California-Redwood City-700 Chesapeake Lease - Seaport Centre Associates LLC and Clarent Corp.
LEASE AGREEMENT
between
SEAPORT CENTRE ASSOCIATES, LLC
as "LANDLORD"
and
CLARENT CORPORATION
as "TENANT"
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TABLE OF CONTENTS
SECTION PAGE
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1. PREMISES........................................................ 1
2. TERM; POSSESSION................................................ 1
3. RENT............................................................ 2
4. SECURITY DEPOSIT................................................ 5
5. USE AND COMPLIANCE WITH LAWS.................................... 6
6. TENANT IMPROVEMENTS & ALTERATIONS............................... 9
7. MAINTENANCE AND REPAIRS......................................... 11
8. TENANT'S TAXES.................................................. 12
9. UTILITIES....................................................... 13
10. EXCULPATION AND INDEMNIFICATION................................. 13
11. INSURANCE....................................................... 14
12. DAMAGE OR DESTRUCTION........................................... 16
13. CONDEMNATION.................................................... 17
14. ASSIGNMENT AND SUBLETTING....................................... 19
15. DEFAULT AND REMEDIES............................................ 22
16. LATE CHARGE AND INTEREST........................................ 24
17. WAIVER.......................................................... 24
18. ENTRY, INSPECTION AND CLOSURE................................... 25
19. SURRENDER AND HOLDING OVER...................................... 25
20. ENCUMBRANCES.................................................... 26
21. ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS.................. 27
22. NOTICES......................................................... 28
23. ATTORNEYS' FEES................................................. 28
24. QUIET POSSESSION................................................ 28
25. SECURITY MEASURES............................................... 28
26. FORCE MAJEURE................................................... 28
27. RULES AND REGULATIONS........................................... 29
28. LANDLORD'S LIABILITY............................................ 29
29. CONSENTS AND APPROVALS.......................................... 29
30. BROKERS......................................................... 30
31. RELOCATION OF PREMISES.......................................... 30
32. ENTIRE AGREEMENT................................................ 30
33. MISCELLANEOUS................................................... 30
34. AUTHORITY....................................................... 31
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INDEX OF DEFINED TERMS
ADDITIONAL PREMISES COMMENCEMENT DATE............................. 4
ADDITIONAL PREMISES SCHEDULED........
COMMENCEMENT DATE................................................ 4
ADDITIONAL RENT................................................... 7
ALTERATIONS....................................................... 12
AWARD............................................................. 20
BROKER............................................................ 33
BUILDING.......................................................... 4
BUILDING RULES.................................................... 32
BUILDING SYSTEMS.................................................. 9
CLAIMS............................................................ 16
CONDEMNATION...................................................... 20
CONDEMNOR......................................................... 21
CONTROLS.......................................................... 15
DATE OF CONDEMNATION.............................................. 21
DEVELOPMENT....................................................... 4
ENCUMBRANCE....................................................... 29
ENVIRONMENTAL LOSES............................................... 10
ENVIRONMENTAL REQUIREMENTS........................................ 10
EVENT OF DEFAULT.................................................. 25
EXPIRATION DATE................................................... 4
HANDLED BY TENANT................................................. 10
HANDLING BY TENANT................................................ 10
HAZARDOUS MATERIALS............................................... 10
HVAC.............................................................. 9
INITIAL PREMISES COMMENCEMENT DATE................................ 4
INITIAL PREMISES SCHEDULED
COMMENCEMENT DATE................................................ 4
INTEREST RATE..................................................... 27
LAWS.............................................................. 6
MORTGAGEE......................................................... 30
OPERATING COSTS................................................... 5
PARKING FACILITY.................................................. 4
PERMITTED HAZARDOUS MATERIALS..................................... 10
PREMISES.......................................................... 4
PROJECT........................................................... 4
PROPERTY.......................................................... 4
PROPERTY MANAGER.................................................. 17
PROPOSED TRANSFEREE............................................... 22
RENT.............................................................. 8
RENTAL TAX........................................................ 15
REPRESENTATIVES................................................... 10
SECURITY DEPOSIT.................................................. 9
SERVICE FAILURE................................................... 16
TAXES............................................................. 7
TENANT'S SHARE.................................................... 7
TENANT'S TAXES.................................................... 15
TENANT IMPROVEMENTS............................................... 12
TERM.............................................................. 4
TRADE FIXTURES.................................................... 13
TRANSFER.......................................................... 23
VISITORS.......................................................... 10
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BASIC LEASE INFORMATION
LEASE DATE: For identification purposes only, the date of this
Lease is August 12, 1998
LANDLORD: SEAPORT CENTRE ASSOCIATES, LLC, a California limited
liability company
TENANT: CLARENT CORPORATION. a California corporation
PROJECT: Seaport Centre Phase Three (East Campus)
DEVELOPMENT: Seaport Centre Phases One, Two and Three, consisting
of 26 buildings, the underlying land and associated
land.
BUILDING ADDRESS: 700 Chesapeake, Building 19 Redwood City, California
RENTABLE AREA OF Approximately 24,877 square feet
BUILDING:
RENTABLE AREA OF PROJECT: Approximately 176,392 square
PREMISES: Building Number: 19
Rentable Area: Approximately 24,877 square feet
INITIAL PREMISES: Rentable Area: Approximately 10,769 square feet out
of the Premises
ADDITIONAL PREMISES: Rentable Area: Approximately 14,108 square feet out
of the Premises
TERM FOR INITIAL (a) Initial Premises Commencement Date through the
PREMISES: Additional Premises Commencement Date, plus (b) 60
full calendar months (plus any partial month at the
beginning of the Term) following the Additional
Premises Commencement Date
TERM FOR ADDITIONAL 60 full calendar months (plus any partial month at
PREMISES: the beginning of the Term) following the Additional
Premises Commencement Date
INITIAL PREMISES
SCHEDULED COMMENCEMENT
DATE: August 28, 1998
ADDITIONAL PREMISES
SCHEDULED COMMENCEMENT
DATE: December 20, 1998
1.
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EXPIRATION DATE: The last day of the 60th full calendar month
following the Additional Premises Commencement Date
BASE RENT: Initial Premises Only:
Initial Premises Commencement Date to the
Additional Premises Commencement Date: $2.55 per
rentable square foot per month, and thereafter as
follows:
Existing Premises and Additional Premises combined:
Months following Additional Premises Commencement
Date:
Months 0 1 - 12:$2.55 per rentable square foot per
month
Months 13-24:$2.63 per rentable square foot per
month
Months 25-36:$2.71 per rentable square foot per
month
Months 37-48:$2.79 per rentable square foot per
month
Months 49-60:$2.87 per rentable square foot per
month
MAINTENANCE, OPERATING This is a "triple net lease" where Tenant is
COSTS AND TAXES responsible for maintenance, operating costs and
taxes, all in accordance with the applicable
provisions of the Lease.
TENANT'S SHARE: 6.11% from the Initial Premises Commencement Date
to the Additional Premises Commencement Date
14.10% from and after the Additional Premises
Commencement Date
SECURITY DEPOSIT: A Letter of Credit as provided in Section 36 below.
LANDLORD'S ADDRESS FOR Seaport Centre Associates, LLC
PAYMENT OF RENT: Ten Almaden Boulevard, Suite 430
San Jose, CA 95113
LANDLORD'S ADDRESS FOR Seaport Centre Associates, LLC
NOTICES: c/o William Wilson & Associates
Ten Almaden Boulevard, #430
San Jose, CA 95113
with a copy to:
Seaport Centre Associates, LLC
c/o William Wilson & Associates
2929 Campus Drive, Suite 450
San Mateo, CA 94403
Attn: General Counsel
TENANT'S ADDRESS FOR 700 Chesapeake, Building 19
NOTICES: Redwood City, California
2.
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BROKER(S): Cornish & Carey Commercial
GUARANTOR(S): (none)
PROPERTY MANAGER: William Wilson & Associates
ADDITIONAL PROVISIONS: 35. Letter of Credit
36. Parking
Exhibits:
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Exhibit A: The Premises
Exhibit A-1: The Initial Premises
Exhibit A-2: The Additional Premises
Exhibit A-3: Manufacturing Area
Exhibit B: Construction Rider
Exhibit C: Building Rules
Exhibit D: Additional Provisions
The Basic Lease Information set forth above is part of the Lease. In the
event of any conflict between any provision in the Basic Lease Information and
the Lease, the Lease shall control.
3.
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THIS LEASE is made as of the Lease Date set forth in the Basic Lease
Information, by and between the Landlord identified in the Basic Lease
Information ("LANDLORD"), and the Tenant identified in the Basic Lease
Information ("TENANT"). Landlord and Tenant hereby agree as follows:
1. PREMISES. Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, upon the terms and subject to the conditions of this Lease, and
subject to covenants, conditions and restrictions recorded in the real estate
records in the county in which the Property is located, the space identified in
the Basic Lease Information as the Premises (the "PREMISES"), in the Building
located at the address specified in the Basic Lease Information (the
"BUILDING"). The approximate configuration and location of the Premises is
shown on Exhibit A. The approximate configuration and location of the Initial
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Premises is shown on Exhibit A-1. The approximate configuration and location of
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the Additional Premises is shown on Exhibit A-2. Landlord and Tenant agree that
the rentable area of the Premises for all purposes under this Lease shall be the
Rentable Area specified in the Basic Lease Information. The Building, together
with the parking facilities serving the Building (the "PARKING FACILITY"), and
the parcel(s) of land on-which the Building and the Parking Facility are
situated (collectively, the "PROPERTY"), is part of the Project identified in
the Basic Lease Information (the "PROJECT"), which is part of the Development
identified in the Basic Lease Information (the "DEVELOPMENT").
2. TERM; POSSESSION. The term of this Lease with respect to the Initial
Premises shall commence on the date ("INITIAL PREMISES COMMENCEMENT DATE")
Landlord delivers possession of the Initial Premises to Tenant after Landlord
has obtained possession of the Initial Premises from the Existing Tenant
pursuant to the provisions contained hereinbelow. The "TERM") shall commence on
the Additional Premises Commencement Date as described below and, unless sooner
terminated, shall expire on the Expiration Date set forth in the Basic Lease
Information (the "EXPIRATION DATE"). The term of this Lease with respect to the
Additional Premises shall commence on the date ("ADDITIONAL PREMISES
COMMENCEMENT DATE") Landlord delivers possession of the Additional Premises to
Tenant after Landlord has obtained possession of the Additional Premises from
the Existing Tenant pursuant to the provisions contained hereinbelow. The
parties anticipate that the Initial Premises Commencement Date and the
Additional Premises Commencement Date will occur on or about the Initial
Premises Scheduled Commencement Date set forth in the Basic Lease Information
(the "INITIAL PREMISES SCHEDULED COMMENCEMENT DATE") and the Additional Premises
Scheduled Commencement Date get forth in the Basic Lease Information (the
"ADDITIONAL PREMISES SCHEDULED COMMENCEMENT DATE"); provided, however, that
Landlord shall not be liable for any claims, damages or liabilities if the
Initial Premises and Additional Premises are not ready for occupancy by their
respective Scheduled Commencement Dates. When the Initial Commencement Date and
Additional Commencement Date have been established, Landlord and Tenant shall at
the request of either party confirm the respective Commencement Dates and
Expiration Date in writing.
TENANT UNDERSTANDS AND AGREES THAT THE PREMISES ARE CURRENTLY LEASED BY
ANOTHER TENANT (THE "EXISTING TENANT"). LANDLORD AGREES TO USE ITS GOOD FAITH
EFFORTS TO NEGOTIATE A TERMINATION OF LEASE WITH THE EXISTING TENANT BY AUGUST
15, 1998, AND DELIVER POSSESSION OF THE INITIAL PREMISES TO TENANT ON OR BEFORE
THE INITIAL PREMISES SCHEDULED COMMENCEMENT DATE AND DELIVER POSSESSION OF THE
ADDITIONAL PREMISES TO TENANT ON OR BEFORE THE ADDITIONAL PREMISES SCHEDULED
COMMENCEMENT DATE. NOTWITHSTANDING ANY PROVISION
4.
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CONTAINED HEREIN TO THE CONTRARY, LANDLORD SHALL NOT BE OBLIGATED TO PAY ANY
CONSIDERATION TO THE EXISTING TENANT IN ORDER TO TERMINATE THE LEASE WITH THE
EXISTING TENANT. NOTWITHSTANDING THE FOREGOING, IF LANDLORD HAS NOT NEGOTIATED A
TERMINATION OF LEASE WITH THE EXISTING TENANT BY AUGUST 18, 1998, TENANT SHALL
HAVE THE RIGHT TO TERMINATE THIS LEASE BY WRITTEN NOTICE TO LANDLORD.
IN ADDITION, THE FORM AND CONTENT OF THIS LEASE ARE SUBJECT TO THE PRIOR
APPROVAL OF THE CURRENT MORTGAGEE (AS HEREINAFTER DEFINED) HAVING AN ENCUMBRANCE
ON THE PROPERTY. NOTWITHSTANDING THE FOREGOING, IF LANDLORD HAS NOTIFIED TENANT
OF MORTGAGEE APPROVAL BY AUGUST 18, 1998, TENANT SHALL HAVE THE RIGHT TO
TERMINATE THIS LEASE BY WRITTEN NOTICE TO LANDLORD.
3. RENT.
3.1 Base Rent. Tenant agrees to pay to Landlord the Base Rent set forth
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in the Basic Lease Information, without prior notice or demand, on the first day
of each and every calendar month during the Term, except that (a) for the
Initial Premises the Base Rent for the first full calendar month in which Base
Rent is payable shall be paid upon Tenant's execution of this Lease (b) for the
Additional Premises the Base Rent shall be payable within ten (10) days
following the Additional Premises Commencement Date, and (c) any partial month
at the beginning of the Term shall be paid on the respective Commencement Dates.
Base Rent for any partial month at the beginning or end of the Term shall be
prorated based on the actual number of days in the month.
If the Basic Lease Information provides for any change in Base Rent by
reference to years or months (without specifying particular dates), the change
will take effect on the applicable annual or monthly anniversary of the
Commencement Date (which won't necessarily be the first day of a calendar
month).
3.2 Additional Rent: Operating Costs and Taxes.
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(A) Definitions.
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(1) "OPERATING COSTS" means all costs of managing, operating,
maintaining and repairing the Project, including all costs, expenditures, fees
and charges for: (A) operation, maintenance and repair of the Project (including
maintenance, repair and replacement of glass, the roof covering or membrane, and
landscaping); (B) utilities and services (including telecommunications
facilities and equipment, recycling programs and trash removal), and associated
supplies and materials; (C) compensation (including employment taxes and fringe
benefits) for persons who perform duties in connection with the operation,
management, maintenance and repair of the Project, such compensation to be
appropriately allocated for persons who also perform duties unrelated to the
Project; (D) property (including coverage for earthquake and flood if carried by
Landlord), liability, rental income and other insurance relating to the Project,
and expenditures for deductible amounts paid under such insurance; (E) licenses,
permits and inspections; (F) complying with the requirements of any law,
statute, ordinance or governmental rule or regulation or any orders pursuant
thereto (collectively "LAWS"); (G) amortization of capital
5.
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replacements, repairs or improvements to the Project, including capital
replacements, repairs or improvements required to comply with Laws, with
interest on the unamortized balance at the rate paid by Landlord on funds
borrowed to finance such capital improvements (or, if Landlord finances such
improvements out of Landlord's funds without borrowing, the rate that Landlord
would have paid to borrow such funds, as reasonably determined by Landlord),
over such useful life as Landlord shall reasonably determine in accordance with
generally accepted accounting principles; (H) an office for the management of
the Project, including expenses of furnishing and equipping such office and the
rental value of any space occupied for such purposes; (I) property management
fees reasonably charged by owners of commercial projects in the geographical
area of the Project; (J) accounting, legal and other professional services
incurred in connection with the operation of the Project and the calculation of
Operating Costs and Taxes; (K) a reasonable allowance for depreciation on
machinery and equipment used to maintain the Project and on other personal
property owned by Landlord in the Project (including window coverings and
carpeting in common areas); (L) contesting the validity or applicability of any
Laws that may affect the Project; (M) the Project's share of any shared or
common area maintenance fees and expenses (including costs and expenses of
operating, managing, owning and maintaining the Parking Facility and the common
areas of the Project, any fitness center in the Development, the fees and
charges from the Seaport Centre Owners Association and any other fees and
expenses shared with the Development); and (N) any other cost, expenditure, fee
or charge, whether or not hereinbefore described, which in accordance with
generally accepted property management practices would be considered an expense
of managing, operating, maintaining and repairing the Project. Operating Costs
for any calendar year during which average occupancy of the Project is less than
one hundred percent (100%) shall be calculated based upon the Operating Costs
that would have been incurred if the Project had an average occupancy of one
hundred percent (100%) during the entire calendar year.
