|
|
|
|
Legal Resources
Business Contracts
MCLE Courses
Projects
Friends
|
Sample Business ContractsHome: Sample Business Contracts:
NET LEASE
BASIC LEASE INFORMATION
DATE: November 14, 2000
LANDLORD: Hollis Street Investors, L.L.C., a Delaware limited liability
company
TENANT: Knowledge Kids Enterprises, a Delaware corporation, doing
business as "LeapFrog"
PREMISES: A portion of the Building located at 6401 Hollis Street,
Emeryville, California, as shown on EXHIBIT A attached hereto.
Landlord and Tenant stipulate that for all purposes of this
Lease the Premises contains 40,060 rentable square feet.
PROPERTY: Hollis Business Center, Emeryville, California
USE: General office and administrative purposes, including customer
training and support incidental thereto.
TERM: Approximately five (5) years
ESTIMATED COMMENCEMENT DATES: February 1, 2001
INITIAL BASE RENT: $100,150.00 ($2.50 per month per rentable
sq. ft.)
TENANT'S PERCENTAGE SHARE: 29.34%
SECURITY DEPOSIT: $1,200,000.00 Letter of Credit (subject to
adjustment as provided in Section 17)
BROKERS: Colliers International (representing
Tenant)
ADDRESS FOR NOTICES: Landlord: Hollis Street Investors, L.L.C.
c/o Riggs & Company / MEPT
808 17th Street, N.W.
Washington, D.C. 200006
Attention: Patrick O. Mayberry
With a copy to: Hollis Street Investors, L.L.C.
c/o Simeon Commercial Properties
655 Montgomery Street; Suite 1190
San Francisco, CA 94111
Attn: Director of Property Management
Tenant: Knowledge Kids Enterprises
1400 65th Street Emeryville, CA 94608
Attn: Chief Financial Officer
After Commencement Date: To Tenant at the Premises,
Attn: Chief Financial Officer
LANDLORD'S INITIALS: [INIT] TENANT'S INITIALS: [INIT]
1.
<PAGE>
LANDLORD'S CONTRIBUTION TO TENANT IMPROVEMENTS: $1,022,000.00
[REMAINDER OF PAGE INTENTIONALLY BLANK]
LANDLORD'S INITIALS: [INIT] TENANT'S INITIALS: [INIT]
2.
<PAGE>
TABLE OF CONTENTS
PAGE
1. PREMISES..................................................................1
2. TERM......................................................................1
3. RENT......................................................................3
4. BASE RENT.................................................................4
5. OPERATING EXPENSES........................................................4
6. PRORATION OF RENT.........................................................9
7. TENANT IMPROVEMENTS.......................................................9
8. USE OF THE PREMISES.......................................................9
9. ALTERATIONS..............................................................11
10. REPAIRS..................................................................13
11. DAMAGE OR DESTRUCTION....................................................14
12. EMINENT DOMAIN...........................................................15
13. INDEMNITY AND INSURANCE..................................................15
14. ASSIGNMENT OR SUBLET.....................................................18
15. DEFAULT..................................................................21
16. LANDLORD'S RIGHT TO PERFORM TENANT'S COVENANTS...........................23
17. LETTER OF CREDIT.........................................................23
18. SURRENDER OF PREMISES....................................................25
19. HOLDING OVER.............................................................26
20. ACCESS TO PREMISES.......................................................26
21. SIGNS....................................................................26
22. SUBORDINATION............................................................27
23. TRANSFER OF THE PROPERTY.................................................28
24. ESTOPPEL CERTIFICATES; FINANCIAL STATEMENTS..............................28
25. MORTGAGEE PROTECTION.....................................................29
26. ATTORNEYS' FEES..........................................................29
27. BROKERS..................................................................29
28. PARKING..................................................................29
29. UTILITIES AND SERVICES...................................................30
30. FITNESS FACILITY.........................................................31
31. ACCEPTANCE...............................................................31
i.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
32. USE OF BUILDING NAME.....................................................32
33. RECORDING................................................................32
34. QUITCLAIM................................................................32
35. NOTICES..................................................................32
36. LANDLORD'S EXCULPATION...................................................32
37. ADDITIONAL STRUCTURES....................................................33
38. CONSENTS AID APPROVALS...................................................33
39. RENEWAL OPTION...........................................................33
40. ROOFTOP SPACE............................................................34
41. GENERAL..................................................................35
Exhibit "A" - Premises Designation
Exhibit "B" - Property Site Plan
Exhibit "C" - Commencement Date Memorandum
Exhibit "D" - Rules and Regulations
Exhibit "E" - Form of Tenant Estoppel Certificate
Exhibit "F" - Utilities and Services
Exhibit "G" - Appraisal Procedure
ii.
<PAGE>
NET LEASE
THIS LEASE, which is effective as of the date set forth in the Basic
Lease Information, is entered by Landlord and Tenant, as set forth in the Basic
Lease Information. Terms which are capitalized in this Lease shall have the
meanings set forth in the Basic Lease Information or as otherwise defined in
this Lease.
1. PREMISES.
Landlord leases to Tenant, and Tenant leases from Landlord, the
Premises described in the Basic Lease Information (as shown on EXHIBIT A),
together with the right in common to use the Common Areas. The Common Areas
shall mean the areas and facilities within the land shown on Exhibit A-1 (the
"Land") and within the Building identified in the Basic Lease Information (the
"Building") and within all other buildings and improvements now or hereafter
located on the Land, provided and designated by Landlord for the general use,
convenience or benefit of Tenant and other tenants and occupants of the Property
restrooms; janitorial, telephone and electrical closets; sidewalks; driveways,
public lobbies, entrances and stairs; and unreserved parking areas). Landlord
reserves the right to make changes to the Common Areas, provided that such
changes do not permanently materially adversely affect Tenant's reasonable
access to the Premises or reduce the parking spaces available to Tenant to less
than that required by applicable Legal Requirements (as defined in Section 8.c.
below). The Building and such other buildings and improvements now or hereafter
located on the Land are collectively referred to in this Lease as the
"Buildings". The Land, the Buildings and the Common Areas are collectively
referred to in this Lease as the "Property" or the "Real Property". Reference
herein to the "Building" or the "Buildings" includes all leasable space and
Common Areas located therein.
2. TERM.
a. LEASE TERM. The term of this Lease (the "Term") shall commence on
the Commencement Date (as defined in Subsection 2.b.) and, unless terminated on
an earlier date in accordance with the terms of this Lease or renewed pursuant
to Section 39 below, shall end on the date (the "Expiration Date") that is the
last day of the calendar month in which occurs the day preceding the fifth (5th)
annual anniversary of the Commencement Date.
b. COMMENCEMENT DATE. The "Commencement Date" of this Lease shall be
the earliest to occur of the following: (i) the date that the Tenant
Improvements (as such terms are defined in EXHIBIT B attached hereto) have been
Substantially Completed and Landlord provides written notice thereof to Tenant;
(ii) the date Tenant occupies the Premises for the conduct of business; (iii)
the date the Commencement Date would have occurred but for Tenant Delay; or (iv)
February 1, 2001.
"Substantial Completion of the Tenant Improvements" shall be deemed to
have occurred when the Tenant Improvements have been completed in accordance
with the Final Plans (as defined in EXHIBIT B), subject only to the completion
or correction of Punch List Items, Landlord's Work has been completed to the
extent required so that the Premises may be lawfully occupied by Tenant for
general office and administrative purposes, and the Premises may
1.
<PAGE>
otherwise be lawfully occupied by Tenant for general office and administrative
purposes. Tenant shall be responsible, at its sole cost and expense, for
obtaining any permits required by reason of Tenant's particular use of the
Premises (including, without limitation, permits for any Hazardous Materials
used in connection therewith) (collectively, the "Special Use Permits"), and in
no event shall Substantial Completion of the Tenant Improvements require that
the Special Use Permits have been obtained. "Punch List Items" shall mean
incomplete or defective work or materials in the Tenant Improvements which do
not materially impair Tenant's use of the Premises for the conduct of Tenant's
business therein and which can be completed or corrected without material
interference with Tenant's use and enjoyment of the Premises. Within fifteen
(15) days after Substantial Completion of the Tenant Improvements, but prior to
Tenant moving any of its furniture, fixtures or equipment into the Premises,
upon either party's request Landlord and Tenant shall together conduct an
inspection of the Premises and prepare a list of the Punch List Items any items
of the Tenant Improvements that are not in conformity with the Tenant
Improvements as required by the terms of this Lease. Landlord shall use its good
faith efforts to correct all such items within a reasonable period of time
following preparation of such list. In addition, within thirty (30) days
following preparation of such list, upon either party's request Landlord and
Tenant shall conduct a second inspection of the Premises and prepare a second
list with respect to any items that were not adequately completed from the first
list and any items that were not reasonably discoverable during the first
inspection. Landlord shall use its good faith efforts to correct any items
listed on the second list within a reasonable period of time following
preparation of such list. Punch List Items shall be corrected by Landlord in an
orderly fashion, and without material interference to Tenant's use and enjoyment
of the Premises. "Tenant Delay" means any delay in completion of the Tenant
Improvements caused or requested by Tenant, including any such delay caused by
(I) any Changes (as defined in Exhibit B attached hereto) to the Tenant
Improvements requested by Tenant (including any proposed Changes that are not
ultimately approved or made), (II) Tenant's interference with the construction
of the Tenant Improvements (including any early entry into the Premises, whether
or not approved by Landlord), (III) Tenant's failure to promptly respond to
inquiries regarding the construction of the Tenant Improvements or to promptly
make any selection of materials, finishes or colors, (IV) Tenant's failure to
approve or reasonably disapprove any plans or specifications or costs or budgets
or other items within the time period set forth on Exhibit B for the same, (V)
Tenant's failure to furnish any information to Landlord within the time period
set forth on Exhibit B for the same, (VI) Tenant's request that the Tenant
Improvements include special materials, finishes or installations or other
so-called "long lead" items, or (VII) the Special Use Permits, or any
requirement that the same be obtained.
Landlord shall endeavor in good faith to notify Tenant in writing of
any Tenant Delay (identifying the nature of the Tenant Delay) as soon as
reasonably practicable after Landlord becomes actually aware of such Tenant
Delay, together with Landlord's then good faith estimate of the probable
duration of such Tenant Delay.
C. PREMISES NOT DELIVERED. If, for any reason, Landlord is unable to
deliver possession of the Premises to Tenant on the Commencement Date, such
failure shall not affect the validity of this Lease nor shall such failure
subject Landlord to any liability, and the term of this Lease, and the
commencement of Tenant's obligation to pay Rent, shall nevertheless commence on
the Commencement Date, as determined pursuant to Section 2.b. above.
Notwithstanding the foregoing, in the event that Landlord does not deliver the
Premises to
2.
<PAGE>
Tenant, with the Tenant. Improvements Substantially Completed therein, on or
prior to June l, 2001, as such date shall be extended for delays caused by
Tenant Delay or Force Majeure (such date, as so extended, the "Trigger Date"),
then Tenant shall have the right to terminate this Lease by notice to Landlord
given, if at all, within ten (10) days after the Trigger Date. For purposes of
this Lease, "Force Majeure" shall mean strikes, lock-outs, labor disputes,
shortages of material or labor, fire, earthquake, flood or other casualty, acts
of God or any other cause (other than financial inability) beyond the reasonable
control of Landlord. If Tenant exercises such termination option, this Lease
shall terminate effective as of the tenth (10th) day following delivery of
Tenant's notice of termination, unless Landlord shall deliver the Premises to
Tenant, with the Tenant Improvements Substantially Completed therein, prior to
such effective termination date. If this Lease is so terminated, Landlord shall
return any payments of Rent previously made by Tenant, the Letter of Credit and
any Letter of Credit Pry needs (as such terms are defined in Section 17), and
any sums paid by Tenant to Landlord as Tenant's contribution to the cost of the
Tenant Improvements, and the parties thereupon shall be released of further
liability under this Lease.
d. COMMENCEMENT DATE MEMORANDUM. When the Commencement Date is
determined, the parties shall execute a Commencement Date Memorandum, in the
form attached hereto as EXHIBIT C, setting forth the Commencement Date and the
Expiration Date.
e. EARLY ENTRY. Tenant shall be permitted to enter the Premises fifteen
(15) days prior to the Commencement Date for the purpose of installing its
telecommunications and data equipment, so long as Landlord shall reasonably
determine that the same will not delay or interfere with Landlord's construction
of the Tenant Improvements, or increase the cost of the Tenant Improvements.
