California-San Mateo-1900 South Norfolk Street Lease - Norfolk Atrium and NetGravity Inc.
THE ATRIUM
OFFICE LEASE
by and between
NORFOLK ATRIUM,
a California limited partnership,
as Lessor
and
NETGRAVITY, INC.,
a Delaware corporation,
as Lessee
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TABLE OF CONTENTS
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1. SUMMARY OF LEASE PROVISIONS ................................... 1
2. PREMISES DEMISED .............................................. 2
3. TERM .......................................................... 2
4. POSSESSION..................................................... 4
5. RENT .......................................................... 4
6. SECURITY DEPOSIT............................................... 5
7. PERIODIC COST OF LIVING, PROJECT TAXES AND OPERATING EXPENSE
ADJUSTMENTS.................................................... 6
8. USE............................................................ 11
9. COMPLIANCE WITH LAWS........................................... 12
10. ALTERATIONS AND ADDITIONS...................................... 13
11. REPAIRS........................................................ 14
12. LIENS.......................................................... 14
13. ASSIGNMENT AND SUBLETTING...................................... 15
14. HOLD HARMLESS.................................................. 17
15. SUBROGATION.................................................... 17
16. LESSEE'S INSURANCE............................................. 18
17. SERVICES AND UTILITIES......................................... 18
18. RULES AND REGULATIONS.......................................... 19
19. HOLDING OVER................................................... 20
20. ENTRY BY LESSOR................................................ 20
21. RECONSTRUCTION................................................. 20
22. DEFAULT........................................................ 21
23. REMEDIES UPON DEFAULT.......................................... 22
24. EMINENT DOMAIN................................................. 23
25. OFFSET STATEMENT; MODIFICATIONS FOR LENDER..................... 23
26. PARKING........................................................ 23
27. AUTHORITY ..................................................... 24
28. SURRENDER OF PREMISES.......................................... 24
29. LESSOR DEFAULT AND MORTGAGEE PROTECTION........................ 25
30. RIGHTS RESERVED BY LESSOR...................................... 25
31. EXHIBITS....................................................... 25
32. WAIVER......................................................... 25
33. NOTICES........................................................ 25
34. JOINT OBLIGATIONS.............................................. 26
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35. MARGINAL HEADINGS ............................................. 26
36. TIME........................................................... 26
37. SUCCESSORS AND ASSIGNS......................................... 26
38. RECORDATION.................................................... 26
39. QUIET POSSESSION .............................................. 26
40. LATE CHARGES; ADDITIONAL RENT AND INTEREST..................... 26
41. PRIOR AGREEMENTS............................................... 26
42. INABILITY TO PERFORM........................................... 26
43. ATTORNEYS' FEES ............................................... 27
44. SALE OF PREMISES BY LESSOR..................................... 27
45. SUBORDINATION/ATTORNMENT....................................... 27
46. NAME........................................................... 27
47. SEVERABILITY................................................... 27
48. CUMULATIVE REMEDIES............................................ 27
49. CHOICE OF LAW.................................................. 27
50. SIGNS.......................................................... 27
51. GENDER AND NUMBER.............................................. 28
52. CONSENTS....................................................... 28
53. BROKERS ....................................................... 28
54. SUBSURFACE AND AIRSPACE ....................................... 28
55. COMMON AREA.................................................... 28
56. LABOR DISPUTES................................................. 28
57. REASONABLENESS................................................. 29
58. LESSEE'S FINANCIAL STATEMENTS.................................. 29
59. LESSOR NOT A TRUSTEE........................................... 29
60. MERGER......................................................... 29
61. NO PARTNERSHIP OR JOINT VENTURE................................ 29
62. LESSOR'S RIGHT TO PERFORM LESSEE'S COVENANTS................... 29
63. PLANS.......................................................... 29
64. RIGHT OF FIRST OPPORTUNITY..................................... 29
65. WAIVER OF JURY................................................. 30
66. JOINT PARTICIPATION............................................ 30
67. COUNTERPARTS................................................... 30
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THE ATRIUM
OFFICE LEASE
For and in consideration of rentals, covenants, and conditions hereinafter
set forth, Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, the herein described Premises for the term, at the rental rate
specified herein and subject to and upon all of the terms, covenants and
agreements set forth in this lease ("Lease"):
1. SUMMARY OF LEASE PROVISIONS.
a. LESSEE: NETGRAVITY, INC., a Delaware corporation ("Lessee").
