California-Redwood City-4 Pacific Shores Center Lease - Pacific Shores Development LLC and BroadVision Inc.
TRIPLE NET BUILDING LEASE
Between
PACIFIC SHORES DEVELOPMENT LLC,
as
LESSOR
and
BROADVISION INC.
a Delaware corporation
as
LESSEE
for
PREMISES
at
Pacific Shores Center
Building 4
Redwood City, California
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ARTICLE I
PARTIES
Section 1.01. Parties. This Lease, dated for reference purposes, and
effective as of April 12, 2000, is made by and between PACIFIC SHORES
DEVELOPMENT LLC, or assignee, ("Lessor") and BROADVISION INC., a Delaware
corporation ("Lessee").
ARTICLE II
PREMISES
Section 2.01. Demise of Premises. Lessor hereby leases to Lessee and
Lessee leases from Lessor for the term, at the rental, and upon all of the terms
and conditions set forth herein, Premises consisting of one building
("Building") of ten free standing, office and research and development buildings
("Buildings") together with other Common Area improvements, buildings,
structural features and amenities described herein to be constructed by Lessor
on real property situated in Redwood City, County of San Mateo, State of
California, more particularly described in Exhibit A and commonly known as
Pacific Shores Center (the "Project"). The Building will be four stories tall
and will consist of approximately One Hundred Fourteen Thousand Six Hundred and
Sixty-Seven (114,667) rentable square feet, as more particularly described and
depicted herein in Exhibits "A" and "B." The actual rentable square footage of
the Building (the "Rentable Area") will be determined and certified by Lessor's
architect by a method described as "dripline," whereby the measurement
encompasses the outermost perimeter of the constructed building, including every
projection thereof and all area beneath each such projection, whether or not
enclosed, with no deduction for any inward deviation of structure and with the
measurement being made floor by floor, beginning from the top of the Building.
The legal parcel on which the Building is to be constructed is herein designated
as the "Property." The Building leased hereunder, commonly known as Building 4 -
Pacific Shores Center, Redwood City, California, and its appurtenances described
herein are herein designated as the "Premises."
Section 2.02. Common Area. During the Lease Term, Lessee shall have the
non-exclusive right to use the Common Area defined herein. Lessor reserves the
right to modify the Common Area, including reducing the size or changing the
use, configuration and elements thereof in its sole discretion (including
without limitation, for the purpose of construction of parking facilities or
additional buildings, of any nature or size whatsoever, and in any part of the
Project including, without limitation, any of the Common Area including Common
Area on the Property so long as Lessee's parking is not reduced) and to close or
restrict access from time to time for repair, maintenance or to prevent a
dedication thereof, provided that (1) any changes in the Common Area or
construction therein shall not diminish or interfere with Lessee's view from the
Premises or the natural light into the Premises, (2) Lessee nonetheless shall
have access to parking and the Premises during such activities and, (3) provided
further, that Lessor will continue to maintain the baseball and soccer fields
and the amenities/athletic facility or replacement items of like kind for so
long as Lessor is legally able to do so during the Lease
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Term. Lessor further reserves the right to establish, repeal and amend from time
to time rules and regulations for the use of the Common Area (provided that, to
the extent that any conflict between any new Rules and Regulations and this
Lease (including the Rules and Regulations attached hereto as Exhibit "L") would
materially and adversely affect Lessee's use of the Premises, this Lease shall
govern, and to grant reciprocal easements or other rights to use the Common Area
to owners of other property. "Common Area" includes, without limitation, all
portions of the Property other than the Building, including landscaping,
sidewalks, walkways, driveways, curbs, parking lots (including striping),
roadways within the Project, sprinkler systems, lighting, surface water drainage
systems, an amenities/athletic facility to be available for use by Lessee's
employees (the "Amenities/Athletic Facility"), as well as baseball and soccer
fields, a water front park, and a perimeter walking/biking trial, and, to the
extent required by government authorities having jurisdiction over Lessor's
development of the Project, amphitheater, marine life resource center, retreat
and conference center, child care center and such further portions of the
Project or additional or different facilities as Lessor may from time to time
designate or install or make available for the use by Lessee in common with
others.
Section 2.03. Parking. Lessor shall provide Lessee with parking spaces
within the Property in the ratio to space within the Building as required by law
which is three (3.0) spaces per one thousand (1,000) square feet of space within
the Building. In the event Lessor elects or is required by any law to limit or
control parking at the Premises, whether by validation of parking tickets or any
other method of assessment, Lessee agrees to participate in such validation or
assessment program under such reasonable rules and regulations as are from time
to time established by Lessor.
Section 2.04. Construction.
(a) Government Approvals. Lessor shall diligently pursue obtaining
governmental approval of a Site Plan and Building design and elevations with
respect to the development of the Premises, copies of which are attached hereto
as Exhibit "A." The parties acknowledge and agree that the final footprint and
elevations of the Building may vary from those attached as Exhibit "A" because
the plans and specifications will undergo a plancheck process with the City of
Redwood City (the "City") and Lessor will make such revisions as are required or
are otherwise deemed necessary or appropriate by Lessor, provided however, that
nothing herein shall be deemed to relieve Lessor from the duty to develop the
Building substantially in compliance with Exhibits "A" and "B." In the event the
City requires material changes to the Site Plan and Building design attached
hereto as Exhibit A, Lessor shall notify Lessee and provide Lessee with the
opportunity to review such changes. In the event the proposed changes are
unacceptable to Lessee, Lessee shall have the right to meet with the City (in
the presence of Lessor) to discuss the changes and negotiate changes that are
acceptable to Lessee and Lessor in the reasonable discretion of each, provided
that no delay to the construction schedule will be caused by same. If the
changes to the Building Design result in additional square footage being added
to the Building, any additional square footage which will increase the Load (as
defined below) of the Rentable Area of the Building as the Building design
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exists on February 15, 2000 by more than 5%, shall not be included in the
rentable square footage of the Premises. For purposes of this Lease, "Load"
shall mean that square footage of the Building outside the exterior walls and
included in Rentable Area because of projections from the roof of the Building
or the "dripline."
(b) Construction of Shell Building. Lessor, utilizing Rudolph & Sletten
(or such alternate as Lessor in its sole discretion may select) as general
contractor ("General Contractor"), shall construct the "Building Shell" (as
defined in the attached Exhibit "D") in accordance with (i) plans and
specifications to be attached as Exhibit "B," which shall be consistent with DES
Development Progress Plan dated February 14, 2000 for structural steel for lot 6
and 6P, and (ii) all existing applicable municipal, local, state and federal
laws, statutes, rules, regulations and ordinances. Lessor shall pay all costs of
constructing the Building Shell.
(c) Construction of Tenant Improvements. All improvements not included
within the scope of the Building Shell shall be deemed "Tenant Improvements."
Lessor, using the General Contractor, shall construct the Tenant Improvements
and Lessee shall pay all costs associated with same.
(d) Tenant Improvement Plans and Cost Estimate If Lessor's Contractor
Constructs Tenant Improvement. Lessee shall work with Lessor's architect to
develop interior schematic drawings and Lessee shall approve final interior
schematic drawings for the Building no later than September 1, 2000. Lessee
shall work with Lessor's architect to develop working drawings outlining, among
other things, Lessee's wall layout, detailed electrical and air conditioning
requirements and finishes ("Working Drawings") and Lessee shall approve final
Working Drawings on or before November 24, 2000. The cost of the interior
schematic drawings and Working Drawings shall be a Tenant Improvement cost.
Based on this information, Landlord shall cause the General Contractor to
prepare and deliver to Lessee a budget for the Tenant Improvements ("Budget").
Lessee shall approve the Budget (or disapprove and modify the same with Lessor's
consent), in writing, within ten (10) business days thereafter. The Working
Drawings and Budget must be approved by Lessor in writing and be of quality
equal to or greater than the Interior Specifications Standards set forth in
Exhibit "C." Once the Budget is approved, Lessor shall enter into a guaranteed
maximum price contract with the General Contractor for the construction of the
Tenant Improvements in accordance with the approved final Working Drawings (the
"Construction Contract"). Lessee shall have no liability for costs to construct
the Tenant Improvements which are in excess of such guaranteed maximum price
except for Change Orders and any costs resulting from Lessee Delay. Lessee shall
have no liability for traffic mitigation payments.
(e) Construction Plans. Attached as Exhibit "C" to this Lease is a Work
Letter Agreement for Tenant Improvements, and Exhibit "D," Cost Responsibilities
of Lessor and Lessee, which together with this Section 2.04, describe the
planning and payment responsibilities of the Lessor and Lessee with respect to
the construction of the Shell Building and Tenant Improvements at the Premises.
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(f) No Tenant Improvement Allowance. Lessor shall provide to Lessee
semi-improved "cold" shell facilities as described in Exhibit "D" attached.
Subcontracts for all Tenant Improvement Work shall be obtained by a sealed
competitive bid process (involving at least two qualified bidders) wherever
practical and as to work done without such process, Lessor or the General
Contractor shall provide reasonable assurance to Lessee that the cost and
expense of same is competitive in the industry for first-class workmanship and
materials.
(g) Payment for Tenant Improvements. Within ten (10) days after the
Budget is approved by Lessor and Lessee, Lessee shall deposit the entire amount
budgeted for the entire Tenant Improvement construction schedule (together with
the cost of any Tenant Improvements already made) in an interest bearing escrow
account with Lessor's Construction Lender the interest being credited to Lessee,
provided that, if Lessor's Construction Lender fails to agree in writing that,
upon any foreclosure, Lender or any other successor in interest to Lessor, will
either apply the deposited amount in accordance with the provisions of this
Lease or return same to Lessee, said escrow account shall be opened at an
institution, other than Lessor's Construction Lender, pursuant to joint escrow
instructions of Lessor and Lessee providing for disbursements in accordance with
this Lease. Said construction lender (or other institutional escrow holder, as
the case may be) shall issue payments from said account pursuant to the
construction contract for the Tenant Improvements, until the account is
exhausted, whereupon any remaining payments shall be made 100% by Lessee. Lessor
shall manage the construction of the Tenant Improvements for a supervision fee
of 2.5% of the Budget (as such budget may change by agreement of the parties)
due and payable in nine equal monthly installments beginning on the first day of
the calendar month following the calendar month in which the Budget is first
approved.
(h) Lessee's Fixturing Period. Lessor shall provide Lessee access to
the Premises during the thirty (30) day period prior to the Commencement Date
("Lessee's Fixturing Period") for the purpose of installing furnishings and
equipment, e.g. security system, furniture system and phone and data system,
provided, that Lessee and Lessee's employees and contractors shall at all times
avoid interfering with Lessor's ongoing work to bring the Premises to a
substantially completed condition. Except for payment of Base Rent, all terms
and provisions of this Lease shall apply during Lessee's Fixturing Period,
including, without limitation, Lessee's indemnity and other obligations set
forth in Sections 7.07., 7.08. and 17.22. hereof.
ARTICLE III
TERM
Section 3.01. Lease Term.
(a) Commencement Date. The term of this Lease ("Lease Term") shall be
for twelve (12) years beginning on the earlier of (i) the date a Certificate of
Occupancy first is issued affecting the Building, or (ii) the date on which
Lessee first occupies or conducts business at the Premises (the "Commencement
Date") provided that, (i) for each day of delay by Lessee in
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failing to approve the interior schematic drawings or the Working Drawings when
required under Section 2.04(d), or (ii) for each day of delay by Lessee in
failing to approve the Budget, in writing, within ten (10) business days after
delivery by the General Contractor as provided in Section 2.04(d), or (iii) for
each day of delay caused by any changes to the approved Working Drawings
requested by Lessee, or (iv) for each day that any other act or omission by
Lessee causes the construction schedule for Tenant Improvements to be delayed
(collectively "Lessee Delay"), the Commencement Date shall occur one (1) day in
advance of the date of the Certificate of Occupancy for each such day of delay,
provided that, in no event shall Lessee Delay be used to advance the
Commencement Date to a date earlier than August 1, 2001. For example, if seven
(7) days of Lessee Delay causes the date of issuance of the Certificate of
Occupancy to occur on August 8, 2001 rather than August 1, 2001, the
Commencement Date shall be August 1, 2001 for all purposes, including payment of
Base Rent and Additional Rent. The Lease Term shall expire, unless sooner
terminated or extended as provided herein, on the date which completes twelve
(12) years after the Commencement Date occurs or is deemed to have occurred,
e.g. if the date on which the Certificate of Occupancy is issued or deemed to be
issued for the Building is August 1, 2001, the Lease Term shall expire on August
31, 2013 and if that date is September 3, 2001, the Lease Term shall expire on
September 2, 2013 ("Expiration Date"). The parties shall execute a "Memorandum
of Commencement of Lease Term" when the Commencement Date becomes known, which
shall include a certification of the actual Rentable Area of the Building
determined by the methodology described in Section 2.01. and the actual monthly
installments of Base Rent to be paid pursuant to Section 4.01., and shall be
substantially in the form attached hereto as Exhibit "E."
(b) Scheduled Commencement Date. Lessor shall use commercially
reasonable efforts to cause the Certificate of Occupancy for Building 4 to be
issued no later than August 1, 2001 ("Scheduled Commencement Date"). If a
Certificate of Occupancy is not issued for Building 4 on or before the Scheduled
Commencement Date, this failure shall not affect the validity of this Lease or
the obligations of Lessee under it. If the Commencement Date is adjusted for
delay from any cause, the Expiration Date shall be likewise adjusted for a like
period.
(c) Termination in Event of Delay.
(i) If for any reason Lessor has not commenced construction of
the Building Shell (i.e. begun driving piles for the foundation) by January 1,
2001, then Lessee, at its sole election, may terminate this Lease upon giving
notice within ten (10) days thereafter.
(ii) If Lessor is unable to cause the issuance of a
Certificate of Occupancy for the Building, on or before the date which is one
hundred eighty (180) days after the Scheduled Commencement Date (for any cause
other than Lessee Delay or Force Majeure, Delays excused under Section 17.21.),
Lessee, at its sole election, may terminate this Lease upon giving notice within
ten (10) days thereafter.
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(iii) If Lessor is unable to cause the issuance of a
Certificate of Occupancy for the Building, on or before the date which is
eighteen (18) months (extended by any Lessee Delay) after the Scheduled
Commencement Date (for a cause other than Lessee Delay), of which a maximum
amount of twelve (12) months of delay may be due to Force Majeure Delays, but
which date shall not otherwise be extended for Force Majeure Delays, Lessee, at
its sole election, may terminate this Lease upon giving notice within ten (10)
days thereafter.