Such early entry shall not in and of itself cause the Commencement Date to occur
or give rise to Tenant's obligation to pay Base Rent or Operating Expenses, but
prior to any such entry Tenant shall submit evidence to Landlord that the
insurance required to be maintained by Tenant pursuant to Sections 13.c. and
13.h. is in effect. Tenant shall be fully responsible for any equipment or
personal property it installs during such early entry period, and Landlord shall
have no liability for any loss or damage thereto from any cause whatsoever.
Tenant's indemnification obligations under clauses (a) and (b) of Section 13.a.
shall fully apply during any such early entry period.
3. RENT.
As used in this Lease, the term "Rent" shall include: (i) the Base
Rent; (ii) Operating Expenses payable by Tenant pursuant to Section 5 below; and
(iii) all other amounts which Tenant is obligated to pay under the terms of this
Lease, including, without limitation, the parking charges payable by Tenant
pursuant to Section 28 below. All amounts of money payable by Tenant to Landlord
shall be paid without prior notice or demand, deduction or offset. If any
installment of Base Rent is not paid by Tenant by the fifth (5th) day of the
month, or if any payment of Operating Expenses or any other amount payable by
Tenant is not paid within five (5) days of the due date thereof, Tenant shall
pay to Landlord a late payment charge equal to five percent (5%) of the amount
of the delinquent amount, in addition to the amount of Rent then owing,
regardless of whether a notice of default or notice of termination has been
given by Landlord. In addition to the five percent (5%) late charge, any Base
Rent, Operating Expenses or other amounts owing hereunder which are not paid
within five (5) days after the date they are
3.
<PAGE>
due shall thereafter bear interest at the rate ("Interest Rate") which is the
lesser of eighteen percent (18%) per annum or the maximum rate permitted by
applicable law. Notwithstanding the foregoing, Landlord shall give Tenant notice
of non-payment and five (5) days from receipt of such notice to cure such
non-payment once in each calendar year before assessing such late fees and/or
interest in such calendar year.
4. BASE RENT.
a. INITIAL BASE RENT. Commencing on the Commencement Date, and
thereafter on the first day of each calendar month of the Term, Tenant shall pay
monthly base rent ("Base Rent") for the Premises to Landlord (or other entity
designated by Landlord), in advance, at Landlord's address for notices (as set
forth in the Basic Lease Information) or at such other address as Landlord may
designate. The initial Base Rent shall be the amount set forth in the Basic
Lease Information. Base Rent payable hereunder for the first full calendar month
after Tenant's obligation to pay Base Rent commences shall be paid upon Tenant's
execution of this Lease.
b. BASE RENT ADJUSTMENT. Effective as of each annual anniversary of the
Commencement Date, the Base Rent payable by Tenant for the Premises shall
increase to one-hundred four percent (104%) of the Base Rent then in effect for
the Premises (without taking into account any temporary rental abatements then
in effect).
5. OPERATING EXPENSES.
a. OPERATING EXPENSES. Tenant shall pay Tenant's Percentage Share of
Operating Expenses incurred by Landlord during each calendar year falling in
whole or in part during the Term. Tenant's Percentage Share has been calculated
as the ratio that the stipulated rentable area of the Premises bears to the
stipulated rentable area of the Building. If during the Term there is a physical
change in the rentable area of the Premises or the Building (as distinguished
from a change in the method of measuring any such rentable area), there shall be
a corresponding adjustment in Tenant's Percentage Share.
b. OPERATING EXPENSES. The term "Operating Expenses" shall include all
reasonable expenses and costs of every kind and nature, except as provided in
the next paragraph, which Landlord shall pay or become obligated to pay because
of or in connection with the ownership, management, administration, maintenance,
repair and operation of the Premises, the Buildings, the Common Areas and the
balance of the Property, to the extent allocable, as reasonably determined by
Landlord, to the Building in which the Premises is located. Operating Expenses
shall include, without limitation, the following: (i) all impositions relating
to the Real Property, including Real Property Taxes (as defined in Section
5.d.); (ii) premiums for insurance relating to the Real Property, including as
set forth in Sections 13.b., 13.d. and 13.i., and insurance deductibles paid by
Landlord; (iii) wages, salaries, bonuses and expenses and benefits (including
hospitalization, medical, surgical, retirement plan, pension plan, union dues,
life insurance, including group life insurance, welfare and other fringe
benefits, and vacation, holidays and other paid absence benefits, and costs of
uniforms) of all on-site and off-site employees of Landlord or its agents, at
the rank of property manager or below, engaged in operation, management,
administration, maintenance, repair and security of the Real Property,
4.
<PAGE>
including, without limitation, administrative, management and accounting
personnel and the individual(s) responsible for management of the Property, and
payroll, social security, workers' compensation, unemployment and similar taxes
with respect to such employees of Landlord or its agents, and the cost of
providing disability or other benefits imposed by law or otherwise, with respect
to such employees; (iv) costs of all supplies, materials and equipment rentals
used in operations with respect to the Real Property; (v) all maintenance,
janitorial (including refuse and rubbish removal and pest extermination),
security and service costs, including costs of maintaining and repairing a card
access security system and of providing cards with respect thereto; (vi) a
management fee not to exceed 5% of all gross revenues from the Real Property,
including revenues attributable to Tenant's and other tenants' payments of
Operating Expenses; (vii) legal and accounting expenses, including the cost of
audits by certified public accountants: (viii) all repair, painting and
maintenance costs relating to the Real Property and its Common Areas, including
sidewalks, landscaping, service areas, mechanical rooms, parking areas, Building
exterior and driveways; (ix) all charges for heat, water, gas, steam, fuel,
electricity and other utilities used or consumed in the Buildings and Common
Areas, provided, however, that so long as Tenant pays for electricity and gas
furnished to the Premises and to the HVAC systems serving the Premises on a
direct metered basis, charges for electricity and gas furnished to leasable
space or to the HVAC equipment serving leasable space shall be excluded from
Operating Expenses; (x) costs of repairs, replacements, and general maintenance
to and of the Building Systems and the Base Building Components (as such teens
are defined in Sections 9.a. and 10.a.; respectively, below), including, without
limitation, costs of regularly scheduled preventive maintenance/service
contracts with respect to the same; (xi) the costs of capital improvements,
capital replacements, capital repairs, capital equipment, and capital tools and
devices installed or paid for by Landlord and intended to reduce other Operating
Expenses or required to comply with Legal Requirements with which the Real
Property was not required to comply as of the Commencement Date or intended for
the protection of the health and safety of the occupants of the Property; (xii)
in the event that Landlord shall elect to operate a fitness facility on the
Property, the costs of purchasing and/or renting fitness equipment and other
equipment and personal property used in connection with such facility, and all
costs of maintaining and operating such facility, including costs described in
the other clauses of this Section 5.b.; (xiii) the cost of furniture, draperies,
carpeting, and other items of personal property (excluding paintings, sculptures
and other works of art) provided by Landlord for use in the Common Areas, the
fitness facility or the Building office (to the extent that such Building office
is dedicated to the operation and management of the Property); and (xiv)
Building office rent or rental value, for no more than 1,500 rentable square
feet. With respect to any costs included in Operating Expenses under clause (x)
which are capital expenditures, as determined by Landlord in accordance with
generally accepted accounting principles consistently applied, and with respect
to the costs of items included in Operating Expenses under clause (xi), such
costs shall be amortized over a period determined by Landlord, together with
interest on the unamortized balance at a rate per annum equal to three (3)
percentage points over the Treasury Rate charged at the time such item is
constructed or acquired, or at such higher rate as may have been paid by
Landlord on funds borrowed for the purpose of acquiring or constructing such
item, but in either case not more than the maximum rate permitted by law at the
time such item is acquired or constructed. As used herein, "Treasury Rate" means
the six-month United States treasury bill rate in effect from time to time by
the San Francisco Main Office of Bank of America, NA (or
5.
<PAGE>
any successor bank thereto), or if there is no such rate, the rate quoted by
such bank in pricing ninety day commercial loans to substantial commercial
borrowers.
Operating Expenses shall not include the following: (i) depreciation on
the Buildings or equipment or systems therein; (ii) debt service or the costs of
financing or selling the Property; (iii) rental under any ground or underlying
lease; (iv) attorneys' fees and expenses incurred in connection with lease
negotiations or disputes with past, current or prospective Building tenants; (v)
the cost of decorating, improving for tenant occupancy, painting or redecorating
portions of the Buildings to be demised to tenants; (vi) advertising,
promotional or marketing expenses; (vii) costs reimbursed by insurance proceeds,
warranty proceeds, or condemnation awards, or costs for which Landlord is
otherwise reimbursed (other than by tenants pursuant to a provisions similar to
this Section 5); (viii) real estate broker's or other leasing commissions; (ix)
penalties and interest incurred due to Landlord's failure to timely pay any Real
Property Taxes or other Operating Expenses or charges due in connection with the
Real Property, unless caused in whole or part by Tenant's failure to timely pay
any amount due from it under this Lease; (x) costs incurred due to a violation
by Landlord, as determined by written admission, stipulation, final judgment or
arbitration award, of any of the terms and conditions of this Lease or any other
lease relating to a Building, except to the extent such costs reflect costs that
would have been incurred by Landlord absent such violation; (xi) costs, fines
and penalties incurred due to a violation by Landlord or the Real Property of
any Legal Requirements, except to the extent due to a violation by Tenant of the
terms of this Lease, and except further to the extent such costs reflect costs
that would have been incurred by Landlord absent such violation; (xii) the cost
of services made available at no special cost to any tenant of a Building but
only made available to Tenant at special cost; (xiii) the cost of special
services made available to Tenant for which Tenant pays Landlord pursuant to
another provision of this Lease; (xiv) overhead and profit increments paid to
Landlord or to subsidiaries or affiliates of Landlord for services (other than
management) to the Property to the extent that the costs of the services
materially exceed the amounts normally payable for similar services to unrelated
third parties under similar circumstances (taking into account the market
factors in effect on the date any relevant contracts were" negotiated) in
comparable business parks in the county in which the Property is located; (xv)
Landlord's general corporate office overhead and administrative expenses, except
for management fees and as otherwise provided in the preceding paragraph; (xvi)
charitable and political contributions; (xvii) the purchase price of sculptures,
paintings or other objects of art'(which shall not be deemed to include
landscaping or features related thereto) placed in the Common Areas; and (xvii)
the cost of any large-scale abatement, remediation or removal activities with
respect to Hazardous Materials (as defined in Section 8.d.), provided, however,
Operating Expenses may include the costs attributable to those actions taken by
Landlord to comply with any Hazardous Materials Laws (as defined in Section
8.d.) or other Legal Requirements in connection with the ordinary operation and
maintenance of the Building or the Property.
The parties agree that statements in this Lease to the effect that
Landlord is to perform certain of its obligations hereunder at its own or sole
cost and/or expense shall not be interpreted as excluding any cost from
Operating Expenses if such cost is an Operating Expense pursuant to the terns u
this Section 5.b.
c. MONTHLY ADJUSTMENT. Promptly following the commencement of the Term
and prior to the commencement of each subsequent calendar year (or as soon
thereafter as
6.