b. LESSOR: NORFOLK ATRIUM, a California limited partnership ("Lessor").
c. DATE OF LEASE (FOR REFERENCE PURPOSES ONLY): August 5, 1998.
d. PREMISES: That certain office space commonly known as 1900 South
Norfolk Street, Suite 150, San Mateo, California, and shown cross-hatched
on the reduced floor plan attached hereto as Exhibit "A," consisting of
approximately twenty-six thousand five hundred two (26,502) square feet
of Rentable Area ("the Premises"). (ARTICLE 2)
e. TERM: Eighty-four (84) months. (ARTICLE 3)
f. COMMENCEMENT DATE: As defined in Exhibit "C" attached hereto. (ARTICLE 3)
g. LEASE TERMINATION: The date which is eighty-four (84) months following
the Commencement Date ("Expiration Date"), unless sooner terminated
pursuant to the terms of this Lease. (ARTICLE 3)
h. BASE RENT: Eighty-Six Thousand Six Hundred Sixty-One and 54/100ths
Dollars ($86,661.54) per month (based upon Three and 27/100ths Dollars
($3.27) per month per square foot of Rentable Area in the Premises);
subject to increase on each anniversary of the Commencement Date
occurring during the Term, including, without limitation, during the
Extended Term, if applicable (except on the commencement of such
Extended Term, when Base Rent shall be adjusted in accordance with
Article 3.b. below), to equal one hundred three percent (103%) of the
monthly Base Rent in effect immediately prior to such adjustment date.
(ARTICLE 5)
i. SECURITY DEPOSIT: See Article 6. (ARTICLE 6)
j. LESSEE'S PERCENTAGE SHARE: Sixteen and 37/100ths percent (16.37%).
(ARTICLE 7)
k. BASE EXPENSES: Eight Dollars ($8.00) per square foot per year of
Rentable Area within the Building. (ARTICLE 7)
1. PARKING: Non-Exclusive right to use no more than three and one-half
(3.5) unreserved, uncovered spaces per each one thousand (1,000) square
feet of Rentable Area in the Premises (rounded to the nearest whole
number) without charge during the Term, subject to the provisions of
Article 26. (ARTICLE 26)
m. ADDRESSES FOR NOTICES:
Lessor: c/o Maxim Property Management
350 Bridge Parkway
Redwood City, California 94065-1517
Attn: Mr. Sanford Diller
Telephone No.: (650) 596-5300
Fax No.: (650) 596-5377
with a concurrent copy to:
c/o Maxim Property Management
350 Bridge Parkway
Redwood City, California 94065-1517
Attn: Ms. Vicki Mullins
Telephone No.: (650) 596-5300
Fax No.: (650) 596-5377
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and with a concurrent copy to the
Project Management Office at:
1900 South Norfolk Street, Suite 230
San Mateo, California 94403
Attn: Property Manager
Telephone No.: (650) 570-6619
Fax No.: (650) 570-4380
Lessee: Prior to Commencement Date: Following Commencement Date
NetGravity, Inc. NetGravity, Inc.
1700 South Amphlett Blvd., 1900 South Norfolk Street,
Suite 250 Suite 150
San Mateo, California 94402 San Mateo, California 94403
Attn: Chief Financial Officer Attn: Chief Financial Officer
Telephone No.: (650) 655-2586 Telephone No.: _______________
Fax No.: (650) 655-2259 Fax No.: _____________________
n. BROKERS: BT Commercial, as Lessor's broker, and The Staubach
Company, as Lessee's broker. (ARTICLE 53)
o. LESSEE IMPROVEMENT ALLOWANCE: Eight and 50/100ths Dollars ($8.50) per
square foot of Rentable Area in the Premises. (EXHIBIT "C")
p. SUMMARY PROVISIONS IN GENERAL. Parenthetical references in this
Article 1 to other articles in this Lease are for convenience of reference,
and designate some of the other Lease articles where applicable provisions
are set forth. All of the terms and conditions of each such referenced
article shall be construed to be incorporated within and made a part of each
of the above referred to Summary of Lease Provisions. If any conflict exists
between any Summary of Lease Provisions as set forth above and the balance of
the Lease, then the latter shall control.