(iv) In the event of any termination by Lessee under this
Section 3.01(c) all amounts previously deposited by Lessee with Lessor
(including, without limitation, any prepaid rent, the Security Deposit, and
undisbursed Tenant Improvement costs) shall be returned to Lessee. Failure to
give such notice within any specified then (10) day time period constitutes an
irrevocable waiver of the foregoing rights to terminate under this Section
3.01(c).
Section 3.02. Option to Extend.
(a) Exercise. Lessee is given one (1) option to extend the Lease Term
("Option to Extend") for a five (5) year period ("Extended Term") following the
date on which the initial Lease Term would otherwise expire, which option may be
exercised only by written notice ("Option Notice") from Lessee to Lessor given
not less than twelve (12) months prior to the end of the initial Lease Term
("Option Exercise Date"); provided, however, if Lessee is in material default
under this Lease (beyond the expiration of any applicable notice and cure
period) on the Option Exercise Date or on any day thereafter on or before the
last day of the initial Lease Term, the Option Notice shall be totally
ineffective, and this Lease shall expire on the last day of the initial Lease
Term, if not sooner terminated in accordance with the terms of this Lease. The
right of Lessee to exercise an Option to Extend shall not be affected by any
sublease or assignment of this Lease previously entered into by Lessee pursuant
to the provisions of this Lease.
(b) Extended Term Rent. In the event Lessee exercises its Option to
Extend set forth herein, all the terms and conditions of this Lease shall
continue to apply except that the Base Rent payable by Lessee during each Option
Term shall be equal to one hundred percent (100%) of Fair Market Rent (defined
below), as determined under subparagraph (c) below. "Fair Market Rent" shall
mean the effective rate being charged (including periodic adjustments thereto as
applicable during the period of the Extended Term), for comparable space in
similar buildings in the Project, i.e. of a similar age and quality considering
any recent renovations or modernization, and floor plate size or, if such
comparable space is not available, adjustments shall be made in the
determination of Fair Market Rent to reflect the age and quality of the Building
as contrasted to other buildings used for comparison purposes, with similar
amenities, taking into consideration: size, location, floor level, leasehold
improvements or allowances provided or to be provided, term of the lease, extent
of services to be provided, the time that the particular rate under
consideration became or is to become effective, and any other relevant terms or
conditions applicable to both new and renewing tenants.
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(c) Determination of Fair Market Rent.
(i) Negotiation. If Lessee so exercises its Option to Extend
in a timely manner, the parties shall then meet in good faith to negotiate the
Base Rent for the Premises for the Extended Term, during the first thirty (30)
days after the date of the delivery by Lessee of the Option Notice (the
"Negotiation Period"). If, during the Negotiation Period, the parties agree on
the Base Rent applicable to the Premises for the Extended Term, then such agreed
amount shall be the Base Rent payable by Lessee during the Extended Term.
(ii) Arbitration. In the event that the parties are unable to
agree on the Base Rent for the Premises within the Negotiation Period, then
within ten (10) days after the expiration of the Negotiation Period, each party
shall separately designate to the other in writing an appraiser to make this
determination. Each appraiser designated shall be a member of MAI and shall have
at least ten (10) years experience in appraising commercial real property, of
similar quality and use as the Premises, in San Mateo County. The failure of
either party to appoint an appraiser within the time allowed shall be deemed
equivalent to appointing the appraiser appointed by the other party, who shall
then determine the Fair Market Rent for the Premises for the Extended Term.
Within five (5) business days of their appointment, the two designated
appraisers shall jointly designate a third similarly qualified appraiser. Within
thirty (30) days after their appointment, each of the two appointed appraisers
shall submit to the third appraiser a sealed envelope containing such appointed
appraiser's good faith determination of the Fair Market Rent for the Premises
for the Extended Term; concurrently with such delivery, each such appraiser
shall deliver a copy of his or her determination to the other appraiser. The
third appraiser shall within ten (10) days following receipt of such
submissions, then determine which of the two appraisers' determinations most
closely reflects Fair Market Rent as defined above. The determination most
closely reflecting the third appraiser's determination shall be deemed to be the
Fair Market Rent for the Premises during the Extended Term; the third appraiser
shall have no rights to adjust, amend or otherwise alter the determinations made
by the appraiser selected by the parties, but must select one or the other of
such appraisers' submissions. The determination by such third appraiser shall be
final and binding upon the parties. Said third appraiser shall, upon selecting
the determination which most closely resembles Fair Market Rent, concurrently
notify both parties hereto. The Base Rent for the Extended Term shall be the
determination so selected. The parties shall share the appraisal expenses
equally. If the Extended Term begins prior to the determination of Fair Market
Rent, Lessee shall pay monthly installments of Base Rent equal to one hundred
ten percent (110%) of the monthly installment of Base Rent in effect for the
last year of the initial Lease Term. Once a determination is made, any over
payment or under payment shall be reimbursed as a credit against, or paid by
adding to, the monthly installment of Base Rent next falling due.
ARTICLE IV
RENT: TRIPLE NET LEASE
Section 4.01. Base Rent. Lessee shall pay to Lessor as Base Rent an
initial monthly installment of Four Dollars and Twenty-Five Cents ($4.25) per
square foot of Rentable Area as
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determined under Section 2.01., in advance, on the first day of each calendar
month of the Lease Term, commencing on the Commencement Date. Base Rent for any
period during the Lease Term which is for less than one month shall be a pro
rata portion of the monthly installment (based on the actual days in that
month).
Section 4.02. Rent Adjustment. The Base Rent set forth in Section 4.01.
above shall be adjusted upward by an annual compounded increase of four percent
(4%), as of the first day of the thirteenth (13th) full calendar month following
the Commencement Date and as of each anniversary of that date thereafter during
the Lease Term, as shown on Exhibit "E" attached hereto.
Section 4.03. First Payment of Base Rent. The estimated first monthly
payment of Base Rent in the sum of Four Hundred Eighty-Seven Thousand, Three
Hundred Thirty-Four Dollars and Seventy-Five Cents ($487,334.75) shall be due
within five (5) days after Lessee's execution of this Lease. Base Rent payments
shall resume on the first day of the calendar month immediately succeeding the
Commencement Date. If the Commencement Date is other than the first day of a
calendar month, the first payment of Base Rent subsequent to the Commencement
Date, but only that payment of Base Rent, shall be reduced by any excess of the
first Base Rent installment paid in advance over the prorated amount actually
due for such partial first month of the Lease Term.
Section 4.04. Absolute Triple Net Lease. This Lease is what is commonly
called an "Absolute Triple Net Lease," it being understood that Lessor shall
receive the Base Rent set forth in Section 4.01. free and clear of any and all
expenses, costs, impositions, taxes, assessments, liens or charges of any nature
whatsoever. Lessee shall pay all rent in lawful money of the United States of
America to Lessor at the notice address stated herein or to such other persons
or at such other places as Lessor may designate in writing on or before the due
date specified for same without prior demand, set-off or deduction of any nature
whatsoever. It is the intention of the parties hereto that this Lease shall not
be terminable for any reason by Lessee expressly provided in Section 3.01, and
that, except as herein expressly provided in Articles III, VIII and XIII,
concerning delay, destruction and condemnation, Lessee shall in no event be
entitled to any abatement of or reduction in rent payable under this Lease. Any
present or future law to the contrary shall not alter this agreement of the
parties.
Section 4.05. Additional Rent. In addition to the Base Rent reserved by
Section 4.01., Lessee shall pay, as Additional Rent (i) 100% as to amounts
applicable solely to the Premises or Property and Lessee's Share is to amounts
applicable to the Project or Common Area of all taxes, assessments, fees and
other impositions payable by Lessee in accordance with the provisions of Article
IX, and insurance premiums in accordance with the provisions of Article VII,
(ii) Lessee's Share of Operating Expenses defined below provided that
notwithstanding the foregoing, prior to January 1, 2002, during the construction
phase of the Project, Lessee shall pay 100% of Operating Expenses applicable to
the property or Premises in lieu of paying Lessee's Share on the specific items
being billed, and (iii) any other charges, costs and expenses
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(including appropriate reserves therefor) which are contemplated or which may
arise under any provision of this Lease during the Lease Term, plus a Management
Fee to Lessor equal to 3% of the Base Rent. The Management Fee is due and
payable, in advance, with each installment of Base Rent. All of such charges,
costs, expenses, Management Fee and all other amounts payable by Lessee
hereunder, shall constitute Additional Rent, and upon the failure of Lessee to
pay any of such charges, costs or expenses, Lessor shall have the same rights
and remedies as otherwise provided in this Lease for the failure of Lessee to
pay Base Rent.
Section 4.06. Security Deposit. Upon the date this Lease is executed by
Lessee, Lessee shall deposit with Lessor a Security Deposit equal to twelve (12)
month's estimated Base Rent in the amount of Five Million, Eight Hundred
Forty-Eight Thousand, Eight Hundred One Dollars and no cents ($5,848,017.00) in
the form of an unconditional, irrevocable letter of credit. without documents,
with Lessor as beneficiary, drawable in whole or in part, and providing for
payment in San Francisco on presentation of Lessee's drafts on sight and
otherwise from a bank and in a form acceptable to Lessor (the "Security
Deposit"). The Security Deposit shall be held by Lessor as security for the
faithful performance by Lessee of all of the terms, covenants, and conditions of
this Lease applicable to Lessee. If Lessee defaults with respect to any
provision of this Lease, including but not limited to the provisions relating to
the condition of the Premises upon Lease Termination, Lessor may (but shall not
be required to) use, apply or retain all or any part of the Security Deposit for
the payment of any amount which Lessor may spend by reason of Lessee's default
or to compensate Lessor for any loss or damage which Lessor actually suffers by
reason of Lessee's default. If any portion of the Security Deposit is so used or
applied, Lessee shall, within ten days after written demand therefor, deposit
cash with Lessor in an amount sufficient to restore the Security Deposit to its
original amount. Lessee's failure to do so shall be a Default by Lessee. The
rights of Lessor pursuant to this Section 4.06. are in addition to any rights
which Lessor may have pursuant to Article 12 below. If Lessee fully and
faithfully performs every provision of this Lease to be performed by it, the
Security Deposit or any balance thereof shall be returned (without interest) to
Lessee (or, at Lessor's option, to the last assignee of Lessee's interests
hereunder) at Lease expiration or termination and after Lessee has vacated the
Premises. Lessor shall not be required to keep the Security Deposit separate
from Lessor's general funds or be deemed a trustee of same. The letter of credit
shall be reduced to an amount equal to the total of three (3) months of Base
Rent at the then current rate, if Lessee establishes through financial
statements prepared in accordance with generally accepted accounting principles
and in a form acceptable to Lessor that Lessee has achieved annual revenue for a
period of at least one (1) fiscal year of at least Seven Hundred Fifty Million
Dollars ($750,000,000) and has further achieved quarterly operating profit of at
least One Hundred Million Dollars ($100,000,000) for not less than four (4)
consecutive quarters.
Section 4.07. Operating Expenses.
(a) Definition. "Operating Expenses" shall mean and include, to the
extent not billed as a cost or expense of the Premises or Property pursuant to
Article VII or IX, all costs and expenses of every kind and nature paid or
incurred by Lessor (whether obligated to do so or undertaken at Lessor's
discretion) in the operation, maintenance and replacement of the Common Areas,
including Common Area buildings and improvements located within the Project and
including Common Areas
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located on the Property. Such cost and expenses shall include, but not be
limited to, costs of management; cleaning; lighting; the costs of maintaining,
repairing and replacing all Common Area improvements (replacing shall be deemed
to include but not be limited to the replacement of light poles and fixtures,
storm and sanitary sewers, parking lots, driveways and roads), repairs to and
maintenance of the structural and non-structural portions of the
amenity/athletic facility; supplies, tools, equipment and materials used in the
operation and maintenance of the Project; snow removal; parking lot striping;
removal of trash, rubbish, garbage and other refuse; painting; removal of
graffiti; painting of exterior walls; landscaping; providing security to the
extent Lessor determines in its sole discretion to do so (including security
systems and/or systems designed to safeguard life or property against acts of
God and/or criminal and/or negligent acts, and the costs of maintaining of
same); public liability, property damage, fire insurance, earthquake and flood
coverage, all risk or special form insurance coverage, rent interruption
insurance coverage, the costs of excess award above insurance aggregate, total
compensation and benefits (including premiums for workers' compensation and
other insurance) paid to or on behalf of employees, including but not limited to
full or part time on-site management or maintenance personnel; personal property
taxes; fire protection and fire hydrant charges (including fire protection
system signaling devices, now or hereafter required, and the costs of
maintaining of same); water and sewer charges; utility charges; license and
permit fees necessary to operate and maintain the initial cost of or the
reasonable depreciation of equipment used in operating and maintaining the
Common Areas and rent paid for leasing any such equipment; reasonable cost of on
or off site storage space of any and all items used in conjunction with the
operation, maintenance and management of the Project, including but not limited
to tools, machinery, records, decorations, tables, benches, supplies and meters;
the cost of and installation cost of any and all items which are installed for
the purpose of reducing Operating Expenses, increasing building or public safety
or which may be then required by governmental authority, laws, statutes,
ordinances and/or regulations, a use privilege consisting of Base Rent and
Operating Expenses allocated to the Amenities/Athletic Facility and all costs
and expenses arising from the operation of same. Lessor shall apply all of the
following amounts received by Lessor to reduce Operating Expenses; (1) fees paid
by any user other than tenants of the Project (including, without limitation,
the public and Lessee's employees) for use of the Amenities/Athletic Facility
and any of the other Common Areas; (2) base rent and additional rent paid by the
operators of the Amenities/Athletic Facility and any of the other Common Areas.
Lessor agrees to use commercially reasonable efforts to seek such amounts to
reduce the amount of Operating Expenses payable by Lessee hereunder, bearing in
mind the amenity nature of the Common Areas and restrictions imposed by the
City.