<PAGE>
practicable), Landlord shall in good faith estimate the Operating Expenses
payable by Tenant for such calendar year pursuant to this Section. Tenant shall
pay to Landlord, on the first day of each month, in advance, one-twelfth (1/12)
of Landlord's estimated amount. If at any time during the course of the year
Landlord determines that the Operating Expenses payable by Tenant will vary from
the then estimated amount, by notice to Tenant Landlord may revise the amount
payable by Tenant during the balance of the calendar year such that the total
estimated additional amount due from Tenant for such calendar year is paid by
Tenant during the balance of the calendar year in equal monthly amounts. Within
ninety (90) days (or as soon thereafter as practicable) after the close of each
calendar year, Landlord shall provide Tenant with a statement to account for any
difference between the actual and the estimated Operating Expenses for the
previous year. Landlord's annual statement shall be final and binding upon
Landlord and Tenant unless, within ninety (90) days after delivery thereof to
Tenant, Landlord shall revise or Tenant shall contest any item therein by
written notice to the other, specifying each item revised or contested and the
reason therefor. Notwithstanding the foregoing, the Real Property Taxes included
in any such annual statement may be modified by any subsequent adjustment or
retroactive application of Real Property Taxes affecting the calculation of
Operating Expenses. If Tenant has overpaid the amount of Operating Expenses
owing pursuant to this Section, Landlord shall credit the overpayment against
Tenant's next payments due under this Section 5 and under Section 4 above, and
if no further payments are due from Tenant Landlord shall refund the overpayment
to Tenant within thirty (30) days after delivery of such statement. If Tenant
has underpaid the amount of Operating Expenses owing pursuant to this Section,
Tenant shall pay the amount of the underpayment to Landlord within thirty (30)
days after Tenant's receipt of Landlord's statement. If the rentable area of the
Building is not fully occupied during any calendar year, Operating Expenses for
such calendar year which vary based on the level of occupancy shall be adjusted
to equal Landlord's reasonable estimate of the Operating Expenses which would
have been incurred during such calendar year if the total rentable area of the
Building were occupied.
d. DEFINITION OF REAL PROPERTY TAXES. The term "Real Property Taxes"
shall mean any ordinary or extraordinary form of assessment or special
assessment, license fee, rent tax, levy, penalty (if a result of Tenant's
delinquency), or tax (other than net income, estate, succession, inheritance,
transfer or franchise taxes), imposed by any authority having the direct or
indirect power to tax, or by any city, county, state or federal government for
any maintenance or improvement or other district or division thereof. The term
shall include all transit charges, housing fund assessments, real estate taxes
and all other taxes relating to the Premises, Building and/or Property, all
other taxes which may be levied in lieu of real estate taxes, all assessments,
assessment bonds, levies, fees, and other governmental charges (including, but
not limited to, charges for traffic facilities, improvements, child care, water
services studies and improvements, and fire services studies and improvements)
for amounts necessary to be expended because of governmental orders, whether
general or special, ordinary or extraordinary, unforeseen as well as foreseen,
of any kind and nature for public improvement, services, benefits or any other
purposes which are assessed, levied, confirmed, imposed or become a lien upon
the Premises, Building or Property or become payable during the Term. With
respect to any assessments which may be paid in installments, the Real Property
Taxes for any given year of the Term shall be calculated on the assumption that
Landlord elected the installment method of payment.
7.
<PAGE>
e. ACKNOWLEDGEMENT OF PARTIES. It is acknowledged by Landlord and
Tenant that Proposition 13 was adopted by the voters of the State of California
in the June, 1978 election, and that assessments, taxes, fees, levies and
charges may be imposed by governmental agencies for such purposes as fire
protection, street, sidewalk, road, utility construction and maintenance, refuse
removal and for other governmental services which formerly may have been
provided without charge to property owners or occupants. It is the intention of
the parties that all new and increased assessments, taxes, fees, levies and
charges due to Proposition 13 or any other cause are to be included within the
definition of Real Property Taxes for purposes of this Lease.
f. TAXES ON TENANT IMPROVEMENTS AND PERSONAL PROPERTY. Notwithstanding
any other provision hereof, Tenant shall pay the full amount of any increase in
Real Property Taxes during the Term resulting from any and all Alterations (as
defined in Section 9.a. below) of any kind whatsoever placed in, on or about the
Premises for the benefit of, at the request of, or by Tenant. Tenant shall pay,
prior to delinquency, all taxes assessed or levied against Tenant's personal
property, equipment, furniture or fixtures (collectively, "Personal Property")
in, on or about the Premises. When possible, Tenant shall cause its Personal
Property to be assessed and billed separately from the real or personal property
of Landlord. Tenant recognizes that pursuant to Section 107.6 of the California
Revenue and Taxation Code Tenant's possessory interest under this Lease may be
subject to property taxation based on the full cash value, as defined in
Sections 110 and 110.1 of the California Revenue and Taxation Code.
g. FISCAL YEAR. Landlord shall have the right to account and bill for
Operating Expenses on the basis of a fiscal year, rather than a calendar year as
set forth above, and to revise such fiscal year from time to time, provided that
Landlord follows generally accepted accounting principles consistently applied
in connection therewith.
h. NET LEASE. This shall be a Net Lease and Base Rent shall be paid to
Landlord absolutely net of all costs and expenses except as expressly herein
provided. The provisions for Tenant's payment of Tenant's Percentage Share of
Operating Expenses are intended to pass on to Tenant and reimburse Landlord for
Tenant's Percentage Share of all costs and expenses associated with the Real
Property, except as expressly provided in this Lease.
i. TENANT'S AUDIT RIGHT. Tenant shall have the right to cause a
reputable nationally recognized accounting firm to audit Landlord's books and
records pertaining to Operating Expenses for the immediately prior calendar
year, provided that Tenant notifies Landlord in writing of Tenant's intention to
exercise such audit right within ninety (90) days after receipt of the relevant
annual statement described in Section 5.c., actually begins such audit within
thirty (30) days after such notice from Tenant (but in no event earlier than ten
(10) Business Days (as defined below) after such notice) and diligently pursues
such audit to completion. Landlord agrees to make available to Tenant's
auditors, at the Building or at Landlord's office in the State of California,
the books and records relevant to the audit for review and copying, but such
books and records may not be removed from Landlord's location. Tenant shall
promptly deliver to Landlord a copy of the report or other documentation
prepared by Tenant's auditors upon completion of the audit. Tenant shall bear
all costs of such audit, except that, if the audit (as conducted and certified
by Tenant's nationally recognized accounting fin-n) shows an aggregate
overstatement of Operating Expenses of more than five percent (5%), and
Landlord's auditors concur in such findings (or, in the absence of such
concurrence, such overstatement is ultimately
8.
<PAGE>
confirmed by dispute resolution), then Landlord shall bear Tenant's costs of the
audit, such payment to be made by Landlord within thirty (30) days of Landlord's
receipt of the invoice (with reasonably satisfactory supporting documentation)
for such costs. If the agreed or confirmed audit shows an underpayment of
Operating Expenses by Tenant, Tenant shall pay to Landlord, within thirty (30)
days after the audit is agreed to or confirmed, the amount owed to Landlord,
and, if the agreed or confirmed audit shows an overpayment of Operating Expenses
by Tenant, Landlord shall reimburse Tenant for such overpayment within thirty
(30) days after the audit is agreed to or confirmed. As used in this Lease, a
"Business Day" is Monday through Friday, excluding state or federal holidays.
6. PRORATION OF RENT. If the Commencement Date is not the first day of a
calendar month, or if the end of the Term is not the last day of a calendar
month, Base Rent payable by Tenant pursuant to Section 4, and Operating Expenses
payable by Tenant pursuant to Section 5, shall be prorated on a daily basis
(based upon a thirty (30) day month) for such fractional month. If any date on
which Base Rent is to be adjusted hereunder is not the first day of a calendar
month, Base Rent payable by Tenant pursuant to Section 4 for such calendar month
shall be prorated on a daily basis (based on the number of days in such month)
to take into account the differing Base Rent rates. The termination of this
Lease shall not affect the obligations of Landlord and Tenant pursuant to
Section 5.c. which are to be performed after the termination.
7. TENANT IMPROVEMENTS. Landlord agrees to complete Landlord's Work and to
construct within the Premises certain improvements to the Premises ("Tenant
Improvements") pursuant to the terms of Exhibit B. Subject to completion of
Landlord's Work and the Tenant Improvements, the Premises shall be delivered to
Tenant in its then "as-is" condition, and Landlord shall not have any obligation
to make or pay for any alterations, additions, improvements or repairs to
prepare the Premises for Tenant's occupancy.
8. USE OF THE PREMISES.
a. USE. The Premises shall be used solely for the use set forth in the
Basic Lease Information and for no other use or purpose, Tenant shall not do or
suffer or permit anything to be done in or about the Premises or the Real
Property which will in any way obstruct or interfere with the rights of other
tenants or occupants of the Building or injure or annoy them, or use or suffer
or permit the Premises to be used for any immoral, unlawful or objectionable
purpose, nor shall Tenant cause, maintain, suffer or permit any nuisance in, on
or about the Premises or the Real Property. Without limiting the foregoing,
Tenant shall not permit any odors, smoke, dust, gas, substances, noise or
vibration to emanate from the Premises, and no loudspeakers or other similar
device which can be heard outside the Premises shall, without the prior written
approval of Landlord, be used in or about the Premises. Tenant shall not commit
or suffer to be committed any waste in, to or about the Premises. Tenant agrees
not to employ any person, entity or contractor for any work in the Premises
(including moving Tenant's equipment and furnishings in, out or around the
Premises) whose presence may give rise to a labor or other disturbance in the
Building and, if necessary to prevent such a disturbance in a particular
situation, Landlord may require Tenant to employ union labor for the work.
b. RULES AND REGULATIONS: CC&R's. Tenant shall comply with the Rules
and Regulations attached hereto as Exhibit D as the same may be modified from
time to time by
9.
<PAGE>
Landlord upon prior notice to Tenant (the "Rules"). In addition, Tenant shall
comply with any covenants, conditions and restrictions ("CC&R's") applicable to
the Real Property, and all rules, regulations and restrictions imposed by any
association formed pursuant to the CC&R's, in each case to the extent Landlord
has delivered a copy thereof to Tenant and the same are not in conflict with the
provisions of this Lease. Landlord shall not be responsible to Tenant for the
nonperformance or noncompliance by any other tenant or occupant of the Building
or Property of or with any of the Rules, but Landlord shall not enforce the
Rules in a discriminatory manner. In the event of any conflict or inconsistency
between the Rules and the balance of this Lease, the balance of this Lease shall
control.
c. COMPLIANCE. Tenant shall not permit the Premises to be used in
violation of or in conflict with, and at its sole cost and expense shall
promptly comply with, all laws, statutes, ordinances and governmental rules,
regulations or requirements now in force or which hereinafter may be in force,
with the requirements of any board of fire underwriters or other similar board
now or hereafter constituted, with any direction or occupancy certificate issued
pursuant to any law by any public officer or officers, as well as the provisions
of all recorded documents affecting the Premises (all of the foregoing,
collectively, "Legal Requirements"), insofar as any thereof relate to or affect
the condition, use or occupancy of the Premises, and Tenant shall perform all
work to the Premises and other portions of the Real Property required to effect
such compliance (or, at Landlord's election, Landlord may perform such work at
Tenant's expense). Notwithstanding the foregoing, in discharging its duty to
comply with Legal Requirements Tenant shall not be obligated to make structural
changes to the Premises or the Building, or to alter or supplement any Base
Building Components or any Building Systems which do not exclusively serve the
Premises, unless the need for compliance arises by reason of or is caused or
triggered by (i) Tenant's particular use or particular manner of use of the
Premises (as distinguished from Tenant's use of the Premises for general office
purposes in a normal and customary manner), or (ii) Tenant's Alterations, or
(iii) Tenant's particular employees or employment practices. The judgement of
any court of competent jurisdiction or the admission of Tenant in any actions
against Tenant, whether Landlord be a party thereto or not, that Tenant has so
violated any such law, statute, ordinance, rule, regulation or requirement,
shall be conclusive of such violation as between Landlord or Tenant.
d. HAZARDOUS MATERIALS. Tenant shall not cause or permit the storage,
use, generation, release, handling or disposal (collectively, "Handling") of any
Hazardous Materials (as defined below), in, on, or about the Premises or the
Real Property by Tenant or any agents, employees, contractors, licensees,
subtenants, customers, guests or invitees of Tenant (collectively with Tenant,
"Tenant Parties"), except that Tenant shall be permitted to use in the Premises
in a normal and customary manner normal quantities of office supplies or
products (such as copier fluids or cleaning supplies) customarily used in the
conduct of general business office activities ("Common Office Chemicals"),
provided that the Handling of such Common Office Chemicals shall comply at all
times with all Legal Requirements, including Hazardous Materials Laws (as
defined below). Upon Landlord's request from time to time, Tenant shall provide
to Landlord a complete written inventory of all Hazardous Materials which Tenant
anticipates using or storing on, or discharging from , the Premises along with
copies of all reports, permits and business plans filed with any federal, state,
local or other governmental agency. Tenant shall update the inventory as
frequently as required to reflect any material changes to the items required to
be disclosed therein. Tenant shall be solely responsible for and
10.