2. PREMISES DEMISED. Lessor does hereby lease to Lessee and Lessee hereby
leases from Lessor the Premises described in Article 1.d., subject,
nevertheless, to all of the terms and conditions of this Lease.
Notwithstanding anything to the contrary contained in this Lease, the
Premises shall be deemed for all purposes of this Lease to contain the amount
of Rentable Area specified in Article 1.d. above, notwithstanding any
deviation in actual Rentable Area of the Premises from such amount.
Calculation of the actual "Rentable Area" of the Building and Project shall
be performed by Lessor's architect in accordance with Building measurement
standards, which calculation shall be conclusive and binding upon Lessor and
Lessee. The Premises is approximately as shown as cross-hatched on the floor
plan(s) attached hereto as Exhibit "A". As used in this Lease, the term
"Building" shall mean the building at the address listed in Article 1.d.
above in which the Premises is located. The Building is situated upon the
parcel(s) of land shown on Exhibit "B" attached hereto (collectively, the
"Parcel"). The Building and the "Exterior Common Area" (as defined in Article
55 below) and all other improvements as now or hereafter located on the
Parcel, if any, are herein sometimes referred to collectively as the
"Project".
3. TERM; OPTION TO EXTEND.
a. TERM. The term of this Lease shall be for the period designated
in Article 1.e., commencing on the Commencement Date and ending on the
Expiration Date set forth in Article 1.g., unless sooner terminated pursuant
to this Lease ("Term"). The expiration or sooner termination of the Lease is
hereinafter referred to as "Lease Termination".
b. OPTION TO EXTEND. Lessee shall have the option to extend the Term
for a period of sixty (60) months immediately following the expiration of the
initial Term (the "Extended Term"), on all provisions contained in this Lease
(subject to adjustment of Base Rent upon the commencement of the Extended
Term as described below, and except for such terms and conditions of this
Lease as are specifically or by their operation limited to the initial Term
only (including, without limitation, Exhibit "C" attached hereto and
provisions respecting construction of Lessee Improvements and payment of a
Lessee Improvement Allowance) and except that Lessee shall have no further
right or option to extend the term upon the expiration of the Extended Term),
by giving notice of exercise of the option (the "Option Notice") to Lessor at
least twelve (12) months but not more than eighteen (18) months before the
expiration of the then applicable Term.
Lessor's ability to plan for the orderly transaction of its rental
business, to accommodate the needs of other existing and potential tenants,
and to enjoy the benefits of increasing rentals at such times as Lessor is
able to do so in its sole and absolute discretion, are fundamental elements
of Lessor's willingness to provide Lessee with the option to extend contained
herein. Accordingly, Lessee hereby acknowledges that strict compliance with
the notification provisions contained herein, and Lessee's strict compliance
with the time period for such notification contained herein, are material
elements of the bargained for exchange between Lessor and Lessee and are
material elements of Lessee's consideration paid to Lessor in exchange for
the grant of the option. Therefore, Lessee's failure to adhere strictly and
completely to the provisions and time frame contained in this provision shall
render the option automatically null, void and of no further force or effect,
without notice, acknowledgement, or any action of any nature or sort,
required of Lessor. Lessee acknowledges that no other act or notice, other
than the express written notice set forth hereinabove, shall act to put
Lessor on notice of Lessee's intent to extend, and Lessee hereby waives any
claims to the contrary, notwithstanding any other actions of Lessee during
the Term of this Lease or any statements, written or oral, of Lessee to
Lessor to the contrary during the Term of this Lease. Notwithstanding the
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foregoing, if Lessee is in default (after the expiration of any applicable
period for cure pursuant to Article 22 below) on the date of giving the
Option Notice, the Option Notice shall be totally ineffective, or if Lessee
is in default (after the expiration of any applicable period for cure
pursuant to Article 22 below) on the date the Extended Term is to commence,
in addition to any and all other remedies available to Lessor under this
Lease, at Lessor's election, the exercise of the option shall be deemed null
and void, the Extended Term shall not commence, and this Lease shall expire
at the end of the Term.
