California-San Francisco-353 Sacramento Street Lease - John Hancock Mutual Life Insurance Co. and Digital Island Inc.
353 SACRAMENTO STREET OFFICE LEASE
BETWEEN
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY,
A MASSACHUSETTS CORPORATION
("LANDLORD")
AND
DIGITAL ISLAND
A CALIFORNIA CORPORATION
"TENANT"
DATED AS OF APRIL 8, 1997
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TABLE OF CONTENTS
PAGE
SECTION 1. PREMISE................................................. 1
SECTION 2. TERM.................................................... 1
SECTION 3. USE, NUISANCE OR HAZARD................................. 2
SECTION 4. RENT.................................................... 3
SECTION 5. OPERATING EXPENSES...................................... 4
SECTION 6. SERVICES TO BE PROVIDED BY LANDLORD..................... 8
SECTION 7. REPAIRS AND MAINTENANCE BY LANDLORD..................... 9
SECTION 8. REPAIRS AND CARE OF BUILDING BY TENANT.................. 10
SECTION 9. TENANT'S EQUIPMENT AND INSTALLATIONS; EXCESS UTILITIES.. 10
SECTION 10. FORCE MAJEURE.......................................... 11
SECTION 11. MECHANIC'S AND MATERIALMAN'S LIENS..................... 11
SECTION 12. INSURANCE.............................................. 12
SECTION 13. QUIET ENJOYMENT........................................ 13
SECTION 14. TENANT IMPROVEMENT ALLOWANCE........................... 13
SECTION 15. ALTERATIONS............................................ 13
SECTION 16. FURNITURE. FIXTURES AND PERSONAL PROPERTY.............. 15
SECTION 17. TAXES.................................................. 15
SECTION 18. ASSIGNMENT AND SUBLETTING.............................. 16
SECTION 19. FIRE AND CASUALTY...................................... 17
SECTION 20. CONDEMNATION........................................... 18
SECTION 21. INDEMNIFICATION........................................ 19
SECTION 22. DEFAULT BY TENANT ..................................... 20
SECTION 23. LIEN FOR RENT.......................................... 23
SECTION 24. RIGHT TO RELOCATE...................................... 23
SECTION 25. ATTORNEYS' FEES........................................ 23
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TABLE OF CONTENTS
(CONTINUED)
PAGE
SECTION 26. NON-WAIVER................................... 24
SECTION 27. RULES AND REGULATIONS........................ 24
SECTION 28. ASSIGNMENT BY LANDLORD....................... 24
SECTION 29. LIABILITY OF LANDLORD........................ 24
SECTION 30. SUBORDINATION AND ATTORNMENT................. 24
SECTION 31. HOLDING OVER................................. 25
SECTION 32. SIGNS........................................ 26
SECTION 33. HAZARDOUS SUBSTANCES......................... 26
SECTION 34. COMPLIANCE WITH LAWS AND OTHER REGULATIONS... 27
SECTION 35. GOVERNING LAW; SEVERABILITY.................. 27
SECTION 36. NOTICES...................................... 28
SECTION 37. OBLIGATIONS OF SUCCESORS, PLURALITY, GENDER.. 28
SECTION 38. ENTIRE AGREEMENT............................. 29
SECTION 39. SECTION CAPTIONS............................. 29
SECTION 40. CHANGES...................................... 29
SECTION 41. AUTHORITY.................................... 29
SECTION 42. BROKERAGE.................................... 29
SECTION 43. ADDITIONS TO LEASE........................... 30
EXHIBIT A - LOCATION OF PREMISES
EXHIBIT B - RULES AND REGULATIONS
EXHIBIT C - TENANT IMPROVEMENT WORK
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BASIC LEASE INFORMATION
353 SACRAMENTO STREET
Lease Date: April 8, 1997
Landlord: John Hancock Mutual Life Insurance Company,
a Massachusetts corporation
Address of c/o The Galbreath Company
Landlord: 353 Sacramento Street, Suite 320
San Francisco, CA 94111
Tenant: Digital Island,
a California corporation
Address of Tenant: 353 Sacramento Street, Suite 1520
San Francisco, CA 94111
Contact for Tenant: Attn: Ron Higgins
Contact for Landlord: Melody Hanhan
353 Sacramento Street Building Manager
Tenant's Address
Prior to Occupancy: 1139 Bishop Sweet, Suite 1001
Honolulu, HI 96813
Attn: Ron Higgins
Section 1:
Premises: Suite 1520, 15th floor
The Building: 353 Sacramento Street
San Francisco, CA 94111
Building Rentable
Area (Office and
Retail Space): 251,777 square feet
Building Rentable.
Area (Office Space): 241,683 square feet
Premises Rentable
Area: 6,132 square feet
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Section 2:
Lease Term: 5 years
Term Commencement Date The date Landlord delivers the Premises to Tenant
Scheduled Term Commencement for
Phase I portion: Approximately May 15, 1997
Scheduled Term Commencement for
Phase 2 portion: Approximately July 1, 1997
Term Expiration Date: May 30, 2002
Section 3:
Use: General office purposes
Section 4:
P.S.F. Annual Monthly Minimum Annual Minimum
Year Rental Rental Rental
---- ------ ------ ------
*First $29.00 $14,819 $177,828
Second $30.00 $15,330 $183,960
Third $31.00 $15,841 $190,092
Fourth $32.00 $16,352 $196,224
Fifth $33.00 $16,863 $202,356
*Until the Phase 2 portion of the Premises is delivered to Tenant the
Monthly Minimum Rental is $7,566.60.
Security Deposit: $200,000 (See Section 4.6)
Section 5:
**Tenant's Expense Share: 2.54%
Tenant's Tax Share: 2.44%
**Until the Phase 2 portion of the Premises is delivered to Tenant,
Tenant's Expense Share is 1.30% and Tenant's Tax share is 1.24%
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Section 42:
Landlord's Broker: The Galbreath Company
Tenant's Broker: CB Commercial
The foregoing Basic Lease Information is hereby incorporated into and made
a part of this Lease. Each reference in this Lease to any of the Basic Lease
Information shall mean the information set forth above. In the event of a
conflict between any Basic Lease Information and the Lease, the Lease shall
control.
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353 SACRAMENTO STREET
OFFICE LEASE AGREEMENT
This Lease Agreement ("LEASE") is made and entered into as of April 8,
1997, by and between JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, a Massachusetts
corporation ("Landlord"), and DIGITAL ISLAND, a California Corporation
("TENANT")
Section I. Premises
1.1 Subject to all of the terms and conditions set forth in this Lease,
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord those
certain premises (the "LEASED PREMISES"), as described in attached Exhibit A
---------
The Leased Premises are part of the office building known as 353 Sacramento
Street (the "BUILDING"), located in San Francisco California. As used herein the
term "BUILDING" includes the Building, the underlying land and all improvements
thereon and appurtenances thereto. The Premises and the Building contain the
rentable square footage set forth in the Basic Lease Information (calculated
pursuant to the American National Standard method adopted by the Building Owners
and Managers Association International). The Building, the land and improvements
under and surrounding the Building and designated from time to time by Landlord
as laud or common areas appurtenant to the Building, together with utilities,
facilities; drives, walkways and other amenities appurtenant to or servicing the
Building are herein sometimes collectively called the "REAL PROPERTY." Tenant is
hereby granted the right to the non-exclusive use of the common corridors and
hallways, stairwells, elevators, electrical and telephone closets, restrooms and
other public or common areas; provided, however, that the maximum in which the
public and common areas are maintained and operated shall be at the sole
discretion of Landlord and the use thereof shall be subject to such rules,
regulations and restrictions as Landlord may make from time to time. Tenant
shall also have the right to the non-exclusive use of the loading dock of the
Building without charge, which use shall also be subject to such rules,
regulations and restrictions as Landlord may establish or alter at any time or
from time to time during the term hereof. Landlord reserves the right to make
alterations or additions to or to change the location of elements of the Real
Property and the common areas thereof.
1.2 The term "RENTABLE AREA" shall be computed by measuring from the
inside surface of the exterior glass of the outer building walls, to the center
of corridor walls, and to the center of all partitions which separate the Leased
Premises from adjoining areas, plus Tenant's pro rata portion of areas common to
all tenants of the Building including, without limitation, corridors, lobbies,
rest rooms, public areas, mechanical, electrical, telephone, janitorial or
equipment room, closet or space, and spaces within the entire Building. Elevator
shafts shall be excluded in computing Rentable Area.
SECTION 2. TERM
2.1 This Lease shall remain in effect for a term (the "INITIAL TERM")
commencing on the date Landlord delivers the Premises to Tenant as provided in
attached Exhibit C (which date is herein referred to as the "COMMENCEMENT DATE")
---------
and expiring at 6:00 P.M. on the Expiration Date specified in the Basic Lease
Information (the "EXPIRATION DATE") unless sooner terminated or extended as
provided in this Lease. The earlier of the Expiration Date or the date this
Lease is terminated is herein referred to as
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the "TERMINATION DATE". The Premises will be delivered to Tenant in two phases,
Phase 1 (consisting of approximately 3131 square feet) and Phase 2 (consisting
of approximately 3001 square feet). The estimated delivery date for each of
Phase 1 and Phase 2 is set forth in the Basic Lease Information.
2.2 Tenant accepts the Leased Premises in its "as is" condition, as of the
date hereof subject only to Landlord's obligations under Exhibit C. Except as
----------
provided in Exhibit C. Landlord shall have no obligation to modify or improve
--------
the Leased Premises and shall not be liable for any claims or damages arising in
connection with any modifications or improvements.
SECTION 3. USE, NUISANCE OR HAZARD
3.1 The Leased Premises shall be used and occupied by Tenant solely for
general office purposes and for no other purposes without Landlord's prior
written consent which consent may be given or withheld in Landlord's sole
discretion.
3.2 Tenant shall not use, occupy or permit the use or occupancy of the
Leased Premises for any purpose which Landlord, in its reasonable discretion,
deems to be illegal, immoral or dangerous; permit any public or private
nuisance; do or permit any act or thing which may disturb the quiet enjoyment of
any other tenant or occupancy of the Building; keep any substance or carry on or
permit any operation which might introduce offensive odors or conditions into
other portions of the Building; use any apparatus which might make undue noise
or set up vibrations in or about the Building; permit anything to be done which
would increase the premiums paid by Landlord for fire and extended coverage
insurance on the Building or its contents or cause a cancellation of any
insurance policy covering the Building or any part thereof or any of its
contents; or permit anything to be done which is prohibited by or which shall in
any way conflict with any Law (as defined in Section 34). Should Tenant do any
of the above without the prior written consent of Landlord, it shall constitute
an Event of Default (as defined in Section 22) and Landlord shall be entitled to
exercise any of its rights and remedies under this Lease or at law or in equity.
3.3 Without limiting the generality of the foregoing, Tenant shall
promptly comply with all requirements of the Americans with Disabilities Act and
the regulations promulgated thereunder in effect from time to time ("ADA
REQUIREMENTS") relating to the conduct of Tenant's business. Tenant shall have
exclusive responsibility for compliance with ADA Requirements pertaining to the
interior of the Premises, including the design and construction of the access
thereto and egress therefrom. Landlord shall have responsibility for compliance
with ADA Requirements which affect the common areas of the Building, subject to
Tenant's obligation to pay for its share of the expense of such compliance
pursuant To Section 5 of this Lease. Tenant shall comply promptly with any
direction of any governmental authority having jurisdiction which imposes any
duty upon Tenant or Landlord with respect to the Premises or with respect to the
use or occupation thereof, and Tenant agrees to furnish Landlord with a copy of
any such direction promptly after receipt of the same. In addition, Tenant shall
comply with any reasonable plan adopted by Landlord which is designed to fulfill
the requirements of any Laws, including ADA Requirements.
Should compliance by Tenant with this Section require Landlord's consent
pursuant to Section 15.1, Tenant shall promptly seek such consent, provide the
assurances and documents required
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by Section 15.1 and, following receipt of such consent, promptly comply with the
provisions of Section 15.1 and this Section 3.3.
If Tenant fails to comply with ADA Requirements as required in this Section
3.3, then, after notice to Tenant, Landlord may comply or cause such compliance,
in which case Tenant shall reimburse Landlord upon demand for Landlord's costs
incurred in connection therewith.
SECTION 4. RENT
4.1 Tenant shall pay to Landlord an initial base annual rental ("BASE
RENT") in the amount specified in the Basic Lease Information. Reference to
"BASE RENT" shall refer both to the initial Base Rent and the adjustment thereto
specified in the Basic Lease Information. The Base Rent shall be due and
payable, without notice, in twelve equal installments ("MONTHLY RENT") by check
or money order, in advance, on or before the first day of each calendar month.
In addition to the Base Rent, Tenant shall pay any and all other sums of money
as shall be become due and payable by Tenant as set forth in this Lease
("ADDITIONAL RENT"). The Monthly Rent and/or Additional Rent are sometimes
collectively called the "RENT" and shall be paid when due in lawful money of the
United States without demand, deduction, abatement or offset at the address
specified in the Basic Lease Information or such other place as Landlord may
designate from time to time. All Rent and any other charges due and unpaid as of
the Termination Date shall be deemed due and payable on the Termination Date
and, if unpaid as of such date, shall sin-rive the Termination Date. Landlord
expressly reserves the right to apply the payment of Base Rent to any other
items of Rent that are not paid by Tenant.