(b) Payment. Lessee shall pay Lessee's Share of Additional Rent in
monthly installments on the first day of each month in an amount set forth in a
written estimate by Lessor. Lessor agrees that it will base its estimate on
Lessor's experience in managing office/research and development projects and in
a reasonable manner. Within ninety (90) days following the end of the period
used by Lessor in estimating Lessor's cost, Lessor shall furnish to Lessee a
statement (hereinafter referred to as "Lessor's Statement") of the actual amount
of Lessee's
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Share of such Additional Rent for such period. Within thirty (30) days
thereafter, Lessee shall pay to Lessor, as Additional Rent, or Lessor shall
remit to Lessee, as the case may be, the difference between the estimated
amounts paid by Lessee and the actual amount of Lessee's Share of Additional
Rent for such period as shown by such Statement. Lessee's Share of Additional
Rent for the ensuing estimation period shall be adjusted upward or downward
based upon Lessor's Statement.
(c) Lessee's Share. For purposes hereof, "Lessee's Share" shall mean
the rentable square footage of the Building subject to this Lease at the time in
question divided by the greater of (i) 1,550,000, (ii) at the time in question,
a number equal to the number of rentable square feet which is then constructed
at the Project, measured on a dripline basis.
(d) Exclusions. For purposes of this Lease, the term Operating Expenses
shall not include (and Lessee shall have no liability for) any of the following:
school fees and other charges imposed under the Development Agreement;
construction costs of the Pacific Shores Infrastructure (as defined in the
Development Agreement); construction costs of any child care facility at the
Project or payment to the City in lieu of constructing the child care facility;
construction of any Common Area improvements; traffic mitigation payments due
under Section 13 of the Development Agreement; legal fees, permit fees,
architectural and engineering fees related to the development and construction
of the Project; any off-site improvements (other than the widening of Seaport
Boulevard as set forth below); the purchase of sanitary sewer capacity; costs to
fill wetlands at the Project or restore wetlands habitat; costs to relocate
power lines or other utilities; marketing costs, costs of leasing commissions,
attorneys' fees and other costs and expenses incurred in connection with
negotiations or disputes with prospective tenants or other occupants of the
Project; costs incurred by Landlord in the repairs, capital additions,
alterations or replacements made or incurred to rectify or correct defects in
design, materials or workmanship in connection with the Project; costs
(including permit, license and inspection costs) incurred in renovating or
otherwise improving, decorating or redecorating rentable space for prospective
tenants or vacant rentable space; costs incurred due to the violation by Lessor
of the terms, covenants and conditions of any lease or license of space in the
Project; costs of general overhead and general administrative expenses, not
including management fees and building office expenses which are included in
operating expenses by landlords of comparable buildings; marketing costs, legal
fees, space planner's fees, and advertising and promotional expenses and
brokerage fees incurred in connection with the original development, subsequent
improvement, or original or future leasing of the Project; any bad debt loss,
rent loss, or reserves for bad debts or rent loss; costs associated with the
operation of the business of the partnership or entity which constitutes the
Lessor, as the same are distinguished from the costs of operation of the Project
(which shall specifically include, but not be limited to, costs of partnership
accounting and legal matters, costs of defending any lawsuits with any mortgagee
(except as the actions of the Lessee may be in issue), costs of selling,
syndicating, financing, mortgaging or hypothecating any of the Lessor's interest
in the Project, and costs incurred in connection with any disputes between
Lessor and its employees, between Lessor and Project management, or between
Lessor and other tenants or occupants, and Lessor's general corporate overhead
and general and administrative expenses); the wages and benefits of any employee
who does not
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devote substantially all of his or her employed time to the Project unless such
wages and benefits are prorated to reflect time spent on operating and managing
the Project vis-a-vis time spent on matters unrelated to operating and managing
the Project; provided, that in no event shall Operating Expenses for purposes of
this Lease include wages and/or benefits attributable to personnel above the
level of Project manager or Project engineer; interest, charges and fees
incurred on debt, payments on mortgages and amounts paid as ground rental for
the real property underlying the Project by the Lessor; any costs covered by any
warranty, rebate, guarantee or service contract which are actually collected by
Lessor (which shall not prohibit Lessor from passing through the costs of any
such service contract if otherwise includable in Operating Expenses); interest,
late charges and tax penalties incurred as a result of Lessor's gross
negligence, inability or unwillingness to make payments or file returns when
due; any expense, to the extent Lessor receives reimbursement for such costs, to
remedy damage caused by or resulting from the gross negligence of any licensees
in the Project, including their agents, contractors and employees; reserves for
anticipated future expenses; costs or repairs or other work occasioned by fire,
casualty or other risk to the extent of proceeds received from insurance
maintained (or obligated to be maintained pursuant to this Lease) by Lessor;
costs, fines, or fees incurred by Lessor due to Lessor's violations of any
federal, state or local law, statute or ordinance, or any rule, regulation,
judgment or decree of any governmental rule or authority; any costs representing
an amount paid to a person, firm, corporation or other entity related to Lessor
which is in excess of the amount which would have been paid in the absence of
such relationship; capital costs incurred to bring the Building or the Property
into compliance as of the Commencement Date with any use permit or design
permit, any CC&R's, underwriter's requirements, or Laws applicable to the
Premises, the Building or the Project. Nothing contained in this Section shall
prohibit or limit Lessor from passing through, in Article IX, any one or more
specified items as part of the Community Facility District Bond.
Section 4.08 Lessee's Right to Review Supporting Data.
(1) Exercise of Right by Lessee. Provided that Lessee is not
in default under this Lease and provided further that Lessee strictly complies
with the provisions of this Paragraph, Lessee shall have the right to reasonably
review supporting data for any portion of a Lessor's statement that Lessee
claims is incorrect. In order for Lessee to exercise its right under this
Paragraph, Lessee shall, within thirty (30) days after any such Lessor's
statement is sent, deliver a written notice to Lessor specifying the portions of
the Lessor's statement that are claimed to be incorrect, and Lessee shall
simultaneously pay to Lessor all amounts due from Lessee to Lessor as specified
in the Lessor's statement. Except as expressly set forth in subparagraph 3
below, in no event shall Lessee be entitled to withhold, deduct, or offset any
monetary obligation of Lessee to Lessor under the Lease including, without
limitation, Lessee's obligation to make all Base Rent payments and all payments
for Additional Rent pending the completion of, and regardless of the results of,
any review under this Paragraph. The right to review granted to Lessee under
this Paragraph may only be exercised once for any Lessor's statement, and if
Lessee fails to meet any of the above conditions as a prerequisite to the
exercise of such right, the right of Lessee under this Paragraph for a
particular Lessor's statement shall be deemed waived.
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(2) Procedures for Review. Lessee acknowledges that Lessor
maintains its records for the Building and Project at its offices in San
Francisco, and Lessee therefore agrees that any review of supporting data under
this Paragraph shall occur at such location. Any review to be conducted under
this Paragraph shall be at the sole expense of Lessee and shall be conducted by
an independent (i.e. not then engaged by lessee for any other purposes) firm of
certified public accountants of national standing. Lessee acknowledges and
agrees that any supporting data reviewed under this Paragraph constitute
confidential information of Lessor, which shall not be disclosed to anyone other
than the accountants performing the review and the principals of Lessee who
receive the results of the review. The disclosure of such information to any
other person, whether or not caused by the conduct of Lessee, shall constitute a
material breach of this Lease.
(3) Finding of Error. Any errors disclosed by the review of
supporting data under this Paragraph shall be promptly corrected, provided that
Lessor shall have the right to cause another review of the supporting data to be
made by an independent (i.e. not then engaged by Lessor for any other purposes)
firm of certified public accountants of national standing. In the event of a
disagreement between the two accounting firms, the review that discloses the
least amount of deviation from the Lessor's statement shall be deemed to be
correct and its review shall be final and binding on both Lessor and Lessee. If
the results of the review of supporting data taking into account, if applicable,
the results of any additional review caused by Lessor reveal that Lessee has
overpaid obligations for a preceding period, the amount of such overpayment
shall be credit against Lessee's subsequent installment obligations to pay its
share of Additional Rent. In the event that such results show that Lessee has
underpaid its obligations for a preceding period, the amount of such
underpayment shall be paid by Lessee to Lessor with the next succeeding
installment obligation of Additional Rent or, if the Lease has terminated, in
cash within thirty (30) days after the determination of underpayment is
delivered to Lessee.
Each party shall pay the cost and expense of its chosen accounting firm.
(4) Effect of Lessee's Default. In the event that Lessee
becomes in default of its obligations under this Lease at any time during the
pendency of a review of records under this Paragraph, said right to review shall
immediately cease and the matters originally set forth in the Lessor's statement
shall be deemed to be correct.
ARTICLE V
USE
Section 5.01. Permitted Use and Limitations on Use. The Premises shall
be used and occupied only for office, research and development, together with
such ancillary uses which do not cause excessive wear of the Premises or
increase the potential liability of Lessor, and for no other use, without
Lessor's prior written consent. Lessee shall not use, suffer or permit the use
of the Premises in any manner that will tend to create waste, nuisance or
unlawful acts. In no event shall it be unreasonable for Lessor to withhold its
consent as to uses which it determines would tend to increase materially the
wear of the Premises or any part thereof or increase the potential
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liability of Lessor or decrease the marketability, financability, leasability or
value of the Premises. Lessee shall not do anything in or about the Premises
which will (i) cause structural injury to the Building or Premises, or (ii)
cause damage to any part of the Building except to the extent reasonably
necessary for the installation of Lessee's trade fixtures and Lessee's
Alterations, and then only in a manner which has been first approved by Lessor
in writing. Lessee shall not operate any equipment within the Building or
Premises which will (i) materially damage the Building or the Common Area, (ii)
overload existing electrical systems or other mechanical equipment servicing the
Building, (iii) impair the efficient operation of the sprinkler system or the
heating, ventilating or air conditioning ("HVAC") equipment within or servicing
the Building, or (iv) damage, overload or corrode the sanitary sewer system.
Lessee shall not attach, hang or suspend anything from the ceiling, roof, walls
or columns of the Building or set any load on the floor in excess of the load
limits for which such items are designed nor operate hard wheel forklifts within
the Premises. Any dust, fumes, or waste products generated by Lessee's use of
the Premises shall be contained and disposed so that they do not (i) create an
unreasonable fire or health hazard, (ii) damage the Premises, or (iii) result in
the violation of any law. Except as approved by Lessor, Lessee shall not change
the exterior of the Building, or install any equipment or antennas on or make
any penetrations of the exterior or roof of the Building. Lessee shall not
conduct on any portion of the Premises any sale of any kind, including any
public or private auction, fire sale, going-out-of-business sale, distress sale
or other liquidation sale. No materials, supplies, tanks or containers,
equipment, finished products or semifinished products, raw materials, inoperable
vehicles or articles of any nature shall be stored upon or permitted to remain
within the outside areas of the Premises except in fully fenced and screened
areas outside the Building which have been designed for such purpose and have
been approved in writing by Lessor for such use by Lessee.
Section 5.02. Compliance with Law.
(a) Lessor shall deliver the Premises to Lessee on the Commencement
Date (without regard to the use for which Lessee will use the Premises) free of
violations of any covenants or restrictions of record, or any applicable law,
building code, regulation or ordinance in effect on such Commencement Date,
including without limitation, the Americans with Disability Act, and free of
Year Two Thousand computer programming defects.
(b) Except as provided in paragraph 5.02.(a), Lessee shall, at Lessee's
cost and expense, comply promptly with all statutes, ordinances, codes, rules,
regulations, orders, covenants and restrictions of record, and requirements
applicable to the Premises and Lessee's use and occupancy of same in effect
during any part of the Lease Term, whether the same are presently foreseeable or
not, and without regard to the cost or expense of compliance. In the event any
compliance under this paragraph 5.02(b) is not caused by Lessee's particular use
or Alterations and would require Lessee to make any capital improvement to the
Premises, Lessor shall make such capital improvement, amortize the costs thereof
(including interest at the Agreed Rate) over the useful life of the improvement
(as determined by Lessor in the reasonable exercise
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of its discretion) and charge to Lessee as Additional Rent, such amortizing
portion to be paid in equal monthly installments with payments of Base Rent.
(c) By executing this Lease, Lessee acknowledges that it has reviewed
and satisfied itself as to its compliance, or intended compliance with the
applicable zoning and permit laws, hazardous materials and waste requirements,
and all other statutes, laws, or ordinances relevant to the uses stated in
Section 5.01., above.
Section 5.03. Condition of Premises at Commencement Date. Subject to
all of the terms of this Lease for the construction of Tenant Improvements.
Lessor shall deliver the Building to Lessee on the Commencement Date with the
Building plumbing, lighting, heating, ventilating, air conditioning, gas,
electrical, and sprinkler systems and loading doors as set forth in Exhibit "D"
in proper operating condition and built substantially in accordance with the
approved plans therefor, and in a workmanlike manner. Except as otherwise
provided in this Lease, Lessee hereby accepts the Premises in their condition
existing as of the Commencement Date, subject to all applicable zoning,
municipal, county and state laws, ordinances and regulations governing and
regulating the use and condition of the Premises, and any covenants or
restrictions, liens, encumbrances and title exceptions of record, and accepts
this Lease subject thereto and to all matters disclosed thereby and by any
exhibits attached hereto. Lessee acknowledges that neither Lessor nor any agent
of Lessor has made any representation or warranty as to the present or future
suitability of the Premises for the conduct of Lessee's business.
Section 5.04. Defective Condition at Commencement Date. In the event
that it is determined, and Lessee notifies Lessor in writing within one year
after the Commencement Date, that any of the obligations of Lessor set forth in
Section 5.02.(a) or Section 5.03.(a) were not performed, then it shall be the
obligation of Lessor, and the sole right and remedy of Lessee, after receipt of
written notice from Lessee setting forth with specificity the nature of the
failed performance, to promptly, within a reasonable time and at Lessor's sole
cost, correct same. Lessee's failure to give such written notice to Lessor
within one year after the Commencement Date shall constitute a conclusive
presumption that Lessor has complied with all of Lessor's obligations under the
foregoing sections 5.02. and 5.03., and any required correction after that date
shall be performed by Lessee, at its sole cost and expense. At the end of the
first year of the Lease Term, Lessor shall promptly assign to Lessee all of
Lessor's contractor's, and/or manufacturer's guarantees, warranties, and causes
of action.