<PAGE>
shall indemnify, defend and hold Landlord and all other Indemnitees (as defined
in Section 13.a. below), harmless from and against all Claims (as defined in
Section 13.a. below), arising out of or in connection with, or otherwise
relating to (i) any Handling of Hazardous Materials by any Tenant Party or
Tenant's breach of its obligations hereunder, or (ii) any removal, cleanup, or
restoration work and materials necessary to return the Real Property or any
other property of whatever nature located on the Real Property to their
condition existing prior to the Handling of Hazardous Materials in, on or about
the Premises by any Tenant Party. Tenant shall promptly provide Landlord with
copies of all notices received by it, including, without limitation, any notice
of violations, notice of responsibility or demand for action from any federal,
state or local authority or official in connection with the presence of
Hazardous Materials in or about the Premises or any other portion of the
Property. In the event of any release of Hazardous Materials upon the Premises
or any other portion of the Property, or upon adjacent lands, if caused by
Tenant or any other Tenant Party, Tenant shall promptly remedy the problem in
accordance with all applicable Legal Requirements. For purposes of this Lease,
"Hazardous Materials" means any explosive, radioactive materials, hazardous
wastes, or hazardous substances, including without limitation asbestos
containing materials, PCB's, CFC's, or substances defined as "hazardous
substances" in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601-9657; the Hazardous
Materials Transportation Act of 1975, 49 U.S.C. Section 1801-1812; the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901-6987; or any other
Legal Requirement regulating, relating to, or imposing liability or standards of
conduct concerning any such materials or substances now or at any time hereafter
in effect (collectively, "Hazardous Materials Laws"). Tenant's obligations under
this Section 8.d. shall survive the expiration or other termination of this
Lease.
e. DEED RESTRICTION. The Land described herein contains hazardous
materials in soils and in the ground water under the property, and is subject to
a deed restriction dated as of October 6, 1999, and recorded on December 21,
1999, in the Official Records of Alameda County, California, as Document No.
1999450464, which Covenant and Restriction imposes certain covenants, conditions
and restrictions on the usage of the property described herein. This statement
is not a declaration that a hazard exists. Landlord has provided a copy of said
deed restriction to Tenant.
9. ALTERATIONS.
a. ALTERATIONS. Tenant shall not make any alteration, addition or
improvement in, to or upon the Premises ("Alteration") without the prior written
consent of Landlord in each instance, which consent shall not be unreasonably
withheld with respect to proposed Alterations which (i) are not structural in
nature, (ii) do not affect the Base Building Components, (iii) are, in
Landlord's opinion, compatible with the Building and the balance of the Real
Property and the Building's mechanical, plumbing, gas, electrical,
heating/ventilation/air conditioning, communication, security and fire and other
life safety systems (collectively, the "Building Systems"), (iv) in Landlord's
opinion will not interfere with the use and occupancy of any other portion of
the Building or the Real Property by any other tenant or permitted occupant
thereof, and (v) do not cause or trigger, under applicable Legal Requirements, a
requirement for "Beam Alterations". As used in this Lease, "Beam Alterations"
mean any wrapping or other alterations to the beams in the Premises or in other
portions of the Building which negatively impact the
11.
<PAGE>
aesthetics of the Premises or the Building, as determined by Landlord in good
faith. Tenant shall give Landlord not less than twenty-one (21) days' prior
written notice of any Alteration Tenant desires to make. Any Alterations as to
which Landlord shall consent shall be made only by contractors approved in
advance, in writing by Landlord, which approval shall not be unreasonably
withheld; provided, however, that Landlord may, in its sole discretion, specify
the engineers and contractors to perform any work relating to or affecting the
Building Systems or the Base Building Components. Tenant shall comply with all
Legal Requirements applicable to each Alteration and shall deliver to Landlord a
complete set of "as built" plans and specifications for each Alteration. Any
work to the balance of the Building or Real Property related to or affected or
triggered by Tenant's Alterations shall be performed by Tenant at Tenant's
expense (or, at Landlord's election, Landlord may perform such work at Tenant's
expense). Tenant shall be solely responsible for maintenance and repair of all
Alterations made by Tenant. Tenant shall pay Landlord on demand (whether prior
to or during the course of construction) an amount (the "Alteration Fee") equal
to five percent (5%) of the total cost of each Alteration (and for purposes of
calculating the Alteration Fee, such cost shall include architectural and
engineering fees, but shall not include permit fees) as compensation to Landlord
for miscellaneous costs incurred by Landlord in connection with the Alteration.
In addition, Tenant shall reimburse Landlord for all third party fees paid by
Landlord in connection with reviewing the proposed Alterations (whether or not
the proposed Alterations are ultimately approved by Landlord or made by Tenant),
including, without limitation, Landlord's architectural and engineering fees.
All Alterations shall be performed diligently and in a first-class workmanlike
manner and in accordance with plans and specifications approved by Landlord, and
shall comply with Landlord's construction procedures and requirements for the
Building (including Landlord's requirements relating to insurance and contractor
qualifications and scheduling of the work).
Notwithstanding the foregoing, Tenant shall have the right, without
Landlord's consent, to make any Alteration to the Premises that (a) is
decorative in nature (such as paint, carpet or other wall or floor finishes,
movable partitions or other such work), (b) does not affect the Base Building
Components or the Building Systems, (c) is not structural in nature and does not
require a building permit or other governmental permit, uses only first-class
materials and is performed in a workman-like manner and in accordance with all
applicable Legal Requirements, and (d) when aggregated with all other Cosmetic
Alterations performed on or about the same time or otherwise related thereto,
does not cost in excess of Ten Thousand Dollars ($10,000.00). Any Alteration
permitted without Landlord's consent pursuant to this paragraph is referred to
in this Lease as a "Cosmetic Alteration".
b. LIENS. If, because of any act or omission of Tenant or anyone
claiming by, through, or under Tenant, any mechanic's lien or other lien is
filed against the Premises or any other portion of the Real Property or against
other property of Landlord (whether or not the lien is valid or enforceable),
Tenant shall, at its own expense, cause it to be discharged of record within a
reasonable time, not to exceed ten (10) days, after the date of the filing. In
addition, Tenant shall defend and indemnify Landlord and hold it harmless from
any and all Claims resulting from the lien. Without limitation of Landlord's
other remedies, Landlord shall have the rights under Section 16 below if any
such lien is not timely discharged by Tenant.
c. OWNERSHIP OF ALTERATIONS. All Alterations shall immediately become
Landlord's property. Except as provided in Section 9.d., Landlord may require
Tenant, at Tenant's sole
12.
<PAGE>
expense and by the end of the Term, to remove any Alterations and to restore the
Premises to its condition prior to the Alteration.
d. REQUEST REGARDING REMOVAL OBLIGATION. At the time that Tenant
requests Landlord's consent to any Alteration, Tenant may request that Landlord
notify Tenant if Landlord will require Tenant, at Tenant's sole expense, to
remove any or all of the Alteration by the end of the Term, and to restore the
Premises to its condition prior to the Alteration. Unless Landlord shall have
expressly agreed in writing not to require such removal and restoration,
Landlord's election right under Section 9.c. shall continue through the end of
the Term as to such Alterations. In no event shall Tenant be required to remove
any of the Tenant Improvements constructed pursuant to EXHIBIT B hereto, unless
Landlord shall have notified Tenant in writing of such removal obligation on or
prior to Landlord's approval of the Final Plans (as defined in EXHIBIT B).
10. REPAIRS.
a. LANDLORD'S REPAIRS. Landlord shall maintain the roof, foundations,
floor slabs and exterior walls of the Building (collectively, the "Base Building
Components") in good condition and repair, reasonable wear and tear excepted.
The term walls as used herein shall not include windows, glass or plate glass,
doors, special store fronts or office entries. The term roof as used herein
shall include skylights, smoke hatches and roof vents. Landlord shall also
maintain in good condition and repair, reasonable wear and tear excepted, the
Common Areas, including, but not limited to, the landscaped areas, parking areas
and driveways, and Building Systems (other than those which are Tenant's
responsibility under Section 10.b.). Tenant shall reimburse Landlord for
Landlord's costs of complying with its obligations under this Section 10 in
accordance with Section .5 above, provided, however, that, subject to Section
13.g. below, any damage caused by or repairs necessitated by any act of Tenant
or any other Tenant Party may be repaired by Landlord at Landlord's option and
at Tenant's expense. Tenant shall give Landlord prompt written notice of any
repairs required of Landlord pursuant to this Section 10, after which notice
Landlord shall have reasonable opportunity to perform the same.
b. TENANT'S REPAIRS. Tenant shall, at Tenant's expense, subject to
damage by fire or other casualty or a taking (which shall be governed by
Sections 11 and 12, respectively, below), maintain all parts of the Premises in
a good, clean and secure condition, promptly making all necessary repairs and
replacements including, but not limited to, all windows, glass or plate glass,
doors and any special store fronts or office entries, walls and wall finishes,
floor coverings. Tenant, at Tenant's expense, shall also maintain and repair all
supplemental or special HVAC systems or other Building Systems located within
and exclusively serving the Premises, such as dedicated computer or conference
room HVAC facilities, computer room fire suppression systems, security systems
other than the Building's standard card access system and any electrical system
components other than Building standard wiring and other equipment.
Notwithstanding the foregoing, subject to Section 13.g. below, Tenant shall not
be responsible for repairs to the extent such repairs are Landlord's
responsibility pursuant to Section 10.a. or are necessitated by the gross
negligence or willful misconduct of Landlord or Landlord's agents, employees or
contractors. Tenant shall not damage any demising wall or disturb the integrity
and support provided by any demising wall and shall, at its sole expense,
immediately repair any damage to any demising wall caused by Tenant or its
employees, agents or invitees or any other
13.
<PAGE>
Tenant Party. Tenant hereby waives all right to make repairs at the expense of
Landlord or in lieu thereof to vacate the Premises and its other similar rights
as provided in California Civil Code Sections 1932(1), 1941 and 1942 or any
other Legal Requirement (whether now or hereafter in effect).
11. DAMAGE OR DESTRUCTION.
a. LANDLORD'S OBLIGATION TO REBUILD. If the Premises are damaged or
destroyed, Landlord shall promptly and diligently repair the Premises unless
Landlord has the option to terminate this Lease as provided herein, and Landlord
elects to terminate.
b. RIGHT TO TERMINATE. Landlord shall have the option to terminate this
Lease if the Premises or the Building is destroyed or damaged by fire or other
casualty, regardless of whether the casualty is insured against under this
Lease, if Landlord reasonably estimates that the repair of the Premises or the
Building cannot be completed within one hundred eighty (180) days after the
casualty. Landlord shall also have the right to terminate this Lease if the
repair is not fully covered by insurance maintained (or required to be
maintained) by the Landlord pursuant to this Lease other than by reason of the
deductible amounts under Landlord's insurance policies. Tenant shall have the
option to terminate this Lease if the Premises is damaged or destroyed by fire
or other casualty, and Landlord reasonably estimates that the repair of the
Premises cannot be completed within one hundred eighty (180) days after the
casualty. Landlord shall notify Tenant of Landlord's reasonable repair period
estimate within (60) days after the casualty. If a party desires to exercise the
right to terminate this Lease as a result of a casualty, the party shall
exercise the right by giving the other party written notice of its election to
terminate within thirty (30) days after delivery of Landlord's repair period
estimate, in which event this Lease shall terminate fifteen (15) days after the
date of the terminating party's notice. If neither Landlord nor Tenant exercises
the right to terminate this Lease, this Lease shall continue in full force and
effect and Landlord shall promptly commence the process of obtaining necessary
permits and approvals, and shall commence repair of the Premises or the Building
as soon as practicable and thereafter prosecute the repair diligently to
completion.
c. LIMITED OBLIGATION TO REPAIR. Landlord's obligation, should Landlord
elect or be obligated to repair or rebuild, shall be limited to the Building
shell and any tenant improvements in the Premises which are constructed by
Landlord pursuant to Exhibit B (excluding such of the Tenant Improvements which
are unusual or extraordinary for use of the Premises as permitted hereunder, as
reasonably determined by Landlord and noticed to Tenant at the time Landlord
approves the Final Plans pursuant to Exhibit B (the "Above Standard Tenant
Improvements"). Tenant, at its option and expense, shall replace or fully repair
all trade fixtures, equipment, Above Standard Tenant Improvements, Alterations
and other improvements installed by Tenant and existing at the time of the
damage or destruction.
d. ABATEMENT OF RENT. In the event of any damage or destruction to the
Premises which does not result in termination of this Lease, the Base Rent shall
be temporarily abated proportionately to the degree the Premises are
untenantable as a result of the damage or destruction, commencing from the date
of the damage or destruction and continuing during the period required by
Landlord to substantially complete its repair and restoration of the Premises;
provided, however, that nothing herein shall preclude Landlord from being
entitled to collect the
14.