4.2 Notwithstanding the above, in the event any Rent or other amounts
owing under this Lease are not paid within five days after the due date, then
Landlord and Tenant agree that Landlord will incur additional administrative
expenses, the amount of which will be difficult, if not impossible, to determine
Accordingly, in addition to such required payment, Tenant shall pay to Landlord,
upon demand, an additional one time late charge ("LATE CHARGE"), as Additional
Rent, for any such late payment in the amount often percent of the amount of
such late payment. Failure to pay any applicable Late Charge shall be deemed a
Monetary Default (as defined in Section 22). Provision for the Late Charge shall
be in addition to all other rights and remedies available to Landlord under this
Lease, at law or in equity, and shall not be construed as liquidated damages or
limiting Landlord's remedies in any manner. Failure to charge or collect such
Late Charge in connection with any one or more such late payments shall not
constitute a waiver of Landlord's right to charge and collect such Late Charges
in connection with any other or similar or like late payments.
4.3 If the Term commences on a date other than the first day of a calendar
month or terminates on a date other than the last day of a calendar month, the
Rent for such partial months shall be prorated to the actual number of days the
Lease is in effect for said partial months.
4.4 All Rents and any other amounts payable by Tenant to Landlord, if not
paid when due, shall bear interest from the date due until paid at the rate of
interest publicly announced from time to time by Bank of America National Trust
and Savings Association in San Francisco as its Reference Rate (the "REFERENCE
RATE") plus four percent per annum, but not in excess of the maximum legal rate
permitted by law. Failure to charge or collect such interest in connection with
any one or more such late
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payments shall not constitute a waiver of Landlord's right to charge and collect
such interest in connection with any other or similar or like late payments.
4.5 If Tenant fails to timely make two consecutive payments of Monthly
Rent or makes two (2) consecutive payments of Money Rent which are returned to
Landlord by Tenant's financial institution for insufficient funds, Landlord may
require, by giving written notice to Tenant, that all future payments of Rent
shall be made in cashier's check or money order. The above is in addition to any
other remedy of Landlord under this Lease, at law or in equity.
4.6 The first payment of Monthly Rent shall be due and payable upon the
execution of this Lease by Tenant, which sum shall be applied to the Base Rent
for the first month of the Term. Additionally, Tenant shall pay to Landlord the
security deposit (the "SECURITY DEPOSIT") in the amount specified in the Basic
Lease Information as security for Tenant's faithful performance of all of the
terms, covenants, conditions and obligations required to be performed by Tenant
hereunder. Without waiving any of Landlord's other rights and remedies under
this Lease, but after notice and expiration of any cure period (if required
under Section 22), Landlord may apply any part or all of the Security Deposit to
remedy any failure by Tenant to repair or maintain the Leased Premises or to
perform any other term, covenants or conditions contained in this Lease or to
compensate Landlord for damages incurred in connection with any event of default
by Tenant under this Lease. If Landlord so applies the Security Deposit, Tenant
shall within ten days after demand from Landlord restore the Security Deposit to
the full amount required hereunder. Failure of Tenant to do so shall be a
default under this Lease. Landlord's application of the Security Deposit shall
in no event be construed as in any way limiting Tenant's liability or obligation
with respect to any such default. If Tenant has kept and performed all terms,
covenants and conditions of this Lease, Landlord will, within thirty days
following termination of this Lease, return the Security Deposit to Tenant or
the last permitted assignee of Tenant's interest hereunder at the Termination
Date. Landlord shall not be required to keep the Security Deposit separate from
its general funds, and Tenant shall not be entitled to interest on the Security
Deposit. No trust or fiduciary relationship is created by this Lease between
Landlord and Tenant with respect to the Security Deposit. If the Security
Deposit is in the form of a letter of credit, the letter of credit shall conform
to the Letter of Credit Requirements provided by Landlord to Tenant and shall be
drawable at a location in the San Francisco Bay Area.
SECTION 5. ADDITIONAL RENT; OPERATING EXPENSES AND APPLICABLE TAXES
5.1 As used in this Lease, the following terms have the meanings
hereinafter set forth:
(a) "EXPENSE BASE YEAR" and "TAX BASE YEAR" shall mean calendar year 1997.
(b) "EXPENSE COMPARISON YEAR" shall mean each successive calendar year
after the Expense Base Year during the Lease Term.
(c) "TAX COMPARISON YEAR" shall mean each successive calendar year after
the Tax Base Year during the Lease Term.
(d) "TENANT'S EXPENSE SHARE" shall mean the percentage of Operating
Expenses set forth in the Basic Lease Information. Tenant's Expense Share was
calculated by dividing the rentable area of the
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Premises by the total rentable area of the office space in the Building. In the
event either the rentable area of the Premises and/or the total rentable area of
the office space in the Building is changed, Tenant's Expense Share shall be
appropriately adjusted, and, as to the Expense Year in which such change occurs,
Tenant's Expense Share for such year shall be prorated for the periods before
and after such change on the basis of the number of days during such Expense
Year.
(e) "TENANT'S TAX SHARE" shall mean the percentage of Applicable Taxes set
forth in the Basic Lease Information. Tenant's Tax Share was calculated by
dividing the rentable area of the Premises by the total rentable area of the
office and retail space in the Building. In the event either the rentable area
of the Premises or the total rentable area of the office and retail space in the
Building is changed, Tenants Tax Share shall be appropriately adjusted, and, as
to the Tax Year in which such change occurs, Tenant's Tax Share for such year
shall be prorated for the periods before and after such change on the basis of
the number of days during such Tax Year.
(f) "OPERATING EXPENSES" shall mean any and all costs and expenses paid or
incurred by Landlord in connection with the operation, maintenance, management,
repair and replacement of the Real Property. By way of illustration but not
limitation, Operating Expenses shall include the following: (i) the cost of air
conditioning, electricity, steam, heating, water, mechanical, ventilating,
sanitary and storm drainage (including provision of services, maintenance,
repair and replacement), the cost of environmental surcharges imposed by any
government entity, escalator and elevator systems and all other utilities and
the cost of supplies and equipment and maintenance and service contracts in
connection therewith; (ii) the cost of repairs and general maintenance and
cleaning, including all goods, services and supplies purchased by Landlord in
connection therewith; (iii) the cost of fire, extended coverage, boiler,
sprinkler, public liability, property damage, loss of rent, earthquake and other
insurance on or coveting operations of the Building, including such other
endorsements as Landlord may desire, all in such amounts as Landlord may
reasonably determine, and the cost of any losses payable by Landlord as a
deductible; (iv) wages, salaries and other labor costs, including uniforms,
taxes, insurance, retirement, medical and other employee benefits; (v)
reasonable fees, charges and other costs, including management fees, consulting
fees, legal fees and accounting fees, of all independent contractors engaged by
Landlord or reasonably charged by Landlord if Landlord or its affiliate(s)
perform management services in connection with the Real Property, and the costs
of supplying, replacing and cleaning employee uniforms; (vi) the cost of
licenses, permits and inspections and the cost of contesting the validity or
applicability of any governmental enactments which may affect Operating
Expenses; (vii) the cost of window coverings, carpeting and other wall or floor
coverings furnished by Landlord from time to time in public corridors and common
areas; (viii) the amount of reasonable reserves established for anticipated
expenditures; (ix) the cost of repairs, changes, alterations or improvements of
any kind to the Building (collectively, "CHANGES") in a good faith effort to
comply with the requirements of any Laws, the entire cost of such changes ("CODE
COSTS") to be deemed Operating Expenses in the year in which they accrue or are
paid by Landlord, at Landlord's option, except that if Landlord's accountants
determine that any portion of Code Costs must be. capitalized rather than
expensed, then each year Landlord shall include in Operating Expenses only the
properly chargeable portion of capitalized Code Costs during such year based on
a determination of the useful life of the Changes for which the Code Costs were
incurred together with interest on the unamortized balance at the rate of
interest publicly announced from time to time by Bank of America National Trust
and Savings Association in San Francisco, California as its Reference Rate (the
"B OF A REFERENCE RATE") and two percentage points; (x) the cost of any capital
improvements made to the Building after completion of its construction as a
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labor-saving or energy conservation device or to effect other economies in the
operation or maintenance of the Building, or made to the Building after the date
of this Lease that are required under any governmental law or regulation that
was not applicable to the Building at the time that permits for the construction
thereof were obtained, to be capitalized if appropriate under clause (ix); and
(xi) management fees paid by Landlord to third parties or to management
companies owned by, or management divisions of, Landlord for management services
directly rendered to the Building.
For purposes of computing Tenant's Expense Share pursuant to this Section
5.1, Operating Expenses for the entire Building that are not, in Landlord's sole
discretion, allocable or chargeable solely to either the office or retail space
of the Building shall be allocated between and charged to the office and retail
space of the Building on an equitable basis as determined by landlord.
For purposes of this Lease, Operating Expenses shall not include Applicable
Taxes covered under clause (g) below, depreciation on the improvements contained
in the Building (except as provided above), the cost of capital improvements
(except as provided above). The computation of Operating Expenses, and whether a
particular item must be capitalized or expensed, shall be consistent with
generally accepted real estate accounting practices.
(g) "APPLICABLE TAXES" shall mean all taxes, assessments and charges levied
on or with respect to the Building, the Real Property, or any personal property
of Landlord used in the operation thereof and payable by Landlord. Applicable
Taxes shall include, without limitation, all general real property taxes and
general and special assessments; fees, assessments or charges for transit,
police, fire, housing, other governmental services, or purported benefits to the
Building; service payments in lieu of taxes; and any tax, fee or excise on the
act of entering into this Lease or on the use or occupancy of the Building or
any part thereof, or on the rent payable under any lease or in connection with
the business of renting space in the Building, that are now or hereafter levied
on or assessed against Landlord by, or payable by Landlord as a result of, the
requirements oft he United States of America, the State of California, or any
political subdivision, public corporation, district or other political or public
entity, and shall also include any other tax, fee or other excise, however
described, that may be levied or assessed as a substitute for, or as an addition
to, in whole or in part, any other taxes. Applicable Taxes shall not include
franchise, transfer, inheritance or capital stock taxes or income taxes measured
by the net income of Landlord from all sources, unless, due to a change in the
method of taxation, any of such taxes are levied or assessed against Landlord as
a substitute for, in whole or in part, any other tax which would otherwise
constitute an Applicable Tax. Applicable Taxes shall also include reasonable
legal fees, costs and disbursements incurred in connection with proceedings to
contest, determine or reduce Applicable Taxes. Notwithstanding anything to the
contrary in this Lease, in the event that any Applicable Taxes are payable, or
may at the option of the taxpayer be paid in installments, such Applicable Taxes
shall be deemed to have been paid in installments, regardless of the method of
actual payment by Landlord, and Tenant's share of such Applicable Taxes shall
only include those installments which would become due and payable during the
Term.
5.2 If, with respect to any Expense Comparison Year, the Operating
Expenses shall be higher than the Operating Expenses for the Expense Base Year,
Tenant shall pay to Landlord, as Additional Rent, Tenant's Expense Share of any
such increase in Operating Expenses in the manner provided herein. If, with
respect to any Tax Comparison Year, the Applicable Taxes shall be higher than
the
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Applicable Taxes for the Tax Base Year, Tenant shall pay to Landlord as
Additional Rent Tenant's Tax Share of any such increase in Applicable Taxes in
the manner provided herein.
5.3 The payments contemplated under Section 5.2 shall be made as follows:
(a) During each month of each Comparison Year, Tenant shall pay to
Landlord, with each installment of Monthly Rent, such amounts as are reasonably
estimated by Landlord to be one-twelfth (1/12th) of the amounts payable pursuant
to Section 5.2 with respect to each of the Tax Comparison Year and the Expense
Comparison Year, provided, however, that Landlord may, by written notice to
Tenant, reasonably revise its estimates for such year and subsequent payments
during the Comparison Year shall be based upon such revised estimates.
(b) With reasonable promptness after the end of each Tax and/or Expense
Comparison Year, Landlord shall deliver to Tenant a statement setting forth the
actual Operating Expenses and Applicable Taxes for the Comparison Year, a
comparison with the Operating Expenses and Applicable Taxes for the Base Year
and a comparison of any mounts payable under Section 5.2 with the estimated
payments made by Tenant. If the amounts payable under Section 5.2 are less than
the estimated payments made by Tenant with respect to such Comparison Year, the
statement shall be accompanied by a refund of the excess by Landlord to Tenant,
or, at Landlord's election, a notice that Landlord shall credit the excess to
the next succeeding monthly installments of the Monthly Rent. If the amounts
payable under Section 5.2 are more than the estimated payments made by Tenant
with respect to such Comparison Year, Tenant shall pay the deficiency to
Landlord within ten days after delivery of such statement. Statements provided
by Landlord shall be final and binding upon Tenant, if Tenant fails to contest
the same within ninety days after the date of delivery to Tenant.
5.4 If the Expiration Date shall occur on a date other than the first or
last day of a Comparison Year, Tenant's Tax Share and Tenant's Expense Share for
such Comparison Year shall be prorated according to the ratio that the number of
days during said Comparison Year that the Lease was in effect bears to 365.
5.5 Notwithstanding anything to the contrary in this Lease, if during any
Expense Base Year or Expense Comparison Year the Building is less than 95%
occupied, for the purposes of computing Tenant's share of Operating Expenses for
said year, those Operating Expenses which vary based upon occupancy levels shall
be adjusted as though the Building were 95% occupied; provided, however, in no
event shall the aggregate amount billed by Landlord to all tenants in the
Building exceed the actual Operating Expenses for said year.
