Additional Allowance described in paragraph 6(a) of the Work Letter Agreement
attached as EXHIBIT B.
---------
C. Adjustments to Monthly Rent. The Monthly Rent shall be adjusted
---------------------------
as of the first day of the 13th month of the Term and every twelve (12) months
thereafter (each, an "Adjustment Date") by the percentage increase in the
Consumer Price Index, All Urban Consumers, All Items, published by the U.S.
Department of Labor, Bureau of Labor Statistics for the San Francisco-Oakland-
San Jose Metropolitan Area (1982-84=100) (the "Index"). The Index published for
the month immediately preceding each Adjustment Date (the "Current Index) shall
be compared with the Index published for the month immediately preceding the
Commencement Date (the "Beginning Index"), to determine the percentage increase
in the Monthly Rent for the next twelve (12) months of the Term. The Monthly
Rent for any such period (the "Current Monthly Rent") shall be determined by
multiplying the Monthly Rent for the first twelve (12) months of the Term
("Initial Monthly Rent") by the ratio of the Current Index to the Beginning
Index; provided, however, that in no event shall the Monthly Rent for any year
increase by more than three percent (3%) over the Monthly Rent for the preceding
year (the "Previous Monthly Rent"). Thus, the Current Monthly Rent shall be
determined by the following calculations: Current Monthly Rent = Initial Monthly
Rent x (Current Index / Beginning Index) provided that Current Monthly Rent
Previous Monthly Rent x 103%. If no Index is published for either of the months
set forth above, the Index for the next preceding month shall be used. If the
base of the Index is revised, the Index increases, if any, shall be calculated
with a common base year. If the Index is discontinued or revised, such other
governmental index with which it is replaced, with appropriate conversion
factors, shall be the basis of the adjustment.
D. Management Fee. Tenant shall pay to Landlord monthly, as
--------------
Additional Rent, a management fee equal to one percent (1%) of the Monthly Rent.
E. Additional Rent. All monies required to be paid by Tenant under
---------------
this Lease, including, without limitation, Real Property Taxes pursuant to
paragraph 15, insurance premiums pursuant to paragraph 21, the management fee
pursuant to paragraph 5.D., and any portion of the Additional Allowance utilized
by Tenant pursuant to paragraph 5 of the Work Letter Agreement, shall be deemed
Additional Rent.
F. Prorations. If the Commencement Date is not the first (1st) day
----------
of a month, or if the termination date of this. Lease is not the last day of a
month, a prorated installment of Monthly Rent based on a 30-day month shall be
paid for the fractional month during which the Lease commences or terminates.
6. Late Payment Charges.
--------------------
Tenant acknowledges that late payment by Tenant to Landlord of Rent
and other charges provided for under this Lease will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of such costs being
extremely difficult or impracticable to fix. Therefore, if any installment of
Rent or any other charge due from Tenant is not received by Landlord within ten
(10) days after the date such Rent or other charge is due hereunder, Tenant
shall pay to Landlord an additional sum equal to five percent (5%) of the amount
overdue as a late charge for every month or portion thereof that the Rent or
other charges remain unpaid. The
6
<PAGE>
parties agree that this late charge represents a fair and reasonable estimate of
the costs that Landlord will incur by reason of the late payment by Tenant.
Initials:
--------
----------------------------------- -------------------------------------
Landlord Tenant-
7. Security Deposit.
----------------
Tenant shall deposit with Landlord an amount equal to twelve (12)
months of the estimated Monthly Rent (determined pursuant to paragraph 5.B.) as
the Security Deposit for the full and faithful performance of every provision of
this Lease to be performed by Tenant Upon determination of the actual Monthly
Rent, the amount of the Security Deposit shall be increased or decreased as
appropriate, to equal twelve (12) months of the actual Monthly Rent payable
hereunder. If the actual amount of the Security Deposit exceeds the estimated
amount paid by Tenant, the difference shall be paid by Tenant on or before the
Commencement Date. If, however, the actual amount of the Security Deposit is
less than the estimated amount paid by Tenant, the excess shall be refunded to
Tenant on or before the Commencement Date. At Tenant's option, the Security
Deposit may be in the form of an irrevocable standby letter of credit ("L-C").
At any time following the commencement of the thirteenth (13th) month of the
Term, the Security Deposit shall be reduced to an amount equal to nine (9)
months of the then scheduled Monthly Rent (taking into account any increases in
Monthly Rent provided for in paragraph 5.C.) provided that Tenant is not then in
default under this Lease and all of the following conditions have been met for
the two (2) calendar years immediately prior to such date:
A. Tenant has posted two (2) consecutive calendar years of profit, as
determined by audited financial statements prepared by independent certified
public accountants.
B. Tenant's ratio of current assets to current liabilities is 1.5 or
higher.
C. Tenant's earnings before interest expense, taxes, depreciation and
total amortization (EBITDA) as a percent of Tenant's' revenues is fourteen
percent (14%) or higher. "Earnings" may include interest income and audited
ongoing royalty income (but shall exclude one-time royalty payments), and shall
include appropriate Deductions for Imputed Rent.
D. The ratio of Tenant's earnings before interest expense, taxes,
depreciation and total amortization (EBITDA) minus capital expenditures (free
cash flow) to Tenant's interest expense is 3.0 or higher. "Earnings" may include
interest income and audited ongoing royalty income (but shall exclude one-time
royalty payments), and shall include appropriate deductions for Imputed Rent.
Capital expenditures excludes the cost of tenant improvements and capital
improvements (less any Landlord reimbursements) made by Tenant under the
Premises 1 Lease. A sample calculation is attached as EXHIBIT D to this
---------
Lease.
