California-San Jose-160 West Santa Clara Street Lease - W9/PHC II San Jose LLC and Callidus Software Inc.
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[OFFICE - CALIFORNIA]
LEASE AGREEMENT
BETWEEN
W9/PHC II SAN JOSE, L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY
AS LANDLORD,
AND
CALLIDUS SOFTWARE, INC.,
A DELAWARE CORPORATION
AS TENANT
DATED:
AUGUST 28, 2003
160 W. SANTA CLARA STREET
SAN JOSE, CALIFORNIA 95113
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BASIC LEASE INFORMATION
Lease Date: August 28, 2003
Landlord: W9/PHC II SAN JOSE, L.L.C., a Delaware limited
liability company
Tenant: CALLIDUS SOFTWARE, INC., a Delaware corporation
Premises: (i) Suite 800, which contains 15,751 rentable
square feet, (ii) Suite 1300, which contains 7,066
rentable square feet, (iii) Suite 1350, which
contains 7,015 rentable square feet, (iv) Suite
1500, which contains 14,314 rentable square feet,
and (v) the server room on the 14th floor (the
"SERVER ROOM"), which contains 390 rentable square
feet, for a total of 44,536 rentable square feet,
collectively referred to herein as the "Premises,"
in the office building whose street address is 160
West Santa Clara Street, San Jose, California
95113 (the "BUILDING"). The Premises are outlined
on the plan attached to the Lease as Exhibit A.
The land on which the Building is located (the
"LAND") is described on Exhibit B. The term
"PROJECT" shall collectively refer to the
Building, the Land and the driveways, parking
facilities, and similar improvements and easements
associated with the foregoing or the operation
thereof.
Term: 84 months, commencing on the Commencement Date and
ending at 5:00 p.m. local time on the last day of
the 84th full calendar month following the
Commencement Date, subject to adjustment and
earlier termination as provided in the Lease.
Option to Renew: Two options for 36 months each
Commencement Date: For Suites 800, 1500 and the Server Room:
This Lease shall commence with respect to Suite
800, 1500 and the Server Room on the date on which
this Lease is fully executed by Landlord and
Tenant.
For Suite 1300: This Lease shall commence with
respect to Suite 1300 on the earliest of (a) the
date on which Tenant occupies any portion of Suite
1300 and begins conducting its regular business
therein, (b) the date on which the Suite 1300 Work
(as defined in Exhibit D hereto) in Suite 1300 is
Substantially Completed (as defined in Exhibit D
hereto), or (c) the date on which such Suite 1300
Work would have been Substantially Completed but
for the occurrence of any Tenant Delay Days (as
defined in Exhibit D hereto) with respect to Suite
1300 (the "SUITE 1300 CD").
For Suite 1350: This Lease shall commence with
respect to Suite 1350 on the earliest of (a) the
date on which Tenant occupies any portion of Suite
1350 and begins conducting its regular business
therein, (b) the date on which the Suite 1350 Work
(as defined in Exhibit D hereto) in Suite 1350 is
Substantially Completed, or (c) the date on which
such Suite 1350 Work would have been Substantially
Completed but for the occurrence of any Tenant
Delay Days with respect to Suite 1350 (the "SUITE
1350 CD").
Basic Rent: Basic Rent shall be the following amounts for the
following
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periods of time:
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Suite Number Lease Month Monthly Basic Rent
800, 500, Server Room 1-42 $77,660.25
43-84 $86,796.75
1350 Suite 1350 CD-42 $17,888.25
43-84 $19,992.75
1300 Suite 1300 CD-42 $18,018.30
43-84 $20,138.10
Temporary Space 1-Suite 1300 CD $21,858.60
Summary of Monthly Basic Rent for Premises and
Temporary Space:
<CAPTION>
Lease Month Monthly Basic Rent
1 - Suite 1350 CD $99,518.85
Suite 1350 CD-Suite 1300 CD $117,407.10
Suite 1300 CD-42 $113,566.80
43-84 $126,927.60
As used herein, the term "LEASE MONTH" shall mean
each calendar month during the Term (and if the
Commencement Date does not occur on the first day
of a calendar month, the period from the
Commencement Date to the first day of the next
calendar month shall be included in the first
Lease Month for purposes of determining the
duration of the Term and the prorated amount of
the monthly Basic Rent rate applicable for such
partial month).
All Lease Months referenced in this Lease shall be
measured from the Commencement Date for Suites
800, 1500 and the Server Room.
Supplemental Rent: Supplemental Rent shall be the following amounts
for the following periods of time:
<CAPTION>
Suite Number Lease Month Monthly Supplemental
Rent
800, 1500, Server Room 1-84 $2,131.85
1350 Suite 1350 CD-84 $491.05
1300 Suite 1300 CD-84 $494.62
Temporary Space 1-Suite 1300 CD $600.04
Summary of Monthly Supplement Rent for Premises
and Temporary Space:
<CAPTION>
Lease Month Monthly Supplemental Rent
1-Suite 1350 CD $2,731.89
Suite 1350 CD-Suite 1300 CD $3,222,94
Suite 1300 CD-84 $3,117.52
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Security Deposit: None; Landlord and Tenant acknowledge and agree
that Landlord currently holds a cash Security
Deposit on behalf of Tenant in the amount of
$50,558.14. Landlord shall apply all of such
Security Deposit toward Monthly Basic Rent payable
by Tenant for the first Lease Month of the Term.
Letter of Credit: See Section 28.
Rent: Basic Rent, Supplemental Rent, Tenant's
Proportionate Share of Taxes, Tenant's share of
Additional Rent, and all other sums that Tenant
may owe to Landlord or otherwise be required to
pay under the Lease.
Permitted Use: General office use and other legally permitted
uses.
Tenant's Proportionate
Share:
<CAPTION>
Suite Number Proportionate Share
800, 1500, Server Room 14.38%
1350 3.31%
1300 3.34%
Temporary Space 4.05%
Summary of Tenant's Proportionate Share:
<CAPTION>
Lease Months Proportionate Share
1-Suite 1350 CD 18.43%
Suite 1350 CD-Suite 1300 CD 21.74%
Suite 1300 CD-84 21.03%
Tenant's Proportionate Share is the percentage
obtained by dividing (a) the number of rentable
square feet in the relevant portion of the
Premises as stated above by (b) the 211,757
rentable square feet in the Building. Landlord and
Tenant stipulate that the number of rentable
square feet in the Premises and in the Building
set forth above is conclusive and shall be binding
upon them.
Expense Stop: Operating Costs for the calendar year 2004
(grossed up as provided in Section 4(b)(5) of the
Lease).
Base Tax Year: The calendar year 2004.
Initial Liability
Insurance Amount: $3,000,000.
Maximum Construction
Allowance: N/A; See Exhibit D.
Guarantor: None
Temporary Space: Upon the full execution by Landlord and Tenant of
this Lease, and up to and until the Suite 1300 CD,
Tenant shall occupy Suite 1400,
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containing 8,572 rentable square feet (the
"TEMPORARY SPACE") in the Building. The Temporary
Space is outlined on the plan attached to this
Lease as Exhibit G. Tenant shall pay to Landlord,
Basic Rent for the Temporary Space in the amount
of $21,858.60 per month, and Supplemental Rent for
the Temporary Space in the amount of $600.04 per
month, without offset or deduction on the first
day of each month. Basic Rent and Supplemental
Rent due for any partial month for the Temporary
Space shall be prorated as provided in Section
4(a) of this Lease. Tenant shall vacate and
surrender the Temporary Space by 5:00 p.m. on the
Suite 1300 CD in the condition required by this
Lease. Except as otherwise set forth in this
Section, occupancy of the Temporary Space by
Tenant shall be subject to all of the provisions
of this Lease.
Termination of
Previous Leases: Upon the Commencement Date of this Lease, (i) that
certain Lease Agreement dated April 21, 2000, by
and between Landlord's predecessor in interest and
Tenant, as amended by that certain First Amendment
to Lease dated June 7, 2001, and (ii) that certain
Office Building Lease dated February 1998, by and
between Landlord's predecessor in interest and
Tenant's predecessor in interest, as amended by
(a) that certain First Amendment to Lease dated
September 23, 1998, (b) that certain Second
Amendment to Lease dated November 9, 1998, (c)
that certain Third Amendment to Lease dated
January 11, 1999, (d) that certain Fourth
Amendment to Lease dated April 5, 1999, (e) that
certain Fifth Amendment to Lease dated April 26,
1999, and (f) that certain Sixth Amendment to
Lease dated September 10, 1999 (collectively, the
"PREVIOUS LEASES"), shall terminate and be of no
further force and effect, except for (i) issues of
Tenant's defaults or unpaid rent and other
monetary obligations due Landlord, (ii) those
matters related to Tenant's reconciliation and
audit rights and corresponding reimbursements for
payments made by Tenant under the Previous Leases,
and (iii) provisions of the Previous Leases that
are specifically said to survive the expiration or
earlier termination of said lease.
<CAPTION>
Tenant's Address: For all Notices: With a copy to:
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Callidus Software, Inc. Hopkins & Carley, APC
160 W. Santa Clara Street, Suite 1500 P.O. Box 1469
San Jose, California 95113 San Jose, California 95109
Attention: Brian S. Cabrera Attention: Real Estate Department
Telephone: (408) 808-6470 Telephone: (408) 286-9800
Telecopy: (408) 271-2663 Telecopy: (408) 998-4790
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<CAPTION>
Landlord's Address: For all Notices: With a copy to:
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W9/PHC II San Jose, L.L.C. W9/PHC II San Jose, L.L.C.
c/o CB Richard Ellis c/o Archon Group, L.P.
160 W Santa Clara Street, Two California Plaza
Suite 550 350 S. Grand Avenue, Suite 4600
San Jose, Califonria 95113 Los Angeles, California 90071
Attention: Property Manager Attention: Nancy M. Haag
Telephone: (408) 293-2400 Telephone: (213) 633-5800
Telecopy: (408) 971-9880 Telecopy: (213) 633-5870
For Rent Payments:
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W9/PHC II San Jose, L.L.C.
160 W. Santa Clara Street
File 57026
Los Angeles, California 90074-7026
[SIGNATURE PAGE FOLLOWS]
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The foregoing Basic Lease Information is incorporated into and made a part of
the Lease identified above. If any conflict exists between any Basic Lease
Information and the Lease, then the Lease shall control.
LANDLORD: W9/PHC II SAN JOSE, L.L.C.,
a Delaware limited liability company
By:
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Name: Nancy M. Haag
Title: Assistant Vice President
TENANT: CALLIDUS SOFTWARE, INC.,
a Delaware corporation
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
Tax I.D. No.:
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*NOTE:
IF TENANT IS A CORPORATION INCORPORATED IN A STATE OTHER THAN CALIFORNIA, then
Tenant shall deliver to Landlord a certified copy of a corporate resolution in a
form reasonably acceptable to Landlord authorizing the signatory(ies) to execute
this Lease.
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TABLE OF CONTENTS
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Page
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1. Definitions and Basic Provisions.................................... 1
2. Lease Grant......................................................... 1
3. Tender of Possession................................................ 1
(a) Suites 800, 1500 and the Server Room............................ 1
(b) Suite 1350...................................................... 1
(c) Suite 1300...................................................... 2
(d) Confirmation of Commencement Date............................... 2
4. Rent................................................................ 2
(a) Payment......................................................... 2
(b) Operating Costs; Taxes.......................................... 2
(c) Tenant's Inspection Right....................................... 5
5. Delinquent Payment; Handling Charges................................ 6
6. INTENTIONALLY DELETED............................................... 6
7. Landlord's Obligations.............................................. 6
(a) Services........................................................ 6
(b) Excess Utility Use.............................................. 7
(c) Restoration of Services; Abatement.............................. 7
8. Improvements; Alterations; Repairs; Maintenance..................... 8
(a) Improvements; Alterations....................................... 8
(b) Repairs; Maintenance............................................ 9
(c) Performance of Work............................................. 9
(d) Mechanic's Liens................................................ 9
9. Use ................................................................ 10
10. Assignment and Subletting........................................... 10
(a) Transfers ...................................................... 10
(b) Consent Standards............................................... 11
(c) Request for Consent............................................. 11
(d) Conditions to Consent........................................... 11
(e) Attornment by Subtenants........................................ 12
(f) Cancellation.................................................... 12
(g) Additional Compensation......................................... 12
(h) Permitted Transfers............................................. 12
11. Insurance; Waivers; Subrogation; Indemnity.......................... 13
(a) Tenant's Insurance.............................................. 13
(b) Landlord's Insurance............................................ 14
(c) No Subrogation.................................................. 14
(d) Indemnity....................................................... 14
12. Subordination; Attornment; Notice to Landlord's Mortgagee........... 15
(a) Subordination................................................... 15
(b) Attornment...................................................... 15
(c) Notice to Landlord's Mortgagee.................................. 15
(d) Landlord's Mortgagee's Protection Provisions.................... 16
(e) Subordination, Non-Disturbance and Attornment Agreement......... 16
13. Rules and Regulations............................................... 16
14. Condemnation........................................................ 16
(a) Total Taking.................................................... 16
(b) Partial Taking - Tenant's Rights................................ 17
(c) Partial Taking - Landlord's Rights.............................. 17
(d) Temporary Taking................................................ 17
(e) Award........................................................... 17
15. Fire or Other Casualty.............................................. 17
(a) Repair Estimate................................................. 17
(b) Tenant's Rights................................................. 17
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(c) Landlord's Rights............................................... 18
(d) Repair Obligation............................................... 18
(e) Waiver of Statutory Provisions.................................. 18
(f) Abatement of Rent............................................... 18
16. Personal Property Taxes............................................. 18
17. Events of Default................................................... 19
(a) Payment Default................................................. 19
(b) Abandonment .................................................... 19
(c) Estoppel........................................................ 19
(d) Insurance....................................................... 19
(e) Mechanic's Liens................................................ 19
(f) Other Defaults.................................................. 19
(g) Insolvency...................................................... 19
18. Remedies............................................................ 19
(a) Termination of Lease............................................ 20
(b) Enforcement of Lease............................................ 20
(c) Sublessees of Tenant............................................ 20
(d) Efforts to Relet ............................................... 21
19. Payment by Tenant; Non-Waiver; Cumulative Remedies.................. 21
(a) Payment by Tenant............................................... 21
(b) No Waiver....................................................... 21
(c) Cumulative Remedies............................................. 21
20. INTENTIONALLY DELETED............................................... 21
21. Surrender of Premises............................................... 21
22. Holding Over........................................................ 22
23. Certain Rights Reserved by Landlord................................. 22
(a) Building Operations............................................. 22
(b) Security........................................................ 22
(c) Prospective Purchasers and Lenders.............................. 23
(d) Prospective Tenants............................................. 23
24. INTENTIONALLY DELETED............................................... 23
25. Miscellaneous....................................................... 23
(a) Landlord Transfer............................................... 23
(b) Landlord's Liability; Tenant's Liability........................ 23
(c) Force Majeure................................................... 23
(d) Brokerage....................................................... 23
(e) Estoppel Certificates........................................... 24
(f) Notices......................................................... 24
(g) Separability.................................................... 24
(h) Amendments; Binding Effect; No Electronic Records............... 24
(i) Quiet Enjoyment................................................. 24
(j) No Merger....................................................... 25
(k) No Offer........................................................ 25
(l) Entire Agreement................................................ 25
(m) Waiver of Jury Trial............................................ 25
(n) Governing Law................................................... 25
(o) Recording....................................................... 25
(p) Joint and Several Liability..................................... 25
(q) Financial Reports............................................... 25
(r) Landlord's Fees................................................. 26
(s) Attorneys' Fees................................................. 26
(t) Telecommunications.............................................. 26
(u) INTENTIONALLY DELETED........................................... 26
(v) Authority....................................................... 26
(w) Hazardous Materials............................................. 27
(x) Parking......................................................... 27
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(y) Signage......................................................... 28
(z) List of Exhibits................................................ 28
26. Renewal Option...................................................... 28
(a) Grant of Option................................................. 28
(b) Basic Rent...................................................... 29
(c) Termination of Option........................................... 30
27. Satellite Equipment................................................. 30
28. Letter of Credit.................................................... 31
(a) General Provisions.............................................. 31
(b) Drawings under Letter of Credit................................. 31
(c) Use of Proceeds by Landlord..................................... 31
(d) Additional Covenants of Tenant.................................. 32
(e) Transfer of Letter of Credit.................................... 33
(e) Transfer of Letter of Credit........................................ 33
(f) Reduction in Letter of Credit Amount............................ 33
(g) Nature of Letter of Credit...................................... 33
29. Expansion Option for Suite 1400 .................................... 33
(a) Grant of Offer.................................................. 33
(b) Possession...................................................... 34
(c) Termination of Rights........................................... 35
30. Expansion Option for Suite 1450..................................... 35
(a) Grant of Offer.................................................. 35
(b) Possession...................................................... 35
(c) Termination of Rights........................................... 36
31. Expansion Option for Suite 1200..................................... 36
(a) Grant of Offer.................................................. 36
(b) Possession...................................................... 36
(c) Termination of Rights........................................... 37
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LIST OF DEFINED TERMS
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Page
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Additional Rent.......................................................... 2
Affiliate................................................................ 1
AS-IS........................................................... 29, 30, 32, 1
Base Tax Year............................................................ iv
Basic Lease Information.................................................. 1
Basic Rent .............................................................. iii
Building................................................................. ii
Building's Structure..................................................... 1
Building's Systems....................................................... 1
Casualty................................................................. 15
Class A San Jose Buildings............................................... 25
Commencement Date........................................................ ii
Damage Notice............................................................ 15
Default Rate............................................................. 5
Disabilities Acts........................................................ 9
Event of Default......................................................... 16
Expense Stop............................................................. iv
Extended Term............................................................ 25
Extra HVAC............................................................... 6
Final LC Expiration Date................................................. 27
GAAP .................................................................... 12
Guarantor................................................................ iv
Hazardous Materials...................................................... 23
HVAC .................................................................... 6
including................................................................ 1
Initial Liability Insurance Amount....................................... iv
Land .................................................................... ii
Landlord................................................................ ii, 1
Landlord's Mortgagee..................................................... 13
Law .................................................................... 1
Laws .................................................................... 1
LC Proceeds Account...................................................... 27
Lease.................................................................... 1
Lease Date............................................................... ii
Lease Month.............................................................. iii
Letter of Credit......................................................... 27
Letter of Credit Amount.................................................. 27
Loss .................................................................. 13, 27
Maximum Construction Allowance........................................... iv
Mortgage................................................................. 13
Operating Costs.......................................................... 2
Operating Costs and Tax Statement........................................ 4
Option to Renew.......................................................... ii
Parking Area............................................................. 23
Partial Premises......................................................... 1
Permitted Delays......................................................... 1
Permitted Transfer....................................................... 11
Permitted Transferee..................................................... 11
Permitted Use............................................................ iv
Pre-approved Alterations................................................. 7
Premises................................................................. ii
Prevailing Rental Rate................................................... 25
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Previous Lease........................................................... v
Previous Leases.......................................................... v
Primary Lease............................................................ 13
Project.................................................................. ii
Punchlist Items.......................................................... 1
Renewal Premises ........................................................ 25
Rent .................................................................... iv
Repair Period............................................................ 15
Satellite Equipment...................................................... 26
Security Deposit......................................................... iii
Security Deposit Laws.................................................... 29
Server Room.............................................................. ii
SNDA .................................................................... 14
Space Plans.............................................................. 1
Substantial Completion................................................... 2
Substantially Completed.................................................. 2
Suite 1200 Commencement Date............................................. 32
Suite 1200 Expansion Space............................................... 32
Suite 1300 CD............................................................ ii
Suite 1300 Estimated Delivery Date....................................... 1
Suite 1350 CD............................................................ ii
Suite 1350 Estimated Delivery Date....................................... 1
Suite 1400 Commencement Date............................................. 29
Suite 1400 Expansion Space............................................... 29
Suite 1400 Lease Amendment............................................... 29
Suite 1450 Commencement Date............................................. 31
Suite 1450 Expansion Space............................................... 30
Suite 1450 Lease Amendment............................................... 31
Taking................................................................... 14
Tangible Net Worth....................................................... 12
Taxes.................................................................... 4
Telecommunications Services.............................................. 23
Temporary Space.......................................................... iv
Tenant........................................................... ii, 1, 17, 1
Tenant Delay Day......................................................... 2
Tenant Party............................................................. 1
Tenant's Off-Premises Equipment.......................................... 1
Tenant's Proportionate Share............................................. iv
Term .................................................................... ii
Transfer................................................................. 9
Work .................................................................... 2
Working Drawings......................................................... 2
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LEASE
THIS LEASE AGREEMENT (this "LEASE") is entered into as of August 28, 2003,
between W9/PHC II SAN JOSE, L.L.C., a Delaware limited liability company
("LANDLORD"), and CALLIDUS SOFTWARE, INC., a Delaware corporation ("TENANT").
1. DEFINITIONS AND BASIC PROVISIONS. The definitions and basic
provisions set forth in the Basic Lease Information (the "BASIC LEASE
INFORMATION") executed by Landlord and Tenant contemporaneously herewith are
incorporated herein by reference for all purposes. Additionally, the following
terms shall have the following meanings when used in this Lease: "AFFILIATE"
means any person or entity which, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with the
party in question; "BUILDING'S STRUCTURE" means the Building's exterior walls,
roof, elevator shafts, footings, foundations, structural portions of
load-bearing walls, structural floors and subfloors, and structural columns and
beams; "BUILDING'S SYSTEMS" means the Building's HVAC, life-safety, plumbing,
electrical, and mechanical systems; "INCLUDING" means including, without
limitation; "LAWS" means all federal, state, and local laws, ordinances, rules
and regulations, all court orders, governmental directives, and governmental
orders and all interpretations of the foregoing, and all restrictive covenants
affecting the Project, and "LAW" shall mean any of the foregoing; "TENANT'S
OFF-PREMISES EQUIPMENT" means any of Tenant's equipment or other property that
may be located on or about the Project (other than inside the Premises); and
"TENANT PARTY" means any of the following persons: Tenant; any assignees
claiming by, through, or under Tenant; any subtenants claiming by, through, or
under Tenant; and any of their respective agents, contractors, employees, and
invitees.
2. LEASE GRANT. Subject to the terms of this Lease, Landlord leases to
Tenant, and Tenant leases from Landlord, the Premises.
3. TENDER OF POSSESSION.
(a) SUITES 800, 1500 AND THE SERVER ROOM. This Lease with respect
to Suites 800, 1500 and the Server Room shall commence on the date on which
Landlord and Tenant fully execute this Lease. Landlord and Tenant acknowledge
and agree that Tenant is already in possession of such portion of the Premises
pursuant to the Previous Leases.
(b) SUITE 1350. Landlord and Tenant presently anticipate that
possession of Suite 1350 will be tendered to Tenant Substantially Completed on
December 1, 2003 (the "SUITE 1350 ESTIMATED DELIVERY DATE") If Landlord is
unable to tender possession of Suite 1350 in such condition to Tenant by the
Suite 1350 Estimated Delivery Date, then (a) the validity of this Lease shall
not be affected or impaired thereby, (b) Landlord shall not be in default
hereunder or be liable for damages therefor, and (c) Tenant shall accept
possession of Suite 1350 when Landlord tenders possession thereof to Tenant
Substantially Completed, which shall then be the Suite 1350 CD; provided,
however, if the Suite 1350 CD has not occurred by February 1, 2004, for reasons
other than Permitted Delays, Basic Rent for the Temporary Space shall abate
until the occurrence of the Suite 1350 CD. By occupying Suite 1350 for the
purpose of conducting its regular business therein, Tenant shall be deemed to
have accepted Suite 1350 in its condition as of the date of such occupancy,
subject to the performance of punch-list items in Suite 1350 that remain to be
performed by Landlord, if any. As used herein, "PERMITTED DELAYS" shall mean any
delays attributable to Force Majeure, Tenant Delay Days or a holdover tenant
(provided Landlord has not consented to such tenant holding over and is using
commercially reasonable efforts to promptly recover possession of the Suite).