5.6 Tenant shall reimburse Landlord upon demand for any and all taxes
required to be paid by Landlord (subject to the same exclusions provided for in
Section 5.2(g) in connection with Applicable Taxes), whether or not now
customary or within the contemplation of the parties hereto, when:
(a) Said taxes are measured by or reasonably attributable to the cost or
value of Tenant's equipment, furniture, fixtures and other personal property
located in the Premises or by the cost or value of any above Building Standard
Alterations made in or to the Leased Premises by or for Tenant, regardless of
whether title to such improvements shall be vested in Tenant or Landlord;
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(b) Said taxes are measured by or reasonably attributable to the Base Rent
and/or Additional it, Rent payable hereunder, or either of them, including,
without limitation, any gross income tax or excise tax levied by any
governmental entity (local, state or federal), with respect to the receipt of
such Base Rent and/or Additional Rent;
(c) Said taxes are assessed upon or with respect to the possession,
leasing, operation, management, maintenance, alteration, repair, use or
occupancy by Tenant of the Premises or any portion thereof; or
(d) Said taxes are assessed upon this transaction or any document to which
Tenant is a party creating or transferring any interest or an estate in the
Leased Premises.
The portion of any taxes payable by Tenant pursuant to this Section 5.6 and
other tenants of the Building pursuant to similar provisions in their leases
shall be excluded from Applicable Taxes for purpose of computing Tenant's Tax
Share thereof.
5.7 In the event that it shall not be lawful for Tenant to reimburse
Landlord for the items specified in Section 5.6, the Monthly Rent payable to
Landlord under this Lease shall be increased to net Landlord the same net rent
after imposition of any such tax upon Landlord as would have been payable to
Landlord if any such tax had not been imposed.
SECTION 6. SERVICES TO BE PROVIDED BY LANDLORD
6.1 Subject to Section 5 above, Landlord shall furnish to Tenant, while
occupying the Leased Premises, the following services:
(a) Electrical facilities to furnish sufficient power for
building standard lighting and customary and usual office machinery in the
Leased Premise's, such as typewriters, calculating machines, personal
computers, and other machines of similar electrical consumption, but not
including any item of electrical equipment which requires electricity in
excess of the building standard. Tenant shall pay to Landlord monthly, as
billed, such charges as may be separately metered (the cost of such meter
and its installation shall be borne by Tenant) or as Landlord's engineer
may compute for any electrical service in excess of that stated above;
(b) Water for lavatory and drinking purposes at those points of
supply provided for general use of all tenants in the Building;
(c) Air conditioning and heating as reasonably required for
comfortable use and occupancy under ordinary office conditions during
reasonable and customary office hours, as determined by Landlord; and
(d) Replacement of all standard fluorescent bulbs in all areas
and all incandescent bulbs in public areas, rest room areas, and
stairwells. Routine maintenance and
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electric lighting service for all public areas of the Building in a manner
and to the extent deemed by Landlord to be standard.
6.2 Landlord shall not be liable for any loss or damage arising or alleged
to arise in connection with the failure, stoppage or interruption of any such
services; nor shall the same be construed as an eviction of Tenant, result in an
abatement of Rent, entitle Tenant to any reduction in Rent, or relieve Tenant
from the operation of any covenant or condition of this Lease. Landlord reserves
the right to temporarily discontinue such services or any of them at such times
as may be necessary or appropriate by reason of accident, unavailability of
employees, repairs, alterations, or improvements, or strikes, lockouts, riots,
acts of God or any other happening or occurrence beyond the reasonable control
of Landlord. In the event of any such failure, stoppage or interruption of
services, Landlord shall use reasonable diligence to have the same restored.
Neither diminution nor shutting off of light or air or both nor any other effect
on the Building by any structure erected or condition now or subsequently
existing on lands adjacent to the Building shall affect this Lease, abate Rent,
or otherwise impose any liability on Landlord.
6.3 Landlord shall have the right to reduce heating, cooling or lighting
within the Leased Premises and in the public area in the Building as required by
any mandatory fuel or energy-saving program. Landlord shall be entitled to
cooperate voluntarily in a reasonable manner with the efforts of national, state
or local governmental bodies or of' suppliers of utilities in reducing energy or
other resources consumption. Landlord's acts under this Section 6.3 shall not
affect this Lease, abate Rent or otherwise impose any liability on Landlord.
6.4 Unless otherwise provided by Landlord, Tenant shall separately arrange
with the applicable local public authorities or utilities, as the case may be,
for the furnishing of and payment for all telephone services as may be required
by Tenant in the use of the Leased Premises. Tenant shall directly pay for such
telephone services, including the establishment and connection thereof, at the
rates charged for such services by said authority or utility. The failure of
Tenant to obtain or to continue to receive such services for any reason
whatsoever shall not relieve Tenant of any of its obligations under this Lease.
6.5 The above services are the only services which Landlord shall be
required to provide to Tenant. Without limiting the foregoing, Landlord shall
not be required to provide, and Tenant expressly waives, any right to receive,
any security services with respect to the Leased Premises or the Building. It is
expressly understood and agreed that Landlord shall have no liability to Tenant
for injury or losses due to theft or burglary caused by unauthorized persons in
the Building.
SECTION 7. REPAIRS AND MAINTENANCE BY LANDLORD
7.1 Landlord shall provide for the cleaning and maintenance of the public
portions of the Building in keeping with the ordinary standard for office
buildings similar to the Building as a pan of Operating Expenses. Unless
otherwise expressly stipulated herein, Landlord shall not be required to make
any improvements or repairs of any kind or character to the Leased Premises
during the Term, except such repairs as may be required to the exterior walls,
corridors, windows, roof and other structural elements and equipment of the
Building, and such additional maintenance as may be necessary because of the
damage caused by persons other than Tenant, its agents, employees, licensees or
invitees.
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7.2 Landlord, or Landlord's officers, agents and representatives (subject
to any security regulations imposed by any governmental authority) shall have
the right to enter all parts of the Leased Premises at all reasonable hours to
inspect, make repairs, alterations, and additions to the Building or the Leased
Premises which Landlord may deem necessary or desirable, to make repairs to
adjoining spaces, to cure any Event of Default of Tenant that Landlord elects to
cure, to show the Leased Premises to prospective Tenants, or to provide any
service which it is obligated or elects to furnish to Tenant. Tenant shall not
be entitled to any abatement or reduction of Rent by mason of Landlord's right
of entry. Landlord shall have the right to enter the Leased Premises at any time
and by any means in the case of an emergency. Tenant hereby waives and releases
its right to make repairs at Landlord's expenses under Sections 1932(1), 1941
and 1942 of the California Civil Code or under any similar law, statute or
ordinance now or subsequently in effect.
SECTION 8. REPAIRS AND CARE OF BUILDING BY TENANT
8.1 If the Building or any portion of the Building, including without
limitation, the elevators, boilers, engines, pipes and other apparatus, or
elements of the Building (or any of them) used for the purpose of climate
control of the Building or operating the elevators, or if the water pipes,
drainage pipes, electric lighting or other equipment of the Building or the roof
or outside walls of the Building or the Leased Premises' improvements including
without limitation, the carpet, wall covering, doors and woodwork, become
damaged or are destroyed through negligence, carelessness or misuse by Tenant,
its agents, employees, licensees or invitees, or through it or them, then the
cost of the necessary repairs, replacements or alterations shall be borne by
Tenant who shall promptly pay the same on demand to Landlord as Additional Rent.
Landlord shall have the exclusive right, but not the obligation, to make any
repairs necessitated by such damage.
8.2 At its sole cost and expense, Tenant shall repair or replace any
damage or injury done to the Building, or any part of the Building, caused by
Tenant, Tenant's agents, employees, licensees or invitees which Landlord elects
not to repair. Tenant shall not injure the Building or the Leased Premises and
shall maintain the Leased Premises in a clean, attractive condition and in good
repair. If Tenant fails to keep the Leased Premises in such good order,
condition and repair as required under this Lease to Landlord's reasonable
satisfaction, Landlord may restore the Leased Premises to such good order and
condition and make such repairs without liability to Tenant for any loss or
damage that may accrue to Tenant's property or business by reason of the same,
and upon completion, Tenant shall pay to Landlord, as Additional Kent, upon
demand, the cost of restoring the Leased Premises to such good order and
condition and of the making of such repairs plus an additional charge of fifteen
percent (15%) thereof. Upon the Termination Date, Tenant shall surrender and
deliver up the Leased Premises to Landlord in the same condition as existed at
the Commencement Date, excepting only ordinary wear and tear and damage arising
from any cause not required to be repaired by Tenant. Upon the Termination Date,
Landlord shall have the right to reenter and take possession of the Leased
Premises.
SECTION 9. TENANT'S EQUIPMENT AND INSTALLATIONS; EXCESS UTILITIES
Except for desk or table mounted typewriters, calculating machines,
personal computers, and other similar office equipment, Tenant shall not install
within the Leased Premises any fixtures, equipment, facilities or other
improvements without the specific written consent of Landlord. Tenant
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shall not, without Landlord's prior written consent, use heat generating
machines other than normal fractional horsepower office machines, or equipment
or lighting other than building standard lights in the Leased Premises which may
affect the temperature otherwise maintained by the air conditioning system or
increase the electricity or water normally furnished for the Leased Premises. If
such consent is given, Landlord shall have the right to install supplementary
air conditioning units or other facilities in the Leased Premises, and the cost
thereof, including the cost of installation, operation and maintenance,
increased wear and tear on existing equipment and other similar charges, shall
by paid by Tenant to Landlord upon billing by Landlord. Said costs shall include
the cost of electrical metering or surveying necessary 1o determine the
additional operating cost attributable to the supplementary equipment. Landlord
shall also have the light to impose reasonable additional charges (payable by
Tenant to Landlord upon billing) by reason of Tenant's off-hours or additional
use of utilities or services, for the use of non-standard machine, s, equipment
or lighting, and because of the carelessness of Tenant or the nature of Tenant's
business. Tenant shall not, without Landlord's prior written consent, install
additional lighting or equipment requiring electric current to be supplied to
the Leased Pries in excess of the building standard. If such consent is given,
Tenant shall pay to Landlord upon billing for the cost of such excess
consumption.
SECTION 10. FORCE MAJEURE
Landlord shall not be liable for, and Tenant shall not be entitled to any
reduction of the Base Rent or Additional Rent by reason of, Landlord's failure
to furnish any of the services or utilities described in this Lease such failure
is caused by acts of God, accident, breakage, repairs, strikes, lockouts or
other labor disturbances or disputes of any character, interruption of service
by suppliers thereof, unavailability of materials or labor, or by any other
cause, similar or dissimilar, beyond the reasonable control of Landlord, or by
rationing or restrictions on the use of said services and utilities due to
energy shortages or other causes, or the making of repairs, alterations or
improvements to the Leased Premises or Building, whether or not any of the above
result from acts or omissions of Landlord. Furthermore, Landlord shall not be
liable under any circumstances for a loss of or injury to property or for injury
to or interference with Tenant's business, including, without limitation, loss
of profits, however occurring, through or in connection with or incidental to
failure to furnish any of the foregoing services or utilities, and Tenant shall
not be relieved of its obligation to pay the full Base Rent or Additional Rent
by reason of the same.
SECTION 11. MECHANIC'S SAD MATERIALMAN'S LIENS
11.1 Tenant shall not suffer or permit any mechanic's or materialman's
lien to be filed against the Leased Premises or any portion of the Building by
reason of work, labor, services, or materials supplied or claimed to have been
supplied to Tenant. Nothing in this Lease shall be deemed or construed in any
way as constituting the consent or request of Landlord, expressed or implied, by
inference or otherwise, for any contractor, subcontractor, laborer or
materialman to perform any labor or to furnish any materials or to make any
specific improvement, alteration or repair of or to the Leased Premises or any
portion of the Building, nor of giving the Tenant any right, power or authority
to contract for, or permit the rendering of, any services or the furnishing of
any materials that could give rise to the filing of any mechanic's or
materialman's lien against the Leased Premises or any portion of the Building.
Landlord shall have the right at all times to post and keep posted on the Leased
Premises any notices which it deems necessary for protection from such liens.
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11.2 If any such mechanic's or materialman's lien shall at any time be
filed against the Leased Premises or any portion of the Building as the result
of any act or omission of Tenant, Tenant covenants that it shall, within ten
(10) days after Tenant has notice of the claim for lien, procure the discharge
thereof by payment or by giving security or in such other manner as may be
required or permitted by law or which .shall otherwise satisfy Landlord. If
Tenant fails to take such action, Landlord, in addition to any other right or
remedy it may have, may take such action as may be reasonably necessary to
protect its interests. Any amounts paid by Landlord in connection with such
action and all reasonable legal and other expenses of Landlord incurred in
connection with the same, in. eluding reasonable attorney's fees, court costs
and other necessary disbursements shall be repaid by the Tenant to the Landlord
on demand.