Section 5.05. Building Security. Lessee acknowledges and agrees that it
assumes sole responsibility for security at the Premises and the Property for
its agents, employees, invitees, licensees, contractors, guests and visitors and
will provide such systems and personnel for same including, without limitation,
the Property, as it deems necessary or appropriate and at its sole cost and
expense. Lessee acknowledges and agrees that Lessor does not intend to provide
any security system or security personnel at the Premises, Property or Project
including, without limitation, at the Common Areas.
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Section 5.06. Rules and Regulations. Lessor may from time to time
promulgate reasonable and nondiscriminatory rules and regulations applicable for
the care and orderly management of the Premises the Common Area and the Project.
Such rules and regulations shall be binding upon Lessor upon delivery of a copy
thereof to Lessor, and Lessor agrees to abide by such rules and regulations. A
copy of the initial Rules and Regulations is attached hereto as Exhibit "L." If
there is a conflict between the rules and regulations and any of the provisions
of this Lease, the provisions of this Lease shall prevail. Lessor shall not be
responsible for the violation of any such rules and regulations by any person,
including, without limitation, Lessee or its employees, agents, invitees,
licensees, guests, visitors or contractors.
ARTICLE VI
MAINTENANCE, REPAIRS AND ALTERATIONS
Section 6.01. Maintenance of Premises.
(a) Throughout the Lease Term, Lessee, at its sole cost and expense,
shall keep, maintain, repair and replace the Premises (except as provided in
6.01.(b)) and all improvements and appurtenances in or serving the Premises,
including, without limitation, all interior and exterior walls, all doors and
windows, the roof membrane, all elevators and stairways, all wall surfaces and
floor coverings, all Tenant Improvements and alterations, additions and
improvements installed during the Lease Term, all sewer, plumbing, electrical,
lighting, heating, ventilation and cooling systems, fire sprinklers, fire safety
and security systems, fixture and appliances and all wiring and glazing, in the
same good order, condition and repair as they are in on the Commencement Date,
or may be put in during the Lease Term, reasonable wear excepted, provided that
wear which could be prevented by first class maintenance shall not be deemed
reasonable.
(b) Lessor, at its sole cost and expense, shall repair defects in the
exterior walls (including all exterior glass which is damaged by structural
defects in such exterior walls), supporting pillars, structural walls, roof
structure and foundations of the Building and sewer and plumbing systems outside
the Building, provided that the need for repair is not caused by Lessee, in
which event Lessor shall, at Lessee's sole cost and expense, repair same. Lessor
shall replace the roof membrane of the Building, the parking lot surface,
landscaping, drainage, irrigation, sprinkler and sewer and plumbing systems
outside the Building systems when the useful life of each has expired, and
Lessee shall pay that portion of the cost of each replacement, together with
annual interest at the Agreed Rate which shall be amortized over the useful life
of each such replacement applicable to the balance of the Lease Term, in equal
monthly installments due and payable with installments of Base Rent provided
that as to repairs and replacements within the Common Area, Lessee shall pay
Lessee's Share. Lessee shall give Lessor written notice of any need of repairs
which are the obligation of Lessor hereunder and Lessor shall have a reasonable
time to perform same. Should Lessor default as provided in Section 12.03 with
respect to its obligation to make any of the repairs assumed by it hereunder
with respect to the Building, Lessee shall have the right to perform such
repairs and Lessor agrees that within thirty (30) days
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after written demand accompanied by detailed invoice(s), it shall pay to Lessee
the cost of any such repairs together with accrued interest from the date of
Lessee's payment at the Agreed Rate. Lessor shall not be liable to Lessee, its
employees, invitees, or licensees for any damage to person or property, and
Lessee's sole right and remedy shall be the performance of said repairs by
Lessee with right of reimbursement from Lessor of the reasonable fair market
cost of said repairs, not exceeding the sum actually expended by Lessee,
together with accrued interest from the date of Lessee's payment at the Agreed
Rate, provided that nothing herein shall be deemed to create a right of setoff
or withholding by Lessee of Base Rent or Additional Rent or any other amounts
due herein. Lessee hereby expressly waives all rights under and benefits of
Sections 1941 and 1942 of the California Civil Code or under any similar law,
statute or ordinance now or hereafter in effect to make repairs and offset the
cost of same against rent or to withhold or delay any payment of rent or any
other of its obligations hereunder as a result of any default by Lessor under
this Section 6.01.(b).
(c) Lessee agrees to keep the Premises, both inside and out, clean and
in sanitary condition as required by the health, sanitary and police ordinances
and regulations of any political subdivision having jurisdiction and to remove
all trash and debris which may be found in or around the Premises. Lessee
further agrees to keep the interior surfaces of the Premises, including, without
limitation, windows, floors, walls, doors, showcases and fixtures clean and neat
in appearance.
(d) If Lessee refuses or neglects to commence such repairs and/or
maintenance for which Lessee is responsible under this Article VI within a
thirty (30) day period (or as soon as practical and in no event later than five
(5) days, if the failure to initiate the repair threatens to cause further
damage to the Premises) after written notice from Lessor and thereafter
diligently prosecute the same to completion, then Lessor may (i) enter the
Premises (except in an emergency, upon at least 24 hours advanced written
notice) during Lessor's business hours and cause such repairs and/or maintenance
to be made and shall not be responsible to Lessee for any loss or damage
occasioned thereby and Lessee agrees that upon demand, it shall pay to Lessor
the reasonable cost of any such repairs, not exceeding the sum actually expended
by Lessor, together with accrued interest from the date of Lessor's payment at
the Agreed Rate and (ii) elect to enter into a maintenance contract at a market
rate for first-rate maintenance with a third party for the performance of all or
a part of Lessee's maintenance obligations, whereupon, Lessee shall be relieved
from its obligations to perform only those maintenance obligations covered by
such maintenance contract, and Lessee shall bear the entire cost of such
maintenance contract which shall be paid in advance, as Additional Rent, on a
monthly basis with Lessee's Base Rent payments.
Section 6.02. Maintenance of Common Areas. Subject to 6.01.(c) and
subject to Lessee paying Lessee's Share of the cost and expense for same
pursuant to Section 4.05 and 4.07 Lessor shall maintain, repair and replace all
landscape, hardscape and other improvements within the Common Areas and shall
operate and manage the Amenities/Athletic Facility and other Common Area
features and facilities described in Section 2.02 including without limitation,
all landscape, hardscape and other improvements within the outside areas of the
Premises located on
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the Property, including without limitation, landscaping, curbs, walkways,
driveways, parking areas and lighting and sprinkler systems.
Section 6.03. Alterations, Additions and Improvements. No alterations,
additions, or improvements ("Alterations") shall be made to the Premises by
Lessee without the prior written consent of Lessor which Lessor will not
unreasonably withhold, provided, however, that Lessee may make Alterations which
do not affect the Building systems, exterior appearance, structural components
or structural integrity and which do not exceed collectively One Hundred
Thousand Dollars ($100,000) in cost within any twelve (12) month period, without
Lessor's prior written consent. As a condition to Lessor's obligation to
consider any request for consent hereunder, Lessee shall pay Lessor upon demand
for the reasonable costs and expenses of consultants, engineers, architects and
others for reviewing plans and specifications and for monitoring the
construction of any proposed Alterations. Lessor may require Lessee to remove
any such Alterations at the expiration or termination of the Lease Term and to
restore the Premises to their prior condition by written notice given on or
before the earlier of (i) the expiration of the Lease Term or (ii) thirty (30)
days after termination prior to the expiration of the Lease Term of the Lease or
(iii) thirty (30) days after a written request from Lessee for such notice from
Lessor provided, that, if Lessee requests same from Lessor, Lessor will notify
Lessee within five (5) business days after receipt of Lessee's request and a
copy of all plans and specifications for the proposed Alteration whether it will
require removal. All Alterations to be made to the Premises shall be made under
the supervision of a competent, California licensed architect and/or competent
California licensed structural engineer (each of whom has been approved by
Lessor) and shall be made in accordance with plans and specifications which have
been furnished to and approved by Lessor in writing prior to commencement of
work. All Alterations shall be designed, constructed and installed at the sole
cost and expense of Lessee by California licensed architects, engineers, and
contractors approved by Lessor, in compliance with all applicable law, and in
good and workmanlike manner. Any Alteration except furniture and trade fixtures,
shall become the property of Lessor at the expiration, or sooner termination of
the Lease, unless Lessor directs otherwise, provided that Lessee shall retain
title to all furniture and trade fixtures placed on the Premises. All heating,
lighting, electrical, air conditioning, full height partitioning (but not
moveable, free standing cubicle-type partitions which do not extend to the
ceiling or connect to Building walls), drapery and carpeting installations made
by Lessee together with all property that has become an integral part of the
Premises, shall be and become the property of Lessor upon the expiration, or
sooner termination of the Lease, and shall not be deemed trade fixtures. Within
thirty (30) days after completion of any Alteration, Lessee, Lessee shall
provide Lessor with a complete set of "as built" plans for same.
Section 6.04. Covenant Against Liens. Lessee shall not allow any liens
arising from any act or omission of Lessee to exist, attach to, be placed on, or
encumber Lessor's or Lessee's interest in the Premises or Project, or any
portion of either, by operation of law or otherwise. Lessee shall not suffer or
permit any lien of mechanics, material suppliers, or others to be placed against
the Premises or Project, or any portion of either, with respect to work or
services performed or claimed to
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have been performed for Lessee or materials furnished or claimed to have been
furnished to Lessee or the Premises. Lessor has the right at all times to post
and keep posted on the Premises any notice that it considers necessary for
protection from such liens. At least seven (7) days before beginning
construction of any Alteration, Lessee shall give Lessor written notice of the
expected commencement date of that construction to permit Lessor to post and
record a notice of nonresponsibility. If any such lien attaches or Lessee
received notice of any such lien, Lessee shall cause the lien to be immediately
released and removed of record. Despite any other provision of this Lease, if
the lien is not released and removed within twenty (20) days after Lessor
delivers notice of the lien to Lessee, Lessor may immediately take all action
necessary to release and remove the lien, without any duty to investigate the
validity of it. All expenses (including reasonable attorney fees and the cost of
any bond) incurred by Lessor in connection with a lien incurred by Lessee or its
removal shall be considered Additional Rent under this Lease and be immediately
due and payable by Lessee. Nothing contained herein shall prohibit Lessee from
obtaining secured financing for personal property at the Premises.
Section 6.05 Reimbursable Capital Expenditures. Except for items of
capital expenditures, which are to be made at Lessor's sole cost and expense
pursuant to the first sentence of Section 6.01(b) above, capital expenditures,
together with interest thereon at the Agreed Rate, for any replacement item at
the Common Areas made by Lessor in excess of Ten Thousand Dollars ($10,000.00)
during the Lease Term shall be amortized over the remaining Lease Term for the
useful life of such replacement item within the numerator being the number of
months remaining in the Lease Term and the denominator being the number of
months of the "useful life" of the improvements. Lessee shall be obligated for
such amortized portion of any such expenditure in equal monthly installments due
and payable with each installment of Base Rent.
ARTICLE VII
INSURANCE
Section 7.01. Property/Rental Insurance for Premises: At all times
during the Lease Term, Lessor shall keep the Premises and Project insured
against loss or damage by fire and those risks normally included in the term
"all risk," including, without limitation, coverage for (i) earthquake and
earthquake sprinkler leakage, (ii) flood, (iii) loss of rents and extra expense
for eighteen (18) months, including scheduled rent increases, (iv) boiler and
machinery, (v) Tenant Improvements and (vi) fire damage legal liability form,
including waiver of subrogation. Any deductibles shall be paid by Lessee. The
amount of such insurance shall not be less than 100% of replacement cost.
Insurance shall include a Building Ordinance and Increased Cost of Construction
Endorsement insuring the increased cost of reconstructing the Premises incurred
due to the need to comply with applicable statutes, ordinances and requirements
of all municipal, state and federal authorities now in force, which or may be in
force hereafter. Any recovery received from said insurance policy shall be paid
to Lessor and thereafter applied by Lessor to the reconstruction of the Premises
in accordance with the provisions of Article VIII below. Lessee, in addition to
the rent and other charges provided herein, shall reimburse Lessor for Lessee's
Share (100% if the insurance covers only the Building or the Building and the
Property)of the cost of the premiums for all such insurance described herein in
accordance with
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Article IV. Lessee shall pay to Lessor any deductible (subject to the above
conditions) owing within fifteen (15) days after receipt of notice from Lessor
of the amount owing. To the extent commercially available, Lessor's insurance
shall have a deductible not greater than fifteen percent (15%) for earthquake
and five percent (5%) for the basic "all risk" coverage. Any deductible over
$100,000 payable by Lessee hereunder shall be amortized over the useful life of
the repair or replacement, and charged to Lessee as Additional Rent.
Section 7.02. Property Insurance for Fixtures and Inventory. At all
times during the Lease Term, Lessee shall, at its sole expense, maintain
insurance with "all risk" coverage on any fixtures, furnishings, merchandise
equipment or personal property in or on the Premises, whether in place as of the
date hereof or installed hereafter. The amount of such insurance shall not be
less than one hundred percent (100%) of the replacement cost thereof, and Lessor
shall not have any responsibility nor pay any cost for maintaining any types of
such insurance. Lessee shall pay all deductibles.
Section 7.03. Lessor's Liability Insurance. During the Lease Term,
Lessor shall maintain a policy of policies of comprehensive general liability
insurance naming Lessor (and such others as designated by Lessor) against claims
and liability for bodily injury, property damage on our about the Premises, with
combined single limit coverage in an amount determined by Lessor in its sole
discretion (which amount is currently Fifty Million Dollars ($50,000,000.00));
provided that if such policy is a blanket policy that covers properties (other
than the Project) owned by Lessor, only that portion allocable to the Project
shall be payable hereunder. Lessee, in addition to the rent and other charges
provided herein, agrees to pay Lessee's Share of the premiums for all such
insurance in accordance with Article IV.
Section 7.04. Liability Insurance Carried by Lessee. At all times
during the Lease Term (and any holdover period) Lessee shall obtain and keep in
force a commercial general liability policy of insurance protecting Lessee,
Lessor and any Lender(s) whose names are provided to Lessee as Additional
Insureds against claims and liability for bodily injury, personal injury and
property damage based upon involving or arising out of ownership, use, occupancy
or maintenance of the Premises. Such insurance shall be on an occurrence basis
providing a single limit coverage in amount of not less than Ten Million Dollars
($10,000,000) per occurrence with an Additional Lessors or Premises Endorsements
and containing an "Amendment of the Pollution Exclusion Endorsement" for damage
caused by heat, smoke, fumes from a hostile fire. The limits of said insurance
required by this Lease as carried by Lessee shall not, however limit the
liability of Lessee nor relieve Lessee of any obligation hereunder. All
insurance to be carried by Lessee shall be primary to and not contributory with,
any similar insurance carried by Lessor whose insurance shall be considered
excess insurance only.