(c) SUITE 1300. Landlord and Tenant presently anticipate that
possession of Suite 1300 will be tendered to Tenant Substantially Completed in
the condition required by this Lease on April 1, 2004 (the "SUITE 1300 ESTIMATED
DELIVERY DATE"). If Landlord is unable to
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tender possession of Suite 1300 in such condition to Tenant by the Suite 1300
Estimated Delivery Date, then (a) the validity of this Lease shall not be
affected or impaired thereby, (b) Landlord shall not be in default hereunder or
be liable for damages therefor, and (c) Tenant shall accept possession of Suite
1300 when Landlord tenders possession thereof to Tenant Substantially Completed,
which shall then be the Suite 1300 CD; provided, however, if the Suite 1300 CD
has not occurred by June 1, 2004, for reasons other than Permitted Delays, Basic
Rent for the Temporary Space shall abate until the occurrence of the Suite 1300
CD. By occupying Suite 1300 for the purpose of conducting its regular business
therein, Tenant shall be deemed to have accepted Suite 1300 in its condition as
of the date of such occupancy, subject to the performance of punchlist items in
Suite 1300 that remain to be performed by Landlord, if any.
(d) CONFIRMATION OF COMMENCEMENT DATE. Immediately upon occupying
any portion of the Premises for the purpose of conducting its regular business
therein, Tenant shall execute and deliver to Landlord a letter substantially in
the form of Exhibit E hereto confirming (1) the Commencement Date with respect
to that portion of the Premises and the expiration date of the initial Term, (2)
that Tenant has accepted that portion of the Premises, and (3) that Landlord has
performed all of its obligations with respect to that portion of the Premises
(except for punch-list items specified in such letter); however, the failure of
the parties to execute such letter shall not defer any Commencement Date
hereunder or otherwise invalidate this Lease.
4. RENT.
(a) PAYMENT. Tenant shall timely pay to Landlord Rent, without
notice, demand, deduction or set off (except as otherwise expressly provided
herein), by good and sufficient check drawn on a national banking association at
Landlord's address provided for in this Lease or as otherwise reasonably
specified by Landlord. The obligations of Tenant to pay Basic Rent, Supplemental
Rent and other sums to Landlord and the obligations of Landlord under this Lease
are independent obligations. Basic Rent and Supplemental Rent, adjusted as
herein provided, shall be payable monthly in advance. The first monthly
installment of Basic Rent and Supplemental Rent, less the application of the
security deposit held by Landlord pursuant to the Previous Leases in the amount
of $50,558.14, shall be payable contemporaneously with the execution of this
Lease; thereafter, Basic Rent shall be payable on the first day of each month
beginning on the first day of the second full calendar month of the Term. The
monthly Basic Rent and Supplemental Rent for any partial month at the beginning
of the Term shall equal the product of 1/365 of the annual Basic Rent and
Supplemental Rent in effect during the partial month and the number of days in
the partial month, and shall be due on the Commencement Date. Payments of Basic
Rent and Supplemental Rent for any fractional calendar month at the end of the
Term shall be similarly prorated. Tenant shall pay Additional Rent at the same
time and in the same manner as Basic Rent and Supplemental Rent.
(b) OPERATING COSTS; TAXES.
(1) Tenant shall pay to Landlord the amount (per each
rentable square foot in the Premises) ("ADDITIONAL RENT") by which the annual
Operating Costs (defined below) per rentable square foot in the Building exceed
the Expense Stop (per rentable square foot in the Building). Landlord may make a
good faith estimate of the Additional Rent to be due by Tenant for any calendar
year or part thereof during the Term. During each calendar year or partial
calendar year of the Term (after the base year, if the Expense Stop is
calculated on a base year basis), Tenant shall pay to Landlord, in advance
concurrently with each monthly installment of Basic Rent, an amount equal to the
estimated Additional Rent for such calendar year or part thereof divided by the
number of months therein. From time to time, Landlord may estimate and
reestimate the Additional Rent to be due by Tenant and deliver a copy of the
estimate or re-estimate to Tenant. Thereafter, the monthly installments of
Additional Rent payable by Tenant shall be appropriately adjusted in accordance
with the estimations so that, by the end of the calendar year in question,
Tenant shall have paid all of the Additional Rent as estimated by
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Landlord. Any amounts paid based on such an estimate shall be subject to
adjustment as herein provided when actual Operating Costs are available for each
calendar year.
(2) The term "OPERATING COSTS" shall mean all expenses and
disbursements (subject to the limitations set forth below) that Landlord incurs
in connection with the ownership, operation, and maintenance of the Project,
determined in accordance with sound accounting principles consistently applied,
including the following costs: (A) wages and salaries of all on-site employees
at or below the grade of senior building manager engaged in the operation,
maintenance or security of the Project (together with Landlord's reasonable
allocation of expenses of off-site employees at or below the grade of senior
building manager who perform a portion of their services in connection with the
operation, maintenance or security of the Project), including taxes, insurance
and benefits relating thereto; (B) all supplies and materials used in the
operation, maintenance, repair, replacement, and security of the Project; (C)
costs for improvements made to the Project which, although capital in nature,
are reasonably expected and are primarily intended to reduce the normal
operating costs (including all utility costs) of the Project, as amortized using
a commercially reasonable interest rate over the time period reasonably
estimated by Landlord to recover the costs thereof taking into consideration the
anticipated cost savings, as determined by Landlord using its good faith,
commercially reasonable judgment, as well as capital improvements made in order
to comply with any Law hereafter promulgated by any governmental authority or
any interpretation hereafter rendered with respect to any existing Law, as
amortized using a commercially reasonable interest rate over the useful economic
life of such improvements as determined by Landlord in its reasonable
discretion; (D) cost of all utilities, except the cost of other utilities
reimbursable to Landlord by the Project's tenants other than pursuant to a
provision similar to this Section 4(b); (E) insurance expenses provided that the
deductible attributable to earthquake insurance alone shall not exceed $35,000
to Tenant each calendar year; (F) repairs, replacements, and general maintenance
of the Project; (G) fair market rental and other costs with respect to the
management office for the Building; and (H) service, maintenance and management
contracts with independent contractors for the operation, maintenance,
management, repair, replacement, or security of the Project (including alarm
service, window cleaning, and elevator maintenance); provided that the
management fee for the Project shall not exceed three percent of gross revenues
of the Project.
Operating Costs shall not include costs for (i) capital improvements
made to the Building (including any amortized costs related thereto), other than
capital improvements described in Section 4(b)(2)(C) and except for items which
are generally considered maintenance and repair items, such as painting of
common areas, replacement of carpet in elevator lobbies, and the like; (ii)
repair, replacements and general maintenance paid by proceeds of insurance or by
Tenant or other third parties; (iii) interest, amortization or other payments on
loans to Landlord; (iv) depreciation; (v) leasing commissions; (vi) legal
expenses for services, other than those that benefit the Project tenants
generally (e.g., disputes regarding Taxes); (vii) renovating or otherwise
improving space for occupants of the Project or vacant space in the Project;
(viii) Taxes, taxes assessed against the personal property of tenants of the
Project and any federal, state or local income, estate, inheritance, gift,
documentary transfer or franchise taxes or similar assessments or levies; (ix)
federal income taxes imposed on or measured by the income of Landlord from the
operation of the Project; (x) repairs or other work occasioned by or incurred in
connection with (a) earthquake, fire, windstorm, or other casualty of the type
which Landlord has insured against or is required to insure against pursuant to
the terms of this Lease, or for which Landlord is reimbursed from third parties,
(b) the exercise of the right of eminent domain, or (c) the maintenance and
repair of the Building's Structure; (xi) marketing costs, leasing commissions,
finders' fees, attorneys' fees, costs and disbursements and other expenses
incurred in connection with negotiations or disputes with tenants, other
occupants, prospective tenants or third parties, or the sale or refinancing of
the Building, or legal fees incurred in connection with this Lease; (xii)
expenses, including permits, license, design, space planning and inspection
costs, incurred in tenant build-out, renovating or otherwise improving or
decorating, painting or redecorating space for tenants or other occupants of
space; (xiii) Landlord's costs of electricity and other services sold or
provided to tenants in the Building and for which Landlord is entitled to be
reimbursed, whether
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or not collected, by such tenants as a separate additional charge or rental over
and above the basic rent or escalation payment payable under the lease with such
tenant; (xiv) expenses in connection with non-Building standard services or
benefits of a type which are not provided to Tenant but which are provided to
other tenants or occupants of the Building, or for which Tenant is charged
directly but which are provided to another tenant or occupant of the Building
without direct charge; (xv) cost of electricity and other utilities consumed by
other tenants or occupants in excess of levels provided by Landlord to tenants
for normal office consumption; (xvi) costs incurred due to violation by Landlord
or any tenant or other occupant of the terms and conditions of any lease or
other rental arrangements covering space in the Building; (xvii) amounts paid to
subsidiaries or other Affiliates of Landlord for services on or to the Project
or the Premises (or any portion thereof), to the extent only that the costs of
such services exceed competitive costs of such services were they not so
rendered by a subsidiary or other Affiliate of Landlord; (xviii) bad debt
expenses, payments of principal, interest, late fees, prepayment fees or other
charges on any debt or amortization payments on any mortgage or mortgages
executed by Landlord covering the Project or the Building (or any portion
thereof) now or in the future, rental concessions or negative cash flow
guaranties, or rental payments under any ground or underlying lease or leases;
(xix) Landlord's general administrative overhead expenses for services not
specifically performed for the Building, or salaries of any officer or employee
of Landlord (or any subsidiary or Affiliate of Landlord) above the grade of
building manager; (xx) all items and services for which Tenant pays directly to
third parties or for which tenants reimburse Landlord; (xxi) advertising and
promotional expenditures, and costs of signs in or on the Building identifying
the owner of the Building or any other tenant of the Building; (xxii) any fines
or penalties incurred due to violations by Landlord or another tenant of any
Laws or governmental rule or authority; (xxiii) costs for or relating to
sculpture, paintings, or other art; (xxiv) any costs necessitated by or
resulting from the sole or gross negligence of Landlord, its agents, employees
and/or independent contractors; (xxv) charitable or political contributions;
(xxvi) costs associated with the operation of the business of the partnership or
entity which constitutes Landlord, or the operation of any parent, subsidiary or
Affiliate of Landlord, as the same are distinguished from the costs of operation
of the Building, including without limitation partnership accounting and legal
matters, costs of defending any lawsuits with any mortgagee, costs of selling,
syndicating, financing, mortgaging or hypothecating any of Landlord's interest
in the Project, and costs of any disputes between Landlord and its partners,
members and employees or disputes of Landlord with third-party building
management; (xxvii) any and all costs of Landlord in complying with Laws
regarding Hazardous Materials including, but not limited to, the costs and
expenses of clean-up, remediation, environmental surveys/assessments, compliance
with environmental Laws, consulting fees, treatment and monitoring charges,
transportation expenses and disposal fees, except if such costs are a result of
Tenant's use of or activities in or on the Building; (xxviii) any compensation
paid to clerks, attendants, or other persons in commercial concessions operated
by Landlord; and (xxix) costs of installing, operating, and maintaining any
specialty services operated by Landlord, including, without limiting any of the
foregoing, any luncheon club, athletic facility, public meeting rooms, art
galleries, concierge, or retail facility. If the Expense Stop is calculated on a
base year basis, Operating Costs for the base year only shall not include
temporary market-wide labor-rate increases due to extraordinary circumstances,
including boycotts and strikes; and temporary utility rate increases due to
extraordinary circumstances, including conservation surcharges, boycotts,
embargos or other shortages; or amortized costs relating to capital
improvements.
(3) Tenant shall also pay Tenant's Proportionate Share of
any increase in Taxes for each year and partial year falling within the Term
over the Taxes for the Base Tax Year. Tenant shall pay Tenant's Proportionate
Share of Taxes in the same manner as provided above for Tenant's Proportionate
Share of Operating Costs. "TAXES" shall mean taxes, assessments, and
governmental charges or fees whether federal, state, county or municipal, and
whether they be by taxing districts or authorities presently taxing or by
others, subsequently created or otherwise, and any other taxes and assessments
(including non-governmental assessments for common charges under a restrictive
covenant or other private agreement that are not treated as part of Operating
Costs) now or hereafter attributable to the Project (or its operation) during
the Term hereof, excluding, however, penalties and interest thereon, any taxes
assessed
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against the personal property of tenants of the Project and federal, state and
local income (except as provided below), estate, inheritance, gift, documentary
transfer or franchise taxes or similar assessments or levies (if the present
method of taxation changes so that in lieu of or in addition to the whole or any
part of any Taxes, there is levied on Landlord a capital tax directly on the
rents received therefrom or a franchise tax, assessment, or charge based, in
whole or in part, upon such rents for the Project, then all such taxes,
assessments, or charges, or the part thereof so based, shall be deemed to be
included within the term "Taxes" for purposes hereof). Taxes shall include the
costs of consultants retained in an effort to lower Taxes and all costs incurred
in disputing any Taxes or in seeking to lower the tax valuation of the Project.
For property tax purposes, Tenant waives all rights to protest or appeal the
appraised value of the Premises, as well as the Project, unless they are
patently excessive and all rights to receive notices of reappraisement.
(4) By April 1 of each calendar year, or as soon thereafter
as practicable, Landlord shall furnish to Tenant a statement of Operating Costs
for the previous year, in each case adjusted as provided in Section 4(b)(5), and
of the Taxes for the previous year (the "OPERATING COSTS AND TAX STATEMENT"). If
Tenant's estimated payments of Operating Costs or Taxes under this Section 4(b)
for the year covered by the Operating Costs and Tax Statement exceed Tenant's
Proportionate Share of such items as indicated in the Operating Costs and Tax
Statement, then Landlord shall promptly credit or reimburse Tenant for such
excess; likewise, if Tenant's estimated payments of Operating Costs or Taxes
under this Section 4(b) for such year are less than Tenant's Proportionate Share
of such items as indicated in the Operating Costs and Tax Statement, then Tenant
shall pay Landlord such deficiency within 30 days after written notice thereof.
(5) With respect to any calendar year or partial calendar
year in which the Building is not occupied to the extent of 95% of the rentable
area thereof, or Landlord is not supplying services to 95% of the rentable area
thereof, the Operating Costs for such period shall, for the purposes hereof, be
increased to the amount which would have been incurred had the Building been
occupied to the extent of 95% of the rentable area thereof and Landlord had been
supplying services to 95% of the rentable area thereof.
(c) TENANT'S INSPECTION RIGHT. After giving Landlord 30 day's
prior written notice thereof, Tenant may reasonably inspect or audit Landlord's
records relating to Operating Costs and Taxes for any periods of time within one
year before the audit or inspection; however, no audit or inspection shall
extend to periods of time before the Commencement Date, except to the extent
reasonably required to establish the actual Expense Stop or Base Tax Year. If
Tenant fails to object to the calculation of Operating Costs and Taxes on an
annual Operating Costs and Tax Statement within one year after the statement has
been delivered to Tenant, then Tenant shall have waived its right to object to
the calculation of Operating Costs and Taxes for the year in question and the
calculation of Operating Costs and Taxes set forth on such statement shall be
final. Tenant's audit or inspection shall be conducted only during business
hours reasonably designated by Landlord. Each party shall pay its own cost of
such audit or inspection. If the total Operating Costs and Taxes for the time
period in question is determined to be in error by more than five percent in the
aggregate, Landlord shall pay to Tenant the audit costs incurred by Tenant.
Tenant may not conduct an inspection or have an audit performed more than once
during any calendar year. Tenant or the accounting firm conducting such audit
shall, at no charge to Landlord, submit its audit report in draft form to
Landlord for Landlord's review and comment before the final approved audit
report is submitted to Landlord, and any reasonable comments by Landlord shall
be incorporated into the final audit report. If such inspection or audit reveals
that an error was made in the Operating Costs and Taxes previously charged to
Tenant, then Landlord shall refund to Tenant any overpayment of any such costs,
or Tenant shall pay to Landlord any underpayment of any such costs, as the case
may be, within 30 days after notification thereof. Tenant shall maintain the
results of each such audit or inspection confidential and shall not be permitted
to use any third party to perform such audit or inspection, other than an
independent firm of certified public accountants (A) reasonably acceptable to
Landlord, (B) which is not compensated on a contingency fee basis or in any
other manner which is dependent upon the results of such audit or
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inspection (and Tenant shall deliver the fee agreement or other similar evidence
of such fee arrangement to Landlord upon request), and (C) which agrees with
Landlord in writing to maintain the results of such audit or inspection
confidential.
5. DELINQUENT PAYMENT; HANDLING CHARGES. All past due payments required
of Tenant hereunder shall bear interest from the date which is five days after
the date due until paid at the lesser of ten percent per annum or the maximum
lawful rate of interest (such lesser amount is referred to herein as the
"DEFAULT RATE"); additionally, Landlord, in addition to all other rights and
remedies available to it, may charge Tenant a fee equal to five percent of the
delinquent payment to reimburse Landlord for its cost and inconvenience incurred
as a consequence of Tenant's delinquency, unless such delinquent payment is paid
within five days after the date due. In no event, however, shall the charges
permitted under this Section 5 or elsewhere in this Lease, to the extent they
are considered to be interest under applicable Law, exceed the maximum lawful
rate of interest. Notwithstanding the foregoing, the late fee referenced above
shall not be charged with respect to the first occurrence (but not any
subsequent occurrence) during any 12-month period that Tenant fails to make
payment when due, if the delinquent amount is paid within five days after
Landlord delivers written notice of such delinquency to Tenant, and each late
fee shall be deemed waived by Landlord if not assessed in writing to Tenant
within 90 days after the date such payment was due.
6. INTENTIONALLY DELETED.
7. LANDLORD'S OBLIGATIONS.
(a) SERVICES. Landlord shall use all reasonable efforts to furnish
to Tenant (1) water at those points of supply provided for general use of
tenants of the Building; (2) heated and refrigerated air conditioning ("HVAC")
as appropriate, at such temperatures and in such amounts as are standard for
comparable buildings in the vicinity of the Building; (3) janitorial service to
the Premises on weekdays, other than holidays, for Building-standard
installations and such window washing as may from time to time be reasonably
required; (4) elevators for ingress and egress to the floor on which the
Premises are located, in common with other tenants, provided that Landlord may
reasonably limit the number of operating elevators during non-business hours and
holidays; and (5) electrical current during normal business hours for equipment
that does not require more than 110 volts and whose electrical energy
consumption does not exceed normal office usage. Landlord shall maintain the
common areas of the Building in reasonably good order and condition, except for
damage caused by a Tenant Party. If Tenant desires any of the services specified
in Section 7(a)(2): (1) at any time other than between 7:30 a.m. and 6:00 p.m.
on weekdays (other than holidays), or (2) on Saturday, Sunday or holidays, then
such services shall be supplied to Tenant upon the written request of Tenant
delivered to Landlord before 3:00 p.m. on the business day preceding such extra
usage, and Tenant shall pay to Landlord the direct cost of providing such
services within 30 days after Landlord has delivered to Tenant an invoice
therefor. Notwithstanding the foregoing to the contrary, Landlord shall furnish
to Tenant, in the Server Room and in the Customer Visiting Center on the 13th
floor, HVAC at such temperatures and in such amounts as are standard for
comparable buildings in the vicinity of the Building 24 hours per day, seven
days per week ("EXTRA HVAC"). Landlord shall provide the Extra HVAC, at
Landlord's option, either by (i) installing a separate HVAC unit in the Premises
or (2) upgrading, modifying or augmenting the existing HVAC system serving the
Premises, the cost of which shall be paid by Tenant to Landlord within 30 days
after demand therefore. In the event Landlord installs a separate HVAC unit to
supply the Extra HVAC, Tenant shall be responsible for and shall pay to
Landlord, Landlord's actual cost to install, operate and maintain such separate
unit within 30 days after demand therefore. The direct costs incurred by
Landlord in providing after-hour HVAC service and/or Extra HVAC service to
Tenant shall include Landlord's actual costs for electricity, water, sewage,
water treatment, labor, metering, filtering, and maintenance for providing such
service and shall not include any markup for profit to Landlord. In the event
Tenant vacates an entire floor of the Premises, (1) Tenant shall notify Landlord
of such vacation, (2) Landlord shall suspend janitorial service to such floor,
(3) Tenant shall have no obligation to
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pay for janitorial service to the vacated floor for the duration of time that
such janitorial service is suspended, and (4) Tenant shall receive a credit from
Landlord for any amounts billed by Landlord for such janitorial service after
the date of Tenant's written notification of such vacation.
(b) EXCESS UTILITY USE. Landlord shall not be required to furnish
electrical current for equipment that requires more than 110 volts or other
equipment whose electrical energy consumption exceeds normal office usage. If
Tenant's requirements for or consumption of electricity exceed the electricity
to be provided by Landlord as described in Section 7(a), Landlord shall, at
Tenant's expense, make reasonable efforts to supply such service through the
then-existing feeders and risers serving the Building and the Premises, and
Tenant shall pay to Landlord the cost of such service within 30 days after
Landlord has delivered to Tenant an invoice therefor. Landlord may determine the
amount of such additional consumption and potential consumption by any
verifiable method, including installation of a separate meter in the Premises
installed, maintained, and read by Landlord, at Tenant's expense. Tenant shall
not install any electrical equipment requiring unusual wiring or requiring
voltage in excess of 110 volts unless approved in advance by Landlord, which
approval shall not be unreasonably withheld. Tenant shall not install any
electrical equipment requiring voltage in excess of Building capacity unless
approved in advance by Landlord, which approval may be withheld in Landlord's
sole discretion. The use of electricity in the Premises shall not exceed the
capacity of existing feeders and risers to or wiring in the Premises. Any risers
or wiring required to meet Tenant's excess electrical requirements shall, upon
Tenant's written request, be promptly installed by Landlord, at Tenant's cost,
if, in Landlord's reasonable judgment, the same shall not cause permanent damage
to the Building or the Premises, cause or create a dangerous or hazardous
condition, entail excessive or unreasonable alterations, repairs, or expenses,
or unreasonably interfere with or disturb other tenants of the Building. If
Tenant uses machines or equipment in the Premises which affect the temperature
otherwise maintained by the air conditioning system or otherwise overload any
utility, Landlord may install supplemental air conditioning units or other
supplemental equipment in the Premises, and the cost thereof, including the cost
of installation, operation, use, and maintenance, shall be paid by Tenant to
Landlord within 30 days after Landlord has delivered to Tenant an invoice
therefor.
