California-Long Beach-ARCO Center Lease - Pacific Towers Associates and Netgateway Inc.
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PACIFIC TOWERS ASSOCIATES
STANDARD FORM
OFFICE LEASE
LANDLORD: PACIFIC TOWERS ASSOCIATES,
a California Limited Partnership
TENANT: NETGATEWAY, Inc., a Nevada corporation
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Dated for reference purposes as of: June 26, 1998
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PACIFIC TOWERS ASSOCIATES OFFICE LEASE
Basic Lease Information
Lease Date June 26, 1998
Tenant NETGATEWAY, INC., a Nevada Corporation
Address 300 Oceangate, Suite 500
Long Beach, CA 90802
Contact Person
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Telephone
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Landlord PACIFIC TOWERS ASSOCIATES,
a California Limited Partnership
Address 200 Oceangate, Suite 310
Long Beach, CA 90802
Contact Person Building Manager
Telephone (562) 435-8200
Building ARCO Center
Building Rentable Area 436,596 rentable square feet
Premises 300 Oceangate
Suite 500
Floor(s) a portion of fifth floor
Rentable Area 4,140 rentable square feet
Term 3 years with one three-year option to
extend
Commencement Date July 10, 1998
Expiration Date July 9, 2001
Annual Base Rental Months 1-12: $1.29 per rentable sq.
ft. per month
Months 13-24: $1.34 per rentable sq.
ft. per month
Months 25-36: $1.40 per rentable sq.
ft. per month
Tenant's Share (of Increased
Operating Expenses and Taxes) 0.95%
Excess Taxes Factor (See P.4.1(d)) Landlord's taxes calculated for the
1998 Calendar Year
Excess Expenses Factor (See P.4.1(g)) Landlord's 1998 annual expenses
Use General office purposes
1
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Security Deposit One month's rent equal to rent for last
month of term
Parking
Number of Stalls 4 per 1000 rentable square feet of
premises
Rent Per Stall Market rate - see Exhibit D
PACIFIC TOWERS ASSOCIATES,
a California Limited
Partnership
By: SIC - Long Beach
a California Limited
Partnership, Its General
Partner
By: The Swig Company, a California
Corporation, Its General
Partner
/s/ Jeanne Wye
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NETGATEWAY, INC., a Nevada corporation
By: /s/ David Bassett - Parkins
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Title: C.O.O.
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David Bassett - Parkins
By: /s/ Donald M. Corliss, Jr.
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Title: President
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Donald M. Corliss, Jr.
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Page
Article Description Number
1. Premises 1
2. Term 1
3. Rent; Additional Charges 2
4. Additional Charges for Increased Operating Expenses and Taxes 2
5. Terms of Payment 5
6. Construction of the Building and Premises 5
7. Conduct of Business by Tenant 6
8. Alterations and Tenant's Property 6
9. Repairs 8
10. Liens 8
11. Compliance with Laws and Insurance Requirements 8
12. Subordination 9
13. Inability to Perform 9
14. Destruction 10
15. Eminent Domain 11
16. Assignment 11
17. Utilities 13
18. Default 15
19. Indemnity 17
20. Tenant's Insurance 17
21. Limitation of Landlord's Liability 17
22. Access to Premises 17
23. Notices 18
24. No Waiver 18
25. Tenant's Certificates 18
26. Rules and Regulations 19
27. Tax on Tenant's Personal Property and Overstandard Tenant Improvements 19
28. Security Deposit 19
29. Authority 20
30. Miscellaneous 20
EXHIBIT A -- Floor Plan
EXHIBIT B -- Work Agreement
EXHIBIT C -- Rules & Regulations
EXHIBIT D -- Parking
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1
OFFICE LEASE
This lease is made and entered into this 26th day of June, 1998, by and between
Pacific Towers Associates, a California Limited Partnership (herein called
"Landlord"), and NETGATEWAY, Inc., a Nevada Corporation (herein called
"Tenant").
WITNESSETH:
Landlord and tenant hereby covenant and agree as follows:
1. PREMISES
1.1 Upon and subject to the terms, covenants and conditions hereinafter
set forth, Landlord hereby leases to Tenant and Tenant hereby hires from
Landlord those premises (herein called the "Premises") in the building specified
in the Basic Lease Information attached hereto (herein called the "Building")
comprising the area substantially as shown on the floor plan or plans attached
hereto as Exhibit A. The Premises are located on the floor(s) of the Building
that is (are) specified in the Basic Lease information. The term "Building"
includes the entire complex consisting of two office buildings and a parking
garage currently known as the Arco Center and the land and improvements
surrounding the complex and designated from time to time by Landlord as land or
common areas appurtenant to the complex together with utilities, facilities,
drives, walkways and other amenities appurtenant to or servicing the complex.
1.2 As used herein, the term "rentable area" shall be computed in
accordance with the modified standards of the Building Owners and Managers
Association (BOMA) as follows: The rentable area of a floor shall be computed by
measuring to the inside surface of the exterior glass building surface excluding
any major vertical penetrations of the floor. No deductions shall be made for
columns and projections necessary to the building. The rentable area of an
office on the floor shall be computed by multiplying the usable area of the
office by the quotient of the division of the rentable area of the floor by the
usable area of the floor.
1.3 Landlord hereby reserves the right from time to time to relocate
Tenant to another part of the Building prior to or during the Term, as
hereinafter defined, so long as (a) the number of square feet so substituted
equals or exceeds the number of square feet in the Premises and (b) Landlord
pays Tenant's reasonable costs of relocation including preparation of the
Premises for occupancy. Landlord shall not have any other liability with respect
to any such relocation.
2. TERM
2.1 The Premises are leased for a term (herein called the "Term") to
commence and end on the dates respectively specified in the Basic Lease
Information, unless the Term shall sooner terminate as hereinafter provided. If,
on or prior to the date set forth in the Basic Lease Information for the
commencement of the Term, Landlord fails to deliver possession of the Premises,
either (a) because Landlord's Work (as hereinafter defined in Article 6 hereof)
shall not have been substantially completed, or (b) because a previous occupant
is holding over, or (c) because of any other cause or reason beyond the
reasonable control of Landlord, then the following provisions shall apply: (i)
the Term shall not commence on the date set forth above but shall, instead,
commence on a date fixed by Landlord in a notice to Tenant, which notice shall
state that the Premises are, or prior to the commencement date fixed in such
notice will be, substantially completed and ready for occupancy by Tenant; (ii)
neither the validity of this Lease nor the obligations of Tenant under this
Lease shall be affected by such failure to deliver possession, except that the
Term shall begin as provided in clause (i) above; (iii) Tenant shall have no
claim against Landlord because of Landlord's failure to deliver possession of
the Premises on the date originally fixed therefor; and (iv) in no event shall
the expiration date of the Term be extended beyond the date specified in the
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Basic Lease Information.
2.2 The dates upon which the Term shall commence and terminate pursuant to
this Article 2 are herein called the "Commencement Date" and the "Expiration
Date," respectively.
2.3 Notwithstanding anything to the contrary herein contained, in the
event that the Term shall not have commenced on or before such date as shall be
2 months from the date of this Lease, then this Lease shall be automatically
terminated without any further act of either party hereto and both parties
hereto shall be released from all obligations hereunder.
3. RENT; ADDITIONAL CHARGES
3.1 Tenant shall pay to Landlord during the Term the Annual Base Rental
specified in the Basic Lease Information (herein called the "Rent"), which sum
shall be payable by Tenant in equal consecutive monthly installments on or
before the first day of each month, in advance, at the address specified for
Landlord in the Basic Lease Information, or such other place as Landlord shall
designate, without any prior demand therefor and without any deductions or
set-off whatsoever. If the Commencement Date should occur on a day other than
the first day of a calendar month, or the Expiration Date should occur on a day
other than the last day of a calendar month, then the rental for such fractional
month shall be prorated upon a daily basis based upon a thirty (30) day month.
3.3 Tenant shall pay to Landlord all charges and other amounts required
under this Lease as additional rent hereunder (herein called "Additional Rent"),
including, without limitation, any increase in the Rent resulting from the
provisions of Article 4 hereof. All such amounts and charges shall be payable to
Landlord at the place where the Rent is payable. Landlord shall have the same
remedies for a default in the payment of Additional Rent as for a default in the
payment of Rent.
4. ADDITIONAL CHARGES FOR INCREASED OPERATING EXPENSES AND TAXES
4.1 For purposes of this Article 4, the following terms shall have the
meanings hereinafter set forth:
(a) "Tenants Share" shall mean the percentage figure so specified in
the Basic Lease Information. Tenant's Share has been computed by dividing the
rentable area of the Premises by the total rentable area of the office space in
the Building. In the event that either the rentable area of the Premises or the
total rentable area of the office space of the Building is changed, Tenant's
Share will be appropriately
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adjusted, and, as to the Tax Year or Expense Year (as said terms are hereinafter
defined) in which such change occurs, for purposes of this Article 4, Tenant's
Share shall be determined on the basis of the number of days during such Tax
Year and Expense Year at each such percentage.
(b) "Tax Year" shall mean each twelve (12) consecutive month period
commencing January 1st of each year during the Term, including any partial year
during which the Lease may commence, provided that Landlord, upon notice to
Tenant, may change the Tax Year from time to time to any other twelve (12)
consecutive month period and, in the event of any such change, Tenant's Share of
Excess Taxes (as hereinafter defined) shall be equitably adjusted for the Tax
Year involved in any such change.
(c) "Real Estate Taxes" shall mean all taxes, assessments and
charges levied upon or with respect to the Building or any personal property of
Landlord used in the operation thereof, or Landlord's interest in the Building
or such personal property. Real Estate Taxes shall include, without limitation,
all general real property taxes and general and special assessments, charges,
fees or assessments for transit, housing, police, fire or other governmental
services or purported benefits to the Building, service payments in lieu of
taxes, and any tax, fee or excise on the act of entering into this Lease or any
other lease of space in the Building, or on the use or occupancy of the Building
or any part thereof, or on the rent payable under any lease or in connection
with the business of renting space in the Building, that are now or hereafter
levied or assessed against Landlord by the United States of America, the State
of California, or any political subdivision, public corporation, district or
other political or public entity, and shall also include any other tax, fee or
other excise, however described, that may be levied or assessed as a substitute
for, or as an addition to, in whole or in part, any other Real Estate Taxes,
whether or not now customary or in the contemplation of the parties on the date
of this Lease, Real Estate Taxes shall not include franchise, transfer,
inheritance or capital stock taxes or income taxes measured by the net income of
Landlord from all sources, unless, due to a change in the method of taxation,
any of such taxes is levied or assessed against Landlord as a substitute for, or
as an addition to, in whole or in part, any other tax that would otherwise
constitute a Real Estate Tax. Real Estate Taxes shall also include reasonable
legal fees, costs and disbursements incurred in connection with proceedings to
contest, determine or reduce Real Estate Taxes.
(d) "Excess Taxes" with respect to any Tax Year shall mean the
amount, if any, by which Real Estates Taxes for such Tax Year exceed or are less
than the amount set forth in the Basic Lease Information.
(e) "Expense Year" shall mean each twelve (12) consecutive month
period commencing January 1st of each year during the Term, including any
partial year during which the Lease may commence, provided that Landlord, upon
notice to Tenant, may change the Expense Year from time to time to any other
twelve (12) consecutive month period, and, in the event of any such change,
Tenant's Share of Excess Expenses (as hereinafter defined) shall be equitably
adjusted for the Expense Years involved in any such change.