At any time following the commencement of the twenty-fifth (25th) month of the
Term, if the Security Deposit has been previously reduced to nine (9) months of
the then scheduled Monthly
7
<PAGE>
Rent, then the Security Deposit shall be further reduced to an amount equal to
six (6) months of the then scheduled Monthly Rent (taking into account any
increases in Monthly Rent provided for in paragraph 5.C.) provided that Tenant
is not then in default under this Lease and all of the conditions set forth in
items A., B., C., and D. above have been met for the calendar year immediately
prior to such date. At any time following the commencement of the thirty-seventh
(37th) month of the Term, if the Security Deposit has been previously reduced to
six (6) months of the then scheduled Monthly Rent the Security Deposit shall be
further reduced to an amount equal to five (5) months of the then scheduled
Monthly Rent (taking into account any increases in Monthly Rent provided for in
paragraph 5.C.) provided that Tenant is not then in default under this Lease and
all of the conditions set forth in items A., B., C., and D. above have been met
for the calendar year immediately prior to such date. At any time following the
commencement of the forty-ninth (49th) month of the Term, if the Security
Deposit has been previously reduced to five (5) months of the then scheduled
Monthly Rent, the Security Deposit shall be further reduced to an amount equal
to four (4) months of the then scheduled Monthly Rent (taking into account, any
increases in Monthly Rent provided for in paragraph 5.C.) provided that Tenant
is not then in default under this Lease and all of the conditions set forth in
items A., B., C., and D. above have been met for the calendar year immediately
prior to such date. When and if the Security Deposit is reduced to an amount
equal to four (4) months of the then scheduled Monthly Rent, the Security
Deposit held by Landlord shall remain at that amount for the balance of the
Term.
The reduced Security Deposit shall be paid by Tenant in cash or in the
form of an L-C. The balance of any cash deposit then held by Landlord shall be
returned to Tenant within ten (10) business days after notice to Landlord of
Tenant's election.
If Tenant defaults with respect to any provision of this Lease, after
the expiration of any applicable cure or grace periods expressly provided in
this Lease, Landlord may apply all or any part of the Security Deposit for the
payment of any rent or other sum in default, the repair of such damage to the
Premises or the payment of any other amount which Landlord may spend or become
obligated to spend by reason of Tenant's default or to compensate Landlord for
any other loss or damage which Landlord may suffer by reason of Tenant's default
to the full extent permitted by law. If any portion of a cash Security Deposit
is so applied, or any portion of an L-C posted as the Security Deposit, as
applicable, is drawn by Landlord for such purposes, Tenant shall, within ten
(10) business days after written demand therefor, either deposit cash with
Landlord in an amount sufficient to restore the Security Deposit to its original
amount or deposit a replacement L-C with Landlord in the amount of the original
L-C. If Tenant is not otherwise in default, the Security Deposit or any balance
thereof shall be returned to Tenant within thirty (30) days of termination of
the Lease.
If at any time Tenant elects to deposit an L-C as the Security
Deposit, the L-C shall be issued by a bank mutually acceptable to Landlord and
Tenant, shall be issued for a term of at least twelve (12) months, and shall be
substantially in the form attached as EXHIBIT E. At the end of each twelve (12)
---------
month term of the L-C, Tenant shall either replace the expiring L-C with an L-C
in an amount equal to the original L-C or renew the expiring L-C, in any event
no later than thirty (30) days prior to the expiration of the term of the L-C.
If Tenant fails to deposit a replacement L-C or renew the expiring L-C, Landlord
shall have the right to draw upon the expiring L-C for the full amount thereof.
Drawing upon the L-C shall be conditioned only upon
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the presentation to the issuer of the L-C of a certified statement executed by a
general partner of Landlord that (i) Tenant is in default under the Lease and
Landlord is exercising its right to draw upon so much of the L-C as is necessary
to cure Tenant's default, or (ii) Tenant has not renewed or replaced an expiring
L-C as required by this Lease and Landlord is authorized to draw upon the L-C
prior to its expiration. The L-C shall not be mortgaged, assigned or encumbered
in any manner whatsoever by Tenant without the prior written consent of
Landlord. The use, application or retention of the L-C, or any portion thereof,
by Landlord shall not prevent Landlord from exercising any other right or remedy
provided by this Lease or by law, it being intended that Landlord shall not
first be required to proceed against the L-C, and such use, application or
retention shall not operate as a limitation on any recovery to which Landlord
may otherwise be entitled.
8. Holding Over.
------------
If Tenant remains in possession of all or any part of the Premises
after the expiration of the Term, with the express or implied consent of
Landlord, such tenancy shall be month-to-month only and shall not constitute a
renewal or extension for any further term. If Tenant remains in possession
either with or without Landlord's consent, Monthly Rent shall be increased to an
amount equal to one hundred twenty-five percent (125%) of the Monthly Rent
payable during the last month of the Term, and any other sums due under this
Lease shall be payable in the amount and at the times specified in this Lease.
Such month-to-month tenancy shall be subject to every other term, condition, and
covenant contained herein.
9. Tenant Improvements.
-------------------
Landlord agrees to construct the Tenant Improvements pursuant to the
terms of EXHIBIT B.
---------
10. Condition of Premises. Within ten (10) days after completion of the
---------------------
Tenant Improvements, Tenant shall conduct a walk-through inspection of the
Premises with Landlord and complete a punch-list of items needing additional
work by Landlord. Other than the items specified in the punch-list, if any, by
taking possession of the Premises, Tenant shall be deemed to have accepted the
Premises in good, clean and completed condition and repair, subject to all
applicable laws, codes and ordinances. Any damage to the Premises caused by
Tenant's move-in shall be repaired or corrected by Tenant, at its expense.
Tenant acknowledges that neither Landlord nor its Agents have made any
representations or warranties as to the suitability or fitness of the Premises
for the conduct of Tenant's business or for any other purpose, nor has Landlord
or its Agents agreed to undertake any Alterations or construct any Tenant
Improvements to the Premises except as expressly provided in this Lease. If
Tenant fails to submit a punch-list to Landlord within such 10-day period, it
shall be deemed that there are no Tenant Improvement items needing additional
work or repair. Landlord's contractor shall complete all reasonable punch-list
items within thirty (30) days after the walk-through inspection or as soon as
practicable thereafter. Upon completion of such punch-list items, Tenant shall
approve such completed items in writing to Landlord, if Tenant fails to approve
such items within fourteen (14) days of completion, such items shall be deemed
approved by Tenant.