The option to extend granted pursuant hereto is personal to original
Lessee signatory to this Lease and cannot be assigned, transferred or
conveyed to, or exercised for the benefit of, any other person or entity
(voluntarily, involuntarily, by operation of law or otherwise) including,
without limitation, to any assignee or subtenant permitted under Article 13,
other than a "Permitted Transferee" (as defined in Article 13). All of
Lessee's rights under this Article 3.b. shall terminate upon the expiration
of the initial Term or sooner termination of this Lease.
The parties shall have thirty (30) days after Lessor receives the Option
Notice in which to agree upon the Base Rent to be payable during the Extended
Term. The Base Rent payable during the Extended Term shall be an amount
equal to the then current "Fair Market Rental Value" (defined below) of the
Premises at the time of commencement of the proposed Extended Term. However,
in no event shall the Base Rent during the Extended Term be less than the
Base Rent payable at the expiration of the initial Term. The term "Fair
Market Rental Value" of the Premises as used in this Lease shall mean the
then prevailing fair market rent for the Premises as of the commencement of
the Extended Term. In determining such rate, the parties may consider
non-sublease lease renewal transactions for first class office space
comparable in size and quality to the Premises, if any, located in the San
Mateo/Foster City area and located in the Building and other buildings
comparable in size and quality to the Building in which the Premises is
located, and taking into consideration all other factors normally considered
when determining fair market rental value (including, without limitation, the
duration of the Extended Term), provided that the parties shall not consider
the then value of any alterations or improvements to the Premises made by
Lessee at Lessee's cost.
Upon determination of the Fair Market Rental Value for the Premises, the
parties shall immediately execute an amendment to this Lease stating the Base
Rent to be paid during the Extended Term. In the event Lessee has retained
the services of a real estate broker to represent Lessee during the
negotiations in connection with the Extended Term, it is expressly understood
that Lessor shall have no obligation for the payment of all or any part of a
real estate commission or other brokerage fee to Lessee's real estate broker
in connection with the Extended Term. Lessee shall be solely responsible for
payment of fees for services rendered to Lessee by such broker in connection
with the Extended Term.
If the parties are unable to agree, in their sole and absolute
discretion, on the Fair Market Rental Value for the Premises within such
thirty (30) day period, then the Fair Market Rental Value for the Extended
Term shall be determined as follows:
a. Following the expiration of such thirty (30) day period, Lessor
and Lessee shall meet and endeavor in good faith to agree upon a licensed
commercial real estate agent with at least seven (7) years full-time
experience as a real estate agent active in leasing of commercial office
buildings in the area of the Premises to appraise and set the Fair Market
Rental Value for the Extended Term. If Lessor and Lessee fail to reach
agreement upon such agent within fifteen (15) days following the expiration
of such thirty (30) day period, then, within fifteen (15) days thereafter,
each party, at its own cost and by giving notice to the other party, shall
appoint a licensed commercial real estate agent with at least seven (7) years
full-time experience as a real estate agent active in leasing of commercial
office buildings in the area of the Premises to appraise and set the Fair
Market Rental Value for the Extended Term. If a party does not appoint an
agent within fifteen (15) days after the other party has given notice of the
name of its agent, the single agent appointed shall be the sole agent and
shall set the Fair Market Rental Value for the Extended Term. If there are
two (2) agents appointed by the parties as stated above, the agents shall
meet within ten (10) days after the second agent has been appointed and
attempt to set Fair Market Rental Value for the Extended Term. If the two
(2) agents are unable to agree on such Fair Market Rental Value within
fifteen (15) days after the second agent has been appointed, they shall,
within fifteen (15) days after the last day the two (2) agents were to have
set such Fair Market Rental Value, attempt to select a third agent who shall
be a licensed commercial real estate agent meeting the qualifications stated
above. If the two (2) agents are unable to agree on the third agent within
such fifteen (15) day period, either Lessor or Lessee may request the
President of the local chapter of the Society of Industrial and Office
Realtors (SIOR) or a then equivalent organization if SIOR is not then in
existence to select a third agent meeting the qualifications stated in this
subsection. Each of the parties shall bear one-half (1/2) of the cost of
appointing the third agent and of paying the third agent's fee. No agent
shall be employed by, or otherwise be engaged in business with or affiliated
with, Lessor or Lessee, except as an independent contractor.