(f) "Expenses" shall mean the total cost and expenses paid or
incurred by Landlord in connection with the management, operation, maintenance
and repair of the office space and the common areas of the Building, including,
without limitation, (i) the cost of air conditioning, electricity, steam,
heating, mechanical, ventilating, escalator and elevator systems and all other
utilities and the cost of supplies and equipment and maintenance and service
contracts in connection therewith, (ii) the cost of repairs and general
maintenance cleaning, (iii) the cost of fire, extended coverage, boiler,
sprinkler, public liability, property damage, rent, earthquake and other
insurance, (iv) wages, salaries and other labor costs, including taxes,
insurance, retirement, medical and other employee benefits, (v) fees, charges
and other costs, including management fees, consulting fees, legal fees and
accounting fees, of all independent contractors engaged by Landlord or
reasonably charged by Landlord if Landlord performs management services in
connection with the Building, (vi) the cost of supplying, replacing and cleaning
employee uniforms, (vii) the fair market rental value of Landlord's and the
property manager's offices in the Building, (viii) the cost of any capital
improvements made to the Building after completion of its construction as a
labor-saving device or to effect other economies in the operation or maintenance
of the Building, or made
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to the Building after the date of this Lease, that are required under a
governmental law or regulation that was not applicable to the Building at the
time that permits for the construction thereof were obtained, such cost to be
amortized over such reasonable period as Landlord shall determine, together with
interest on the unamortized balance at the rate of fifteen percent (15%) per
annum or such higher rate as may have been paid by Landlord on funds borrowed
for the purpose of constructing such capital improvements, and (ix) any other
expenses of any other kind whatsoever reasonably incurred in managing,
operating, maintaining, and repairing the Building. For purposes of computing
Tenant's Additional Charges pursuant to this Article 4, Expenses for the entire
Building that are not, in Landlord's sole discretion, allocable or chargeable
solely to either the office or retail space of the Building shall be allocated
between and charged to the office and retail space of the Building on an
equitable basis as determined by Landlord. Expenses shall be adjusted to reflect
a ninety-five percent (95%) occupancy of the Building during any period in which
the Building is not at least ninety-five percent (95%) occupied.
(g) "Excess Expenses" with respect to any Expense Year shall mean
the amount, if any, by which Expenses for such Expense Year exceed the amount
set forth in the Basic Lease Information.
4.2 Tenant shall pay to Landlord as Additional Charges one twelfth
(1/12th) of Tenant's Share of the Excess Taxes of each Tax Year on or before the
first day of each month during such Tax Year, in advance, in an amount estimated
by Landlord and billed by Landlord to Tenant; provided that Landlord shall have
the right initially to determine monthly estimates and to revise such estimates
one time per year. With reasonable promptness after Landlord has received the
tax bills for any Tax Year, Landlord shall furnish Tenant with a statement
(herein called "Landlord's Tax Statement") setting forth the amount of Real
Estate Taxes for such Tax Year, and Tenant's Share, if any, of Excess Taxes. If
the actual Excess Taxes for such Tax Year exceed the estimated Excess Taxes paid
by Tenant for such Tax Year, Tenant shall pay to to Landlord the difference
between the amount paid by Tenant and the actual Excess Taxes within 30 days
after the receipt of Landlord's Tax Statement, and if the total amount paid by
Tenant for any such Tax Year shall exceed the actual Excess Taxes for such Tax
Year, such excess shall be credited against the next installment of Excess Taxes
due from Tenant to Landlord hereunder.
4.3 Tenant shall pay to Landlord as Additional Charges one twelfth
(1/12th) of Tenant's Share of the Excess Expenses for each Expense Year on or
before the first day of each month of such Expense Year, in advance, in an
amount estimated by Landlord and billed by Landlord to Tenant; provided that
Landlord shall have the right initially to determine monthly estimates and to
revise such estimates from time to time. With reasonable promptness after the
expiration of each Expense Year, Landlord shall furnish Tenant with a statement
(herein called "Landlord's Expense Statement"), setting forth in reasonable
detail the Expenses for the Base Expense Year and such Expense Year, and
Tenant's Share, if any, of Excess Expenses. If the actual Excess Expenses for
such Expense Year exceed the estimated Excess Expenses paid by Tenant for such
Expense Year, Tenant shall pay to Landlord the difference between the amount
paid by Tenant and the actual Excess Expenses within 30 days after the receipt
of Landlord's Expense Statement, and if the total amount paid by Tenant for any
such Expense Year shall exceed the actual Excess Expenses for such Expense Year,
such excess shall be credited against the next installment of the estimated
Excess Expenses due from Tenant to Landlord hereunder.
4.4 If the Expiration Date fixed for this Lease shall occur on a date
other than the end of a Tax Year or Expense Year, Tenant's Share of Excess
Taxes, if any, and Excess Expenses, if any, for the Tax Year and the Expense
Year in which the Expiration Date falls shall be in the proportion that the
number of days from and including the first day of the Tax Year of Expense Year
in which the Expiration Date occurs to and including the Expiration Date bears
to 365; provided, however, Landlord may, pending the determination of the
amount, if any, of Excess Taxes and Excess Expenses for such partial Tax Year
and Expense Year, furnish Tenant with statements of estimated Excess Taxes,
estimated Excess Expenses, and Tenant's Share of each thereof for such partial
Tax Year and Expense Year. Within 30 days after receipt of such estimated
statement, Tenant shall remit to Landlord, as Additional Charges, the amount of
Tenant's Share of such Excess Taxes and Excess Expenses. After such Excess Taxes
and
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such Excess Expenses have been finally determined and Landlord's Tax Statement
and Landlord's Expense Statement have been furnished to Tenant pursuant to
Articles 4.2 and 4.3 hereof, respectively, and if there shall have been an
underpayment of Tenant's Share of Excess Taxes or Excess Expenses, Tenant shall
remit the amount of such underpayment to Landlord within fifteen (15) days of
receipt of such statements, and if there shall have been an overpayment,
Landlord shall remit the amount of any such overpayment to Tenant within fifteen
(15) days of the issuance of such statements.
5. TERMS OF PAYMENT
5.1 Except as specifically provided to the contrary in this Lease, Tenant
shall pay to Landlord, within five (5) days after delivery by Landlord to Tenant
of bills or statements therefor: (a) sums equal to all expenditures made and
monetary obligations incurred by Landlord including, without limitation,
expenditures made and obligations incurred for reasonable counsel fees, in
connection with the remedying by Landlord for Tenant's account pursuant to the
provisions of Article 18 hereof; (b) sums equal to all losses, costs,
liabilities, damages and expenses referred to in Article 18 hereof; (c) sums
equal to all expenditures made and monetary obligations incurred by Landlord,
including, without limitation, expenditures made and obligations incurred for
reasonable counsel fees, in collecting or attempting to collect the Rent, any
Additional Charges or any other sum of money accruing under this Lease or in
enforcing or attempting to enforce any rights of Landlord under this Lease or
pursuant to law; and (d) all other sums of money (other than Rent) accruing from
Tenant to Landlord under the provisions of this Lease. Any sum of money (other
than Rent) accruing from Tenant to Landlord pursuant to any provision of this
Lease, including, without limitation, the provisions of Exhibit B attached
hereto, whether prior to or after the Commencement Date, may, at Landlord's
option, be deemed Additional Charges. Tenant's obligations under this Article
5.1 shall survive the expiration or sooner termination of the Term.
5.2 If Tenant shall fail to pay any Rent or Additional Charges within
three (3) days after the date same is due and payable, such unpaid amounts shall
be subject to a late payment charge equal to 5% percent of such unpaid amounts
in each instance to cover Landlord's additional administrative cost and cost of
funds resulting from Tenant's failure. Such late payment charge shall not impair
any other remedies available to Landlord.
5.3 If any of the Rent or Additional Charges payable under the terms and
provisions of this Lease shall be or become uncollectible, reduced or required
to be refunded because of any act or law enacted by a governmental authority,
Tenant shall enter into such agreement(s) and take such other steps (without
additional expense to Tenant) as Landlord may request and as may be legally
permissible to permit Landlord to collect the maximum rents which from time to
time during the continuance of such legal rent restriction may be legally
permissible (and not in excess of the amounts reserved therefor under this
Lease). Upon the termination of such legal rent restriction, (a) the Rent and/or
Additional Charges shall become and thereafter be payable in accordance with the
amounts reserved herein for the periods following such termination, and (b)
Tenant shall pay to Landlord promptly upon being billed, to the maximum extent
legally permissible, an amount equal to (i) the Rent and/or Additional Charges
which would have been paid pursuant to this Lease but for such legal rent
restriction less (ii) the rents paid by Tenant during the period such legal rent
restriction was in effect.
6. LANDLORD'S WORK
6.1 Prior to the Commencement Date, Landlord will perform the work and
make the installations in the Premises substantially as set forth in Exhibit B
annexed hereto and made a part hereof (such work and installations being herein
called "Landlord's Work"). Landlord's obligation to perform Landlord's Work
shall not require Landlord to incur overtime costs and expenses and shall be
subject to unavoidable delays due to acts of God, governmental restrictions,
strikes, labor disturbances, shortages of material and supplies, and for any
other cause or event beyond Landlord's reasonable control. Landlord shall, when
construction progress so permits, notify Tenant in advance of the approximate
date on which Landlord's Work will be substantially completed in accordance with
Exhibit B and will notify Tenant when Landlord's Work is in fact so completed,
which latter notice shall constitute delivery of possession of the Premises to
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Tenant and notice to Tenant of the Commencement Date pursuant to Article 2.1. If
any dispute shall arise as to whether the Premises are substantially completed
and ready for Tenant's occupancy, a certificate furnished by Landlord's
architect certifying the date of substantial completion shall be conclusive of
that fact and date and binding upon Landlord and Tenant. It is understood and
agreed by Tenant that any minor changes from any plans or from said Exhibit B
that may be necessary during construction of the Building or the Premises shall
not affect or change this Lease or invalidate same. It is agreed that by
occupying the Premises, Tenant formally accepts same and acknowledges that the
Premises are in the condition called for hereunder. Failure of Landlord to
deliver possession of the Premises within the time and in the condition provided
for in this Lease will not give rise to any claim for damages by Tenant against
Landlord or Landlord's contractor.
6.2 The manner in which the common areas are maintained and operated and
the expenditures therefor shall be at the sole discretion of Landlord, and the
use of such areas and facilities shall be subject to such rules and regulations
as Landlord shall make from time to time. The term "common areas" as used herein
shall mean the pedestrian sidewalk, malls, truckways, loading docks, hallways,
lobby, corridors, delivery areas, elevators and escalators and stairs not
contained in the leased areas, public bathrooms and comfort stations and all
other areas or improvements that may be provided by Landlord for the convenience
and use of the tenants of the Building and their respective sub-tenants, agents,
employees, customers, invitees and any other licensees of Landlord. Landlord
reserves the rights, from time to time, to utilize portions of the common areas
for entertainment, displays, product shows, the leasing of kiosks or such other
uses that, in Landlord's judgment, do not unreasonably interfere with Tenant's
use and enjoyment of the Premises.
6.3 The purpose of attached Exhibit A is to show the approximate location
of the Premises in the Building and Landlord hereby reserves the right, at any
time and from time to time, to make alterations or additions to the Building and
the common areas. Landlord also reserves the right at any time and from time to
time to construct other improvements in the Building (including within the
common areas) and to enlarge same and make alterations therein or additions
thereto.
7. CONDUCT OF BUSINESS BY TENANT
7.1 Tenant shall use and occupy the Premises during the Term of this Lease
solely for the use specified in the Basic Lease Information and for no other use
or uses without the prior written consent of Landlord.
7.2 Tenant shall not use or occupy, or permit the use or occupancy of, the
Premises or any part thereof for any use other than the use specifically set
forth in Article 7.1 hereof, or in any manner that, in Landlord's judgment,
would adversely affect or interfere with any services required to be furnished
by Landlord to Tenant or to any other tenant or occupant of the Building, or
with proper and economical rendition of any such service, or with the use or
enjoyment of any part of the Building by any other tenant or occupant.
8. ALTERATIONS AND TENANT'S PROPERTY
8.1 Tenant shall make no changes or alterations in or to the Premises of
any nature without Landlord's prior written approval. Prior to commencing any
work in the Premises, Tenant shall submit to Landlord for Landlord's written
approval complete drawings, plans and specifications (herein collectively
referred to as "Tenant's Plan") for the improvements and installations to be
made by Tenant (herein collectively referred to as "Tenant's Work"). Tenant's
Plan shall be fully detailed and shall show complete dimensions, shall not be in
conflict with Landlord's basic plans for the Building, shall not require any
changes in the structure of the Building and shall not be in violation of any
laws, orders, rules or regulations of any governmental department or bureau
having jurisdiction over the Premises.
After submission to Landlord of Tenant's Plan, Landlord shall either
approve same or shall set forth in writing the particulars in which Landlord
does not approve same, in which latter case Tenant shall,
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within 5 days after Landlord's notification, return to Landlord appropriate
corrections thereto. Such corrections shall be subject to Landlord's approval.
Tenant shall pay to Landlord, promptly upon being billed and as Additional
Charges, any charges or expenses Landlord may incur in reviewing Tenant's Plan.
Tenant agrees that any review or approval by Landlord of Tenant's Plan is solely
for Landlord's benefit, and without any representation or warranty whatsoever to
Tenant with respect to the adequacy, correctness or efficiency thereof or
otherwise.