Operating Costs shall not include (i) costs of special services rendered to
individual tenants (including Tenant) for which a special charge is made; (ii)
interest and principal payments, including penalties and late charges thereon,
on loans or indebtedness secured by the Building; (iii) costs of improvements
for Tenant or other tenants of the Project; (v) costs of services or other
benefits of a type which are not available to Tenant but which are available to
other tenants or occupants, and costs for which Landlord is reimbursed by other
tenants of the Project other than through payment of tenants' shares of
Operating Costs and Taxes; (vi) utility charges paid by Tenant (and other
tenants in the Project) directly to the applicable public utility company; (vii)
leasing commissions, attorneys' fees and other expenses incurred in connection
with leasing space in the Project or enforcing such leases; (viii) depreciation
or amortization, other than as specifically enumerated in the definition of
Operating Costs above; (ix) the auto court work made by Landlord in calendar
year 1998; (x) any capital repairs to the Parking Facility taking place near
building 15 (800 Chesapeake) caused by land sinkage; and (xi) costs, fines or
penalties incurred due to Landlord's violation of any Law. In no event shall
the Operating Costs used by Landlord in determining Tenant's Share of Operating
Costs exceed one hundred percent (100%) of the actual Operating Costs incurred
by Landlord in connection with the Project, and Landlord shall not recover the
costs of any items more than once.
(4) "TAXES" means: all real property taxes and general, special or
district assessments or other governmental impositions, of whatever kind, nature
or origin, imposed on or by reason of the ownership or use of the Project;
governmental charges, fees or
6.
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assessments for transit or traffic mitigation (including area-wide traffic
improvement assessments and transportation system management fees), housing,
police, fire or other governmental service or purported benefits to the Project;
personal property taxes assessed on the personal property of Landlord used in
the operation of the Project; service payments in lieu of taxes and taxes and
assessments of every kind and nature whatsoever levied or assessed in addition
to, in lieu of or in substitution for existing or additional, real or personal
property taxes on the Project or the personal property described above; any
increases in the foregoing caused by changes in assessed valuation, tax rate or
other factors or circumstances; and the reasonable cost of contesting by
appropriate proceedings the amount or validity of any taxes, assessments or
charges described above. Taxes shall not include any state and federal personal
or corporate income taxes measured by the income of Landlord from all sources
(other than taxes on rent at the Property), as well as any franchise,
inheritance, or estate, succession, gift tax, or capital levy. Landlord agrees
that for the purpose of this Lease any special assessments or special taxes for
public improvements to the property will be amortized, with interest at the rate
payable to the assessing or taxing authority, over the maximum time Landlord is
permitted to pay such special assessment or special tax without penalty. To the
extent paid by Tenant or other tenants as "Tenant's Taxes" (as defined in
Section 8 - Tenant's Taxes), "Tenant's Taxes" shall be excluded from Taxes.
(5) "TENANT'S SHARE" means the Rentable Area of the Premises
divided by the total Rentable Area of the Project, as set forth in the Basic
Lease Information. If the Rentable Area of the Project is changed or the
Rentable Area of the Premises is changed by Tenant's leasing of additional space
hereunder or for any other reason, Tenant's Share shall be adjusted accordingly.
(B) Additional Rent.
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(1) Tenant shall pay Landlord as "ADDITIONAL RENT" for each
calendar year or portion thereof during the Term Tenant's Share of the sum of
(x) the amount of Operating Costs, and (y) the amount of Taxes.
(2) Prior to the Commencement Date and each calendar year
thereafter, Landlord shall notify Tenant of Landlord's estimate of Operating
Costs, Taxes and Tenant's Additional Rent for the following calendar year (or
first partial year following the Commencement Date). Commencing on the
Commencement Date, and in subsequent calendar years, on the first day of January
of each calendar year and continuing on the first day of every month thereafter
in such year, Tenant shall pay to Landlord one-twelfth (1/12th) of the
Additional Rent, as reasonably estimated by Landlord for such full calendar
year. If Landlord thereafter reasonably estimates that Operating Costs or Taxes
for such year will vary from Landlord's prior estimate, Landlord may, by notice
to Tenant, revise the estimate for such year (and Additional Rent shall
thereafter be payable based on the revised estimate).
(3) As soon as reasonably practicable after the end of each
calendar year, Landlord shall furnish Tenant a statement with respect to such
year, showing Operating Costs, Taxes and Additional Rent for the year, and the
total payments made by Tenant with respect thereto. Unless Tenant raises any
objections to Landlord's statement within ninety (90) days after receipt of the
same, such statement shall conclusively be deemed correct and Tenant
7.
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shall have no right thereafter to dispute such statement or any item therein or
the computation of Additional Rent based thereon. If Tenant does object to such
statement, then Landlord shall provide Tenant with reasonable verification of
the figures shown on the statement and the parties shall negotiate in good faith
to resolve any disputes. Any objection of Tenant to Landlord's statement and
resolution of any dispute shall not postpone the time for payment of any amounts
due Tenant or Landlord based on Landlord's statement, nor shall any failure of
Landlord to deliver Landlord's statement in a timely manner relieve Tenant of
Tenant's obligation to pay any amounts due Landlord based on Landlord's
statement.
(4) If Tenant's Additional Rent as finally determined for any
calendar year exceeds the total payments made by Tenant on account thereof,
Tenant shall pay Landlord the deficiency within twenty (20) days of Tenant's
receipt of Landlord's statement. If the total payments made by Tenant on account
thereof exceed Tenant's Additional Rent as finally determined for such year,
Tenant's excess payment shall be credited toward the rent next due from Tenant
under this Lease. For any partial calendar year at the beginning or end of the
Term, Additional Rent shall be prorated on the basis of a 365-day year by
computing Tenant's Share of the Operating Costs and Taxes for the entire year
and then prorating such amount for the number of days during such year included
in the Term. Notwithstanding the termination of this Lease, Landlord shall pay
to Tenant or Tenant shall pay to Landlord, as the case may be, within twenty
(20) days after Tenant's receipt of Landlord's final statement for the calendar
year in which this Lease terminates, the difference between Tenant's Additional
Rent for that year, as finally determined by Landlord, and the total amount
previously paid by Tenant on account thereof.
If for any reason Taxes for any year during the Term are reduced, refunded
or otherwise changed, Tenant's Additional Rent shall be adjusted accordingly.
If Taxes are temporarily reduced as a result of space in the Project being
leased to a tenant that is entitled to an exemption from property taxes or other
taxes, then for purposes of determining Additional Rent for each year in which
Taxes are reduced by any such exemption, Taxes for such year shall be calculated
on the basis of the amount the Taxes for the year would have been in the absence
of the exemption. The obligations of Landlord to refund any overpayment of
Additional Rent and of Tenant to pay any Additional Rent not previously paid
shall survive the expiration of the Term.
3.3 Payment of Rent. All amounts payable or reimbursable by Tenant under
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this Lease, including late charges and interest (collectively, "RENT"), shall
constitute rent and shall be payable and recoverable as rent in the manner
provided in this Lease. All sums payable to Landlord on demand under the terms
of this Lease shall be payable within twenty (20) days after receipt of notice
from Landlord of the amounts due. All rent shall be paid without offset;
recoupment or deduction in lawful money of the United States of America to
Landlord at Landlord's Address for Payment of Rent as set forth in the Basic
Lease Information, or to such other person or at such other place as Landlord
may from time to time designate.
4. SECURITY DEPOSIT. On execution of this Lease, Tenant shall deposit with
Landlord the amount specified in the Basic Lease Information as the Security
Deposit, if any (the "SECURITY DEPOSIT"), as security for the performance of
Tenant's obligations under this Lease. Landlord may (but shall have no
obligation to) use the Security Deposit or any portion thereof to cure any Event
of Default under this Lease or to compensate Landlord for any damage Landlord
incurs as a result of Tenant's failure to perform any of Tenant's obligations
hereunder. In such
8.
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event Tenant shall pay to Landlord on demand an amount sufficient to replenish
the Security Deposit. If Tenant is not in default at the expiration or
termination of this Lease, then within thirty (30) days after Tenant vacates the
Premises Landlord shall return to Tenant the Security Deposit or the balance
thereof then held by Landlord and not applied as provided above. Landlord may
commingle the Security Deposit with Landlord's general and other funds. Landlord
shall not be required to pay interest on the Security Deposit to Tenant.
5. USE AND COMPLIANCE WITH LAWS.
5.1 Use. The Premises shall be used and occupied solely for the purposes
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of (a) general business offices, (b) research and development, and (c) a limited
amount of light manufacturing, and for no other use or purpose. Tenant shall
comply with all present and future Laws relating to Tenant's use or occupancy of
the Premises (and make any repairs, alterations or improvements as required to
comply with all such Laws), and shall observe the "Building Rules" (as defined
in Section 27 - Rules and Regulations); provided, however, that the foregoing
shall not be interpreted to require Tenant to perform structural or capital work
except to the extent required as a result of Tenant's specific use of the
Premises. Tenant shall not do, bring, keep or sell anything in or about the
Premises that is prohibited by, or that will cause a cancellation of or an
increase in the existing premium for, any insurance policy covering the Property
or any part thereof. Tenant shall not permit the Premises to be occupied or
used in any manner that will constitute waste or a nuisance, or disturb the
quiet enjoyment of or otherwise annoy other tenants in the Building. Without
limiting the foregoing, the Premises shall not be used to manufacture goods or
products (other than computer software products), for educational activities
(other than occasional training sessions for Tenant's customers), practice of
medicine or any of the healing arts, providing social services, for any
governmental use (including embassy or consulate use), or for personnel agency,
customer service office, studios for radio, television or other media, travel
agency or reservation center operations or uses. Tenant shall not, without the
prior consent of Landlord, (i) bring into the Building or the Premises anything
that may cause substantial noise, odor or vibration, overload the floors in the
Premises or the Building or any of the heating, ventilating and air-conditioning
("HVAC"), mechanical, elevator, plumbing, electrical, fire protection, life
safety, security or other systems in the Building ("BUILDING SYSTEMS"), or
jeopardize the structural integrity of the Building or any part thereof; (ii)
connect to the utility systems of the Building any apparatus, machinery or other
equipment other than typical office equipment; or (iii) connect to any
electrical circuit in the Premises any equipment or other load wit with
aggregate electrical power requirements in excess of 80% of the rated capacity
of the circuit.
Tenant shall honor and comply with the terms of all recorded covenants,
conditions and restrictions relating to the Property.
9.
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5.2 Hazardous Materials.
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(A) Definitions.
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(1) "HAZARDOUS MATERIALS" shall mean any substance: (A) that now
or in the future is regulated or governed by, requires investigation or
remediation under, or is defined as a hazardous waste, hazardous substance,
pollutant or contaminant under any governmental statute, code, ordinance,
regulation, rule or order, and any amendment thereto, including the
Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C.
(S)9601 et seq., and the Resource Conservation and Recovery Act, 42 U. S.C.
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(S)6901 et seq., or (B) that is toxic, explosive, corrosive, flammable,
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radioactive, carcinogenic, dangerous or otherwise hazardous, including gasoline,
diesel fuel, petroleum hydrocarbons, polychlorinated biphenyls (PCBs), asbestos,
radon and urea formaldehyde foam insulation.
(2) "ENVIRONMENTAL REQUIREMENTS" shall mean all present and
future Laws, orders, permits, licenses, approvals, authorizations and other
requirements of any kind applicable to Hazardous Materials.
(3) "HANDLED BY TENANT" and "HANDLING BY TENANT" shall mean and
refer to any installation, handling, generation, storage, use, disposal,
discharge, release, abatement, removal, transportation, or any other activity of
any type by Tenant or its agents, employees, contractors, licensees, assignees,
sublessees, transferees or representatives (collectively, "REPRESENTATIVES") or
its guests, customers, invitees, or visitors (collectively, "VISITORS"), at or
about the Premises in connection with or involving Hazardous Materials.
(4) "ENVIRONMENTAL LOSSES" shall mean all costs and expenses of
any kind, damages, including foreseeable and unforeseeable consequential
damages, fines and penalties incurred in connection with any violation of and
compliance with Environmental Requirements and all losses of any kind
attributable to the diminution of value, loss of use or adverse effects on
marketability or use of any portion of the Premises or Property.
(B) Tenant's Covenants. No Hazardous Materials shall be Handled by
------------------
Tenant at or about the Premises or Property without Landlord's prior written
consent, which consent may be granted, denied, or conditioned upon compliance
with Landlord's requirements, all in Landlord's absolute discretion.
Notwithstanding the foregoing, normal quantities and use of those Hazardous
Materials customarily used in the conduct of general office activities, such as
copier fluids and cleaning supplies ("PERMITTED HAZARDOUS MATERIALS"), may be
used and stored at the Premises without Landlord's prior written consent,
provided that Tenant's activities at or about the Premises and Property and the
Handling by Tenant of all Hazardous Materials shall comply at all times with all
Environmental Requirements. At the expiration or termination of the Lease,
Tenant shall promptly remove from the Premises and Property all Hazardous
Materials Handled by Tenant at the Premises or the Property. Tenant shall keep
Landlord fully and promptly informed of all Handling by Tenant of Hazardous
Materials other than Permitted Hazardous Materials. Tenant shall be responsible
and liable for the compliance with all of the provisions of this Section by all
of Tenant's Representatives and Visitors, and all of Tenant's obligations under
this Section (including its indemnification obligations under paragraph (e)
below) shall survive the expiration or termination of this Lease.
10.
<PAGE>
(C) Compliance. Tenant shall at Tenant's expense promptly take all
----------
actions required by any governmental agency or entity in connection with or as a
result of the Handling by Tenant of Hazardous Materials at or about the Premises
or Property, including inspection and testing, performing all cleanup, removal
and remediation work required with respect to those Hazardous Materials,
complying with all closure requirements and post-closure monitoring, and filing
all required reports or plans. All of the foregoing work and all Handling by
Tenant of all Hazardous Materials shall be performed in a good, safe and
workmanlike manner by consultants qualified and licensed to undertake such work
and in a manner that will not interfere with any other tenant's quiet enjoyment
of the Property or Landlord's use, operation, leasing and sale of the Property.
Tenant shall deliver to Landlord prior to delivery to any governmental agency,
or promptly after receipt from any such agency, copies of all permits,
manifests, closure or remedial action plans, notices, and all other documents
relating to the Handling by Tenant of Hazardous Materials at or about the
Premises or Property. If any lien attaches to the Premises or the Property in
connection with or as a result of the Handling by Tenant of Hazardous Materials,
and Tenant does not cause the same to be released, by payment, bonding or
otherwise, within twenty (20) days after the attachment thereof, Landlord shall
have the right but not the obligation to cause the same to be released and any
sums expended by Landlord (plus Landlord's administrative costs) in connection
therewith shall be payable by Tenant on demand.
(D) Landlord's Rights. Landlord shall have the right, but not the
-----------------
obligation, to enter the Premises at any reasonable time, upon reasonable notice
(and without any notice requirement for any emergency) (i) to confirm Tenant's
compliance with the provisions of this Section 5.2, and (ii) to perform Tenant's
obligations under this Section if Tenant has failed to do so after reasonable
notice to Tenant. Landlord shall also have the right to engage qualified
Hazardous Materials consultants to inspect the Premises and review the Handling
by Tenant of Hazardous Materials, including review of all permits, reports,
plans, and other documents regarding same. Tenant shall pay to Landlord on
demand the costs of Landlord's consultants' fees and all costs incurred by
Landlord in performing Tenant's obligations under this Section. Landlord shall
use reasonable efforts to minimize any interference with Tenant's business
caused by Landlord's entry into the Premises, but Landlord shall not be
responsible for any interference caused thereby.