<PAGE>
full amount of any rent loss insurance proceeds. Tenant shall not be entitled to
any compensation or damages from Landlord for loss of the use of the Premises,
damage to Tenant's Personal Property or any inconvenience occasioned by any
damage, repair or restoration. Tenant hereby waives the provisions of Section
1932, Subdivision 2, and Section 1933, Subdivision 4, and Sections 1941 and 1942
of the California Civil Code, and the provisions of any similar Legal
Requirement (whether now or hereafter in effect).
e. INSURANCE PROCEEDS. If this Lease is terminated, Landlord may keep
all the insurance proceeds resulting from the damage payable pursuant to
insurance coverage maintained by Landlord, and Tenant shall have no claims
thereto.
12. EMINENT DOMAIN. If all or any material part of the Premises or balance of
the Real Property is taken for public or quasi-public use by a governmental
authority under the power of eminent domain or is conveyed to a governmental
authority in lieu of such taking (a "taking"), Landlord may terminate this Lease
by written notice to Tenant within thirty (30) days after the taking. If all or
any material part of the Premises is taken, and if the taking causes the
remaining part of the Premises to be untenantable or inadequate for use by
Tenant for the purpose for which they were leased, then Tenant, at its option
and by giving notice within fifteen (15) days after the taking, may terminate
this Lease as of the date Tenant is required to surrender possession of the
Premises. If part of the Premises is taken but the remaining part is tenantable
and adequate for Tenant's use, then this Lease shall be terminated as to the
part taken as of the date Tenant is required to surrender possession, and,
unless Landlord shall have terminated this Lease pursuant to the foregoing
provisions, Landlord shall make such repairs, alterations and improvements as
may be necessary to render the part not taken tenantable, and the Base Rent
shall be reduced in proportion to the part of the Premises taken. All
compensation awarded for the taking shall be the property of Landlord without
any deduction therefrom for any estate of Tenant, and Tenant hereby assigns to
Landlord all its right, title and interest in and to the award. Tenant shall
have the right, however, to recover from the governmental authority, but not
from Landlord, such compensation as may be awarded to Tenant on account of the
interruption of Tenant's business, moving and relocation expenses, the
unamortized cost of Tenant's Alterations (which shall in no event be deemed to
include the Tenant Improvements) (such amortization to be on a straight line
basis, without interest, from the date such Alterations are installed through
the Expiration Date), and removal of Tenant's Personal Property, provided that
any such award to Tenant will not reduce the award which would otherwise be made
to Landlord.
13. INDEMNITY AND INSURANCE.
a. INDEMNITY. Tenant shall hold Landlord and its constituent
shareholders, partners, members or other owners, and all of their agents,
contractors, servants, officers, directors, employees and licensees
(collectively with Landlord, the "Indemnitees") harmless from and indemnify the
Indemnitees against any and all claims, liabilities, damages, costs and
expenses, including reasonable attorneys' fees and costs incurred in defending
against the same (collectively, "Claims"), to the extent arising from (a) the
acts or omissions of Tenant or any other Tenant Party in, on or about the Real
Property, or (b) any construction or other work undertaken by or on behalf of
Tenant in, on or about the Premises, whether prior to or during the Term, or (c)
any accident, injury or damage, howsoever and by whomsoever caused, to any
person or property, occurring in, on or about the Premises; except to the extent
such Claims are
15.
<PAGE>
caused directly by the negligence or willful misconduct of Landlord or its
authorized representatives. In case any action or proceeding be brought against
any of the Indemnitees by reason of any such Claim, Tenant, upon notice from
Landlord, covenants to resist and defend at Tenant's sole expense such action or
proceeding by counsel reasonably satisfactory to Landlord. The provisions of
this Section 13.a. shall survive the expiration or earlier termination of this
Lease with respect to any injury, illness; death or damage occurring prior to
such expiration or termination.
b. FIRE AND EXTENDED COVERAGE. Landlord shall procure and maintain in
full force and effect with respect to the Building (including any tenant
improvements in the Premises constructed by Landlord pursuant to Exhibit B,
excluding, at Landlord's option, the Above Standard Tenant Improvements), policy
or policies of all risk insurance (including sprinkler, vandalism and malicious
mischief coverage, and any other endorsements desired by the Landlord or
required by the holder of any fee or leasehold mortgage on the Real Property,
but excluding, at Landlord's option, the insurance described in Section 13.i.
below) in such amount as Landlord shall determine, but in an amount at least
equal to eighty percent (80%) (or such greater percentage as shall be required
to preclude Landlord from being deemed a coinsurer) ) of the full replacement
cost (including debris removal, and demolition, but excluding the land and the
footings, foundations and installations below the basement level) thereof. Such
insurance, and all other insurance maintained by Landlord under this Lease,
shall be for the sole benefit of Landlord, and the proceeds therefrom shall be
under Landlord's sole control.
c. PUBLIC LIABILITY. Tenant, at its own cost and expense, shall keep
and maintain in full force and effect during the Term the following insurance
coverages, written by an insurance company licensed by and admitted to issue
insurance in the State of California, with a general policyholders' rating of
"A" or better and a financial size ranking of "Class X" or higher, in the most
recent edition of Best's Insurance Guide, in the form customary to the locality,
(i) commercial general liability insurance, including contractual liability
coverage, insuring Tenant's activities with respect to the Premises and/or
the-Raiding against loss, damage or liability for personal injury or death of
any person or loss or damage to property occurring in, upon or about the
Premises, with a minimum coverage of One Million Dollars ($1,000,000) per
occurrence/Two Million Dollars ($2,000,000) general aggregate, plus a Five
Million Dollar (55,000,000) per occurrence/general aggregate umbrella, (ii) fire
damage legal liability insurance and personal/advertising injury insurance
(which shall not be subject to the contractual, liability exclusion), each in
the minimum amount of One Million Dollars ($1,000,000), (iii) medical payments
insurance in the minimum amount of Five Thousand Dollars ($5,000), (iv) worker's
compensation insurance in statutory amounts, and (v) if Tenant operates owned,
leased or non-owned vehicles on the Property, comprehensive automobile liability
insurance with a minimum coverage of $1,000,000 per occurrence/ Two Million
Dollars ($2,000,000) general aggregate; provided, however, that if, at any time
during the Term, Tenant shall have in full force and effect a blanket policy of
public liability insurance with the same coverage for the Premises as described
above, as well as coverage of other premises and properties of Tenant, or in
which Tenant has some interest, the blanket insurance shall satisfy the
requirement hereof and be endorsed to separately apply to the Premises.
16.
<PAGE>
d. RENTAL ABATEMENT INSURANCE. Landlord may keep and maintain in full
force and effect during the Term rental abatement insurance against abatement or
loss of rents with respect to the Real Property in such amount as reasonably
determined by Landlord.
e. INSURANCE CERTIFICATES. Tenant shall furnish to Landlord, on or
before the Commencement Date and thereafter within thirty (30) days prior to the
expiration of each policy, an original certificate of insurance issued by the
insurance carrier of each policy of insurance carried by Tenant pursuant to this
Section 13. The certificates shall expressly provide that the policies shall not
be cancelable or subject to reduction of coverage or otherwise be subject to
modification except after thirty (30) days' prior written notice to the parties
named as insureds. Landlord, its successors and assigns, and any nominee of
Landlord holding any direct or indirect ownership or security interest in the
Premises, including, without limitation, any ground lessor or the holder of any
fee or leasehold mortgage, shall be named as an additional insured under each
policy of insurance maintained by Tenant pursuant to this Lease. The policies
and certificates shall further provide that the coverage shall be primary, and
that any coverage carried by Landlord shall be secondary and noncontributory
with respect to Tenant's policy.
f. TENANT'S FAILURE. If Tenant fails to maintain any insurance required
by this Lease, Tenant shall be liable for any loss or cost resulting from the
failure. This Section shall not be deemed to be a waiver of any of Landlord's
rights and remedies under any other provision of this Lease.
g. WAIVER OF SUBROGATION. Any policy or policies of fire, extended
coverage, all risk or similar casualty or property insurance which either party
obtains in connection with the Building, the Premises, or Tenant's Personal
Property shall include a clause or endorsement denying the insurer any rights of
subrogation against the other party (and the other parties named as additional
insureds pursuant to Section 13.e. above) to the extent rights have been waived
by the insured prior to the occurrence of injury or loss. Landlord and Tenant
each waives any rights of recovery against the other (and the other parties
named as additional insureds pursuant to Section 13.e. above) for injury or loss
due to hazards insurable by policies of fire, extended coverage, all risk or
similar casualty or property insurance, regardless of-whether such insurance
policies or coverage shall actually have been obtained by the party granting
such waiver, and regardless of the cause of such fire or casualty, including the
negligence of the party benefiting from such waiver. Because this Section 13.g.
will preclude the assignment of any claim mentioned in it by way of subrogation
or otherwise to an insurance company or any other person, each party to this
Lease agrees immediately to give to each of its insurance companies written
notice of the terms of the mutual waivers contained in this Section 13.g. and to
have the insurance policies properly endorsed, if necessary, to prevent the
invalidation of the insurance coverages by reason of the mutual waivers
contained in this Section 13.g.
h. TENANT'S PROPERTY AND FIXTURES. Tenant shall assume the risk of
damage to any of Tenant's furniture, equipment, machinery, goods, supplies or
fixtures or other Personal Property, and to any Alterations which Tenant may
make to the Premises, and shall insure the same throughout the Term, for their
full replacement cost, under insurance policies reasonably satisfactory to
Landlord (certificates of which shall be delivered to Landlord as set forth
above in Section 13.e). Tenant hereby releases Landlord from any obligation to
insure the foregoing items and from any liability for loss of or damage to such
items, regardless of cause.
17.
<PAGE>
i. EARTHQUAKE AND FLOOD INSURANCE. In addition to any other insurance
policies carried by Landlord in connection with the Building, Landlord may elect
to procure and maintain in full force and effect during the Term with respect to
the Building a policy of earthquake/volcanic action and flood and/or surface
water insurance, including rental value insurance against abatement or loss of
rent in the case of damage or loss covered under the earthquake/volcanic and
flood and/or surface water insurance, in an amount up to one hundred percent
(100%) of the full replacement cost (including debris removal and demolition) of
the Building.
14. ASSIGNMENT OR SUBLET.
a. Tenant shall not assign this Lease or sublet the Premises or any
portion thereof without the prior written consent of Landlord in each instance,
which consent shall not, subject to Landlord's rights under clause (i) below, be
unreasonably withheld. If Tenant desires to assign this Lease or to sublet the
Premises, or any part thereof, Tenant shall give to Landlord written notice of
its intent at least thirty (30) days in advance of the date on which Tenant
desires to assign or sublet the Premises, which notice shall designate the terms
of the proposed assignment or sublet, the identity of the proposed assignee or
sublessee, and shall be accompanied by financial statements of such proposed
assignee or sublessee and such other information regarding such party and its
business and reputation as shall be required by Landlord to evaluate the
proposed assignment or sublet. Landlord shall have thirty (30) days after
receipt of Tenant's written notice and the above specified information within
which to notify Tenant in writing that Landlord elects to (i) terminate this
Lease, in the case of a proposed assignment, or to terminate this Lease as to
that portion of the Premises to be sublet, in the case of a proposed sublet the
term of which extends into the last three (3) years of the then Term of this
Lease, (ii) consent to the proposed assignment or sublet as described in
Tenant's notice, or (iii) refuse to consent to Tenant's proposed assignment or
sublet, stating the reasonable reasons for such refusal. If Landlord fails to
notify Tenant in writing of its election within the thirty (30) day period,
Landlord shall be deemed to have made the election in clause (iii) above. No
consent by Landlord to any assignment or sublet shall be deemed to be a consent
to a use not permitted under this Lease, to any act in violation of this Lease
or to any subsequent assignment or sublet. No assignment or sublet by Tenant
shall relieve Tenant of any liability theretofore or thereafter arising under
this Lease. Any attempted assignment or sublet by Tenant in violation of the
terms and covenants of this Section shall be void. The parties hereto agree and
acknowledge that, among other circumstances for which Landlord may reasonably
withhold its consent to an assignment or sublease, it shall be reasonable for
Landlord to withhold its consent where the assignment or subletting would cause
or trigger, under applicable Legal Requirements, a requirement for Beam
Alterations.
b. PROCESSING EXPENSES. Tenant shall pay to Landlord, as Landlord's
cost of processing each proposed assignment or subletting (whether or not the
same is ultimately approved by Landlord or consummated by Tenant), an amount
equal to the sum of (i) Landlord's reasonable attorneys' and other professional
fees, plus (ii) the sum of $1000.00 for the cost of Landlord's administrative,
accounting and clerical time (collectively, "Processing Costs"). Notwithstanding
anything to the contrary herein, Landlord shall not be required to process any
request for Landlord's consent to an assignment or subletting until Tenant has
paid to Landlord the amount of Landlord's estimate of the Processing Costs. When
the actual amount of the
18.