11. Use of the Premises.
-------------------
9
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A. Tenant's Use. Tenant shall use the Premises only for general
------------
office, research and development, light manufacturing, storage, distribution and
marketing and any other use permitted by applicable laws. Tenant shall not use
the Premises or suffer or permit anything to be done in or about the Premises
which will in any way conflict with any law, statute, zoning restriction,
ordinance or governmental law, rule, regulation or requirement of public
authorities now in force or which may hereafter be in force, relating to or
affecting the condition, use or occupancy of the Premises. Tenant shall not
commit any public or private nuisance or any other act or thing which might or
would disturb the quiet enjoyment of any other tenant of Landlord or any
occupant of nearby property. Tenant shall place no loads upon the floors, walls
or ceilings in excess of the maximum designed load determined by a licensed
structural engineer or which endanger the structure; nor place any harmful
liquids in the drainage systems; nor dump or store waste materials or refuse or
allow such to remain outside the Building proper, except in the enclosed trash
areas provided. Tenant shall not store or permit to be stored or otherwise place
any other material of any nature whatsoever outside the Building, except on a
temporary basis.
B. Hazardous Materials.
-------------------
(i) Tenant, at its sole cost, shall comply with all laws relating
to the storage, use and disposal of Hazardous Materials (as defined below). If,
during the Term of this Lease, Tenant does store, use or dispose of any
Hazardous Materials, Tenant shall provide Landlord with a copy of any Hazardous
Materials data sheets, hazardous materials management plans ("HMMP"), or other
reports or documentation relating to Hazardous Materials that Tenant is required
to file with the Redwood City Fire Department or any other governmental agency,
if applicable. Such information shall be provided to Landlord (A) within ten
(10) days after Lease execution with respect to any Hazardous Materials that are
currently used, stored or disposed of by Tenant in, on or from the Premises, and
(B) promptly following submission of any such HMMP's or other reports or
documentation to the applicable governmental agency (but in no event later than
five (5) business days after the date of such submission) with respect to any
Hazardous Materials first used, stored or disposed of by Tenant in, on or from
the Premises after the date of this Lease. Additionally, Tenant shall deliver to
Landlord upon Lease execution a comprehensive listing of all Hazardous Materials
currently used, stored or disposed of by Tenant in, on or from the Premises
("Hazardous Materials List"). Tenant shall provide an updated Hazardous
Materials List to Landlord quarterly throughout the Term of this Lease and at
other times within ten (10) business days after Landlord's written request
therefor if a current Hazardous Materials List is required by Landlord's lender
or a prospective tender.
(ii) Notwithstanding anything to the contrary contained in the
Purchase and Sale Agreement between Landlord and Tenant for the purchase of the
Project by Landlord, Tenant shall be solely responsible for and shall defend,
indemnify and hold Landlord and its Agents harmless from and against any and all
liabilities, claims, demands, damages and expenses of any kind or nature,
including reasonable attorneys' fees and costs, resulting from, or arising out
of, any Hazardous Materials used, stored, released or disposed of in, on or
about the Premises by Tenant, its agents, employees, contractors, invitees or
subtenants during the Term of this Lease, including without limitation, any
action, proceeding, claim, demand, suit or proceeding by any governmental
agency, quasi-governmental agency or third party (including, without limitation,
penalties, fines, clean-up costs, mitigation costs and liens) arising from the
use,
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storage, release or disposal of any such Hazardous Materials in, on or about the
Premises by Tenant, its agents, employees, contractors, invitees or subtenants.
Tenant shall promptly give Landlord written notice of (A) any release or
suspected release of any Hazardous Materials in, on, under or adjacent to the
Premises of which Tenant has actual knowledge and that Tenant is required to
report to Landlord or any governmental or regulatory agency under applicable
laws, and/or (B) any investigation, claim, demand, lawsuit or other action by
any governmental or regulatory agency or private party involving the presence or
suspected presence of any Hazardous Materials in, on, under or adjacent to the
Premises of which Tenant has actual knowledge. Tenant's obligations hereunder
shall survive the termination of this Lease.
(iii) Tenant's indemnity obligations under paragraph 11.B.(ii) are
subject to the following conditions: (A) Tenant is promptly notified in writing
of any such claim(s); (B) Tenant shall have the right to manage the defense of
such claim(s) and any settlement negotiations, provided, however, that Tenant
shall keep Landlord apprised, on a monthly basis, of the status of any such
claims and/or settlement negotiations, and no action may be taken by Tenant
which may materially and adversely affect Landlord's rights or obligations
without Landlord's consent; (C) Landlord shall cooperate with Tenant in the
defense and/or settlement of such claim(s); and (D) subject to the provisions
set forth in paragraph 11.B.(iv), Tenant shall have the right to direct and
manage the removal, clean-up and/or remediation (collectively, "Remediation") of
any Hazardous Materials which may be required under paragraph 11.B.(ii) so long
as Tenant is not in default hereunder at the time such Remediation is required
and so long as such Remediation is conducted by Tenant in accordance with all
applicable laws and governmental regulations. Notwithstanding the foregoing,
Landlord shall have the right, in its sole discretion, but without being
required to do so, to defend, adjust, settle or compromise any claim,
obligation, debt, demand, suit or judgment naming Landlord as a defendant or
potentially responsible party arising out of or in connection with the matters
covered by Tenant's indemnity and, in such event, Tenant shall reimburse
Landlord for all reasonable charges and expenses incurred by Landlord in
connection therewith, including reasonable attorneys' fees; provided, however,
that Landlord shall not undertake any unilateral action or settlement so long as
Tenant or an insurance company, at its or their sole expense, is contesting in
good faith, diligently and with continuity such claim, action, obligation,
demand or suit, and so long as such claim, action, obligation, demand or suit
does not have or threaten to have a material adverse impact on Landlord's
assets, reputation or business affairs and does not, in the reasonable judgment
of the holder of any deed of trust recorded against the Premises, impair or
threaten to impair the value of the security given by Landlord to the holder
under such deed of trust. Tenant acknowledges that the holder of any deed of
trust recorded against the Premises shall have the right, but not the
obligation; to join and participate in any legal proceedings or actions
initiated in connection with any claims covered by Tenant's indemnity if the
holder of such deed of trust has a reasonable basis to believe that its security
under the deed of trust is or might be impaired by such claims or if Landlord is
in default under the terms of the deed of trust.