(E) Tenant's Indemnification. Tenant agrees to indemnify, defend,
------------------------
protect and hold harmless Landlord and its partners or members and its or their
partners, members, directors, officers, shareholders, employees and agents from
all Environmental Losses and all other claims, actions, losses, damages,
liabilities, costs and expenses of every kind, including reasonable attorneys',
experts' and consultants' fees and costs, incurred at any time and arising from
or in connection with the Handling by Tenant of Hazardous Materials at or about
the Property or Tenant's failure to comply in full with all Environmental
Requirements with respect to the Premises.
(F) Landlord's Responsibilities. Landlord shall not use any of the
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Land or Building for any activities involving the use, generation, handling,
release, threatened release, treatment, storage, discharge, disposal or
transportation of any Hazardous Materials, except in such quantity or
concentration that is customarily used, stored or disposed in the ordinary
course of the business so long as such activity duly complies with applicable
Laws and good business practice. If Landlord violates the foregoing covenant
resulting in an Environmental Claim (as
11.
<PAGE>
hereinafter defined) with respect to the Premises, then Landlord agrees to (a)
notify Tenant immediately of any such Environmental Claim and (b) clean up any
contamination in full compliance with all applicable Laws. The costs of any
Environmental Claim for Hazardous Materials (x) existing on the Land, or
included in the Building, on the Commencement Date of this Lease, (y) caused by
underground flow of Hazardous Materials shall not be included in Operating
Costs. "Environmental - Claim" means any claim, demand, action, cause of action,
suit, damage, punitive damage, fine, penalty, expense, liability, criminal
liability, judgment, or governmental investigation relating to remediation or
compliance with requirements of Laws covering Hazardous Materials. The term
"Environmental Claim" also includes any costs incurred in responding to efforts
to require remediation and any claim based upon any asserted or actual breach or
violation of any requirements of any Laws covering Hazardous Materials.
(G) Third Parties. Except as provided in the immediately preceding
-------------
subsection (f), if any third party (other than Landlord or its representatives,
any other tenant in the Project, or Tenant or its representatives) places
Hazardous Materials on the Property, then Landlord shall have the right to
include the costs of remediation and removal in Operating Costs, subject to the
provisions of Section 3.2 of this Lease.
6. TENANT IMPROVEMENTS & ALTERATIONS.
6.1 Landlord and Tenant shall perform their respective obligations with
respect to design and construction of any improvements to be constructed and
installed in the Premises (the "TENANT IMPROVEMENTS"), as provided in the
Construction Rider. Except for any Tenant Improvements to be constructed by
Tenant as provided in the Construction Rider, Tenant shall not make any
alterations, improvements or changes to the Premises, including installation of
any security system or telephone or data communication wiring, ("ALTERATIONS"),
without Landlord's prior written consent, which consent shall not be
unreasonably withheld or delayed. Notwithstanding any other provision contained
herein, Tenant shall not be required to obtain Landlord's prior consent for
minor, non-structural Alterations that (a) do not affect any of the Building
Systems, (b) are not visible from the exterior of the Premises, and (c) cost
less than Ten Thousand Dollars ($10,000), so long as Tenant gives Landlord
notice of the proposed Alterations at least ten (10) days prior to commencing
the Alterations and complies with all of the following provisions (except that
Tenant shall not be required to obtain Landlord's approval of any plans or
specifications therefor). Any such Alterations shall be completed by Tenant at
Tenant's sole cost and expense: (i) with due diligence, in a good and
workmanlike manner, using new materials; (ii) in compliance with plans and
specifications approved by Landlord; (iii) in compliance with reasonable
construction rules and regulations promulgated by Landlord from time to time;
(iv) in accordance with all applicable Laws (including all work, whether
structural or non-structural, inside or outside the Premises, required to comply
fully with all applicable Laws and necessitated by Tenant's work); and (v)
subject to all conditions which Landlord may in Landlord's discretion impose.
Such conditions may include requirements for Tenant to: (i) provide payment or
performance bonds or additional insurance (from Tenant or Tenant's contractors,
subcontractors or design professionals); (ii) use contractors or subcontractors
approved by Landlord, which approval shall not be unreasonably withheld, and use
contractors designated by Landlord for Alterations affecting the structure of
the Building, the Building Systems and the life safety systems of the Building;
(iii) for all Alterations costing more than One Hundred Thousand and 00/100
Dollars ($ 100,000.00) either (x) use Commercial Interior
12.
<PAGE>
Contractors ("CIC"), which is Landlord's contractor for such Alterations, or (y)
pay to Landlord a construction management fee, at market rates, for supervising
contractors other than CIC and (iv) remove all or part of the Alterations prior
to or upon expiration or termination of the Term, as designated in writing by
Landlord at the time Tenant requests Landlord's consent to the Alteration. If
any work outside the Premises, or any work on or adjustment to any of the
Building Systems, is required in connection with or as a result of Tenant's
work, such work shall be performed at Tenant's expense by contractors designated
by Landlord. Landlord's right to review and approve (or withhold approval of)
Tenant's plans, drawings, specifications, contractor(s) and other aspects of
construction work proposed by Tenant is intended solely to protect Landlord, the
Property and Landlord's interests. No approval or consent by Landlord shall be
deemed or construed to be a representation or warranty by Landlord as to the
adequacy, sufficiency, fitness or suitability thereof or compliance thereof with
applicable Laws or other requirements. Except as otherwise provided in
Landlord's consent, all Alterations shall upon installation become part of the
realty and be the property of Landlord.
6.2 Before making any Alterations, Tenant shall submit to Landlord for
Landlord's prior approval reasonably detailed final plans and specifications
prepared by a licensed architect or engineer, a copy of the construction
contract, including the name of the contractor and all subcontractors proposed
by Tenant to make the Alterations and a copy of the contractor's license.
Tenant shall reimburse Landlord upon demand for any reasonable expenses incurred
by Landlord in connection with any Alterations made by Tenant, including
reasonable fees charged by Landlord's contractors or consultants to review plans
and specifications prepared by Tenant and to update the existing as-built plans
and specifications of the Building to reflect the Alterations. Tenant shall
obtain all applicable permits, authorizations and governmental approvals and
deliver copies of the same to Landlord before commencement of any Alterations.
6.3 Tenant shall keep the Premises and the Project free and clear of all
liens arising out of any work performed, materials furnished or obligations
incurred by Tenant. If any such lien attaches to the Premises or the Project,
and Tenant does not cause the same to be released by payment, bonding or
otherwise within twenty (20) days after the attachment thereof, Landlord shall
have the right but not the obligation to cause the same to be released, and any
sums expended by Landlord (plus Landlord's reasonable administrative costs) in
connection therewith shall be payable by Tenant on demand with interest thereon
from the date of expenditure by Landlord at the Interest Rate (as defined in
Section 16.2 - Interest). Tenant shall give Landlord at least ten (10) days'
notice prior to the commencement of any Alterations and cooperate with Landlord
in posting and maintaining notices of non-responsibility in connection
therewith.
6.4 Subject to the provisions of Section 5 - Use and Compliance with Laws
and the foregoing provisions of this Section, Tenant may install and maintain
furnishings, equipment, movable partitions, business equipment and other trade
fixtures ("TRADE FIXTURES") in the Premises, provided that the Trade Fixtures do
not become an integral part of the Premises or the Building. Tenant shall
promptly repair any damage to the Premises or the Building caused by any
installation or removal of such Trade Fixtures.
13.
<PAGE>
7. MAINTENANCE AND REPAIRS.
7.1 By taking possession of the Premises Tenant agrees that the Premises
are then in a good and tenantable condition. Tenant shall be responsible to
clean, maintain and repair the Premises, including providing janitorial services
and disposal of trash; and to that end, during the Term, Tenant, at Tenant's
expense but under the direction of Landlord, shall repair and maintain the
Premises, including, without limitation, any elevator, the heating, ventilating
and air conditioning system or systems serving the Premises, the electrical and
plumbing systems serving the Premises, including the lighting and plumbing
fixtures, the restrooms serving the Premises, interior stairways in the
Premises, the interior and exterior glass, plate glass skylights, interior
walls, floor coverings, ceiling (ceiling tiles and grid), Tenant Improvements,
Alterations, fire extinguishers, outlets and fixtures, and any appliances
(including dishwashers, hot water heaters and garbage disposers) in the
Premises, in a first class condition, and keep the Premises in a clean, safe and
orderly condition. Prior to the Commencement Date Tenant shall provide Landlord
with a copy of a service contract with a licensed commercial Heating,
Ventilating and Air-conditioning maintenance company (which contract and company
shall be subject to Landlord's prior approval, which shall not be unreasonably
withheld or delayed), to maintain, on an ongoing basis (at least quarterly), the
heating, ventilating and air-conditioning system serving the Premises. Tenant
acknowledges that the sewer piping at the Development is made of ABS plastic.
Accordingly, without Landlord's prior written consent, which consent may be
granted or withheld in Landlord's sole discretion, Tenant shall allow only
ordinary domestic sewage to be placed in the sewer system from the Premises.
UNDER NO CIRCUMSTANCES SHALL TENANT EVER PLACE, OR ALLOW TO BE PLACED, ANY
ESTERS OR KETONES (USUALLY FOUND IN SOLVENTS TO CLEAN UP PETROLEUM PRODUCTS) IN
THE DRAINS OR SEWER SYSTEM, FROM THE PREMISES.
7.2 Landlord shall (a) maintain or cause to be maintained in reasonably
good order, condition and repair, the structural portions of the roof,
foundations, floors and exterior walls of the Building, and the public and
common areas outside of the Building, (b) that portion of the electrical, water
and sanitary sewer systems serving the Building and located outside the
Building, (c) wash the exterior windows of the Building on a periodic basis, (d)
caulk exterior window joints and concrete slabs and (e) paint the exterior of
the Building, all of which shall be included as a part of Operating Costs,
subject to the terms and conditions contained in Section 3.2 of this Lease;
provided, however, if any maintenance or repair of electrical, water and
sanitary sewer systems outside the Building is caused by Tenant's misuse of such
system, the costs of such maintenance and repair shall not constitute a capital
expenditure for the purposes of Section 3.2 of this Lease. Landlord shall be
under no obligation to inspect the Premises. Tenant shall promptly report in
writing to Landlord any defective condition known to Tenant which Landlord is
required to repair. As a material part of the consideration for this Lease,
Tenant hereby waives any benefits of any applicable existing or future Law,
including the provisions of California Civil Code Sections 1932(l), 1941 and
1942, that allows a tenant to make repairs at its landlord's expense.
7.3 Landlord hereby reserves the right, at any time and from time to time,
without liability to Tenant, and without constituting an eviction, constructive
or otherwise, or entitling Tenant to any abatement of rent or to terminate this
Lease or otherwise releasing Tenant from any of Tenant's obligations under this
Lease:
14.
<PAGE>
(A) To make alterations, additions, repairs, improvements to or in or
to decrease the size of area of, all or any part of the Building, the fixtures
and equipment therein, and the Building Systems (except that Landlord shall not
have any right under this provision to materially reduce the size of the
Building, or permanently, materially and adversely affect Tenant's access to and
use of the Premises, except only as may be required to comply with Laws or as a
result of any fire or other casualty, or Condemnation);
(B) To change the Building's name or street address;
(C) To install and maintain any and all signs on the exterior and
interior of the Building;
(D) To reduce, increase, enclose or otherwise change at any time and
from time to time the size, number, location, lay-out and nature of the common
areas (including the Parking Facility) and other tenancies and premises in the
Property and to create additional rentable areas through use or enclosure of
common areas; and
(E) If any governmental authority promulgates or revises any Law or
imposes mandatory or voluntary controls or guidelines on Landlord or the
Property relating to the use or conservation of energy or utilities or the
reduction of automobile or other emissions or reduction or management of traffic
or parking on the Property (collectively "CONTROLS"), to comply with such
Controls, whether mandatory or voluntary, or make any alterations to the
Property related thereto.
(F) In exercising its rights under this Section 7.3, Landlord agrees
to use reasonable efforts to minimize any interruption to or disruption of
Tenant's use of the Premises.
8. TENANT'S TAXES. "TENANT'S TAXES" shall mean (a) all taxes, assessments,
license fees and other governmental charges or impositions levied or assessed
against or with respect to Tenant's personal property or Trade Fixtures in the
Premises, whether any such imposition is levied directly against Tenant or
levied against Landlord or the Property, (b) all rental, excise, sales or
transaction privilege taxes arising out of this Lease (excluding, however, state
and federal personal or corporate income taxes measured by the income of
Landlord from all sources) imposed by any taxing authority upon Landlord or upon
Landlord's receipt of any rent payable by Tenant pursuant to the terms of this
Lease ("RENTAL TAX"), and (c) any increase in Taxes attributable to inclusion of
a value placed on Tenant's personal property, Trade Fixtures or Alterations.
Tenant shall pay any Rental Tax to Landlord in addition to and at the same time
as Base Rent is payable under this Lease, and shall pay all other Tenant's Taxes
before delinquency (and, at Landlord's request, shall furnish Landlord
satisfactory evidence thereof). If Landlord pays Tenant's Taxes or any portion
thereof, Tenant shall reimburse Landlord upon demand for the amount of such
payment, together with interest at the Interest Rate from the date of Landlord's
payment to the date of Tenant's reimbursement.
15.
<PAGE>
9. UTILITIES.
9.2 Payment for Utilities and Services.
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(A) If the temperature otherwise maintained in any portion of the
Premises by the HVAC systems of the Building is affected as a result of any
lights, machines or equipment used by Tenant in the Premises, then Landlord
shall have the right to install any machinery or equipment reasonably necessary
to restore the temperature, including modifications to the standard air-
conditioning equipment. The cost of any such equipment and modifications,
including the cost of installation and any additional cost of operation and
maintenance of the same, shall be paid by Tenant to Landlord upon demand.
(B) Electricity, water, sanitary sewer and any gas will be separately
metered for the Premises. Tenant shall pay prior to delinquency all charges for
water, gas, electricity, telephone and other telecommunication services,
janitorial service, trash pick-up, sewer and all other services consumed on or
supplied to the Premises, and all taxes, levies, fees and surcharges thereon.
9.3 Interruption of Services. In the event of an interruption in or
------------------------
failure or inability to provide any services or utilities to the Premises or
Building for any reason (a "SERVICE FAILURE"), such Service Failure shall not,
regardless of its duration, impose upon Landlord any liability whatsoever,
constitute an eviction of Tenant, constructive or otherwise, entitle Tenant to
an abatement of rent or to terminate this Lease or otherwise release Tenant from
any of Tenant's obligations under this Lease. Tenant hereby waives any benefits
of any applicable existing or future Law, including the provisions of California
Civil Code Section 1932(l), permitting the termination of this Lease due to such
interruption, failure or inability.
10. EXCULPATION AND INDEMNIFICATION.
10.1 Landlord's Indemnification of Tenant. Landlord shall indemnify,
------------------------------------
protect, defend and hold Tenant harmless from and against any claims, actions,
liabilities, damages, costs or expenses, including reasonable attorneys' fees
and costs incurred in defending against the same ("CLAIMS") asserted by any
third party against Tenant for loss, injury or damage, to the extent such loss,
injury or damage is caused by the willful misconduct or negligent acts or
omissions of Landlord or its authorized representatives.
10.2 Tenant's Indemnification of Landlord. Tenant shall indemnify,
------------------------------------
protect, defend and hold Landlord and Landlord's authorized representatives
harmless from and against Claims arising from (a) the acts or omissions of
Tenant or Tenant's Representatives or Visitors in or about the Property, or (b)
any construction or other work undertaken by Tenant on the Premises (including
any design defects), or (c) any breach or default under this Lease by Tenant, or
(d) any loss, injury or damage, howsoever and by whomsoever caused, to any
person or property, occurring in or about the Premises during the Term,
excepting only Claims described in this clause (d) to the extent they are caused
by the willful misconduct or negligent acts or omissions of Landlord or its
authorized representatives.
16.