Section 7.05. Lessee to Furnish Proof of Insurance. Lessee shall
furnish to Lessor prior to the Commencement Date, and at least thirty (30) days
prior to the expiration date of any policy, certificates indicating that the
property insurance and liability insurance required to be maintained by Lessee
is in full force and effect for the twelve (12) month period following such
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expiration date; that Lessor has been named as an additional insured to the
extent of contractual liability assumed in Section 7.07. "Indemnification" and
Section 7.08. "Lessor as Party Defendant"; and that all such policies will not
be canceled unless thirty (30) days' prior written notice of the proposed
cancellation has been given to Lessor. The insurance shall be with insurers
approved by Lessor, provided, however, that such approval shall not be
unreasonably withheld so long as Lessee's insurance carrier has a Best's
Insurance Guide rating not less than A+ VIII.
Section 7.06. Mutual Waiver of Claims and Subrogation Rights. Lessor
and Lessee hereby release and relieve the other, and waive their entire claim of
recovery for loss or damage covered by the insurance policies required to be
carried by Lessor and Lessee pursuant to this Article VII when such property
constitutes the Premises, or is in, on or about the Premises, whether or not
such loss or damage is due to the negligence of Lessor or Lessee, or their
respective agents, employees, guests, licensees, invitees, or contractors.
Lessee and Lessor waive all rights of subrogation against each other on behalf
of, and shall obtain a waiver of all subrogation rights from, all property and
casualty insurers referenced in this Article VII.
Section 7.07. Indemnification and Exculpation.
(a) Except as otherwise provided in Section 7.07.(b), Lessee shall
indemnify and hold Lessor free and harmless from any and all liability, claims,
loss, damages, causes of action (whether in tort or contract, law or equity, or
otherwise), expenses, charges, assessments, fines, and penalties of any kind,
including without limitation, reasonable attorney fees, expert witness fees and
costs, arising by reason of the death or injury of any person, including any
person who is an employee, agent, invitee, licensee, permittee, visitor, guest
or contractor of Lessee, or by reason of damage to or destruction of any
property, including property owned by Lessee or any person who is an employee,
agent, invitee, permitee, visitor, or contractor of Lessee, caused or allegedly
caused (1) while that person or property is in or about the Premises; (2) by
some condition of the Premises; (3) by some act or omission by Lessee or its
agent, employee, licensee, invitee, guest, visitor or contractor or any person
in, adjacent, on, or about the Premises with the permission, consent or
sufferance of Lessee; (4) by any matter connected to or arising out of Lessee's
occupation and use of the Premises, or any breach or default in timely
observance or performance of any obligation on Lessee's part to be observed or
performed under this Lease.
(b) Notwithstanding the provisions of Section 7.07.(a) of this Lease,
Lessee's duty to indemnify and hold Lessor harmless shall not apply to any
liability, claims, loss or damages arising because of Lessor's active negligence
or willful acts of misconduct.
(c) Lessee hereby waives all claims against Lessor for damages to
goods, wares and merchandise and all other personal property in, on or about the
Premises and for injury or death to persons in, on or about the Premises from
any cause arising at any time to the fullest extent permitted by law. In no
event shall Lessor be liable (i) for lost profits or other consequential damages
arising from any cause or (ii) for any damage which is or could be covered by
the insurance Lessee is required to carry under this Lease.
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Section 7.08. Lessor as Party Defendant. If by reason of an act or
omission of Lessee or any of its employees, agents, invitees, licensee,
visitors, guests or contractors, Lessor is made a party defendant or a
cross-defendant to any action involving the Premises or this Lease, Lessee shall
hold harmless and indemnify Lessor from all liability or claims of liability,
including all damages, attorney fees and costs of suit.
ARTICLE VIII
DAMAGE OR DESTRUCTION
Section 8.01. Destruction of the Premises.
(a) In the event of a partial destruction of the Premises during the
Lease Term from any cause, Lessor, upon receipt of, and to the extent of,
insurance proceeds paid in connection with such casualty, shall forthwith repair
the same, provided the repairs can be made within a reasonable time under state,
federal, county and municipal applicable law, but such partial destruction shall
in no way annul or void this Lease, (except as provided in Section 8.01.(b)
below) provided that Lessee shall be entitled to a proportionate credit for rent
equal to the payment of rental income insurance received by Lessor; provided
that if Lessor failed to carry such insurance as required by Article VII hereof,
Lessee shall nonetheless be entitled to an abatement of rent to the same extent
as if Lessor had carried such insurance. Lessor shall use diligence in making
such repairs within a reasonable time period, acts of God, strikes and delays
beyond Lessor's control excepted, in which instance the time period shall be
extended accordingly, and this Lease shall remain in full force and effect, with
the rent to be proportionately reduced as provided in this Section. If the
Premises are damaged by any peril within twelve (12) months prior to the last
day of the Lease Term (taking into account any previously exercised Option to
Extend) and, in the reasonable opinion of the Lessor's architect or construction
consultant, the restoration of the Premises cannot be substantially completed
within ninety (90) days after the date of such damage and such damage renders
unusable more than thirty percent (30%) of the Premises, Lessor may terminate
this Lease on sixty (60) days written notice to Lessee.
(b) If the Building is damaged or destroyed by any cause to the extent
of more than fifty percent (50%) of its total Rentable Area during the Lease
Term, Lessor shall notify Lessee within sixty (60) days after such damage or
destruction whether it will repair the same within nine months (9) (subject to
Force Majeure Delays) from the date of such notice and if Lessor states that it
will not repair within said nine months (9) (subject to Force Majeure Delays)
this Lease shall terminate ten (10) business days after Lessor gives its notice.
In the event of termination, Lessee shall pay to Lessor all insurance proceeds,
if any, received by Lessee as a result of the damage or destruction except to
the extent allocable to the unamortized (over the Lease Term) cost of (i) Tenant
Improvements paid for by Lessee over and above the Tenant Improvement Allowance
and (ii) other Alterations installed therein at Lessee's sole cost and expense.
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Section 8.02. Waiver of Civil Code Remedies. Lessee hereby expressly
waives any rights to terminate this Lease upon damage or destruction to the
Premises, including without limitation any rights pursuant to the provisions of
Section 1932, Subdivisions 1 and 2 and Section 1933, Subdivision 4, of the
California Civil Code, as amended from time-to-time, and the provisions of any
similar law hereinafter enacted.
Section 8.03. No Abatement of Rentals. The Rentals and other charges
due under this Lease shall not be reduced or abated by reason of any damage or
destruction to the Premises (except to the extent of proceeds received by Lessor
from the Rental Loss Insurance; provided that if Lessor failed to carry such
insurance as required by Article VII hereof, Lessee shall nonetheless be
entitled to an abatement of rent to the same extent as if Lessor had carried
such insurance), and Lessor shall be entitled to all proceeds of the insurance
maintained pursuant to Section 7.01. above during the period of rebuilding
pursuant to Section 8.01.(a) above, or if the Lease is terminated pursuant to
Section 8.01.(a) above. Lessee shall have no claim against Lessor, including,
without limitation, for compensation for inconvenience or loss of business,
profits or goodwill during any period of repair or reconstruction.
Section 8.04. Liability for Personal Property. In no event shall Lessor
have any liability for, nor shall it be required to repair or restore, any
injury or damage to Lessee's personal property or to any other personal property
or to Alterations in or upon the Premises by Lessee.
Section 8.05. Lessee's Right to Terminate. If the Premises are damaged
by any peril and Lessor does not elect to terminate this Lease or is not
entitled to terminate this Lease pursuant to this Article, then as soon as
reasonably practicable, Lessor shall furnish Lessee with the written opinion of
Lessor's architect or construction consultant as to when the restoration work
required of Lessor may be complete. Lessee shall have the option to terminate
this Lease in the event any of the following occurs, which option may be
exercised only by delivery to Lessor of a written notice of election to
terminate within seven days after Lessee receives from Lessor the estimate of
the time needed to complete such restoration (i) if the time estimated to
substantially complete the restoration or the actual restoration exceeds fifteen
(15) months from and after the date the architect's or construction consultant's
written opinion is delivered or (ii) if the damage occurred within twelve months
prior to the last day of the Lease Term and the time estimated to substantially
complete the restoration exceeds one hundred eighty (180) days from and after
the date such restoration is commenced.
ARTICLE IX
REAL PROPERTY TAXES
Section 9.01. Payment of Taxes. Lessee shall pay Lessee's Share of all
real property taxes, including any escaped or supplemental tax and any form of
real estate tax or assessment, general, special, ordinary or extraordinary, and
any license, fee, charge, excise or imposition ("real property taxes"), imposed,
assessed or levied on or with respect to the Project by any Federal, State,
County, City or other political subdivision or public authority having the
direct or
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indirect power to tax, including, without limitation, any improvement district
or any community facilities district, as against any legal or equitable interest
of Lessor in the Project or against the Project or any part thereof applicable
to the Project for a period of time included within the Lease Term as well as
any government or private cost sharing agreement assessments made for the
purpose of augmenting or improving the quality of services and amenities
normally provided by government agencies. All such payments shall be made at
least ten (10) days prior to the delinquency date for such payment or ten (10)
days after Lessee's receipt of the tax bill, whichever is later. Notwithstanding
the foregoing, Lessee shall not be required to pay any net income taxes,
franchise taxes, or any succession or inheritance taxes of Lessor. If any
anytime during the Lease Term, the State of California or any political
subdivision of the state, including any county, city, city and county, public
corporation, district, or any other political entity or public corporation of
this state, levies or assesses against Lessor a tax, fee, charge or imposition,
excise on rents under the Lease, the square footage of the Project, the act of
entering into this Lease, or the occupancy of Lessee, or levies or assesses
against Lessor any other tax, fee, or excise, however described, including,
without limitation, a so-called value added, business license, transit,
commuter, environmental or energy tax fee, charge or excise or imposition
related to the Project as a direct substitution in whole or in part for, or in
addition to, any real property taxes on the Project, the same shall be included
in real property taxes. Real property taxes payable by Lessee hereunder shall
not include real property taxes applicable to other office/research and
development buildings or the legal parcels on which such buildings are located,
but Lessee shall pay one hundred percent (100%) of real property taxes
applicable to the Property. Notwithstanding anything to the contrary contained
in this Lease, Lessee shall have no obligation to pay for any improvement
district for construction of the presently approved Project or any community
facilities district except for such a district established for purposes of
constructing the Seaport Boulevard improvements and other improvements as
required in the Development Agreement ("Community Facility District Bond"). The
maximum amount of the Community Facility District Bond shall be $12,000,000;
which amount shall be amortized over not less than fifteen (15) years. Lessee
shall pay only Lessee's Share of the yearly amortizing amount. Lessee shall have
no obligation to pay for the initial construction of any other off-site
improvements, improvements in the Common Areas or infrastructure at the Project
contemplated as part of the initial development of the Project, regardless of
whether characterized as an assessment, tax, bond or operating expense.
Section 9.02. Pro Ration for Partial Years. If any such taxes paid by
Lessee shall cover any period prior to the Commencement Date or after the
Expiration Date of the Lease Term, Lessee's share of such taxes shall be
equitably prorated to cover only the period of time within the tax fiscal year
during which this Lease shall be in effect, and Lessor shall reimburse Lessee to
any extent required. If Lessee shall fail to pay any such taxes, Lessor shall
have the right to pay the same in which case Lessee shall repay such amount to
Lessor within ten (10) days after written demand, together with interest at the
Agreed Rate.
Section 9.03. Personal Property Taxes.
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(a) Lessee shall pay prior to delinquency all taxes imposed, assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Lessee contained in the Premises or elsewhere. When
possible, Lessee shall cause said trade fixtures, furnishings, equipment and all
other personal property to be assessed and billed separately from the real
property of Lessor.
(b) If any of Lessee's said personal property shall be assessed with
Lessor's real property, Lessee shall pay Lessor the taxes attributable to Lessee
within ten (10) days after receipt of a written statement setting forth the
taxes applicable to Lessee's property.
(c) If Lessee shall fail to pay any such taxes, Lessor shall have the
right to pay the same, in which case Lessee shall repay such amount to Lessor
with Lessee's next rent installment together with interest at the Agreed Rate.
ARTICLE X
UTILITIES
Section 10.01. Lessee to Pay. Lessee shall pay prior to delinquency and
throughout the Lease Term, all charges for water, gas, heating, cooling, sewer,
telephone, electricity, garbage, air conditioning and ventilation, janitorial
service, landscaping and all other materials and utilities supplied to the
Premises. The disruption, failure, lack or shortage of any service or utility
due to any cause whatsoever shall not affect any obligation of Lessee hereunder,
and Lessor shall faithfully keep and observe all the terms, conditions and
covenants of this Lease and pay all rent due hereunder, all without diminution,
credit or deduction.
ARTICLE XI
ASSIGNMENT AND SUBLETTING
Section 11.01. Lessor's Consent Required. Except as provided in Section
11.02, Lessee shall not voluntarily or by operation of law assign, transfer,
mortgage, sublet, license or otherwise transfer or encumber all or any part of
Lessee's interest in this Lease or in the Premises or any part thereof, without
Lessor's prior written consent which Lessor shall not unreasonably withhold or
delay. Lessor shall respond in writing to Lessee's request for consent hereunder
in a timely manner and any attempted assignment, transfer, mortgage,
encumbrance, subletting or licensing without such consent shall be void, and
shall constitute a breach of this Lease. By way of example, but not limitation,
reasonable grounds for denying consent include: (i) poor credit history or
insufficient financial strength of transferee, (ii) transferee's intended use of
the Premises is inconsistent with the permitted use or will materially and
adversely affect Lessor's interest. Lessee shall reimburse Lessor upon demand
for Lessor's reasonable costs and expenses (including attorneys' fees, architect
fees and engineering fees) involved in renewing any request for consent whether
or not consent is granted.