(iv) Tenant shall not commence any Remediation of any Hazardous
Materials pursuant to paragraph 11.B.(ii) unless and until (A) Landlord has
reasonably approved the environmental consultant and/or engineering firm that
will be engaged to assess the nature and extent of the Hazardous Materials that
are present and to complete the Remediation of such Hazardous Materials; (B)
Landlord has reasonably approved the scope of work and the proposed
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<PAGE>
methods and timing for completing such Remediation of such Hazardous Materials;
and (C) Tenant has provided Landlord with documentary evidence that the
governmental agency(ies) with jurisdiction over such matter has/have approved
Tenant's proposed plan for Remediation of such Hazardous Materials. If Landlord
fails to notify Tenant of Landlord's approval or disapproval of Tenant's
environmental consultant and/or engineering firm or Tenant's proposed scope of
work and proposed methods for completing any Remediation, within thirty (30)
days after Landlord's receipt of the above-specified information, Landlord's
approval shall be deemed given. Tenant shall complete such Remediation in a
diligent manner, in compliance with all applicable laws (including any order
issued for such Remediation) and in accordance with applicable governmental
standards for such Remediation. Upon completion of such removal, clean-up or
other remediation, Tenant shall provide Landlord with a copies of any
documentation obtained from any governmental agency(ies) indicating that the
required Remediation was completed and accepted by such agency(ies).
(v) Landlord and Landlord's designated consultants and, in the
event of any default by Landlord under any deed of trust recorded against the
Premises, the holder of such deed of trust and its designated consultants, shall
have the right to enter the Premises at any time in the case of an emergency,
and otherwise at reasonable times with reasonable notice and with reasonable
frequency, for the purpose of verifying compliance by Tenant with all applicable
laws relating to the storage, use or disposal of Hazardous Materials and, in
connection therewith, Landlord or the holder of such deed of trust shall be
entitled to employ experts and/or consultants, at such party's sole expense, to
advise such party with respect to Tenant's installation, operation, use,
monitoring, maintenance, or removal of any Hazardous Materials in, on or from
the Premises. Any parties entering the Premises to verify such compliance by
Tenant as permitted herein shall, at Tenant's request, first execute and deliver
to Tenant a confidentiality agreement substantially in the form attached as
EXHIBIT F. If at any time Landlord obtains a phase I environmental site
---------
assessment of the Premises or the Property which discloses the presence or
possible presence of Hazardous Materials in, on, under or adjacent to the
Premises or the Property, and the report generated by the environmental
consultant as a result of such site assessment recommends that further testing
be conducted on the Premises and/or the Property, including invasive testing of
the soil and groundwater, to determine the nature, location and extent of such
Hazardous Materials, Landlord may cause testing and/or monitoring wells to be
installed on or about the Outside Area and may cause the soil and/or ground
water to be tested to detect the presence of Hazardous Materials by the use of
such tests as are then customarily used for such purposes, provided that
Landlord shall use diligent efforts to minimize any inconvenience or disruption
to Tenant's business in connection with such installation and testing. The cost
of installing, operating and removing any such wells shall be paid by the party
requesting the same unless Tenant is liable for such costs pursuant to the terms
of Tenant's indemnity under paragraph 11.B.(ii), Landlord shall provide Tenant
with a copy of any final report generated for Landlord by an environmental
consultant in connection with the Premises or the Property. Landlord may,
however, require Tenant to execute a reasonable confidentiality agreement prior
to delivering copies of any such report to Tenant.
(vi) If at any time Landlord determines that Tenant is not in
compliance with any laws relating to the storage, use or disposal of Hazardous
Materials, Landlord shall notify Tenant in writing of the specific laws and the
provisions thereof which Landlord believes Tenant has violated. Except in the
event of any emergency, in which event
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<PAGE>
Tenant shall promptly take appropriate action to correct any violation(s),
Tenant shall have thirty (30) days after Landlord's notice to correct any such
violation(s); provided, however, that if Tenant or Tenant's environmental
consultant disagrees with Landlord's determination that a violation has
occurred, Landlord and Tenant shall promptly select an independent environmental
consultant or environmental attorney mutually acceptable to Landlord and Tenant
to review the alleged violation and the determination of such consultant or
attorney shall be binding upon Landlord and Tenant. The cost of such consultant
or attorney's services shall be shared equally by Landlord and Tenant. If
Landlord and Tenant fail to agree on the independent consultant to be selected
for such purposes, the consultant shall be selected in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. Landlord
agrees that Landlord shall not notify any governmental or regulatory agency of
any violation by Tenant of any laws relating to the use, storage or disposal of
Hazardous Materials unless (A) Landlord has first notified Tenant in writing of
such, violation, and (B)Tenant has failed to notify the appropriate governmental
or regulatory agency(ies) to the extent required by applicable laws and to
provide Landlord with a copy of any such notice(s).