<PAGE>
10.3 Damage to Tenant and Tenant's Property. Landlord shall not be liable
--------------------------------------
to Tenant for any loss, injury or other damage to Tenant or to Tenant's property
in or about the Premises or the Property from any cause (including defects in
the Property or in any equipment in the Property; fire, explosion or other
casualty; bursting, rupture, leakage or overflow of any plumbing or other pipes
or lines, sprinklers, tanks, drains, drinking fountains or washstands in, above,
or about the Premises or the Property; or acts of other tenants in the
Property). Tenant hereby waives all claims against Landlord for any such loss,
injury or damage and the cost and expense of defending against claims relating
thereto, including any loss, injury or damage caused by Landlord's negligence
(active or passive) or willful misconduct. Notwithstanding any other provision
of this Lease to the contrary, in no event shall Landlord or Tenant be liable to
the other party for any punitive or consequential damages or damages for loss of
business by Tenant or Landlord except for any liability which Tenant might have
for holding over in the Premises beyond the expiration of the Term in accordance
with the provisions of Section 19.2 of this Lease.
10.4 Survival. The obligations of the parties under this Section 10 shall
--------
survive the expiration or termination of this Lease.
11. INSURANCE.
11.1 Tenant's Insurance.
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(A) Liability Insurance. Tenant shall maintain in full force
throughout the Term, commercial general liability insurance providing coverage
on an occurrence form basis with limits of not less than Two Million Dollars
($2,000,000.00) each occurrence for bodily injury and property damage combined,
Two Million Dollars ($2,000,000.00) annual general aggregate, and Two Million
Dollars ($2,000,000.00) products and completed operations annual aggregate.
Tenant's liability insurance policy or policies shall: (i) include premises and
operations liability coverage, products and completed operations liability
coverage, broad form property damage coverage including completed operations,
blanket contractual liability coverage including, to the maximum extent
possible, coverage for the indemnification obligations of Tenant under this
Lease, and personal and advertising injury coverage; (ii) provide that the
insurance company has the duty to defend all insureds under the policy; (iii)
provide that defense costs are paid in addition to and do not deplete any of the
policy limits; (iv) cover liabilities arising out of or incurred in connection
with Tenant's use or occupancy of the Premises or the Property; (v) extend
coverage to cover liability for the actions of Tenant's Representatives and
Visitors; and (iv) designate separate limits for the Property. Each policy of
liability insurance required by this Section shall: (i) contain a cross
liability endorsement or separation of insureds clause; (ii) provide that any
waiver of subrogation rights or release prior to a loss does not void coverage;
(iii) provide that it is primary to and not contributing with, any policy of
insurance carried by Landlord covering the same loss; (iv) provide that any
failure to comply with the reporting provisions shall not affect coverage
provided to Landlord, its partners, property managers and Mortgagees; and (v)
name Landlord, its partners, the Property Manager identified in the Basic Lease
Information (the "PROPERTY MANAGER"), and such other parties in interest as
Landlord may from time to time reasonably designate to Tenant in writing, as
additional insureds. Such additional insureds shall be provided at least the
same extent of coverage as is provided to Tenant under such policies. All
endorsements effecting such additional insured
17.
<PAGE>
status shall be at least as broad as additional insured endorsement form number
CG 20 11 1185 promulgated by the Insurance Services Office.
(B) Property Insurance. Tenant shall at all times maintain in effect
------------------
with respect to any Alterations and Tenant's Trade Fixtures and personal
property, commercial property insurance providing coverage, on an "all risk" or
"special form" basis, in an amount equal to at least 90% of the full replacement
cost of the covered property. Tenant may carry such insurance under a blanket
policy, provided that such policy provides coverage equivalent to a separate
policy. During the Term, the proceeds from any such policies of insurance shall
be used for the repair or replacement of the Alterations, Trade Fixtures and
personal property so insured. Landlord shall be provided coverage under such
insurance to the extent of its insurable interest and, if requested by Landlord,
both Landlord and Tenant shall sign all documents reasonably necessary or proper
in connection with the settlement of any claim or loss under such insurance.
Landlord will have no obligation to carry insurance on any Alterations or on
Tenant's Trade Fixtures or personal property.
(C) Requirements For All Policies. Each policy of insurance required
-----------------------------
under this Section 11. 1 shall: (i) be in a form, and written by an insurer,
reasonably acceptable to Landlord, (ii) be maintained at Tenant's sole cost and
expense, and (iii) require at least thirty (30) days' written notice to Landlord
prior to any cancellation, nonrenewal or modification of insurance coverage.
Insurance companies issuing such policies shall have rating classifications of
"A" or better and financial size category ratings of "VII" or better according
to the latest edition of the A.M. Best Key Rating Guide. All insurance companies
issuing such policies shall be admitted carriers licensed to do business in the
state where the Property is located. Any deductible amount under such insurance
shall not exceed $5,000. Tenant shall provide to Landlord, upon request,
evidence that the insurance required to be carried by Tenant pursuant to this
Section, including any endorsement effecting the additional insured status, is
in full force and effect and that premiums therefor have been paid.
(D) Updating Coverage. Tenant shall increase the amounts of insurance
-----------------
as required by any Mortgagee, and, not more frequently than once every three (3)
years, as recommended by Landlord's insurance broker, if, in the reasonable
opinion of either of them, the amount of insurance then required under this
Lease is not adequate.
(E) Certificates of Insurance. Prior to occupancy of the Premises by
-------------------------
Tenant, and not less than thirty (30) days prior to expiration of any policy
thereafter, Tenant shall furnish to Landlord a certificate of insurance
reflecting that the insurance required by this Section is in force, accompanied
by an endorsement showing the required additional insureds satisfactory to
Landlord in substance and form. Notwithstanding the requirements of this
paragraph, Tenant shall at Landlord's request provide to Landlord a certified
copy of each insurance policy required to be in force at any time pursuant to
the requirements of this Lease or its Exhibits.
11.2 Landlord's Insurance. During the Term, to the extent such coverages
--------------------
are available at a commercially reasonable cost, Landlord shall maintain in
effect insurance on the Building with responsible insurers, on an "all risk" or
"special form" basis, insuring the Building and the Tenant Improvements in an
amount equal to at least 90% of the replacement cost thereof, excluding land,
foundations, footings and underground installations. Landlord may, but shall
not
18.
<PAGE>
be obligated to, carry insurance against additional perils and/or in greater
amounts. Landlord shall maintain in full force throughout the Term, commercial
general liability insurance providing coverage with limits of not less than Two
Million Dollars ($2,000,000.00) each occurrence for bodily injury and property
damage combined covering the Property (the cost of the premiums for which shall
be included in Operating Costs).
11.3 Mutual Waiver of Right of Recovery & Waiver of Subrogation. Landlord
----------------------------------------------------------
and Tenant each hereby waive any right of recovery against each other and the
partners, managers, members, shareholders, officers, directors and authorized
representatives of each other for any loss or damage that is covered by any
policy of property insurance maintained by either party (or required by this
Lease to be maintained) with respect to the Premises or the Property or any
operation therein, regardless of cause, including negligence (active or passive)
of the party benefiting from the waiver. If any such policy of insurance
relating to this Lease or to the Premises or the Property does not permit the
foregoing waiver or if the coverage under any such policy would be invalidated
as a result of such waiver, the party maintaining such policy shall obtain from
the insurer under such policy a waiver of all right of recovery by way of
subrogation against either party in connection with any claim, loss or damage
covered by Such policy.
12. DAMAGE OR DESTRUCTION.
12.1 Landlord's Duty to Repair.
-------------------------
(A) If all or a substantial part of the Premises are rendered
untenantable or inaccessible by damage to all or any part of the Property from
fire or other casualty then, unless either party is entitled to and elects to
terminate this Lease pursuant to Sections 12.2 - Landlord's Right to Terminate
and 12.3 -Tenant's Right to Terminate, Landlord shall, at its expense, use
reasonable efforts to repair and restore the Premises and/or the Property, as
the case may be, to substantially their former condition to the extent permitted
by then applicable Laws; provided, however, in no event shall Landlord have any
obligation for repair or restoration: (i) beyond the extent of the sum of (x)
the insurance proceeds received by Landlord for such repair or restoration plus
(y) $ 10,000, or (ii) for any of Tenant's personal property, Trade Fixtures or
Alterations.
(B) If Landlord is required or elects to repair damage to the
Premises and/or the Property, this Lease shall continue in effect, but Tenant's
Base Rent and Additional Rent shall be abated with regard to any portion of the
Premises that Tenant is prevented from using by reason of such damage or its
repair from the date of the casualty until substantial completion of Landlord's
repair of the affected portion of the Premises as required under this Lease. In
no event shall Landlord be liable to Tenant by reason of any injury to or
interference with Tenant's business or property arising from fire or other
casualty or by reason of any repairs to any part of the Property necessitated by
such casualty.
12.2 Landlord's Right to Terminate. Landlord may elect to terminate this
-----------------------------
Lease following damage by fire or other casualty under the following
circumstances:
19.
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(A) If, in the reasonable judgment of Landlord, the Premises and the
Property cannot be substantially repaired and restored under applicable Laws
within one (1) year from the date of the casualty;
(B) If, in the reasonable judgment of Landlord, adequate proceeds are
not, for any reason (except for Landlord's failure to maintain the insurance
coverage required to be maintained by Landlord under this Lease), made available
to Landlord from Landlord's insurance policies (and/or from Landlord's funds
made available for such purpose, at Landlord's sole option) to make the required
repairs;
(C) If the Building is damaged or destroyed to the extent that, in
the reasonable judgment of Landlord, the cost to repair and restore the Building
would exceed twenty-five percent (25%) of the full replacement cost of the
Building, whether or not the Premises are at all damaged or destroyed; or
(D) If the fire or other casualty occurs during the last year of the
Term.
If any of the circumstances described in subparagraphs (a), (b), (c) or (d) of
this Section 12.2 occur or arise, Landlord shall give Tenant notice within one
hundred and twenty (120) days after the date of the casualty, specifying whether
Landlord elects to terminate this Lease as provided above and, if not,
Landlord's estimate of the time required to complete Landlord's repair
obligations under this Lease.
12.3 Tenant's Right to Terminate. If all or a substantial part of the
---------------------------
Premises are rendered untenantable or inaccessible by damage to all or any part
of the Property from fire or other casualty, and Landlord does not elect to
terminate as provided above, then Tenant may elect to terminate this Lease if
Landlord's estimate of the time required to complete Landlord's repair
obligations under this Lease is greater than one (1) year, in which event Tenant
may elect to terminate this Lease by giving Landlord notice of such election to
terminate within thirty (30) days after Landlord's notice to Tenant pursuant to
Section 12.2 - Landlord's Right to Terminate.
12.4 Waiver. Landlord and Tenant each hereby waive the provisions of
------
California Civil Code Sections 1932(2), 1933(4) and any other-applicable
existing or future Law permitting the termination of a lease agreement in the
event of damage or destruction under any circumstances other than as provided in
Sections 12.2 - Landlord's Right to Terminate and 12.3 - Tenant's Right to
Terminate.
13. CONDEMNATION.
13.1 Definitions.
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(A) "AWARD" shall mean all compensation, sums, or anything of value
awarded, paid or received on a total or partial Condemnation.
(B) "CONDEMNATION" shall mean (i) a permanent taking (or a temporary
taking for a period extending beyond the end of the Term) pursuant to the
exercise of the power of condemnation or eminent domain by any public or quasi-
public authority, private corporation or individual having such power
("CONDEMNOR"), whether by legal proceedings or otherwise, or
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(ii) a voluntary sale or transfer by Landlord to any such authority, either
under threat of condemnation or while legal proceedings for condemnation are
pending.
(C) "DATE OF CONDEMNATION" shall mean the earlier of the date that
title to the property taken is vested in the Condemnor or the date the Condemnor
has the right to possession of the property being condemned.
13.2 Effect on Lease.
---------------
(A) If more than one-third (1 /3) of the Premises is taken by
Condemnation, this Lease shall terminate as of the Date of Condemnation. If one-
third (1/3) or less of the Premises is taken by Condemnation, this Lease shall
remain in effect; provided, however, that if the portion of the Premises
remaining after the Condemnation will be unsuitable for Tenant's continued use,
then upon notice to Landlord within thirty (30) days after Landlord notifies
Tenant of the Condemnation, Tenant may terminate this Lease effective as of the
Date of Condemnation.
(B) If twenty-five percent (25%) or more of the Project or of the
parcel(s) of land on which the Building is situated or of the Parking Facility
or of the floor area in the Building is taken by Condemnation, or if as a result
of any Condemnation the Building is no longer reasonably suitable for use as an
office building, whether or not any portion of the Premises is taken, Landlord
may elect to terminate this Lease, effective as of the Date of Condemnation, by
notice to Tenant within thirty (30) days after the Date of Condemnation.
(C) If all or a portion of the Premises is temporarily taken by a
Condemnor for a period not extending beyond the end of the Term, this Lease
shall remain in full force and effect.
13.3 Restoration. If this Lease is not terminated as provided in Section
-----------
13.2 - Effect on Lease, Landlord, at its expense, shall diligently proceed to
repair and restore the Premises to substantially its former condition (to the
extent permitted by then applicable Laws) and/or repair and restore the Building
to an architecturally complete office building; provided, however, that
Landlord's obligations to so repair and restore shall be limited to the amount
of any Award received by Landlord and not required to be paid to any Mortgagee
(as defined in Section 20.2 below). In no event shall Landlord have any
obligation to repair or replace any improvements in the Premises beyond the
amount of any Award received by Landlord for such repair or to repair or replace
any of Tenant's personal property, Trade Fixtures, or Alterations.
13.4 Abatement and Reduction of Rent. If any portion of the Premises is
-------------------------------
taken in a Condemnation or is rendered permanently untenantable by repairs
necessitated by the Condemnation, and this Lease is not terminated, the Base
Rent and Additional Rent payable under this Lease shall be proportionally
reduced as of the Date of Condemnation based upon the percentage of rentable
square feet in the Premises so taken or rendered permanently untenantable. In
addition, if this Lease remains in effect following a Condemnation and Landlord
proceeds to repair and restore the Premises, the Base Rent and Additional Rent
payable under this Lease shall be abated during the period of such repair or
restoration to the extent such repairs prevent Tenant's use of the Premises.
21.
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13.5 Awards. Any Award made shall be paid to Landlord, and Tenant hereby
------
assigns to Landlord, and waives all interest in or claim to, any such Award,
including any claim for the value of the unexpired Term; provided, however, that
Tenant shall be entitled to receive, or to prosecute a separate claim for, an
Award for a temporary taking of the Premises or a portion thereof by a Condemnor
where this Lease is not terminated (to the extent such Award relates to the
unexpired Term), or an Award or portion thereof separately designated for
relocation and moving expenses or the interruption of or damage to Tenant's
business or as compensation for Tenant's personal property, Trade Fixtures or
Alterations.
13.6 Waiver. Landlord and Tenant each hereby waive the provisions of
------
California Code of Civil Procedure Section 1265.130 and any other applicable
existing or future Law allowing either party to petition for a termination of
this Lease upon a partial taking of the Premises and/or the Property.
14. ASSIGNMENT AND SUBLETTING.
14.1 Landlord's Consent Required. Tenant shall not assign this Lease or
---------------------------
any interest therein, or sublet or license or permit the use or occupancy of the
Premises or any part thereof by or for the benefit of anyone other than Tenant,
or in any other manner transfer all or any part of Tenant's interest under this
Lease (each and all a "TRANSFER"), without the prior written consent of
Landlord, which consent (subject to the other provisions of this Section 14)
shall not be unreasonably withheld. If Tenant is a business entity, any direct
or indirect transfer of fifty percent (50%) or more of the ownership interest of
the entity (whether in a single transaction or in the aggregate through more
than one transaction) shall be deemed a Transfer. A public offering of Tenant's
stock shall not constitute a Transfer under the provisions of this Lease.
Notwithstanding any provision in this Lease to the contrary, Tenant shall not
mortgage, pledge, hypothecate or otherwise encumber this Lease or all or any
part of Tenant's interest under this Lease.
14.2 Reasonable Consent.
-------------------
(A) Prior to any proposed Transfer, Tenant shall submit in writing to
Landlord (i) the name and legal composition of the proposed assignee, subtenant,
user or other transferee (each a "PROPOSED TRANSFEREE"); (ii) the nature of the
business proposed to be carried on in the Premises; (iii) a current balance
sheet, income statements for the last two years and such other reasonable
financial and other information concerning the Proposed Transferee as Landlord
may request; and (iv) a copy of the proposed assignment, sublease or other
agreement governing the proposed Transfer. Within fifteen (15) Business Days
after Landlord receives all such information it shall notify Tenant whether it
approves or disapproves such Transfer or if it elects to proceed under Section
14.7 - Landlord's Right to Space.