SECTION 12. INSURANCE
12.1 Landlord shall maintain during the Term a commercial (comprehensive)
insurance policy (written on an occurrence, not claims made, basis) including
coverage for contractual liability, public liability and property damage in a
commercially reasonable amount, as determined by Landlord, covering the
Building. Landlord may maintain during the Term a policy of insurance insuring
the Building against loss or damage due to fire and other casualties covered by
a standard "all risk" coverage policy. Such coverage in such amounts as Landlord
may from time to time determine may include the risks of lightning, vandalism
and malicious mischief, and, at the option of Landlord, the risks of earthquakes
and additional hazards, a rental loss endorsement and one or more loss payee
endorsements in favor of the holders of any mortgages or deeds of trust
encumbering the interest of Landlord in the Building or the ground or underlying
lessors. The parties acknowledge that the premiums for insurance specified in
Section 12.1 are Operating Expenses, as defined in Section 5.
12.2 At its own expense, Tenant shall maintain during the Term a
commercial (comprehensive) liability insurance policy (written on an occurrence,
not claims made, basis), including coverage for contractual liability, public
liability and property damage in the amount of Two Million and 00/100 Dollars
($2,000,000.00) per person and per occurrence for personal injuries or deaths of
persons occurring in or about the Leased Premises.
12.3 At its own expertise, Tenant shall maintain during the Term "all
risk" casualty insurance for the full replacement value of all Alterations and
all of Tenant's Property and other items in the Premises.
12.4 At its own expense, Tenant shall maintain during the Term workers'
compensation insurance and all such other insurance as may be required by
applicable Laws.
12.5 All such insurance shall: (i) name Landlord, and any oilier party
which Landlord so specifies, as additional insureds; (ii) specifically cover the
liability assumed by Tenant under this Lease; (iii) be issued by an insurance
company which has a general policy holder's rating of not less than "A", and a
financial rating of not less than Class "X", in the most current edition of
Best's Insurance Reports, and is licensed to do business in the State of'
California; (iv) be primary insurance as to all claims thereunder; (v) provide
that said insurance shall not be canceled or coverage changed unless thirty (30)
days' prior written notice shall have been given to Landlord, any other named
insured and the holders of any mortgages or deeds of trust referred to above;
and (vi) shall not eliminate cross-liability and shall
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contain a severability of interest clause. Tenant shall deliver certificates
thereof to Landlord on or before the Commencement Date and at least thirty days
before the expiration dates thereof. In the event Tenant shall fail to procure
such insurance, or to deliver such certificates, Landlord may, without waiving
any of its rights or remedies, procure such policies for the account of Tenant,
and the cost thereof shall be paid to Landlord as Additional Rent within five
days after delivery to Tenant of bills therefor. Tenant's compliance with the
provisions of this Section 12 shall in no way limit Tenant's liability under any
of the other provisions of this Lease. The limits of insurance required to be
maintained by Tenant hereunder shall not be a limitation on any obligation of
Tenant, including Tenant's indemnification obligations under Section 21 below.
Not more frequently than once every two years, Landlord may require Tenant to
increase the amount of liability insurance coverage if, in the opinion of
Landlord's lender or insurance consultant, the amount of such coverage is not
then adequate.
12.6 Landlord and Tenant shall have their respective insurance companies
issuing property damage insurance waive any rights of subrogation that such
companies may have against Landlord or Tenant, as the case may be, so long as
the insurance carried by Landlord and Tenant, respectively, is not invalidated
thereby. As long as such waivers of subrogation are contained in their
respective insurance policies, Landlord and Tenant hereby waive any right that
either may have against the other on account of any loss or damage to their
respective property to the extent such loss or damage is insured under policies
of insurance for fire and all risk coverage, theft, public liability, worker's
compensation or other similar insurance.
SECTION 13. QUIET ENJOYMENT
Provided Tenant has performed all its obligations under this Lease,
including but not limited to the payment of Rent and all other sums due
hereunder, Tenant shall peace, ably and quietly hold and enjoy the Leased
Premises for the Term, without hindrance by Landlord, subject to the provisions
and conditions set forth in this Lease.
SECTION 14. TENANT IMPROVEMENT ALLOWANCE
Landlord shall construct or install in the Leased Premises the improvements
(the "TENANT IMPROVEMENT WORK") as specified in, and in accordance with the
provisions of attached Exhibit C. Landlord shall provide an allowance (the
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"TENANT IMPROVEMENT ALLOWANCE") in the amount specified in Exhibit C. The
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Tenant Improvement Allowance shall be applied to the actual costs of the Tenant
Improvement Work. Any costs of the Tenant Improvement Work in excess of the
Tenant Improvement Allowance shall be paid by Tenant.
SECTION 15. ALTERATIONS
15.1 Tenant shall not make or allow to be made any alterations, physical
additions, or improvements in or to the Leased Premises (collectively,
"ALTERATIONS") without first obtaining Landlord's written consent in each
instance, which consent may be given or withheld in Landlord's sole discretion.
At the time of said request, Tenant shall submit to Landlord plans and
specifications of the proposed Alterations. Landlord shall have a period of not
less than sixty days therefrom in which to review and approve or disapprove said
plans. Tenant shall pay upon demand the reasonable costs of Landlord's review of
such plans and specifications, not to exceed One Thousand Dollars ($1,000.00).
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The contractor or person selected by Tenant to make such Alterations must be
approved in writing by Landlord prior to commencement of any work. Such
contractor or person shall carry insurance in forms and amounts reasonably
satisfactory to Landlord and shall at all times be subject to Landlord's rules
and regulations while in the Building. All Alterations shall be performed in
full compliance with plans and specifications approved by Landlord, all
applicable Laws and the requirements of the Board of Underwriters, Fire Rating
Bureau or similar body. All Alterations shall be performed at Tenant's sole cost
and expense (including reasonable costs for Landlord's supervision, not to
exceed 5% of the project's cost), at such time and in such manner as Landlord
may designate, and shall be promptly completed in a good and workmanlike manner.
Tenant shall reimburse Landlord's review and supervision costs within thirty
days after receipt of Landlord's invoice(s) therefor. Landlord's approval of the
plans, specifications and working drawings for Tenant's Alterations shall create
no responsibility or liability on the part of Landlord for their completeness,
design sufficiency, or compliance with all applicable Laws.
15.2 Tenant shall give to Landlord at least fifteen business days' prior
written notice of commencement of construction of any Alterations. Landlord
shall have the right to require that (a) any contractor hired by .Tenant shall,
prior to commencing work in the Leased Premises, provide Landlord with a
performance bond and labor and materials payment bond in the amount of the
contract price for the work, naming Landlord and Tenant (and any other persons
designated by Landlord) as co-obligees, and that (b) any such contractor employ
such labor as necessary to avoid any delay in or interruption to the progress of
work under in the Leased Premises or elsewhere in the Building due to union
picket lines. Tenant's contractors shall not use any portion of the common areas
of the Building for performance of the work unless the written consent of
Landlord is first obtained. The granting or withholding of such consent shall be
at Landlord's sole discretion.
15.3 All Alterations, whether made by Tenant or Landlord or at either's
expense, including, without limitation, all Tenant Improvement Work and all
carpeting and fixtures of any kind, shall become a part of the Building
immediately upon installation in the Leased Premises, and shall be and remain
the property of Landlord, except for trade fixtures, office supplies and
moveable furniture and furnishings placed on the Premises by Tenant that are
removable without damage to the Building or the Leased Premises, which shall be
subject to Section 16. Notwithstanding any other provisions of this Lease, upon
Landlord's written request made within thirty days prior to the expiration or
termination of this Lease, Tenant at Tenant's sole cost and expense shall
promptly remove any Alterations or Tenant Improvement Work, designated by
Landlord to be removed and repair any damage to the Promises or the Building
resulting from such removal.
15.4 Tenant shall be responsible for the entire cost of the Alterations
and Tenant Improvement Work (subject to Landlord's obligation to fund the Tenant
Improvement Allowance), including any cost or expense of Landlord, relating to
the interior of the Leased Premises, on account of the need to comply with the
ADA (as defined in Section 34) or other Laws. Under no circumstances shall
Landlord be responsible to Tenant or any third party for determining whether the
Alterations comply with all applicable Laws, including the ADA, regardless of
whether Tenant must obtain Landlord's approval of the Alterations or the plans
and specifications therefor as a condition to making them.
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15.5 Should any construction, alteration, addition, improvements or
decoration of the Leased Premises by Tenant interfere with harmonious labor
relations in the Building, all such work shall be halted immediately by Tenant
until such time as construction can proceed without such interference.
SECTION 16. FURNITURE, FIXTURES AND PERSONAL PROPERTY
16.1 Tenant, at its sole cost and expense, may remove its trade fixes,
office supplies and moveable office furniture and equipment not attached to the
Building or Leased Premises provided:
(a) such removal is made prior to the Termination Date;
(b) no Event of Default exists at the time of such removal; and
(c) Tenant promptly repairs all damage caused by such removal.
16.2 If Tenant does not remove its trade fixtures, office supplies and
moveable furniture and equipment prior to the Termination Date (unless prior
arrangements have been made with Landlord and Landlord has agreed in writing to
permit Tenant to leave such items in the Leased Premises for an agreed period),
then, in addition to its other remedies at law or in equity, Landlord shall have
the right to have such items removed and stored at Tenant's sole cost and
expense and all damage to the Building or the Leased Premises resulting from
said removal shall be repaired at Tenant's cost. Any such items not removed
prior to the Termination Date, shall, at Landlord's option, subject to
applicable Laws, become the property of Landlord upon the Termination Date, and
Tenant shall not have any further rights with respect thereto or reimbursement
therefor.
16.3 All furnishings, Fixtures, equipment, effects and property of every
kind, nature and description of Tenant and of all persons claiming by, through
or trader Tenant which, during the Term or any occupancy of the Leased Premises
by Tenant or anyone claiming under Tenant, may be on the Leased Premises or
elsewhere in the Building shall be at the sole risk and hazard of Tenant If the
whole or any part thereof is destroyed or damaged by fire, water or otherwise,
or by the leakage or bursting of water pipes, steam pipes, or other pipes, by
theft, or from any other cause, no part of said loss or damage is to be charged
to or be borne by Landlord.
SECTION 17. TAXES
During the Term, Tenant shall pay, prior to delinquency, all business and
other taxes, charges, notes, duties and assessments levied, and rates or fees
imposed, charged, or assessed against or in respect of Tenant's occupancy of the
Leased Premises or in respect of the personal property, trade fixtures,
furnishings, equipment, and all other personal property of Tenant contained in
the Building, and shall hold Landlord harmless from and against all payment of
such taxes, charges, notes, duties, assessments, rates, and fees. Tenant shall
cause said fixtures, furnishings, equipment, and other personal property to' be
assessed and billed separately from the real and personal property of Landlord.
In the event any or all of Tenant's fixtures, furnishings, equipment, and other
personal property shall be assessed and taxed with Landlord's real property,
Tenant shall pay to Landlord Tenant's share of such taxes within ten days after
delivery to Tenant by Landlord of a statement in writing setting forth the
amount of such taxes applicable to Tenant's property.
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SECTION 18. ASSIGNMENT AND SUBLETTING
18.1 Neither Tenant nor Tenant's legal representatives nor successors in
interest by operation of law or other shall assign this Lease or sublease the
Leased Premises or any part thereof or mortgage, pledge or hypothecate its
leasehold interest, nor make any attempt to do so, without the prior express
written consent of Landlord. Any such attempt shall be void, of no effect, and
constitute an Event of Default This prohibition against assigning or subletting
shall be construct to include a prohibition against any assignment or subletting
by operation of law. The voluntary or other surrender of this Lease by Tenant or
a mutual cancellation hereof shall not work a merger and shall, at the option of
Landlord, terminate all or any existing subleases or may, at the option of
Landlord, operate as an assignment to Landlord of Tenant's interest in any or
all such subleases.
18.2 The following shall constitute a prohibited assignment subject to
Section 18.1 a sale, transfer, pledge or hypothecation by Tenant of all or
substantially all of its assets or all or substantially all of its stock, if
Tenant's stock is publicly traded; a merger of Tenant with another corporation;
the sale, transfer, pledge or hypothecation of fifty percent or more of Tenant's
stock if Tenant's stock is not publicly waded; or the sale, transfer, pledge or
hypothecation of fifty percent or more Tenant's beneficial ownership interest if
Tenant is a partnership; provided, however, that Landlord's consent shall not be
required for the assignment of the Lease or subletting of the Leased Premises to
a Permitted Affiliate. For purposes hereof, the term "Permitted Affiliate" means
a subsidiary of Tenant with an independent net worth as of the date of the
proposed assignment or subletting equal to or greater than the net worth of
Tenant as of the date hereof.
18.3 If Tenant should desire to assign this Lease or sublease the Leased
Premises or any portion thereof, Tenant shall give Landlord written notice of
such desire to make such assignment or effect such sublease. At the time of
giving such notice, Tenant shall provide Landlord with a copy of the proposed
assignment or sublease document, and such information as Landlord may reasonably
request concerning the proposed sublessee or assignee to assist Landlord in
making an informed judgment regarding the financial condition, reputation,
operation and general desirability of the proposal sublessee or assignee.
Landlord shall then have a period of thirty days following receipt of such
notice within which to notify Tenant in writing of Landlord's election to:
(a) terminate this Lease as to the space so affected as of the
date specified by Tenant, in which event Tenant shall be relieved of all
obligations accruing under this Lease after the termination as to the
Leased Premises or such portion, after paying all Rent due as of the
Termination Date, or
(b) permit Tenant to assign or sublet the Lease Premises or such
portion, or
(c) refuse to consent to Tenant's assignment or subleasing of the
Leased Premises or such portion and to continue this Lease in full force
and effect as to the entire Leased Premises.