b. Within fifteen (15) days after the selection of the third agent, a
majority of the agents shall set the Fair Market Rental Value for the
Extended Term. If a majority of the agents are unable to set such Fair Market
Rental Value within the stipulated period of time, each agent shall make a
separate determination of such Fair Market Rental Value and the three (3)
appraisals shall be added together and the total shall be divided by three
(3). The resulting quotient shall be the Fair Market Rental Value for the
Premises for the Extended Term. If, however, the low appraisal and/or high
appraisal is/are more than twenty percent (20%) lower and/or higher than the
middle appraisal, the low appraisal and/or the high appraisal shall be
disregarded. If only one (1) appraisal is disregarded, the remaining two (2)
appraisals shall be added together and their total divided by two (2), and
the resulting quotient shall be Fair Market Rental Value for the Extended
Term. If both the low appraisal and the high appraisal are disregarded as
stated in this subsection, the middle appraisal shall be the Fair Market
Rental Value for the Extended Term.
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c. Each agent shall hear, receive and consider such information as
Lessor and Lessee each care to present regarding the determination of Fair
Market Rental Value for the Extended Term and each agent shall have access to
the information used by each other agent. Upon determination of the Fair
Market Rental Value for the Extended Term, the agents shall immediately
notify the parties hereto in writing of such determination by certified mail,
return receipt requested. Notwithstanding anything to the contrary contained
herein, in the event the Fair Market Rental Value is determined by appraisal
by licensed commercial real estate agent(s) as provided herein, Lessee shall
have the right to rescind its exercise of the option to extend the Term by
the Extended Term by written notice delivered to Lessor within fifteen (15)
days following Lessee's receipt of notice of such determination, in the event
of which rescission, notwithstanding anything to the contrary contained in
the foregoing, (i) Lessee shall be solely responsible for all costs of such
appraisal process (including, without limitation, fees and costs of all real
estate agents in such appraisal process), and (ii) Lessee shall have no
further right or option to extend the Lease Term and the Lease Term shall
expire at the end of the initial eighty-four (84) month Term.
4. POSSESSION.
a. CONSTRUCTION OF IMPROVEMENTS/DELAY IN POSSESSION. Lessor and
Lessee agree to the provisions set forth in the work letter attached hereto
as Exhibit "C" ("Work Letter"), if any. Lessee agrees that its construction
within the Premises of the improvements described in the Work Letter (the
"Lessee Improvements") shall be upon and subject to the provisions thereof.
The parties acknowledge that the Premises is presently vacant and available
for occupancy by Lessee and, accordingly, agree that Lessor shall have
delivered possession of the Premises to Lessee upon the execution of this
Lease by Lessee and Lessor. However, if for any reason whatsoever, Lessor
cannot deliver possession of the Premises to Lessee by such date, this Lease
shall not be void or voidable, nor shall Lessor be liable to Lessee for any
loss or damage resulting therefrom.
b. EARLY POSSESSION. Notwithstanding that Lessee shall occupy the
Premises prior to the Lease Commencement Date for purposes of construction of
the Lessee Improvements, this Lease shall be fully effective from and after
the date of the execution of this Lease by Lessee and Lessor. Lessee's
occupancy of the Premises following the delivery of possession of the
Premises to Lessee by Lessor and prior to the Commencement Date shall be
subject to all terms and conditions of this Lease other than Lessee's
obligation for payment of monthly Base Rent and Excess Expenses.
c. CERTIFICATES AND LICENSES. Prior to occupancy, Lessee shall provide
to Lessor the certificate(s) of insurance required by Article 16 and a copy of
all licenses and authorizations that may be required for the lawful operation
of Lessee's business upon the Premises, including any City business licenses
as may be required.