(B) Tenant acknowledges and agrees that, among other circumstances
for which Landlord could reasonably withhold consent to a proposed Transfer, it
shall be reasonable for Landlord to withhold consent where (i) the Proposed
Transferee does not intend itself to occupy the entire portion of the Premises
assigned or sublet, (ii) Landlord reasonably disapproves of the Proposed
Transferee's business operating ability or history, reputation or
creditworthiness or the nature or character of the business to be conducted by
the Proposed
22.
<PAGE>
Transferee at the Premises, (iii) the Proposed Transferee is a governmental
agency or unit or an existing tenant in the Project, unless, in the case of an
existing tenant, Landlord does not have space available for lease containing the
same or more square feet as is contained in the Premises to accommodate the
existing tenant's expansion or renewal in the Project, (iv) the proposed
Transfer would violate any "exclusive" rights of any tenants in the Project, (v)
Landlord or Landlord's agent has shown space in the Project to the Proposed
Transferee or responded to any inquiries from the Proposed Transferee or the
Proposed Transferee's agent concerning availability of space in the Project, at
any time within the preceding six months, or (vi) Landlord otherwise determines
that the proposed Transfer would have the effect of materially decreasing the
financial value of the Project or increasing the expenses associated with
operating, maintaining and repairing the Project. In no event may Tenant
publicly advertise all or any portion of the Premises for assignment or sublease
at a rental less than that then sought by Landlord for a direct lease (non-
sublease) of comparable space in the Project. Notwithstanding the foregoing,
Tenant may employ a broker who advertises on a commercial multiple listing
service in order to offer the Premises for assignment or sublease.
14.3 Excess Consideration. If Landlord consents to the Transfer, Landlord
--------------------
shall be entitled to receive as Additional Rent hereunder, fifty percent (50%)
of all "Sublease Profits" (as defined below). "Sublease Profits" shall mean any
consideration paid by the Transferee for the assignment or sublease and, in the
case of a sublease, the excess of the rent and other consideration payable by
the subtenant over the amount of Base Rent and Additional Rent payable hereunder
applicable to the subleased space, less any and all direct, out-of-pocket
expenses and cash concessions, including costs for necessary Alterations,
attorneys' fees (not to exceed One Thousand and 00/ 100 Dollars [$ 1,000.00] in
attorneys' fees) and brokerage commission, paid by Tenant to procure the
assignee or subtenant. Tenant shall pay to Landlord as additional rent, within
twenty (20) days after receipt by Tenant, any such excess consideration paid by
any transferee (the "TRANSFEREE") for the Transfer provided any capital
expenditures and brokerage commissions in connection with any sublease shall be
amortized over the term of the sublease.
14.4 No Release Of Tenant. No consent by Landlord to any Transfer shall
--------------------
relieve Tenant of any obligation to be performed by Tenant under this Lease,
whether occurring before or after such consent, assignment, subletting or other
Transfer. Each Transferee shall be jointly and severally liable with Tenant
(and Tenant shall be jointly and severally liable with each Transferee) for the
payment of rent (or, in the case of a sublease, rent in the amount set forth in
the sublease) and for the performance of all other terms and provisions of this
Lease. The consent by Landlord to any Transfer shall not relieve Tenant or any
such Transferee from the obligation to obtain Landlord's express prior written
consent to any subsequent Transfer by Tenant or any Transferee. The acceptance
of rent by Landlord from any other person (whether or not such person is an
occupant of the Premises) shall not be deemed to be a waiver by Landlord of any
provision of this Lease or to be a consent to any Transfer.
14.5 Expenses and Attorneys' Fees. Tenant shall pay to Landlord on demand
----------------------------
all costs and expenses (including reasonable attorneys' fees not to exceed One
Thousand and 00/ 100 Dollars [$ 1,000.00] for each request for Landlord's
consent to a proposed Transfer) incurred by Landlord in connection with
reviewing or consenting to any proposed Transfer (including any
23.
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request for consent to, or any waiver of Landlord's rights in connection with,
any security interest in any of Tenant's property at the Premises).
14.6 Effectiveness of Transfer. Prior to the date on which any permitted
-------------------------
Transfer (whether or not requiring Landlord's consent) becomes effective, Tenant
shall deliver to Landlord a counterpart of the fully executed Transfer document
and Landlord's standard form of Consent to Assignment or Consent to Sublease
executed by Tenant and the Transferee in which each of Tenant and the Transferee
confirms its obligations pursuant to this Lease. Failure or refusal of a
Transferee to execute any such instrument shall not release or discharge the
Transferee from liability as provided herein. The voluntary, involuntary or
other surrender of this Lease by Tenant, or a mutual cancellation by Landlord
and Tenant, shall not work a merger, and any such surrender or cancellation
shall, at the option of Landlord, either terminate all or any existing subleases
or operate as an assignment to Landlord of any or all of such subleases.
14.7 Landlord's Right to Space. Notwithstanding any of the above
-------------------------
provisions of this Section to the contrary, if Tenant notifies Landlord that it
desires to enter into a Transfer, Landlord, in lieu of consenting to such
Transfer, may elect (x) in the case of an assignment or a sublease of the entire
Premises, to terminate this Lease, or (y) in the case of a sublease of less than
the entire Premises, to terminate this Lease as it relates to the space proposed
to be subleased by Tenant. In such event, this Lease will terminate (or the
space proposed to be subleased will be removed from the Premises subject to this
Lease and the Base Rent and Tenant's Share under this Lease shall be
proportionately reduced) on the date the Transfer was proposed to be effective,
and Landlord may lease such space to any party, including the prospective
Transferee identified by Tenant.
14.8 Assignment of Sublease Rents. Tenant hereby absolutely and
----------------------------
irrevocably assigns to Landlord any and all rights to receive rent and other
consideration from any sublease and agrees that Landlord, as assignee or as
attorney-in-fact for Tenant solely for purposes of collecting rent and other
consideration from any sublessee, or a receiver for Tenant appointed on
Landlord's application may (but shall not be obligated to) collect such rents
and other consideration and apply the same toward Tenant's obligations to
Landlord under this Lease; provided, however, that Landlord grants to Tenant at
all times prior to occurrence of any breach or default by Tenant a revocable
license to collect such rents (which license shall automatically and without
notice be and be deemed to have been revoked and terminated immediately upon any
Event of Default).
14.9 Transfer to Affiliate. Notwithstanding any provision contained in the
---------------------
Section 14 to the contrary, Tenant shall have the right, without the consent of
Landlord, upon ten (10) days prior written notice to Landlord, to transfer
Tenant's interest in this Lease to an "Affiliate" of Tenant, and the provisions
of Sections 14.2, 14.3 and 14.7 shall not apply with respect to the transfer to
the Affiliate, but the transfer to the Affiliate shall be subject to all other
terms and conditions of this Lease, including the provisions of this Section
14.9. Tenant shall remain liable under this Lease after any such transfer. For
the purposes of this Article 14, the term "Affiliate" of Tenant shall mean and
refer to any entity controlling, controlled by or under common control with
Tenant or Tenant's parent, as the case may be, or any corporation or other
entity resulting from a merger or consolidation with Tenant, or to any person or
entity which acquires at least ninety percent (90%) of all the assets of Tenant
as a going concern. "Control" as used herein
24.
<PAGE>
shall mean the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of such controlled entity; and the
ownership, or possession of the right to vote, in the ordinary direction of its
affairs, of at least fifty percent (50%) of the voting interest in any entity.
Notwithstanding Tenant's right to Transfer to an Affiliate pursuant to the
provisions of this Section 14.9, Tenant may not, through use of its rights under
this Article 14 in two or more transactions (whether separate transactions or
steps or phases of a single transaction), at one time or over time, whether by
first assigning this Lease to a subsidiary and then merging the subsidiary into
another entity or selling the stock of the subsidiary or by other means, assign
or sublease the Premises, or transfer control of Tenant, to any person or entity
which is not a subsidiary, affiliate or controlling corporation of the original
Tenant, as then constituted, existing prior to the commencement of such
transactions, without first obtaining Landlord's prior written consent pursuant
to the provisions of Section 14.2.
15. DEFAULT AND REMEDIES.
15.1 Events of Default. The occurrence of any of the following shall
-----------------
constitute an "EVENT OF DEFAULT" by Tenant:
(A) Tenant fails to make any payment of rent when due, or any amount
required to replenish the security deposit as provided in Section 4 above, if
payment in full is not received by Landlord within three (3) days after written
notice that it is due.
(B) Tenant abandons the Premises, together with Tenant's failure to
pay Rent when due.
(C) Tenant fails timely to deliver any subordination document,
estoppel certificate or financial statement requested by Landlord within the
applicable time period specified in Sections 20 - Encumbrances - and 21 -
Estoppel Certificates and Financial Statements - below.
(D) Tenant violates the restrictions on Transfer set forth in Section
14 -Assignment and Subletting.
(E) Tenant ceases doing business as a going concern; makes an
assignment for the benefit of creditors; is adjudicated an insolvent, files a
petition (or files an answer admitting the material allegations of a petition)
seeking relief under any under any state or federal bankruptcy or other statute,
law or regulation affecting creditors' rights; all or substantially all of
Tenant's assets are subject to judicial seizure or attachment and are not
released within 60 days, or Tenant consents to or acquiesces in the appointment
of a trustee, receiver or liquidator for Tenant or for all or any substantial
part of Tenant's assets.
(F) Tenant fails, within ninety (90) days after the commencement of
any proceedings against Tenant seeking relief under any state or federal
bankruptcy or other statute, law or regulation affecting creditors' rights, to
have such proceedings dismissed, or Tenant fails, within ninety (90) days after
an appointment, without Tenant's consent or acquiescence, of any trustee,
receiver or liquidator for Tenant or for all or any substantial part of Tenant's
assets, to have such appointment vacated.
25.
<PAGE>
(G) Tenant fails to perform or comply with any provision of this
Lease other than those described in (a) through (f) above, and does not fully
cure such failure within thirty (30) days after notice to Tenant or, if such
failure cannot be cured within such thirty (30)-day period, Tenant fails within
such thirty (30)-day period to commence, and thereafter diligently proceed with,
all actions necessary to cure such failure as soon as reasonably possible but in
all events within one hundred twenty (120) days of such notice; provided,
however, that if Landlord in Landlord's reasonable judgment determines that such
failure will not be cured by Tenant within such one hundred twenty (120) days,
then such failure shall constitute an Event of Default immediately upon such
notice to Tenant.
15.2 Remedies. Upon the occurrence of an Event of Default, Landlord shall
--------
have the following remedies, which shall not be exclusive but shall be
cumulative and shall be in addition to any other remedies now or hereafter
allowed by law:
(A) Landlord may terminate Tenant's right to possession of the
Premises at any time by written notice to Tenant. Tenant expressly acknowledges
that in the absence of such written notice from Landlord, no other act of
Landlord, including re-entry into the Premises, efforts to relet the Premises,
reletting of the Premises for Tenant's account, storage of Tenant's personal
property and Trade Fixtures, acceptance of keys to the Premises from Tenant or
exercise of any other rights and remedies under this Section, shall constitute
an acceptance of Tenant's surrender of the Premises or constitute a termination
of this Lease or of Tenant's right to possession of the Premises. Upon such
termination in writing of Tenant's right to possession of the Premises, as
herein provided, this Lease shall terminate and Landlord shall be entitled to
recover damages from Tenant as provided in California Civil Code Section 1951.2
and any other applicable existing or future Law providing for recovery of
damages for such breach, including the worth at the time of award of the amount
by which the rent which would be payable by Tenant hereunder for the remainder
of the Term after the date of the award of damages, including Additional Rent as
reasonably estimated by Landlord, exceeds the amount of such rental loss as
Tenant proves could have been reasonably avoided, discounted at the discount
rate published by the Federal Reserve Bank of San Francisco for member banks at
the time of the award plus one percent (1%).
(B) Landlord shall have the remedy described in California Civil Code
Section 1951.4 (Landlord may continue this Lease in effect after Tenant's breach
and abandonment and recover rent as it becomes due, if Tenant has the right to
sublet or assign, subject only to reasonable limitations).
(C) Landlord may cure the Event of Default at Tenant's expense. If
Landlord pays any sum or incurs any expense in curing the Event of Default,
Tenant shall reimburse Landlord upon demand for the amount of such payment or
expense with interest at the Interest Rate from the date the sum is paid or the
expense is incurred until Landlord is reimbursed by Tenant.
(D) Landlord may remove all Tenant's property from the Premises, and
such property may be stored by Landlord in a public warehouse or elsewhere at
the sole cost and for the account of Tenant. If Landlord does not elect to store
any or all of Tenant's property left in the Premises, Landlord may consider such
property to be abandoned by Tenant, and Landlord
26.
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may thereupon dispose of such property in any manner deemed appropriate by
Landlord. Any proceeds realized by Landlord on the disposal of any such property
shall be applied first to offset all expenses of storage and sale, then credited
against Tenant's outstanding obligations to Landlord under this Lease, and any
balance remaining after satisfaction of all obligations of Tenant under this
Lease shall be delivered to Tenant.
16. LATE CHARGE AND INTEREST.
16.1 Late Charge. If any payment of rent is not received by Landlord
-----------
within five (5) days after written notice from Landlord to Tenant that the
payment is past due, Tenant shall pay to Landlord on demand as a late charge an
additional amount equal to four percent (4%) of the overdue payment; provided,
however, if Landlord has given Tenant written notice two (2) or more times in
any consecutive twelve (12) month period that a payment of rent is past due,
then Tenant shall pay to Landlord on demand commencing with the third (3rd) past
due payment in any twelve (12) month period, and continuing with each past due
payment thereafter in such twelve (12) month period, as a late charge an
additional amount equal to four percent (4%) of the overdue payment without any
requirement of additional notice that such payment is past due. A late charge
shall not be imposed more than once on any particular installment not paid when
due, but imposition of a late charge on any payment not made when due does not
eliminate or supersede late charges imposed on other (prior) payments not made
when due or preclude imposition of a late charge on other installments or
payments not made when due.
16.2 Interest. In addition to the late charges referred to above, which
--------
are intended to defray Landlord's costs resulting from late payments, any
payment from Tenant to Landlord not paid when due shall at Landlord's option
bear interest from the date due until paid to Landlord by Tenant at the rate of
fifteen percent (15%) per annum or the maximum lawful rate that Landlord may
charge to Tenant under applicable laws, whichever is less (the "INTEREST RATE").
Acceptance of any late charge and/or interest shall not constitute a waiver of
Tenant's default with respect to the overdue sum or prevent Landlord from
exercising any of its other rights and remedies under this Lease.
17. WAIVER. No provisions of this Lease shall be deemed waived by either party
unless such waiver is in a writing signed by the waiving party. The waiver by
either party of any breach of any provision of this Lease shall not be deemed a
waiver of such provision or of any subsequent breach of the same or any other
provision of this Lease. No delay or omission in the exercise of any right or
remedy of either party upon any default by the other party shall impair such
right or remedy or be construed as a waiver. Landlord's acceptance of any
payments of rent due under this Lease shall not be deemed a waiver of any
default by Tenant under this Lease (including Tenant's recurrent failure to
timely pay rent) other than Tenant's nonpayment of the accepted sums, and no
endorsement or statement on any check or on any letter accompanying any check or
payment shall be deemed an accord and satisfaction. The consent to or approval
by either party of any act by the other party requiring the first party's
consent or approval shall not be deemed to waive or render unnecessary the
consenting or approving party's consent to or approval of any subsequent act by
the other party.
27.