Tenant further agrees that if Tenant makes any changes in Tenant's
Plan subsequent to its approval by Landlord and if Landlord consents to such
changes, Tenant shall pay to Landlord all costs and expenses caused by such
changes, which Landlord may incur or sustain by reason of delays or changes
necessitated in the performance by Landlord of any construction or work it is
performing in the Building; it being understood and agreed, however, that
Landlord shall have the right to refuse to consent to any such changes. Any
charges payable under this Section 8.1 shall be paid by Tenant from time to time
under demand as Additional Charges, whether or not the Lease Term shall have
commenced.
Following compliance by Tenant with its obligations under the
foregoing sections of this article, Tenant shall timely commence Tenant's Work
in order to complete same within a reasonable period of time. Tenant's Work
shall be diligently pursued and shall be performed in a good and workmanlike
manner.
Tenant agrees that in the performance of Tenant's Work (i) neither
Tenant nor its agents or employees shall interfere with the work being done by
Landlord and its agents and employees, (ii) that Tenant shall comply with any
reasonable work schedule, rules and regulations proposed by Landlord, its agents
and employees, (iii) that the labor employed by Tenant shall be harmonious and
compatible with the labor employed by Landlord in the Building, it being agreed
that if in Landlord's judgment the labor is incompatible Tenant shall forthwith
upon Landlord's demand withdraw such labor from the Premises, (iv) that Tenant
shall procure and deliver to Landlord workmen's compensation, public liability,
property damage and such other insurance policies, in such amounts as shall be
reasonably acceptable to Landlord in connection with Tenant's Work, and shall
upon Landlord's request cause Landlord to be named as an insured thereunder, (v)
that Tenant shall hold Landlord harmless from and against any and all claims
arising from or in connection with any act or omission of Tenant or its agents
or employees, (vi) that Tenant's Work shall be performed in accordance with the
approved Tenant's Plan and in compliance with the laws, orders, rules and
regulations of any governmental department or bureau having jurisdiction over
the Premises, and (vii) that Tenant shall promptly pay for Tenant's Work in full
and shall not permit any lien to attach to the Premises or the Building. As a
condition precedent to any such written consent of Landlord, Tenant shall
deliver to Landlord written and unconditional waivers of mechanics' and
materialmen's liens upon the Building for all work, labor and services to be
performed and material to be furnished in connection with proposed alterations.
8.2 All appurtenances, fixtures, improvements, additions and other
property attached to or installed in the Premises, whether by Landlord or by or
on behalf of Tenant, and whether at Landlord's expense or Tenant's expense, or
at the joint expense of Landlord and Tenant, shall be and remain the property of
Landlord. Any furnishings and personal property placed in the Premises that are
removable without material damage to the Building or the Premises, whether the
property of Tenant or leased by Tenant, are herein sometimes called "Tenant's
Property." Any replacements of any property of Landlord, whether made at
Tenant's expense or otherwise, shall be and remain the property of Landlord.
8.3 Any of Tenant's Property remaining on the Premises at the expiration
of the Term shall be removed by Tenant at Tenant's cost and expense, and Tenant
shall, at its cost and expense, repair any damage to the Premises or the
Building caused by such removal. Any of Tenant's Property not removed from the
Premises prior to the expiration of the Term shall, at Landlord's option, become
the property of Landlord or Landlord may remove such Tenant's Property, and
Tenant shall pay to Landlord Landlord's cost of removal and of any repairs in
connection therewith within ten (10) days after the receipt of a bill therefor.
Tenant's obligation to pay any such costs shall survive any termination of this
Lease.
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9. REPAIRS
9.1 Tenant shall take good care of the Premises and at Tenant's cost and
expense shall make all repairs and replacements, as and when Landlord deems
necessary, to preserve the Premises in good working order and in a clean, safe
and sanitary condition, except that any structural repairs or structural
replacements deemed necessary by Landlord shall be made by Landlord on behalf of
Tenant and at Tenant's expense. Landlord shall not be liable for and, except as
provided in Article 14 hereof, there shall be no abatement of Rent with respect
to any injury to or interference with Tenant's business arising from any
repairs, maintenance, alteration or improvement in or to any portion of the
Building, including the Premises, or in or to the fixtures, appurtenances and
equipment therein. Tenant hereby waives and releases its right to make repairs
at Landlord's expense under Sections 1941 and 1942 of the California Civil Code
or under any similar law, statute or ordinance now or hereafter in effect.
9.2 All repairs and replacements made by or on behalf of Tenant or any
person claiming through or under Tenant shall be made and performed (a) at
Tenant's cost and expense and at such time and in such manner as Landlord may
reasonably designate, (b) by contractors or mechanics approved by Landlord, (c)
so that same shall be at least equal in quality, value, and utility to the
original work or installation, and (d) in accordance with the Rules and
Regulations for the Building adopted by Landlord from time to time and in
accordance with all applicable laws and regulations of governmental authorities
having jurisdiction over the Premises. If Landlord gives Tenant notice of the
necessity of any repairs or replacements required to be made under Article 9.1
above and Tenant fails to commence diligently to effect the same within 10 days
thereafter, Landlord may proceed to make such repairs or replacements and the
expenses incurred by Landlord in connection therewith shall be due and payable
from Tenant upon demand as Additional Charges; provided that Landlord's making
any such repairs or replacements shall not be deemed a waiver of Tenant's
default in failing to make the same. Landlord shall operate, maintain and repair
the Building in a first class manner.
10. LIENS
10.1 Tenant shall keep the Premises free from any liens arising out of any
work performed, material furnished or obligations incurred by or for Tenant or
any person or entity claiming through or under Tenant. In the event that Tenant
shall not, within ten (10) days following the imposition of any such lien, cause
same to be released of record by payment or posting of a proper bond, Landlord
shall have, in addition to all other remedies provided herein and by law, the
right but not the obligation to cause same to be released by such means as it
shall deem proper, including payment of the claim giving rise to such lien. All
such sums paid by Landlord and all expenses incurred by it in connection
therewith shall be considered Additional Charges and shall be payable to it by
Tenant on demand. Any such action by Landlord shall not in any event be deemed a
waiver of Tenant's default with respect thereto. Landlord shall have the right
at all times to post and keep posted on the Premises any notices permitted or
required by law, or that Landlord shall deem proper, for the protection of
Landlord, the Premises, the Building, and any other party having an interest
therein, from mechanics' and materialmen's liens, and Tenant shall give to
Landlord at least ten (10) business days' prior notice of commencement of any
construction on the Premises.
11. COMPLIANCE WITH LAWS AND INSURANCE REQUIREMENTS
11.1 Tenant, at Tenant's cost and expense, shall comply with all laws,
orders and regulations of federal, state, county and municipal authorities, and
with all directions, pursuant to law, of all public officers, that shall impose
any duty upon Landlord or Tenant with respect to the Premises or the use or
occupancy thereof, except that Tenant shall not be required to make any
structural Alterations in order to comply unless such Alterations shall be
necessitated or occasioned, in whole or in part, by the acts, omissions or
negligence of Tenant or any person claiming through or under Tenant, or any of
their servants, employees, contractors, agents, visitors or licensees, or by use
or occupancy or manner of use of occupancy of the Premises by Tenant or any such
person. Any work or installations made or performed by or on behalf of Tenant or
any person claiming through or under Tenant pursuant to the provisions of this
Article 11 shall be made in conformity with, and subject to the provisions of,
Article 9.2 hereof.
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11.2 Tenant shall not do anything, or permit anything to be done, in or
about the Premises which shall (a) invalidate or be in conflict with the
provisions of any fire or other insurance policies covering the Building or any
property located therein, or (b) result in a refusal by fire insurance companies
of good standing to insure the Building or any such property in amounts
reasonably satisfactory to Landlord, or (c) subject Landlord to any liability or
responsibility for injury to any person or property by reason of any business
operation being conducted in the Premises, or (d) cause any increase in the fire
insurance rates applicable to the Building or property located therein at the
beginning of the Term or at any time thereafter. Tenant, at Tenant's expense,
shall comply with all rules, orders, regulations or requirements of the American
Insurance Association (formerly the National Board of Fire Underwriters) and
with any similar body that shall hereafter perform the function of such
Association.
12. SUBORDINATION
12.1 Without the necessity of any additional document being executed by
Tenant for the purpose of effecting a subordination, Tenant agrees that this
Lease and Tenant's tenancy hereunder are and shall be automatically subject and
subordinate at all times to (a) all ground leases or underlying leases that may
now exist or hereafter be executed affecting the Building, (b) the lien of any
mortgage, deed or trust or similar security instrument that may now exist or
hereafter be executed in any amount for which the Building, ground leases or
underlying leases, or Landlord's interest or estate in any of said items is
specified as security, provided that the mortgages or beneficiaries named in
said mortgages or deeds of trust or other parties secured thereunder shall agree
to recognize the interest of Tenant under this Lease in the event of
foreclosure, if Tenant is not then in default, and (c) all renewals,
modifications, consolidations, replacements and extensions of any of the
foregoing. Notwithstanding the foregoing, Landlord shall have the right to
subordinate or cause to be subordinated any such ground leases or underlying
leases or any such liens to this Lease. In the event that any ground lease or
underlying lease terminated for any reason or any mortgage or deed of trust is
foreclosed or a conveyance in lieu of foreclosure is made for any reason, Tenant
shall, notwithstanding any subordination of any ground lease, underlying lease
or lien to this Lease, attorn to and become the Tenant of the successor in
interest to Landlord at the option of such successor in interest. Upon such
attornment this Lease shall continue in full force and effect as a direct Lease
between the successor Landlord and Tenant upon all of the terms, conditions and
covenants as are set forth in this Lease, except that the successor Landlord
shall not (a) be liable for any previous act or omission of Landlord under this
Lease; (b) be subject to any offset, not expressly provided for in this Lease,
which theretofore shall have accrued to Tenant against Landlord; or (c) be bound
by any previous modification of this Lease or by any previous prepayment of more
than one month's Rent or Additional Charges, unless such modification or
prepayment shall have been expressly approved in writing by the lessor of the
superior Lease or the holder of the superior mortgage through or by reason of
which the successor Landlord shall have succeeded to the rights of Landlord
under this Lease. Tenant covenants and agrees to execute and deliver, upon
demand by Landlord and in the form requested by Landlord, any additional
documents evidencing the priority or subordination of this Lease with request to
any such ground leases or underlying leases or the lien of any such mortgage or
deed of trust.
13. INABILITY TO PERFORM
13.1 If, by reason of the occurrence of any of the events of unavoidable
delay specified in Article 6.1 hereof, Landlord is unable to furnish or is
delayed in furnishing any utility or service required to be furnished by
Landlord under the provisions of Article 17 or of any other Article of this
Lease or of any collateral instrument, or is unable to perform or make or is
delayed in performing or making any installations, decorations, repairs,
alterations, additions or improvements, whether required to be performed or made
under this Lease or under any collateral instrument, or is unable to fulfill or
is delayed in fulfilling any of Landlord's other obligations under this Lease or
any collateral instrument, no such inability or delay shall constitute an actual
or constructive eviction, in whole or in part, or entitle Tenant to any
abatement or diminution of Rent or Additional Charges, or relieve Tenant from
any of its obligations under this Lease, or impose any liability upon Landlord
or its agents by reason of inconvenience or annoyance to Tenant or by reason of
injury to or interruption of Tenant's business, or otherwise. Tenant hereby
waives and releases
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10
its right to terminate this Lease under Section 1932(1) of the California Civil
Code or under any similar law, statute or ordinance now or hereafter in effect.
14. DESTRUCTION
14.1 If the Premises shall be damaged by fire or other casualty insured
against by Landlord's fire and extended coverage insurance policy covering the
Building, and if Tenant shall give prompt notice to Landlord of such damage,
Landlord, at Landlord's expense, shall repair such damage; provided, however,
that Landlord shall have no obligation to repair any damage to or to replace
Tenant's Property, Alterations or any other property or effects of Tenant.
Except as otherwise provided in this Article 14, if the entire Premises shall be
rendered untenantable by reason of any such damage, the Rent shall abate for the
period from the date of such damage to the date when such damage to the Premises
shall have been repaired, and if only a part of the Premises shall be rendered
untenantable, the Rent shall abate for such period in the proportion that the
rentable area of the part of the Premises so rendered untenantable bears to the
total rentable area of the Premises; provided, however, if, prior to the date
when all of such damage shall have been repaired, any part of the Premises so
damaged shall be rendered tenantable or shall be used or occupied by Tenant or
any person or persons claiming through or under Tenant, then the amount by which
the Rent shall abate shall be equitably apportioned for the period from the date
of any such use or occupancy to the date when all such damage shall have been
repaired.