(c) RESTORATION OF SERVICES; ABATEMENT. Landlord shall use
reasonable efforts to restore any service required of it that becomes
unavailable; however, such unavailability shall not render Landlord liable for
any damages caused thereby, be a constructive eviction of Tenant, constitute a
breach of any implied warranty, or, except as provided in the next sentence,
entitle Tenant to any abatement of Tenant's obligations hereunder, except to the
extent caused by the gross negligence or willful misconduct of Landlord. If,
however, Tenant is prevented from using in a commercially reasonable manner and
does not use the Premises or a material portion of the Premises because of the
unavailability of any such service for a period of 10 consecutive business days
(or five consecutive business days because of the unavailability and the
restoration of such services is within the reasonable control of Landlord)
without consideration for Force Majeure following Landlord's receipt from Tenant
of a written notice regarding such unavailability and such unavailability was
not caused by a Tenant Party or a governmental directive, then Tenant shall, as
its exclusive remedy be entitled to a reasonable abatement of Rent for each
consecutive day (after such 10-business day period, or after such five-business
day period, as applicable) that Tenant is so prevented from using the Premises.
8. IMPROVEMENTS; ALTERATIONS; REPAIRS; MAINTENANCE.
(a) IMPROVEMENTS; ALTERATIONS. Except as otherwise provided
hereunder, improvements to the Premises shall be installed at Tenant's expense
only in accordance with plans and specifications which have been previously
submitted to and approved in writing by Landlord, which approval shall be
governed by the provisions set forth in this Section 8(a). Except as otherwise
provided hereunder, no alterations or physical additions in or to the Premises
may be made without Landlord's prior written consent, which shall not be
unreasonably withheld and shall be provided within 15 business days after
Landlord's receipt of Tenant's substantially
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complete submission of such plans and specifications; however, Landlord may
withhold its consent to any alteration or addition that would adversely affect
(in the reasonable discretion of Landlord) (1) the Building's Structure or the
Building's Systems (including the Building's restrooms or mechanical rooms), (2)
the exterior appearance of the Building, (3) the appearance of the Building's
common areas or elevator lobby areas, or (4) provision of services to other
occupants of the Building. In connection with Landlord's review and approval of
any of Tenant's proposed alterations, additions or improvements to the Premises,
Landlord shall notify Tenant in writing, contemporaneously with Landlord's
notice of approval to Tenant with respect to the improvements in question,
whether Landlord will require Tenant to remove such alterations prior to the
expiration of the Term. In the event Landlord does not so require Tenant to
remove such alterations prior to the expiration of the Term, Tenant shall have
the option to remove such alterations or to leave such alterations in the
Premises upon such expiration. Except as otherwise provided hereunder, Tenant
shall not paint or install lighting or decorations, signs, window or door
lettering, or advertising media of any type visible from the exterior of the
Premises without the prior written consent of Landlord, which consent may be
withheld in Landlord's sole and absolute discretion. All alterations, additions,
and improvements shall be, except as otherwise provided hereunder, constructed,
maintained, and used by Tenant, at its risk and expense, in accordance with all
Laws; Landlord's consent to or approval of any alterations, additions or
improvements (or the plans therefor) of Tenant shall not constitute a
representation or warranty by Landlord, nor Landlord's acceptance, that the same
comply with sound architectural and/or engineering practices or with all
applicable Laws, and Tenant shall be solely responsible for ensuring all such
compliance. Notwithstanding the foregoing, Tenant shall not be required to
obtain Landlord's consent for repainting, recarpeting, or other alterations,
tenant improvements, or physical additions to the Premises which are not
structural in nature totaling less than $20,000 in any single instance or series
of related alterations performed within a three-month period (the "PRE-APPROVED
ALTERATIONS") (provided that Tenant shall not perform any improvements,
alterations or additions as to the Premises in stages as a means to subvert this
provision), in each case provided that (A) Tenant delivers to Landlord written
notice thereof, a list of contractors and subcontractors to perform the work
(and certificates of insurance for each such party) and any plans and
specifications therefor prior to commencing any such alterations, additions, or
improvements (for informational purposes only so long as no consent is required
by Landlord as required by this Lease), (B) the installation thereof does not
involve any core drilling or the reconfiguration or relocation of any exterior
or interior load-bearing walls of the Building, and (C) such alterations,
additions and improvements will not adversely affect (in Landlord's reasonable
discretion) (i) the Building's Structure or the Building's Systems, (ii) the
provision of services to other Building tenants, or (iii) the appearance of the
Building's common areas or the exterior of the Building. Tenant may, when
notifying Landlord of the Pre-approved Alterations as set forth in subsection
8(a)(A) above, request that Landlord notify Tenant in writing, to be delivered
to Tenant within 15 days after such request by Tenant, whether Landlord will
require Tenant to remove the Pre-approved Alterations at the end of the Term.
(b) REPAIRS; MAINTENANCE. Tenant shall maintain the Premises in a
clean, safe, and operable condition, and shall not permit or allow to remain any
waste or damage to any portion of the Premises. Additionally, Tenant, at its
sole expense, shall repair, replace and maintain in good condition and in
accordance with all Laws and the equipment manufacturer's suggested service
programs, all portions of the Premises, Tenant's Off-Premises Equipment and all
areas, improvements and systems exclusively serving the Premises. Tenant shall
repair or replace, subject to Landlord's direction and supervision, any damage
to the Building caused by a Tenant Party. If Tenant fails to make such repairs
or replacements within 30 days after obtaining knowledge of the occurrence of
such damage (except for emergencies), then Landlord may make the same at
Tenant's cost. If any such damage occurs outside of the Premises, then Landlord
may elect to repair such damage at Tenant's expense, rather than having Tenant
repair such damage. The cost of all maintenance, repair or replacement work
performed by Landlord under this Section 8 shall be paid by Tenant to Landlord
within 30 days after Landlord has invoiced Tenant therefor. Tenant hereby waives
and releases its right to make repairs at Landlord's expense under Sections 1941
and 1942 of the California Civil Code or under any similar law, statute, or
ordinance now or
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hereafter in effect. Notwithstanding any provision of this Lease to the
contrary, Landlord shall, at its sole cost and expense (and without right to
reimbursement from Tenant pursuant to Section 4(b)), maintain in good condition
and repair the Building's Structure. Tenant's obligation to repair as set forth
in this Section shall not apply to damage from normal wear and tear, casualty,
condemnation and any other damage caused, created or, with respect to actions of
a third party other than a Tenant Party, consented to by Landlord.
(c) PERFORMANCE OF WORK. All work described in this Section 8
shall be performed only by Landlord or by subcontractors reasonably approved in
writing by Landlord. Tenant shall cause all subcontractors that it contracts
with to procure and maintain insurance coverage naming Landlord, Landlord's
property management company and Landlord's asset management company as
additional insureds against such risks, in such amounts, and with such companies
as Landlord may reasonably require. Tenant shall provide Landlord with the
identities, mailing addresses and telephone numbers of all persons performing
work or supplying materials prior to beginning such construction and Landlord
may post on and about the Premises notices of non-responsibility pursuant to
applicable Laws. All such work shall be performed in accordance with all Laws
and in a good and workmanlike manner so as not to damage the Building (including
the Premises, the Building's Structure and the Building's Systems). All such
work which may affect the Building's Structure or the Building's Systems must be
approved by the Building's engineer of record, at Tenant's expense and, at
Landlord's election, must be performed by Landlord's usual contractor for such
work, provided that the cost of such contractor's work shall not exceed the cost
of other similar-quality contractors for similar services in other similar-class
office buildings located in the submarket in the city in which the Building is
located. All work affecting the roof of the Building must be performed by
Landlord's roofing contractor and no such work will be permitted if it would
void or reduce the warranty on the roof.
(d) MECHANIC'S LIENS. All work performed, materials furnished, or
obligations incurred by or at the request of a Tenant Party shall be deemed
authorized and ordered by Tenant only, and Tenant shall not permit any
mechanic's liens to be filed against the Premises or the Project in connection
therewith. Upon completion of any such work, Tenant shall deliver to Landlord
final lien waivers from all contractors, subcontractors and materialmen who
performed such work. If such a lien is filed, then Tenant shall, within ten days
after Landlord has delivered notice of the filing thereof to Tenant (or such
earlier time period as may be necessary to prevent the forfeiture of the
Premises, the Project or any interest of Landlord therein or the imposition of a
civil or criminal fine with respect thereto), either (1) pay the amount of the
lien and cause the lien to be released of record, or (2) diligently contest such
lien and deliver to Landlord a bond or other security reasonably satisfactory to
Landlord. If Tenant fails to timely take either such action, then Landlord may
pay the lien claim, and any amounts so paid, including expenses and interest,
shall be paid by Tenant to Landlord within ten days after Landlord has invoiced
Tenant therefor. Landlord and Tenant acknowledge and agree that their
relationship is and shall be solely that of "landlord-tenant" (thereby excluding
a relationship of "owner-contractor," "owner-agent" or other similar
relationships). Nothing herein shall be deemed a consent by Landlord to any
liens being placed upon the Premises, the Project or Landlord's interest therein
due to any work performed by or for Tenant or deemed to give any contractor or
subcontractor or materialman any right or interest in any funds held by Landlord
to reimburse Tenant for any portion of the cost of such work. Tenant shall
defend, protect, indemnify and hold harmless Landlord and its agents and
representatives from and against all claims, demands, causes of action, suits,
judgments, damages and expenses (including attorneys' fees) in any way arising
from or relating to the failure by any Tenant Party to pay for any work
performed, materials furnished, or obligations incurred by or at the request of
a Tenant Party. This indemnity provision shall survive termination or expiration
of this Lease.
9. USE. Tenant shall occupy and use the Premises only for the Permitted
Use and shall comply with all Laws relating to the use, condition, access to,
and occupancy of the Premises and will not commit waste, overload the Building's
Structure or the Building's Systems or subject the Premises to use that would
damage the Premises, normal wear and tear and casualty excepted.
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The population density within the Premises as a whole shall at no time exceed
one person for each 200 rentable square feet in the Premises. Tenant shall not
conduct second or third shift operations within the Premises; however, Tenant
may use the Premises after normal business hours, so long as Tenant is not
generally conducting significant and ongoing business from the Premises after
normal business hours. Notwithstanding anything in this Lease to the contrary,
as between Landlord and Tenant, (a) Tenant shall bear the risk of complying with
Title III of the Americans With Disabilities Act of 1990, any state laws
governing handicapped access or architectural barriers, and all rules,
regulations, and guidelines promulgated under such laws, as amended from time to
time (the "DISABILITIES ACTS") in the Premises, and (b) Landlord shall bear the
risk of complying with the Disabilities Acts in the common areas of the
Building, other than compliance that is necessitated by the use of the Premises
for other than the Permitted Use or as a result of any alterations or additions
made by or on behalf of a Tenant Party (which risk and responsibility shall be
borne by Tenant), but excluding any initial tenant improvement work in any of
the Suites covered by this Lease (which risk and responsibility shall be borne
by Landlord). The Premises shall not be used for any use which is disreputable,
creates extraordinary fire hazards, or results in an increased rate of insurance
on the Building or its contents, or for the storage of any Hazardous Materials
(other than typical office supplies [e.g., photocopier toner] and then only in
compliance with all Laws). Tenant shall not use any substantial portion of the
Premises for a "call center," any other telemarketing use, or any credit
processing use. If, as a direct result of Tenant's or a Tenant Party's acts or
because Tenant vacates the Premises, the rate of insurance on the Building or
its contents increases, then Tenant shall pay to Landlord the amount of such
increase attributable to Tenant on written demand (which demand shall include
reasonable evidence that any such cost increase is attributable to Tenant), and
acceptance of such payment shall not waive any of Landlord's other rights. If
Tenant fails to cease or remediate such acts within five days after Landlord's
written request that Tenant do so, then such acts shall be an Event of Default.
Tenant shall conduct its business and control each other Tenant Party so as not
to create any nuisance or unreasonably interfere with other tenants or Landlord
in its management of the Building.
10. ASSIGNMENT AND SUBLETTING.
(a) TRANSFERS. Except as provided in Sections 10(h) and 10(i),
Tenant shall not, without the prior written consent of Landlord, which consent
shall not be unreasonably withheld, conditioned or delayed, (1) assign,
transfer, or encumber this Lease or any estate or interest herein, whether
directly or by operation of law, (2) permit any other entity to become Tenant
hereunder by merger, consolidation, or other reorganization, (3) if Tenant is an
entity other than a corporation whose stock is publicly traded, permit the
transfer of an ownership interest in Tenant so as to result in a change in the
current control of Tenant, (4) sublet any portion of the Premises, (5) grant any
license, concession, or other right of occupancy of any portion of the Premises,
or (6) permit the use of the Premises by any parties other than Tenant (any of
the events listed in Section 10(a)(1) through 10(a)(6) being a "TRANSFER").
(b) CONSENT STANDARDS. Landlord shall not unreasonably withhold
its consent to any assignment or subletting of the Premises, provided that the
proposed transferee (1) is creditworthy, (2) has a good reputation in the
business community, (3) will use the Premises for the Permitted Use (thus,
excluding, without limitation, uses for credit processing and telemarketing) and
will not use the Premises in any manner that would conflict with any exclusive
use agreement or other similar agreement entered into by Landlord with any other
tenant of the Building or the Project, (4) will not use the Premises, the
Building or the Project in a manner that would materially increase the
pedestrian or vehicular traffic to the Premises, the Building or the Project,
(5) is not a governmental entity, or subdivision or agency thereof, (6) is not
another occupant of the Building or the Project with whom Landlord is then, or
has been within the 120-day period prior to the time Tenant seeks to enter into
such assignment or subletting, actively negotiating to lease space in the
Building or Project if Landlord then has available space for rent in the
Building or Project and is willing to accommodate such existing occupant's space
requirements within their budgetary confines, and (7) is not a person or entity
with whom Landlord is then, or has been within the 30-day period prior to the
time Tenant seeks to enter into
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such assignment or subletting, actively negotiating to lease space in the
Building or the Project or any Affiliate of any such person or entity if
Landlord has available space for rent in the Building or Project and is willing
to accommodate such person's or entity's space requirement within their
budgetary confines. Additionally, Landlord may withhold its consent in its sole
discretion to any proposed Transfer if any Event of Default by Tenant then
exists and continues beyond all applicable cure periods.
(c) REQUEST FOR CONSENT. If Tenant requests Landlord's consent to
a Transfer, then, at least ten business days prior to the effective date of the
proposed Transfer, Tenant shall provide Landlord with a written description of
all material terms and conditions of the proposed Transfer, copies of the
proposed documentation, and the following information about the proposed
transferee: name and address; reasonably satisfactory information about its
business and business history; its proposed use of the Premises; banking,
financial, and other credit information; and general references sufficient to
enable Landlord to determine the proposed transferee's creditworthiness and
character. Concurrently with Tenant's notice of any request for consent to a
Transfer, Tenant shall pay to Landlord a fee of $500 to defray Landlord's
expenses in reviewing such request, and Tenant shall also reimburse Landlord
immediately upon request for its reasonable attorneys' fees incurred in
connection with considering any request for consent to a Transfer.
(d) CONDITIONS TO CONSENT. If Landlord consents to a proposed
Transfer, then the proposed transferee shall deliver to Landlord a written
agreement whereby it expressly assumes Tenant's obligations hereunder; however,
any transferee of less than all of the space in the Premises shall be liable
only for obligations under this Lease that are properly allocable to the space
subject to the Transfer for the period of the Transfer. No Transfer shall
release Tenant from its obligations under this Lease, but rather Tenant and its
transferee shall be jointly and severally liable therefor. Landlord's consent to
any Transfer shall not waive Landlord's rights as to any subsequent Transfers.
If an Event of Default occurs while the Premises or any part thereof are subject
to a Transfer, then Landlord, in addition to its other remedies, may collect
directly from such transferee all rents becoming due to Tenant and apply such
rents against Rent. Tenant authorizes its transferees to make payments of rent
directly to Landlord upon receipt of notice from Landlord to do so following the
occurrence of an Event of Default hereunder. Tenant shall pay for the cost of
any demising walls or other improvements necessitated by a proposed subletting
or assignment.
(e) ATTORNMENT BY SUBTENANTS. Each sublease by Tenant hereunder
shall be subject and subordinate to this Lease and to the matters to which this
Lease is or shall be subordinate, and each subtenant by entering into a sublease
is deemed to have agreed that in the event of termination, re-entry or
dispossession by Landlord under this Lease, Landlord may, at its option, take
over all of the right, title and interest of Tenant, as sublandlord, under such
sublease, and such subtenant shall, at Landlord's option and provided its rights
under the sublease are not materially modified, attorn to Landlord pursuant to
the then executory provisions of such sublease, except that Landlord shall not
be (1) liable for any previous act or omission of Tenant under such sublease,
(2) subject to any counterclaim, offset or defense that such subtenant might
have against Tenant, (3) bound by any previous modification of such sublease not
approved by Landlord in writing except as expressly provided hereunder or by any
rent or additional rent or advance rent which such subtenant might have paid for
more than the current month to Tenant, and all such rent shall remain due and
owing, notwithstanding such advance payment, (4) bound by any security or
advance rental deposit made by such subtenant which is not delivered or paid
over to Landlord and with respect to which such subtenant shall look solely to
Tenant for refund or reimbursement, or (5) obligated to perform any work in the
subleased space which it would not have been obligated to perform for Tenant or
to prepare it for occupancy, and in connection with such attornment, the
subtenant shall execute and deliver to Landlord any instruments Landlord may
reasonably request to evidence and confirm such attornment. Each subtenant or
licensee of Tenant shall be deemed, automatically upon and as a condition of its
occupying or using the Premises or any part thereof, to have agreed to be bound
by the terms and conditions set forth in this Section 10(e). The
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provisions of this Section 10(e) shall be self-operative, and no further
instrument shall be required to give effect to this provision.
(f) CANCELLATION. Except for Permitted Transfers, Landlord may,
within 30 days after submission of Tenant's written request for Landlord's
consent to (i) an assignment or (ii) a subletting which brings the total amount
of the Premises then sublet by Tenant to more than 50% of the Premises for more
than 75% of the then-remaining Term, cancel this Lease as to the portion of the
Premises proposed to be sublet or assigned as of the date the proposed Transfer
is to be effective. If Landlord cancels this Lease as to any portion of the
Premises, then this Lease shall cease for such portion of the Premises and
Tenant shall pay to Landlord all Rent accrued through the cancellation date
relating to the portion of the Premises covered by the proposed Transfer.
Thereafter, Landlord may lease such portion of the Premises to the prospective
transferee (or to any other person) without liability to Tenant.
(g) ADDITIONAL COMPENSATION. Tenant shall pay to Landlord,
immediately upon receipt thereof, 50% of the excess of (1) all compensation
received by Tenant for a Transfer less the actual out-of-pocket costs reasonably
incurred by Tenant with unaffiliated third parties (i.e., brokerage commissions,
attorneys' fees and costs and tenant finish work) in connection with such
Transfer (such costs shall be amortized on a straight-line basis over the term
of the Transfer in question) over (2) the Rent allocable to the portion of the
Premises covered thereby.
(h) PERMITTED TRANSFERS. Notwithstanding Section 10(a), Tenant may
Transfer all or part of its interest in this Lease or all or part of the
Premises (a "PERMITTED TRANSFER") to the following types of entities (a
"PERMITTED TRANSFEREE") without the written consent of Landlord and without
obligation to comply with Section 10(g):
(1) an Affiliate of Tenant;
(2) any corporation, limited partnership, limited liability
partnership, limited liability company or other business entity in which or with
which Tenant, or its corporate successors or assigns, is merged or consolidated,
in accordance with applicable statutory provisions governing merger and
consolidation of business entities, so long as (A) Tenant's obligations
hereunder are assumed by the entity surviving such merger or created by such
consolidation; and (B) the Tangible Net Worth of the surviving or created entity
is not less than the Tangible Net Worth of Tenant as of the date hereof; or
(3) any corporation, limited partnership, limited liability
partnership, limited liability company or other business entity acquiring all or
substantially all of Tenant's assets if such entity's Tangible Net Worth after
such acquisition is not less than the Tangible Net Worth of Tenant as of the
date hereof.
Tenant shall promptly notify Landlord of any such Permitted Transfer. Tenant
shall remain liable for the performance of all of the obligations of Tenant
hereunder, or if Tenant no longer exists because of a merger, consolidation, or
acquisition, the surviving or acquiring entity shall expressly assume in writing
the obligations of Tenant hereunder. Additionally, the Permitted Transferee
shall comply with all of the terms and conditions of this Lease, including the
Permitted Use, and the use of the Premises by the Permitted Transferee may not
violate any other agreements affecting the Premises, the Building or the
Project, Landlord or other tenants of the Building or the Project. No later than
30 days after the effective date of any Permitted Transfer, Tenant agrees to
furnish Landlord with (A) copies of the instrument effecting any of the
foregoing Transfers, (B) documentation establishing Tenant's satisfaction of the
requirements set forth above applicable to any such Transfer, and (C) evidence
of insurance as required under this Lease with respect to the Permitted
Transferee. The occurrence of a Permitted Transfer shall not waive Landlord's
rights as to any subsequent Transfers. "TANGIBLE NET WORTH" means the excess of
total assets over total liabilities, in each case as determined in accordance
with generally accepted accounting principles
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consistently applied ("GAAP"), excluding, however, from the determination of
total assets all assets which would be classified as intangible assets under
GAAP including goodwill, licenses, patents, trademarks, trade names, copyrights,
and franchises. Any subsequent Transfer by a Permitted Transferee shall be
subject to the terms of this Section 10.
(i) PERMITTED SUBLEASES. Notwithstanding the provisions of this
Section 10 to contrary, Tenant shall have the right to sublease the Premises
without first obtaining Landlord's consent, subject to the following terms and
conditions: (1) the total amount of space under sublease at any time shall not
exceed 7,000 rentable square feet of the Premises, (2) no sublease shall extend
longer than six months, (3) the sublease(s) must be with a business entity
having a contractual joint venture or other strategic contractual business
relationship with Tenant involving the sharing of technology or customers in
some capacity, (4) within 30 days after the execution of any such executed
sublease, Tenant shall deliver a copy of such executed sublease and evidence of
such contractual relationship to Landlord, and (5) Sections 10(f) and 10(g)
shall not apply to the sublease(s) described in this Section 10(i).
11. INSURANCE; WAIVERS; SUBROGATION; INDEMNITY.
(a) TENANT'S INSURANCE. Effective as of the earlier of (1) the
date Tenant enters or occupies the Premises, or (2) the Commencement Date, and
continuing throughout the Term, Tenant shall maintain the following insurance
policies: (A) commercial general liability insurance in amounts of $3,000,000
per occurrence or, following the expiration of the initial Term, such other
amounts as Landlord may from time to time reasonably require (and, if the use
and occupancy of the Premises include any activity or matter that is or may be
excluded from coverage under a commercial general liability policy [e.g., the
sale, service or consumption of alcoholic beverages], Tenant shall obtain such
endorsements to the commercial general liability policy or otherwise obtain
insurance to insure all liability arising from such activity or matter
[including liquor liability, if applicable] in such amounts as Landlord may
reasonably require), insuring Tenant, Landlord, Landlord's property management
company and Landlord's asset management company against all liability for injury
to or death of a person or persons or damage to property arising from the use
and occupancy of the Premises and (without implying any consent by Landlord to
the installation thereof) the installation, operation, maintenance, repair or
removal of Tenant's Off-Premises Equipment, (B) insurance covering the full
value of all alterations and improvements and betterments in the Premises,
naming Landlord and Landlord's Mortgagee as additional loss payees as their
interests may appear, (C) insurance covering the full value of all furniture,
trade fixtures and personal property (including property of Tenant or others) in
the Premises or otherwise placed in the Project by or on behalf of a Tenant
Party (including Tenant's Off-Premises Equipment), (D) contractual liability
insurance sufficient to cover Tenant's indemnity obligations hereunder (but only
if such contractual liability insurance is not already included in Tenant's
commercial general liability insurance policy), (E) worker's compensation
insurance, and (F) business interruption insurance. Tenant's insurance shall
provide primary coverage to Landlord when any policy issued to Landlord provides
duplicate or similar coverage, and in such circumstance Landlord's policy will
be excess over Tenant's policy. Tenant shall furnish to Landlord certificates of
such insurance and such other evidence satisfactory to Landlord of the
maintenance of all insurance coverages required hereunder at least ten days
prior to the earlier of the Commencement Date or the date Tenant enters or
occupies the Premises, and at least 15 days prior to each renewal of said
insurance, and Tenant shall obtain a written obligation on the part of each
insurance company to notify Landlord at least 30 days before cancellation or a
material change of any such insurance policies. All such insurance policies
shall be in form, and issued by companies with an A.M. Best rating of A-VII or
better, reasonably satisfactory to Landlord. If Tenant fails to comply with the
foregoing insurance requirements or to deliver to Landlord the certificates or
evidence of coverage required herein after five days written notice thereof from
Landlord, Landlord, in addition to any other remedy available pursuant to this
Lease or otherwise, may, but shall not be obligated to, obtain such insurance
and Tenant shall pay to Landlord on demand the premium costs thereof, plus an
administrative fee of 10% of such cost.