<PAGE>
Processing Costs is determined, it shall be reconciled with Landlord's estimate,
and any payments or refunds required as a result thereof shall promptly
thereafter be made by the parties.
c. CONSIDERATION TO LANDLORD. In the event of any' assignment or
sublease, other than an assignment or sublease pursuant to Section 13.g.,
Landlord shall be entitled to receive as additional rent hereunder, seventy-five
percent (75%) of any consideration (including, without limitation, payment for
leasehold improvements) paid by the assignee or subtenant for the assignment or
sublease and, in the case of a sublease, the excess of the amount of rent paid
for the sublet space by the subtenant over the amount of Monthly Base Rent under
Section 4 above, Operating Expenses under Section 5 above and the Improvement
Advance under Paragraph l.f.iv. of EXHIBIT B attached hereto (if applicable)
attributable to the sublet space for the corresponding month. Upon Landlord's
request, Tenant shall direct any subtenant or assignee to pay the directly to
Landlord the amounts due to it pursuant to this Section 14.c. on account of such
sublease or assignment. If there is more than one sublease under this Lease, the
amounts (if any) to be paid by Tenant to Landlord pursuant to this Section 14.c.
shall be separately calculated for each sublease and amounts due Landlord with
regard to any one sublease may not be offset against rental and other
consideration pertaining to or due under any other sublease.
d. DOCUMENTATION. No permitted assignment or subletting by Tenant shall
be effective until there has been delivered to Landlord a fully executed
counterpart of the assignment or sublease which expressly provides that (i) in
the case of a sublease, the subtenant may not assign its sublease or further
sublet the sublet space without Landlord's prior written consent, (ii) in the
case of an assignment, the assignee assumes all of Tenant's obligations under
this Lease arising on or after the date of the assignment, and (iii) in the case
of a sublease, the subtenant agrees to be and remain jointly and severally
liable with Tenant to Landlord for the payment of Rent pertaining to the sublet
space in the amount set forth in the sublease, and for the performance of all of
the terms and provisions of this Lease pertaining to the sublet space. In
addition to the foregoing, no assignment or sublease by Tenant shall be
effective until there has been delivered to Landlord a fully executed
counterpart of Landlord's consent to assignment or sublease form, as applicable.
The failure or refusal of a subtenant or assignee to execute any such instrument
shall not release or discharge the subtenant or assignee from its liability as
set forth above. Notwithstanding the foregoing, no subtenant or assignee shall
be permitted to occupy the Premises unless and until such subtenant or assignee
provides Landlord with certificates evidencing that such subtenant or assignee
is carrying all insurance coverage required of it under this Lease.
e. NO MERGER. Without limiting any of the provisions of this Section
14, the voluntary or other surrender of this Lease by Tenant, or a mutual
cancellation by Landlord and Tenant, shall not work a merger, and shall, at the
option of Landlord, terminate all or any existing subleases or subtenancies or,
at the option of Landlord, operate as an assignment to Landlord of any or all
such subleases or subtenancies. If Landlord does elect that such surrender or
cancellation operate as an assignment of such subleases or subtenancies,
Landlord shall in no way be liable for any previous act or omission by Tenant
under the subleases or for the return of any deposit(s) under the subleases that
have not been actually delivered to Landlord, nor shall Landlord be bound by any
sublease modification(s) executed without Landlord's consent or for any advance
rental payment by the subtenant in excess of one month's rent.
19.
<PAGE>
f. INDIRECT ASSIGNMENTS. For purposes of this Section 14, the following
events shall be deemed an assignment or sublease, as appropriate: (i) the
issuance of equity interests (whether stock, partnership interests or otherwise)
in Tenant or any subtenant or assignee, or any entity controlling any of them,
to any person or group of related persons, in a single transaction or a series
of related or unrelated transactions, such that, following such issuance, such
person or group shall have Control (as defined below) of Tenant or any subtenant
or assignee; (ii) a transfer of Control of Tenant or any subtenant or assignee,
or any entity controlling any of them, in a single transaction or a series of
related or unrelated transactions (including, without limitation, by
consolidation, merger, acquisition or reorganization), except- that the issuance
of new, or the transfer of outstanding, capital stock or other listed equity
interests through the "over-the-counter" market or any recognized national or
international securities exchange (including as part of an initial public
offering of capital stock or other equity interests), shall not be included in
determining whether Control has been transferred; (iii) a reduction of Tenant's
assets to the point that this Lease and/or other leases are substantially
Tenant's only asset(s); or (iv) a change or conversion in the form of entity of
Tenant, any subtenant or assignee, or any entity controlling any of them, which
has the effect of limiting the liability of any of the partners, members or
other owners of such entity. "Control" shall mean direct or indirect ownership
of 50% or more of all of the voting stock of a corporation or 50% or more of the
voting legal or equitable interest in any other business entity, or the power to
direct the management and operations of any entity (by equity ownership,
contract or otherwise). The following transfers shall also be excluded in
determining whether Control has been transferred: (A) transfers in connection
with the death, disability or legal incapacity of an individual shareholder; (B)
transfers made from one spouse to another in connection with a dissolution of
marriage; and (C) transfers made to members of an individual shareholder's
family or to trusts established for the benefit of such family members.
g. AFFILIATES: SUCCESSORS. Notwithstanding anything to the contrary in
Section 14.a or Section 14.c., but subject to the other provisions of this
Section 14, Tenant may assign this Lease or sublet the Premises or any portion
thereof, without Landlord's consent, to any partnership, corporation or other
entity which controls, is controlled by, or is under common control with Tenant
(control being defined for such purposes as ownership of 50% or more of all of
the voting stock of a corporation or 50% or more of the voting legal or
equitable interest in any other business entity, and the power to direct the
management and operations of, the relevant entity) (an "Affiliate") or to any
partnership, corporation or other entity resulting from a merger or
consolidation with Tenant or which acquires all or substantially all of Tenant's
assets (through a transfer of assets or equity interests in Tenant) as a going
concern and such assets include substantial assets other than this Lease (a
"Successor"), provided that (i) Landlord receives at least ten (10) days' prior
written notice of the assignment or subletting, in which Tenant shall expressly
confirm that Tenant remains primarily liable (together with the assignee in the
event of an assignment) for all of the obligations of the Tenant under this
Lease, except that if such prior notice shall be prohibited under applicable
Legal Requirements, then such notice shall be given as promptly as is
permissible under applicable Legal Requirements, (ii) in the case of an
assignment to a Successor, the Successor's net worth is not less than Tenant's
net worth immediately prior to such assignment (or series of transactions of
which such assignment is a part), (iii) in the case of a subletting or
assignment to an Affiliate, the Affiliate remains an Affiliate for the duration
of the subletting or the balance of the terns in the event of an assignment,
(iv) Landlord receives a fully executed copy of the assignment or sublease
20.
<PAGE>
agreement between Tenant and the Affiliate or Successor at least ten (10) days
prior to the effective date of such assignment or sublease, in which the
Affiliate or Successor, as the case may be, assumes (in the event of an
assignment) all of Tenant's obligations under this Lease, and agrees (in the
event of a sublease) that such subtenant will, at Landlord's election, attorn
directly to Landlord in the event that this Lease is terminated for any reason,
except that if such prior delivery of the assignment or sublease shall be
prohibited under applicable Legal Requirements, then such delivery shall be made
as promptly as is permissible under applicable Legal Requirements, (v) the use
of the Premises will not change from the use of the Premises prior to such
assignment (or series of transactions of which such assignment is a part) or
subletting, and (vi) in the case of an assignment, the essential purpose of such
assignment is to transfer an active, ongoing business with substantial assets in
addition to this Lease, and in the case of an assignment or sublease the
transaction is for legitimate business purposes unrelated to this lease and the
transaction is not a subterfuge by Tenant to avoid it obligations under this
Lease or the restrictions on assignment and subletting contained herein.
15. DEFAULT.
a. TENANT'S DEFAULT. A material breach of this Lease by Tenant shall
exist if any of the following events (severally, "Event of Default";
collectively, "Events of Default") shall occur: (i) if Tenant shall have failed
to pay Base Rent, Tenant's Percentage Share of increased Operating Expenses, or
any other sum required to be paid hereunder when due, including any interest due
under Section 3, and such failure shall continue for three (3) days after
written notice thereof from Landlord, except that Landlord shall only be
required to give two (2) such notices in any calendar year, and thereafter any
such failure by Tenant shall constitute an Event of Default without the
requirement of notice from Landlord; (ii) if Tenant shall have failed to perform
any term, covenant or condition of this Lease except those requiring the payment
of money, and Tenant shall have failed to cure the breach within fifteen (15)
days after written notice from Landlord if the breach could reasonably be cured
within fifteen (15) day period; provided, however, if the failure could not
reasonably be cured within the fifteen (15) day period, then Tenant shall not be
in default unless it has failed to promptly commence and thereafter continue to
make diligent and reasonable efforts to cure the failure as soon as practicable
as reasonably determined by Landlord; (iii) if Tenant shall have assigned its
assets for the benefit of its creditors; (iv) if the sequestration of,
attachment of, or execution on, any material part of the property of Tenant or
on any property essential to the conduct of Tenant's business shall have
occurred, and Tenant shall have failed to obtain a return or release of the
property within thirty (30) days thereafter, or prior to sale pursuant to any
sequestration, attachment or levy, whichever is earlier; (v) if Tenant shall
have abandoned the Premises; (vi) if a court shall have made or entered any
decree or order adjudging Tenant to be insolvent, or approving as properly filed
a petition seeking reorganization of Tenant, or directing the winding up or
liquidation of Tenant, and the decree or order shall have continued for a period
of thirty (30) days; (vii) if Tenant shall make or suffer any transfer which
constitutes a fraudulent or otherwise avoidable transfer under any provision of
the federal Bankruptcy Laws or any applicable state law; or (viii) if Tenant
shall have failed to comply with the provisions of Sections 22 or 24 of this
Lease within the time periods stated therein. An Event of Default shall
constitute a default under this Lease.
b. REMEDIES UPON TENANT'S DEFAULT. Upon an Event of Default, Landlord
shall have the following remedies, in addition to all other rights and remedies
provided by law, equity,
21.
<PAGE>
statute or otherwise provided in this Lease, to which Landlord may resort
cumulatively or in the alternative:
(i) Landlord has the remedy described in California Civil Code Section
1951.4 (a landlord may continue the lease in effect after the tenant's breach
and abandonment and recover rent as it becomes due, if the tenant has the right
to sublet and assign subject only to reasonable limitations), and may continue
this Lease in full force and effect, and this Lease shall continue in full force
and effect as long as Landlord does not terminate Tenant's right to possession,
and Landlord shall have the right to collect Rent when due. During the period
Tenant is in default, Landlord may enter the Premises and relet it, or any part
of it, to third parties for Tenant's account, provided that any Rent in excess
of the Rent due hereunder shall be payable to Landlord. Tenant shall be liable
immediately to Landlord for all costs Landlord incurs in reletting the Premises
including, without limitation, brokers' commissions, expenses of cleaning and
redecorating the Premises required by the reletting and like costs. Reletting
may be for a period shorter or longer than the remaining Term of this Lease.
Tenant shall pay to Landlord the Rent and other sums due under this Lease on the
dates the Rent is due, less the Rent and other sums Landlord receives from any
reletting. No act by Landlord allowed by this Subsection (i) shall terminate
this Lease unless Landlord notifies Tenant in writing that Landlord elects to
terminate this Lease.