14.2 Notwithstanding the provisions of Article 14.1 hereof, if, prior to
or during the Term (a) the Premises shall be totally damaged or rendered wholly
untenantable by fire or other casualty, and if Landlord shall determine, in its
sole discretion, not to restore the Premises, or (b) the Building shall be so
damaged by fire or other casualty that, in Landlord's opinion, substantial
alteration, demolition or reconstruction of the Building shall be required
(whether or not the Premises shall have been damaged or rendered untenantable),
then, in any of such events, Landlord, at Landlord's option, may give to Tenant,
within ninety (90) days after such fire or other casualty, a thirty (30) days'
notice of termination of this Lease and, in the event such notice is given, this
Lease and the Term shall terminate upon the expiration of such thirty (30) days
with the same effect as if the date of expiration of such thirty (30) days were
the Expiration Date; and the Rent and Additional Charges shall be apportioned as
of such date and any prepaid portion of Rent or Additional Charges of any period
after such date shall be refunded by Landlord to Tenant.
14.3 Landlord shall attempt to obtain and maintain, throughout the Term,
in Landlord's property insurance policies, provisions to the effect that such
policies shall not be invalidated should the insured waive, in writing, prior to
loss, any or all right of recovery against any party for loss occurring to the
Building. In the event that at any time Landlord's property insurance carriers
shall exact an additional premium for the inclusion of such or similar
provisions, Landlord shall give Tenant notice thereof. In such event, if Tenant
agrees, in writing, to reimburse Landlord for such additional premium for the
remainder of the Term, Landlord shall require the inclusion of such or similar
provisions by Landlord's property insurance carriers. As long as such or similar
provisions are included in Landlord's property insurance policies then in force,
Landlord hereby waives any right of recovery against Tenant, any other permitted
occupant of the Premises, and any of their servants, employees, agents or
contractors, for any loss occasioned by fire or other property that is an
insured risk under such policies. In the event that at any time Landlord's
property insurance carriers shall not include such or similar provisions in
Landlord's property insurance policies, the waivers set forth in the foregoing
sentence shall, upon notice given by Landlord to Tenant, be deemed of no further
force or effect.
14.4 Except to the extent expressly provided in Article 14.3 hereof,
nothing contained in this Lease shall relieve Tenant of any liability to
Landlord or to its insurance carriers which Tenant may have under law or under
the provisions of this Lease in connection with any damage to the Premises or
the Building by fire or other casualty.
14.5 Notwithstanding the provisions of Article 14.1 hereof, if any such
damage is due to the fault or neglect of Tenant, any person claiming through or
under Tenant, or any of their servants, employees, agents, contractors, visitors
or licensees, then there shall be no abatement of Rent or Additional Charges
<PAGE>
11
by reason of such damages, unless Landlord is reimbursed for such abatement of
Rent or Additional Charges pursuant to any rental insurance policies that
Landlord may, in its sole discretion, elect to carry.
14.6 The Provisions of this Lease, including this Article 14, constitute
an express agreement between Landlord and Tenant with respect to any and all
damage to, or destruction of, all or any part of the Premises or any other
portion of the Building, and any statute or regulation of the State of
California, including, without limitations, Sections 1932(2) and 1933(4) of the
California Civil Code, with respect to any rights or obligations concerning
damage or destruction in the absence of any express agreement between the
parties, and any other statute or regulation, now or hereafter in effect, shall
have no application to this Lease or any damage or destruction to all or any
part of the Premises or the Building.
15. EMINENT DOMAIN
15.1 If all of the Premises is condemned or taken in any manner for public
or quasi-public use, including but not limited to a conveyance or assignment in
lieu of a condemnation or taking, this Lease shall automatically terminate as of
the earlier of the date of the vesting of title or the date of dispossession of
Tenant as a result of such condemnation or other taking. If a part of the
Premises is so condemned or taken, this Lease shall automatically terminate as
to the portion of the Premises so taken as of the earlier of the date of the
vesting of title or the date of dispossession of Tenant as a result of such
condemnation or taking. If such portion of the Building is condemned or
otherwise taken so as to require, in the opinion of Landlord, a substantial
alteration or reconstruction of the remaining portions thereof, this Lease may
be terminated by Landlord, as of the earlier of the date of the vesting of title
or the date of dispossession of Tenant as a result of such condemnation or
taking, by written notice to Tenant within sixty (60) days following notice to
Landlord of the date on which said vesting or dispossession will occur. If such
portion of the Premises is taken so as to render the remaining portion
untenantable and unusable by Tenant, this Lease may be terminated by Tenant as
of the earlier of the date of the vesting of title or the date of dispossesion
of Tenant as a result of such condemnation or taking, by written notice to
Landlord within sixty (60) days following notice to Tenant of the date on which
said vesting or dispossession will occur.
15.2 Landlord shall be entitled to the entire award in any condemnation
proceeding or other proceeding for taking for public or quasi-public use,
including, without limitation, any award made for the value of the leasehold
estate created by this Lease. No award for any partial or entire taking shall be
apportioned, and Tenant hereby assigns to Landlord any award that may be made in
such condemnation or other taking, together with any and all rights of Tenant
now or hereafter arising in or to same or any part thereof; provided, however,
that nothing contained herein shall be deemed to give Landlord any interest in
or to require Tenant to assign to Landlord any award made to Tenant specifically
for its relocation expenses or the taking of personal property and fixtures
belonging to Tenant.
15.3 In the event of a partial condemnation or other taking that does not
result in a termination of this Lease as to the entire Premises, the Rent and
Additional Charges shall abate in proportion to the portion of the Premises
taken by such condemnation or other taking.
15.4 If all or any portion of the Premises is condemned or otherwise taken
for public or quasi-public use for a limited period of time, this Lease shall
remain in full force and effect and Tenant shall continue to perform all of the
terms, conditions and covenants of this Lease; provided, however, the Rent and
Additional Charges shall abate during such limited period in proportion to the
portion of the Premises that is rendered untenantable and unusable as a result
of such condemnation or other taking. Landlord shall be entitled to receive the
entire award made in connection with any such temporary condemnation or other
taking.
16. ASSIGNMENT
16.1 Tenant shall not directly or indirectly, voluntarily or by operation
of law, sell, assign, encumber, pledge or otherwise transfer or hypothecate all
or any part of the Premises or Tenant's leasehold estate hereunder
(collectively, "Assignment"), or permit the Premises to be occupied by anyone
other than
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12
Tenant or sublet the Premises (collectively, "Sublease") or any portion thereof
without Landlord's prior written consent in each instance.
16.2 If Tenant desires at any time to enter into an Assignment of this
Lease or a Sublease of the Premises or any portion thereof, it shall first give
written notice to Landlord of its desire to do so, which notice shall contain
(a) the name of the proposed assignee, subtenant or occupant, (b) the nature of
the proposed assignee's, subtenant's or occupant's business to be carried on in
the Premises, (c) the portion(s) (including all) of the Premises to be subject
to such Assignment or Sublease and the other terms and provisions of the
proposed Assignment or Sublease, and (d) such financial information as Landlord
may reasonably request concerning the proposed assignee, subtenant or occupant.
16.3 At any time within sixty (60) days after Landlord's receipt of the
notice specified in Article 16.2 hereof, Landlord may by written notice to
Tenant elect to (a) Sublease itself the portion of the Premises specified in
Tenant's notice or any portion thereof, (b) take an Assignment of Tenant's
leasehold estate specified in Tenant's notice hereunder, or any portion thereof,
(c) terminate this Lease as to the portion (including all) of the Premises that
is specified in Tenant's notice, with a proportionate abatement in the Rent, (d)
consent to the Sublease or Assignment, or (e) disapprove the Sublease or
Assignment. In the event Landlord elects to Sublease or take an Assignment from
Tenant as described in subsections (a) and (b) above, the rent payable by
Landlord shall be the lower of that set forth in Tenant's notice or the Rent
payable by Tenant under this Lease at the time of the Assignment or Sublease (or
a proportionate amount thereof representing the portion of the Premises subject
to the Assignment or Sublease, if less than the entire Premises is subject to
the Assignment or Sublease). In the event Landlord elects any of the options set
forth in subsections (a), (b) and (c) above, with respect to a portion of the
Premises, (i) Tenant shall at all times provide reasonable and appropriate
access to such portion of the Premises and use of any common facilities, and
(ii) Landlord shall have the right to use such portion of the Premises for any
legal purpose in its sole discretion and the right to further assign or sublease
the portion of the Premises subject to Landlord's election without the consent
of Tenant. If Landlord consents to the Sublease or Assignment within said sixty
(60) day period, Tenant may thereafter within ninety (90) days after Landlord's
consent, but not later than the expiration of said ninety (90) days, enter into
such Assignment or Sublease of the Premises or portion thereof, upon the terms
and conditions set forth in the notice furnished by Tenant to Landlord pursuant
to Article 16.2 hereof; provided that if any amounts are payable to Tenant in
consideration of Tenant's entering into such Sublease or Assignment or as rent
thereunder, Tenant shall pay to Landlord monthly during the term of such
Sublease or Assignment as Additional Rent an amount equal to any amount by which
the total of all such amounts payable to Tenant exceeds the monthly Rent then
otherwise in effect under the Lease.
16.4 No consent by Landlord to any Assignment or Sublease by Tenant shall
relieve Tenant of any obligation to be performed by Tenant under this Lease,
whether arising before or after the Assignment or Sublease. The consent by
Landlord to any Assignment or Sublease shall not relieve Tenant from the
obligation to obtain Landlord's express written consent to any other Assignment
or Sublease. Any Assignment or Sublease that is not in compliance with this
Article 16 shall be void and, at the option of Landlord, shall constitute a
material default by Tenant under this Lease. The acceptance of Rent or
Additional Charges by Landlord from a proposed assignee or sublessee shall not
constitute the consent to such Assignment or Sublease by Landlord.
16.5 Any sale or other transfer, including by consolidation, merger or
reorganization, of a majority of the voting stock of Tenant, if Tenant is a
corporation, or any sale or other transfer of a majority of the partnership
interests in Tenant, if Tenant is a partnership, shall be an Assignment for
purposes of this Article 16. As used in this Article 16.5, the term "Tenant"
shall also mean any entity which has guaranteed Tenant's obligations under this
Lease, and the prohibition hereof shall be applicable to any sales or transfers
of the stock or partnership interests of said guarantor.
16.6 Each assignee, sublessee, or other transferee, other than Landlord,
shall assume, as provided in this Article 16.6, all obligations of Tenant under
this Lease and shall be and remain liable jointly and severally with Tenant for
the payment of Rent and Additional Charges, and for the performance of all
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13
the terms, covenants, conditions and agreements herein contained on Tenant's
part to be performed for the Term; provided, however, that the assignee,
sublessee, mortgagee, pledgee or other transferee shall be liable to Landlord
for rent only in the amount set forth in the Assignment or Sublease. No
Assignment shall be binding on Landlord unless the assignee or Tenant shall
deliver to Landlord a counterpart of the Assignment and an instrument in
recordable form that contains a covenant of assumption by the assignee
satisfactory in substance and form to Landlord, consistent with the requirements
of this Article 16.6, but the failure or refusal of the assignee to execute such
instrument of assumption shall not release or discharge the assignee from its
liability as set forth above.
16.7 In no event shall this Lease be assigned or assignable by operation
of law or by voluntary or involuntary bankruptcy proceedings or otherwise, and
in no event shall this Lease or any rights or privileges hereunder be an asset
of Tenant under any bankruptcy, insolvency, reorganization or other debtor
relief proceedings.