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(b) LANDLORD'S INSURANCE. Throughout the Term of this Lease,
Landlord shall maintain, as a minimum, the following insurance policies: (1)
property insurance for the Building's replacement value (excluding property
required to be insured by Tenant), less a commercially-reasonable deductible if
Landlord so chooses, and (2) commercial general liability insurance in an amount
of not less than $3,000,000. Landlord may, but is not obligated to, maintain
such other insurance and additional coverages as it may deem necessary. The cost
of all insurance carried by Landlord with respect to the Project shall be
included in Operating Costs. The foregoing insurance policies and any other
insurance carried by Landlord shall be for the sole benefit of Landlord and
under Landlord's sole control, and Tenant shall have no right or claim to any
proceeds thereof or any other rights thereunder.
(c) NO SUBROGATION. Landlord and Tenant each waives any claim it
might have against the other for any damage to or theft, destruction, loss, or
loss of use of any property, to the extent the same is insured against under any
insurance policy of the types described in this Section 11 that covers the
Project, the Premises, Landlord's or Tenant's fixtures, personal property,
leasehold improvements, or business, or is required to be insured against under
the terms hereof, regardless of whether the negligence of the other party caused
such Loss (defined below). Additionally, Tenant waives any claim it may have
against Landlord for any uninsured Loss to the extent such Loss is caused by a
terrorist act. Each party shall cause its insurance carrier to endorse all
applicable policies waiving the carrier's rights of recovery under subrogation
or otherwise against the other party.
(d) INDEMNITY. Subject to Section 11(c), Tenant shall defend,
protect, indemnify, and hold harmless Landlord and its representatives and
agents from and against all claims, demands, liabilities, causes of action,
suits, judgments, damages, and expenses (including reasonable attorneys' fees)
arising from an injury to or death of any person or the damage to or theft,
destruction, loss, or loss of use of any property or inconvenience (a "LOSS"),
occurring on the Premises or arising out of the installation, operation,
maintenance, repair or removal of any of Tenant's Off-Premises Equipment, in
each case even though caused or alleged to be caused by the negligence or fault
of Landlord or its agents (other than a Loss arising from the sole or gross
negligence or willful misconduct of Landlord or its agents), and even though any
such claim, cause of action, or suit is based upon or alleged to be based upon
the strict liability of Landlord or its agents. This indemnity is intended to
indemnify Landlord and its agents against the consequences of their own
negligence or fault as provided above when Landlord or its agents are jointly,
comparatively, contributively, or concurrently negligent with Tenant. Subject to
Section 11(c), Landlord shall defend, protect, indemnify, and hold harmless
Tenant and its agents from and against all claims, demands, liabilities, causes
of action, suits, judgments, and expenses (including reasonable attorneys' fees)
for any Loss arising from any occurrence in the Building's common areas, even
though caused or alleged to be caused by the negligence or fault of Tenant or
its agents (other than a Loss arising from the sole or gross negligence or
willful misconduct of Tenant or its agents or arising out of the installation,
operation, maintenance, repair or removal of any of Tenant's Off-Premises
Equipment), and even though any such claim, cause of action, or suit is based
upon or alleged to be based upon the strict liability of Tenant or its agents.
This indemnity is intended to indemnify Tenant and its agents against the
consequences of their own negligence or fault as provided above when Tenant or
its agents are jointly, comparatively, contributively, or concurrently negligent
with Landlord. The indemnities set forth in this Lease shall survive termination
or expiration of this Lease and shall not terminate or be waived, diminished or
affected in any manner by any abatement or apportionment of Rent under any
provision of this Lease. If any proceeding is filed for which indemnity is
required hereunder, the indemnifying party agrees, upon request therefor, to
defend the indemnified party in such proceeding at its sole cost utilizing
counsel satisfactory to the indemnified party.
12. SUBORDINATION; ATTORNMENT; NOTICE TO LANDLORD'S MORTGAGEE.
(a) SUBORDINATION. This Lease shall be subordinate to any deed of
trust, mortgage, or other security instrument (each, a "MORTGAGE"), or any
ground lease, master lease, or
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primary lease (each, a "PRIMARY LEASE"), that now or hereafter covers all or any
part of the Premises (the mortgagee under any such Mortgage, beneficiary under
any such deed of trust, or the lessor under any such Primary Lease is referred
to herein as a "LANDLORD'S MORTGAGEE"). Any Landlord's Mortgagee may elect, at
any time, unilaterally, to make this Lease superior to its Mortgage, Primary
Lease, or other interest in the Premises by so notifying Tenant in writing. The
provisions of this Section shall be self-operative and no further instrument of
subordination shall be required; however, in confirmation of such subordination,
Tenant shall execute and return to Landlord (or such other party designated by
Landlord) within ten days after written request therefor such documentation, in
recordable form if required, as a Landlord's Mortgagee may reasonably request to
evidence the subordination of this Lease to such Landlord's Mortgagee's Mortgage
or Primary Lease (including a subordination, non-disturbance and attornment
agreement) or, if the Landlord's Mortgagee so elects, the subordination of such
Landlord's Mortgagee's Mortgage or Primary Lease to this Lease.
(b) ATTORNMENT. Subject to the provisions of this Section 12,
Tenant shall attorn to any party succeeding to Landlord's interest in the
Premises, whether by purchase, foreclosure, deed in lieu of foreclosure, power
of sale, termination of lease, or otherwise, upon such party's request, and
shall execute such agreements confirming such attornment as such party may
reasonably request.
(c) NOTICE TO LANDLORD'S MORTGAGEE. Tenant shall not seek to
enforce any remedy it may have for any default on the part of Landlord without
first giving written notice by certified mail, return receipt requested,
specifying the default in reasonable detail, to any Landlord's Mortgagee whose
address has been given to Tenant, and affording such Landlord's Mortgagee at
least 30 days from receipt of such notice to perform Landlord's obligations
hereunder.
(d) LANDLORD'S MORTGAGEE'S PROTECTION PROVISIONS. If Landlord's
Mortgagee shall succeed to the interest of Landlord under this Lease, Landlord's
Mortgagee shall not be: (1) liable for any act or omission of any prior lessor
(including Landlord); (2) bound by any rent or additional rent or advance rent
which Tenant might have paid for more than the current month to any prior lessor
(including Landlord), and all such rent shall remain due and owing,
notwithstanding such advance payment, except to the extent transferred to or
received by Landlord's Mortgagee; (3) bound by any security or advance rental
deposit made by Tenant which is not delivered or paid over to Landlord's
Mortgagee and with respect to which Tenant shall look solely to Landlord for
refund or reimbursement; (4) bound by any termination, material amendment or
modification of this Lease made without Landlord's Mortgagee's consent and
written approval, except for those terminations, amendments and modifications
permitted to be made by Landlord without Landlord's Mortgagee's consent pursuant
to the terms of the loan documents between Landlord and Landlord's Mortgagee;
(5) subject to the defenses which Tenant might have against any prior lessor
(including Landlord), except to the extent they remain applicable against
Landlord's Mortgagee after Landlord's Mortgagee acquires the Building; and (6)
subject to the offsets which Tenant might have against any prior lessor
(including Landlord) except for those offset rights which (A) are expressly
provided in this Lease or any permitted amendment thereto, (B) relate to periods
of time following the acquisition of the Building by Landlord's Mortgagee, and
(C) Tenant has provided written notice to Landlord's Mortgagee and provided
Landlord's Mortgagee an opportunity to cure the event giving rise to such offset
event consistent with Section 12(c) above. Landlord's Mortgagee shall have no
liability or responsibility under or pursuant to the terms of this Lease or
otherwise after it ceases to own an interest in the Project. Nothing in this
Lease shall be construed to require Landlord's Mortgagee to see to the
application of the proceeds of any loan, and Tenant's agreements set forth
herein shall not be impaired on account of any modification of the documents
evidencing and securing any loan.
(e) SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT.
Landlord shall use reasonable efforts to obtain a subordination, non-disturbance
and attornment agreement ("SNDA") substantially in the form attached hereto as
Exhibit H, from the current
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Landlord's Mortgagee within 90 days after the date of this Lease, and Landlord
shall use reasonable efforts to obtain a SNDA from any future Landlord's
Mortgagee, in a form reasonably acceptable to Tenant and such Landlord's
Mortgagee or other institutional lenders. The subordination of Tenant's rights
hereunder to any future Landlord's Mortgagee under Section 12(a) shall be
conditioned upon such future Landlord's Mortgagee's execution and delivery of
the SNDA in a form reasonably acceptable to Tenant and such Landlord's Mortgagee
or other institutional lenders.
13. RULES AND REGULATIONS. Tenant shall comply with the rules and
regulations of the Project which are attached hereto as Exhibit C. Landlord may,
from time to time, change such rules and regulations for the safety, care, or
cleanliness of the Project and related facilities, provided that such changes
are applicable to all tenants of the Project, will not unreasonably interfere
with Tenant's use of the Premises and are enforced by Landlord in a
non-discriminatory manner. Tenant shall be responsible for the compliance with
such rules and regulations by each Tenant Party.
14. CONDEMNATION.
(a) TOTAL TAKING. If the entire Building or Premises are taken by
right of eminent domain or conveyed in lieu thereof (a "TAKING"), this Lease
shall terminate as of the date of the Taking.
(b) PARTIAL TAKING - TENANT'S RIGHTS. If any part of the Building
becomes subject to a Taking and such Taking will prevent Tenant from conducting
on a permanent basis its business in the Premises in a manner reasonably
comparable to that conducted immediately before such Taking, then Tenant may
terminate this Lease as of the date of such Taking by giving written notice to
Landlord within 30 days after the Taking, and Basic Rent and Additional Rent
shall be apportioned as of the date of such Taking. If Tenant does not terminate
this Lease, then Rent shall be abated on a reasonable basis as to that portion
of the Premises rendered untenantable by the Taking.
(c) PARTIAL TAKING - LANDLORD'S RIGHTS. If any material portion,
but less than all, of the Building becomes subject to a Taking, or if Landlord
is required to pay any of the proceeds arising from a Taking to a Landlord's
Mortgagee in an amount exceeding $100,000, then Landlord may terminate this
Lease by delivering written notice thereof to Tenant within 30 days after such
Taking, and Basic Rent and Additional Rent shall be apportioned as of the date
of such Taking. If Landlord does not so terminate this Lease, then this Lease
will continue, but if any portion of the Premises has been taken, Rent shall
abate as provided in the last sentence of Section 14(b). Tenant hereby waives
any and all rights it might otherwise have pursuant to Section 1265.130 of the
California Code of Civil Procedure.
(d) TEMPORARY TAKING. If all or any portion of the Premises
becomes subject to a Taking for a limited period of time, this Lease shall
remain in full force and effect and Tenant shall continue to perform all of the
terms, conditions and covenants of this Lease, including the payment of Basic
Rent and all other amounts required hereunder. Tenant shall be entitled to
receive the entire award made in connection with any other temporary
condemnation or other taking attributable to any period within the Term.
Landlord shall be entitled to the entire award for any such temporary
condemnation or other taking which relates to a period after the expiration of
the Term or which is allocable to the cost of restoration of the Premises. If
any such temporary condemnation or other taking terminates prior to the
expiration of the Term, Tenant shall restore the Premises as nearly as possible
to the condition prior to the condemnation or other taking, at Tenant's sole
cost and expense; provided that, Tenant shall receive the portion of the award
attributable to such restoration and excepting damage to the Premises from any
intervening casualty. Tenant may, at its election, deem any temporary Taking
which exceeds 180 days in duration as a partial Taking under Section 14(b).
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(e) AWARD. If any Taking occurs, then Landlord shall receive the
entire award or other compensation for the Land, the Building, and other
improvements taken; however, Tenant may separately pursue a claim (to the extent
it will not reduce Landlord's award) against the condemnor for the value of
Tenant's personal property which Tenant is entitled to remove under this Lease,
moving and relocation costs, and loss of business.
15. FIRE OR OTHER CASUALTY.
(a) REPAIR ESTIMATE. If the Premises or the Building are damaged
by fire or other casualty (a "CASUALTY"), Landlord shall, within 75 days after
such Casualty, deliver to Tenant a good faith estimate (the "DAMAGE NOTICE") of
the time needed to repair the damage caused by such Casualty.
(b) TENANT'S RIGHTS. If a material portion of the Premises is
damaged by Casualty such that Tenant is prevented from conducting its business
in the Premises in a manner reasonably comparable to that conducted immediately
before such Casualty and Landlord reasonably estimates that the damage caused
thereby cannot be repaired within 210 days after the commencement of repairs
(the "REPAIR PERIOD"), then Tenant may terminate this Lease by delivering
written notice to Landlord of its election to terminate within 30 days after the
Damage Notice has been delivered to Tenant.
(c) LANDLORD'S RIGHTS. If a Casualty damages the Premises or a
material portion of the Building and (1) Landlord reasonably estimates that the
damage to the Premises cannot be repaired within the Repair Period using
reasonable diligence, (2) the damage to the Premises exceeds 50% of the
replacement cost thereof (excluding foundations and footings), as reasonably
estimated by Landlord, and such damage occurs during the last two years of the
Term, (3) regardless of the extent of damage to the Premises, the damage is not
fully covered (including deductibles) by Landlord's insurance policies or
Landlord makes a good faith and reasonable determination that restoring the
Building would be uneconomical, or (4) Landlord is required to pay any insurance
proceeds arising out of the Casualty to a Landlord's Mortgagee in an amount
exceeding $150,000, then Landlord may terminate this Lease by giving written
notice of its election to terminate within 30 days after the Damage Notice has
been delivered to Tenant.
(d) REPAIR OBLIGATION. If neither party elects to terminate this
Lease following a Casualty, then Landlord shall, within a reasonable time after
such Casualty, begin to repair the Premises and shall proceed with reasonable
diligence to restore the Premises to substantially the same condition as they
existed immediately before such Casualty; however, Landlord shall not be
required to repair or replace any alterations or betterments within the Premises
required to be covered by Tenant's insurance hereunder (which shall be promptly
and with due diligence repaired and restored by Tenant at Tenant's sole cost and
expense) or any furniture, equipment, trade fixtures or personal property of
Tenant or others in the Premises or the Building, and Landlord's obligation to
repair or restore the Premises shall be limited to the extent of the insurance
proceeds actually received after pursuing reasonable negotiation with the
insurer by Landlord for the Casualty in question, plus deductibles, unless
caused or created by Landlord's gross negligence or willful misconduct. If this
Lease is terminated under the provisions of this Section 15, Landlord shall be
entitled to the full proceeds of the insurance policies providing coverage for
all alterations, improvements and betterments in the Premises, except to the
extent they constitute Tenant's trade fixtures and Tenant shall have no
obligation to restore or repair same.
(e) WAIVER OF STATUTORY PROVISIONS. The provisions of this Lease,
including this Section 15, constitute an express agreement between Landlord and
Tenant with respect to any and all damage to, or destruction of, all or any part
of the Premises or the Building and any statute or regulation of the State of
California, including, without limitation, Sections 1932(2) and 1933(4) of the
California Civil Code, with respect to any rights or obligations
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concerning damage or destruction in the absence of an express agreement between
the parties, and any other statute or regulation, now or hereafter in effect,
shall have no application to this Lease or any damage or destruction to all or
any part of the Premises or the Building.
(f) ABATEMENT OF RENT. If the Premises are damaged by Casualty,
Rent for the portion of the Premises rendered untenantable by the damage shall
be abated on a reasonable basis from the date of damage until the completion of
Landlord's repairs (or until the date of termination of this Lease by Landlord
or Tenant as provided above, as the case may be), unless a Tenant Party caused
such damage, in which case, Tenant shall continue to pay Rent without abatement
to the extent insurance proceeds are not available to Landlord therefor.
16. PERSONAL PROPERTY TAXES. Tenant shall be liable for all taxes levied
or assessed against personal property, furniture, or fixtures placed by Tenant
in the Premises or in or on the Building or Project. If any taxes for which
Tenant is liable are levied or assessed against Landlord or Landlord's property
and Landlord elects to pay the same, or if the assessed value of Landlord's
property is increased by inclusion of such personal property, furniture or
fixtures and Landlord elects to pay the taxes based on such increase, then
Tenant shall pay to Landlord, within 30 days following written request therefor,
the part of such taxes for which Tenant is primarily liable hereunder; however,
Landlord shall not pay such amount if Tenant notifies Landlord that it will
contest the validity or amount of such taxes before Landlord makes such payment,
and thereafter diligently proceeds with such contest in accordance with Law and
if the non-payment thereof does not pose a threat of loss or seizure of the
Project or interest of Landlord therein or impose any fee or penalty against
Landlord.
17. EVENTS OF DEFAULT. Each of the following occurrences shall be an
"EVENT OF DEFAULT":
(a) PAYMENT DEFAULT. Tenant's failure to pay Rent within five days
after Landlord has delivered written notice to Tenant that the same is due (any
such written notice shall be in lieu of, and not in addition to, any notice
required under California Code of Civil Procedure Section 1161 or any similar or
successor law); however, an Event of Default shall occur hereunder without any
obligation of Landlord to give any notice if Tenant fails to pay Rent when due
and, during the 12-month interval preceding such failure, Landlord has given
Tenant written notice of failure to pay Rent on two or more occasions;
(b) ABANDONMENT. Tenant abandons the Premises;
(c) ESTOPPEL. Tenant fails to provide any estoppel
certificate after Landlord's written request therefor pursuant to Section 25(e)
and such failure shall continue for five days after Landlord's second written
notice thereof to Tenant;
(d) INSURANCE. Tenant fails to procure, maintain and deliver
to Landlord evidence of the insurance policies and coverages as required under
and in accordance with Section 11(a);
(e) MECHANIC'S LIENS. Tenant fails to pay and release of
record, or diligently contest and bond around, any mechanic's lien filed against
the Premises or the Project for any work performed, materials furnished, or
obligation incurred by or at the request of Tenant, within the time and in the
manner required by Section 8(d);
(f) OTHER DEFAULTS. Tenant's failure to perform, comply
with, or observe any other agreement or obligation of Tenant under this Lease
and the continuance of such failure for a period of more than 30 days after
Landlord has delivered to Tenant written notice thereof (any such notice shall
be in lieu of, and not in addition to, any notice required under California Code
of Civil Procedure Section 1161 or any similar or successor law); and
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(g) INSOLVENCY. The filing of a petition by or against
Tenant (the term "TENANT" shall include, for the purpose of this Section 17(g),
any guarantor of Tenant's obligations hereunder) (1) in any bankruptcy or other
insolvency proceeding; (2) seeking any relief under any state or federal debtor
relief law; (3) for the appointment of a liquidator or receiver for all or
substantially all of Tenant's property or for Tenant's interest in this Lease;
(4) for the reorganization or modification of Tenant's capital structure; or (5)
in any assignment for the benefit of creditors proceeding; however, if such a
petition is filed against Tenant, then such filing shall not be an Event of
Default unless Tenant fails to have the proceedings initiated by such petition
dismissed within 90 days after the filing thereof.
18. REMEDIES. Upon any Event of Default, Landlord may, in addition to
all other rights and remedies afforded Landlord hereunder or by law or equity,
take any one or more of the following actions, each and all of which shall be
cumulative and non-exclusive, without notice or demand whatsoever:
(a) TERMINATION OF LEASE. Terminate this Lease, in which event
Tenant shall immediately surrender the Premises to Landlord, and if Tenant fails
to do so, Landlord may, without prejudice to any other remedy which it may have
for possession or arrearages in Rent, enter upon and take possession of the
Premises and expel or remove Tenant and any other person who may be occupying
the Premises or any part thereof, without being liable for prosecution or any
claim or damages therefor; and Landlord may recover from Tenant the following:
(1) The worth at the time of award of any unpaid Rent which
has been earned at the time of such termination; plus
(2) The worth at the time of award of the amount by which
the unpaid Rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; plus
(3) The worth at the time of award of the amount by which
the unpaid Rent for the balance of the Term after the time of award exceeds the
amount of such rental loss that Tenant proves could have been reasonably
avoided; plus
(4) Any other amount necessary to compensate Landlord for
all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, specifically including but not limited to, brokerage
commissions and advertising expenses incurred, expenses of remodeling the
Premises or any portion thereof for a new tenant, whether for the same or a
different use, and any special concessions made to obtain a new tenant; and
(5) At Landlord's election, such other amounts in addition
to or in lieu of the foregoing as may be permitted from time to time by
applicable Law.
The term "Rent" as used in this Section 18(a) shall be deemed to be and to
mean all sums of every nature required to be paid by Tenant pursuant to the
terms of this Lease, whether to Landlord or to others. As used in Sections
18(a)(1) and 18(a)(2) above, the "worth at the time of award" shall be computed
by allowing interest at the Interest Rate set forth in Section 5 of this Lease,
but in no case greater than the maximum amount of such interest permitted by
Law. As used in Section 18(a)(3) above, the "worth at the time of award" shall
be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent (1%).
(b) ENFORCEMENT OF LEASE. Landlord shall have the remedy described
in California Civil Code Section 1951.4 (lessor may continue lease in effect
after lessee's breach and abandonment and recover rent as it becomes due, if
lessee has the right to sublet or assign, subject only to reasonable
limitations). Accordingly, Landlord may, from time to time, without
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terminating this Lease, enforce all of its rights and remedies under this Lease,
including the right to recover all rent as it becomes due.
(c) SUBLESSEES OF TENANT. Whether or not Landlord elects to
terminate this Lease on account of any default by Tenant, as set forth in this
Section 18, Landlord shall have the right to terminate any and all subleases,
licenses, concessions or other consensual arrangements for possession entered
into by Tenant and affecting the Premises or may, in Landlord's sole discretion,
succeed to Tenant's interest in such subleases, licenses, concessions or
arrangements. In the event of Landlord's election to succeed to Tenant's
interest in any such subleases, licenses, concessions or arrangements, Tenant
shall, as of the date of notice by Landlord of such election, have no further
right to or interest in the rent or other consideration receivable thereunder.
(d) EFFORTS TO RELET. For the purposes of this Section 18,
Tenant's right to possession shall not be deemed to have been terminated by
efforts of Landlord to relet the Premises, by its acts of maintenance or
preservation with respect to the Premises, or by appointment of a receiver to
protect Landlord's interests hereunder. The foregoing enumeration is not
exhaustive, but merely illustrative of acts which may be performed by Landlord
without terminating Tenant's right to possession.