Section 11.02. Lessee Affiliates. Lessee may assign or sublet the
Premises, or any portion thereof, to any corporation which controls, is
controlled by, or is under common control
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with Lessee, or to any corporation resulting from the merger or consolidation
with Lessee, or to any person or entity which acquires all, or substantially all
of the assets of Lessee as a going concern of the business that is being
conducted on the Premises, provided that said assignee or sublessee assumes, in
full, the obligations of Lessee under this Lease and provided further that the
use to which the Premises will be put does not materially change. Any such
assignment shall not, in any way, affect or limit the liability of Lessee under
the terms of this Lease.
Section 11.03. No Release of Lessee. Regardless of Lessor's consent, no
subletting or assignment shall release Lessee of Lessee's obligation or alter
the primary liability of Lessee to pay the rent and to perform all other
obligations to be performed by Lessee hereunder. The acceptance of rent by
Lessor from any other person shall not be deemed consent to any subsequent
assignment or subletting. In the event of default by any assignee of Lessee or
any successor of Lessee, in the performance of any of the terms hereof, Lessor
may proceed directly against Lessee without the necessity of exhausting remedies
against said assignee.
Section 11.04. Excess Rent. In the event Lessor shall consent to a
sublease or an assignment, Lessee shall pay to Lessor with its regularly
scheduled Base Rent payments, fifty percent (50%) of all sums and the fair
market value of all consideration collected or received by Lessee from a
sublessee or assignee which are in excess of the Base Rent and Additional Rent
due and payable with respect to the subject space pursuant to Article IV for the
time period encompassed by the sublease or assignment term, after first
deducting (i) reasonable leasing commissions paid by Lessee with respect to such
sublease or assignment, (ii) tenant improvements made by Lessee in connection
with the sublease or assignment and (iii) that portion of the cost of Tenant
Improvements paid by Lessee which remains unamortized (using an amortization
schedule of the first 36 months of the Lease Term) during any portion of the
sublease or assignment term.
Section 11.05. No Impairment of Security. Lessee's written request to
Lessor for consent to an assignment or subletting or other form of transfer
shall be accompanied by (a) the name and legal composition of the proposed
transferee; (b) the nature of the proposed transferee's business to be carried
on in the Premises; (c) the terms and provisions of the proposed transfer
agreement; and (d) such financial and other reasonable information as Lessor may
request concerning the proposed transferee.
Section 11.06. Lessor's Recapture Rights.
(a) Lessor's Recapture Rights. Notwithstanding any other provision of
this Article 11, in the event that Lessee proposes to sublease or assign or
otherwise transfer any interest in this Lease or the Premises or any part
thereof affecting (collectively with all other such subleases, assignments, or
transfers then in effect) more than sixty percent (60%) of the square footage of
the Rentable Area of the Building ("Recapture Space") for more than half of the
then remaining Lease Term, then Lessor shall have the option to recapture the
Recapture Space by written notice to Lessee ("Recapture Notice") given within
ten (10) business days after Lessor
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receives any notice of such proposed assignment or sublease or other transfer
("Transfer Notice"). A timely Recapture Notice terminates this Lease for the
Recapture Space, effective as of the date specified in the Transfer Notice. If
Lessor declines or fails timely to deliver a Recapture Notice, Lessor shall have
no further right under this Section 11.06 to the Recapture Space unless it
becomes available again after transfer by Lessee. Notwithstanding anything to
the contrary contained herein, Lessee shall be entitled to sublease all or a
portion of Premises for all or part of the first 3 years of the Lease Term in
accordance with the terms of this Article XI, (excepting this Section 11.06) and
Lessor shall have no recapture rights in the event of such subleasing.
(b) Consequences of Recapture. To determine the new Base Rent under
this Lease if Lessor recaptures the Recapture Space, the then current Base Rent
(immediately before Lessor's recapture) under the Lease shall be multiplied by a
fraction, numerator of which is the square feet of the Rentable Area retained by
Lessee after Lessor's recapture and the denominator of which is the total square
feet of the Rentable Area before Lessor's recapture. The Additional Rent, to the
extent that it is calculated on the basis of the square feet within the
Building, shall be reduced to reflect Lessee's proportionate share based on the
square feet of the Building retained by Lessee after Lessor's recapture. This
Lease as so amended shall continue thereafter in full force and effect. Either
party may require written confirmation of the amendments to this Lease
necessitated by Lessor's recapture of the Recapture Space. If Lessor recaptures
the Recapture Space, Lessor shall, at Lessor's sole expense, construct, paint,
and furnish any partitions required to segregate the Recapture Space from the
remaining Premises retained by Lessee.
ARTICLE XII
DEFAULTS; REMEDIES
Section 12.01. Defaults. The occurrence of any one or more of the
following events shall constitute a material default and breach of this Lease by
Lessee:
(a) The abandonment of the Premises by Lessee or the commission of
waste at the Premises or the making of an assignment or subletting in violation
of Article XI, provided however, abandonment shall be considered to not occur if
the Premises are maintained and occupied to the extent necessary to maintain the
insurance on each and every portion of the Premises;
(b) The failure by Lessee to make any payment of rent or any other
payment required to be made by Lessee hereunder, as and when due, if such
failure continues for a period of five (5) business days after written notice
thereof from Lessor to Lessee. In the event that Lessor serves Lessee with a
Notice to Pay Rent or Quit in the form required by applicable Unlawful Detainer
statutes such Notice shall constitute the notice required by this paragraph,
provided that the cure period stated in the Notice shall be five (5) business
days rather than the statutory three (3) days;
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(c) Lessee's failure to provide (i) any instrument or assurance as
required by Section 7.05 or (ii) estoppel certificate as required by Section
15.01 or (iii) any document subordinating this Lease to a Lender's deed of
trust, if any such failure continues for five (5) business days after written
notice of the failure. In the event Lessor serves Lessee with a Notice to
Perform Covenant or Quit in the form required by applicable Unlawful Detainer
Statutes, such Notice shall constitute the notice required by this paragraph,
provided that the cure period stated in the Notice shall be five (5) days rather
than the statutory three (3) days;
(d) The failure by Lessee to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or performed by Lessee,
other than described in paragraph (a) (b) or (c) above, if such failure
continues for a period of ten (10) days after written notice thereof from Lessor
to Lessee; provided, however, that if the nature of Lessee's default is such
that more than ten (10) days are reasonably required for its cure, then Lessee
shall not be deemed to be in default if Lessee commences such cure within said
ten (10) day period and thereafter diligently prosecutes such cure to
completion;
(e) (i) The making by Lessee of any general arrangement or assignment
for the benefit of creditors; (ii) the filing by Lessee of a voluntary petition
in bankruptcy under Title 11 U.S.C. or the filing of an involuntary petition
against Lessee which remains uncontested for a period of sixty days; (iii) the
appointment of a trustee or receiver to take possession of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this Lease;
or (iv) the attachment, execution or other judicial seizure of substantially all
of Lessee's assets located at the Premises or of Lessee's interest in this
Lease, provided, however, in the event that any provisions of this Section
12.01(e) is contrary to any applicable law, such provision shall be of no force
or effect;
(f) The discovery by Lessor that any financial statement given to
Lessor by Lessee, or any guarantor of Lessee's obligations hereunder, was
materially false.
(g) The occurrence of a material default and breach by Lessee under any
other Lease between Lessee and Lessor (or any affiliate of Lessor) for Premises
in Pacific Shores Center.
Section 12.02. Remedies. In the event of any such material default and
breach by Lessee, Lessor may at any time thereafter, and without limiting Lessor
in the exercise of any right or remedy which Lessor may have by reason of such
default and breach:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means including by way of unlawful detainer (and without any further
notice if a notice in compliance with the unlawful detainer statutes and in
compliance with paragraphs (b), (c) and (d) of Section 12.01 above has already
been given), in which case this Lease shall terminate and Lessee shall
immediately surrender possession of the Premises to Lessor. In such event Lessor
shall be entitled to recover from Lessee all damages incurred by Lessor by
reason of Lessee's default including, but not limited to, (i) the cost of
recovering possession of the Premises including
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reasonable attorney's fees related thereto; (ii) the worth at the time of the
award of any unpaid rent that had been earned at the time of the termination, to
be computed by allowing interest at the Agreed Rate but in no case greater than
the maximum amount of interest permitted by law, (iii) the worth at the time at
the time of the award of the amount by which the unpaid rent that would have
been earned between the time of the termination and the time of the award
exceeds the amount of unpaid rent that Lessee proves could reasonably have been
avoided, to be computed by allowing interest at the Agreed Rate but in no case
greater than the maximum amount of interest permitted by law, (iv) the worth at
the time of the award of the amount by which the unpaid rent for the balance of
the Lease Term after the time of the award exceeds the amount of unpaid rent
that Lessee proves could reasonably have been avoided, to be computed by
discounting that amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of the award plus one per cent (1%), (v) any other amount
necessary to compensate Lessor for all the detriment proximately caused by
Lessee's failure to perform obligations under this Lease, including brokerage
commissions and advertising expenses, expenses of remodeling the Premises for a
new tenant (whether for the same or a different use), and any special
concessions made to obtain a new tenant, and (vi) any other amounts, in addition
to or in lieu of those listed above, that may be permitted by applicable law.
(b) Maintain Lessee's right to possession as provided in Civil Code
Section 1951.4 in which case this Lease shall continue in effect whether or not
Lessee shall have abandoned the Premises. In such event Lessor shall be entitled
to enforce all of Lessor's rights and remedies under this Lease, including the
right to recover the rent as it becomes due hereunder.
(c) Pursue any other remedy now or hereafter available to Lessor under
the laws or judicial decisions of the state of California. Unpaid amounts of
rent and other unpaid monetary obligations of Lessee under the terms of this
Lease shall bear interest from the date due at the Agreed Rate.
Section 12.03. Default by Lessor. Lessor shall not be in default under
this Lease unless Lessor fails to perform obligations required of Lessor within
a reasonable time, but in no event later than thirty (30) days after written
notice by Lessee to Lessor and to the holder of any first mortgage or deed of
trust covering the Premises whose name and address shall have theretofore been
furnished to Lessee in writing, specifying that Lessor has failed to perform
such obligation; provided, however, that if the nature of Lessor's obligation is
such that more than thirty (30) days are required for performance then Lessor
shall not be in default if Lessor commences performance within such thirty day
period and thereafter diligently prosecutes the same to completion. In the event
Lessor does not commence performance within the thirty (30) day period provided
herein, Lessee may perform such obligation and will be reimbursed for its
expenses by Lessor together with interest thereon at the Agreed Rate. Lessee
waives any right to terminate this Lease or to vacate the Premises on Lessor's
default under this Lease. Lessee's sole remedy on Lessor's default is an action
for damages or injunctive or declaratory relief. Notwithstanding the foregoing,
nothing herein shall be deemed applicable in the event of Lessor's delay in
delivery of the Premises. In that situation, all rights and remedies shall be
determined under Section 3.01 above.
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Section 12.04. Late Charges. Lessee hereby acknowledges that late
payment by Lessee to Lessor of rent and other sums due hereunder will cause
Lessor to incur costs not contemplated by this Lease, the exact amount of which
will be extremely difficult to ascertain. Such costs include, but are not
limited to, processing and accounting charges, and late charges which may be
imposed on Lessor by the terms of any mortgage or trust deed covering the
Premises. Accordingly, if any installment of rent or any other sum due from
Lessee shall not be received by Lessor or Lessor's designated agent within five
(5) days after such amount is due and owing, Lessee shall pay to Lessor a late
charge equal to ten percent (10%) of such overdue amount. The parties hereby
agree that such late charge represents a fair and reasonable estimate of the
costs Lessor will incur by reason of late payment by Lessee. Acceptance of such
late charge by Lessor shall in no event constitute a waiver of Lessee's default
with respect to such overdue amount, nor prevent Lessor from exercising any of
the other rights and remedies granted hereunder. In the event that a late charge
is payable hereunder, whether or not collected, for three (3) consecutive
installments of rent, then rent shall automatically become due and payable
quarterly in advance, rather than monthly, notwithstanding Section 4.01 or any
other provision of this Lease to the contrary.
ARTICLE XIII
CONDEMNATION OF PREMISES.
Section 13.01. Total Condemnation. If the entire Premises, whether by
exercise of governmental power or the sale or transfer by Lessor to any
condemnor under threat of condemnation or while proceedings for condemnation are
pending, at any time during the Lease Term, shall be taken by condemnation such
that there does not remain a portion suitable for occupation, this Lease shall
then terminate as of the date transfer of possession is required. Upon such
condemnation, all rent shall be paid up to the date transfer of possession is
required, and Lessee shall have no claim against Lessor or the award for the
value of the unexpired portion of this Lease Term.
Section 13.02. Partial Condemnation. If any portion of the Premises is
taken by condemnation during the Lease Term, whether by exercise of governmental
power or the sale for transfer by Lessor to an condemnor under threat of
condemnation or while proceedings for condemnation are pending, this Lease shall
remain in full force and effect except that in the event a partial taking leaves
the Premises unfit for the conduct of the business of Lessee, then Lessee shall
have the right to terminate this Lease effective upon the date transfer of
possession is required. Moreover, Lessor shall have the right to terminate this
Lease effective on the date transfer of possession is required if more than
thirty-three percent (33%) of the total square footage of the Premises is taken
by condemnation. Lessee and Lessor may elect to exercise their respective rights
to terminate this Lease pursuant to this Section by serving written notice to
the other within thirty (30) days after receipt of notice of condemnation. All
rent shall be paid up to the date of termination, and Lessee shall have no claim
against Lessor for the value of any unexpired portion of the Lease Term. If this
Lease shall not be canceled, the rent after such
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partial taking shall be that percentage of the adjusted base rent specified
herein, equal to the percentage which the square footage of the untaken part of
the Premises, immediately after the taking, bears to the square footage of the
entire Premises immediately before the taking. If Lessee's continued use of the
Premises requires alterations and repair by reason of a partial taking, all such
alterations and repair shall be made by Lessee at Lessee's expense. Lessee
waives all rights it may have under California Code of Civil Procedure Section
1265.130 or otherwise, to terminate this Lease based on partial condemnation.
Section 13.03. Award to Lessee. In the event of any condemnation,
whether total or partial, Lessee shall have the right to claim and recover from
the condemning authority such compensation as may be separately awarded or
recoverable by Lessee for loss of its business fixtures, moving expenses or
equipment belonging to Lessee immediately prior to the condemnation. The balance
of any condemnation award shall belong to Lessor (including, without limitation,
any amount attributable to any excess of the market value of the Premises for
the remainder of the Lease Term over the then present value of the rent payable
for the remainder of the Lease Term) and Lessee shall have no further right to
recover from Lessor or the condemning authority for any claims arising out of
such taking.