(vii) For the purposes of this Lease, the term "Hazardous
Materials" shall mean any substance, material or waste which is or becomes
regulated by any local government authority, the State of California, or the
United States Government, including, but not limited to, any material or
substance which is (a) petroleum, (b) asbestos, (c), polychlorinated biphenyls,
(d) designated as a "hazardous substance" pursuant to Section 311 of the Clean
Water Act, 33 U.S.C. 1251 et seq. (33 U.S.C. 1321) or listed pursuant to Section
307 of the Clean Water Act (33 U.S.C. 1317), (e) defined as a "hazardous waste"
pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42
U.S.C. 6901 et seq. (42 U.S.C. 6903), or (f) 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).
Nothing contained in this paragraph 11.B. shall be deemed to require Tenant to
comply with any Hazardous Materials requirements or standards that are stricter
than those imposed by applicable governmental or regulatory agencies.
12. Quiet Enjoyment.
---------------
Landlord covenants that Tenant, upon performing the terms, conditions
and covenants of this Lease, shall have quiet and peaceful possession of the
Premises as against any person claiming the same by, through or under Landlord.
13. Alterations.
-----------
After the Commencement Date, Tenant shall not make or permit any
Alterations in, on or about the Premises, without the prior written consent of
Landlord, which consent shall not be unreasonably withheld; provided, however,
that Landlord's consent shall not be required for any nonstructural Alterations
that do not exceed Twenty-Five Thousand and no/100ths Dollars ($25,000.00) in
cost. In no event, however, shall Tenant make any: (i) Alterations to the
exterior of the Building; (ii) Alterations to and penetrations of the roof of
the Building; or (iii) Alterations visible from outside the Building without the
prior written consent of Landlord, to which Landlord may withhold Landlord's
consent on wholly aesthetic grounds.
13
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All Alterations shall be installed at Tenant's sole expense, in compliance with
all applicable laws, by a licensed contractor, shall be done in a good and
workmanlike manner conforming in quality and design with the Premises existing
as of the Commencement Date, and shall not diminish the value of either the
Building or the Premises. All Alterations made by Tenant shall be and become the
property of Landlord upon installation and shall not be deemed Tenant's Personal
Property; provided, however, that Landlord shall notify Tenant upon Landlord's
consent to such Alterations by Landlord (or if Landlord's consent is not
required, upon written request by Tenant) whether Tenant will be required to
remove, at Tenant's expense, such Alterations from the Premises at the
expiration or sooner termination of this Lease and to return the Premises to
their condition as of the Commencement Date of this Lease, normal wear and tear
excepted and subject to the provisions of paragraph 23. Notwithstanding any
other provision of this Lease, Tenant shall be solely responsible for the
maintenance and repair of any and all Alterations made by it to the Premises.
Tenant shall give Landlord written notice of Tenant's intention to perform work
on the Premises at least ten (10) days prior to the commencement of such work to
enable Landlord to post and record a Notice of Nonresponsibility or other notice
deemed proper before the commencement of any such work.
14. Surrender of the Premises.
-------------------------
Upon the expiration or earlier termination of the Term, Tenant shall
surrender the Premises to Landlord in its condition existing as of the
Commencement Date, normal wear and tear and fire or other casualty excepted,
with all interior walls repaired if damaged, all broken, marred or nonconforming
acoustical ceiling tiles replaced, all windows washed, the plumbing and
electrical systems and lighting in good order and repair, including replacement
of any burned out or broken light bulb or ballasts, the HVAC equipment serviced
and repaired by a reputable and licensed service firm, and all floors cleaned,
all to the reasonable satisfaction of Landlord. Tenant shall remove from the
Premises all of Tenant's Alterations required to be removed pursuant to
paragraph 13, and all Tenant's Personal Property, and repair any damage and
perform any restoration work caused by such removal. If Tenant fails to remove
such Alterations and Tenant's Personal Property, and such failure continues
after the termination of this Lease, Landlord may retain such Property and all
rights of Tenant with respect to it shall cease, or Landlord may place all or
any portion of such Property in public storage for Tenant's account. Tenant
shall be liable to Landlord for costs of removal of any such Alterations and
Tenant's Personal Property and storage and transportation costs of same, and the
cost of repairing and restoring the Premises, together with interest at the
Interest Rate from the date of expenditure by Landlord. If the Premises are not
so surrendered at the termination of this Lease, Tenant shall indemnify Landlord
and its Agents against all loss or liability, including reasonable attorneys'
fees and costs, resulting from delay by Tenant in so surrendering the Premises.
Normal wear and tear, for the purposes of this Lease, shall be
construed to mean wear and tear caused to the Premises by a natural aging
process which occurs in spite of prudent application of the best standards for
maintenance, repair and janitorial practices. It is not intended, nor shall it
be construed, to include items of neglected or deferred maintenance which would
have or should have been attended to during the Term of the Lease if the best
standards had been applied to properly maintain and keep the Premises at all
times in good condition and repair.
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15. Real Property Taxes.
-------------------
A. Payment by Tenant. On or before April 10 and December 10 of each
-----------------
year of the Term, Tenant shall pay directly to the San Mateo County assessor
Tenant's percentage of the Real Property Taxes for the Property as set forth on
the assessor's tax bill for the Property, which percentage shall be determined
by dividing the area of the Building by the total area of the Building plus the
buildings at 1228 Douglas Avenue, 1250 Douglas Avenue, and 550 Broadway and
multiplying the result by 100. Promptly following payment of the Real Property
Taxes, Tenant shall provide Landlord with copies of paid receipts or other
documentary evidence that the Real Property Taxes have been paid by Tenant. If
Tenant fails to pay the Real Property Taxes on or before April 10 and December
10, respectively, Tenant shall pay to Landlord any penalty incurred by such late
payment. In addition, Tenant shall pay any Real Property Tax not included within
the county tax assessor's tax bill within ten (10) days after being billed for
same by Landlord. The foregoing dates are based on the dates established by the
county as the dates on which Real Property Taxes become delinquent if not paid.