(ii) Landlord may terminate Tenant's right to possession of the
Premises at any time by giving written notice to that effect. No act by Landlord
other than giving written notice to Tenant of such termination shall terminate
this Lease. Acts of maintenance, efforts to relet the Premises or the
appointment of a receiver on Landlord's initiative to protect Landlord's
interest under this Lease shall not constitute a termination of Tenant's right
to possession. On termination, Landlord shall have the right to remove all
personal property of Tenant and store it at Tenant's cost and to recover from
Tenant as damages: (a) the worth at the time of award of unpaid Rent and other
sums due and payable which had been earned at the time of termination; plus (b)
the worth at the time of award of the amount by which the unpaid Rent and other
sums due and payable which would have been payable after termination until the
time of award exceeds the amount of the Rent loss that Tenant proves could have
been reasonably avoided; plus (c) the worth at the time of award of the amount
by which the unpaid Rent and other sums due and payable for the balance of the
Term after the time of award exceeds the amount of the Rent loss that Tenant
proves could be reasonably avoided; plus (d) any other amount necessary to
compensate Landlord for all the detriment proximately caused by Tenant's failure
to perform Tenant's obligations under this Lease, or which, in the ordinary
course of things, would be likely to result therefrom, including, without
limitation, any costs or expenses incurred by Landlord: (1) in retaking
possession of the Premises, including reasonable attorneys' fees and costs
therefor; (2) maintaining or preserving the Premises for reletting to a new
tenant, including repairs or alterations to the Premises for the reletting; (3)
leasing commissions; (4) any other costs necessary or appropriate to relet the
Premises; and (5) at Landlord's election, such other amounts in addition to or
in lieu of the foregoing as may be permitted from time to time by California
Civil Code Section 1951.2 or any other laws of the State of California.
The "worth at the time of award" of the amounts referred to in
Subsections (ii)(a) and (ii)(b) is computed by allowing interest at the lesser
of eighteen percent (18%) per annum or the maximum rate permitted by law, on the
unpaid Rent and other sums due and payable from the
22.
<PAGE>
date due through the date of award. The "worth at the time of award" of the
amount referred to in Subsection (ii)(c) is computed by discounting the amount
at the discount rate of the Federal Reserve Bank of San Francisco at the time of
award, plus one percent (1%). Tenant waives redemption or relief from forfeiture
under California Code of Civil Procedure Sections 1174 and 1179, or under any
other present or future law, if Tenant is evicted or Landlord takes possession
of the Premises by reason of any default of Tenant hereunder.
c. LANDLORD'S DEFAULT. Landlord shall not be deemed to be in default in
the performance of any obligation required to be performed by Landlord hereunder
unless and until Landlord has failed to perform the obligation within thirty
(30) days after receipt of written notice by Tenant to Landlord specifying the
obligation Landlord has failed to perform; provided, however, that if the nature
of Landlord's obligation is such that more than thirty (30) days are required
for its performance, then Landlord shall not be deemed to be in default if
Landlord shall commence the performance of such obligation within the thirty
(30) day period and thereafter shall diligently prosecute the same to
completion.
16. LANDLORD'S RIGHT TO PERFORM TENANT'S COVENANTS.
If Tenant shall at any time fail to make any payment or perform any
other act on its part to be made or performed under this Lease, Landlord may,
but shall not be obligated to, make the payment or perform any other act to the
extent Landlord may deem desirable and, in connection therewith, pay expenses
and employ counsel. Any payment or performance by Landlord shall not waive or
release Tenant from any obligations of Tenant under this Lease. All sums so paid
by Landlord, and all penalties, interest and costs in connection therewith,
shall be due and payable by Tenant on the next day after any payment by
Landlord, together with interest thereon at the Interest Rate, from that date to
the date of payment thereof by Tenant to Landlord, plus collection costs and
attorneys' fees. Landlord shall have the same rights and remedies for the
nonpayment thereof as in the case of default in the payment of Base Rent.
17. LETTER OF CREDIT.
a. LETTER OF CREDIT. Within ten (10) days after the date of this Lease,
Tenant shall deliver to Landlord the Letter of Credit described below as
security for Tenant's performance of all of Tenant's covenants and obligations
under this Lease; provided, however, that neither the Letter of Credit nor any
proceeds therefrom (the "Letter of Credit Proceeds") shall be deemed an advance
rent deposit or an advance payment of any other kind, or a measure or limitation
of Landlord's damages or constitute a bar or defense to any of the Landlord's
other remedies under this Lease or at law upon Tenant's default. The Letter of
Credit shall be maintained in effect from the date of this Lease through thirty
(30) days after the expiration or earlier termination of the Term, and on or
prior to the expiration of such thirty (30) day period, Landlord shall return to
Tenant the Letter of Credit (unless presented for payment as provided herein)
and any Letter of Credit Proceeds then held by Landlord (other than those held
for application by Landlord as provided below, including application to cure any
failure by Tenant to restore the Premises as required by this Lease upon the
surrender thereof); provided, however, that in no event shall any such return be
construed as an admission by Landlord that Tenant has performed all of its
obligations hereunder. Landlord shall not be required to segregate the Letter of
Credit Proceeds from its other funds and no interest shall accrue or be payable
to Tenant with respect thereto.
23.
<PAGE>
Landlord may (but shall not be required to) draw upon the Letter of Credit and
use the Letter of Credit proceeds or any portion thereof to cure any Event of
Default by Tenant under this Lease or to compensate Landlord for any damage
Landlord incurs as a result of Tenant's failure to perform any of its
obligations hereunder, it being understood that any use of the Letter of Credit
Proceeds shall not constitute a bar or defense to any of Landlord's other
remedies under this Lease. In such event and upon written notice from Landlord
to Tenant specifying the amount of the Letter of Credit Proceeds so utilized by
Landlord and the particular purpose for which such amount was applied, Tenant
shall immediately deliver to Landlord an amendment to the Letter of Credit or a
replacement thereof in an amount equal to one hundred percent (100%) of the
amount specified below for the applicable period. Tenant's failure to deliver
such amendment or replacement to Landlord within five (5) days of Landlord's
notice shall constitute an Event of Default hereunder. No lessor under any
ground or underlying lease or holder of or beneficiary under a mortgage or deed
of trust, nor any purchaser at any judicial or private foreclosure sale of the
Property or any portion thereof, shall be responsible to Tenant for such Letter
of Credit or any Letter of Credit Proceeds unless such lessor, holder or
purchaser shall have actually received the same.
b. As used herein, Letter of Credit shall mean an unconditional,
irrevocable letter f credit (hereinafter referred to as the "Letter of Credit")
issued at Tenant's sole expense by the San Francisco office of a national bank
satisfactory to Landlord (the "Bank"), naming Landlord as beneficiary, and in
the form and substance satisfactory to Landlord, in the amount of One Million
Two Hundred Thousand Dollars ($1,200,000.00) during the period from the delivery
date thereof through the fourth annual anniversary of the Commencement Date, and
reducing in amount on the fourth annual anniversary of the Commencement Date and
each annual anniversary of the Commencement Date thereafter by an amount equal
to twenty-five percent (25%) of the original amount of the Letter of Credit;
provided, however, that if on the date the Letter of credit amount would
otherwise reduce, an Event of Default, or default that with notice or the
passage of time or both could mature into an Event of Default, shall have
occurred and be continuing, the Letter of Credit amount shall not reduce on such
date and shall not thereafter reduce until such Event of Default or default
shall have been cured. The Letter of Credit shall be for a one-year or, at
Tenant's election, longer, term and shall provide: (i) that Landlord may make
mark partial and multiple draws thereunder, up to the face amount thereof, (ii)
that Landlord may draw upon the Letter of Credit up to the full amount thereof,
as determined by Landlord, and the Bank will pay to Landlord the amount of such
draw upon receipt by the Bank of a sight draft signed by Landlord and
accompanied by a written certification from Landlord to the Bank stating either:
(a) that an Event of Default has occurred and is continuing under this Lease, or
(b) that an uncured failure by the Tenant to perform one or more of its
obligations has occurred under this Lease and there exist circumstances under
which Landlord is enjoined or otherwise prevented by operation of law from
giving to Tenant a written notice which would be necessary for such failure of
performance to constitute an Event of Default under this Lease, or (c) that
Landlord has not received notice from the Bank that the Letter of Credit will be
renewed by the Bank for at least one (1) year beyond the then relevant
expiration date and Tenant has not furnished Landlord with a replacement Letter
of Credit as hereinafter provided, or (d) that Bank no longer meets the
requirements set forth above and Tenant has not furnished Landlord with a
replacement Letter of Credit as required hereunder from a Bank meeting such
requirements; and (iii) that, in the event of Landlord's assignment or other
transfer of its interest in this Lease, the Letter of Credit shall be freely
transferable by Landlord, without charge and without recourse, to
24.
<PAGE>
the assignee or transferee of such interest and the Bank shall confirm the same
to Landlord and such assignee or transferee. The Letter of Credit shall further
provide that a draw thereon pursuant to clause (ii)(c) above may only be made
during the forty-five (45) day period preceding the then applicable expiration
date of the Letter of Credit. In the event that the Bank shall fail to notify
Landlord that the Letter of Credit will be renewed for at least one (1) year
beyond the then applicable expiration date, and Tenant shall not have delivered
to Landlord, at least forty-five (45) days prior to the relevant annual
expiration date, a replacement Letter of Credit in the amount required hereunder
and otherwise meeting the requirements set forth above, then Landlord shall be
entitled to draw on the Letter of Credit as provided above, and shall hold and
apply the proceeds of such draw as Letter of Credit Proceeds pursuant to
Paragraph 17.b. above.
Notwithstanding the foregoing, in the event that Landlord shall be
required to make the Improvement Advance described in EXHIBIT B attached hereto,
then the original amount of the Letter of Credit shall be increased by the
amount of the Improvement Advance within ten (10) days after determination of
the amount of the Improvement Advance.
In the event that Tenant shall not deliver the Letter of Credit to
Landlord in the form and amount required hereby on or prior to the date required
hereby, then in lieu thereof Tenant shall deliver to Landlord cash in the amount
of the so required Letter of Credit, and Tenant's failure to deliver either cash
or the Letter of Credit shall be deemed an Event of Default hereunder. In
addition to Landlord's other rights and remedies by reason of such Event of
Default, each day which passes after the applicable due date for the Letter of
Credit until and including the day on which Tenant shall deliver such cash or
Letter of Credit to Landlord shall be chargeable to Tenant as a day of Tenant
Delay pursuant to Section 2 above of this Lease.
18. SURRENDER OF PREMISES.
By taking possession of the Premises, Tenant shall be deemed to have
accepted the Premises and the Property in good, clean and completed condition
and repair, subject to all applicable laws, codes and ordinances, but the
foregoing shall not release Landlord from liability for completion of Punch List
Items or Landlord's repair obligations under this Lease. On the Expiration Date
or earlier termination of this Lease, Tenant shall surrender the Premises to
Landlord in its condition as of the Commencement Date, normal wear and tear and
damage by fire or other casualty or eminent domain excepted. Tenant shall remove
from the Premises all of Tenant's Personal Property and any Alterations required
to be removed pursuant to Section 9 of this Lease. Tenant shall repair any
damage or perform any restoration work required by the removal. If Tenant fails
to timely remove any Personal Property or Alterations as aforesaid, Landlord may
remove the property and store and/or dispose of the same at Tenant's expense,
including interest at the Interest Rate. If the Premises are not so surrendered
at the termination of this Lease, Tenant shall indemnify Landlord against all
Claims resulting from delay by Tenant in so surrendering the Premises,
including, without limitation, any claims made by any succeeding tenant, losses
to Landlord due to lost opportunities to lease to succeeding tenants, and
attorneys' fees and costs. Tenant shall give written notice to Landlord at least
thirty (30) days prior to vacating the Premises and shall meet with Landlord for
a joint inspection of the Premises at the time of vacating. In the event of
Tenant's failure to give such notice or participate in such joint inspection,
Landlord's inspection at or after Tenant's vacating the Premises shall
conclusively be
25.
<PAGE>
deemed correct for purposes of determining Tenant's responsibility for removal
of Alterations and repairs and restoration of the Premises.
19. HOLDING OVER.
If Tenant remains in possession of all or any part of the Premises
after the expiration of the Term or the earlier termination of this Lease
without Landlord's prior written consent, the tenancy shall be a tenancy at
sufferance only and shall not constitute a renewal or extension for any further
term, regardless of whether Landlord shall accept Rent for any such period. In
such event, Base Rent shall be increased in an amount equal to the greater of
(i) two hundred percent (200%) of the Base Rent during the last month of the
Term (including any extensions); and (ii) two hundred percent (200%) of the fair
market value of the Premises. and any other sums due under this Lease shall be
payable in the amount, and at the times, specified in this Lease. The tenancy
shall be subject to every other term, condition, covenant and agreement
contained in this Lease, except that any renewal or extension option in favor of
Tenant shall not be applicable. No such increase shall impair Landlord's other
rights and remedies against Tenant by reason of such holding over by Tenant, and
Tenant shall vacate the Premises immediately upon Landlord's request.