If Landlord should fail to notify Tenant of its election within the thirty
day period, Landlord shall be deemed to have elected option (c). In the
event of any approved assignment or subletting, the rights of
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any such assignee or sublessee shall be subject to all of the terms, conditions
and provisions of this Lease, including without limitation, restrictions on use
and the covenant to pay Rent. If Landlord, approves the proposed assignment or
sublease, Tenant may, not later than ninety days thereafter, enter into such
assignment or sublease with the proposed assignee or sublessee upon the terms
and conditions set forth in the notice provided to Landlord, and 50% of the
Excess Rent received by Tenant shall be paid to Landlord as and when received by
Tenant. For purposes hereof "EXCESS RENT" means any rent or other consideration
received by Tenant in excess of (i) the Base Rent and Additional Rent payable
hereunder (or the amount thereof proportionate to the portion of the Leased
Premises subject to such sublease in the case of a sublease of a portion of the
Premises) and (ii) reasonable brokerage commissions incurred in connection with
such sublease or assignment. No such consent to or recognition of any such
assignment or subletting shall constitute a release of Tenant or any guarantor
of Tenant's performance from further performance by Tenant or such guarantor of
covenants undertaken to be performed by Tenant. Tenant and/or such guarantor
shall remain liable and responsible for all Rent and other obligations of Tenant
under this Lease. Consent by Landlord to a particular assignment, sublease or
other transaction shall not be deemed a consent to any other or subsequent
transaction. Whether or not Landlord consents to any assignment, sublease or
other transaction, Tenant shall pay any reasonable attorneys' fees incurred by
Landlord in connection with such transaction. All documents utilized by Tenant
to evidence any subletting or assignment for which Landlord's consent has been
requested, shall be subject to prior approval by Landlord or its attorney. If
any consideration payable to Tenant by any sublessee, assignee, licensee or
other transferee exceeds the Rent, then Tenant shall pay to Landlord all such
excess within ten days following receipt by Tenant.
18.4 If this Lease is assigned to any person or entity pursuant to the
provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et. seq. (the
"BANKRUPTCY CODE"), any and all monies or other consideration payable or
otherwise to be delivered in connection with such assignment shall be paid or
delivered to Landlord, shall be and remain the exclusive property of Landlord,
and shall not constitute property of Tenant or of the estate of Tenant within
the meaning of the Bankruptcy Code. Any such monies or other consideration not
paid or delivered to Landlord shall be held in trust for the benefit of Landlord
and shall be promptly paid or delivered to Landlord. Any person or entity to
whom this Lease is so assigned shall be deemed, without further act or deed, to
have assumed all of the obligations arising under this Lease as of the date of
such assignment. Upon demand therefor, any such assignee shall execute and
deliver to Landlord an instrument confirming such assumption. In no event shall
Tenant have any right to sublet or assign if there exists any default under this
Lease.
18.5 Notwithstanding the above, any consents required by Landlord under
this Section 18 shall not be unreasonably withheld or untimely delayed.
SECTION 19. FIRE AND CASUALTY
19.1 If the Leased Premises or any part thereof shall be damaged by fire
or other casualty, Tenant shall give prompt written notice to Landlord. If (i)
in Landlord's reasonable opinion the insurance proceeds available to Landlord
are not insufficient for restoration, or (ii) in Landlord's reasonable opinion
the Building shall be so damaged by fire or other casualty that substantial
alteration or reconstruction of the Building shall be required (whether or not
the Leased Premises shall have been damaged by such fire or other casualty), or
(iii) if any mortgagee under a mortgage or deed of trust covering the Building
requires that the insurance proceeds payable as a result of said fire or other
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casualty be used to retire the mortgage debt; then Landlord, at its option, may
terminate this Lease by notifying Tenant in writing of such termination within
sixty days after the date of such damage or casualty, in which event the Rent
shall be abated proportionately as of the date of such damage, based upon the
extent the Leased Premises are rendered unfit for occupancy.
19.2 If Landlord does not elect to terminate this Lease as provided in
Section 19.1, and if repairs have not been commenced within ninety days from the
date of such damage and thereafter completed within nine months (excluding
delays caused by force majeure events, as described in Section 10), then Tenant
may terminate this Lease upon thirty days written notice to Landlord; provided,
however, that if Landlord completes repairs within thirty days' after receipt of
Tenant's termination notice (or such longer period of time as it reasonably
required because the delays were due to force majeure events), then Tenant's
exercise of its termination right shall be void and this Lease shall continue in
effect
19.3 To the extent of the insurance proceeds available to Landlord
therefor, Landlord shall repair and restore the Building and/or the Leased
Premises to substantially the same condition in which they were immediately
prior to the fire or other casualty, except that Landlord shall not be required
to rebuild, repair or replace any part of Tenants Alterations, trade fixtures,
office supplies and materials, furniture and equipment. Landlord shall not be
liable for any inconvenience, annoyance, or injury done to the business of
Tenant resulting in any way from such damage or the repair thereof, except
Landlord shall allow Tenant an equitable reduction of Rent during the time and
to the extent the Leased Premises are unfit for occupancy, save for Tenant's
fault or negligence described in Section 19.4.
19.4 If the Leased Premises or the Building shall be totally or partially
damaged by fire or other casualty resulting from the fault or negligence of
Tenant, or its agents, employees, licensees, or invitees, such damage shall be
repaired by and at the expense of Tenant (to the extent that such destruction or
damage is not covered by the fire and extended coverage insurance carried by
Landlord as provided in Section 12), under the direction and supervision of
Landlord, and Rent shall continue without abatement.
19.5 The provisions of this Lease, including this Section 19, constitute
an express agreement between Landlord and Tenant with respect to any and all
damage to, or destruction of, all or any part of the Leased Premises, the
Building or any other portion of the Real Property, and any statute or
regulation of the State of California, including without limitation, Sections
1932(2) and 1933(4) of the California Civil Code, with respect to any rights or
obligations concerning damage or destruction in the absence of an express
agreement between the parties and any other statute or regulation, now or
subsequently in effect, shall have no application to this Lease or any damage or
destruction to all or any part of the Premises, the Building or any other
portion of the Real Property. Tenant hereby specifically waives all rights to
terminate this Lease under said Civil Code sections or any similar provisions of
law.
SECTION 20. CONDEMNATION
20.1 If any part of the Leased Premises or the Building is taken by
exercise of the power of eminent domain, or by conveyance in lieu thereof,
Landlord may elect to terminate this Lease upon written notice to Tenant within
thirty days after the date of such taking or transfer in lieu thereof or to
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continue the same in effect. All compensation awarded for any taking (or the
proceeds of private sale in lieu thereof) of the Leased Premises or the Building
shall be the property of Landlord, and Tenant hereby assigns its interest in any
such award to Landlord; provided, however, Landlord shall have no interest in
any award made to Tenant for the taking of Tenant's personal property or moving
expenses if a separate award for such items is made to Tenant. If this Lease is
terminated under this Section 20. l, Rent shall be payable up to the date that
possession is taken by the condemning authority, Landlord shall refund to Tenant
any prepaid unaccrued Rent less any sum then owing by Tenant to Landlord, and
Tenant shall have no claim against Landlord for the value of any unexpired
portion of the Term.
20.2 In the event of a taking of any portion of the Leased Premises, or a
conveyance in lieu thereof, and if this Lease is not terminated by Landlord as
provided above, then this Lease shall automatically terminate as to the portion
of the Leased Premises so taken as of the earlier of the date of vesting of
title or the date possession is taken by the condemning authority, and the Base
Rent as well as the Additional Rent shall be apportioned according to the ratio
that the remaining Rentable Area of the Leased Premises bears to the total
original Rentable Area of the Leased Premises. Tenant hereby waives any and all
rights it might otherwise have pursuant to Section 1265.130 of California Code
of Civil Procedure or any similar provisions of Laws now or subsequently in
effect.
20.3 In the event of temporary taking of all or any portion of the Leased
Premises for a period of ninety days or less, then this Lease shall not
terminate but the Base Rent and the Additional Rent shall be abated for the
period of such taking in proportion to the ratio that the remaining Rentable
Area of the Leased Premises bears to the total Rentable Area of the Leased
Premises. Landlord shall be entitled to receive the entire award made in
connection with any such temporary taking.
SECTION 21. INDEMNIFICATION
21.1 Landlord shall not be liable to Tenant for and Tenant hereby waives
all claims against Landlord for damage to any property or injury, illness or
death of any person in, upon, or about the Leased Premises, the Building or the
Real Property arising at any time and from any cause whatsoever except to the
extent caused by the gross negligence or willful misconduct of Landlord or its
employees or agents. Without limiting the generality of the foregoing, Landlord
shall not be liable for any damage or damages of any nature whatsoever to
persons or property caused by explosion, fire, theft or breakage, by sprinkler,
drainage or plumbing systems, by failure for any cause to supply adequate
drainage, by the intention of any public utility or service, by steam, gas,
water, rain or other substances leaking, issuing or flowing into any part of the
Leased Premises, by natural occurrence, acts of a public enemy, riot, strike,
insurrection, war, court order, requisition or order of governmental body or
authority, or for any damage or inconvenience which may arise through repair,
maintenance or alteration of any part of the Building, or by anything done or
omitted to be done by any tenant, occupant or person in the Building. In
addition, Landlord shall not be liable for any loss or damage for which Tenant
is required to insure or for any loss or damage resulting from any construction,
alterations or repair by Landlord or by others.
21.2 Tenant shall defend, with counsel approved by Landlord, all actions
against Landlord, any partner, trustee, stockholder, officer, director, employee
or beneficiary of Landlord, holders of mortgages secured by the Leased Premises
or the Building and any other party having an interest therein ("INDEMNIFIED
PARTIES") with respect to, and shall pay, protect, indemnify and save harmless,
to the
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extent permitted by law, all Indemnified Parties from and against, any and all
liabilities, losses damages, costs, expenses (including reasonable attorneys'
fees and expenses), causes of action, suits, claims, demands or judgments of any
nature (i) to which any Indemnified Party is subject because of its estate or
interest in the Leased Premises or the Building or the Real Property, or (ii)
arising from (1) injury to or death of' any person, or damage to or loss of
property, on the Leased Premises, the Building or the Real Property, or on
adjoining sidewalks, streets or ways; or connected with the use, condition or
occupancy of any thereof (except to the extent caused by the gross negligence or
willful misconduct of Landlord or its agents or employees), (2) any violation by
Tenant in the observance or performance of its obligations under this Lease, or
(3) any act, fault, omission, or other misconduct of Tenant or its agents,
contractors, licenses, sublessees or invitees. Tenant shall use and occupy the
Leased Premises and other facilities of the Building at its own risk, and hereby
releases the Indemnified Parties from any and all claims for any damage or
injury to the fullest extent permitted by law.
21.3 The provisions of this Section 21 shall survive the expiration or
sooner termination of this Lease.
SECTION 22. DEFAULT BY TENANT
22.1 The term "EVENT OF DEFAULT" refers to the occurrence of any one or
more of the following:
(a) failure of Tenant to pay when due any sum required to be
paid hereunder (a "MONETARY DEFAULT")
(b) failure of Tenant, after ten (10) days Written notice, to
perform any of Tenant's obligations, covenants or agreements except a
Monetary Default;
(c) if Tenant, or any guarantor of Tenant's obligations under
this Lease (a "GUARANTOR"), admits in writing that it cannot meet its
obligations as they become due; or is declared insolvent according to any
law; or assignment of Tenant's or Guarantor's property is made for the
benefit of creditors; or a receiver or trustee is appointed for Tenant or
Guarantor or its property; or the interest of Tenant or Guarantor under
this Lease is levied on under execution or other legal process; or any
petition is filed by or against Tenant or Guarantor to declare Tenant
bankrupt or to delay, reduce or modify Tenant's debts or obligations; or
any petition is fried or other action taken to reorganize or modify
Tenant's or Guarantor's capital structure, if Tenant is a corporation or
other entity; provided that, any involuntary levy, execution, legal process
or petition filed against Tenant or Guarantor shall not constitute an Event
of Default provided Tenant or Guarantor shall vigorously contest the same
by appropriate proceedings and shall remove or vacate the same within sixty
days from the date of its creation, service or filing;
(d) the abandonment of the Leased Premises by Tenant, which
shall mean that Tenant has vacated the Leased Premises for ten consecutive
days, whether or not Tenant is in Monetary Default; or that Tenant, in the
judgment of Landlord, is vacating the Leased Premises by removing fracture
and fixtures;
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(e) the discovery by Landlord that any financial statement given
by Tenant or any of its assignees, subtenants or successors-in-interests,
or Guarantors, was materially false; or
(f) if Tenant or any Guarantor shall die, cease to exist as a
corporation or partnership or be otherwise dissolved or liquidated or
become insolvent, or shall make a transfer in fraud of creditors.