If such delinquency dates change, the dates on which Tenant must pay the Real
Property Taxes for the Property shall be at least ten (10) days prior to the
delinquency dates. Assessments, taxes, fees, levies and charges may be imposed
by governmental agencies for such purposes as fire protection, street, sidewalk,
road, utility construction and maintenance, refuse removal and for other
governmental services which may formerly have been provided without charge to
property owners or occupants. It is the intention of the parties that all new
and increased assessments, taxes, fees, levies and charges are to be included
within the definition of Real Property Taxes for purposes of this Lease.
Notwithstanding the foregoing to the contrary, Tenant shall not be liable for
any increase in Real Property Taxes resulting from a reassessment of the
Premises or the Property in connection with the sale or transfer of the Property
in the following instances: (i) the sale or transfer occurs during the first
five (5) years of the Term and a prior sale or transfer of the Premises or the
Property (causing an increase in Real Property Taxes) has occurred during such
five (5) year period, or (ii) the sale or transfer occurs during the sixth (6th)
through tenth (10th) years of the Term. Tenant shall, however, be liable for any
increase in Real Property Taxes resulting from a reassessment of the Premises or
the Property in connection with the first sale or transfer of the Premises or
the Property that occurs during the first five (5) years of the Term. For
purposes of this paragraph 15, the "first sale or transfer of the Premises or
the Property" shall not include the sale of the Project by Tenant to Landlord.
B. Taxes on Tenant Improvements and Personal Property. Tenant shall
--------------------------------------------------
pay any increase in Real Property Taxes resulting from any and all Alterations
and Tenant Improvements of any kind whatsoever placed in, on or about the
Premises for the benefit of, at the request of, or by Tenant. Tenant shall pay
prior to delinquency all taxes assessed or levied against Tenant's Personal
Property in, on or about the Premises. When possible, Tenant shall cause its
Personal Property to be assessed and billed separately from the real or Personal
Property of Landlord.
C. Proration. Tenant's liability to pay Real Property Taxes shall be
---------
prorated on the basis of a 365-day year to account for any fractional portion of
a fiscal tax year included at the commencement or expiration of the Term. With
respect to any assessments which may be levied against or upon the Property, or
which under the laws then in force may be evidenced by improvements or other
bonds or may be paid in annual installments, only the amount of such
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annual installment (with appropriate proration for any partial year) and
interest due thereon shall be included within the computation of the annual Real
Property Taxes levied against the Premises.
16. Utilities and Services.
----------------------
Tenant shall be responsible for and shall pay promptly all charges for
water, gas. electricity, telephone, refuse pick-up, janitorial service and all
other utilities, materials and services furnished directly to or used by Tenant
in, on or about the Premises during the Term, together with any taxes thereon.
Landlord shall not be liable in damages or otherwise for any failure or
interruption of any utility service or other service furnished to the Premises,
except that resulting from the negligence or willful misconduct of Landlord.
17. Repair and Maintenance.
----------------------
A. Landlord's Obligations. Landlord shall keep in good order,
----------------------
condition and repair the structural parts of the Building, which structural
parts include only the foundation, subflooring, exterior walls (excluding the
interior of all walls and the exterior and interior of all windows, doors,
ceilings, and plateglass), and the roof structure of the Building, except for
any damage thereto caused by the negligence or willful acts or omissions of
Tenant or of Tenant's agents, employees or invitees, or by reason of the failure
of Tenant to perform or comply with any terms of this Lease, or caused by
Alterations made by Tenant or by Tenant's agents, employees or contractors. It
is an express condition precedent to all obligations of Landlord to repair and
maintain that Tenant shall have notified Landlord of the need for such repairs
or maintenance. Tenant waives the provisions of Sections 1941 and 1942 of the
California Civil Code and any similar or successor law regarding Tenant's right
to make repairs and deduct the expenses of such repairs from the Rent due under
this Lease.
B. Tenant's Obligations. Tenant shall at all times and at its own
--------------------
expense clean, keep and maintain in good order, condition and repair every part
of the Premises which is not within Landlord's obligation pursuant to paragraph
17.A. Tenant's repair and maintenance obligations shall include the roof
membrane, all plumbing and sewage facilities within the Premises, fixtures,
interior walls and ceiling, floors, windows, doors, entrances, plate glass,
showcases, skylights, all electrical facilities and equipment, including
lighting fixtures, lamps, fans and any exhaust equipment and systems, all
mechanical and HVAC systems, any automatic fire extinguisher equipment within
the Building, electrical motors and all other appliances and equipment of every
kind and nature located in, upon or about the Building or the Premises. Tenant
shall also maintain the landscaping, parking lots, exterior lighting, signage,
and any other facilities located within the boundaries of the Premises
(collectively, the "Outside Area") in good order, condition and repair,
consistent with the reasonable maintenance standards established by Landlord for
the balance of the Project. If at any time Landlord determines that Tenant's
repair and maintenance of the Outside Area is not consistent with the reasonable
maintenance standards established by Landlord for the balance of the Project,
Landlord shall notify Tenant in writing of any such deficiencies. If Tenant
fails to cure such deficiencies within thirty (30) days after receipt of
Landlord's notice, Landlord shall have the right, on thirty (30) days' written
notice to Tenant to assume responsibility for maintenance and repair of the
Outside Area. In such event, Tenant shall reimburse Landlord monthly, as
Additional Rent, for the costs incurred by Landlord
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to maintain and repair the Outside Area. Tenant shall also be responsible for
all pest control within the Premises. Tenant shall maintain the HVAC systems in
accordance with manufacturer recommendations, which shall include replacement of
filters, oiling and lubricating of machinery, parts replacement, adjustment of
drive belts, oil changes and other preventive maintenance, including annual
maintenance of duct work, interior unit drains and caulking at sheet metal, and
recaulking of jacks and vents on an annual basis. At Tenant's option, Tenant may
either obtain HVAC systems preventive maintenance contracts for such purpose, or
utilize Tenant's facilities maintenance personnel to maintain the HVAC systems
provided that Tenant can demonstrate to Landlord's reasonable satisfaction that
any facilities maintenance personnel designated for such maintenance have
sufficient experience to properly maintain the HVAC system in good operating
condition and repair. In either event, Tenant shall have the benefit of all
warranties available to Landlord regarding the equipment in such HVAC systems.