19. PAYMENT BY TENANT; NON-WAIVER; CUMULATIVE REMEDIES.
(a) PAYMENT BY TENANT. Upon any Event of Default, Tenant shall pay
to Landlord all costs incurred by Landlord (including court costs and reasonable
attorneys' fees and expenses) in (1) obtaining possession of the Premises, (2)
removing and storing Tenant's or any other occupant's property, (3) repairing,
restoring, altering, remodeling, or otherwise putting the Premises into
condition reasonably acceptable to a new tenant, (4) performing Tenant's
obligations which Tenant failed to perform, and (5) enforcing, or advising
Landlord of, its rights, remedies, and recourses arising out of the default. To
the full extent permitted by law, Landlord and Tenant agree the federal and
state courts of the state in which the Premises are located shall have exclusive
jurisdiction over any matter relating to or arising from this Lease and the
parties' rights and obligations under this Lease.
(b) NO WAIVER. Landlord's acceptance of Rent following an Event of
Default shall not waive Landlord's rights regarding such Event of Default. No
waiver by Landlord of any violation or breach of any of the terms contained
herein shall waive Landlord's rights regarding any future violation of such
term. Landlord's acceptance of any partial payment of Rent shall not waive
Landlord's rights with regard to the remaining portion of the Rent that is due,
regardless of any endorsement or other statement on any instrument delivered in
payment of Rent or any writing delivered in connection therewith; accordingly,
Landlord's acceptance of a partial payment of Rent shall not constitute an
accord and satisfaction of the full amount of the Rent that is due. Landlord's
acceptance of a partial Rent payment shall not constitute a waiver of any of
Landlord's rights available under this Lease or at law or equity, including,
without limitation, the right to recover possession of the Premises.
(c) CUMULATIVE REMEDIES. Any and all remedies set forth in this
Lease: (1) shall be in addition to any and all other remedies Landlord may have
at law or in equity, (2) shall be cumulative, and (3) may be pursued
successively or concurrently as Landlord may elect. The exercise of any remedy
by Landlord shall not be deemed an election of remedies or preclude Landlord
from exercising any other remedies in the future. Additionally, Tenant shall
defend, indemnify, protect and hold harmless Landlord, Landlord's Mortgagee and
their respective representatives and agents from and against all claims,
demands, liabilities, causes of action, suits, judgments, damages and expenses
(including reasonable attorneys' fees) arising from Tenant's failure to perform
its obligations under this Lease.
20. INTENTIONALLY DELETED.
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21. SURRENDER OF PREMISES. No act by Landlord shall be deemed an
acceptance of a surrender of the Premises, and no agreement to accept a
surrender of the Premises shall be valid unless it is in writing and signed by
Landlord. At the expiration or termination of this Lease, Tenant shall deliver
to Landlord the Premises with all improvements located therein in good repair
and condition, free of Hazardous Materials placed on the Premises by Tenant or a
Tenant Party during the Term, broom-clean, reasonable wear and tear (and
condemnation and Casualty damage, as to which Sections 14 and 15 shall control)
excepted, and shall deliver to Landlord all keys to the Premises. Provided that
Tenant has performed all of its obligations hereunder, Tenant may remove all
unattached trade fixtures, furniture, and personal property placed in the
Premises or elsewhere in the Building by Tenant (but Tenant may not remove any
such item which was paid for, in whole or in part, by Landlord or any wiring or
cabling facilities or improvements unless Landlord requires such removal).
Additionally, at Landlord's option, Tenant shall remove such alterations
(including the Pre-approved Alterations), additions, improvements, trade
fixtures, personal property, equipment, wiring, conduits, cabling, and furniture
(including Tenant's Off-Premises Equipment) installed by or for Tenant as
Landlord may request; however, Tenant shall not be required to remove any
addition or improvement to the Premises or the Project unless Landlord has
notified Tenant in writing in accordance herewith that the improvement or
addition in question need be removed. Tenant shall repair all damage caused by
such removal. All items not so removed shall, at Landlord's option, be deemed to
have been abandoned by Tenant and may be appropriated, sold, stored, destroyed,
or otherwise disposed of by Landlord without notice to Tenant and without any
obligation to account for such items. The provisions of this Section 21 shall
survive the end of the Term.
22. HOLDING OVER. If Tenant fails to vacate the Premises at the end of
the Term, then Tenant shall be a tenant at sufferance and, in addition to all
other damages and remedies to which Landlord may be entitled for such holding
over, (a) Tenant shall pay, in addition to the other Rent, Basic Rent equal to
the greater of (1) 150% of the Basic Rent payable during the last month of the
Term, or (2) 125% of the prevailing rental rate in the Building for similar
space, and (b) Tenant shall otherwise continue to be subject to all of Tenant's
obligations under this Lease. The provisions of this Section 22 shall not be
deemed to limit or constitute a waiver of any other rights or remedies of
Landlord provided herein or at law. If Tenant fails to surrender the Premises
upon the termination or expiration of this Lease, in addition to any other
liabilities to Landlord accruing therefrom, Tenant shall protect, defend,
indemnify and hold Landlord harmless from all loss, costs (including reasonable
attorneys' fees) and liability resulting from such failure, including any claims
made by any succeeding tenant founded upon such failure to surrender, and any
lost profits to Landlord resulting therefrom.
23. CERTAIN RIGHTS RESERVED BY LANDLORD. Provided that the exercise of
such rights does not unreasonably interfere with Tenant's use and occupancy of
the Premises, and subject to any other provisions of this Lease, Landlord shall
have the following rights:
(a) BUILDING OPERATIONS. To decorate and to make inspections,
repairs, alterations, additions, changes, or improvements, whether structural or
otherwise, in and about the Project, or any part thereof; to enter upon the
Premises (after giving Tenant reasonable notice thereof, which may be oral
notice, of not less than 24 hours, except in cases of real or apparent
emergency, in which case no notice shall be required) and, during the
continuance of any such work, to temporarily close doors, entryways, public
space, and corridors in the Building; to interrupt or temporarily suspend
Building services and facilities; to change the name of the Building; and to
change the arrangement and location of entrances or passageways, doors, and
doorways, corridors, elevators, stairs, restrooms, or other public parts of the
Building;
(b) SECURITY. To take such reasonable measures as Landlord deems
advisable for the security of the Building and its occupants; evacuating the
Building for cause, suspected cause, or for drill purposes with reasonable prior
notice to Tenant; temporarily denying access to the Building; and closing the
Building after normal business hours and on Sundays and
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holidays, subject, however, to Tenant's right to enter when the Building is
closed after normal business hours under such reasonable regulations as Landlord
may prescribe from time to time;
(c) PROSPECTIVE PURCHASERS AND LENDERS. To enter the Premises at
all reasonable hours to show the Premises to prospective purchasers or lenders;
and
(d) PROSPECTIVE TENANTS. At any time during the last 12 months of
the Term (or earlier if Tenant has notified Landlord in writing that it does not
desire to renew the Term) or at any time following the occurrence of an Event of
Default, to enter the Premises at all reasonable hours upon not less than 24
hours prior notice to show the Premises to prospective tenants.
24. INTENTIONALLY DELETED.
25. MISCELLANEOUS.
(a) LANDLORD TRANSFER. Landlord may transfer any portion of the
Project and any of its rights under this Lease. If Landlord assigns its rights
under this Lease, then Landlord shall thereby be released from any further
obligations hereunder arising after the date of transfer, provided that the
assignee assumes in writing Landlord's obligations hereunder arising from and
after the transfer date.
(b) LANDLORD'S LIABILITY; TENANT'S LIABILITY. The liability of
Landlord (and its partners, shareholders or members) to Tenant (or any person or
entity claiming by, through or under Tenant) for any default by Landlord under
the terms of this Lease or any matter relating to or arising out of the
occupancy or use of the Premises and/or other areas of the Building shall be,
except to the extent attributable to the gross negligence or willful or
intentional misconduct of Landlord, limited to Tenant's actual direct, but not
consequential, damages therefor and shall be recoverable only from the interest
of Landlord in the Building, and Landlord (and its partners, shareholders or
members) shall not be personally liable for any deficiency. Except for any
damages which Landlord may suffer because of Tenant's holding over in the
Premises following the expiration of the Term (for which Landlord may recover
consequential damages from Tenant), the liability of Tenant to Landlord for any
monetary damages arising from any default by Tenant under the terms of this
Lease shall be limited to Landlord's actual direct, but not consequential
damages therefor. Nothing in this Section 25(b) shall affect or limit Landlord's
rights to file legal actions to recover possession of the Premises, or for
injunctive relief against Tenant, or any other non-monetary relief as provided
in Sections 18 or 19 of this Lease.
(c) FORCE MAJEURE. Other than for Tenant's obligations under this
Lease that can be performed by the payment of money (e.g., payment of Rent and
maintenance of insurance) or as otherwise expressly provided herein, whenever a
period of time is herein prescribed for action to be taken by either party
hereto, such party shall not be liable or responsible for, and there shall be
excluded from the computation of any such period of time, any delays due to
strikes, riots, acts of God, shortages of labor or materials, war, terrorist
acts or activities, governmental laws, regulations, or restrictions, or any
other causes of any kind whatsoever which are beyond the control of such party.
(d) BROKERAGE. Neither Landlord nor Tenant has dealt with any
broker or agent in connection with the negotiation or execution of this Lease,
other than Landlord's broker, CPS - Commercial Property Services Company (J.
Houston/M.McSwain), and Tenant's broker, Cushman & Wakefield of California, Inc.
(R. Gage), whose commission shall be paid by Landlord pursuant to a separate
written agreement. Tenant and Landlord shall each indemnify the other against
all costs, expenses, attorneys' fees, liens and other liability for commissions
or other compensation claimed by any broker or agent claiming the same by,
through, or under the indemnifying party.
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(e) ESTOPPEL CERTIFICATES. From time to time, Tenant shall furnish
to any party designated by Landlord, within ten business days after Landlord has
made a request therefor, a certificate signed by Tenant confirming and
containing such factual certifications and representations as to this Lease as
Landlord may reasonably request. Unless otherwise required by Landlord's
Mortgagee or a prospective purchaser or mortgagee of the Project, the initial
form of estoppel certificate to be signed by Tenant is attached hereto as
Exhibit F. If Tenant does not deliver to Landlord the certificate signed by
Tenant within such required time period, Landlord, Landlord's Mortgagee and any
prospective purchaser or mortgagee, may conclusively presume and rely upon the
following facts: (1) this Lease is in full force and effect, (2) the terms and
provisions of this Lease have not been changed except as otherwise represented
by Landlord, (3) not more than one monthly installment of Basic Rent and other
charges have been paid in advance, (4) there are no claims against Landlord nor
any defenses or rights of offset against collection of Rent or other charges,
and (5) Landlord is not in default under this Lease. In such event, Tenant shall
be estopped from denying the truth of the presumed facts, except to the extent
of manifest error or intentional misrepresentations of Landlord.
(f) NOTICES. All notices and other communications given pursuant
to this Leaseshall be in writing and shall be (1) mailed by first class, United
States Mail, postage prepaid, certified, with return receipt requested, and
addressed to the parties hereto at the address specified in the Basic Lease
Information, (2) hand delivered to the intended addressee, (3) sent by a
nationally recognized overnight courier service, or (4) sent by facsimile
transmission during normal business hours followed by a confirmatory letter sent
in another manner permitted hereunder. All notices shall be effective upon
delivery to the address of the addressee. The parties hereto may change their
addresses by giving notice thereof to the other in conformity with this
provision.
(g) SEPARABILITY. If any clause or provision of this Lease is
illegal, invalid, or unenforceable under present or future laws, then the
remainder of this Lease shall not be affected thereby and in lieu of such clause
or provision, there shall be added as a part of this Lease a clause or provision
as similar in terms to such illegal, invalid, or unenforceable clause or
provision as may be possible and be legal, valid, and enforceable.
(h) AMENDMENTS; BINDING EFFECT; NO ELECTRONIC RECORDS. This Lease
may not be amended except by instrument in writing signed by Landlord and
Tenant. No provision of this Lease shall be deemed to have been waived by
Landlord unless such waiver is in writing signed by Landlord, and no custom or
practice which may evolve between the parties in the administration of the terms
hereof shall waive or diminish the right of Landlord to insist upon the
performance by Tenant in strict accordance with the terms hereof. Landlord and
Tenant hereby agree not to conduct the transactions or communications
contemplated by this Lease by electronic means, except by facsimile transmission
as specifically set forth in Section 25(f); nor shall the use of the phrase "in
writing" or the word "written" be construed to include electronic communications
except by facsimile transmissions as specifically set forth in Section 25(f).
The terms and conditions contained in this Lease shall inure to the benefit of
and be binding upon the parties hereto, and upon their respective successors in
interest and legal representatives, except as otherwise herein expressly
provided. This Lease is for the sole benefit of Landlord and Tenant, and, other
than Landlord's Mortgagee, no third party shall be deemed a third party
beneficiary hereof.
(i) QUIET ENJOYMENT. Provided Tenant has performed all of its
obligations hereunder, Tenant shall peaceably and quietly hold and enjoy the
Premises for the Term, without hindrance from Landlord or any party claiming by,
through, or under Landlord, but not otherwise, subject to the terms and
conditions of this Lease.
(j) NO MERGER. There shall be no merger of the leasehold estate
hereby created with the fee estate in the Premises or any part thereof if the
same person acquires or holds,
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directly or indirectly, this Lease or any interest in this Lease and the fee
estate in the leasehold Premises or any interest in such fee estate.
(k) NO OFFER. The submission of this Lease to Tenant shall not be
construed as an offer, and Tenant shall not have any rights under this Lease
unless Landlord executes a copy of this Lease and delivers it to Tenant.
(l) ENTIRE AGREEMENT. This Lease constitutes the entire agreement
between Landlord and Tenant regarding the subject matter hereof and supersedes
all oral statements and prior writings relating thereto. Except for those set
forth in this Lease, no representations, warranties, or agreements have been
made by Landlord or Tenant to the other with respect to this Lease or the
obligations of Landlord or Tenant in connection therewith. The normal rule of
construction that any ambiguities be resolved against the drafting party shall
not apply to the interpretation of this Lease or any exhibits or amendments
hereto.
(m) WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY LAW,
LANDLORD AND TENANT EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LITIGATION OR
TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE ARISING OUT OF OR WITH
RESPECT TO THIS LEASE OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.
(n) GOVERNING LAW. This Lease shall be governed by and construed
in accordance with the laws of the state in which the Premises are located.
(o) RECORDING. Tenant shall not record this Lease or any
memorandum of this Lease without the prior written consent of Landlord, which
consent may be withheld or denied in the sole and absolute discretion of
Landlord, and any recordation by Tenant shall be a material breach of this
Lease. Tenant grants to Landlord a power of attorney to execute and record a
release releasing any such recorded instrument of record that was recorded
without the prior written consent of Landlord.
(p) JOINT AND SEVERAL LIABILITY. If Tenant is comprised of more
than one party, each such party shall be jointly and severally liable for
Tenant's obligations under this Lease. All unperformed obligations of Tenant
hereunder not fully performed at the end of the Term shall survive the end of
the Term, including payment obligations with respect to Rent and all obligations
concerning the condition and repair of the Premises.
(q) FINANCIAL REPORTS. Within 15 days after Landlord's request,
Tenant will furnish Tenant's most recent audited financial statements (including
any notes to them) to Landlord, or, if no such audited statements have been
prepared, such other financial statements (and notes to them) as may have been
prepared by an independent certified public accountant or, failing those,
Tenant's internally prepared financial statements. If Tenant is a publicly
traded corporation, Tenant may satisfy its obligations hereunder by providing to
Landlord Tenant's most recent annual and quarterly reports. Tenant will discuss
its financial statements with Landlord and, following the occurrence of an Event
of Default hereunder, will give Landlord access to Tenant's books and records in
order to enable Landlord to verify the financial statements. Landlord will not
disclose any aspect of Tenant's financial statements that Tenant designates to
Landlord as confidential except (1) to Landlord's Mortgagee or prospective
mortgagees or purchasers of the Building, (2) in litigation between Landlord and
Tenant, and/or (3) if required by court order. Tenant shall not be required to
deliver the financial statements required under this Section 25(q) more than
once in any 12-month period unless requested by Landlord's Mortgagee or a
prospective buyer or lender of the Building or an Event of Default occurs.
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(r) LANDLORD'S FEES. Whenever Tenant requests Landlord to take any
action not required of it hereunder or give any consent or approval required or
permitted under this Lease (any such consent or approval of Landlord shall not
be unreasonably withheld, conditioned or delayed, except as otherwise expressly
provided in this Lease), Tenant will reimburse Landlord for Landlord's
reasonable, out-of-pocket costs payable to third parties and incurred by
Landlord in reviewing the proposed action or consent, including reasonable
attorneys', engineers' or architects' fees, within 30 days after Landlord's
delivery to Tenant of a statement of such costs. Tenant will be obligated to
make such reimbursement without regard to whether Landlord consents to any such
proposed action. If Landlord reasonably believes that the out-of-pocket costs
payable to third parties to be incurred by Landlord in reviewing the proposed
action or consent will exceed $1,000, Landlord will first notify Tenant of such
cost estimate before proceeding with such third party expenses. If Tenant fails
to consent to such additional costs and expenses within five business days after
Landlord's written notification to Tenant thereof, Tenant shall be deemed to
have rescinded its request for such action or consent.
(s) ATTORNEYS' FEES. In the event that either Landlord or Tenant
should bring suit for the possession of the Premises, for the recovery of any
sum due under this Lease, or because of the breach of any provision of this
Lease or for any other relief against the other, then all costs and expenses,
including reasonable attorneys' fees, incurred by the prevailing party therein,
shall be paid by the other party, which obligation on the part of the other
party shall be deemed to have accrued on the date of the commencement of such
action and shall be enforceable whether or not the action is prosecuted to
judgment.
(t) TELECOMMUNICATIONS. Tenant and its telecommunications
companies, including local exchange telecommunications companies and alternative
access vendor services companies, shall have no right of access to and within
the Building other than the Premises, for the installation and operation of
telecommunications systems, including voice, video, data, Internet, and any
other services provided over wire, fiber optic, microwave, wireless, and any
other transmission systems ("TELECOMMUNICATIONS SERVICES"), for part or all of
Tenant's telecommunications within the Building and from the Building to any
other location without Landlord's prior written consent. All providers of
Telecommunications Services shall be required to comply with the rules and
regulations of the Building, applicable Laws and Landlord's policies and
practices for the Building. Tenant acknowledges that Landlord shall not be
required to provide or arrange for any Telecommunications Services and that
Landlord shall have no liability to any Tenant Party in connection with the
installation, operation or maintenance of Telecommunications Services or any
equipment or facilities relating thereto. Tenant, at its cost and for its own
account, shall be solely responsible for obtaining all Telecommunications
Services.
(u) INTENTIONALLY DELETED.
(v) AUTHORITY. Tenant (if a corporation, partnership or other
business entity) hereby represents and warrants to Landlord that Tenant is a
duly formed and existing entity qualified to do business in the state in which
the Premises are located, that Tenant has full right and authority to execute
and deliver this Lease, and that each person signing on behalf of Tenant is
authorized to do so. Landlord hereby represents and warrants to Tenant that
Landlord is a duly formed and existing entity qualified to do business in the
state in which the Premises are located, that Landlord has full right and
authority to execute and deliver this Lease, and that each person signing on
behalf of Landlord is authorized to do so.
(w) HAZARDOUS MATERIALS. The term "HAZARDOUS MATERIALS" means any
substance, material, or waste which is now or hereafter classified or considered
to be hazardous, toxic, or dangerous under any Law relating to pollution or the
protection or regulation of human health, natural resources or the environment,
or poses or threatens to pose a hazard to the health or safety of persons on the
Premises or in the Project. Tenant shall not use, generate, store, or dispose
of, or permit the use, generation, storage or disposal of Hazardous Materials on
or about the Premises or the Project except in a manner and quantity necessary
for the ordinary performance of
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Tenant's business, and then in compliance with all Laws. If Tenant breaches its
obligations under this Section 25(w), Landlord may immediately take any and all
action reasonably appropriate to remedy the same, including taking all
appropriate action to clean up or remediate any contamination resulting from
Tenant's use, generation, storage or disposal of Hazardous Materials.
Notwithstanding Landlord's indemnity contained in Section 11(d), Tenant shall
defend, protect, indemnify, and hold harmless Landlord and its representatives
and agents from and against any and all claims, demands, liabilities, causes of
action, suits, judgments, damages and expenses (including reasonable attorneys'
fees and cost of clean up and remediation) arising from Tenant's failure to
comply with the provisions of this Section 25(w). This indemnity provision shall
survive termination or expiration of this Lease.
(x) PARKING. Tenant may use up to the number of unreserved parking
spaces set forth below in the parking facilities associated with the Building
(the "PARKING AREA") subject to such terms, conditions and regulations as are
from time to time applicable to patrons of the Parking Area. Regardless of
whether Tenant elects to use such parking spaces, Tenant shall pay to Landlord,
contemporaneously with the payment of Basic Rent, parking rent (plus all
applicable taxes), during the initial Term equal to the rate then established by
Landlord for reserved and unreserved parking spaces, as applicable, in the
Parking Area, which are consistent with prevailing market rates for such
parking.
<CAPTION>
Suite Number Unreserved Parking Spaces
800, 1500, Server Room 76
1350 17
1300 18
Temporary Space 21
Summary of Unreserved Parking Spaces:
<CAPTION>
Lease Month Unreserved Parking Spaces
1-Suite 1350 CD 97
Suite 1350 CD-Suite 1300 CD 114
Suite 1300 CD-84 111
Tenant shall at all times comply with all Laws respecting the use of the
Parking Area. Landlord reserves the right to adopt, modify, and enforce
reasonable rules and regulations governing the use of the Parking Area from time
to time including any key-card, sticker, or other identification or entrance
systems and hours of operations. Landlord may refuse to permit any person who
violates such rules and regulations to park in the Parking Area, and any
violation of the rules and regulations shall subject the car to removal from the
Parking Area.
Tenant may validate visitor parking by such method or methods as Landlord
may approve, at the validation rate from time to time generally applicable to
visitor parking. Unless specified to the contrary above, the parking spaces
provided hereunder shall be provided on an unreserved, "first-come, first
served" basis. Tenant acknowledges that Landlord has arranged or may arrange for
the Parking Area to be operated by an independent contractor, not affiliated
with Landlord.
There will be a reasonable replacement charge payable by Tenant equal to
the amount posted from time to time by Landlord for loss of any magnetic parking
card or parking sticker issued by Landlord.
If, for any reason, Landlord is unable to provide all or any portion of
the parking spaces to which Tenant is entitled hereunder, then Tenant's
obligation to pay for such parking spaces
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shall be abated for so long as Tenant does not have the use thereof; this
abatement shall be in full settlement of all claims that Tenant might otherwise
have against Landlord because of Landlord's failure or inability to provide
Tenant with such parking spaces. Landlord shall not be responsible for enforcing
Tenant's parking rights against any third parties.