22.2 Upon the occurrence of any Event Default by Tenant, Landlord may at
any time thereafter, without limiting Landlord in the exercise of any right or
remedy which Landlord may have under this Lease, at law or in equity by mason of
such Event of Default:
(a) Terminate this Lease and recover from Tenant as provided by
California Civil Code Section 1951.2: (i) the worth at the time of award of
the unpaid rent and other amounts which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time
of award exceeds the amount of such rental loss that Tenant proves could
have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the Term after the time
of award exceeds the amount of such rental loss that Tenant proves could be
reasonably avoided; and (iv) any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant's failure to
perform its obligations under this Lease. or which, in the ordinary course
of things, would be likely to result therefrom. The "worth at the time of
award" of the amount referred to in (iii) shall be computed by discounting
such mount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%). For purposes of
computing unpaid rent which would have accrued and become payable under
this Lease pursuant to the provisions of this subsection (a), unpaid rent
shall consist of the sum of the unpaid Base Rent and the Additional Rent as
reasonably estimated by Landlord for the balance of the Term; or
(b) Continue this Lease in effect and enforce all of its rights
and remedies under this Lease, as provided by California Civil Code Section
1951.4, including the right to recover Base Rent and Additional Rent as
they become due, for so long as Landlord does not terminate Tenant's right
to possession; provided, however, if Landlord elects to exercise its
remedies described in this subsection (b) and Landlord does not terminate
this Lease, and if Tenant requests Landlord's consent to an assignment of
this Lease or a sublease of the Leased Premises at such time as Tenant is
in default, Landlord shall not unreasonably withhold its consent to such
assignment or sublease. Acts of maintenance or preservation, efforts to
relet the Leased Premises, or the appointment of a receiver upon Landlord's
initiative to protect its interest under this Lease, shall not constitute a
termination of Tenant's right to possession; or
(c) With or without terminating this Lease, to reenter the
Leased Premises and remove all persons and property from the Leased
Premises. Such property may be removed and stored in a public warehouse or
elsewhere at the cost of and for the account of Tenant. No such reentry
shall constitute an election to terminate this Lease unless a written
notice of such intention is given to Tenant or unless the termination
thereof is decreed by a court of competent jurisdiction. In addition to its
other rights under this Lease, Landlord shall have the right, even though
tenant is in default and has abandoned the Leased premises, (i) to maintain
this Lease in
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effect and not terminate Tenant's right to possession, and (ii) to enforce
its rights and remedies under this Lease, including the right to recover
Base Rent and Additional Rent as they become due under this Lease.
22.3 If Tenant fails to make any payment or cure any Event of Default
hereunder within the time permitted, Landlord, without being under any
obligation to do so and without thereby waiving such Event of Default, may make
the payment and/or remedy the Event of Default for the account of Tenant (and
enter the Leased Premises for such purpose), and Tenant shall pay Landlord, upon
demand, all reasonable costs, expenses and disbursements plus fifteen percent
(15%) overhead cost, incurred by Landlord in connection with such payment or
cure.
22.4 Nothing contained in this Section 22 shall limit or prejudice the
right of Landlord to prove and obtain as liquidate damages in any bankruptcy,
insolvency, receivership, reorganization or dissolution proceeding, an amount
equal to the maximum allowed by applicable Law, whether or not such amount is
greater, equal to or less than the amounts recoverable, either as damages or
Rent, referred to in any of the preceding provisions of this Section 22.
Notwithstanding anything contained in this Section 22 to the contrary, any such
proceeding or action involving bankruptcy, insolvency, reorganization,
arrangement assignment for the benefit of creditors, or appointment of a
receiver or trustee, shall be considered to be an Event of Default only when
such proceeding, action or remedy shall be taken or brought by or against the
then holder of the leasehold estate under this Lease or the guarantor under a
Guaranty of this Lease.
22.5 In connection with an Event of Default Tenant shall also be liable
and shall pay to Landlord, in addition to any sums provided to be paid above,
broker's fees incurred by Landlord in connection with reletting the whole or any
part of the Leased Premises, the costs of removing and storing Tenant's or other
occupants' property, the costs of repairing, altering, remodeling, or otherwise
putting the Leased Premises into condition acceptable to a new tenant or
tenants, and all reasonable expenses incurred by Landlord in enforcing or
defending Landlord's rights and/or remedies, including reasonable attorneys'
fees whether suit was actually filed or not.
22.6 Landlord is entitled to accept, receive, in check or money order,
and deposit any payment made by Tenant for any reason or purpose or in any
amount whatsoever, and apply them at Landlord's option to any obligation of
Tenant, and such amounts shall not constitute payment of any amount owed except
that to which Landlord has applied them. No endorsement or statement on any
check or letter of Tenant shall be deemed an accord and satisfaction or
recognized for any purpose whatsoever. The acceptance of any such check or
payment shall be without prejudice to Landlord's rights to recover any and all
amounts owed by Tenant and shall not be deemed to cure any other default nor
prejudice Landlord's rights to pursue any other available remedy.
22.7 Landlord shall not be in default unless Landlord fails to perform
obligations required of Landlord within thirty days after written notice thereof
from Tenant to Landlord, and after the notice and other requirements of Section
36 have been meg provided that, if such default cannot reasonably be cured
within thirty days then Landlord shall not be in default if it commences to cure
the default within the thirty day period and continues diligently to complete
the cure within a reasonable time. Any such notice of default shall specify the
obligation Landlord has allegedly failed to perform, and shall identify the
Lease provision containing such obligation. If, by reason of the occurrence of
any of the events
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specified in Section 10 hereof, Landlord is unable to fulfill or is delayed in
fulfilling any of Landlord's obligations under this Lease or any collateral
instrument, no such inability or delay shall constitute an actual or
constructive eviction, in whole or in pan, or entitle Tenant to any abatement or
diminution of Base Rent or Additional Rent, or relieve Tenant from any of its
obligations under this Lease, or impose any liability upon Landlord or its
agents by reason of inconvenience or annoyance to Tenant or by mason of injury
to or interruption of Tenant's business, loss of profits, or otherwise. Tenant
hereby waives and releases its right to terminate this Lease under Section
1932(1) of the California Civil Code or under may similar law, statute or
ordinance now or hereafter in effect
SECTION 23. LIEN FOR RENT
To secure the payment of all Rent and the faithful performance of all the
other covenants of this Lease to be performed by Tenant, Tenant hereby gives to
Landlord an express contract lien on and first security interest in and to all
property, equipment, machinery, trade fixtures, chattels and merchandise
("LIEN") which may be placed in the Leased Premises and also upon all proceeds
of any insurance which may accrue to Tenant by reason of damage to or
destruction of any such property, and agrees that this Lease shall constitute a
security agreement with respect thereto. All exemption laws are hereby waived by
Tenant. This Lien is given in addition to any statutory liens and shall be
cumulative thereto. Tenant agrees to execute from time to time at the request of
Landlord UCC-1 Financing Statements referencing this security agreement in a
form satisfactory to Landlord, and to file originals of such statements with the
clerk of the cities or towns where (i) the Leased Premises are located, and (ii)
Tenant maintains its principal business office or residence, or wherever else
such statements would ordinarily be filed to protect creditor's rights under
California law. In addition to all other rights of Landlord under this Lease,
upon Tenant's default, Landlord shall have all of the remedies of a secured
party with respect to said property, equipment, machinery, trade fixtures,
chattels and merchandise.
SECTION 24. RIGHT TO RELOCATE
Notwithstanding anything herein to the contrary, Landlord shall in all
cases retain the right and power to relocate Tenant upon thirty (30) days'
written notice within the Building in such space which is comparable in size and
location and suited to Tenant's use, such right and power to be exercised
reasonably. Landlord shall not be liable or responsible for any claims, damages
or liabilities in connection with or occasioned by such relocation. Landlord's
reasonable exercise of such right and power shall include, but not be limited
to, a relocation to consolidate the Rentable Area occupied in order to provide
Landlord's services more efficiently or a relocation to provide contiguous
vacant space for a prospective tenant. If Landlord shall exercise said option,
the substituted premises shall hereafter be deemed for the purposes hereof, the
"LEASED PREMISES" hereunder, and a new amended Exhibit A showing the new Leased
----------
Premises will be substituted for the original Exhibit A attached hereto.
----------
Landlord agrees to pay the Tenant's reasonable expenses to move its furniture,
fixtures and equipment to such substituted Leased Premises and for reprinting
stationary and business cards.
SECTION 25. ATTORNEYS' FEES
If either party commences litigation against the other in connection with
this Lease, the parties hereby waive any right to a trial by jury. In the event
of such litigation, the prevailing party shall be entitled to recover from the
other party such costs and reasonable attorneys' fees as may have been
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incurred. Further, if for any reason Landlord consults legal counsel or
otherwise incurs any costs or expenses as a result of its rightful attempt to
enforce the provisions of this Lease, even though no litigation is commenced, or
if commenced is not pursued to final judgment, Tenant shall pay to Landlord, in
addition to all other amounts for which Tenant is obligated, all of Landlord's
reasonable costs and expenses incurred in connection with any such acts,
including reasonable attorneys fees.
SECTION 26. NON-WAIVER
Neither acceptance of any payment by Landlord from Tenant nor failure by
Landlord to complain of any action, non-action, or default of Tenant shall
constitute a waiver of any of Landlord's rights. Time is of the essence with
respect to the performance of every obligation of Tenant under this Lease.
Waiver by Landlord of any right in connection with any Event of Default shall
not constitute a waiver of such right or remedy or any other right or remedy
arising in connection with either a subsequent Event of Default with respect to
the same obligation or any other obligation. No right or remedy of Landlord or
covenant, duty, or obligation of Tenant shall be deemed waived by Landlord
unless such waiver is in writing, signed by Landlord or Landlord's duly
authorized agent.
SECTION 27. RULES AND REGULATIONS
Tenant shall comply with the rules and regulations set forth in Exhibit B.
---------
Landlord shall have the right at all times to change such rules and regulations
or to amend them in any manner as-may be deemed advisable by Landlord, all of
which changes and amendments shall be sent by Landlord to Tenant in writing.
Tenant shall thereafter comply with the changed or amended rules and
regulations. Landlord shall have no liability to Tenant for any failure of any
other tenants of the Building to comply with such rules and regulations.
SECTION 28. ASSIGNMENT BY LANDLORD
Landlord shall have the right to transfer, in whole or in part, all its
rights and obligations under this Lease and in the Leased Premises and the
Building.
SECTION 29. LIABILITY OF LANDLORD
The obligations of Landlord under this Lease shall be binding upon Landlord
and its successors and assigns and any furore owner of the Building only with
respect to events occurring during its and their respective ownership of the
Building. In addition, Tenant shall look solely to Landlord's interest in the
Building for recovery of any judgment against Landlord arising in connection
with this Lease, it being agreed that neither Landlord nor any successor or
assign of Landlord nor any future owner of the Building, nor any trustee,
director, officer, employee, beneficiary, partner, shareholder, or agent of any
of the foregoing shall ever be personally liable for any such judgment.
SECTION 30. SUBORDINATION AND ATTORNMENT
At Landlord's option, this Lease shall be subordinate to any mortgage, deed
of trust (now or subsequently placed upon the Building), ground lease,
declaration of covenants (subsequently placed upon the Building) regarding
maintenance and use of any areas contained in any portion of the Building,
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and to any and all advances made under any mortgage or deed of trust and to all
renewals, modifications, consolidations, replacements and extensions of the
same. With respect to any of the above documents, Tenant agrees that no
documentation other than this Lease shall be required to evidence the
subordination. Any holder of a mortgage or deed of trust may elect, by written
notice to Tenant, to make this Lease superior to the lien of its mortgage or
deed of trust, in which case this Lease shall automatically be deemed prior to
such mortgage or deed of trust, whether this Lease is dated earlier or later
than the date of the mortgage or deed of trust or the date the same was
recorded. Tenant shall execute such documents as may be required to evidence the
subordination or to make this Lease prior to the lien of any mortgage or deed of
trust, as the case may be. By failing to do so within five days after written
demand, Tenant does hereby make, constitute and irrevocably appoint Landlord as
Tenant's attorney-in-fact to do so. This power of attorney is coupled with an
interest. Tenant hereby attorns to all successor owners of the Building, whether
or not such ownership is acquired as a result of a sale through foreclosure of a
deed of trust or mortgage, or other. Notwithstanding the above, Tenant shall be
obligated to subordinate its leasehold interest to any mortgage, deed of trust,
ground lease or declaration of covenants now or subsequently placed upon the
Building only if the holder of such mortgage or deed of trust or the landlord
under such ground lease or the declarant under such declaration of covenants
will grant to Tenant a nondisturbance agreement, using the form of document then
being employed by such holder, landlord or declarant for such purposes, which
will provide that Tenant, notwithstanding any default of Landlord, shall have
the right to remain in possession of the Leased Premises in accordance with this
Lease for so long as Tenant shall not be in default under this Lease.
Additionally, at such time or times as Landlord may request, upon not less than
five days' prior written request by Landlord, Tenant shall sign and deliver to
Landlord a certificate stating whether this Lease is in full force and effect;
whether any amendments or modifications exist; whether there are any Events of
Default; and such other information and agreements as may be reasonably
requested. Any such statement delivered pursuant to this Section may be relied
upon by Landlord and by any prospective purchaser of all or any portion of
Landlord's interest, or a holder or prospective holder of any mortgage or deed
of trust encumbering the Building. Tenant's failure to deliver such statement
within such time shall constitute an Event of Default and shall conclusively be
deemed to be an admission by Tenant of the matters set forth in the request for
an estoppel certificate.