ARTICLE XIV
ENTRY BY LESSOR
Section 14.01. Entry by Lessor Permitted. Lessee shall permit Lessor
and its employees, agents and contractors to enter the Premises and all parts
thereof (i) upon twenty-four (24) hours notice (or without notice in an
emergency), including without limitation, the Building and all parts thereof at
all reasonable times for any of the following purposes: to inspect the Premises;
to maintain the Premises (in accordance with the terms of this Lease; to make
such repairs to the Premises as Lessor is obligated or may elect to make
pursuant to the terms of this Lease; to make repairs, alterations or additions
to any other portion of the Project and (ii) upon twenty-four (24) hours notice
to show the Premises and post "To Lease" signs for the purposes of reletting
during the last twelve (12) months of the Lease Term (provided that Lessee has
failed to exercise its option to extend) or extended Lease Term to show the
Premises as part of a prospective sale by Lessor or to post notices of
nonresponsibility. Lessor shall have such right of entry without any rebate of
rent to Lessee for any loss of occupancy or quiet enjoyment of the Premises
hereby occasioned.
ARTICLE XV
ESTOPPEL CERTIFICATE
Section 15.01. Estoppel Certificate.
(a) Lessee shall at any time upon not less than fifteen (15) days'
prior written notice from Lessor execute, acknowledge and deliver to Lessor a
statement in writing (i) certifying, if true, that this Lease is unmodified and
in full force and effect (or, if modified, stating the nature of such
modification and certifying, if true, that this Lease, as so modified, is in
full force and
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effect) and the date to which the rent and other charges are paid in advance, if
any, and (ii) acknowledging, if true, that there are not, to Lessee's knowledge,
any uncured defaults on the part of Lessor hereunder, or specifying such
defaults if any are claimed and (iii) certifying or acknowledging such other
matters as are requested by any prospective lender or buyer which are reasonably
related to the loan or sale transaction. Any such statement may be conclusively
relied upon by any prospective purchaser or encumbrancer of the Premises.
(b) Lessee's failure to deliver such statement within such time shall
be conclusive upon Lessee (i) that this Lease is in full force and effect,
without modification except as may be represented by Lessor, (ii) that there are
no uncured defaults in Lessor's performance, and (iii) that not more than one
month's rent has been paid in advance.
ARTICLE XVI
LESSOR'S LIABILITY
Section 16.01. Limitations on Lessor's Liability. The term "Lessor" as
used herein shall mean only the owner or owners at the time in question of the
fee title of the Premises. In the event of any transfer of such title or
interest, Lessor herein named (and in case of any subsequent transfers then the
grantor) shall be relieved from and after the date of such transfer of all
liability as respects Lessor's obligations thereafter to be performed, except as
to any claim Lessee may have as to any funds in the hands of Lessor or the then
grantor at the time of such transfer, including without limitation, the Security
Deposit, in which Lessee has an interest, which are not delivered to the
grantee. The obligations contained in this Lease to be performed by Lessor
shall, subject as aforesaid, be binding on Lessor's successors and assigns, only
during their respective periods of ownership. For any breach of this Lease by
Lessor, the liability of Lessor (including all persons and entities that
comprise Lessor, and any successor Lessor) and any recourse by Lessee against
Lessor shall be limited to the interest of Lessor, and Lessor's successors in
interest, in and to the Premises. On behalf of itself and all persons claiming
by, through, or under Lessee, Lessee expressly waives and releases Lessor and
each member, agent and employee of Lessor from any personal liability for breach
of this Lease.
ARTICLE XVII
GENERAL PROVISIONS
Section 17.01. Severability. The invalidity of any provision of this
Lease as determined by a court of competent jurisdiction, shall in no way affect
the validity of any other provision hereof.
Section 17.02. Agreed Rate Interest on Past-Due Obligations. Except as
expressly herein provided, any amount due to either party not paid when due
shall bear interest at the Bank of America prime rate plus one percent (1%)
("Agreed Rate"). Payment of such interest shall not excuse or cure any default
by Lessee under this Lease. Despite any other provision of this Lease, the total
liability for interest payments shall not exceed the limits, if any, imposed by
the usury
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laws of the State of California. Any interest paid in excess of those limits
shall be refunded to the payor by application of the amount of excess interest
paid against any sums outstanding in any order that payee requires. If the
amount of excess interest paid exceeds the sums outstanding, the portion
exceeding those sums shall be refunded in cash to the payor by the payee. To
ascertain whether any interest payable exceeds the limits imposed, any
nonprincipal payment (including late charges) shall be considered to the extent
permitted by law to be an expense or a fee, premium, or penalty rather than
interest.
Section 17.03. Time of Essence. Time is of the essence in the
performance of all obligations under this Lease.
Section 17.04. Additional Rent. Any monetary obligations of Lessee to
Lessor under the terms of this Lease shall be deemed to be Additional Rent and
Lessor shall have all the rights and remedies for the nonpayment of same as it
would have for nonpayment of Base Rent, except that the one year requirement of
Code of Civil Procedure Section 1161(2) shall apply only to scheduled
installments of Base Rent and not to any Additional Rent. All references to
"rent" (except specific references to either Base Rent or Additional Rent) shall
mean Base Rent and Additional Rent.
Section 17.05. Incorporation of Prior Agreements, Amendments and
Exhibits. This Lease (including Exhibits A, B, C, D, E, F, G, H, I, J, K, L and
M) contains all agreements of the parties with respect to any matter mentioned
herein. No prior agreement or understanding pertaining to any such matter shall
be effective. This Lease may be modified in writing only, signed by the parties
in interest at the time of the modification. Except as otherwise stated in this
Lease, Lessee hereby acknowledges that neither the Lessor nor any employees or
agents of the Lessor has made any oral or written warranties or representations
to Lessee relative to the condition or use by Lessee of said Premises and Lessee
acknowledges that Lessee assumes all responsibility regarding the Occupational
Safety Health Act, the legal use and adaptability of the Premises and the
compliance thereof with all applicable laws and regulations in effect during the
Lease Term except as otherwise specifically stated in this Lease. Neither party
has been induced to enter into this Lease by, and neither party is relying on,
any representation or warranty outside those expressly set forth in this Lease.
Section 17.06. Notices.
(a) Written Notice. Any notice required or permitted to be given
hereunder shall be in writing and shall be given by a method described in
paragraph (b) below and shall be addressed to Lessee or to Lessor at the
addresses noted below, next to the signature of the respective parties, as the
case may be. Either party may by notice to the other specify a different address
for notice purposes. A copy of all notices required or permitted to be given to
Lessor hereunder shall be concurrently transmitted to such party or parties at
such addresses as Lessor may from time to time hereafter designate by notice to
Lessee, but delay or failure of delivery to such person shall not affect the
validity of the delivery to Lessor or Lessee.
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(b) Methods of Delivery:
(i) When personally delivered to the recipient, notice is
effective on delivery. Delivery to the person apparently designated to receive
deliveries at the subject address is personally delivered if made during
business hours (e.g. receptionist).
(ii) When mailed by certified mail with return receipt
requested, notice is effective on receipt if delivery is confirmed by a return
receipt.
(iii) When delivery by overnight delivery Federal
Express/Airborne/United Parcel Service/DHL WorldWide Express with charges
prepaid or charged to the sender's account, notice is effective on delivery if
delivery is confirmed by the delivery service.
(c) Refused, Unclaimed or Undeliverable Notices. Any correctly
addressed notice that is refused, unclaimed, or undeliverable because of an act
or omission of the party to be notified shall be considered to be effective as
of the first date that the notice was refused, unclaimed, or considered
undeliverable by the postal authorities, messenger, or overnight delivery
service.
Section 17.07. Waivers. No waiver of any provision hereof shall be
deemed a waiver of any other provision hereof or of any subsequent breach of the
same or any other provisions. Any consent to, or approval of, any act shall not
be deemed to render unnecessary the obtaining of consent to or approval of any
subsequent act. The acceptance of rent hereunder by Lessor shall not be a waiver
of any preceding breach by Lessee of any provision hereof, other than the
failure of Lessee to pay the particular rent so accepted, regardless of Lessor's
knowledge of such preceding breach at the time of acceptance of such rent.
Section 17.08. Recording. Either Lessor or Lessee shall, upon request
of the other, execute, acknowledge and deliver to the other a "short form"
memorandum of this Lease for recording purposes, provided that Lessee shall also
simultaneously execute in recordable form and delivering to Lessor a Quit Claim
Deed as to its leasehold and any other interest in the Premises and hereby
authorizes Lessor to date and record the same only upon the expiration or sooner
termination of this Lease.
Section 17.09. Surrender of Possession; Holding Over.
(a) At the expiration of the Lease, Lessee agrees to deliver up and
surrender to Lessor possession of the Premises and all improvements thereon
broom clean and, in as good order and condition as when possession was taken by
Lessee, excepting only ordinary wear and tear (wear and tear which could have
been avoided by first class maintenance practices and in accordance with
industry standards shall not be deemed "ordinary"). Upon expiration or sooner
termination of this Lease, Lessor may reenter the Premises and remove all
persons and property therefrom. If Lessee shall fail to remove any personal
property which it is entitled or obligated to remove from
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the Premises upon the expiration or sooner termination of this Lease, for any
cause whatsoever, Lessor, at its option, may remove the same and store or
dispose of them, and Lessee agrees to pay to Lessor on demand any and all
expenses incurred in such removal and in making the Premises free from all dirt,
litter, debris and obstruction, including all storage and insurance charges. If
the Premises are not surrendered at the end of the Lease Term, Lessee shall
indemnify Lessor against loss or liability resulting from delay by Lessee in so
surrendering the Premises, including, without limitation, actual damages for
lost rent and with respect to any claims of a successor occupant.
(b) If Lessee, with Lessor's prior written consent, remains in
possession of the Premises after expiration of the Lease Term and if Lessor and
Lessee have not executed an express written agreement as to such holding over,
then such occupancy shall be a tenancy from month to month at a monthly Base
Rent equivalent to one hundred fifty percent (150%) of the monthly rental in
effect immediately prior to such expiration, such payments to be made as herein
provided for Base Rent. In the event of such holding over, all of the terms of
this Lease, including the payment of Additional Rent all charges owing hereunder
other than rent shall remain in force and effect on said month to month basis.
Section 17.10. Cumulative Remedies. No remedy or election hereunder by
Lessor shall be deemed exclusive but shall, wherever possible, be cumulative
with all other remedies at law or in equity, provided that notice and cure
periods set forth in Article XII are intended to extend and modify statutory
notice provisions to the extent expressly stated in Section 12.01.
Section 17.11. Covenants and Conditions. Each provision of this Lease
to be observed or performed by Lessee shall be deemed both a covenant and a
condition.
Section 17.12. Binding Effect; Choice of Law. Subject to any provisions
hereof restricting assignment or subletting by Lessee and subject to the
provisions of Article XVI, this Lease shall bind the parties, their personal
representatives, successors and assigns. This Lease shall be governed by the
laws of the State of California and any legal or equitable action or proceeding
brought with respect to the Lease or the Premises shall be brought in Santa
Clara County, California.
Section 17.13. Lease to be Subordinate. Lessee agrees that this Lease
is and shall be, at all times, subject and subordinate to the lien of any
mortgage or other encumbrances which Lessor may create against the Premises
including all renewals, replacements and extensions thereof provided, however,
that regardless of any default under any such mortgage or encumbrance or any
sale of the Premises under such mortgage, so long as Lessee timely performs all
covenants and conditions of this Lease and continues to make all timely payments
hereunder, this Lease and Lessee's possession and rights hereunder shall not be
disturbed by the mortgagee or anyone claiming under or through such mortgagee.
Lessee shall execute any documents subordinating this Lease within ten (10) days
after delivery of same by Lessor so long as the Lender agrees therein that this
Lease will not be terminated if Lessee is not in default following a
foreclosure, including, without limitation, any Subordination Non-Distribution
and
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Attornment Agreement ("SNDA") which is substantially in the form attached hereto
as Exhibit "F." Lessor shall provide Lessee with an SNDA with respect to any
existing lender, ground Lessor or other lien holder on the Project.
Section 17.14. Attorneys' Fees. If either party herein brings an action
to enforce the terms hereof or to declare rights hereunder, the prevailing party
in any such action, on trial or appeal, shall be entitled to recover its
reasonable attorney's fees, expert witness fees and costs as fixed by the Court.
Section 17.15. Signs. Lessee shall not place any sign upon the exterior
of the Building or monument signage on the Premises without Lessor's prior
written consent, which consent shall not be unreasonably withheld or delayed and
subject to approval by the City of Redwood. Lessee, at its sole cost and
expense, after obtaining Lessor's prior written consent, shall install, maintain
and remove prior to expiration of this Lease (or within ten (10) days after any
earlier termination of this Lease) all signage in full compliance with (i) all
applicable law, statutes, ordinances and regulations, (ii) all provisions of
this Lease concerning Alterations, and (iii) Exhibit "G." In creating the
signage provision to be set forth on Exhibit "G," Lessor agrees to request from
City approval for illuminated exterior Building Signage.
Section 17.16. Merger. The voluntary or other surrender of this Lease
by Lessee, or a mutual cancellation thereof, or a termination by Lessor, shall
not work a merger, and shall, at the option of Lessor, terminate all or any
existing subtenancies or may, at the option of Lessor, operate as an assignment
to Lessor of any or all of such subtenancies.
Section 17.17. Guarantor. [Intentionally Omitted]
Section 17.18. Quiet Possession. Upon Lessee timely paying the rent for
the Premises and timely observing and performing all of the covenants,
conditions and provisions on Lessee's part to be observed and performed
hereunder, Lessee shall have quiet possession of the Premises for the entire
Lease Term, subject to all of the provisions of this Lease.
Section 17.19. Easements. Lessor reserves to itself the right, from
time to time, to grant such easements, rights and dedications that Lessor deems
necessary or desirable, and to cause the recordation of Parcel Maps and
conditions, covenants and restrictions, so long as such easements, rights,
dedications, Maps and conditions, covenants and restrictions do not unreasonably
interfere with the use of the Premises by Lessee or materially increased
Lessee's actual or potential monetary and non-monetary obligations under this
Lease. Lessee shall sign any of the aforementioned or other documents, and take
such other actions, which are reasonably necessary or appropriate to accomplish
such granting recordation and subordination of the Lease to same, upon request
of Lessor, and failure to do so within ten (10) business days of a written
request to do so shall constitute a material breach of this Lease.