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18. ENTRY, INSPECTION AND CLOSURE. Upon reasonable oral or written notice to
Tenant (and without notice in emergencies), Landlord and its authorized
representatives may enter the Premises at all reasonable times to: (a) determine
whether the Premises are in good condition, (b) determine whether Tenant is
complying with its obligations under this Lease, (c) perform any maintenance or
repair of the Premises or the Building that Landlord has the right or obligation
to perform, (d) install or repair improvements for other tenants where access to
the Premises is required for such installation or repair, (e) serve, post or
keep posted any notices required or allowed under the provisions of this Lease,
(f) show the Premises to prospective brokers, agents, buyers, transferees, or
Mortgagees, or (g) do any other act or thing necessary for the safety or
preservation of the Premises or the Building. In addition, Landlord shall show
the Premises to prospective tenants upon prior reasonable oral or notice to
Tenant during the last twelve (12) months of the Term. When reasonably
necessary Landlord may temporarily close entrances, doors, corridors, elevators
or other facilities in the Building without liability to Tenant by reason of
such closure. Landlord shall conduct its activities under this Section in a
manner that will minimize inconvenience to Tenant without incurring additional
expense to Landlord. In no event shall Tenant be entitled to an abatement of
rent on account of any entry by Landlord, and Landlord shall not be liable in
any manner for any inconvenience, loss of business or other damage to Tenant or
other persons arising out of Landlord's entry on the Premises in accordance with
this Section. No action by Landlord pursuant to this paragraph shall constitute
an eviction of Tenant, constructive or otherwise, entitle Tenant to an abatement
of rent or to terminate this Lease or otherwise release Tenant from any of
Tenant's obligations under this Lease.
19. SURRENDER AND HOLDING OVER.
19.1 Surrender. Upon the expiration or termination of this Lease, Tenant
---------
shall surrender the Premises and all Tenant Improvements and Alterations to
Landlord broom-clean and in good condition, except for reasonable wear and tear,
damage from casualty or condemnation and any changes resulting from approved
Alterations; provided, however, that on or before the expiration or termination
of this Lease Tenant shall remove all telephone and other cabling installed in
the Building by Tenant and remove from the Premises all Tenant's personal
property and any Trade Fixtures and all Alterations that Landlord has elected to
require Tenant to remove as provided in Section 6.1 - Tenant Improvements &
Alterations, and repair any damage caused by such removal; provided, however,
upon expiration or termination of this Lease Tenant shall not be obligated to
remove any Hazardous Material from the Property unless Handled by Tenant at the
Property. If such removal is not completed on or before the expiration or
termination of the Term, Landlord shall have the right (but no obligation) to
remove the same, and Tenant shall pay Landlord on demand for all costs of
removal and storage thereof and for the rental value of the Premises for the
period from the end of the Term through the end of the time reasonably required
for such removal. Landlord shall also have the right to retain or dispose of
all or any portion of such property if Tenant does not pay all such costs and
retrieve the property within ten (10) days after notice from Landlord (in which
event title to all such property described in Landlord's notice shall be
transferred to and vest in Landlord). Tenant waives all Claims against Landlord
for any damage or loss to Tenant resulting from Landlord's removal, storage,
retention, or disposition of any such property. Upon expiration or termination
of this Lease or of Tenant's possession, whichever is earliest, Tenant shall
surrender all keys to the Premises or any other part of the Building and shall
deliver to Landlord all keys for or make known to Landlord the combination of
locks on all safes, cabinets and vaults that may be located
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in the Premises. Tenant's obligations under this Section shall survive the
expiration or termination of this Lease.
19.2 Holding Over. If Tenant (directly or through any Transferee or other
------------
successor-in-interest of Tenant) remains in possession of the Premises after the
expiration or termination of this Lease, Tenant's continued possession shall be
on the basis of a tenancy at the sufferance of Landlord. No act or omission by
Landlord, other than its specific written consent, shall constitute permission
for Tenant to continue in possession of the Premises, and if such consent is
given or declared to have been given by a court judgment, Landlord may terminate
Tenant's holdover tenancy at any time upon seven (7) days written notice. In
such event, Tenant shall continue to comply with or perform all the terms and
obligations of Tenant under this Lease, except that the monthly Base Rent during
Tenant's holding over shall be twice the Base Rent payable in the last full
month prior to the termination hereof. Acceptance by Landlord of rent after
such termination shall not constitute a renewal or extension of this Lease; and
nothing contained in this provision shall be deemed to waive Landlord's right of
re-entry or any other right hereunder or at law. Tenant shall indemnify, defend
and hold Landlord harmless from and against all Claims arising or resulting
directly or indirectly from Tenant's failure to timely surrender the Premises,
including (i) any rent payable by or any loss, cost, or damages claimed by any
prospective tenant of the Premises, and (ii) Landlord's damages as a result of
such prospective tenant rescinding or refusing to enter into the prospective
lease of the Premises by reason of such failure to timely surrender the
Premises.
20. ENCUMBRANCES.
20.1 Subordination. This Lease is expressly made subject and subordinate
-------------
to any mortgage, deed of trust, ground lease, underlying lease or like
encumbrance affecting any part of the Property or any interest of Landlord
therein which is now existing or hereafter executed or recorded ("ENCUMBRANCE");
provided, however, that such subordination shall only be effective, as to future
Encumbrances, if the holder of the Encumbrance agrees in writing that this Lease
shall survive the termination of the Encumbrance by lapse of time, foreclosure
or otherwise so long as Tenant is not in default under this Lease beyond any
applicable notice and cure period. Provided the conditions of the preceding
sentence are satisfied, Tenant shall execute and deliver to Landlord, within ten
(10) Business Days after written request therefor by Landlord and in a form
reasonably requested by Landlord, any additional documents evidencing the
subordination of this Lease with respect to any such Encumbrance and the
nondisturbance agreement of the holder of any such Encumbrance. If the interest
of Landlord-in the Property is transferred pursuant to or in lieu of proceedings
for enforcement of any Encumbrance, Tenant shall immediately and automatically
attorn to the new owner, and this Lease shall continue in full force and effect
as a direct lease between the transferee and Tenant on the terms and conditions
set forth in this Lease. Landlord agrees to use reasonable good faith efforts
to obtain, at Tenant's cost and expense, within 60 days after execution of this
Lease, a Subordination, Attornment and Non-Disturbance Agreement (the "SNDA")
from the holder of any Encumbrance existing at the date of this Lease pursuant
to the provisions contained above; provided, however, Landlord's failure to
obtain an SNDA shall not affect the validity of this Lease.
29.
<PAGE>
20.2 Mortgagee Protection. Tenant agrees to give any holder of any
--------------------
Encumbrance covering any part of the Property ("MORTGAGEE"), by registered mail,
a copy of any notice of default served upon Landlord, provided that prior to
such notice Tenant has been notified in writing (by way of notice of assignment
of rents and leases, or otherwise) of the address of such Mortgagee. If
Landlord shall have failed to cure such default within thirty (30) days from the
effective date of such notice of default, then the Mortgagee shall have an
additional thirty (30) days within which to cure such default or if such default
cannot be cured within that time, then such additional time as may be necessary
to cure such default (including the time necessary to foreclose or otherwise
terminate its Encumbrance, if necessary to effect such cure), and this Lease
shall not be terminated so long as such remedies are being diligently pursued.
21. ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS.
21.1 Estoppel Certificates. Within ten (10) Business Days after written
---------------------
request therefor, Tenant shall execute and deliver to Landlord, in a form
provided by or satisfactory to Landlord, a certificate stating that this Lease
is in full force and effect, describing any amendments or modifications hereto,
acknowledging that this Lease is subordinate or prior, as the case may be, to
any Encumbrance and stating any other information Landlord may reasonably
request, including the Term, the monthly Base Rent, the date to which Rent has
been paid, the amount of any security deposit or prepaid rent, whether either
party hereto is in default under the terms of the Lease, and whether Landlord
has completed its construction obligations hereunder (if any). If Tenant fails
timely to execute and deliver such certificate as provided above, then Landlord
and the addressee of such certificate shall be entitled to rely upon the
information contained in the certificate submitted to Tenant as true, correct
and complete, and Tenant shall be estopped from later denying, contradicting or
taking any position inconsistent with the information contained in such
certificate. Any person or entity purchasing, acquiring an interest in or
extending financing with respect to the Property shall be entitled to rely upon
any such certificate. If Tenant fails to deliver such certificate within ten
(10) Business Days after Landlord's second written request therefor, Tenant
shall be liable to Landlord for any damages incurred by Landlord including any
profits or other benefits from any financing of the Property or any interest
therein which are lost or made unavailable as a result, directly or indirectly,
of Tenant's failure or refusal to timely execute or deliver such estoppel
certificate.
21.2 Financial Statements. Within ten (10) Business Days after written
--------------------
request therefor, but not more than once a year, Tenant shall deliver to
Landlord a copy of the financial statements (including at least a year end
balance sheet and a statement of profit and loss) of Tenant (and of each
guarantor of Tenant's obligations under this Lease) for each of the two most
recently completed years, prepared in accordance with generally accepted
accounting principles (and, if such is Tenant's normal practice, audited by an
independent certified public accountant), all then available subsequent interim
statements, and such other financial information as may reasonably be requested
by Landlord or required by any Mortgagee. Landlord shall not disclose details of
such financial statements except (x) pursuant to court proceedings, and (y) to
Landlord's (a) directors, (b) shareholders, (c) officers, (d) those employees of
Landlord and of Landlord's agents who have a need to know, (e) accountants, (f)
auditors, (g) lenders and/or Mortgagee, (h) purchasers, (i) potential lenders
and/or Mortgagees and purchasers, and (j) attorneys. Landlord shall use all
reasonable efforts to prevent such persons or employees of such entities from
disclosing details of Tenant's financial statements.
30.
<PAGE>
22. NOTICES. Any notice, demand, request, consent or approval that either party
desires or is required to give to the other party under this Lease shall be in
writing and shall be served personally, delivered by messenger or courier
service, or sent by U.S. certified mail, return receipt requested, postage
prepaid, addressed to the other party at the party's address for notices set
forth in the Basic Lease Information. Any notice required pursuant to any Laws
may be incorporated into, given concurrently with or given separately from any
notice required under this Lease. Notices shall be deemed to have been given and
be effective on the earlier of (a) receipt (or refusal of delivery or receipt);
or (b) one (1) day after acceptance by the independent service for delivery, if
sent by independent messenger or courier service, or three (3) days after
mailing if sent by mail in accordance with this Section. Either party may change
its address for notices hereunder, effective fifteen (15) days after notice to
the other party complying with this Section. If Tenant sublets the Premises,
notices from Landlord shall be effective on the subtenant when given to Tenant
pursuant to this Section.
23. ATTORNEYS' FEES. In the event of any dispute between Landlord and Tenant in
any way related to this Lease, the non-prevailing party shall pay to the
prevailing party all reasonable attorneys' fees and costs and expenses of any
type incurred by the prevailing party in connection with any action or
proceeding (including any appeal and the enforcement of any judgment or award),
whether or not the dispute is litigated or prosecuted to final judgment. The
"prevailing party" shall be determined based upon an assessment of which party's
major arguments or positions taken in the action or proceeding could fairly be
said to have prevailed (whether by compromise, settlement, abandonment by the
other party of its claim or defense, final decision, after any appeals, or
otherwise) over the other party's major arguments or positions on major disputed
issues.
24. QUIET POSSESSION. Subject to Tenant's full and timely performance of all of
Tenant's obligations under this Lease and subject to the terms of this Lease,
including Section 20 - Encumbrances, Tenant shall have the quiet possession of
the Premises throughout the Term as against any persons or entities lawfully
claiming by, through or under Landlord.
25. SECURITY MEASURES. Tenant shall be responsible for all security measures
for the Premises, such as the registration or search of all persons entering or
leaving the Building, requiring identification for access to the Building,
evacuation of the Building for cause, suspected cause, or for drill purposes,
the issuance of magnetic pass cards or keys for Building or elevator access to
prevent any threat of property loss or damage, bodily injury or business
interruption. Landlord shall have no security responsibility for the Premises or
the Project. Landlord, its agents and employees shall have no liability to
Tenant or its Representatives or Visitors for the implementation or exercise of,
or the failure to implement or exercise, any security measures for the Premises
or the Project, or for any resulting disturbance of Tenant's use or enjoyment of
the Premises.
26. FORCE MAJEURE. If either Landlord or Tenant is delayed, interrupted or
prevented from performing any of its obligations under this Lease (other than,
with respect to Tenant the payment of Base Rent, Additional Rent or any other
charge payable by Tenant to Landlord under this Lease), including Landlord's
obligations under the Construction Rider and such delay, interruption or
prevention is due to fire, act of God, governmental act or failure to act, labor
dispute, unavailability of materials or any cause outside the reasonable control
of Landlord or
31.
<PAGE>
Tenant, then the time for performance of the affected obligations of Landlord or
Tenant, as the case may be, shall be extended for a period equivalent to the
period of such delay, interruption or prevention. The inability to pay money
shall in no event constitute force majeure.
27. RULES AND REGULATIONS. Tenant shall be bound by and shall comply with the
rules and regulations attached to and made a part of this Lease as Exhibit C to
---------
the extent those rules and regulations are not in conflict with the terms of
this Lease, as well as any reasonable rules and regulations hereafter adopted by
Landlord for all tenants of the Building, upon notice to Tenant thereof
(collectively, the "BUILDING RULES"). Landlord shall not be responsible to
Tenant or to any other person for any violation of, or failure to observe, the
Building Rules by any other tenant or other person.
28. LANDLORD'S LIABILITY. The term "Landlord," as used in this Lease, shall
mean only the owner or owners of the Building at the time in question. In the
event of any conveyance of title to the Building, then from and after the date
of such conveyance, upon such transferee's written recognition of this Lease,
the transferor Landlord shall be relieved of all liability with respect to
Landlord's obligations to be performed under this Lease after the date of such
conveyance. Notwithstanding any other term or provision of this Lease, the
liability of Landlord for its obligations under this Lease is limited solely to
Landlord's interest in the Building as the same may from time to time be
encumbered, and no personal liability shall at any time be asserted or
enforceable against any other assets of Landlord or against Landlord's partners
or members or its or their respective partners, shareholders, members,
directors, officers or managers on account of any of Landlord's obligations or
actions under this Lease.
29. CONSENTS AND APPROVALS.
29.1 Determination in Good Faith. Wherever the consent, approval, judgment
---------------------------
or determination of Landlord is required or permitted under this Lease, Landlord
may exercise its good faith business judgment in granting or withholding such
consent or approval or in making such judgment or determination without
reference to any extrinsic standard of reasonableness, unless the specific
provision contained in this Lease providing for such consent, approval, judgment
or determination specifies that Landlord's consent or approval is not to be
unreasonably withheld, or that such judgment or determination is to be
reasonable, or otherwise specifies the standards under which Landlord may
withhold its consent. If it is determined that Landlord failed to give its
consent where it was required to do so under this Lease, Tenant shall be
entitled to injunctive relief but shall not to be entitled to monetary damages
or to terminate this Lease for such failure.
29.2 No Liability Imposed on Landlord. The review and/or approval by
--------------------------------
Landlord of any item or matter to be reviewed or approved by Landlord under the
terms of this Lease or any Exhibits or Addenda hereto shall not impose upon
Landlord any liability for the accuracy or sufficiency of any such item or
matter or the quality or suitability of such item for its intended use. Any such
review or approval is for the sole purpose of protecting Landlord's interest in
the Property, and no third parties, including Tenant or the Representatives and
Visitors of Tenant or any person or entity claiming by, through or under Tenant,
shall have any rights as a consequence thereof.
32.
<PAGE>
30. BROKERS. Landlord shall pay the fee or commission of the broker or brokers
identified in the Basic Lease Information (the "BROKER") in accordance with
Landlord's separate written agreement with the Broker, if any. Tenant warrants
and represents to Landlord that in the negotiating or making of this Lease
neither Tenant nor anyone acting on Tenant's behalf has dealt with any broker or
finder who might be entitled to a fee or commission for this Lease other than
the Broker. Tenant shall indemnify and hold Landlord harmless from any claim or
claims, including costs, expenses and attorney's fees incurred by Landlord
asserted by any other broker or finder for a fee or commission based upon any
dealings with or statements made by Tenant or Tenant's Representatives. Landlord
shall indemnify and hold Tenant harmless from any claim or claims, including
costs, expenses and attorney's fees incurred by Tenant asserted by any other
broker or finder for a fee or commission based upon any dealings with or
statements made by Landlord or Landlord's Representatives.