SECTION 31. HOLDING OVER
In the event Tenant, or any party claiming under Tenant, retains possession
of the Leased Premises after the Termination Date, the possession shall be an
unlawful detainer. No tenancy or interest shall result from such possession, and
such parties shall be subject to immediate eviction and removal. Tenant or any
such party shall pay Landlord, as Rent for the period of such holdover, an
amount equal to one hundred fifty percent (150%) of the Rent otherwise provided
for in this Lease during the time of holdover. Tenant also shall be liable for
any and all damages sustained by Landlord as a result of such holdover. Tenant
shall vacate the Leased Premises and deliver the Leases Premises to Landlord
immediately upon Tenant's receipt of notice from Landlord to so vacate. The Rent
during such holdover period shall be payable to Landlord on demand. No holding
over by Tenant, whether with or without Landlord's consent, shall operate to
extend this Lease.
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SECTION 32. SIGNS
No sign, symbol or identifying marks shall be put upon the Building or the
Real Property, or in the halls, elevators, staircases, entrances, parking areas
or upon the doors or walls, without Landlord's prior written approval, which may
be given or withheld in Landlord's sole discretion Should such approval be
granted, the signs or lettering shall conform in all respects to the sign and/or
lettering criteria established by Landlord. Landlord, at Landlord's sole cost
and expense, reserves the right to change the door plaques as Landlord deems
reasonably desirable.
SECTION 33. HAZARDOUS SUBSTANCES
With respect to Tenant's use of the Building, Tenant at all times, at its
own cost and expense, shall comply with all Laws relating to the use, analysis,
production, storage, sale, disposal or transportation of any hazardous materials
("HAZARDOUS SUBSTANCE LAWS"), including, without limitation, oil or petroleum
products or their derivatives, solvents, PCB's, explosive substances, asbestos,
radioactive materials or waste, and any other toxic, ignitable, reactive,
corrosive, contaminating or pollution materials ("HAZARDOUS SUBSTANCES") which
now or in the future are subject to any governmental regulation.
Tenant shall not use, generate, store or dispose of any Hazardous
Substances in or on the Leased Premises or the Building (except to the extent
and in the quantities any such Hazardous Substances are commonly used for
general office purposes and then only in strict accordance with all Hazardous
Substance Laws. Except in emergencies or as otherwise required by Law, Tenant
shall not take any remedial action in response to the presence or release of any
Hazardous Substances on or about the Building without first giving written
notice of the same to Landlord. Tenant shall not enter into any settlement
agreement, consent decree or other compromise with respect to any claims
relating to any Hazardous Substances in any way connected with the Building
without first notifying Landlord of Tenant's intention to do so and affording
Landlord the opportunity to participate in any such proceedings.
Landlord shall have the right at all reasonable times to (i) inspect the
Leased Premises, (ii) conduct tests and investigations to determine whether
Tenant is in compliance with the above provisions, and (iii) request lists of
all Hazardous Substances used, stored or located on the Leased Premises by
Tenant. All costs and expenses incurred by Landlord in connection with any
environmental investigation shall be paid by Landlord (and may be included in
Operating Expenses), except that if any such environmental investigation shows
that Tenant has failed to comply with the provisions of this Section, or that
the Building or the Real Property (including surrounding soil and any underlying
or adjacent groundwater) have become contaminated due to the operations or
activities in any way attributable to Tenant, then all of the costs and expenses
of such investigation shall be paid by Tenant. Tenant's indemnity under-Section
21 shall specifically extend to all liability, including all foreseeable and
unforeseeable consequential damages, directly or indirectly arising out of the
use, generation, disposal or storage of Hazardous Substances by Tenant,
including without limitation the costs of any required repair, cleanup or
detoxification and the preparation of any closure or other required plans,
whether such action is required or necessary prior to or following the
termination of this Lease, to the full extent that such action is proximately
caused by the use, generation, storage, or disposal of Hazardous Substances by
Tenant. Neither the written consent by Landlord to the use, generation,
26
<PAGE>
disposal or storage of Hazardous Substances by Tenant nor the strict compliance
by Tenant with all Hazardous Substances Laws shall excuse Tenant from its
indemnity obligation.
In the event Tenant's occupancy or conduct of business in or on the Leased
Premises, whether or not Landlord has consented to the same, results in any
increase in premiums for the insurance carried from time to time by Landlord
with respect to the Building, Tenant shall pay any such increase in premiums as
Rent within ten days after bills for the additional premiums shall be rendered
by Landlord. In determining whether increased premiums are a result of Tenant's
use or occupancy of the Leased Premises, a schedule issued by the organization
computing the insurance rate on the Building showing the various components of
such rate, shall be conclusive evidence of the several items and charges which
make up such rate. Tenant shall promptly comply with all reasonable requirements
of the insurance authority or of any insurer now or subsequently in effect
relating to the Leased Premises.
Landlord hereby discloses to Tenant that a Phase I Environmental Site
Assessment and Limited Asbestos Survey and Hazard Assessment were performed on
the Property by Hygienetics, Inc. of Emeryville, California in 1990.
Hygienetics, Inc. supplemented the Limited Asbestos Survey in June, 1991 and
March, 1995. Such surveys and assessment revealed 13 samples of vinyl tile floor
mastic, and two samples of vinyl floor files, in the Building, which contained
asbestos and revealed the presence of limited quantities of hazardous and toxic
substances such as cleaning materials, lead and acid batteries in the basement
and diesel fuel storage tanks. Complete copies of the Site Assessment and
Asbestos Surveys are available for inspection in the Building management office.
Except as disclosed in the Site Assessment and Asbestos Surveys, Landlord has no
actual knowledge of Hazardous Substances in the Building that must be removed in
order for the Building to comply with Environmental Laws in effect as of the
date of this Lease. Tenant has had the opportunity, prior to execution and
delivery of this Lease, to make such further investigation and inquiry about
such matters as Tenant deems appropriate and Tenant accepts the Premises with
knowledge of the risks that may be associated with the presence of all materials
or conditions disclosed in such surveys and assessment.
SECTION 34. COMPLIANCE WITH LAWS AND OTHER REGULATIONS
At its sole cost and expense, Tenant shall promptly comply with all laws,
statutes, ordinances, decrees, orders, and governmental roles, regulations or
requirements now in force or which may hereafter become in force, of federal,
state, county, and municipal authorities, including but not limited to the
Americans with Disabilities Act (the "ADA"), with the requirements of any board
of fire underwriters or other similar body now or hereafter constituted, and
with any occupancy certificate issued pursuant to any law by any public officer
or officers, which impose any duty upon Landlord or Tenant, insofar as any
thereof relate to or affect the condition, use, alteration or occupancy of the
Leased Premises (collectively "LAWS"). Landlord's approval of Tenant's plans for
any improvements shall create no responsibility or liability on the part of
Landlord for their completeness, design sufficiency, or compliance with Laws.
SECTION 35. GOVERNING LAW; SEVERABILITY
This Lease shall be construed in accordance with the laws of the State of
California. If any provision of this Lease or the application of it to any
person or circumstance shall be invalid or unenforceable to any extent, it shall
be adjusted, if possible, rather than voided, in order to achieve the
27
<PAGE>
intent of the parties. In any event, the remainder of this Lease and the
application of such provision to the other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.
This Lease shall Ix: construed as though the covenants between Landlord and
Tenant are independent Tenant hereby expressly waives the benefit of any statute
to the contrary and agrees that if Landlord fails to perform its obligations set
forth heroin, Tenant shall not be entitled to make any repairs or perform any
acts hereunder at Landlord's expense or to any set-off of the rent or other
amounts owing hereunder against Landlord.
SECTION 36. NOTICES
All notices, demands, statements or communications (collectively,
"NOTICES") given or required to be given by either party to the other hereunder
shall be in writing, shall be sent by nationally recognized overnight courier
service, or United States certified or registered mail, postage prepaid, return
receipt requested, or delivered personally addressed as follows:
TO THE LANDLORD: John Hancock Mutual Life Insurance Company
c/o The Galbreath Company
353 Sacramento Street
San Francisco, CA 94111
Attn: Melody Hanhaa
with a copy to: John Hancock Mutual Life Insurance Company
Attn Investment Officer Real Estate Investment Group
200 Clarendon St. Floor T-53
Boston, MA 02117
TO THE TENANT: Digital Island
353 Sacramento Street, Suite 1520
San Francisco, CA 94104
Attn: Ken Higgins
Any Notice will be deemed given upon the date actually received. If Tenant
is notified of the identity and address of the holder of any mortgage or deed of
trust given by Landlord, or any ground or underlying lessor, Tenant shall give
to such holder or ground or underlying lessor written notice of any default by
Landlord under the terms of this Lease by registered or certified mail, and such
holder or ground or underlying lessor shall be given a reasonable opportunity to
cure such default prior to Tenant's exercising any termination remedy available
to Tenant. Such addresses may be changed from time to time by either party
serving notice as provided above.
SECTION 37. OBLIGATIONS OF SUCCESSORS, PLURALITY, GENDER
Landlord and Tenant agree that all the provisions hereof are to be
construed as covenants and agreements as though the words imparting such
covenants were used in each paragraph hereof, and that, except as restricted by
the provisions hereof, shall bind and inure to the benefit of the parties
hereto, their respective heirs, legal representatives, successors and assigns.
If the rights of Tenant hereunder are owned by two or more parties or two or
more parties are designated herein as Tenant, then all such
28
<PAGE>
parties shall be jointly and severally liable for the obligations of Tenant
hereunder. Whenever the singular or plural number, masculine or feminine or
neuter gender is used herein, it shall equally include the other.
SECTION 38. ENTIRE AGREEMENT
This Lease and any attached addenda or exhibits constitute the entire
agreement between Landlord and Tenant. No prior or contemporaneous written or
oral or representations shall be binding. This Lease shall not be amended,
changed or extended except by written instrument signed by Landlord and Tenant.
SECTION 39. SECTION CAPTIONS
Section captions are for Landlord's and Tenant's convenience only, and
neither limit nor amplify the provisions of this Lease.
SECTION 40. CHANGES
Tenant shall consent to a modification of this Lease requested by any
mortgagee or beneficiary under a deed of trust as long as the modification does
not increase Tenant's costs or substantially change Tenant's rights and
obligations.
SECTION 41. AUTHORITY
All rights and remedies of Landlord under this Lease, or those which may be
provided by law, may be exercised by Landlord in its own name individually, or
in its name by its agent, and all legal proceedings for the enforcement of any
such rights or remedies, including actions for Rent, unlawful detains, and any
other legal or equitable proceedings, may be commenced and prosecuted to final
judgment and be executed by Landlord in its own name individually or in its name
by its agent. Landlord and Tenant each represent to the other that each has full
power and authority to execute this Lease and to make and perform the agreements
herein contained. Tenant expressly stipulates that any rights or remedies
available to Landlord, either by the provisions of this Lease or otherwise, may
be enforced by Landlord in its own name individually or in its name by its agent
or principal.
SECTION 42. BROKERAGE
Landlord and Tenant hereby warrant to each other that they have had no
dealings with any real estate broker or agent in connection with the negotiation
of this Lease, excepting only the real estate brokers or agents specified in the
Basic Lease Information, and that they know of no other real estate broker or
agent who is entitled to a commission in connection with this Lease. Each party
shall defend, indemnify and hold the other party harmless from and against all
claims, actions, loss, cost, damage, expense and liability (including without
limitation reasonable attorneys' fees and court costs) with respect to any
leasing commission or equivalent compensation alleged to be owing on account of
the indemnifying party's dealings with any real estate broker or agent other
than that specified herein. Additionally, Tenant acknowledges and agrees that
Landlord shall have no obligation for payment of any brokerage fee or similar
compensation to any person with whom Tenant has dealt or may in the
29
<PAGE>
future deal with respect to leasing of any additional or expansion space in the
Building or renewals or extensions of this Lease.
SECTION 43. ADDITIONS TO LEASE
Exhibits "A" through "C" are attached hereto and incorporated in this Lease
for all purposes and are hereby acknowledged by both panics to this Lease.
IN WITNESS WHEREOF, Landlord and Tenant, acting herein through duly
authorized individuals, have caused this Lease to be executed in multiple
counterparts, each of which shall have the force and effect of an original as of
the date first above written
TENANT: DIGITAL ISLAND,
a California corporation
By: /s/ [SIGNATURE ILLEGIBLE]^^
----------------------------
Name: /s/ [SIGNATURE ILLEGIBLE]^^
----------------------------
Title:
---------------------------
TAX ID OR TAX EXEMPT NO.______________
LANDLORD: JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY,
a Massachusetts, corporation
By: /s/ Meliha E. Amour
-----------------------------
Meliha E. Amour
Its: Investment Officer
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LEASE EXHIBIT A (MAP)
[FLOOR PLAN APPEARS HERE]
<PAGE>
EXHIBIT B
---------
Rules and Regulations
353 Sacramento Street Building
**********************************
1. Tenant shall not alter any lock or install any new or additional
locks or bolts on any doors or windows of the Leased Premises without obtaining
Landlord's written consent. Tenant shall bear the cost of any lock changes or
repairs required by Tenant. Two keys will be furnished by Landlord for the
Leased Premises, and any additional keys required by Tenant must be obtained
from Landlord at a reasonable cost to be established by Landlord. Upon
termination of the Lease, all keys to the Building and the Leased Premises shall
be surrendered to Landlord.
2. All doors opening to public corridors shall be kept closed at all
times except for normal ingress to and egress from the Leased Premises.