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Section 17.20. Authority. Each individual executing this Lease on
behalf of a corporation, limited liability company or partnership represents and
warrants that he or she is duly authorized to execute and deliver this Lease on
behalf of such entity in accordance with a duly adopted resolution of the
governing group of the entity empowered to grant such authority, and that this
Lease is binding upon said entity in accordance with its terms. Each party shall
provide the other with a certified copy of its resolution within ten (10) days
after execution hereof, but failure to do so shall in no manner (i) be evidence
of the absence of authority or (ii) affect the representation or warranty.
Section 17.21. Force Majeure Delays. In any case where either party
hereto is required to do any act (other than the payment of money), delays
caused by or resulting from Acts of God or Nature, war, civil commotion, fire,
flood or other casualty, labor difficulties, shortages of labor or materials or
equipment, government regulations, delay by government or regulatory agencies
with respect to approval or permit process, unusually severe weather, or other
causes beyond such party's reasonable control ("Force Majeure Delays") the time
during which act shall be completed, shall be deemed to be extended by the
period of such delay, whether such time be designated by a fixed date, a fixed
time or "a reasonable time."
Section 17.22. Hazardous Materials.
(a) Definition of Hazardous Materials and Environmental Laws.
"Hazardous Materials" means any (a) substance, product, waste or other material
of any nature whatsoever which is or becomes listed regulated or addressed
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. sections 9601, et seq. ("CERCLA"); the Hazardous Materials
Transportation Act ("HMTA") 49 U.S.C. section 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. section 6901, et seq. ("RCRA"); the
Toxic Substances Control Act, 15 U.S.C. sections 2601, et seq. ("TSCA"); the
Clean Water Act, 33 U.S.C. sections 1251, et seq.; the California Hazardous
Waste Control Act, Health and Safety Code sections 25100, et seq.; the
California Hazardous Substances Account Act, Health and Safety Code sections
26300, et seq.; the California Safe Drinking Water and Toxic Enforcement Act,
Health and Safety Code sections 25249.5, et seq.; California Health and Safety
Code sections 25280, et seq.; (Underground Storage of Hazardous Substances); the
California Hazardous Waste Management Act, Health and Safety Code sections
25170.1, et seq.; California Health and Safety Code sections 25501. et seq.
(Hazardous Materials Response Plans and Inventory); or the Porter-Cologne Water
Quality Control Act, California Water Code sections 13000, et seq., all as
amended, or any other federal, state or local statute, law, ordinance,
resolution, code, rule, regulation, order or decree regulating, relating to or
imposing liability (including, but not limited to, response, removal and
remediation costs) or standards of conduct or performance concerning any
hazardous, toxic or dangerous waste, substance or material, as now or at any
time hereafter may be in effect (collectively, "Environmental Laws"); (b) any
substance, product, waste or other material of any nature whatsoever whose
presence in and of itself may give rise to liability under any of the above
statutes or under any statutory or common law theory based on negligence,
trespass, intentional tort, nuisance, strict or absolute liability or under any
reported decisions of a state or federal court, (c) petroleum or crude oil,
including but
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not limited to petroleum and petroleum products contained within regularly
operated motor vehicles and (d) asbestos.
(b) Lessor's Representations and Disclosures. Lessor represents that it
has provided Lessee with a description of the Hazardous Materials on or beneath
the Property as of the date hereof, attached hereto as Exhibit I and
incorporated herein by reference. Lessee acknowledges that in providing the
attached Exhibit I, Lessor has satisfied its obligations of disclosure pursuant
to California Health & Safety Code Section 25359.7 which requires:
"Any owner of nonresidential real property who knows, or has
reasonable cause to believe, that any release of hazardous substances has come
to be located on or beneath that real property shall, prior to the sale, lease
or rental of the real property by that owner, give written notice of that
condition to the buyer, lessee or renter of the real property."
(c) Use of Hazardous Materials. Lessee shall not cause or permit any
Hazardous Materials to be brought upon, kept or used in, on or about the Project
by Lessee, its agents, employees, contractors, licensee, guests, visitors or
invitees without the prior written consent of Lessor. Lessor shall not
unreasonably withhold such consent so long as Lessee demonstrates to Lessor's
reasonable satisfaction that such Hazardous Materials are necessary or useful to
Lessee's business and will be used, kept and stored in a manner that complies
with all applicable Environmental Laws. Lessee shall, at all times, use, keep,
store, handle, transport, treat or dispose all such Hazardous Materials in or
about the Property in compliance with all applicable Environmental Laws. Prior
to the expiration or earlier termination of this Lease, Lessee shall remove from
the Property all Hazardous Materials used or brought onto the Property during
the Lease Term by anyone other than Lessor, its agents, employees or
contractors.
(d) Lessee's Environmental Indemnity. Lessee agrees to indemnify and
hold Lessor harmless from any liabilities, losses, claims, damages, penalties,
fines, attorney fees, expert fees, court costs, remediation costs, investigation
costs, or other expenses resulting from or arising out of the use, storage,
treatment, transportation, release, presence, generation, or disposal of
Hazardous Materials on, from or about the Project, and/or subsurface or ground
water, from an act or omission of Lessee (or Lessee's successor), its agents,
employees, invitees, vendors, contractors, guests or visitors.
(e) Lessee's Obligation to Promptly Remediate. If the presence of
Hazardous Materials on the Premises after the Commencement Date which results
from an act or omission of Lessee (or Lessee's successors), its agents,
employees, invitees, vendors, contractors, guests, or visitors also results in
contamination or deterioration of the Property or any water or soil beneath the
Property, Lessee shall promptly take all action necessary or appropriate to
investigate and remedy that contamination, at its sole cost and expense,
provided that Lessor's approval of such action shall first be obtained. Lessor's
approval shall not be unreasonably withheld.
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(f) Notification. Lessor and Lessee each agree to promptly notify the
other of any communication received from any governmental entity concerning
Hazardous Materials or the violation of Environmental Laws that relate to the
Property.
(g) Lessor's Environmental Indemnity. Lessor agrees to indemnify and
hold Lessee harmless from any liabilities, losses, claims, damages, penalties,
fines, attorney fees, expert fees, court costs, remediation costs, investigation
costs, or other expenses resulting from or arising out of the use, storage,
treatment, transportation, release, presence, generation, or disposal of
Hazardous Materials on, from or about the Premises, and/or subsurface or ground
water prior to the Commencement Date or caused by Lessor (or Lessor's
successor), its agents or employees.
Section 17.23. Modifications Required by Lessor's Lender. If any lender
of Lessor requires a modification of this Lease that will not increase Lessee's
cost or expense or materially and adversely change Lessee's rights and
obligations, this Lease shall be so modified and Lessee shall execute whatever
documents are required by such lender and deliver them to Lessor within ten (10)
days after the request.
Section 17.24. Brokers. Lessor and Lessee each represents to the other
that it has had no dealings with any real estate broker or agent in connection
with the negotiation of this Lease, except for the real estate brokers or agents
identified on the signature page hereof ("Brokers") and that they know of no
other real estate broker or agent who is entitled to a commission or finder's
fee in connection with this Lease. Each party shall indemnify, protect, defend,
and hold harmless the other party against all claims, demands, losses,
liabilities, lawsuits, judgments, and costs and expenses (including reasonable
attorney fees) for any leasing commission, finder's fee, or equivalent
compensation alleged to be owing on account of the indemnifying party's dealings
with any real estate broker or agent other than the Brokers. The terms of this
Section 17.24 shall survive the expiration or earlier termination of the Lease
Term.
Section 17.25. Right of First Refusal to Lease Building.
(a) If Lessor obtains all legally required approvals to construct one
or more additional Buildings on the Common Area portions of Lots 3, 4 or 5 at
the Project, Lessee shall have a right of first offer ("Right of First Refusal")
to lease any such Building and if Lessor does not obtain such approvals, Lessee
shall have a Right of First Refusal to lease Building 3 to be built on Lot 3 on
Exhibit "A" ("Offer Building").
(b) At the time Lessee exercises the Right of First Refusal: (i) The
Lease must be in full force and effect; (ii) Lessee shall not be in Default
under the Lease (nor shall Lessee be in Default under the Lease at the
Commencement Date for the Offer Building) and (iii) Lessee's then current
financial condition, as revealed by its most recent financial statements (which
shall include quarterly and annual financial statements, including income
statements, balance sheets, and cash flow statements), must demonstrate that
either: (1) Lessee's net worth is at least equal to its net worth at the time
this Lease was signed; or (2) Lessee meets the financial criteria reasonably
acceptable to Lessor.
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(c) Lessor shall not lease any Offer Building or Building 3 to any
other party ( other than Building 3 to the current tenant) unless and until
Lessor has first offered Building 3 or any other Offer Building to Lessee in
writing (the "Offer Notice") to lease Building 3 or an Offer Building to Lessee
under the terms that such other party is willing to lease and Lessee either
rejects such offer or a period of ten (10) business days has elapsed from the
date that Lessor has delivered the Offer Notice without Lessee having notified
Lessor in writing of its acceptance of such Offer Notice and supplied Lessor
with current financial statements pursuant to Paragraph b, which ever event
occurs first. The Offer Notice shall contain the following information: (i) The
date on which the Lessor expects Building 3 or the Offer Building to become
available; (ii) The Base Rent; (iv) The pro rata share of Additional Rent; and
(v) Such other terms and conditions upon which the third party is willing to
lease Building 3 or the Offer Building.
(d) If Lessee timely delivers to Lessor, in accordance with the
conditions of this Section, written notice of Lessee's exercise of the Right of
First Refusal (along with Lessee's financial statements pursuant to Paragraph b)
and Lessor determines that Lessee meets all of the conditions provided in this
Section, then Lessor and Lessee shall enter into a new lease for Building 3 or
the Offer Building, as applicable, which lease shall be on the then applicable
terms and conditions in this Lease, as modified by the terms and conditions set
forth in the Offer Notice.
(e) If Lessee declines or fails to duly and timely exercise its Right
of First Refusal or fails to meet all of the conditions provided in this
Section, Lessor shall thereafter be free to lease Building 3 or the Offer
Building, as applicable, in portions or in its entirety to any third-party. upon
the terms contained in the Offer Notice. In the event Lessor has not leased
Building 3 or the Offer Building within 6 months, Lessor shall not lease
Building 3 or the Offer Building without re-offering it to Lessee in accordance
with the terms hereof. In the event Lessor proposes lease terms more favorable
than those set forth in the Offer Notice to any third party, Lessor shall first
offer such terms to Lessee in accordance with the procedure set forth herein.
(f) Within ten (10) business days after the Commencement Date for
Building 3 or the Offer Building, as applicable, Lessor and Lessee shall confirm
the foregoing in a new lease between Lessor and Lessee, which lease shall
contain all of the same terms and conditions of this Lease, except as modified
by the Offer Notice.
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(g) This Right of First Refusal is personal to the Lessee and shall
become null and void upon the occurrence of an assignment of this Lease or a
sublet of all or a major part of the Premises for the remainder of the Term
other than to a Lessee Affiliate.
Section 17.26. Acknowledgment of Notices. Lessor has provided and
Lessee hereby acknowledges receipt of the Notices attached as Exhibits J and K
hereto, concerning the presence of certain uses and operations of neighboring
parcels of land.
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Section 17.27. List of Exhibits.
Ref. Page
EXHIBIT A: Real Property Legal Description,
Site Plan, and Building Elevations
EXHIBIT B: Plans and Specifications for Shell Building
EXHIBIT C: Work Letter Agreement for Tenant
Improvements and Interior Specification Standards
EXHIBIT D: Cost Responsibilities of Lessor and Lessee
EXHIBIT E: Memorandum of Commencement of Lease
Term and Schedule of Base Rent
EXHIBIT F: SNDA
EXHIBIT G: Signage Exhibit
EXHIBIT H: Guaranty of Lease [Intentionally Omitted]
EXHIBIT I: Hazardous Materials Disclosure
EXHIBIT J: Notice to Tenants
EXHIBIT K: Notice to Tenants
EXHIBIT L: Rules and Regulations
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LESSOR AND LESSEE EACH HAS CAREFULLY READ AND HAS REVIEWED THIS LEASE AND BEEN
ADVISED BY LEGAL COUNSEL OF ITS OWN CHOOSING AS TO EACH TERM AND PROVISION
CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOWS ITS INFORMED AND
VOLUNTARY CONSENT THERETO. EACH PARTY HEREBY AGREE THAT, AT THE TIME THIS LEASE
IS EXECUTED, THE TERMS AND CONDITIONS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
Executed at San Jose, California, as of the reference date.
LESSOR: ADDRESS:
PACIFIC DEVELOPMENT LLC, c/o Jay Paul Company
a California limited liability company 353 Sacramento Street, Suite 1740
San Francisco, California 94111
By: ___________________________
Jay Paul, President
With a copy to:
Thomas G. Perkins, Esq.
99 Almaden Blvd., 8th Floor
San Jose, CA 95113
Telephone: 408- 993-9911
Facsimile: 408-286.3312
LESSEE: ADDRESS:
BroadVision Inc.
a Delaware corporation 585 Broadway
Redwood City, CA 94063
Facsimile: (650) 261-5900
By: _______________________ (Before Commencement Date for Building 6)
-----------------------
(Type or print name) ATTN: Legal Department
Pacific Shores Center
Its: Building 6
----------------------------------------------
Redwood City, CA
(After Commencement Date for Building 6)
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By: ________________________
------------------------
(Type or print name)
Its: _________________________
BROKER EXECUTION
By signing below, the indicated real estate broker or agent is not
being made a party hereto, but is signifying its agreement with the provisions
hereof concerning brokerage.
LESSOR'S BROKER: ADDRESS:
Cornish & Carey Commercial 2804 Mission College Boulevard
Suite 120
Santa Clara, California 95054
By: ___________________________
---------------------------
(Type or print name)
Its: Executive Vice President
LESSEE'S BROKER: ADDRESS:
------------------------------ ---------------------------
---------------------------
By: ___________________________
---------------------------
(Type or print name)
Its: ___________________________
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