31. RELOCATION OF PREMISES. [Intentionally Deleted).
32. ENTIRE AGREEMENT. This Lease, including the Exhibits and any Addenda
attached hereto, and the documents referred to herein, if any, constitute the
entire agreement between Landlord and Tenant with respect to the leasing of
space by Tenant in the Building, and supersede all prior or contemporaneous
agreements, understandings, proposals and other representations by or between
Landlord and Tenant, whether written or oral, all of which are merged herein.
Neither Landlord nor Landlord's agents have made any representations or
warranties with respect to the Premises, the Building, the Project or this Lease
except as expressly set forth herein, and no rights, easements or licenses shall
be acquired by Tenant by implication or otherwise unless expressly set forth
herein. The submission of this Lease for examination does not constitute an
option for the Premises and this Lease shall become effective as a binding
agreement only upon execution and delivery thereof by Landlord to Tenant.
33. MISCELLANEOUS. This Lease may not be amended or modified except by a
writing signed by Landlord and Tenant. Subject to Section 14 - Assignment and
Subletting and Section 28 - Landlord's Liability, this Lease shall be binding on
and shall inure to the benefit of the parties and their respective successors,
assigns and legal representatives. The determination that any provisions hereof
may be void, invalid, illegal or unenforceable shall not impair any other
provisions hereof and all such other provisions of this Lease shall remain in
full force and effect. The unenforceability, invalidity or illegality of any
provision of this Lease under particular circumstances shall not render
unenforceable, invalid or illegal other provisions of this Lease, or the same
provisions under other circumstances. This Lease shall be construed and
interpreted in accordance with the laws (excluding conflict of laws principles)
of the State in which the Building is located. The provisions of this Lease
shall be construed in accordance with the fair meaning of the language used and
shall not be strictly construed against either party, even if such party drafted
the provision in question. When required by the context of this Lease, the
singular includes the plural. Wherever the term "including" is used in this
Lease, it shall be interpreted as meaning "including, but not limited to" the
matter or matters thereafter enumerated. The captions contained in this Lease
are for purposes of convenience only and are not to be used to interpret or
construe this Lease. If more than one person or entity is identified as Tenant
hereunder, the obligations of each and all of them under this Lease shall be
joint and several. Time is of the essence with respect to this Lease, except as
to the conditions relating to the
33.
<PAGE>
delivery of possession of the Premises to Tenant. Neither Landlord nor Tenant
shall record this Lease.
34. AUTHORITY. If Tenant is a corporation, partnership, limited liability
company or other form of business entity, each of the persons executing this
Lease on behalf of Tenant warrants and represents that Tenant is a duly
organized and validly existing entity, that Tenant has full right and authority
to enter into this Lease and that the persons signing on behalf of Tenant are
authorized to do so and have the power to bind Tenant to this Lease. Tenant
shall provide Landlord upon request with evidence reasonably satisfactory to
Landlord confirming the foregoing representations.
IN WITNESS WHEREOF, Landlord and Tenant have entered into this Lease as of
the date first above written.
TENANT: LANDLORD:
CLARENT CORPORATION, SEAPORT CENTRE ASSOCIATES, LLC
a California corporation a California limited liability company
By: OPPORTUNITY CAPITAL
By: /s/ Jerry Chang PARTNERS IV, LLC,
--------------------------
Name: Jerry Chang a California limited liability company
---------------------
Title: President and CFO Manager
-------------------
By: __________________________ By: /s/ Stephen J. Pilch
------------------------
Name:_____________________ Name: Stephen J. Pilch
-------------------
Title:____________________ Title:__________________
By:________________________
Name:___________________
Title:__________________
34.
<PAGE>
EXHIBIT A
ATTACHED TO AND FORMING A PART OF
LEASE AGREEMENT
DATED AS OF AUGUST 12, 1998
BETWEEN
SEAPORT CENTRE ASSOCIATES, LLC, AS LANDLORD,
AND
CLARENT CORPORATION, AS TENANT ("LEASE")
THE PREMISES
------------
[FLOOR PLAN APPEARS HERE]
24,877 RSF
INITIALS:
Landlord _______
Tenant _______
Exhibit A, Page 1.
<PAGE>
EXHIBIT A-1
-----------
ATTACHED TO AND FORMING A PART OF
LEASE AGREEMENT
DATED AS OF AUGUST 12, 1998
BETWEEN
SEAPORT CENTRE ASSOCIATES, LLC, AS LANDLORD,
AND
CLARENT CORPORATION, AS TENANT ("LEASE")
THE INITIAL PREMISES
--------------------
[FLOOR PLAN APPEARS HERE]
10,769 RSF
INITIALS:
Landlord: _______
Tenant: _______
Exhibit A-1, Page 1.
<PAGE>
EXHIBIT A-2
-----------
ATTACHED TO AND FORMING A PART OF
LEASE AGREEMENT
DATED AS OF AUGUST 12, 1998
BETWEEN
SEAPORT CENTRE ASSOCIATES, LLC, AS LANDLORD,
AND
CLARENT CORPORATION, AS TENANT ("LEASE")
THE ADDITIONAL PREMISES
-----------------------
[FLOOR PLAN APPEARS HERE]
14,108 RSF
INITIALS:
Landlord: ______
Tenant: ______
Exhibit A-2, Page 1.
<PAGE>
EXHIBIT A-3
-----------
ATTACHED TO AND FORMING A PART OF
LEASE AGREEMENT
DATED AS OF AUGUST 12, 1998
BETWEEN
SEAPORT CENTRE ASSOCIATES, LLC, AS LANDLORD,
AND
CLARENT CORPORATION, AS TENANT ("LEASE")
THE MANUFACTURING AREA
----------------------
[FLOOR PLAN APPEARS HERE]
INITIALS:
Landlord: _______
Tenant: _______
Exhibit A-3, Page 1.
<PAGE>
EXHIBIT B
---------
ATTACHED TO AND FORMING A PART OF
LEASE AGREEMENT
DATED AS OF AUGUST 12, 1998
BETWEEN
SEAPORT CENTRE ASSOCIATES, LLC, AS LANDLORD,
AND
CLARENT CORPORATION, AS TENANT ("LEASE")
CONSTRUCTION RIDER
------------------
1. Tenant Improvements. Tenant shall with reasonable diligence through a
-------------------
contractor selected by Tenant construct and install in the Premises the
improvements and fixtures provided for in this Construction Rider ("TENANT
IMPROVEMENTS"). Landlord shall have the right to review and approve Tenant's
contractor based on its qualifications, including quality of work,
creditworthiness, and experience. Tenant agrees to allow Landlord's contractor,
Commercial Interior Contractors ("CIC"), to bid on such work. Tenant recognizes
and agrees that CIC is an affiliate of Landlord. Upon request by Landlord,
Tenant shall designate in writing an individual authorized to act as Tenant's
Representative with respect to all approvals, directions- and authorizations
pursuant to this Construction Rider.
1.1 Plans. The Tenant Improvements shall be constructed substantially
-----
as shown on the conceptual space plan for the Premises prepared by a space
planner mutually agreeable to Landlord and Tenant, which space planner will be
retained by Tenant as the space planner for the Premises ("SPACE PLANNER"), to
prepare a space plan ("SPACE PLAN") reasonably acceptable to Landlord and
Tenant.
As soon as may be reasonably practicable after requested by Tenant,
the Space Planner will prepare and deliver to Landlord and Tenant detailed plans
and specifications sufficient to permit the construction of the Tenant
Improvements by Tenant's contractor ("CONSTRUCTION DOCUMENTS"). Tenant's
contractor will provide Landlord and Tenant with a cost estimate for the work
shown in the Construction Documents. Landlord and Tenant shall respond to the
Construction Documents and cost estimate within three (3) Business Days after
receipt thereof, specifying any changes or modifications Landlord and Tenant
desire in the Construction Documents. The Space Planner will then revise the
Construction Documents and resubmit them to Landlord and Tenant for their
approval and Tenant's contractor will provide Landlord and Tenant with a revised
cost estimate. Landlord and Tenant shall approve or disapprove the same within
three (3) Business Days after receipt. The revised Construction Documents and
cost estimate, as approved by Tenant and Landlord, are hereinafter referred to
as the "FINAL CONSTRUCTION DOCUMENTS" and "FINAL COST ESTIMATE," respectively.
Additional interior decorating services and advice on the furnishing and
decoration of the Premises, such as the selection of fixtures, furnishings or
design of mill work, shall be provided by Tenant at its expense, but shall be
subject to the reasonable approval of Landlord.
Exhibit B, Page 1.
<PAGE>
1.2 Construction. Upon approval by Landlord and Tenant of the Final
------------
Construction Documents and the Final Cost Estimate, Tenant shall proceed with
reasonable diligence to cause the Tenant Improvements to be Substantially
Completed by Tenant's contractor.
The Tenant Improvements shall be deemed to be "SUBSTANTIALLY COMPLETED"
when they have been completed in accordance with the Final Construction
Documents except for finishing details, minor omissions, decorations and
mechanical adjustments of the type normally found on an architectural "punch
list". (The definition of Substantially Completed shall also define the terms
"SUBSTANTIAL COMPLETION" and "SUBSTANTIALLY COMPLETE.")
Following Substantial Completion of the Tenant Improvements, Landlord and
Tenant shall inspect the Premises and jointly prepare a "punch list" of agreed
items of construction remaining to be completed. Tenant shall cause Tenant's
contractor to complete the items set forth in the punch list as soon as
reasonably possible using commercially reasonable efforts.
1.3 Cost of Tenant Improvements. Landlord shall contribute up to
---------------------------
Fifty Thousand and 00/100 Dollars ($50,000.00) (the "ALLOWANCE"), toward the
cost of the design (including preparation of space plans and Construction
Documents), construction and installation of the Tenant Improvements. The
balance, if any, of the cost of the Tenant Improvements ("ADDITIONAL COST")
shall be paid by Tenant. As construction of Tenant Improvements progresses,
within thirty (30) days after Landlord receives from Tenant each request for
payment, which request shall be accompanied by "Supporting Information,"
Landlord shall disburse portions of the Allowance to Tenant based upon an
invoice from Tenant's contractor for work completed in construction of Tenant
Improvements; provided, however, Landlord shall not be obligated to disburse
portions of the Allowance more often than once per month. The "Supporting
Information" shall include (a) an invoice from Tenant's contractor based upon
work then completed, less (i) previous disbursements and (ii) retainage of ten
percent (10%), (b) a cost breakdown of the work completed by trade or category,
with the amount of previous disbursements by trade or category, and (c)
conditional and unconditional lien releases from Tenant's contractor and the
applicable subcontractors and suppliers. In no event shall Landlord be obligated
to contribute more than the Allowance toward all the costs of the Tenant
Improvements and any permits and inspections required in connection with the
construction thereof.
1.4. Changes. If Tenant requests any change, addition or alteration in
-------
or to any Final Construction Documents ("CHANGES") Tenant shall cause the Space
Planner to prepare additional Plans implementing such Change. As soon as
practicable after the completion of such additional Construction Documents,
Tenant's contractor shall notify Landlord and Tenant of the estimated cost of
the Changes. Within three (3) Business Days after receipt of such cost estimate,
Tenant shall notify Landlord in writing whether Tenant approves the Change. If
Tenant approves the Change, Tenant's contractor shall proceed with the Change
and Tenant shall be liable for any Additional Cost resulting from the Change. If
Tenant fails to approve the Change within such three (3) Business Day period,
construction of the Tenant Improvements shall proceed as provided in accordance
with the original Construction Documents.
Exhibit B, Page 2.
<PAGE>
1.5 Delays. Tenant shall be responsible for, and shall pay to
------
Landlord, any and all costs and expenses incurred by Landlord in connection with
any delay in the commencement or completion of any Tenant Improvements and any
increase in the cost of Tenant Improvements caused by (i) Tenant's failure to
submit information to the Space Planner or approve any Space Plan, Construction
Documents or cost estimates within the time periods required herein, (ii) any
delays in obtaining any items or materials constituting part of the Tenant
Improvements requested by Tenant, (iii) any Changes, or (iv) any other delay
requested or caused by Tenant (collectively, "TENANT DELAYS").
2. Delivery of Premises. [Intentionally Deleted].
--------------------
3. Access to Premises. Landlord shall allow Tenant and Tenant's
------------------
Representatives to enter the Premises prior to the Commencement Date to permit
Tenant to make the Premises ready for its use and occupancy; provided, however,
that prior to such entry of the Premises, Tenant shall provide evidence
reasonably satisfactory to Landlord that Tenant's insurance, as described in
Section 11.1 - Tenant's Insurance of the Lease, shall be in effect as of the
time of such entry.
Tenant agrees that Landlord shall not be liable in any way for any
injury, loss or damage which may occur to any of Tenant's property placed upon
or installed in the Premises prior to the Commencement Date, the same being at
Tenant's sole risk, and Tenant shall be liable for all injury, loss or damage to
persons or property arising as a result of such entry into the Premises by
Tenant or its Representatives.
4. Ownership of Tenant Improvements. All Tenant Improvements, whether
--------------------------------
installed by Landlord or Tenant, shall become a part of the Premises, shall be
the property of Landlord and, subject to the provisions of the Lease, shall be
surrendered by Tenant with the Premises, without any compensation to Tenant, at
the expiration or termination of the Lease in accordance with the provisions of
the Lease. Upon expiration or termination of this Lease Tenant shall in the
manufacturing portion of the Premises, in the areas shown on Exhibit A-3
attached to this Lease, (a) restore any carpet and (b) remove any interior walls
installed by Tenant to be office space.
INITIALS:
Landlord ____
Tenant ____
Exhibit B, Page 3.
<PAGE>
EXHIBIT C
---------
ATTACHED TO AND FORMING A PART OF
LEASE AGREEMENT
DATED AS OF AUGUST 12,1998
BETWEEN
SEAPORT CENTRE ASSOCIATES, LLC, AS LANDLORD,
AND
CLARENT CORPORATION, AS TENANT ("LEASE")
BUILDING RULES
--------------
The following Building Rules are additional provisions of the foregoing
Lease to which they are attached. The capitalized terms used herein have the
same meanings as these terms are given in the Lease.
1. Use of Common Areas. Tenant will not obstruct the sidewalks, halls,
-------------------
passages, exits, entrances, elevators or stairways of the Building ("COMMON
AREAS"), and Tenant will not use the Common Areas for any purpose other than
ingress and egress to and from the Premises. The Common Areas, except for the
sidewalks, are not open to the general public and Landlord reserves the right to
control and prevent access to the Common Areas of any person whose presence, in
Landlord's opinion, would be prejudicial to the safety, reputation and interests
of the Building and its tenants.
2. No Access to Roof. Tenant has no right of access to the roof of the
-----------------
Building and will not install, repair or replace any antenna, aerial, aerial
wires, fan, air-conditioner or other device on the roof of the Building, without
the prior written consent of Landlord. Any such device installed without such
written consent is subject to removal at Tenant's expense without notice at any
time. In any event Tenant will be liable for any damages or repairs incurred or
required as a result of its installation, use, repair, maintenance or removal of
such devices on the roof and agrees to indemnify and hold harmless Landlord from
any liability, loss, damage, cost or expense, including reasonable attorneys'
fees, arising from any activities of Tenant or of Tenant's Representatives on
the roof of the Building. Notwithstanding the foregoing, Landlord hereby
consents to entry by Tenant's HVAC contractor onto the roof for service of the
HVAC units, subject to reasonable rules and regulations of Landlord, and
provided that such contractor shall be responsible for any damage such
contractor causes to the roof.
3. Signage. Tenant shall have the right, at Tenant's sole cost and
-------
expense, to install a sign upon a monument to be located in front of the
Building, subject to Landlord's reasonable approval, and subject to ordinances,
regulations and any approval from the City of Redwood City. Landlord shall, at
Landlord's sole cost and expense, construct a monument, subject to approval of
the City of Redwood City. No sign, placard, picture, name, advertisement or
notice visible from the exterior of the Premises will be inscribed, painted,
affixed or otherwise displayed by Tenant on or in any part of the Building
without the prior written consent of Landlord. Landlord reserves the right to
adopt and furnish Tenant with general guidelines relating to signs in or on the
Building. All approved signage will be inscribed, painted or affixed
Exhibit C, Page 1.
<PAGE>
at Tenant's expense by a person approved by Landlord, which approval will not be
unreasonably withheld.