3. Landlord reserves the right to close and keep locked all entrance
and exit doors of the Building during such hours as are customary for comparable
buildings in the City of San Francisco. Tenant and its employees and agents
shall ascertain that the Building doors are securely closed and locked when
leaving the Premises after normal business hours. When entering or leaving the
Building after normal business hours Tenant and its employees and agents may be
required to sign the Building Register. Access to the Building may be refused
unless the person seeking access has proper identification or a previously
arranged pass. Landlord and its agents shall in no event be liable for damages
for any error with regard to the admission to or exclusion from the Building of
any person. In the event of invasion, mob riot, public excitement, or other
commotion, Landlord reserves the right to prevent access to the Building by any
means Landlord deems appropriate for the protection of life and property.
4. No furniture, freight or equipment of any kind shall be brought
into the Building without prior written notice to Landlord. All moving of the
same into or out of the Building shall be scheduled with Landlord and done only
at such time and in such manner as Landlord shall designate. Landlord shall have
the right to prescribe the weight, size and position of all safes and other
heavy property brought into the Building. Landlord may require safes and other
heavy objects to stand on supports to properly distribute the weight. All damage
done to any pan of the Building, its contents, occupants or visitors by the
moving or maintenance of such safes or other property shall be the sole
responsibility of Tenant.
5. No furniture, packages, supplies, equipment or merchandise shall
be received in the Building or carried up or down in the elevators, except
between such hours and in such elevator as shall be designated by Landlord.
<PAGE>
6. Landlord shall have the right to control and operate the public
portions of the Building, the public facilities, the heating and air
conditioning, and any other facilities furnished for the common use of tenants,
in such manner as is customary for comparable buildings in the City of San
Francisco.
7. Landlord shall furnish heating and air conditioning from 8:00
a.m. to 6:00 p.m., Monday through Friday. In the event Tenant requires heating
and air conditioning during off hours, Saturdays, Sundays, or holidays,
Landlord, on 24 hours' prior written notice from Tenant, shall provide such
services at an hourly rate to be established by Landlord from time to time.
8. Tenant shall apply to the Building office for any work or
maintenance to be provided by Landlord. Employees of Landlord shall not perform
any work other than their regular duties except when so directed by Landlord.
9. Tenant shall not disturb, solicit, or canvass any occupant of the
Building and shall cooperate with Landlord or Landlord's agent to prevent same.
10. The toilet rooms, 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 thrown therein. The expense
of any breakage, stoppage or damage resulting from the violation of this rule by
Tenant or its employees, agents and invitees shall be borne by Tenant
11. Tenant shall not overload the floor of the Leased Premises, nor
mark, drive nails or screws, or drill into the partitions, woodwork or plaster
or in any way deface the Leased Premises or any part thereof without Landlord's
prior written consent.
12. No vending machine or machines of any description other than
fractional horsepower office machines shall be installed, maintained or operated
upon the Leased Premises without Landlord's prior written consent; provided
that, Tenant may install art work, white boards and similar items, so long as
Tenant patches any significant holes resulting from such installation.
13. Tenant shall not use or keep in or on the Leased Premises of the
Building any kerosene, gasoline or other inflammable or combustible fluid or
material. Tenant shall not use, keep or permit to be used or kept foul or
noxious substances in or on the Leased Premises, or permit or allow the Leased
Premises to be occupied or used in a manner offensive or objectionable to
Landlord or other occupants of the Building by reason of noise, odors, or
vibrations, or interfere in any way with other tenants or persons having
business in the Building.
14. Tenant shall not use any heating or air conditioning equipment
other than that supplied by Landlord without Landlord's prior written consent.
2
<PAGE>
15. Tenant shall not bring into or keep within the Building or the
Leased Premises any animals, birds, bicycles or other vehicles.
16. No cooking shall be done or permitted by any Tenant on the Leased
Premises, nor shall the Leased Premises be used for the storage of merchandise
(other than business samples), for lodging, or for any improper purposes.
Notwithstanding the foregoing, Underwriters' Laboratory-approved equipment may
be used in the Lease Premises for brewing coffee, tea, hot chocolate and similar
beverages, and microwave heating of already prepared foodstuffs, provided that
such use is in accordance with all applicable Federal, state and city laws,
codes, ordinances, rules and regulations.
17. Introduction of telephone wires to the Leased Premises and the
location of telephone, call boxes and other office equipment affixed to the
Leased Premises shall be subject to Landlord's prior written approval, which
shall not be unreasonably withheld or delayed.
18. Landlord reserves the right to exclude or expel from the Building
any person who, in Landlord's sole judgment, appears under the influence of
liquor or drugs, or who violates these rules and regulations.
19. Landlord shall have the right, exercisable without notice and
without liability to Tenant, to change the name and street address of the
Building.
20. Tenant shall not employ or admit any person or persons other than
Landlord's janitor for the purpose of cleaning or maintaining the Leased
Premises unless agreed to in writing by Landlord. Any damage to the Leased
Premises caused by Tenant or its employees or agents while engaged in the
cleaning or maintaining of the Leased Premises shall be Tenant's sole
responsibility. Janitorial service shall include ordinary dusting and cleaning
and shall not include cleaning of carpets or rugs, except normal vacuuming, nor
moving of furniture or other special services. Landlord shall in no way be
responsible to Tenant for any loss of or damage to property on the Leased
Premises caused by the janitorial service, but Landlord shall use commercially
reasonable efforts to pursue rights and remedies available against such
janitorial service.
21. Tenant and its employees and agents shall not loiter in the
entrances or corridors, nor in any way obstruct the sidewalks, lobby, halls,
stairways or elevators, and shall use the same only for ingress to and egress
flora the Leased Premises.
22. Tenant shall not waste electricity, water or air conditioning.
Tenant shall cooperate fully with Landlord to ensure the most effective
operation of the Building's heating and air conditioning, and shall not adjust
any controls.
23. Tenant shall store all trash and garbage within the interior of
the Leased Premises. No material shall be placed in trash boxes or receptacles
if disposal in the ordinary and customary manner in the City of San Francisco
would violate any applicable law or
3
<PAGE>
ordinance. All trash, garbage and refuse disposal shall occur only through
entryways and elevators provided for such purposes at times designated by
Landlord.
24. Tenant shall comply with all safety, fire protection and
evacuation procedures and regulations established by Landlord or any
governmental agency.
25. Tenant shall assume all responsibility for protecting the Leased
Premises from theft, robbery and pilferage, including without limitation
preventing entry to the Leased Premises by unauthorized persons.
26. Landlord may waive any one or more of these Rules and Regulations
for the benefit of any particular tenant or tenants, but no such waiver by
Landlord shall be construed as a waiver of such Rules and Regulations in favor
of any other tenant or tenants, nor prevent Landlord from thereafter enforcing
any such Rules and Regulations against any or all tenants of the Building.
27. Landlord reserves the right to make other reasonable rules and
regulations as in its judgment may from time to time be needed for security or
for the preservation of good order, and Tenant shall abide by all such rules and
regulations.
*****
4
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EXHIBIT C
TENANT IMPROVEMENT WORK
This Exhibit C is incorporated in and is part of that certain Lease dated
as of April 8, 1997 (the "LEASE"). Terms defined in the Lease shall have the
same meaning when used herein.
1. PREPARATION OF DRAWINGS
A. DRAWINGS. The space plan prepared by Huntsman Associates has been
approved by Landlord and Tenant and is incorporated herein and
attached to the Lease as Exhibit A. Further detailed working drawings
and specifications (the "WORKING DRAWINGS") as required for
construction of the tenant improvement work (the "TENANT IMPROVEMENT
WORK") in the Leased Premises shall be prepared by Landlord as soon as
practicable.
B. APPROVAL OF THE WORKING DRAWINGS. Within five (5) business days after
Landlord's submission to Tenant of the Working Drawings, Tenant shall
give Landlord written notice of its approval or disapproval of same.
Tenant's approval shall not be unreasonably withheld or delayed
provided that the Working Drawings are consistent with building
standards. If the Working Drawings ate not approved by Tenant, Tenant
shall in its notice of disapproval state specifically all corrections
or changes requested, all of which must be consistent with building
standards.
C. CONSTRUCTION. Upon Tenant's approval of the Working Drawings, Landlord
shall proceed diligently to perform the Tenant Improvement Work as
soon as practicable in accordance with the Working Drawings, current
building standards for labor and materials, and all applicable codes
and regulations.
2. COMPUTER AND TELEPHONE EQUIPMENT. Landlord, at Tenant's request, will allow
Tenant, its employees or other installation personnel, access to the Leased
Premises for the purposes of installing telephone and computer lines,
cables and equipment. Tenant agrees to coordinate its installation of
telephones and computer equipment so as not to delay or increase the costs
of Landlord's performance of the Tenant Improvement Work.
3. PAYMENT OF THE COSTS OF THE TENANT IMPROVEMENT WORK. Landlord shall pay the
costs for design and construction of the Tenant Improvement Work in an
amount not to exceed $85,848. Any costs in excess of $85,848 shall be paid
by Tenant within ten (10) days after receipt of Landlord's invoice
therefor. If the costs of the Tenant Improvement Work are reasonably
estimated by Landlord to exceed $85,848, then Tenant shall deposit with
Landlord the amount of such excess as reasonably estimated by Landlord
prior to commencement of the Tenant Improvement Work Any amount deposited
by Tenant in excess of the amount by which the actual costs of the Tenant
Improvement Work exceed $85,848 shall be credited by Landlord to the next
payment of Rent due under the Lease.
4. DELIVERY OF PREMISE AND COMMENCEMENT OF LEASE TERM. When the Tenant
Improvement Work to be done by Landlord pursuant to this Exhibit C has been
substantially completed (i.e.,
<PAGE>
subject to normal "punch-list" items) for each of the Phase 1 and Phase 2
portions of' the Leased Premises, Landlord shall provide written notice of
such event to Tenant and that portion of the Leased Premises shall be
immediately inspected by Tenant's representative and accepted in writing as
to whether the Tenant Improvement Work has been performed according to the
Working Drawings and building standards; provided, however, that there
shall be no withholding of acceptance if the Tenant Improvement Work to be
done is substantially completed such that there would be no interference
with Tenant's use or occupancy of the Leased Premises caused by any such
incomplete work.
If the Tenant Improvement Work has been substantially but not entirely
complete, Tenant's representative shall accept the Phase I or Phase 2
portion of the Leased Premises, as applicable, and give Landlord a written
punchlist of such items necessary to complete, which items Landlord agrees
in writing should be included on such punchlist are herein called the
"PUNCHLIST ITEMS". Landlord shall promptly complete the Punchlist Items.
Tenant shall be conclusively deemed to have agreed that Landlord has
performed all its obligations with respect to the Tenant Improvement Work
except only as to the Punchlist Items.
Upon Tenant's acceptance of the Tenant Improvement Work for each of the
Phase I and Phase 2 portions of the Leased Premises, as applicable, that
portion of the Leased Premises shall be deemed "Ready for Occupancy" and
possession thereof deemed delivered to Tenant for all purposes of the
Lease.
5. PERFORMANCE OF THE TENANT IMPROVEMENT WORK. Landlord warrants that all
Tenant Improvement Work shall be completed in compliance with the Working
Drawings and building standard materials and techniques. Except for the
warranty continued in the previous sentence, no other warranties or
representations are made by Landlord concerning the tenant improvements.
6. EXTRAS. All extras or changes made to the Tenant Improvement Work after the
Working Drawings have been accepted shall be made only by a writing signed
by both parties.
7. REMEDIES UPON BREACH. In the event of any breach by Tenant of the
provisions of this Exhibit C, Landlord, upon thirty (:30) days' written
notice to Tenant as provided in the Lease (which notice shall be in lieu of
any notice required by the laws of the State of California, unless
California law provides for a longer period), may elect to treat Such
breach as a default under the Lease which shall entitle Landlord to any of
the rights and remedies provided thereunder.
8. TENANT'S REPRESENTATIVE. Tenant has designated MARK NICHOLS as its sole
representative with respect the matters set forth in this Exhibit C, who
shall full authority and responsibility to act on behalf to Tenant as
required in this Exhibit C. If MARK NICHOLS shall not be available for
inspection of the Leased Premises as provided in Paragraph 4 above, Tenant
shall provide an authorized representative within one day after said notice
to inspect and who shall have Tenant's authority to accept the Leased
Premises at that time.
9. LANDLORD'S REPRESENTATIVE. Landlord has designated Melody Hanhan as its
representative with respect to the matters set forth in the Exhibit C, who
shall have the full authority and responsibility to act on behalf of the
Landlord as required in this Exhibit C.
<PAGE>
[DEMOLITION PLAN APPEARS HERE]
<PAGE>
[CONSTRUCTION/FINISH PLAN APPEARS HERE]
<PAGE>
[POWER & SIGNAL PLAN APPEARS HERE]
<PAGE>
[REFLECTED CEILING PLAN APPEARS HERE]
<PAGE>
DEMOLITION LEGEND
DEMOLITION NOTES
SHEET NOTES
<PAGE>
CONSTRUCTION LEGEND
SHEET NOTES
DOOR SCHEDULE
HARDWARE GROUPS
DOOR AND HARDWARE NOTES
<PAGE>
FINISH LEGEND
FINISH KEYNOTES
REFLECTED CEILING LEGEND
REFLECTED CEILING KEYNOTES
REFLECTED CEILING NOTES
POWER AND SIGNAL LEGEND
POWER AND SIGNAL KEYNOTES