(y) SIGNAGE. Tenant shall not erect or maintain any temporary or
permanent sign on or about the Premises, the Building or the Project or visible
from the exterior without obtaining prior written approval from Landlord, which
may be granted or withheld in Landlord's sole and absolute discretion. Any
request for approval of a sign shall be made in such detail, as Landlord shall
request. All signs, whether erected by Landlord or Tenant, shall conform to
Landlord's building standard signage and to all laws, ordinances, rules,
regulations, permits, covenants, conditions, restrictions, and easements
pertaining to signs, and shall be at Tenant's expense. In the event of a
violation of the foregoing by Tenant, Landlord may remove same without any
liability, and may charge the expense incurred in such removal to Tenant. Tenant
shall remove all approved signs, which it has erected upon the termination of
the Lease and repair all damage caused by such removal. Notwithstanding the
foregoing, in the event Tenant or a Permitted Transferee (other than a Permitted
Transferee who is merely subleasing from Tenant) occupies four full floors in
the Building as a direct tenant pursuant to this Lease, Tenant or such Permitted
Transferee (who is not merely subleasing from Tenant) shall have the right to
install, at Tenant's sole cost and expense, Building parapet signage, subject to
(i) the then existing zoning requirements, and (ii) the prior approval of the
City of San Jose. Landlord shall also have the right to approve the name of the
entity on such sign and the design of same.
(z) LIST OF EXHIBITS. All exhibits and attachments attached hereto
are incorporated herein by this reference; provided that the terms of the
primary Lease document shall control any inconsistencies therewith.
Exhibit A - Outline of Premises
Exhibit B - Description of the Land
Exhibit C - Building Rules and Regulations
Exhibit D - Tenant Finish-Work
Exhibit D-1- Space Plan
Exhibit E - Form of Confirmation of Commencement Date Letter
Exhibit F - Form of Tenant Estoppel Certificate
Exhibit G - Outline of Temporary Space
Exhibit H - Form of SNDA
Exhibit I - Suite 1400 Expansion Space and
Suite 1450 Expansion Space
Exhibit J - Suite 1200 Expansion Space
26. RENEWAL OPTION.
(a) GRANT OF OPTION. Provided no Event of Default then exists and
Tenant or a Permitted Transferee (other than a Permitted Transferee who is
merely subleasing from Tenant) is then occupying at least 75% of the Renewal
Premises (as defined below) at the time of such election, Tenant or such
Permitted Transferee (who is not merely subleasing from Tenant) may renew this
Lease with respect to any portion of the Premises, but not less than a full
floor (the "RENEWAL PREMISES") for two additional periods of 36 months each
(each, an "EXTENDED TERM"), by delivering written notice of the exercise of each
such option to Landlord not earlier than 12 months nor later than nine months
before the expiration of the then Term.
(b) BASIC RENT. The Basic Rent payable for each month during each
such Extended Term shall be 95% of the prevailing rental rate (the "PREVAILING
RENTAL RATE"), at the commencement of each such Extended Term, for renewals of
space in the Building or other Class "A" office buildings in the downtown San
Jose area (defined as (1) Fairmont Plaza, located at 50 W. San Fernando, (2)
Opus, located at 225 W. Santa Clara, (3) 10 Almaden, and (4) Riverpark
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Towers, located at 333 w. San Carlos (collectively, the "CLASS A SAN JOSE
Buildings")), of equivalent use, quality, size, utility and location. The
determination of the Prevailing Rental Rate for such renewals of space shall
also reflect any tenant improvements, free rent and other economic concessions,
brokerage commissions, annual escalations, if any, and any other incentives or
allowances then being typically provided and with the length of the extended
Term and the credit standing of Tenant also to be taken into account. Within 20
business days after receipt of Tenant's notice to renew for each option period,
Landlord shall deliver to Tenant written notice of the Prevailing Rental Rate
for such Extended Term and shall advise Tenant of the required adjustment to
Basic Rent, if any, and the other terms and conditions offered. Tenant shall,
within ten days after receipt of Landlord's notice, notify Landlord in writing
whether Tenant accepts or rejects Landlord's determination of the Prevailing
Rental Rate for each Extended Term. If Tenant timely notifies Landlord that
Tenant accepts Landlord's determination of the Prevailing Rental Rate for each
Extended Term, then, on or before the commencement date of such Extended Term,
Landlord and Tenant shall execute an amendment to this Lease extending the Term
on the same terms provided in this Lease, except as follows:
(1) Basic Rent for each Extended Term shall be adjusted to
95% of the then Prevailing Rental Rate;
(2) The Expense Stop and Base Tax Year shall be adjusted to
the calendar year of the commencement date of such Extended Term.
(3) After Tenant has exercised both options hereunder,
Tenant shall have no further renewal option unless expressly granted by Landlord
in writing;
(4) Landlord shall lease to Tenant the Renewal Premises in
their then current condition, and Landlord shall not provide to Tenant any
allowances (e.g., moving allowance, construction allowance, and the like) or
other tenant inducements, except as otherwise agreed by Landlord and Tenant; and
(5) Tenant shall pay for the parking spaces which it is
entitled to use at the rates from time to time charged to patrons of the Parking
Area and/or any other parking area associated with the Building during each
Extended Term (plus all applicable taxes).
If Tenant disagrees with Landlord's determination of Prevailing Rental
Rate for either Extended Term, Tenant may, but only within ten days after
receipt of Landlord's notice, require by written notice to Landlord that the
determination of Prevailing Rental Rate for such Extended Term be made by
brokers. In such event, within ten days thereafter, each party shall select a
qualified commercial real estate broker with at least ten years experience in
appraising the Class A San Jose Buildings. The two brokers shall give their
opinion of Prevailing Rental Rate for such Extended Term and other terms within
20 days after their retention. In no event, however, shall the Basic Rent in the
first year of each Extended Term be less than $2.55 per rentable square foot of
the Renewal Premises. In the event the opinions of the two brokers differ and,
after good faith efforts over the succeeding 20-business day period, they cannot
mutually agree, the brokers shall immediately and jointly appoint a third broker
with the qualifications specified above. This third broker shall immediately
(within five business days) choose either the determination of Landlord's broker
or Tenant's broker and such choice of this third broker shall be final and
binding on Landlord and Tenant. Each party shall pay its own costs for its real
estate broker. The parties shall equally share the costs of any third broker.
The parties shall immediately confirm the Renewal Premises, Extended Term, Basic
Rent and other terms and conditions so determined, in writing.
(c) TERMINATION OF OPTION. Tenant's rights under this Section 26
shall terminate if (1) this Lease or Tenant's right to possession of the
Premises is terminated, (2) Tenant assigns any of its interest in this Lease
(other than to Permitted Transferee but not including any Permitted Transferees
that are merely subtenants of Tenant) or sublets more than 25% of the
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Renewal Premises, or (3) Tenant fails to timely exercise its option under this
Section 26, time being of the essence with respect to Tenant's exercise thereof.
27. SATELLITE EQUIPMENT. Provided that Tenant complies with the terms of
this Section 27, Tenant may, at its sole risk and expense, install one
reasonably sized dish/antenna and related wiring (the "SATELLITE EQUIPMENT") on
the roof of the Building at a location approved by Landlord for Tenant's
personal, nonprofit use, and may use existing and common area passageways in the
Building for ingress and egress to and from the roof as coordinated with
Landlord. No direct revenue can be generated or earned by Tenant from such
installation and operation without Landlord's prior written consent to be
evidenced by entry into a separate document known as Landlord's Antenna Site
Agreement. Before installing the Satellite Equipment, Tenant shall submit to
Landlord for its approval (which approval shall be in Landlord's reasonable
discretion) plans and specifications which (a) specify in detail the design,
location, size, and frequency of the Satellite Equipment and (b) are
sufficiently detailed to allow for the installation of the Satellite Equipment
in a good and workmanlike manner and in accordance with all Laws. If Landlord
approves of such plans, Tenant shall install (in a good and workmanlike manner),
maintain and use the Satellite Equipment in accordance with all Laws and shall
obtain all permits required for the installation and operation thereof; copies
of all such permits must be submitted to Landlord before Tenant begins to
install the Satellite Equipment. Tenant shall provide five days prior written
notice to Landlord and Landlord's property manager of its installation
commencement date. Tenant shall maintain all permits necessary for the
maintenance and operation of the Satellite Equipment while it is on the Building
and operate and maintain the Satellite Equipment in such a manner so as not to
unreasonably interfere with any other satellite, antennae, or other transmission
facility on the Building's roof or in the Building; provided however, that
should such interference occur, Tenant must eliminate such interference or
remove its Satellite Equipment. Landlord may require that Tenant screen the
Satellite Equipment with a parapet wall or other screening device reasonably
acceptable to Landlord. Tenant shall maintain the Satellite Equipment and the
screening therefor in good repair and condition. Tenant shall, at its sole risk
and expense, remove the Satellite Equipment, within five days after the
occurrence of any of the following events: (1) the termination of Tenant's right
to possess the Premises; (2) the termination of the Lease; (3) the expiration of
the Term; or (4) Tenant's vacating the Premises. If Tenant fails to do so,
Landlord may remove the Satellite Equipment and store or dispose of it in any
manner Landlord deems appropriate without liability to Landlord; Tenant shall
reimburse Landlord for all costs incurred by Landlord in connection therewith
within ten days after Landlord's request therefor. Tenant shall repair any
damage to the Building caused by or relating to the Satellite Equipment,
including that which is caused by its installation, maintenance, use, or removal
and shall indemnify Landlord against all liabilities, losses, damages, and costs
(a "LOSS") arising from the installation, maintenance, use, or removal of the
Satellite Equipment, including that caused by Landlord's negligence (unless the
Loss in question was caused by Landlord's sole or gross negligence or willful
misconduct). All work relating to the Satellite Equipment shall, at Tenant's
sole risk and expense, be coordinated with and comply with the requirements of
Landlord's property manager.
28. LETTER OF CREDIT.
(a) GENERAL PROVISIONS. Concurrently with Tenant's execution of
this Lease, Tenant shall deliver to Landlord, as collateral for the full
performance by Tenant of all of its obligations under this Lease and for all
losses and damages Landlord may suffer as a result of any default by Tenant
under this lease, a standby, unconditional, irrevocable, transferable letter of
credit (the "LETTER OF CREDIT") containing the terms required herein, in the
face amount of $390,135.36 (the "LETTER OF CREDIT AMOUNT"), naming Landlord as
beneficiary, issued (or confirmed) by a financial institution acceptable to
Landlord in Landlord's reasonable discretion, permitting multiple and partial
draws thereon, and otherwise in form acceptable to Landlord in its reasonable
discretion. Except as set forth below in Section 28(f), Tenant shall cause the
Letter of Credit to be continuously maintained in effect (whether through
replacement, renewal or extension) in the Letter of Credit Amount through the
date (the "FINAL LC EXPIRATION DATE") that
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is 60 days after the scheduled expiration date of the term or any renewal Term.
If the Letter of Credit held by Landlord expires earlier than the Final LC
Expiration Date (whether by reason of a stated expiration date or a notice of
termination or non-renewal given by the issuing bank), Tenant shall deliver a
new Letter of Credit or certificate of renewal or extension to Landlord not
later than 30 days prior to the expiration date of the Letter of Credit then
held by Landlord. Any renewal or replacement Letter of Credit shall comply with
all of the provisions of this Section 28, shall be irrevocable, transferable and
shall remain in effect (or be automatically renewable) through the Final LC
Expiration Date upon the same terms as the expiring Letter of Credit or such
other terms as may be acceptable to Landlord in its sole discretion.
(b) DRAWINGS UNDER LETTER OF CREDIT. Landlord shall have the right
to draw upon the Letter of Credit, in whole or in part, at any time and from
time to time:
(1) If an Event of Default occurs which is not cured within
any applicable grace and cure period; or
(2) If the Letter of Credit held by Landlord expires earlier
than the Final Letter of Credit Expiration Date (whether by reason of a stated
expiration date or a notice of termination or non-renewal given by the issuing
bank), and Tenant fails to deliver to Landlord, at least 30 days prior to the
expiration date of the Letter of Credit then held by Landlord, a renewal or
substitute Letter of Credit that is in effect and that complies with the
provisions of this Section 28.
No condition or term of this Lease shall be deemed to render the Letter of
Credit conditional to justify the issuer of the Letter of Credit in failing to
honor a drawing upon such Letter of Credit in a timely manner. Tenant hereby
acknowledges and agrees that Landlord is entering into this Lease in material
reliance upon the ability of Landlord to draw upon the Letter of Credit upon the
occurrence of any Event of Default by Tenant under this Lease or upon the
occurrence of any of the other events described above in this Section 28(b).
(c) USE OF PROCEEDS BY LANDLORD. Subject to Section 28(b), the
proceeds of the Letter of Credit may be applied by Landlord against any Rent
payable by Tenant under this Lease that is not paid when due and/or to pay for
all losses and damages that Landlord has suffered or that Landlord reasonably
estimates that it will suffer as a result of any default by Tenant under this
Lease. Landlord shall deposit any unused proceeds in a separate account in the
name of Landlord or its designee at a financial institution selected by Landlord
in its sole discretion (the "LC PROCEEDS ACCOUNT"). Landlord may apply funds
from the LC Proceeds Account against any Rent payable by Tenant under this Lease
that is not paid when due and/or to pay for all losses and damages that Landlord
has suffered or that Landlord reasonably estimates that it will suffer as a
result of any default by Tenant under this Lease. Tenant hereby grants Landlord
a security interest in the LC Proceeds Account and agrees that, in addition to
all other rights and remedies available to Landlord under applicable Law,
Landlord shall have all rights of a secured party under the California Uniform
Commercial Code with respect to the LC Proceeds Account. The LC Proceeds Account
shall be under the sole control of Landlord. Tenant shall not have any right to
direct the disposition of funds from the LC Proceeds Account or any other right
or interest in the LC Proceeds Account. Tenant shall, at any time and from time
to time, execute, acknowledge and deliver such documents and take such actions
as Landlord or the bank with which the LC Proceeds Account is maintained may
reasonably request concerning the creation or perfection of the security
interest granted to Landlord in (including Landlord's control of) LC Proceeds
Account or to effect the provisions of this Section 28(c). Tenant does hereby
make, constitute and appoint Landlord its true and lawful attorney-in-fact, for
it and in its name, place and stead, to execute and deliver all such instruments
and documents, and to do all such other acts and things, as Landlord may deem to
be necessary or desirable to protect and preserve the rights granted to Landlord
under this Section 28(c). Tenant hereby grants to Landlord the full power and
authority to appoint one or more substitutes to perform any of the acts that
Landlord is authorized to perform under this Section 28(c), with a right to
revoke such appointment of substitution at
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Landlord's pleasure. The power of attorney granted pursuant to this Section
28(c) is coupled with an interest and therefore is irrevocable. Any person
dealing with Landlord may rely upon the representation of Landlord relating to
any authority granted by this power of attorney, including the intended scope of
the authority, and may accept the written certificate of Landlord that this
power of attorney is in full force and effect. Photographic or other facsimile
reproductions of this executed Lease may be made and delivered by Landlord, and
may be relied upon by any person to the same extent as though the copy were an
original. Anyone who acts in reliance upon any representation or certificate of
Landlord, or upon a reproduction of this Lease, shall not be liable for
permitting Landlord to perform any act pursuant to this power of attorney.
Provided Tenant has performed all of its obligations under this Lease, Landlord
agrees to pay to Tenant within 30 days after the Final LC Expiration Date the
amount of any proceeds of the Letter of Credit received by Landlord and not
applied against any Rent payable by Tenant under this Lease that was not paid
when due or used to pay for any losses and/or damages suffered by Landlord (or
reasonably estimated by Landlord that it will suffer) as a result of any default
by Tenant under this Lease; provided, that if prior to the Final LC Expiration
Date a voluntary petition is filed by Tenant, or an involuntary petition is
filed against Tenant by any of Tenant's creditors, under the Federal Bankruptcy
Code, then Landlord shall not obligated to make such payment in the amount of
the unused Letter of Credit proceeds until either all preference issues relating
to payments under this Lease have been resolved in such bankruptcy or
reorganization case or such bankruptcy or reorganization case has been
dismissed, in each case pursuant to a final court order not subject to appeal or
any stay pending appeal.
(d) ADDITIONAL COVENANTS OF TENANT. If, as a result of any
application or use by Landlord of all or any part of the Letter of Credit, the
amount of the Letter of Credit shall be less than the Letter of Credit Amount,
Tenant shall, within ten days thereafter, provide Landlord with additional
letter(s) of credit in an amount equal to the deficiency (or a replacement
letter of credit in the total Letter of Credit Amount), and any such additional
(or replacement) letter of credit shall comply with all of the provisions of
this Section 28, and if Tenant fails to comply with the foregoing,
notwithstanding anything to the contrary contained in this Lease, the same shall
constitute an uncured Event of Default by Tenant. Tenant further covenants and
warrants that it will neither assign nor encumber the Letter of Credit or any
party thereof or any interest in the LC Proceeds Account and that neither
Landlord nor its successors or assigns will be bound by any such assignment,
encumbrance, attempted assignment or attempted encumbrance.
(e) TRANSFER OF LETTER OF CREDIT. Landlord may, at any time and
without notice to Tenant and without first obtaining Tenant's consent thereto,
transfer all or any portion of its interest in and to the Letter of Credit to
another party, person or entity, including Landlord's Mortgagee and/or to have
the Letter of Credit reissued in the name of Landlord's Mortgagee. If Landlord
transfers its interest in the Building and transfers the Letter of Credit (or
any proceeds thereof then held by Landlord) in whole or in part to the
transferee, Landlord shall, without any further agreement between the parties
hereto, thereupon be released by Tenant from all liability therefor, except to
the extent of any unauthorized draws. The provisions hereof shall apply to every
transfer or assignment of all or any part of the Letter of Credit to a new
landlord. In connection with any such transfer of the Letter of Credit by
Landlord, Tenant shall, at Tenant's sole cost and expense, execute and submit to
the issuer of the Letter of Credit such applications, documents and instruments
as may be necessary to effectuate such transfer. Tenant shall be responsible for
paying the issuer's transfer and processing fees in connection with any transfer
of the Letter of Credit and, if Landlord advances any such fees (without having
any obligation to do so), Tenant shall reimburse Landlord for any such transfer
or processing fees within ten days after Landlord's written request therefor.
(f) REDUCTION IN LETTER OF CREDIT AMOUNT. Provided no Event of
Default has occurred hereunder during the 12-month period prior to each
reduction and, no less than 30 days prior to each reduction date, Tenant has
delivered to Landlord (and Landlord has approved) reasonably sufficient evidence
that Tenant has maintained four consecutive quarters of
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profitability with retained earnings of not less than $4,300,000, Tenant may
reduce the Letter of Credit amount to the following amounts for the following
periods of time:
<CAPTION>
Lease Month Required Letter of Credit Amount
1-36 $390,135.36
37-48 $260,090.24
49-end of Term $130,045.12
(g) NATURE OF LETTER OF CREDIT. Landlord and Tenant (1)
acknowledge and agree that in no event or circumstance shall the Letter of
Credit or any renewal thereof or substitute therefor or any proceeds thereof
(including the LC Proceeds Account) be deemed to be or treated as a "security
deposit" under any Law applicable to security deposits in the commercial context
("SECURITY DEPOSIT LAWS"), except in the event of an unauthorized draw, (2)
acknowledge and agree that the Letter of Credit (including any renewal thereof
or substitute therefor or any proceeds thereof) is not intended to serve as a
security deposit, and, except as otherwise provided herein, the Security Deposit
Laws shall have no applicability or relevancy thereto, and (3) waive any and all
rights, duties and obligations either party may now or, in the future, will have
relating to or arising from the Security Deposit Laws to the extent expressly
contradicted by this Lease. Tenant hereby waives the provisions of Section
1950.7 of the California Civil Code and all other provisions of Law, now or
hereafter in effect to the extent they are expressly contradicted in this Lease,
which (i) establish the time frame by which Landlord must refund a security
deposit under a lease, and/or (ii) provide that Landlord may claim from the
Security Deposit only those sums reasonably necessary to remedy defaults in the
payment of rent, to repair damage caused by Tenant or to clean the Premises, it
being agreed that Landlord may, in addition, claim those sums specified in this
Section 28 above and/or those sums reasonably necessary to compensate Landlord
for any loss or damage caused by Tenant's breach of this Lease or the acts or
omission of Tenant or any other Tenant Party.
29. EXPANSION OPTION FOR SUITE 1400.
(a) GRANT OF OFFER. Provided no Event of Default then exists and
Tenant or a Permitted Transferee (other than a Permitted Transferee who is
merely subleasing from Tenant) is occupying at least 75% of the Premises at the
time of such election, Tenant may lease all (but not less than all) of Suite
1400 containing 8,572 rentable square feet and more particularly described in
Exhibit I attached hereto (the "SUITE 1400 EXPANSION SPACE"), by delivering to
Landlord, on or before April 1, 2004, written notice of Tenant's election to
include such space in the Premises.
(b) POSSESSION. If Tenant timely exercises its option, then (a)
possession of the Suite 1400 Expansion Space shall be delivered to Tenant in an
"AS-IS" condition, subject to the terms of any applicable work letter agreement
(in which event the Suite 1400 Expansion Space shall be delivered Substantially
Completed pursuant to the terms of such work letter agreement) and subject to
the Building's Systems and the Building's Structure being in good working order
and condition, on January 1, 2005, unless otherwise agreed to in writing by the
parties (the "SUITE 1400 COMMENCEMENT DATE"), and (b) Tenant and Landlord shall
execute an amendment to this Lease (the "SUITE 1400 LEASE AMENDMENT") including
the Suite 1400 Expansion Space in the Premises on the same terms as this Lease,
except as follows:
(1) The rentable square feet of the Premises shall be
increased by the rentable square feet in the Suite 1400 Expansion Space;
(2) The Basic Rent for the Suite 1400 Expansion Space shall
be 95% of the Prevailing Rental Rate (as determined in accordance with Section
26(b)) as of the date
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of Tenant's exercise of its offer hereunder, and shall be payable commencing on
the Suite 1400 Commencement Date;
(3) The applicable work letter and allowances, if any (e.g.
moving allowance, construction allowance, and the like) or other tenant
inducements, if any, shall be negotiated by Landlord and Tenant upon Landlord's
receipt of Tenant's expansion option exercise notice in connection with the
determination of the Prevailing Rental Rate by the parties pursuant to Section
26(b); and
(4) Notwithstanding the above, Tenant shall have the right
to enter the Suite 1400 Expansion Space 30 days prior to the Suite 1400
Commencement Date to prepare such Space for Tenant's occupancy. Tenant's early
occupancy shall be pursuant to all of the terms and conditions of this Lease
other than the obligation to pay Rent.
If Tenant fails or is unable to timely exercise its right hereunder, such
right shall lapse, time being of the essence with respect to the exercise
thereof (it being understood that Tenant's right hereunder is a one-time right
only), and Landlord may lease all or a portion of the Suite 1400 Expansion Space
to third parties on such terms as Landlord may elect. If Tenant timely exercises
its rights hereunder and Landlord is unable to tender possession of the Suite
1400 Expansion Space to Tenant by the Suite 1400 Commencement Date utilizing
commercially reasonable efforts and diligence in the condition required by this
Lease and any applicable work letter agreement, then (A) Landlord shall not be
in default hereunder or be liable for damages therefor, and (B) Tenant shall
accept possession of the Suite 1400 Expansion Space when Landlord tenders
possession thereof to Tenant in the required condition, which date of acceptance
shall then be the Commencement Date for the Suite 1400 Expansion Space, and
Tenant shall begin paying Basic Rent hereunder on such date; provided, however,
if Landlord has not commenced construction of the tenant improvement work
required by the applicable work letter agreement in the Suite 1400 Expansion
Space within 120 days after the Suite 1400 Lease Amendment is fully executed
(subject to Force Majeure, if any, but in no event later than September 1,
2005), Tenant may withdraw its notice exercising its option under this Section
by delivering to Landlord written notice thereof within 30 days of such
applicable date. In the event Tenant retains a leasing broker in connection with
exercising the option under this Section, commission shall be paid by Landlord
pursuant to a separate written agreement. Tenant and Landlord shall each
indemnify the other against all costs, expenses, attorneys' fees, and other
liability for commissions or other compensation claimed by any other broker or
agent claiming the same by, through, or under the indemnifying party.