20. ACCESS TO PREMISES.
Tenant shall permit Landlord and its agents to enter the Premises at
all reasonable times upon reasonable notice, except in the case of an emergency
(in which event entry may be made when necessary and without notice), to inspect
the Premises, to post Notices of Nonresponsibility and similar notices, to show
the Premises to interested parties such as prospective mortgagees, purchasers
and (during the last one year of the Term) tenants, to provide any services
required of Landlord hereunder, to make necessary alterations, additions,
improvements or repairs either to the Premises, the Building, or other premises
within the Building, and to discharge Tenant's obligations hereunder when Tenant
has failed to do so within a reasonable time after written notice from Landlord.
No such entry shall constitute a constructive eviction or give rise to an
abatement of Rent hereunder, constitute a constructive eviction, or otherwise
diminish Tenant's obligations under this Lease. In exercising its rights under
this Section 20, Landlord shall at all times endeavor to minimize interference
with Tenant's operations, to the extent practicable. During the last year of the
Term, Landlord shall have the right to erect on the exterior of the Premises
and/or on the exterior or in the Common Areas of the Building and the Property
suitable signs indicating that the Premises are available for lease.
21. SIGNS.
a. GENERAL. The size, design, color, location and other physical
aspects of any sign in or on the Premises shall be subject to the CC&R's,
Rules., Landlord's approval prior to installation, and to all Legal
Requirements. The costs of any permitted sign, and the costs of its
installation, maintenance and removal, shall be at Tenant's sole expense and
shall be paid within ten (10) days of Tenant's receipt of a bill from Landlord
for the costs. In no event shall Tenant be permitted to place any sign, logo or
other identification on the exterior of the Building, in the Building's Common
_Areas (other than on a Building directory maintained to identify the
26.
<PAGE>
Building's tenants), or upon the Property, or which is inside the Premises but
visible from outside of the Premises (other than upon the door(s) to the
Premises).
b. EXTERIOR BUILDING, SIEGE. Notwithstanding Section 21.a., so long as
the Tenant under this Lease (i) is the Tenant originally named under this Lease
in the Basic Lease Information, (ii) is in occupancy pursuant to this Lease of
the entire Premises originally demised under this Lease, and (iii) is not in
default of any of its obligations hereunder beyond the expiration of any
applicable grace and cure period, Tenant shall be permitted to maintain
identification signage at the top of one exterior side of the Building in a
location reasonably approved by Landlord. The installation, maintenance and
removal of Tenant's signage pursuant to this Section 21.b. shall be performed by
Tenant at Tenant's expense, but in coordination with Landlord and its reasonable
installation procedures and requirements, or at Landlord's option, by Landlord
at Tenant's expense. Such signage of Tenant shall be subject to Landlord's prior
approval and all Legal Requirements, and shall be limited to Tenant's name
and/or logo. If Tenant shall fail to meet the signage conditions specified
herein, Landlord may immediately remove Tenant's signage at Tenant's expense,
and Tenant's signage rights pursuant to this Section 21.b. shall thereafter
forever cease and terminate; provided, however, that if applicable Legal
Requirements do not require removal of such signage prior to the expiration of
the thirty (30) day period hereinafter provided, Landlord shall not remove such
signage unless it shall have given Tenant thirty (30) days' prior notice of the
signage conditions Tenant has failed to meet, and such failure continues after
the expiration of such thirty (30) day period. Upon the expiration or earlier
termination of this Lease, Tenant shall, at Tenant's expense, or at Landlord's
option Landlord shall, at Tenant's expense, remove Tenant's signage and repair
any damage to the Building caused by such removal. Tenant's signage rights with
respect to the exterior of the Building as provided above are non-exclusive, and
Landlord reserves the right to grant other signage rights with respect to the
exterior of the Building.
22. SUBORDINATION.
a. SUBORDINATE NATURE. Except as provided in Subsection b., this Lease
is subject and subordinate to all ground and underlying leases, mortgages and
deeds of trust which now or may hereafter affect the Real Property or any
portion thereof, to the CC&R's, and to all renewals, modifications,
consolidations, replacements and extensions of the foregoing, without the
necessity of any further documentation evidencing such subordination.
Notwithstanding such self-operative subordination, within ten (10) days after
Landlord's written request therefor, Tenant shall execute any and all documents
required by Landlord, the lessor under any ground or underlying lease ("Ground
Lessor"), or the holder or holders of any mortgage or deed of trust ("Holder"),
evidencing this Lease to be subordinate to the lien of any such lease, mortgage
or deed of trust, as the case may be. Tenant hereby irrevocably appoints
Landlord as Tenant's attorney-in-fact to execute and deliver any such instrument
in the name of Tenant if Tenant fails to do so within such time. If the interest
of Landlord in the Real Property or the Building is transferred to any Ground
Lessor or Holder pursuant to or in lieu of proceedings for enforcement of any
such lease, mortgage, or deed of trust, Tenant shall immediately and
automatically attorn to the Ground Lessor or Holder, and this Lease shall
continue in full force and effect as a direct lease between the Ground Lessor or
Holder and Tenant on the terms and conditions set forth herein.
27.
<PAGE>
b. POSSIBLE PRIORITY OF LEASE. If a Ground Lessor or a Holder advises
Landlord that it desires or requires this Lease to be prior and superior to a
lease, mortgage or deed of trust, Landlord may notify Tenant. Within seven (7)
days of Landlord's notice, Tenant shall execute, have acknowledged and deliver
to Landlord any and all documents or instruments, in the reasonable form
presented to Tenant, which Landlord, Ground Lessor or Holder deems necessary or
desirable to make this Lease prior and superior to the lease, mortgage or deed
of trust.
c. LEASE MODIFICATION. If, in connection with obtaining financing for
the Real Property or any portion thereof, any Holder or Ground Lessor shall
request reasonable modification to this Lease as a condition to such ground
lease or financing, Tenant shall execute and deliver to Landlord, within ten
(10) days of Landlord's request, any such modification agreement so requested,
provided such modifications do not materially adversely affect Tenant's rights
or materially increase Tenant's obligations hereunder.
d. NONDISTURBANCE AGREEMENT. Landlord represents that there are no
mortgages or deeds of trust or ground or underlying leases in place as of the
date of this Lease with respect to the Real Property. As a condition to
subordination of this Lease to any mortgage, deed of trust or ground or
underlying lease arising after the date of this Lease, Landlord shall deliver to
Tenant in recordable form, and Tenant agrees to execute and shall have the right
to record with the county recorder of the county in which the Property is
located, a subordination, non-disturbance and attornment agreement from the
applicable Ground Lessor or Holder in the form reasonably required by such
party. If the applicable Ground Lessor or Holder shall impose any fees or
charges in connection with such subordination, non-disturbance and attornment
agreement, Tenant shall either pay the same in advance upon notice thereof from
Landlord, or the delivery of such agreement shall no longer be a condition of
the subordination of this Lease and Landlord shall be relieved of any obligation
to provide such agreement to Tenant.
23. TRANSFER OF THE PROPERTY.
Upon transfer of the Real Property and assignment of this Lease,
Landlord shall be entirely freed and relieved of all liability under any and all
of its covenants and obligations contained in or derived from this Lease
occurring after the consummation of the transfer and assignment and, subject to
Section 25 below and Section 22 above and the terms of any subordination,
non-disturbance and attornment agreement executed pursuant thereto, the
transferee shall be deemed to have assumed such covenants and obligations, and
if Landlord shall transfer the Letter of Credit and the Letter of Credit
Proceeds, if any, to the transferee of Landlord's interest in the Real Property,
Landlord shall be released from all liability for the same. Tenant shall attorn
to any entity purchasing or otherwise acquiring the Premises at any sale or
other proceeding.
24. ESTOPPEL CERTIFICATES; FINANCIAL STATEMENTS.
Within ten (10) days following written request by Landlord from time to
time throughout the Term, Tenant shall execute and deliver to Landlord an
estoppel certificate in the form attached hereto as EXHIBIT F, duly completed by
Tenant. At the request of Landlord from time to time during the Term, Tenant
shall provide to Landlord its current financial statements or other information
setting forth Tenant's financial condition and net worth. Landlord shall use
28.
<PAGE>
such documentation solely for purposes of this Lease and in connection with the
ownership, financing, management and disposition of the Real Property.
25. MORTGAGEE PROTECTION.
In the event of any default on the part of Landlord, Tenant will give
notice by registered or certified mail to each Ground Lessor and Holder whose
identity and address have been disclosed to Tenant, and shall offer the Ground
Lessor or Holder a reasonable opportunity after such notice (but in no event
less than thirty (30) days) to cure the default, including time to obtain
possession of the Property or the Premises by lease termination, power of sale
or a judicial foreclosure (as applicable), if such should prove necessary to
effect a cure. In no event shall any Ground Lessor or Holder in any way or to
any extent be: (a) liable for any act or omission of any prior Landlord in
contravention of any provision of this Lease; or (b) subject to any offsets,
claims or defenses which Tenant might have against any prior Landlord; or (c)
bound by any Rent which Tenant might have paid for more than thirty (30) days in
advance to any prior Landlord; or (d) bound by any agreement or modification of
this Lease made without such Ground Lessor's or Holder's written consent. Tenant
agrees that if any Ground Lessor or Holder acquires possession of the Premises
or title to the Real Property as a result of termination of its ground lease or
foreclosure of such Holder's deed of trust or other security instrument, as
applicable, the acceptance of a lease surrender or deed in lieu of such
foreclosure, or otherwise, the provisions of Section 36 below shall be
applicable to liability of such Ground Lessor or Holder as successor Landlord
under this Lease.
26. ATTORNEYS' FEES.
If either party shall bring any action or legal proceeding for damages
for an alleged breach of any provision of this Lease, to recover rent or other
sums due, to terminate the tenancy of the Premises or to enforce, protect or
establish any term, condition or covenant of this Lease or right of either
party, the prevailing party shall be entitled to recover, as a part of the
action or proceedings, or in a separate action brought for that purpose,
reasonable attorneys' fees and court costs as may be fixed by the court or jury.
The prevailing party shall be the party which secures a final judgment in its
favor, provided that if the party bringing any action shall dismiss the same
without the consent of the other party, the other party shall be deemed the
prevailing party.
27. BROKERS.
Tenant warrants and represents that it has had no dealings with any
real estate broker or agent in connection with the negotiation of this Lease,
except for any brokers(s) specified in the Basic Lease Information, and that it
knows of no other real estate broker or agent who is or might be entitled to a
fee, commission or other compensation in connection with this Lease. Tenant
shall indemnify and hold harmless Landlord from and against any and all
liabilities or expenses (including reasonable attorneys' fees and costs) arising
out of claims made by any other broker or individual for a fee, commission or
other compensation resulting from this Lease.
28. PARKING.
Tenant shall have the right to use unreserved self-park spaces in the
Building's parking common parking facilities, twenty-four hours a day,- seven
days a week (subject to Landlord's
29.
<PAGE>
repair and maintenance obligations under this Lease and to Force Majeure), upon
such terms and conditions as may from time to time be reasonably established by
Landlord, at the ratio of 2.75 parking spaces per 1,000 rentable square feet of
the Premises (as rounded down to the nearest whole space). Such ratio yields a
total of one hundred ten (110) spaces at the inception of this Lease. The charge
for each such space shall initially be Sixty Dollars ($60.00) per month and
shall be considered additional Rent for all purposes of this Lease. Such charge
shall be increased as of the first annual anniversary of the Commencement Date
and each annual anniversary thereafter of the Commencement Date to the then
prevailing market rate for the Building's parking facilities, but in no event
shall such rate be less than Sixty Dollars ($60.00) per month. Tenant shall not
use in excess of the number of spaces for which it is paying the foregoing
parking charge, and Tenant agrees to cooperate with Landlord and other tenants
in the use of the parking facilities. Landlord reserves the right, in its
absolute discretion, to determine whether the parking facilities are becoming
crowded and to allocate and assign parking spaces among Tenant and the other
tenants. Landlord shall not be liable to Tenant, nor shall this Lease be
affected, if any parking is impaired by moratorium, initiative, referendum, law,
ordinance, regulation or order passed, issued or made by any gover |