16.8 If Tenant is a partnership (or is comprised of two (2) or more
persons, individually and/or as co-partners of a partnership) or if Tenant's
interest in this Lease shall be assigned to a partnership (or to two (2) or more
persons, individually and/or as co-partners of a partnership) pursuant to this
article (any such partnership and such persons are referred to in this section
as "Partnership Tenant"), the following provisions of this section shall apply
to such Partnership Tenant: (a) the liability of each of the parties comprising
Partnership Tenant shall be joint and several, and (b) each of the parties
comprising Partnership Tenant hereby consents in advance to, and agrees to be
bound by, any written instrument which may hereafter be executed, changing,
modifying or discharging this Lease, in whole or in part, or surrendering all or
any part of the Premises to Landlord or renewing or extending this Lease and by
any notices, demands, requests or other communications which may hereafter be
given, by Partnership Tenant or by any of the parties comprising Partnership
Tenant, and (c) any bills, statements, notices, demands, requests or other
communications given or rendered to Partnership Tenant or to any of the parties
comprising Partnership Tenant shall be deemed given or rendered to Partnership
Tenant and to all such parties and shall be binding upon Partnership Tenant and
to all such parties, and (d) if Partnership Tenant shall admit new partners, all
of such new partners shall, by their admission to Partnership Tenant, be deemed
to have assumed performance of all of the terms, covenants and conditions of
this Lease on Tenant's part to be observed and performed, and (e) Partnership
Tenant shall give prompt notice to Landlord of the admission of any such new
partners and, upon demand of Landlord, shall cause each such new partner to
execute and deliver to Landlord an agreement in form satisfactory to Landlord,
wherein each such new partner shall assume performance of all of the terms,
covenants and conditions of this Lease on Tenant's part to be observed and
performed (but neither Landlord's failure to request any such agreement nor the
failure of any such new partner to execute or deliver any such agreement to
Landlord shall vitiate the provisions of subdivision (d) of this section).
17. UTILITIES
17.1 As long as Tenant is not in default in the performance of its
obligations under this Lease, Landlord shall furnish to the Premises during the
period from 8:00 a.m. to 6:00 p.m., Monday through Friday, except for New Year's
Day, Washington's Birthday, Memorial Day, Independence Day, Labor Day,
Thanksgiving, Christmas and such other holidays as are generally recognized in
the area where the Building is located, and subject to rules and regulations
from time to time established by Landlord: (a) heating, air conditioning and
ventilation in amounts required, in Landlord's reasonable judgment, for the use
and occupancy of the Premises, (b) freight and passenger elevator service, (c)
electric current in amounts required for normal lighting by building standard
overhead fluorescent fixtures and for normal fractional horsepower office
machines, and (d) water for lavatory and drinking purposes. It is understood
that such freight and passenger elevator service, electric current and water
will be available twenty-four (24) hours a day, subject to Articles 17.2, 17.3
and 17.4 hereof. Landlord shall provide janitorial service five days per week
generally consistent with that furnished in other first-class office buildings
in the area in which the Building is located, and window washing as determined
by Landlord. Anything contained herein to the contrary notwithstanding, Tenant
shall not permit the electrical current for the lighting devices located upon
the Premises, including, without limitation, building standard lighting
fixtures, non-building
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14
standard lighting fixtures and task lighting, to at any time exceed an average
of 2.2 watts per Gross Square Foot of Conditioned Floor Area (as said term is
defined in the California Administrative Code, Title 24, Part 6, Division T-20,
Chapter 2, Subchapter 4) of the Premises.
17.2 Landlord may impose a reasonable charge and establish reasonable
rules and regulations At Tenant's request, Landlord shall provide a schedule of
after-hours charges. Any increases shall be limited to actual increases
experienced by Landlord. for the use of any heating, air conditioning,
ventilation or electric current by Tenant at any time other than during the
hours set forth in Article 17.1, and for the usage of any additional or unusual
janitorial services required because of any non-building standard improvements
in the Premises, the carelessness of Tenant, the nature of Tenant's business
(including the operation of Tenant's business other than from 8:00 a.m. to 6:00
p.m., Monday through Friday) and the removal of any refuse and rubbish from the
Premises except for discarded material placed in wastepaper baskets and left for
emptying as an incident to Landlord's normal cleaning of the Premises. Landlord
shall not be required to provide janitorial services for portions of the
Premises used for preparing or consuming food or beverages, for storage or as a
mail room or storage room or for similar purposes or as a lavatory other than
the lavatory rooms shown on Exhibit A attached hereto.
17.3 Landlord shall not be liable for any interruption in or failure to
furnish any services or utilities when such interruption or failure is caused by
acts of God, accidents, breakage, repairs, strikes, lockouts, other labor
disputes, the making of repairs, alterations or improvements to the Premises or
the Building, the inability to obtain an adequate supply of fuel, steam, water,
electricity, labor or other supplies or by any other condition beyond Landlord's
reasonable control, including, without limitation, any governmental energy
conservation program, and Tenant shall not be entitled to any damages resulting
from such failure nor shall such failure relieve Tenant of the obligation to pay
the full Rent and Additional Charges reserved hereunder or constitute or be
construed as a constructive or other eviction of Tenant. In the event any
governmental entity promulgates or revises any statute, ordinance or building,
fire or other code or imposes mandatory or voluntary controls or guidelines on
Landlord or the Building or any part thereof, relating to the use or
conservation of energy, water, gas, light or electricity or the reduction of
automobile or other emissions or the provision of any other utility or service
provided with respect to this Lease or in the event Landlord is required or
elects to make alterations to any part of the Building in order to comply with
such mandatory or voluntary controls or guidelines, Landlord may, in its sole
discretion, comply with such mandatory or voluntary controls or guidelines or
make such alterations to the Building. Such compliance and the making of such
alterations shall in no event entitle Tenant to any damages, relieve Tenant of
the obligation to pay the full Rent and Additional Charges reserved hereunder or
constitute or be construed as a constructive or other eviction of Tenant.
17.4 Without the prior written consent of Landlord, which Landlord may
refuse in its sole discretion, Tenant shall not use any apparatus or device in
the Premises, including, without limitation, electronic data processing
machines, punch card machines and machines using current in excess of 110 volts
or that will in any way increase the amount of electricity or water usually
furnished or supplied for use of the Premises as general office space; nor shall
Tenant connect any apparatus, machine or device with water pipes or electric
current (except through existing electrical outlets in the Premises), for the
purposes of using electric current or water. If Tenant shall utilize such excess
electric current, Landlord shall have the right to install an electric current
meter in the Premises to measure the amount of electric current consumed on the
Premises. The cost of any such meter and separate conduit, wiring or panel
requirements and the installation, maintenance and repair thereof shall be paid
for by Tenant and Tenant agrees to reimburse Landlord promptly upon demand
therefor by Landlord for all such excess electric current as shown by said
meter, at the rates charged for such services by the city in which the Building
is located or the local public utility furnishing the same, plus any additional
expense incurred in keeping the account of the electric current so consumed. If
the temperature otherwise maintained in any portion of the Premises by the
heating, air conditioning or ventilation systems is affected as a result of (a)
any lights, machines or equipment (including without limitation electronic data
processing machines) used by Tenant in the Premises, (b) the occupancy of the
Premises by more than two persons per one hundred seventy-five (175) square feet
of rentable area therein, or (c) an electrical load in excess of four watts per
square foot of rentable area of the Premises, Landlord shall have the right to
install any machinery and equipment that Landlord reasonably deems necessary to
restore temperature balance, including, without limitation, modifications to the
standard air conditioning equipment, and the cost thereof, including the cost of
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15
installation and any additional cost of operation and maintenance incurred
thereby, shall be paid by Tenant to Landlord as Additional Rent hereunder upon
demand by Landlord. In addition, Tenant shall be responsible for any HVAC
problems that occur in the Premises or the Building as a result of occupancy by
more than 1 person per 175 rentable square feet of space or as a result of an
electrical load in excess of three watts per rentable square foot of Premises.
18. DEFAULT
18.1 Events of Default. The occurrence of any of the following shall
constitute an event of default on the part of Tenant:
(a) Nonpayment of Rent. Failure to pay an installment of Rent or
Additional Charges due and payable hereunder, upon the date when said
payment is due, such failure continuing for a period of three (3) business
days after written notice of such failure; provided, however, that
Landlord shall not be required to provide such notice more than twice
during the Term, the third such non-payment constituting default without
requirement of notice;
(b) Other obligations. Failure to perform any obligations, agreement
or covenant under this lease other than those matters specified in
subparagraph (a) of this Article 18.1, such failure continuing for ten
(10) business days after written notice of such failure (or such longer
period as is reasonably necessary to remedy such default), provided that
Tenant shall continuously and diligently pursue such remedy at all times
until such default is cured;
(c) Abandonment. Vacation or abandonment of the Premises together
with non-payment of rent for a continuous period in excess of five (5)
business days. Tenant waives any right to notice Tenant may have under
Section 1951.3 of the Civil Code of the State of California, the terms of
this subparagraph (c) being deemed such notice to Tenant as required by
said Section 1951.3;
(d) General Assignment. A general assignment by Tenant for the
benefit of creditors;
(e) Bankruptcy. The filing of any voluntary petition in bankruptcy
by Tenant, or the filing of an involuntary petition by Tenant's creditors,
which involuntary petition remains undischarged for a period of ten (10)
business days;
(f) Receivership. The employment of a receiver to take possession of
substantially all of Tenant's assets or the Premises, if such receivership
remains undissolved for a period of ten (10) business days after creation
thereof;
(g) Attachment. The attachment, execution or other judicial seizure
of all or substantially all of Tenant's assets or the Premises, if such
attachment or other seizure remains undismissed or undischarged for a
period of ten (10) business days after the levy thereof;
(h) Insolvency. The admission by Tenant in writing of its inability
to pay its debts as they become due, the filing by Tenant of a petition
seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future
statute, law or regulation, the filing by Tenant of any answer admitting
or failing timely to contest a material allegation of a petition filed
against Tenant in any such proceeding or, if within ten (10) days after
the commencement of any proceeding against Tenant seeking any
reorganization, or arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, such proceeding shall not have been dismissed.
18.2 Upon the occurrence of any event of default by Tenant which is not
cured by Tenant within the grace periods specified in Article 18.1 hereof,
Landlord shall have the following rights and remedies in addition to all other
rights or remedies available to Landlord in law or equity:
(a) The rights and remedies provided by California Civil Code
Section 1951.2, including but not limited to the right to terminate
Tenant's right to possession of the Premises and to recover the
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16
worth at the time of award of the amount by which the unpaid Rent and
Additional Charges for the balance of the Term after the time of award
exceeds the amount of rental loss for the same period that the Tenant
proves could be reasonably avoided, as computed pursuant to subsection (b)
of said Section 1951.2;
(b) The rights and remedies provided by California Civil Code
Section 1951.4, that allows Landlord to continue this Lease in effect and
to enforce all of its rights and remedies under this Lease, including the
right to recover Rent and Additional Charges as they become due, for so
long as Landlord does not terminate Tenant's right to possession;
provided, however, if Landlord elects to exercise its remedies described
in this subsection (b) and Landlord does not terminate this Lease, and if
Tenant requests Landlord's consent to an Assignment of this Lease or a
Sublease of the Premises at such time as Tenant is in default, Landlord
shall not unreasonably withhold its consent to such assignment or
sublease. Acts of maintenance or preservation, efforts to relet the
Premises or the appointment of a receiver upon the Landlord's initiative
to protect its interest under this Lease shall not constitute a
termination of Tenant's right to possession;
(c) The right to terminate this Lease by giving notice to Tenant in
accordance with applicable law;
(d) The right and power, as attorney-in-fact for Tenant, to enter
the Premises and remove therefrom all persons and property, to store such
property in a public warehouse or elsewhere at the cost of and for the
account of Tenant, and to sell such property and apply the proceeds
therefrom pursuant to applicable California law. Landlord, as
attorney-in-fact for Tenant, may from time to time sublet the Premises or
any part thereof for such term or terms (which may extend beyond the Term)
and at such rent and at such other terms as Landlord in its sole
discretion may deem advisable, with the right to make alterations and
repairs to the Premises. Upon each such subletting, (i) Tenant shall be
immediately liable for payment to Landlord of, in addition to indebtedness
other than Rent and Additional Charges due hereunder, the cost of such
subletting and such alterations and repairs incurred by Landlord and the
amount, if any, by which the Rent and Additional Charges for the period of
such subletting (to the extent such period does not exceed the Term)
exceeds the amount to be paid as Rent and Additional Charges for the
Premises for such period, or (ii) at the option of Landlord, rents
received from such subletting shall be applied, first, to payment of any
indebtedness other than Rent and Additional Charges due hereunder from
Tenant to Landlord; second, to the payment of any costs of such subletting
and of such alterations and repairs; third, to payment of Rent and
Additional Charges due and unpaid hereunder; and the residue, if any,
shall be held by Landlord and applied in payment of future Rent and
Additional Charges as the same become due hereunder. If Tenant has been
credited with any rent to be received by such subletting under clause (i)
and such rent shall not be promptly paid to Landlord by the subtenant(s),
or if such rentals received from such subletting under clause (ii) during
any month are less than those to be paid during that month by Tenant
hereunder, Tenant shall pay any such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly. For all purposes set
forth in this Article 18.2 (d), Landlord is hereby irrevocably appointed
attorney-in-fact for Tenant, with power of substitution. No taking
possession of the Premises by Landlord, as attorney-in-fact for Tenant,
shall be construed as an election on its part to terminate this Lease
unless a written notice of such intention is given to Tenant.