4. Prohibited Uses. The Premises will not be used for manufacturing, for
---------------
the storage of merchandise held for sale to the general public, for lodging or
for the sale of goods to the general public. Tenant will not permit any food
preparation on the Premises except that Tenant may use Underwriters' Laboratory
approved equipment for brewing coffee, tea, hot chocolate and similar beverages
so long as such use is in accordance with all applicable federal, state and city
laws, codes, ordinances, rules and regulations.
5. Janitorial Services. Tenant will be responsible, at Tenant's expense,
-------------------
to keep the Premises clean, including daily janitorial service. Tenant shall
enter into an agreement with a janitorial service to clean the Premises during
week-days, which contract and janitorial company shall be subject to Landlord's
prior written consent, which consent shall not be unreasonably withheld or
delayed.
6. Keys and Locks. Landlord will furnish Tenant, free of charge, two keys
--------------
to each door or lock in the Premises. Landlord may make a reasonable charge for
any additional or replacement keys. Tenant will not duplicate any keys, alter
any locks or install any new or additional lock or bolt on any door of its
Premises or on any other part of the Building without the prior written consent
of Landlord, which consent shall not be unreasonably withheld or delayed and, in
any event, Tenant will provide Landlord with a key for any such lock (except for
secure areas designated reasonably by Tenant). On the termination of the Lease,
Tenant will deliver to Landlord all keys to any locks or doors in the Building
which have been obtained by Tenant.
7. Freight. Tenant shall not transport freight in loads exceeding the
-------
weight limitations of any elevator in the Building. Landlord reserves the right
to prescribe the weight, size and position of all equipment, materials,
furniture or other property brought into the Building, and no property will be
received in the Building except along such routes as may be designated by
Landlord. Landlord reserves the right to require that heavy objects will stand
on wood strips of such length and thickness as is necessary to properly
distribute the weight. Landlord will not be responsible for loss of or damage to
any such property from any cause, and Tenant will be liable for all damage or
injuries caused by moving or maintaining such property.
8. Nuisances and Dangerous Substances. Tenant will not conduct itself or
----------------------------------
permit Tenant's Representatives or Visitors to conduct themselves, in the
Premises or anywhere on or in the Project in a manner which is offensive or
unduly annoying to any other Tenant or Landlord's property managers. Tenant
will not install or operate any phonograph, radio receiver, musical instrument,
or television or other similar device in any part of the Common Areas and shall
not operate any such device installed in the Premises in such manner as to
disturb or unreasonably annoy other tenants of the Project. Tenant will not use
or keep in the Premises or the Property any kerosene, gasoline or other
combustible fluid or material other than limited quantities thereof reasonably
necessary for the maintenance of office equipment, or, without Landlord's prior
written approval, use any method of heating or air conditioning other than that
supplied by Landlord. Tenant will not use or keep any foul or noxious gas or
substance in the Premises or permit or suffer the Premises to be occupied or
used in a manner offensive or objectionable to
Exhibit C, Page 2.
<PAGE>
Landlord or other occupants of the Project by reason of noise, odors or
vibrations, or interfere in any way with other tenants or those having business
therein. Tenant will not bring or keep any animals in or about the Premises or
the Project, except for animals trained to assist, and assisting Tenant's
disabled Visitors.
9. Building Name and Address. Without Landlord's prior written consent,
-------------------------
Tenant will not use the name of the Building in connection with or in promoting
or advertising Tenant's business except as Tenant's address.
10. Building Directory. A directory for the Building will be provided for
------------------
the display of the name and location of tenants. Landlord reserves the right to
approve any additional names Tenant desires to place in the directory and, if so
approved, Landlord may assess a reasonable charge for adding such additional
names.
11. Window Coverings. No curtains, draperies, blinds, shutters, shades,
----------------
awnings, screens or other coverings, window ventilators, hangings, decorations
or similar equipment shall be attached to, hung or placed in, or used in or with
any window of the Building without the prior written consent of Landlord, and
Landlord shall have the right to control all lighting within the Premises that
may be visible from the exterior of the Building.
12. Floor Coverings. Tenant will not lay or otherwise affix linoleum,
---------------
tile, carpet or any other floor covering to the floor of the Premises in any
manner except as approved in writing by Landlord. Tenant will be liable for the
cost of repair of any damage resulting from the violation of this rule or the
removal of any floor covering by Tenant or its contractors, employees or
invitees.
13. Wiring and Cabling Installations. Landlord will direct Tenant's
--------------------------------
electricians and other vendors as to where and how data, telephone, and
electrical wires and cables are to be installed. No boring or cutting for wires
or cables will be allowed without the prior written consent of Landlord. The
location of burglar alarms, smoke detectors, telephones, call boxes and other
office equipment affixed to the Premises shall be subject to the written
approval of Landlord, which approval shall not be unreasonably withheld or
delayed.
14. Office Closing Procedures. Tenant will see that the doors of the
-------------------------
Premises are closed and locked and that all water faucets, water apparatus and
utilities are shut off before Tenant or its employees leave the Premises, so as
to prevent waste or damage. Tenant will be liable for all damage or injuries
sustained by other tenants or occupants of the Building or Landlord resulting
from Tenant's carelessness in this regard or violation of this rule. Tenant will
keep the doors to the Building corridors closed at all times except for ingress
and egress.
15. Plumbing Facilities. The toilet rooms, toilets, urinals, wash bowls
-------------------
and other apparatus shall not be used for any purpose other than that for which
they were constructed and no foreign substance of any kind whatsoever shall be
disposed of therein. Tenant will be liable for any breakage, stoppage or damage
resulting from the violation of this rule by Tenant, its employees or invitees.
Exhibit C, Page 3.
<PAGE>
16. Use of Hand Trucks. Tenant will not use or permit to be used in the
------------------
Premises or in the Common Areas any hand trucks, carts or dollies except those
equipped with rubber tires and side guards or such other equipment as Landlord
may approve.
17. Refuse. Tenant shall store all Tenant's trash and garbage within the
------
Premises or in other facilities designated By Landlord for such purpose. Tenant
shall not place in any trash box or receptacle any material which cannot be
disposed of in the ordinary and customary manner of removing and disposing of
trash and garbage in the city in which the Building is located without being in
violation of any law or ordinance governing such disposal. All trash and garbage
removal shall be made in accordance with directions issued from time to time by
Landlord, only through such Common Areas provided for such purposes and at such
times as Landlord may designate. Tenant shall be responsible for removing trash
from the Premises. Tenant shall comply with the requirements of any recycling
program adopted by Landlord for the Building.
18. Soliciting. Canvassing, peddling, soliciting and distribution of
----------
handbills or any other written materials in the Building are prohibited, and
Tenant will cooperate to prevent the same.
19. Parking. Tenant will use, and cause Tenant's Representatives and
-------
Visitors to use, any parking spaces to which Tenant is entitled under the Lease
in a manner consistent with Landlord's directional signs and markings in the
Parking Facility. Specifically, but without limitation, Tenant will not park, or
permit Tenant's Representatives or Visitors to park, in a manner that impedes
access to and from the Building or the Parking Facility or that violates space
reservations for handicapped drivers registered as such with the California
Department of Motor Vehicles. Landlord may use such reasonable means as may be
necessary to enforce the directional signs and markings in the Parking Facility,
including but not limited to towing services, and Landlord will not be liable
for any damage to vehicles towed as a result of noncompliance with such parking
regulations.
20. Fire, Security and Safety Regulations. Tenant will comply with all
-------------------------------------
safety, security, fire protection and evacuation measures and procedures
established by Landlord or any governmental agency.
21. Responsibility for Theft. Tenant assumes any and all responsibility
------------------------
for protecting the Premises from theft, robbery and pilferage, which includes
keeping doors locked and other means of entry to the Premises closed.
22. Sales and Auctions. Tenant will not conduct or permit to be conducted
------------------
any sale by auction in, upon or from the Premises or elsewhere in the Property,
whether said auction be voluntary, involuntary, pursuant to any assignment for
the payment of creditors or pursuant to any bankruptcy or other insolvency
proceeding.
23. Waiver of Rules. Landlord may waive any one or more of these Building
---------------
Rules for the benefit of any particular tenant or tenants, but no such waiver by
Landlord will be construed as a waiver of such Building Rules in favor of any
other tenant or tenants nor prevent
Exhibit C, Page 4.
<PAGE>
Landlord from thereafter enforcing these Building Rules against any or all of
the tenants of the Building.
24. Effect on Lease. These Building Rules are in addition to, and shall
---------------
not be construed to in any way modify or amend, in whole or in part, the terms,
covenants, agreements and conditions of the Lease. Violation of these Building
Rules constitutes a failure to fully perform the provisions of the Lease, as
referred to in Section 15.1 - "Events of Default".
25. Non-Discriminatory Enforcement. Subject to the provisions of the Lease
------------------------------
(and the provisions of other leases with respect to other tenants), Landlord
shall use reasonable efforts to enforce these Building Rules in a non-
discriminatory manner, but in no event shall Landlord have any liability for any
failure or refusal to do so (and Tenant's sole and exclusive remedy for any such
failure or refusal shall be injunctive relief preventing Landlord from enforcing
any of the Building Rules against Tenant in a manner that discriminates against
Tenant).
26. Additional and Amended Rules. Landlord reserves the right to rescind
----------------------------
or amend these Building Rules and/or adopt any other and reasonable rules and
regulations as in its judgment may from time to time be needed for the safety,
care and cleanliness of the Building and for the preservation of good order
therein.
INITIALS:
Landlord _____
Tenant _____
Exhibit C, Page 5.
<PAGE>
EXHIBIT D
---------
ATTACHED TO AND FORMING A PART OF
LEASE AGREEMENT
DATED AS OF AUGUST 12,1998
BETWEEN
SEAPORT. CENTRE ASSOCIATES, LLC, AS LANDLORD,
AND
CLARENT CORPORATION, AS TENANT ("LEASE")
ADDITIONAL PROVISIONS RIDER
---------------------------
35. LETTER OF CREDIT.
(A) Within fifteen (15) days after the execution hereof, Tenant shall
deliver to Landlord a clean, unconditional, irrevocable, transferable letter of
credit (the "Letter of Credit") in form, and issued by a financial institution
("Issuer") satisfactory to Landlord in Landlord's sole discretion. The Letter of
Credit shall be in the amount of Four Hundred Eighty-Five Thousand and 00/100
Dollars ($485,000.00), name Landlord as the beneficiary thereunder, and provide
that draws thereunder will be honored upon receipt by Issuer of a written
statement signed by Landlord or Landlord's authorized agent stating that
Landlord is drawing down on the Letter of Credit pursuant to the terms of this,
Lease. Landlord shall be entitled to draw the entire amount under the Letter of
Credit if either (i) Tenant commits an Event of Default under this Lease, (ii)
Tenant does not deliver to Landlord a replacement letter of credit from Issuer
or another financial institution satisfactory to Landlord in Landlord's sole
discretion in the amount and form of the initial Letter of Credit no later than
one month before the expiration date of the then existing Letter of Credit, or
(iii) upon a proposed sale or other transfer of the Building, the Land, this
Lease, or Landlord (including consolidations, mergers or other entity changes
Tenant does not deliver to any such transferees, successors or assigns a
replacement Letter of Credit pursuant to the provisions of (c) below. Any amount
drawn under the Letter of Credit shall be held or applied by Landlord as a
Security Deposit, subject to, the terms of Section 4 of this Lease.
(B) Tenant shall not assign or encumber or attempt to assign or encumber
the Letter of Credit and neither Landlord nor its successors or assigns shall be
bound by any such assignment or encumbrance or attempted assignment or
encumbrance.
(C) If Landlord shall be holding the Letter of Credit as security, then,
in the event of a proposed sale or lease of the Building by Landlord, Tenant
will, upon ten (10) Business Days' notice, at its sole cost and expense, cause
the issuing bank to consent to the assignment or to issue a substitute letter of
credit on identical terms except for the stated beneficiary, from the same
issuing bank or another bank acceptable to Landlord in Landlord's sole
discretion, naming the new landlord as the beneficiary thereof upon delivery by
Landlord of the then outstanding Letter of Credit.
Exhibit D, Page 1.
<PAGE>
(D) If, and only if, (x) there has been no Event of Default under the
Lease during the eighteen (18) months prior to Reduction Date (as hereinafter
defined) and (y) during each of Tenant's four (4) most recent accounting
quarters immediately prior to the Reduction Date Tenant has publicly reported
positive net income equal to three (3) times the sum of (A) the Base Rent, and
(B) the actual Additional Rent (as such Base Rent and Additional Rent may from
time to time change) for each of the same four (4) accounting quarters for which
net income is being compared, then when all of the preceding conditions
contained in this subsection (d) have been satisfied (the "Reduction Date"),
then the amount remaining available to be drawn under the Letter of Credit shall
be reduced in twelve month increments, beginning twenty-four months after the
Commencement Date, so the amount available to be drawn under the Letter of
Credit shall be as follows:
Months (counting from the Commencement Date through Amount Available
applicable monthly anniversary of Commencement Date Under the Letter of Credit
----------------------------------------------------------------------------------------
01 - 24 $485,000.00
25 - 36 $388,000.00
37 - 48 $291,000.00
49 - 60 $194,000.00
(E) If (i) there is an initial public offering ("IPO") of Tenant' s stock
on any public stock exchange, and (ii) there has been no Event of Default under
the Lease during the eighteen (18) months prior to the IPO, or at any time
thereafter, then six (6) months after the IPO Landlord agrees to review, in
Landlord's sole discretion, the Letter of Credit requirement, taking into
account Tenant's financial strength, including net income, following the IPO and
Tenant's obligations under the Lease at that time, including obligations with
respect to any additional space leased by Tenant hereunder. Based upon such
review Landlord agrees to consider, in Landlord's sole discretion, waiving the
requirement of the Letter of Credit.
36. PARKING.
(A) Tenant's Parking Rights. Landlord shall provide Tenant, on an
-----------------------
unassigned and non-exclusive basis, for use by Tenant and Tenant's
Representatives and Visitors, at the users' sole risk, one (1) parking space in
the Parking Facility for each three hundred thirty-three (333) rentable square
feet of space leased to Tenant. The parking spaces to be made available to
Tenant hereunder may contain a reasonable mix of spaces for compact cars and up
to ten percent (10%) of the unassigned spaces may also be designated by Landlord
as Building visitors' parking.
(B) Availability of Parking Spaces. Landlord shall take reasonable actions
------------------------------
to ensure the availability of the parking spaces leased by Tenant, but Landlord
does not guarantee the availability of those spaces at all times against the
actions of other tenants of the Building and users of the Parking Facility.
Access to the Parking Facility may, at Landlord's option, be regulated by card,
pass, bumper sticker, decal or other appropriate identification issued by
Landlord. Landlord retains the right to revoke the parking privileges of any
user of the Parking Facility who violates the rules and regulations governing
use of the Parking Facility (and Tenant
Exhibit D, Page 2.
<PAGE>
shall be responsible for causing any employee of Tenant or other person using
parking spaces allocated to Tenant to comply with all parking rules and
regulations).
(C) Assignment and Subletting. Notwithstanding any other provision of the
-------------------------
Lease to the contrary, Tenant shall not assign its rights to the parking spaces
or any interest therein, or sublease or otherwise allow the use of all or any
part of the parking spaces to or by any other person, except either (i) to a
Permitted Transferee, or (ii) with Landlord's prior written consent, which may
be granted or withheld by Landlord in its sole discretion. In the event of any
separate assignment or sublease of parking space rights that is approved by
Landlord, Landlord shall be entitled to receive, as additional Rent hereunder,
one hundred percent (100%) of any profit received by Tenant in connection with
such assignment or sublease of parking spaces.
(D) Condemnation, Damage or Destruction. In the event the Parking Facility
-----------------------------------
is the subject of a Condemnation, or is damaged or destroyed, and this Lease is
not terminated, and if in such event the available number of parking spaces in
the Parking Facility is permanently reduced, then Tenant's rights to use parking
spaces hereunder may, at the election of Landlord, thereafter be reduced in
proportion to the reduction of the total number of parking spaces in the Parking
Facility. In such event, Landlord reserves the right to reduce the number of
parking spaces to which Tenant is entitled or to relocate some or all of the
parking spaces to which Tenant is entitled to other areas in the Parking
Facility.
INITIALS:
Landlord ____
Tenant ____
Exhibit D, Page 3.