If Tenant elects to maintain the HVAC systems through a preventive maintenance
contract, Tenant shall provide Landlord with copies of all HVAC maintenance
reports on a quarterly basis, including copies of contractor recommendations for
repairs and/or replacements. If any reasonable repairs and/or replacements are
recommended by the contractor, Tenant shall perform such repairs and/or
replacements and shall provide Landlord with evidence that such repairs and/or
replacements have been completed in accordance with the contractor's
recommendations. If, however, Tenant elects to utilize its facilities
maintenance personnel to maintain the HVAC system, Landlord may, at Landlord's
election, have the HVAC systems inspected by a licensed HVAC contractor on an
annual basis to confirm whether Tenant has maintained the HVAC systems as
required herein. The cost of any such annual inspections shall be paid by Tenant
within thirty (30) days after receipt of an invoice from Landlord. The HVAC
contractor engaged for such purpose shall be selected by Landlord after
receiving competitive bids from at least three (3) licensed HVAC contractors
acceptable to Landlord and Tenant.
C. Compliance with Governmental Regulations. Tenant shall, at its
----------------------------------------
cost, comply with, including the making by Tenant of any Alterations to the
Premises, all present and future regulations, rules, laws, ordinances, and
requirements of all governmental authorities (including, without limitation
state, municipal, county and federal governments and their departments, bureaus,
boards and officials) arising from Tenant's use or occupancy of the Premises or
Tenant's enjoyment of the Premises. Notwithstanding the foregoing, Landlord, and
not Tenant, shall be obligated to make any Alterations to the structural parts
of the Buildings maintained by Landlord pursuant to paragraph 17.A. that are
required to comply with any present and future regulations, rules, laws,
ordinances, and governmental requirements unless such Alterations to the
structural parts of the Building are required solely as a result of any other
Alterations to the Building made by Tenant during the Term of this Lease, in
which case Tenant shall reimburse Landlord for the cost of any such Alterations
to the structural parts of the Building that are required to comply with
regulations, rules, laws, ordinances and governmental requirements.
18. Liens.
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Tenant shall keep the Building and the Premises free from any liens
arising out of any work performed, materials furnished or obligations incurred
by or on behalf of Tenant and hereby indemnities and holds Landlord and its
Agents harmless from all liability and cost, including attorneys' fees and
costs, in connection with or arising out of any such lien or claim of
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lien. Tenant shall cause any such lien imposed to be released of record by
payment or posting of a proper bond reasonably acceptable to Landlord within ten
(10) days after written request by Landlord. Tenant shall give Landlord written
notice of Tenant's intention to perform work on the Premises which might result
in any claim of lien at least ten (10) days prior to the commencement of such
work to enable Landlord to post and record a Notice of Nonresponsibility. If
Tenant fails to so remove any such lien within the prescribed ten 10-day period,
then Landlord may do so at Tenant's expense and Tenant shall reimburse Landlord
for such amounts upon demand. Such reimbursement shall include all costs
incurred by Landlord including Landlord's reasonable attorneys' fees with
interest thereon at the Interest Rate.
19. Landlord's Right to Enter the Premises.
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Tenant shall permit Landlord and its Agents to enter the Premises,
including the Building, at all reasonable times with reasonable notice, except
for emergencies in which case no notice shall be required, to inspect the same,
to post Notices of Nonresponsibility and similar notices, and real estate "For
Sale" signs, to show the Premises to interested parties such as prospective
lenders and purchasers, to make necessary repairs, to discharge Tenant's
obligations hereunder when Tenant has failed to do so within a reasonable time
after written notice from Landlord, and at any reasonable time within one
hundred and eighty (180) days prior to the expiration of the Term, to place upon
the Building and the Outside Area ordinary "For Lease" signs and to show the
Premises to prospective tenants. The above rights are subject to reasonable
security regulations of Tenant, and to the requirement that Landlord shall at
all times act in a manner to cause the least possible interference with Tenant's
business.
20. Signs.
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Subject to Tenant obtaining all necessary approvals from the City of
Redwood City and subject to Landlord's review and approval of plans and
specifications for any proposed signage, which approval shall not be
unreasonably withheld, Tenant shall have the right to install Tenant
identification signage on the exterior of the Building. Tenant shall not
install any Tenant identification sign in any other location in, on or about the
Premises or the Property without Landlord's prior written consent, and shall not
display or erect any other Tenant identification sign, display or other
advertising material that is visible from the exterior of the Building.
Notwithstanding the foregoing, Tenant shall be permitted to install directional
signs on the Premises, subject to Landlord's approval of the size, design and
location of such signs, which approval shall not be unreasonably withheld. Any
changes to the size, design, color or other physical aspects of Tenant's
identification sign (s) shall be subject to the Landlord's prior written
approval, which shall not be unreasonably withheld. The cost of Tenant's
sign(s), and their installation, maintenance and removal shall be Tenant's sole
expense. If Tenant fails to maintain its sign(s), or, if Tenant fails to remove
its sign(s) upon termination of this Lease, Landlord may do so at Tenant's
expense and Tenant's reimbursement to Landlord for such amounts shall be deemed
Additional Rent.
21. Insurance.
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A. Indemnification.