Notwithstanding any such subletting without termination, Landlord may at
any time thereafter elect to terminate this Lease for such previous
breach;
(e) The right to have a receiver appointed for Tenant, upon
application by Landlord, to take possession of the Premises and to apply
any rental collected from the Premises and to exercise all other rights
and remedies granted to Landlord as attorney-in-fact for Tenant pursuant
to Article 18.2(d) hereof; and
(f) The right, without notice, to remedy default for Tenant's
account and at Tenant's expense, without thereby waiving any other rights
or remedies of Landlord with respect to such default.
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17
19. INDEMNITY
19.1 Tenant agrees to indemnify Landlord and save Landlord harmless from
any and all loss, cost, liability, damage and expense including, without
limitation, penalties, fines and reasonable counsel fees, incurred in connection
with or arising from any cause whatsoever in or about the Premises, including,
without limiting the generality of the foregoing, (a) any default by Tenant in
the observance or performance of any of the items, covenants or conditions of
this Lease on Tenant's part to be observed or performed, or (b) the use or
occupancy or manner of use or occupancy of the Premises by Tenant or any person
claiming through or under Tenant, or (c) the condition of the Premises or any
occurrence or happening on the Premises from any cause whatsoever, or (d) any
acts, omissions or negligence of Tenant or any person claiming through or under
Tenant, or of the contractors, agents, servants, employees, visitors or
licensees of Tenant or any such person, in or about the Premises or the
building, either prior to, during, or after the expiration of, the Term
including, without limitation, any acts, omissions or negligence in the making
or performing of any alterations. Tenant further agrees to indemnify and save
harmless Landlord, Landlord's agents, and the lessor under all ground or
underlying leases, from and against any and all loss, cost, liability, damage
and expense including, without limitation, reasonable counsel fees, incurred in
connection with or arising from any claims by any persons by reason of injury to
persons or damage to property occasioned by any use, occupancy, condition,
occurrence, happening, act, omission or negligence referred to in the preceding
sentence.
20. TENANTS INSURANCE
20.1 Tenant shall procure at its cost and expense and keep in effect
during the Term comprehensive general liability insurance including contractual
liability with a minimum combined single limit of liability of two million
dollars ($2,000,000). Such insurance shall name Landlord as an additional
insured, shall specifically include the liability assumed hereunder by Tenant
(provided that the amount of such insurance shall not be construed to limit the
liability of Tenant hereunder), and shall provide that it is primary insurance,
and not excess over or contributory with any other valid, existing and
applicable insurance in force for or on behalf of Landlord, and shall provide
that Landlord shall receive thirty (30) days' written notice from the insurer
prior to any cancellation or change of coverage. Tenant shall deliver policies
of such insurance or certificates thereof to Landlord on or before the
Commencement Date, and thereafter at least thirty (30) days before the
expiration dates of expiring policies; and, in the event Tenant shall fail to
procure such insurance, or to deliver such policies or certificates, Landlord
may, at its option, procure same for the account of Tenant, and the cost thereof
shall be paid to Landlord as Additional Charges within five (5) days after
delivery to Tenant of bills therefor. Tenant's compliance with the provisions of
this Article 20.1 shall in no way limit Tenant's liability under any of the
other provisions of this Article 20.
21. LIMITATION OF LANDLORD'S LIABILITY
21.1 Landlord shall not be responsible for or liable to Tenant for any
loss or damage that may be occasioned by or through the acts or omissions of
persons occupying adjoining premises or any part of the premises adjacent to or
connected with the Premises or any part of the Building or for any loss or
damage resulting to Tenant or its property from burst, stopped or leaking water,
gas, sewer or steam pipes or for any damage or loss of property within the
Premises from any causes whatsoever, including theft.
22. ACCESS TO PREMISES
22.1 Upon reasonable notice to Tenant, Landlord reserves and shall at all
times have the right to enter the Premises at all reasonable times to inspect
same, to supply any service to be provided by Landlord to Tenant hereunder, to
show the Premises to prospective purchasers, mortgagees or tenants, to post
notices of nonresponsibility, and to alter, improve or repair the Premises and
any portion of the Building, without abatement of Rent or Additional Charges,
and may for that purpose erect, use and maintain scaffolding, pipes, conduits
and other necessary structures in and through the Premises where reasonably
required by the character of the work to be performed, provided that the
entrance to the Premises shall not be blocked thereby, and further provided that
the business of Tenant shall not be interfered with unreasonably. Tenant hereby
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18
waives any claim for damages for any injury or inconvenience to or interference
with Tenants business, any loss of occupancy or quiet enjoyment of the Premises
or any other loss occasioned thereby. For each of the aforesaid purposes,
Landlord shall at all times have and retain a key with which to unlock all of
the doors in, upon and about the Premises, excluding Tenant's vaults and safes,
or special security areas (designated in advance), and Landlord shall have the
right to use any and all means that Landlord may deem necessary or proper to
open said doors in an emergency, in order to obtain entry to any portion of the
Premises, and any entry to the Premises or portions thereof obtained by Landlord
by any of said means, or otherwise, shall not under any circumstances be
construed or deemed to be a forcible or unlawful entry into, or a detainer of,
the Premises, or an eviction, actual or constructive, of Tenant from the
Premises or any portion thereof. Landlord shall also have the right at any time,
without same constituting an actual or constructive eviction and without
incurring any liability to Tenant therefor, to change the arrangement and/or
location of entrances or passageways, doors and doorways, and corridors,
elevators, stairs, toilets and other public parts of the Building.
23. NOTICES
23.1 Except as otherwise expressly provided in this Lease, any bills,
statements, notices, demands, requests or other communications given or required
to be given under this Lease shall be effective only if rendered or given in
writing, sent by registered or certified mail or delivered personally, (a) to
Tenant (i) at Tenant's address set forth in the Basic Lease Information, if sent
prior to Tenant's taking possession of the Premises, or (ii) at the Building if
sent subsequent to Tenant's taking possession of the Premises, or (iii) at any
place where Tenant or any agent or employee of Tenant may be found if sent
subsequent to Tenant's vacating, deserting, abandoning or surrendering the
Premises, or (b) to Landlord at Landlord's address set forth in the Basic Lease
Information, or (c) to such other address as either Landlord or Tenant may
designate as its new address for such purpose by notice given to the other in
accordance with the provisions of this Article 23.1. Any such bill, statement,
notice, demand, request or other communication shall be deemed to have been
rendered or given two (2) days after the date when it shall have been mailed as
provided in this Article 23 sent by registered or certified mail, or upon the
date personal delivery is made. If Tenant is notified of the Identity and
address of Landlord's mortgagee or ground or underlying lessor, Tenant shall
give to such mortgagee or ground or underlying lessor notice of any default by
Landlord under the terms of this Lease in writing sent by registered or
certified mail, and such mortgagee or ground or underlying lessor shall be given
a reasonable opportunity to cure such default prior to Tenant exercising any
remedy available to it.
24. NO WAIVER
24.1 No failure by Landlord to insist upon the strict performance of any
obligation of Tenant under this Lease or to exercise any right, power or remedy
consequent upon a breach thereof, no acceptance of full or partial Rent or
Additional Charges during the continuance of any such breach, and no acceptance
of the keys to or possession of the Premises prior to the termination of the
Term by any employee of Landlord shall constitute a waiver of any such breach or
of such term, covenant or condition or operate as a surrender of this Lease. No
payment by Tenant or receipt by Landlord of a lesser amount than the aggregate
of all Rent and Additional Charges then due under this Lease shall be deemed to
be other than on account of the first items of such Rent and Additional Charges
then accruing or becoming due, unless Landlord elects otherwise; and no
endorsement or statement on any check and no letter accompanying any check or
other payment of Rent or Additional Charges in any such lesser amount and no
acceptance of any such check or other such payment by Landlord shall constitute
an accord and satisfaction, and Landlord may accept such check or payment
without prejudice to Landlord's right to recover the balance of such Rent or
Additional Charges or to pursue any other legal remedy.
25. TENANTS CERTIFICATES
25.1 Tenant, at any time and from time to time upon not less than ten (10)
days' prior written notice from Landlord, will execute, acknowledge and deliver
to Landlord and, at Landlord's request, to any prospective purchaser, ground or
underlying lessor or mortgagee of any part of the Real Property, a
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certificate of Tenant stating: (a) that Tenant has accepted the Premises (or, if
Tenant has not done so, that Tenant has not accepted the Premises and specifying
the reasons therefor), (b) the Commencement and Expiration Dates of this Lease,
(c) that this Lease is unmodified and in full force and effect (or, if there
have been modifications, that same is in full force and effect as modified and
stating the modifications), (d) whether or not there are then existing any
defenses against the enforcement of any of the obligations of Tenant under this
Lease (and, if so, specifying same), (e) whether or not there are then existing
any defaults by Landlord in the performance of its obligations under this Lease
(and, if so, specifying same), (f) the dates, if any, to which the Rent and
Additional Charges and other charges under this Lease have been paid, and (g)
any other information that may reasonably be required by any of such persons. It
is intended that any such certificate of Tenant delivered pursuant to this
Article 25.1 may be relied upon by Landlord and any prospective purchaser,
ground or underlying lessor or mortgagee of any part of the real property.
26. RULES AND REGULATIONS
26.1 Tenant shall faithfully observe and comply with the rules and
regulations attached to this Lease as Exhibit C and all modifications thereof
and additions thereto from time to time put into effect by Landlord. Landlord
shall not be responsible for the nonperformance by any other tenant or occupant
of the Building of any said rules and regulations. In the event of an express
and direct conflict between the terms, covenants, agreements and conditions of
this Lease and the terms, covenants, agreements and conditions of such rules and
regulations, as modified and amended from time to time by Landlord, this Lease
shall control. Landlord shall enforce all such rules and regulations in a
non-discriminatory manner.
27. TAX ON TENANTS PERSONAL PROPERTY AND OVERSTANDARD TENANT IMPROVEMENTS
27.1 prior to delinquency, Tenant shall pay all taxes levied or assessed
upon Tenant's equipment, furniture, fixtures and other personal property located
in or about the Premises. If the assessed value of Landlord's property is
increased by the inclusion therein of a value placed upon Tenant's equipment,
furniture, fixtures or other personal property, Tenant shall pay to Landlord,
upon written demand, the taxes so levied against Landlord, or the portion
thereof resulting from said increase in assessment.
27.2 Tenant shall pay to Landlord, upon written demand, such portion of
all real estate taxes levied or assessed against Landlord that are attributable
to the value of the Tenant improvements placed in the Premises in excess of the
value of the Building Standard Work (as defined in Exhibit B attached hereto)
for the Premises. If the assessing authority allocated a specific value to said
over-building standard tenant improvements of Tenant, the amount payable by
Tenant shall be the tax attributable to such specific value. If the assessing
authority does not allocate a specific value to said over-building standard
tenant improvements of Tenant, the amount payable by Tenant pursuant to this
Article 27.2 shall be an amount equal to the total tax assessed against
improvements that include said Tenant improvements multiplied by a fraction, the
numerator of which is the cost of said over-building standard tenant
improvements in excess of the cost of the Building Standard Work for the
Premises and the denominator of which is the total cost of the improvements
covered by assessment.
27.3 The portion of real estate taxes payable by Tenant pursuant to
Article 27.1 and .27.2 hereof and by other tenants of the Building pursuant to
similar provisions in their leases shall be excluded from Real Estate Taxes for
purposes of computing the Additional Charges to be paid under Article 4 hereof.