(c) TERMINATION OF RIGHTS. Tenant's rights under this Section
shall terminate if (1) this Lease or Tenant's right to possession of the
Premises is terminated, or (2) Tenant assigns any of its interest in this Lease
(other than to a Permitted Transferee but not including any Permitted
Transferees that are merely subtenants of Tenant) or sublets more than 25% of
the Premises.
30. EXPANSION OPTION FOR SUITE 1450.
(a) GRANT OF OFFER. Provided no Event of Default then exists and
Tenant or a Permitted Transferee (other than a Permitted Transferee who is
merely subleasing from Tenant) is occupying at least 75% of the Premises at the
time of such election, Tenant may lease all (but not less than all) of Suite
1450 containing 5,834 rentable square feet and more particularly described on
Exhibit I attached hereto (the "SUITE 1450 EXPANSION SPACE"), by delivering to
Landlord, on or before June 1, 2005, written notice of Tenant's election to
include such space in the Premises. Landlord and Tenant acknowledge and agree
that the Suite 1450 Expansion Space is expected to become available for the
commencement of any tenant improvement work to be performed therein on March 1,
2006.
33
<PAGE>
(b) POSSESSION. If Tenant timely exercises its option, then (a)
possession of the Suite 1450 Expansion Space shall be delivered to Tenant in an
"AS-IS" condition, subject to the terms of any applicable work letter agreement
(in which event the Suite 1450 Expansion Space shall be delivered Substantially
Completed pursuant to the terms of such work letter agreement) and subject to
the Building's Systems and the Building's Structure being in good working order
and condition, upon the Substantial Completion of the tenant improvement work to
be performed in the Suite 1450 Expansion Space (the "SUITE 1450 COMMENCEMENT
DATE"), and (b) Tenant and Landlord shall execute an amendment to this Lease
(the "SUITE 1450 LEASE AMENDMENT") including the Suite 1450 Expansion Space in
the Premises on the same terms as this Lease, except as follows:
(1) The rentable square feet of the Premises shall be
increased by the rentable square feet in the Suite 1450 Expansion Space;
(2) The Basic Rent for the Suite 1450 Expansion Space shall
be 95% of the Prevailing Rental Rate (as determined in accordance with Section
26(b)) as of the date of Tenant's exercise of its offer hereunder, and shall be
payable commencing on the Suite 1450 Commencement Date;
(3) The applicable work letter and allowances, if any (e.g.
moving allowance, construction allowance, and the like) or other tenant
inducements, if any, shall be negotiated by Landlord and Tenant upon Landlord's
receipt of Tenant's expansion option exercise notice in connection with the
determination of the Prevailing Rental Rate by the parties pursuant to Section
26(b); and
(4) Notwithstanding the above, Tenant shall have the right
to enter the Suite 1450 Expansion Space 30 days prior to the Suite 1450
Commencement Date to prepare such Space for Tenant's occupancy. Tenant's early
occupancy shall be pursuant to all of the terms and conditions of this Lease
other than the obligation to pay Rent.
If Tenant fails or is unable to timely exercise its right hereunder, such
right shall lapse, time being of the essence with respect to the exercise
thereof (it being understood that Tenant's right hereunder is a one-time right
only), and Landlord may lease all or a portion of the Suite 1450 Expansion Space
to third parties on such terms as Landlord may elect. If Tenant timely exercises
its rights hereunder and Landlord is unable to tender possession of the Suite
1450 Expansion Space by the Suite 1450 Commencement Date in the condition
required by this Lease and any applicable work letter agreement, then (A)
Landlord shall not be in default hereunder or be liable for damages therefor,
and (B) Tenant shall accept possession of the Suite 1450 Expansion Space when
Landlord tenders possession thereof to Tenant in the required condition, which
date of acceptance shall then be the Commencement Date for the Suite 1450
Expansion Space, and Tenant shall begin paying Basic Rent hereunder on such
date; provided, however, if Landlord has not commenced construction of the
tenant improvement work required by the applicable work letter agreement in the
Suite 1450 Expansion Space within 120 days after the Suite 1450 Lease Amendment
is fully executed (subject to Force Majeure, if any, but in no event later than
November 1, 2006), Tenant may withdraw its notice exercising its option under
this Section by delivering to Landlord written notice thereof within 30 days of
such applicable date. Landlord and Tenant acknowledge and agree that Landlord's
obligation to deliver the Suite 1450 Expansion Space is contingent upon the
vacation of the Suite 1450 Expansion Space by the existing tenant therein, and
Landlord shall taken all reasonable action to remove such existing tenant from
the Suite 1450 Expansion Space if Tenant exercises its rights under this
Section. In the event Tenant retains a leasing broker in connection with
exercising the option under this Section, commission shall be paid by Landlord
pursuant to a separate written agreement. Tenant and Landlord shall each
indemnify the other against all costs, expenses, attorneys' fees, and other
liability for commissions or other compensation claimed by any other broker or
agent claiming the same by, through, or under the indemnifying party.
34
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(c) TERMINATION OF RIGHTS. Tenant's rights under this Section
shall terminate if (1) this Lease or Tenant's right to possession of the
Premises is terminated, or (2) Tenant assigns any of its interest in this Lease
(other than to a Permitted Transferee but not including any Permitted
Transferees that are merely subtenants of Tenant) or sublets more than 25% of
the Premises.
31. EXPANSION OPTION FOR SUITE 1200.
(a) GRANT OF OFFER. Provided no Event of Default then exists and
Tenant or a Permitted Transferee (other than a Permitted Transferee who is
merely subleasing from Tenant) is occupying at least 75% of the Premises at the
time of such election, and subject to the written rights held by the existing
tenant in Suite 1200, Tenant may lease all (but not less than all) of Suite 1200
containing 14,000 rentable square feet and more particularly described on
Exhibit J attached hereto (the "SUITE 1200 EXPANSION SPACE"), by delivering to
Landlord, on or before November 1, 2006, written notice of Tenant's election to
include such space in the Premises.
(b) POSSESSION. If Tenant timely exercises its option, then (a)
possession of the Suite 1200 Expansion Space shall be delivered to Tenant in an
"AS-IS" condition, subject to the Building's Systems and the Building's
Structure being in good working order and condition, on the earlier of September
1, 2007 or the date on which Tenant occupies the Suite 1200 Expansion Space with
Landlord's prior written consent (the "SUITE 1200 COMMENCEMENT DATE"), provided
however that Tenant shall have the right to enter the Suite 1200 Expansion Space
30 days prior to the Suite 1200 Commencement Date after the existing tenant
vacates the space to prepare such space for Tenant's occupancy, and such early
occupancy shall be pursuant to all of the terms and conditions of this Lease
other than the obligation to pay Rent, and (b) Tenant and Landlord shall execute
an amendment to this Lease including the Suite 1200 Expansion Space in the
Premises on the same terms as this Lease, except as follows:
(1) The rentable square feet of the Premises shall be
increased by the rentable square feet in the Suite 1200 Expansion Space;
(2) The Basic Rent for the Suite 1200 Expansion Space shall
be 95% of the Prevailing Rental Rate (as determined in accordance with Section
26(b)) as of the date of Tenant's exercise of its offer hereunder, and shall be
payable commencing on the Suite 1200 Commencement Date; and
(3) Landlord shall not provide to Tenant any allowances
(e.g. moving allowance, construction allowance, and the like) or other tenant
inducements.
If Tenant fails or is unable to timely exercise its right hereunder, such
right shall lapse, time being of the essence with respect to the exercise
thereof (it being understood that Tenant's right hereunder is a one-time right
only), and Landlord may lease all or a portion of the Suite 1200 Expansion Space
to third parties on such terms as Landlord may elect. If Tenant timely exercises
its rights hereunder and Landlord is unable to tender possession of the Suite
1200 Expansion Space by the Suite 1200 Commencement Date, then (A) Landlord
shall not be in default hereunder or be liable for damages therefor, and (B)
Tenant shall accept possession of the Suite 1200 Expansion Space when Landlord
tenders possession thereof to Tenant, which shall then be the Commencement Date
for the Suite 1200 Expansion Space, and Tenant shall begin paying Basic Rent
hereunder on such date. Landlord and Tenant acknowledge and agree that
Landlord's obligation to deliver the Suite 1200 Expansion Space is contingent
upon the vacation of the Suite 1200 Expansion Space by the existing tenant
therein, and Landlord shall have no obligation to take legal action to remove
such existing tenant from the Suite 1200 Expansion Space. In no event shall
Landlord be obligated to pay a commission with respect to the Suite 1200
Expansion Space leased by Tenant under this Section, and Tenant and Landlord
shall each indemnify the other against all costs, expenses, attorneys' fees, and
other liability for commissions or other
35
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compensation claimed by any broker or agent claiming the same by, through, or
under the indemnifying party.
(c) TERMINATION OF RIGHTS. Tenant's rights under this Section
shall terminate if (1) this Lease or Tenant's right to possession of the
Premises is terminated, or (2) Tenant assigns any of its interest in this Lease
(other than to a Permitted Transferee but not including any Permitted
Transferees that are merely subtenants of Tenant) or sublets more than 25% of
the Premises.
LANDLORD AND TENANT EXPRESSLY DISCLAIM ANY IMPLIED WARRANTY THAT THE PREMISES
ARE SUITABLE FOR TENANT'S INTENDED COMMERCIAL PURPOSE, AND TENANT'S OBLIGATION
TO PAY RENT HEREUNDER IS NOT DEPENDENT UPON THE CONDITION OF THE PREMISES OR THE
PERFORMANCE BY LANDLORD OF ITS OBLIGATIONS HEREUNDER, AND, EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED HEREIN, TENANT SHALL CONTINUE TO PAY THE RENT, WITHOUT
ABATEMENT, DEMAND, SETOFF OR DEDUCTION, NOTWITHSTANDING ANY BREACH BY LANDLORD
OF ITS DUTIES OR OBLIGATIONS HEREUNDER, WHETHER EXPRESS OR IMPLIED.
This Lease is executed on the respective dates set forth below, but for
reference purposes, this Lease shall be dated as of the date first above
written. If the execution date is left blank, this Lease shall be deemed
executed as of the date first written above.
LANDLORD: W9/PHC II SAN JOSE, L.L.C.,
a Delaware limited liability company
By: /s/ Nancy M. Haag
----------------------------------------
Name: Nancy M. Haag
Title: Assistant Vice President
Execution Date: Sept. 22, 2003
----------------------------
TENANT: CALLIDUS SOFTWARE, INC.,
a Delaware corporation
By: /s/ Ron J. Fior
----------------------------------------
Name: Ron J. Fior
Title: VP/CFO
Execution Date: Aug. 29, 2003
----------------------------
By:
----------------------------------------
Name:
Title:
Execution Date:
----------------------------
Tax I.D. No.:
----------------------------
36
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EXHIBIT A
OUTLINE OF PREMISES- SUITE 800
A-1
<PAGE>
OUTLINE OF PREMISES- SUITE 1300 AND SUITE 1350
A-2
<PAGE>
OUTLINE OF PREMISES- SUITE 1500
A-3
<PAGE>
SERVER ROOM
A-4
<PAGE>
EXHIBIT B
DESCRIPTION OF THE LAND
PARCEL ONE:
PARCEL A, AS SHOWN ON THAT CERTAIN PARCEL MAP FILED IN THE OFFICE OF THE
RECORDER OF THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA ON MAY 7, 1985 IN
BOOK 542 OF MAPS, AT PAGES 46 AND 47.
PARCEL TWO:
AN NON-EXCLUSIVE EASEMENT FOR INGRESS AND EGRESS OVER PARCEL C, AS SHOWN ON THAT
CERTAIN PARCEL MAP FILED IN THE OFFICE OF THE RECORDER OF THE COUNTY OF SANTA
CLARA, STATE OF CALIFORNIA ON MAY 7, 1985 IN BOOK 542 OF MAPS, AT PAGES 46 AND
47.
B-1
<PAGE>
EXHIBIT C
BUILDING RULES AND REGULATIONS
The following rules and regulations shall apply to the Premises, the
Building, the Project, the parking garage associated therewith, and the
appurtenances thereto:
1. Sidewalks, doorways, vestibules, halls, stairways, and other similar
areas shall not be obstructed by tenants or used by any tenant for purposes
other than ingress and egress to and from their respective leased premises and
for going from one to another part of the Building.
2. Plumbing, fixtures and appliances shall be used only for the
purposes for which designed, and no sweepings, rubbish, rags or other unsuitable
material shall be thrown or deposited therein. Damage resulting to any such
fixtures or appliances from misuse by a tenant or its agents, employees or
invitees, shall be paid by such tenant.
3. No signs, advertisements or notices (other than those that are not
visible outside the Premises) shall be painted or affixed on or to any windows
or doors or other part of the Building or the Project without the prior written
consent of Landlord. No nails, hooks or screws (other than those which are
necessary to hang paintings, prints, pictures, or other similar items on the
Premises' interior walls) shall be driven or inserted in any part of the
Building or the Project except by Building maintenance personnel. No curtains or
other window treatments shall be placed between the glass and the Building
standard window treatments.
4. Landlord shall provide and maintain an alphabetical directory for
all tenants in the main lobby of the Building.
5. Landlord shall provide all door locks in each tenant's leased
premises, at the cost of such tenant, and no tenant shall place any additional
door locks in its leased premises without Landlord's prior written consent.
Landlord shall furnish to each tenant a reasonable number of keys to such
tenant's leased premises, at such tenant's cost.
6. Movement in or out of the Building or the Project of furniture or
office equipment, or dispatch or receipt by tenants of any bulky material,
merchandise or materials which require use of elevators or stairways, or
movement through the Building entrances or lobby shall be conducted under
Landlord's supervision at such times and in such a manner as Landlord may
reasonably require. Except to the extent attributable to the gross negligence or
willful misconduct of Landlord, each tenant assumes all risks of and shall be
liable for all damage to articles moved and injury to persons or public engaged
or not engaged in such movement, including equipment, property and personnel of
Landlord if damaged or injured as a result of acts in connection with carrying
out this service for such tenant.
7. Landlord may prescribe weight limitations and determine the
locations for safes and other heavy equipment or items, which shall in all cases
be placed in the Building so as to distribute weight in a manner acceptable to
Landlord which may include the use of such supporting devices as Landlord may
require. All damage to the Building or the Project caused by the installation or
removal of any property of a tenant, or done by a tenant's property while in the
Building or the Project, shall be repaired at the expense of such tenant.
8. Corridor doors, when not in use, shall be kept closed. Nothing shall
be swept or thrown into the corridors, halls, elevator shafts or stairways. No
birds or animals (other than seeing-eye dogs) shall be brought into or kept in,
on or about any tenant's leased premises. No
C-1
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portion of any tenant's leased premises shall at any time be used or occupied as
sleeping or lodging quarters.
9. Tenant shall cooperate with Landlord's employees in keeping its
leased premises neat and clean. Tenants shall not employ any person for the
purpose of such cleaning other than the Project's cleaning and maintenance
personnel.
10. To ensure orderly operation of the Project, no ice, mineral or other
water, towels, newspapers, etc. shall be delivered to any leased area except by
persons approved by Landlord.
11. Tenant shall not make or permit any vibration or improper,
objectionable or unpleasant noises or odors in the Building or in the Project or
otherwise unreasonably interfere in any way with other tenants or persons having
business with them.
12. No machinery of any kind (other than normal office equipment) shall
be operated by any tenant on its leased area without Landlord's prior written
consent, nor shall any tenant use or keep in the Building or in the Project any
flammable or explosive fluid or substance (other than typical office supplies
[e.g., photocopier toner] used in compliance with all Laws).
13. Landlord will not be responsible for lost or stolen personal
property, money or jewelry from tenant's leased premises or public or common
areas regardless of whether such loss occurs when the area is locked against
entry or not.
14. No vending or dispensing machines of any kind may be maintained in
any leased premises without the prior written permission of Landlord.
15. Tenant shall not conduct any activity on or about the Premises, the
Building or the Project other than its normal business operations which will
draw pickets, demonstrators, or the like.
16. All vehicles are to be currently licensed, in good operating
condition, parked for business purposes having to do with Tenant's business
operated in the Premises, parked within designated parking spaces, one vehicle
to each space. No vehicle shall be parked as a "billboard" vehicle in the
parking lot. Any vehicle parked improperly may be towed away. Tenant, Tenant's
agents, employees, vendors and customers who do not operate or park their
vehicles as required shall subject the vehicle to being towed at the expense of
the owner or driver. Landlord may place a "boot" on the vehicle to immobilize it
and may levy a charge of $50.00 to remove the "boot." Tenant shall indemnify,
hold and save harmless Landlord of any liability arising from the towing or
booting of any vehicles belonging to a Tenant Party.
17. No tenant may enter into phone rooms, electrical rooms, mechanical
rooms, or other service areas of the Building or the Project unless accompanied
by Landlord or the Building manager.
18. Tenant will not permit any Tenant Party to bring onto the Project
any handgun, firearm or other weapons of any kind, illegal drugs or, unless
expressly permitted by Landlord in writing, alcoholic beverages.
19. Tenant shall not permit its employees, invitees or guests to smoke
in the Premises or the lobbies, passages, corridors, elevators, vending rooms,
rest rooms, stairways or any other area shared in common with other tenants in
the Building or permit its employees, invitees, or guests to loiter at the
Building entrances for the purposes of smoking. Landlord may, but shall not be
required to, designate an area for smoking outside the Building.
C-2
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EXHIBIT D
TENANT FINISH-WORK: LANDLORD BUILDS TO PLANS
1. ACCEPTANCE OF PREMISES. Except as set forth in this Exhibit, Tenant
accepts the Premises in their "AS-IS" condition on the date that this Lease is
entered into; provided that Landlord shall deliver the Premises and the Suites
with the Building's Systems and the Building's Structure in good working order
and condition.
2. SPACE PLANS.
(a) SPACE PLANS. On or before the execution of this Lease, Tenant
has delivered to Landlord a space plan depicting improvements to be installed in
the Premises, which plans were prepared by Interior Architects and dated
______________, 2003 (the "SPACE PLANS"). The Space Plans are attached hereto as
Exhibit D-1.
(b) PHASED WORK. Landlord and Tenant acknowledge and agree that
Landlord shall be installing improvements in the Premises in phases based on the
location of the improvements, including improvements in Suite 1350 (the "Suite
1350 Work"), and in Suite 1300 (the "Suite 1300 Work"). To the extent necessary
Landlord shall prepare separate working drawings for each of the phases of the
Work and the provisions below shall apply to each phase of the Work as
appropriate. Suites 1300 and 1350 are collectively referred to herein as the
"Suites."
(c) TEST FIT. Landlord shall provide to Tenant one initial test
fit floor plan for the Suites and two revisions thereto, at Landlord's sole cost
and expense. All other revisions thereto shall be at Tenant's sole cost and
expense. The initial Test Fit will be generated by Landlord's architect within
ten days after Tenant's authorization.
3. WORKING DRAWINGS.
(a) PREPARATION AND DELIVERY. On or before the date which is 30
days following the date on which this Lease is fully executed by both Landlord
and Tenant, Landlord shall cause to be prepared final working drawings of all
improvements to be installed in the Suites and deliver the same to Tenant for
its review and approval (which approval shall not be unreasonably withheld,
delayed or conditioned).
(b) APPROVAL PROCESS. Tenant shall notify Landlord whether it
approves of the submitted working drawings within three business days after
Landlord's submission thereof. If Tenant disapproves of such working drawings,
then Tenant shall notify Landlord thereof specifying in reasonable detail the
reasons for such disapproval, in which case Landlord shall, within five business
days after such notice, revise such working drawings in accordance with Tenant's
objections and submit the revised working drawings to Tenant for its review and
approval. Tenant shall notify Landlord in writing whether it approves of the
resubmitted working drawings within three business days after its receipt
thereof. This process shall be repeated until the working drawings have been
finally approved by Landlord and Tenant. If Tenant fails to notify Landlord that
it disapproves of any initial or revised working drawings within three business
days after the submission thereof to Tenant, then Tenant shall be deemed to have
approved the working drawings in question. Any delay caused by Tenant's
unreasonable withholding of its consent or unreasonable delay in giving its
written approval as to such working drawings beyond the time periods specified
herein shall constitute a Tenant Delay Day (defined below). If the working
drawings are not fully approved (or deemed approved) by both Landlord and Tenant
by the 20th business day after the delivery of the initial draft thereof to
Tenant, and Landlord and Tenant have met their obligations hereof with respect
to the delivery, approval and revision of the working
D-1
<PAGE>
drawings, then each day after such 20-business day period that such working
drawings are not fully approved (or deemed approved) by both Landlord and Tenant
shall constitute a Tenant Delay Day.
(c) LANDLORD'S APPROVAL; PERFORMANCE OF WORK. If any of Tenant's
proposed construction work will affect the Building's Structure or the
Building's Systems, then the working drawings pertaining thereto must be
approved by the Building's engineer of record. Landlord's approval of such
working drawings shall not be unreasonably withheld, provided that (1) they
comply with all Laws, and (2) the improvements depicted thereon do not adversely
affect (in the reasonable discretion of Landlord) the Building's Structure or
the Building's Systems (including the Building's restrooms or mechanical rooms),
the exterior appearance of the Building, or the appearance of the Building's
common areas or elevator lobby areas on multi-tenant floors. As used herein,
"WORKING DRAWINGS" shall mean the final working drawings approved by Landlord
and Tenant, as amended from time to time by any changes approved by Landlord and
Tenant thereto, and "WORK" shall mean all improvements to be constructed by
Landlord in accordance with and as indicated on the Working Drawings. Landlord's
approval of the Working Drawings shall not be a representation or warranty of
Landlord that such drawings are adequate for any use or comply with any Law, but
shall merely be the consent of Landlord thereto. Tenant shall, at Landlord's
request, sign the Working Drawings to evidence its review and approval thereof.
After the Working Drawings have been approved, Landlord shall cause the Work to
be diligently performed in substantial accordance with the Working Drawings,
using appropriately licensed contractors and subcontractors selected by Landlord
and such contractors shall be reasonably approved by Tenant. Landlord shall be
responsible for obtaining any required pricing estimates or construction bids
related to the Work.
4. CHANGE ORDERS. Tenant may initiate changes in the Work. Each such
change must receive the prior written approval of Landlord, such approval not to
be unreasonably withheld or delayed; however, if such requested change would
adversely affect (in the reasonable discretion of Landlord) (1) the Building's
Structure or the Building's Systems (including the Building's restrooms or
mechanical rooms), (2) the exterior appearance of the Building, or (3) the
appearance of the Building's common areas or elevator lobby areas on
multi-tenant floors, Landlord may withhold its consent in its sole and absolute
discretion. Landlord shall, upon completion of the Work, furnish Tenant with an
accurate architectural "as-built" plan of the Work as constructed, which plan
shall be incorporated into this Exhibit D by this reference for all purposes.