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(i) Tenant hereby agrees to defend, indemnify and hold harmless
Landlord and its Agents from and against any and all damage, loss, liability or
expense including reasonable attorneys' fees and legal costs suffered directly
or by reason of any claim, suit or judgment brought by or in favor of any person
or persons for damage, loss or expense due to, but not limited to, bodily injury
and property dome sustained by such person or persons which arises out of, is
occasioned by or in any way attributable to the use or occupancy of the Premises
or any part thereof and adjacent areas by Tenant, the acts or omissions of the
Tenant, its agents, employees or any contractors brought onto the Premises by
Tenant, except to the extent caused by the negligence or willful misconduct of
Landlord or its Agents. Tenant agrees that the obligations assumed herein shall
survive this Lease. Tenant's obligations under this paragraph 21.A.(i) are
subject to the following conditions: (i) Tenant is promptly notified in writing
of any such claim(s); (ii) Tenant shall have the right to control the defense of
such claim(s) and any settlement negotiations, provided, however, that no action
may be taken by Tenant which may materially and adversely affect Landlord's
rights or obligations without Landlord's consent; and (iii) Landlord shall
cooperate with Tenant in the defense and/or settlement of such claim(s).
Notwithstanding the foregoing, Landlord shall have the right, in its sole
discretion, but without being required to do so, to defend, adjust, settle or
compromise any claim, obligation, debt, demand, suit or judgment against
Landlord arising out of or in connection with the matters covered by the
foregoing indemnity and, in such event, Tenant shall reimburse Landlord for all
reasonable charges and expenses incurred by Landlord in connection therewith,
including reasonable attorneys' fees; provided, however, that Landlord shall not
undertake any unilateral action or settlement so long as Tenant or an insurance
company, at its or their sole expense, is contesting in good faith, diligently
and with continuity such claim, action, obligation, demand or suit, and so long
as such claim, action, obligation, demand or suit does not have or threaten to
have a material adverse impact on Landlord's assets, reputation or business
affairs.
(ii) Landlord hereby agrees to defend, indemnify and hold harmless
Tenant from and against any and all damage, loss, liability or expense,
including reasonable attorneys' fees and legal costs, suffered directly or by
reason of any claim, suit or judgment brought by or in favor of any person or
persons for damage, loss or expense due to, but not limited to, bodily injury
and property damage sustained by such person or persons which arises out of, is
occasioned by or in any way attributable to the acts or omissions of Landlord,
its Agents, or any contractors brought onto the Premises by Landlord, except to
the extent caused by the negligence or willful misconduct of Tenant, its agents,
employees or contractors. Landlord agrees that the obligations assumed herein
shall survive this Lease. Landlord's obligations under this paragraph 21.A.(ii)
are subject to the following conditions: (i) Landlord is promptly notified in
writing of any such claim(s); (ii) Landlord shall have the right to control the
defense of such claim(s) and any settlement negotiations, provided, however,
that no action may be taken by Landlord which may materially and adversely
affect Tenant's rights or obligations without Tenant's consent, and (iii) Tenant
shall cooperate with Landlord in the defense and/or settlement of such claim(s).
Notwithstanding the foregoing, Tenant shall have the right, in its sole
discretion, but without being required to do so, to defend, adjust, settle or
compromise any claim, obligation, debt, demand, suit or judgment against
Landlord arising out of or in connection with the matters covered by the
foregoing indemnity and, in such event, Landlord shall reimburse Tenant for all
reasonable charges and expenses incurred by Tenant in connection therewith,
including reasonable attorneys' fees; provided, however, that Tenant shall not
undertake any unilateral action or settlement so long as Landlord or an
insurance company, at its or their sole
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expense, is contesting in good faith, diligently and with continuity such claim,
action, obligation, demand or suit, and so long as such claim, action,
obligation, demand or suit does not have or threaten to have a material adverse
impact on Tenant's assets, reputation or business affairs.
B. Tenant's Insurance. Tenant agrees to maintain in full force and
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effect at all times during the Term, at its own expense, for the protection of
Tenant and Landlord, as their interests may appear, policies of insurance which
afford the following coverages:
(i) Commercial general liability insurance in an amount not less
than Three Million and no/100ths Dollars ($3,000,000.00) combined single limit
for both bodily injury and property damage which includes blanket contractual
liability broad form property damage, personal injury, completed operations,
products liability, and fire damage legal (in an amount not less than Twenty-
Five Thousand and no/100ths Dollars ($25,000.00)), which policy shall name
Landlord and its Agents as additional insureds and shall contain a provision
that "the insurance provided Landlord hereunder shall be primary and non-
contributing with any other insurance available to Landlord with respect to any
damage, loss, liability or-expense covered by Tenant's indemnity obligations
under paragraph 21.A.(i) of the Lease."
(ii) Causes of loss - special form property insurance (including,
without limitation, vandalism, malicious mischief, inflation endorsement, and
sprinkler leakage endorsement) on Tenant's Personal Property located on or in
the Premises. Such insurance shall be in the full amount of the replacement
cost, as the same may from time to time increase as a result of inflation or
otherwise. As long as this Lease is in effect, the proceeds of such policy shall
be used for the repair and replacement of such items so insured. Landlord shall
have no interest in the insurance proceeds on Tenant's Personal Property.
Notwithstanding the foregoing, Tenant shall have the right, at its election, to
self-insure with respect to any loss or damage to Tenant's Personal Property.
(iii) Boiler and machinery insurance, including steam pipes,
pressure pipes, condensation return pipes and other pressure vessels and HVAC
equipment, including miscellaneous electrical apparatus, in an amount
satisfactory to Landlord.
C. Premises Insurance. During the Term Landlord shall maintain causes
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of loss-special form property insurance (including inflation endorsement
sprinkler leakage endorsement, and, at Landlord's option, earthquake and flood
coverage) on the Building, excluding coverage of all Tenant's Personal Property
located on or in the Premises, but including the Tenant Improvements. Such
insurance shall also include insurance against loss of rents, including, at
Landlord's option, coverage for earthquake and flood, in an amount equal to the
Monthly Rent and Additional Rent, and any other sums payable under the Lease,
for a period of at least twelve (12) months commencing on the d