28. SECURITY DEPOSIT
28.1 By execution of this Lease, Landlord acknowledges receipt of Tenant's
security deposit for the faithful performance of all terms, covenants and
conditions of this Lease. The sum of the security deposit is specified in the
Basic Lease Information. Tenant shall also pay such reasonable additional
security deposit that Landlord may require for the issuance of each "key card"
Landlord may issue to Tenant. Tenant agrees that Landlord may, without waiving
any of Landlord's other rights and remedies under this Lease upon the occurrence
of any of the events of default described in Article 18 hereof, apply the
security deposit to remedy any failure by Tenant to repair or maintain the
Premises or to perform any
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20
other terms, covenants or conditions contained herein. If Tenant has kept and
performed all terms, covenants and conditions of this Lease during the Term,
Landlord will within thirty (30) days following the termination hereof return
said sum to Tenant or the last permitted assignee of Tenant's interest hereunder
at the expiration of the Term. Should Landlord use any portion of the security
deposit to cure any default by Tenant hereunder, Tenant shall forthwith
replenish the security deposit to the original amount. Landlord shall not be
required to keep the security deposit separate from its general funds, and
Tenant shall not be entitled to interest on any such deposit. Upon the
occurrence of any of the events of default described in Article 18 hereof, the
security deposit shall become due and payable to Landlord to the extent required
to compensate Landlord for damages incurred, or to reimburse Landlord as
provided herein, in connection with any such event of default.
29. AUTHORITY
29.1 If Tenant signs as a corporation or a partnership, each of the
persons executing this Lease on behalf of Tenant does hereby covenant and
warrant that Tenant is a duly authorized and existing entity, that Tenant has
and is qualified to do business in California, that Tenant has full right and
authority to enter into this Lease, and that each and both of the persons
signing on behalf of Tenant are authorized to do so. Upon Landlord's request,
Tenant shall provide Landlord with evidence reasonably satisfactory to Landlord
confirming the foregoing covenants and warranties.
30. MISCELLANEOUS
30.1 The words "Landlord" and "Tenant" as used herein shall include the
plural as well as the singular. The words used in neuter gender include the
masculine and feminine. If there is more than one Tenant, the obligations under
this Lease imposed on Tenant shall be joint and several. The captions preceding
the articles of this Lease have been inserted solely as a matter of convenience
and such captions in no way define or limit the scope or intent of any provision
of this Lease.
30.2 The terms, covenants and conditions contained in this Lease shall
bind and inure to the benefit of Landlord and Tenant and, except as otherwise
provided herein, their respective personal representatives and successors and
assigns; provided, however, upon the sale, assignment or transfer by the
Landlord named herein (or by any subsequent landlord) of its interest in the
Building as owner or lessee, including any transfer by operation of law, the
Landlord (or subsequent landlord) shall be relieved from all subsequent
obligations or liabilities under this Lease, and all obligations subsequent to
such sale, assignment or transfer (but not any obligations or liabilities that
have accrued prior to the date of such sale, assignment or transfer) shall be
binding upon the grantee, assignee or other transferee, who, by accepting such
interest, shall be deemed to have assumed such subsequent obligations and
liabilities. A lease of the entire Building to a person other than for occupancy
thereof shall be deemed a transfer within the meaning of this Article 30.2
30.3 If any provision of this Lease or the application thereof to any
person or circumstance shall, to any extent, be invalid or unenforceable, the
remainder of this Lease, or the application of such provision to persons or
circumstances other than those as to which it is invalid or unenforceable, shall
not be affected thereby, and each provision of this Lease shall be valid and be
enforced to the full extent permitted by law.
30.4 This Lease shall be construed and enforced in accordance with the
laws of the State of California.
30.5 Submission of this instrument for examination or signature by Tenant
does not constitute a reservation of or an option for lease, and it is not
effective as a lease or otherwise until execution and delivery by both Landlord
and Tenant.
30.6 This instrument, including the Exhibits hereto, which are made a part
of this Lease, contains the entire agreement between the parties and all prior
negotiations and agreements are merged herein. Neither Landlord nor Landlord's
agents have made any representations or warranties with respect to the Premises,
the Building or this Lease except as expressly set forth herein, and no rights,
easements or
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21
licenses are or shall be acquired by Tenant by implication or otherwise unless
expressly set forth herein.
30.7 The review, approval, inspection or examination by Landlord of any
item to be reviewed, approved, inspected or examined by Landlord under the terms
of this Lease or the exhibits attached hereto shall not constitute the
assumption of any responsibility by Landlord for either the accuracy or
sufficiency of any such item or the quality or suitability of such item for its
intended use. Any such review, approval, inspection or examination by Landlord
is for the sole purpose of protecting Landlord's interests in the Building and
under this Lease, and no third parties, including, without limitation, Tenant or
any person or entity claiming through or under Tenant, or the contractors,
agents, servants, employees, visitors or licensees of Tenant or any such person
or entity, shall have any rights hereunder.
30.8 In the event that either Landlord or Tenant fails to perform any of
its obligations under this Lease or in the event a dispute arises concerning the
meaning or interpretation of any provision of this Lease, the defaulting party
or the party not prevailing in such dispute, as the case may be, shall pay any
and all costs and expenses incurred by the other party in enforcing or
establishing its rights hereunder, including, without limitation, court costs
and reasonable counsel fees.
30.9 Upon the expiration or sooner termination of the Term, Tenant will
quietly and peacefully surrender to Landlord the Premises in the condition in
which they are required to be kept as provided in Article 9 hereof, ordinary
wear and tear and the provisions of Article 14 excepted.
30.10 Upon Tenant paying the Rent and Additional Charges and performing
all of Tenant's obligations under this Lease, Tenant may peacefully and quietly
enjoy the Premises during the Term as against all persons or entities lawfully
claiming by or through Landlord; subject, however, to the provisions of this
Lease and to any mortgages or ground or underlying leases referred to in Article
12 hereof.
30.11 Tenant covenants and agrees that no diminution of light, air or view
by any structure that may hereafter be erected (whether or not by Landlord)
shall entitle Tenant to any reduction of Rent or Additional Charges under this
Lease, result in any liability of Landlord or Tenant, or in any other way affect
this Lease or Tenant's obligations hereunder.
30.12 Any holding over after the expiration of the Term with the consent
of Landlord shall be construed to be a tenancy from month to month at one
hundred twenty-five percent (125%) of the Rent herein specified (prorated on a
monthly basis), unless Landlord shall specify a different rent in its sole
discretion, together with an amount estimated by Landlord for the monthly
Additional Charges payable under this Lease, and shall otherwise be on the terms
and conditions herein specified so far as applicable. Any holding over without
Landlord's consent shall constitute a default by Tenant and entitle Landlord to
reenter the Premises as provided in Article 18 hereof.
30.13 Neither this Lease nor any term or provision hereof may be changed,
waived, discharged or terminated orally, and no breach thereof shall be waived,
altered or modified, except by a written instrument signed by the party against
which the enforcement of the change, waiver, discharge or termination is sought.
No waiver of any breach shall affect or alter this Lease, but each and every
term, covenant and condition of this Lease shall continue in full force and
effect with respect to any other then existing or subsequent breach thereof.
30.14 The Tenant herein covenants by and for itself, its heirs, executors,
administrators and assigns, and all persons claiming under or through it, and
this Lease is made and accepted upon and subject to the following conditions:
that there shall be no discrimination against or segregation of any person or
group of persons, on account of race, color, creed, religion, sex, marital
status, age, handicaps, national origin or ancestry, in the leasing, subleasing,
transferring, use, occupancy, tenure or enjoyment of the Premises herein leased
nor shall the Tenant itself, or any person claiming under or through it,
establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy,
of tenants, lessees, subtenants, sublessees or vendees in the Premises herein
leased.
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30.15 Tenant shall look only to Landlord's estate in the Building for the
satisfaction of Tenant's remedies or for the collection of a judgment (or other
judicial process) requiring the payment of money by Landlord in the event of any
default by Landlord hereunder, and no other property or assets of Landlord or
its partners or principals, disclosed or undisclosed, shall be subject to levy,
execution or other enforcement procedure for the satisfaction of Tenant's
remedies under or with respect to this Lease, the relationship of Landlord and
Tenant hereunder or Tenant's use or occupancy of the Premises.
30.16 If Tenant shall request Landlord's consent and Landlord shall fail
or refuse to give such consent, Tenant shall not be entitled to any damages for
any withholding by Landlord of its consent, it being intended that Tenant's sole
remedy shall be an action for specific performance or injunction, and that such
remedy shall be available only in those cases where Landlord has expressly
agreed in writing not to unreasonably withhold its consent or where as a matter
of law Landlord may not unreasonably withhold its consent.
PACIFIC TOWERS ASSOCIATES,
a California Limited Partnership NETGATEWAY, Inc.
By: SIC-Long Beach, a California By: /s/ [Illegible]
Limited Partnership, General Partner -------------------------------
Its: C.O.O.
By: The Swig Company, a California ------------------------------
Corporation, General Partner
By: /s/ [Illegible]
By: /s/ Jeanne Wye -------------------------------
---------------------- Its: President
Its: President ------------------------------
---------------------
<PAGE>
A-1
PACIFIC TOWERS ASSOCIATES
STANDARD FORM OFFICE LEASE
EXHIBIT A
FLOOR PLAN
<PAGE>
EXHIBIT A
[FLOOR PLAN OMITTED]
<PAGE>
PACIFIC TOWERS ASSOCIATES
STANDARD FORM OFFICE LEASE
EXHIBIT B
WORK AGREEMENT
SEE LEASE ADDENDUM
--------------------------------------------------------------------------------
<PAGE>
C1
PACIFIC TOWERS ASSOCIATES
STANDARD FORM OFFICE LEASE
EXHIBIT C
RULES AND REGULATIONS
1. BUILDING RULES AND REGULATIONS
(a) The sidewalks, halls, passages, exits, entrances, elevators,
shopping areas, escalators and stairways of the Building shall not be obstructed
by Tenant or used by it for any purpose other than for ingress to and egress
from the Premises. The halls, passages, exits, entrances, elevators, shopping
areas, escalators and stairways are not for the use of the general public, and
Landlord shall in all cases retain the right to control and prevent access
thereto of all persons whose presence in the judgment of Landlord would be
prejudicial to the safety, character, reputation and interests of the Building
and its tenants, provided that nothing herein contained shall be construed to
prevent such access to persons with whom Tenant normally deals in the ordinary
course of its business, unless such person are engaged in illegal activities.
Tenant shall not go upon the roof of the Building, except in areas that Landlord
may designate as "common areas" from time to time.
(b) No sign, placard, picture, name, advertisement or notice visible
from the exterior of the Premises shall be inscribed, painted, affixed or
otherwise displayed by Tenant on any part of the Building without the prior
written consent of Landlord. Landlord will adopt and furnish to Tenant general
guidelines relating to signs inside the Building on the office floors. Tenant
agrees to conform to such guidelines. All approved signs or lettering on doors
shall be printed, painted, affixed or inscribed at the expense of Tenant by a
person approved by Landlord. Material visible from outside the Building will not
be permitted.
(c) The Premises shall not be used for the storage of merchandise
held for sale to the general public or for lodging. No cooking shall be done or
permitted by Tenant on the Premises, except that use by Tenant of Underwriters'
Laboratory approved equipment for brewing coffee, tea, hot chocolate and similar
beverages shall be permitted, provided that such use is in accordance with all
applicable federal, state and city laws, codes, ordinances, rules and
regulations.
(d) Tenant shall not employ any person or persons other than the
janitor of Landlord for the purpose of cleaning the Premises, unless otherwise
agreed to by Landlord in writing. Except with the written consent of Landlord,
no person or persons other than those approved by Landlord shall be permitted to
enter the Building for the
<PAGE>
C2
purpose of cleaning the Premises or any portion of the Building. Tenant shall
not cause any unnecessary labor by reason of Tenant's carelessness or
indifference in the preservation of good order and cleanliness. Janitorial
service will not be furnished on nights when rooms are occupied after 9:30 P.M.
unless, by agreement in writing, service is extended to a later hour for
specifically designated rooms.
(e) Landlord will furnish Tenant with two (2) keys to the Premises,
free of charge. No additional locking devices shall be installed without the
prior written consent of Landlord. Landlord may impose a reasonable charge for
any additional lock or any bolt installed on any door of the Premises without
the prior consent of Landlord. Tenant shall in each case furnish Landlord with a
key for any such lock. Tenant, upon the termination of its tenancy, shall
deliver to Landlord all keys to doors in the Premises.