5. DEFINITIONS. As used herein, a "TENANT DELAY DAY" means each day of
delay in the performance of the Work that occurs (a) because of Tenant's failure
to timely deliver or approve any Tenant required documentation hereunder such as
the Space Plans or Working Drawings, (b) because Tenant fails to timely furnish
any information or deliver or approve any required documents such as the Space
Plans, Working Drawings (whether preliminary, interim revisions or final),
pricing estimates, construction bids, and the like, (c) because of any change by
Tenant to the Space Plans or Working Drawings, (d) because Tenant fails to
attend any meeting with Landlord, the architect, any design professional, or any
contractor, or their respective employees or representatives, as may be required
or scheduled hereunder or otherwise necessary in connection with the preparation
or completion of any construction documents, such as the Space Plans, Working
Drawings, or in connection with the performance of the Work; provided Tenant has
not less than one business day prior notice of such meeting and such meeting is
held during normal business hours, (e) because of any specification by Tenant of
materials or installations in addition to or other than Landlord's standard
finish-out materials, or (f) because a Tenant Party otherwise delays completion
of the Work. As used herein, "SUBSTANTIAL COMPLETION," "SUBSTANTIALLY COMPLETED"
and any derivations thereof mean the Work in the Premises is substantially
completed (as reasonably determined by Landlord's architect or contractor) in
substantial accordance with the Working Drawings. Substantial Completion shall
have occurred even though minor details of construction, decoration, landscaping
and mechanical adjustments remain to be completed by Landlord; provided that
Landlord has obtained a
D-2
<PAGE>
temporary certificate of occupancy or similar written approval for such space
from the appropriate municipal authorities with jurisdiction over the Premises
and the Building and further provided that such incomplete items do not create
any health and/or safety risk or adversely affect the operation of the
Building's Systems, as reasonably determined by Landlord.
6. WALK-THROUGH; PUNCHLIST. When Landlord considers the Work in the
Premises to be Substantially Completed, Landlord will notify Tenant and within
three business days thereafter, Landlord's representative and Tenant's
representative shall conduct a walk-through of the Premises and identify any
necessary touch-up work, repairs and minor completion items that are necessary
for final completion of the Work. Neither Landlord's representative nor Tenant's
representative shall unreasonably withhold his or her agreement on punchlist
items. Landlord shall use reasonable efforts to cause the contractor performing
the Work to complete all punchlist items within 30 days after agreement thereon;
however, Landlord shall not be obligated to engage overtime labor in order to
complete such items.
7. COSTS. Landlord shall bear the entire cost of performing the Work
depicted on the Space Plans initially submitted to and approved by Landlord.
Tenant shall bear the entire additional costs incurred by Landlord in performing
the Work because of any event specified in clauses 5(a), 5(b), 5(c), 5(d), 5(e)
or 5(f) of this Exhibit. Tenant shall pay Landlord an amount equal to 50% of the
estimated additional costs of any change to the Space Plans or the Working
Drawings at the time of such change; Tenant shall pay to Landlord the remaining
portion of additional costs incurred in performing the Work because of an event
specified in clauses 5(a), 5(b), 5(c), 5(d), 5(e) or 5(f) of this Exhibit within
ten days following receipt of an invoice after Substantial Completion of the
Work. In consideration for Landlord's management and supervision for services
performed in connection with clauses 5(a), 5(b), 5(c), 5(d), 5(e) or 5(f),
Tenant shall pay to Landlord a construction management fee equal to five percent
of the additional construction costs specified in this Section 7.
8. CONSTRUCTION REPRESENTATIVES. Landlord's and Tenant's
representatives for coordination of construction and approval of change orders
will be as follows, provided that either party may change its representative
upon written notice to the other:
LANDLORD'S REPRESENTATIVE: W9/PHC II San Jose, L.L.C.
c/o Insiginia/ESG, Inc.
160 W. Santa Clara Street, Suite 550
San Jose, California 95113
Telephone: (408) 293-2400
Telecopy: (408) 971-9880
TENANT'S REPRESENTATIVE: Callidus Software, Inc.
160 W. Santa Clara Street, Suite 1500
San Jose, California 95113
Attn: Brian Cabrera
Telephone: (408) 808-6470
Telecopy: (408) 271-2663
9. MISCELLANEOUS. To the extent not inconsistent with this Exhibit,
Sections 8(a) and 21 of this Lease shall govern the performance of the Work and
Landlord's and Tenant's respective rights and obligations regarding the
improvements installed pursuant thereto.
D-3
<PAGE>
EXHIBIT D-1
SPACE PLANS
D-1
<PAGE>
EXHIBIT E
CONFIRMATION OF COMMENCEMENT DATE
______________, ___
Callidus Software, Inc.
160 W. Santa Clara Street, Suite 1500
San Jose, California 95113
Re: Lease Agreement (the "LEASE") dated August 28, 2003, between W9/PHC
II San Jose, L.L.C., a Delaware limited liability company
("LANDLORD"), and Callidus Software, Inc., a Delaware corporation
("TENANT"). Capitalized terms used herein but not defined shall be
given the meanings assigned to them in the Lease.
Ladies and Gentlemen:
Landlord and Tenant agree as follows:
1. CONDITION OF PREMISES. Tenant has accepted possession of a portion
of the Premises pursuant to the Lease described as _____________ (the "PARTIAL
PREMISES"). Any improvements required by the terms of the Lease to be made by
Landlord to the Partial Premises have been completed to the full and complete
satisfaction of Tenant in all respects except for the punchlist items described
on Exhibit A hereto (the "PUNCHLIST ITEMS"), and except for such Punchlist
Items, Landlord has fulfilled all of its duties under the Lease with respect to
such initial tenant improvements for the Partial Premises. Furthermore, Tenant
acknowledges that the Partial Premises are suitable for the Permitted Use.
2. COMMENCEMENT DATE. The Commencement Date of the Lease for the
Partial Premises is __________, 2003.
3. EXPIRATION DATE. The Term is scheduled to expire on the last day of
the 84th full calendar month of the Term, which date is ______________, 20____.
4. CONTACT PERSON. Tenant's contact person in the Premises is:
Callidus Software, Inc.
160 W. Santa Clara Street, Suite 1500
San Jose, California 95113
Attn: Brian S. Cabrera
Telephone: (408) 808-6470
Telecopy: (408) 271-2663
5. RATIFICATION. Tenant hereby ratifies and confirms its obligations
under the Lease, and represents and warrants to Landlord that it has no defenses
thereto. Additionally, Tenant further confirms and ratifies that, as of the date
hereof, (a) the Lease is and remains in good standing and in full force and
effect, and (b) Tenant has no claims, counterclaims, set-offs or defenses
against Landlord arising out of the Lease or in any way relating thereto or
arising out of any other transaction between Landlord and Tenant.
6. BINDING EFFECT; GOVERNING LAW. Except as modified hereby, the Lease
shall remain in full effect and this letter shall be binding upon Landlord and
Tenant and their respective
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<PAGE>
successors and assigns. If any inconsistency exists or arises between the terms
of this letter and the terms of the Lease, the terms of this letter shall
prevail. This letter shall be governed by the laws of the state in which the
Premises are located.
Please indicate your agreement to the above matters by signing this letter
in the space indicated below and returning an executed original to us.
Sincerely,
CB RICHARD ELLIS, on behalf of Landlord
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
Agreed and accepted:
CALLIDUS SOFTWARE, INC., a Delaware
corporation
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
E-2
<PAGE>
EXHIBIT A
PUNCHLIST ITEMS
Please insert any punchlist items that remain to be performed by Landlord. If no
items are listed below by Tenant, none shall be deemed to exist.
A-1
<PAGE>
EXHIBIT F
FORM OF TENANT ESTOPPEL CERTIFICATE
The undersigned is the Tenant under the Lease (defined below) between
W9/PHC II San Jose, L.L.C., a Delaware limited liability company, as Landlord,
and the undersigned as Tenant, for the Premises in Suite ______ on the
_________________________ floor of the office building located at 160 West Santa
Clara Street, San Jose, California 95113 and hereby certifies as follows:
1. The Lease consists of the original Lease Agreement dated as of
August 28, 2003 between Tenant and Landlord [`s predecessor-in-interest] and the
following amendments or modifications thereto (if none, please state
"none"):________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
The documents listed above are herein collectively referred to as the "LEASE"
and represent the entire agreement between the parties with respect to the
Premises. All capitalized terms used herein but not defined shall be given the
meaning assigned to them in the Lease.
2. The Lease is in full force and effect and has not been modified,
supplemented or amended in any way except as provided in Section 1 above.
3. The Term commenced on __________________, 200___ and the Term
expires, excluding any renewal options, on _____________________, 20___, and
Tenant has no option to purchase all or any part of the Premises or the Building
or, except as expressly set forth in the Lease, any option to terminate or
cancel the Lease.
4. Tenant currently occupies the Premises described in the Lease and
Tenant has not transferred, assigned, or sublet any portion of the Premises nor
entered into any license or concession agreements with respect thereto except as
follows (if none, please state "none"):
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
5. All monthly installments of Basic Rent, all Additional Rent and all
monthly installments of estimated Additional Rent have been paid when due
through ___________. The current monthly installment of Basic Rent is $
_____________.
6. All conditions of the Lease to be performed by Landlord necessary to
the enforceability of the Lease have been satisfied and Landlord is not in
default thereunder. In addition, Tenant has not delivered any notice to Landlord
regarding a default by Landlord thereunder.
7. As of the date hereof, there are no existing defenses or offsets,
or, to the undersigned's knowledge, claims or any basis for a claim, that the
undersigned has against Landlord and no event has occurred and no condition
exists, which, with the giving of notice or the passage of time, or both, will
constitute a default under the Lease.
8. No rental has been paid more than 30 days in advance and no security
deposit has been delivered to Landlord except as provided in the Lease.
9. If Tenant is a corporation, partnership or other business entity,
each individual executing this Estoppel Certificate on behalf of Tenant hereby
represents and warrants that Tenant
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<PAGE>
is a duly formed and existing entity qualified to do business in the state in
which the Premises are located and that Tenant has full right and authority to
execute and deliver this Estoppel Certificate and that each person signing on
behalf of Tenant is authorized to do so.
10. There are no actions pending against Tenant under any bankruptcy or
similar laws of the United States or any state.
11. Other than in compliance with all applicable laws and incidental to
the ordinary course of the use of the Premises, the undersigned has not used or
stored any hazardous substances in the Premises.
12. All tenant improvement work to be performed by Landlord under the
Lease has been completed in accordance with the Lease and has been accepted by
the undersigned and all reimbursements and allowances due to the undersigned
under the Lease in connection with any tenant improvement work have been paid in
full.
Tenant acknowledges that this Estoppel Certificate may be delivered to
Landlord, Landlord's Mortgagee or to a prospective mortgagee or prospective
purchaser, and their respective successors and assigns, and acknowledges that
Landlord, Landlord's Mortgagee and/or such prospective mortgagee or prospective
purchaser will be relying upon the statements contained herein in disbursing
loan advances or making a new loan or acquiring the property of which the
Premises are a part and that receipt by it of this certificate is a condition of
disbursing loan advances or making such loan or acquiring such property.
Executed as of ____________, ____.
TENANT:
CALLIDUS SOFTWARE, INC.,
a Delaware corporation
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
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<PAGE>
EXHIBIT G
TEMPORARY SPACE - SUITE 1400
G-1
<PAGE>
EXHIBIT H
SUBORDINATION NON DISTURBANCE AND ATTORNMENT AGREEMENT
RECORDING REQUESTED BY )
AND WHEN RECORDED MAIL TO: )
Bank of America, N.A. )
Capital Markets Servicing Group )
Mail Code: CA9-706-06-42 )
555 S. Flower Street, 6th Floor )
Los Angeles, CA 90071-2385 )
Attn.: )
Loan No.: )
--------------------------------------------------------------------------------
Space Above for Recorder's Use
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
NOTICE: THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
RESULTS IN YOUR LEASEHOLD ESTATE BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN
THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT.
THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (the
"Agreement") is made as of this _______ day of ____________________, 2003, which
date shall be the effective date of this Agreement, between Callidus Software,
Inc., a Delaware corporation (the "Tenant") and Wells Fargo Bank Minnesota,
N.A., as Trustee for the registered holders of Banc of America Large Loan Inc.,
Commercial Mortgage Pass-Through Certificates, Series 2002-FLT2 (together with
its successors and/or assigns, the "Lender"), acting through its Sub-Servicer,
Bank of America, N.A., a national banking association (the "Sub-Servicer").
The Tenant is the lessee under the lease described in Exhibit A attached
hereto (as the same may from time to time be assigned, subleased, renewed,
extended, amended, modified or supplemented, collectively the "Lease").
Bank of America, N.A. (the "Original Lender") has previously made a loan
(the "Loan") to W9/PHC II San Jose L.L.C., a Delaware limited liability company
or its successors and/or assigns with respect to the landlord's interest under
the Lease (the "Landlord"), evidenced by a promissory note in the original
principal amount of approximately $_______________ (the "Note") executed by the
Landlord and payable to the Original Lender and secured by a first priority deed
of trust, mortgage or deed to secure debt on certain real and personal property
and improvements (the "Premises"), recorded in the appropriate records of
______________ County, on _______________, as Instrument No.
____________________ (the "Security Instrument").
[Alternative language to be used when there is a separate Assignment of Leases
and Rents.]
[Bank of America National Trust and Savings Association, as predecessor to
Bank of America, N.A. (the "Original Lender") has previously made a loan (the
"Loan") to ___________________, a _________________ or its successors and/or
assigns with respect to the landlord's interest under the Lease (the
"Landlord"), evidenced by a promissory note in the
H-1
<PAGE>
original principal amount of approximately $_______________ (the "Note")
executed by the Landlord and payable to the Original Lender. The Note is secured
by a first priority deed of trust with assignment of rents and leases, security
agreement and fixture filing (the "Deed of Trust") on certain real and personal
property and improvements (the "Premises"), recorded in the appropriate records
of _______________ County, ______________ on __________________ as Instrument
No. ________________. The Note is further secured by an assignment of leases and
rents (the "Assignment of Leases") affecting the Premises, recorded on
______________ as Instrument No. _______________. The Deed of Trust and
Assignment of Leases are collectively referred to herein as the "Security
Instrument."]
The Original Lender has assigned to the Lender all right, title and
beneficial interest in and to the Note, the Security Instrument and certain
other documents governing and relating to the Loan. The Lender is the holder of
the Note and has appointed the Sub-Servicer to act on its behalf to service the
Loan.
The Lender has requested the Tenant to confirm the fact that the Lease is
subject and subordinate to the Security Instrument.
The Tenant is willing to confirm the subordination of the Lease, provided
it obtains assurance from the Lender that its possession of the premises demised
under the Lease (the "Demised Premises"), which Demised Premises is all or a
portion of the Premises, and its right to use any common areas will not be
disturbed by reason of or in the event of the foreclosure of the Security
Instrument.
The Lender is willing to give such assurance.
NOW, THEREFORE, for and in consideration of the mutual agreements herein
contained and other good and valuable consideration, the parties hereto do
hereby mutually covenant and agree as follows:
1. The Tenant hereby subordinates the Lease and all terms and
conditions contained therein and all rights, options, liens and charges created
thereby to the Security Instrument and the lien thereof, and to all present or
future advances under the obligations secured thereby and to all renewals,
extensions, amendments, modifications and/or supplements of same, to the full
extent of all amounts secured thereby from time to time.
2. So long as no event of default on the part of the Tenant under the
Lease shall exist which would entitle the Landlord to terminate the Lease, or if
such an event of default shall exist, so long as the Tenant's time to cure the
default shall not have expired, the term of the Lease shall not be terminated or
modified in any respect whatsoever and the Tenant's right of possession to the
Demised Premises and its rights in and to any common areas and its other rights
arising out of the Lease will all be fully recognized and protected by the
Lender and shall not be disturbed, canceled, terminated or otherwise affected by
reason of the Security Instrument or any action or proceeding instituted by the
Lender to foreclose the Security Instrument, or any extension, renewal,
consolidation or replacement of same, irrespective of whether the Tenant shall
have been joined in any action or proceeding.
3. In the event that the Lender takes possession of the Premises,
either as the result of foreclosure of the Security Instrument or accepting a
deed to the Premises in lieu of foreclosure, or otherwise, or the Premises shall
be purchased at such a foreclosure by a third party, the Tenant shall attorn to
the Lender or such third party and recognize the Lender or such third party as
its landlord under the Lease, and the Lender or such third party will recognize
and accept the Tenant as its tenant thereunder, whereupon, the Lease shall
continue in full force and effect as a direct lease between the Lender or such
third party and the Tenant for the full term thereof, together with all
extensions and renewals thereof, and the Lender or such third party shall
thereafter assume and
H-2
<PAGE>
perform all of the Landlord's obligations, as the landlord under the Lease with
the same force and effect as if the Lender or such third party were originally
named therein as the Landlord; provided, however, that the Lender or such third
party shall not be:
(a) liable for any act or omission of any prior landlord
(including the Landlord), except to the extent the Lender was furnished notice
and opportunity to cure the same in accordance with the provisions of this
Agreement prior to taking possession of such Premises; or
(b) subject to any offsets or defenses which the Tenant might have
against any prior landlord (including the Landlord), except to the extent the
Lender was furnished notice and opportunity to cure the same in accordance with
the provisions of this Agreement prior to taking possession of such Premises; or
(c) bound by any rent or additional rent which the Tenant might
have paid for more than two (2) months in advance to any prior landlord
(including the Landlord); or
(d) bound by any amendment or modification of the Lease not
consented to in writing by the Lender.
4. Notwithstanding anything to the contrary in this Agreement or
otherwise, in the event the Lender or a third party takes possession of the
Premises as provided in paragraph 3 above, the liability of the Lender or such
third party under the Lease shall be limited to the Lender's or such third
party's, as the case may be, interest in the Premises, and upon any assignment
or other transfer of the Lender's or such third-party's interest in the
Premises, the Lender or such third party, as applicable, shall be discharged and
released from any obligation or liability under the Lease arising or accruing
after the date of such assignment or transfer.
5. Tenant agrees not to subordinate the Lease to any other lien or
encumbrance which (i) affects the Premises under the Lease, or any part thereof,
or (ii) is junior to the Security Instrument, without the express written
consent of the Lender, and any such subordination or any such attempted
subordination or agreement to subordinate without such consent of Lender, shall
be void and of no force and effect.
6. Tenant agrees to provide copies of all notices given Landlord under
the Lease to Lender at the following address:
Lender: Wells Fargo Bank Minnesota, N.A.,
c/o Bank of America, N.A., as Master Servicer
Capital Markets Servicing Group
P.O. Box 3609
Los Angeles, California 90051
Telephone: 800.462.0505
Telecopy: 213.345.6587
or to such other address as Lender shall designate in writing; and all such
notices shall be in writing and shall be considered as properly given if (i)
mailed to the addressee by first class United States mail, postage prepaid,
registered or certified with return receipt requested, (ii) by delivering same
in person to the addressee, or (iii) by delivery to a third party commercial
delivery service for same day or next day delivery to the office of the
addressee with proof of delivery; any notice so given shall be effective, as
applicable, upon (a) the third (3rd) day following the day such notice is
deposited with the United States mail, (b) delivery to the addressee, or (c)
upon delivery to such third party delivery service; and any notice given in any
other manner shall be effective only if and when received by the addressee.
H-3
<PAGE>
7. In the event Landlord shall fail to perform or observe any of the
terms, conditions or agreements in the Lease, Tenant shall give written notice
thereof to Lender and Lender shall have the right (but not the obligation) to
cure such default. Tenant shall not take any action with respect to such default
under the Lease (including without limitation any action in order to terminate,
rescind or avoid the Lease or to withhold any rent or other monetary obligations
thereunder) for a period of thirty (30) days following receipt of such written
notice by Lender; provided, however, that in the case of any default which
cannot with diligence be cured within such thirty (30) day period, if Lender
shall proceed promptly to cure such default and thereafter prosecute the curing
of such default with diligence and continuity, then the time within which such
default may be cured shall be extended for such period as may be necessary to
complete the curing of such default with diligence and continuity.
8. Nothing contained in this Agreement shall in any way impair or
affect the lien created by the Security Instrument, except as specifically set
forth herein.
9. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns; provided, however,
that in the event of the assignment or transfer of the interest of the Lender to
a party that assumes the Lender's obligations and liabilities hereunder, all
obligations and liabilities of the Lender under this Agreement shall terminate,
and thereupon all such obligations and liabilities shall be the responsibility
of the party to whom the Lender's interest is assigned or transferred.
10. In the event of any litigation or other legal proceeding arising
between the parties to this Agreement, whether relating to the enforcement of a
party's rights under this Agreement or otherwise, the prevailing party shall be
entitled to receive its reasonable attorney's fees and costs of suit from the
non-prevailing party in such amount as the court shall determine.
NOTICE: THIS AGREEMENT CONTAINS A PROVISION WHICH ALLOWS THE PERSON OBLIGATED ON
YOUR LEASE TO OBTAIN A LOAN, A PORTION OF WHICH MAY BE EXPENDED FOR PURPOSES
OTHER THAN IMPROVEMENT OF THE PROPERTY.
TENANT:
CALLIDUS SOFTWARE, INC.,
a Delaware corporation
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
H-4
<PAGE>
LENDER:
Wells Fargo Bank Minnesota, N.A., as
Trustee for the registered holders of
Banc of America Large Loan Inc.,
Commercial Mortgage Pass-Through
Certificates, Series 2002-FLT2
By: Bank of America, N.A.,
as Master Servicer
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
H-5
<PAGE>
[California acknowledgments]
ACKNOWLEDGMENT
STATE OF __________________)
COUNTY OF _________________)
On __________________ before me, _________________________, a Notary
Public in and for the State of __________________, personally appeared
__________________________________ [and ____________________________],
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person[s] whose name[s] [is/are] subscribed to the within instrument
and acknowledged to me that [he/she/they] executed the same in [his/her/their]
authorized [capacity/capacities], and that by [his/her/their] signature[s] on
the instrument the person[s], or the entity upon behalf of which the person[s]
acted, executed the instrument.
WITNESS my hand and official seal.
_____________________________ (Space above for official notarial seal)
ACKNOWLEDGMENT
STATE OF __________________)
COUNTY OF _________________)
On __________________ before me, _________________________, a Notary
Public in and for the State of __________________, personally appeared
__________________________________ [and _____________________________],
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person[s] whose name[s] [is/are] subscribed to the within instrument
and acknowledged to me that [he/she/they] executed the same in [his/her/their]
authorized [capacity/capacities], and that by [his/her/their] signature[s] on
the instrument the person[s], or the entity upon behalf of which the person[s]
acted, executed the instrument.
WITNESS my hand and official seal.
_____________________________ (Space above for official notarial seal)
H-6
<PAGE>
EXHIBIT A
LEASE
That certain Lease Agreement, dated as of August 28, 2003, by and between
Callidus Software, Inc., a Delaware corporation, as tenant, and W9/PHC II San
Jose, L.L.C., a Delaware limited liability company, as landlord, relating to the
Premises generally described as Suites 800, 1300, 1350 and 1500 containing
approximately 44,536 rentable square feet in the office building located at 160
W. Santa Clara Street, San Jose, California 95113, as assigned, subleased,
renewed, extended, amended, modified or supplemented from time to time.
H-7
<PAGE>
EXHIBIT I
SUITE 1400 EXPANSION SPACE AND SUITE 1450 EXPANSION SPACE
I-1
<PAGE>
EXHIBIT J
SUITE 1200 EXPANSION SPACE
J-1