(f) The freight elevator shall be available for use by Tenant,
subject to such reasonable scheduling as Landlord shall deem appropriate. The
persons employed by Tenant to move equipment or other items in or out of the
Building must be acceptable to Landlord. Landlord shall have the right to
prescribe the weight, size and position of all equipment, materials, supplies,
furniture or other property brought into the Building. Heavy objects shall, if
considered necessary by Landlord, stand on wood strips of such thickness as is
necessary to properly distribute the weight of such objects, Landlord will not
be responsible for loss of or damage to any such property from any cause, and
all damage done to the Building by moving or maintaining Tenant's property shall
be repaired at the expense of Tenant.
(g) Tenant shall not use or keep in the Premises or the Building any
kerosene, gasoline or flammable or combustible fluid or materials or use any
method of heating or air conditioning other than that supplied by Landlord.
Tenant shall not use, keep or permit or suffer the Premises to be occupied or
used in a manner offensive or objectionable to Landlord or other occupants of
the Building by reason of noise, odors, and/or vibrations, or interfere in any
way with other tenants or those having business in the Building.
(h) Landlord reserves the right to exclude from the Building between
the hours of 6 P.M. and 8 A.M. and at all hours on Saturdays, Sundays, and legal
holidays all persons who do not present a pass to the Building signed by
Landlord. Landlord will furnish passes to persons for whom Tenant requests same
in writing. Tenant shall be responsible for all persons for whom it requests
passes and shall be liable to Landlord for all acts of such persons. Landlord
shall in no case be liable for damages for any error with regard to the
admission to or exclusion from the Building of any person. In the case of
invasion, mob, dot, public excitement or other circumstances rendering such
action advisable in Landlord's opinion, Landlord reserves the right to prevent
access to the Building during the continuance of same by such action as Landlord
may deem appropriate, including closing doors.
<PAGE>
C3
(i) The directory of the Building will be provided for the display
of the name and location of tenants and a reasonable number of the principal
officers and employees of tenants, and Landlord reserves the right to exclude
any other names therefrom. Any additional name that Tenant shall desire to place
upon the directory must first be approved by Landlord and, if so approved, a
charge will be made therefor.
(j) No curtains, draperies, blinds, shutters, shades, screens or
other coverings, hangings or decorations shall be attached to, hung or placed
in, or used in connection with any window of the Building without the prior
written consent of Landlord. In any event, with the prior written consent of
Landlord, such items shall be installed on the office side of Landlord's
standard window covering and shall in no way be visible from the exterior of the
Building.
(k) Tenant shall not obtain for use in the Premises ice, drinking
water, food, beverage, towel or other similar services, except at such
reasonable hours and under such reasonable regulations as may be fixed by
Landlord.
(l) Tenant shall see that the doors of the Premises are closed and
locked and that all water faucets, water apparatus and utilities are shut off
before Tenant or Tenant's employees leave the Premises, so as to prevent waste
or damage, and for any default or carelessness in this regard Tenant shall make
good all injuries sustained by other tenants or occupants of the Building or
Landlord. On multiple-tenancy floors, all tenants shall keep the doors to the
Building corridors closed at all times except for ingress and egress.
(m) The toilet rooms, toilets, urinals, wash bowls and other
apparatus shall not be used for any purpose other than for which they were
constructed, no foreign substance of any kind whatsoever shall be deposited
therein, and any damage resulting to same from Tenant's misuse thereof shall be
paid by Tenant.
(n) Except with the prior consent of Landlord, Tenant shall not
sell, or permit the sale from the Premises of, or use or permit the use of any
sidewalk or mail area adjacent to the Premises for the sale of, newspapers,
magazines, periodicals, theater tickets or any other goods, merchandise or
service, nor shall Tenant carry on, or permit or allow any employees or other
person to carry on, business in or from the Premises for the service or
accommodation of occupants of any other portion of the complex, nor shall the
Premises be used for manufacturing of any kind, or for any business or activity
other than that specifically provided for in Tenant's lease.
(o) Tenant shall not install any radio or television antenna,
loudspeaker, or other device on the root or exterior walls of the Building.
<PAGE>
C4
(p) Tenant shall not use in any space, or in the common areas of the
Building, any hand trucks except those equipped with rubber tires and side
guards or such other material handling equipment as Landlord may approve. No
other vehicle of any kind shall be brought by Tenant into the Building or kept
in or about the Premises.
(q) Tenant shall store all its trash and garbage within the Premises
until removal of same to such location in the Building as' may be designated
from time to time by Landlord. No material shall be placed in the Building trash
boxes or receptacles if such material is of such nature that it may not be
disposed of in the ordinary and customary manner of removing and disposing of
trash and garbage in the City of Long Beach without being in violation of any
law or ordinance governing such disposal.
(r) All loading and unloading of merchandise, supplies, materials,
garbage and refuse shall be made only through such entryways and elevators and
at such time as Landlord shall designate. In its use of the loading areas on the
first basement floor, Tenant shall not obstruct or permit the obstruction of
said loading areas, and at no time shall Tenant park vehicles therein except for
loading and unloading.
(s) Canvassing, soliciting, peddling or distribution of handbills or
any other written material in the Building is prohibited and Tenant shall
cooperate to prevent same.
(t) Tenant shall immediately, upon request from Landlord (which
request need not be in writing), reduce its lighting in the Premises for
temporary periods designated by Landlord, when required in Landlord's judgment
to prevent overloads of the mechanical or electrical systems of the Building.
(u) Landlord reserves the right to select the name of the Building
and to make such change or changes of name as it may deem appropriate from time
to time, and Tenant shall not refer to the Building by any name other than: (1)
the name selected by Landlord (as same may be changed from time to time), or
(if) the postal address, approved by the United States Post Office. Tenant shall
not use the name of the Building in any respect other than as an address of its
operation in the Building without the prior written consent of Landlord.
(v) The requirements of Tenant will be attended to only upon
application by telephone or writing or in person at the office of the Building.
Employees of Landlord shall not perform any work or do anything outside of their
regular duties unless under special instructions from Landlord.
(w) Landlord may waive any one or more of these Rules and
Regulations for the benefit of any particular tenant or tenants, but no such
waiver by Landlord shall be construed as a waiver of these Rules and Regulations
in favor of any other tenant or tenants, nor prevent Landlord from thereafter
enforcing any such Rules and Regulations against any or all of the tenants of
the Building.
<PAGE>
C5
(x) Wherever the word "Tenant" occurs in these Rules and
Regulations, it is understood and agreed that it shall mean Tenant's associates,
agents, clerks, employees and visitors. Wherever the word "Landlord" occurs in
these Rules and Regulations, it is understood and agreed that it shall mean
Landlord's assigns, agents, clerks, employees and visitors.
(y) These Rules and Regulations are in addition to, and shall not be
construed in any way to modify, alter or amend, in whole or pail, the terms,
covenants, agreements and conditions of any lease of premises in the Building.
(z) Landlord reserves the right to make such other and reasonable
rules and regulations as in its judgment may from time to time be needed for the
safety, care and cleanliness of the Building, and for the preservation of good
order therein.
2. PARKING RULES AND REGULATIONS
Tenant and its agents, employees, invitees and other authorized users
(collectively "Authorized Users") shall strictly comply at all times with the
following rules and regulations in their use of the Arco Center parking
facilities.
(a) Tenant and its Authorized Users shall not park vehicles in any
parking areas designated by Landlord as areas for parking by visitors to the
Building.
(b) Tenant and Authorized Users shall not leave vehicles in the
Building parking areas overnight nor park any vehicles in the Building parking
areas other than automobiles, motorcycles, motor driven or non-motor driven
bicycles or four-wheeled trucks; said vehicles shall be subject to towing.
Landlord may, in its sole discretion, designate separate areas for bicycles and
motorcycles.
(c) Cars must be parked entirely within the stall lines painted on
the floor.
(d) All directional signs and arrows must be observed.
(e) The speed limit shall be 5 miles per hour.
(f) Parking is prohibited, unless a floor parking attendant approved
by Landlord directs otherwise:
(i) In areas not striped for parking
(ii) In aisles;
<PAGE>
C6
(iii) Where "No Parking" or "Handicap" signs are posted;
(iv) On ramps;
(v) In crosshatched areas; or
(vi) In such other areas as may be designated by Landlord, its
agent, lessee or licensee.
(g) Parking stickers or any other device or form of identification
supplied by Landlord shall remain the property of Landlord. Such parking
identification device must be displayed as requested and may not be mutilated in
any manner. The serial number of the parking identification device may not be
obliterated. Devices are not transferrable, and any device in the possession of
an unauthorized holder will be void. There will be a replacement charge to the
Tenant or Authorized Users of $35.00 for loss of any magnetic parking card or
other parking identification device. Tenant acknowledges that Tenant shall not
be entitled a greater number of parking stickers or other devices or forms of
identification than parking privileges allotted to Tenant
(h) Garage managers or attendants are not authorized to make or
allow any exceptions to these Rules and Regulations.
(i) Every Authorized User is requested to park and lock his own car.
All responsibility, for damage to cars is assumed by Authorized Users. Tenant
shall repair or cause to be repaired at its sole cost and expense any and a1l
damage to the Building parking facility or any part thereof caused by Tenant or
its Authorized Users or resulting from vehicles of Authorized Users.
(j) Loss or theft of parking identification devices from automobiles
must be reported to the garage manager immediately. Any parking identification
devices found on any unauthorized car will be confiscated and the illegal holder
will be subject to prosecution. Lost or stolen devices previously reported and
then found must be reported found to the office of the garage immediately.
(k) Spaces are for the express purpose of one automobile per space
unless a floor parking attendant approved by Landlord directs otherwise.
Washing, waxing, cleaning or servicing of any vehicle by the Authorized Users
and/or his agents is prohibited.
(1) The garage management reserves the right to refine the issuance
of monthly stickers or other parking identification devices to any Tenant,
Authorized Users, or person and/or his agents or representatives who willfully
refuse to comply with the above Rules and Regulations or any city, state or
federal ordinance, law or agreement.
<PAGE>
C7
(m) Authorized Users shall not load or unload in areas other than
those designated by Landlord for such activities.
(n) Authorized Users and unauthorized users parked in prohibited
areas are subject to towing at their own expense.
(o) Landlord reserves the right to revoke parking privileges for
vehicles creating or causing a nuisance, as such shall be determined by Landlord
in Landlord's sole discretion.
<PAGE>
D1
PACIFIC TOWERS ASSOCIATES
STANDARD FORM OFFICE LEASE
EXHIBIT D
PARKING AGREEMENT
The undersigned, as Landlord and Tenant respectively, are executing,
simultaneously with this Parking Agreement, a written Lease covering Premises as
described in the Lease and hereby attach this Parking Agreement to said Lease as
Exhibit D thereto.
Landlord shall make available to Tenant the right to park in the Building
(on a self-parking basis or on such other basis as may be presently in effect as
determined by the operator of the parking facilities of the Building) throughout
the Term of this Lease up to at least the number of parking spaces specified in
the Basic Lease Information. Said parking shall be on a non-reserved basis
unless otherwise specified. Tenant must specify in writing to Landlord no later
than the commencement of the Term of this Lease the number of parking spaces
desired by Tenant during the Term of this Lease. Tenant shall pay to Landlord at
the beginning of the Lease Term the monthly amount specified in the Basic Lease
Information per parking space, and thereafter the then current fair market
rental as defined below. In the event that Tenant elects at any time not to
utilize its full parking allowance, Landlord shall have the right to make such
unused spaces available to other tenants of the Building and Tenant's allowance
of parking spaces shall be reduced accordingly. Landlord shall individually
contract with Tenant or Tenant's employees for the parking spaces referred to
above, The "fair market rental" for parking in the Building for those spaces
that Tenant elects to utilize shall be that rent which is reasonably determined
in good faith by Landlord to be the then current fair market rental rate for
such spaces giving consideration to the parking charges for similar space in
buildings within the same community boundaries as the Building.
PACIFIC TOWER ASSOCIATES, a
California Limited Partnership
By: SIC - Long Beach, a California
Limited Partnership, General Partner
By: The Swig Company, a California
Corporation, General Partner
By: /s/ [Illegible]
------------------------------------
Title: President
---------------------------------
NETGATEWAY, INC., a Nevada corporation
By: /s/ [Illegible]
------------------------------------
Title: C.O.O.
---------------------------------
By: /s/ [Illegible]
------------------------------------
Title: President
---------------------------------
Tenant
If Tenant is a corporation, this Lease must be executed by (1) the Chairman,
President, or Vice-President and (2) the Secretary, any Assistant Secretary, the
Chief Financial Officer or any Assistant
Treasurer.