d. CONDITION OF PREMISES ON DELIVERY. Lessee acknowledges that except
as specifically otherwise provided in this Lease, (i) the lease of the
Premises by Lessee pursuant hereto shall be on in its present "AS IS"
condition, in the broadest sense of that term, with all faults, if any, (ii)
neither Lessor nor any employee, representative or agent of Lessor has made
any representation or warranty, express or implied, with respect to the
Premises or any other portion of the Project, and (iii) Lessor shall have no
obligation to improve or alter the Premises or Project for the benefit of
Lessee. Without regard to Lessee's particular use of, or Alterations to, the
Premises, upon the delivery of possession of the Premises to Lessee shall be
in "broom clean" condition, free of debris, and the HVAC, electrical,
plumbing, lighting and integrated Building mechanical systems serving the
Premises shall be in good working condition. In the event it is established
within sixty (60) days following delivery of possession of the Premises that,
other than as a result of work necessitated by Lessee's particular use of, or
Lessee Improvements or Alterations to, the Premises, the HVAC, electrical,
plumbing, lighting and/or integrated Building mechanical systems serving the
Premises were not in good working condition as of the delivery of possession
of the Premises, Lessor shall promptly thereafter commence and diligently
prosecute to completion the work necessary to restore such systems to working
order (provided that Lessor shall not be responsible for any increased costs
of performance of such work resulting from Lessee's particular use (as
opposed to mere general office use) of, or Lessee Improvements or Alterations
to, the Premises). Without regard to Lessee's particular use of, or
Alterations (including, without limitation, the Lessee Improvements) to, the
Premises, to Lessor's actual knowledge, as of the delivery of possession, the
Premises shall comply with the all applicable laws (as enforced upon the
execution of this Lease; the parties hereby acknowledging that the foregoing
reference to "as enforced" shall be deemed to relate to changes in the manner
of interpretation and/or enforcement of the requirements of current laws as
opposed to a failure of governmental authorities to have identified
pre-existing non-compliance with applicable laws in effect upon the execution
of this Lease) other than any pre-existing non-compliance where compliance
work is not presently required to be performed (as opposed to pre-existing
non-compliance where compliance work is legally mandated even in the absence
of subsequent improvements, alterations or change in use). If it is
determined following the delivery of possession that upon the delivery of
possession the Premises was not in compliance with all applicable laws (as
enforced upon the execution of this Lease) where the correcting compliance
work was required to be performed as of the execution of this Lease (as
opposed to pre-existing non-compliance where compliance work was not legally
mandated in the absence of subsequent improvements, alterations or change in
use), then Lessor shall promptly thereafter commence and diligently prosecute
to completion, at Lessor's expense, the work necessary to cause such
compliance (provided that Lessor shall not be responsible for any increased
costs of causing such compliance resulting from Lessee's particular use (as
opposed to mere general office use) of, or Alterations (including, without
limitation, the Lessee Improvements) to, the Premises).
5. RENT. Lessee agrees to pay to Lessor as rental for the Premises, without
offset, deduction, prior notice or demand, the monthly Base Rent designated
in Article 1.h., as the same may be adjusted from time to time in accordance
therewith and (as to adjustment of Base Rent upon the commencement of the
Extended Term, if applicable), in accordance with Article 3.b. above. Base
Rent shall be payable monthly in advance on or before the first day of each
calendar month during the Term, except that Base Rent for the first full
calendar month during the
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Term shall be paid upon the execution of this Lease, and if the Commencement
Date is other than the first day of a calendar month, Base Rent for the
initial partial calendar month during the Term shall be prorated and paid
upon the Commencement Date. Base Rent for any period during the Term which
is for less than one (1) month shall be prorated based upon a thirty (30) day
month. Base Rent and all other amounts owing to Lessor pursuant to this
shall be paid to Lessor in lawful money of the United States of America which
shall be legal tender at the time of payment, at the office of the Project,
or to such other person or at such other place as Lessor may from time to
time designate in writing.
6. SECURITY DEPOSIT.
a. Concurrent with the execution of this Lease, Lessee has deposited
with Lessor an unconditional, irrevocable letter of credit (the "Letter of
Credit") in favor of Lessor in an amount equal to the "L C Amount" (as
hereinafter defined) in form and from an issuer reasonably acceptable to
Lessor, having an expiration date not sooner than one (1) year following the
date thereof, which Letter of Credit shall be renewed or replaced annually,
at least fifteen (15) days prior to the expiration date thereof for
additional one-year periods until the expiration of the Term, as security for
the full and faithful performance of every provision of this Lease to be
performed by Lessee (such Letter of Credit and/or any proceeds thereof are
collectively referred to herein as the "Security Deposit"). As used herein,
the "LC Amount" shall mean an amount equal to the sum of (i) the Lessee
Improvement Allowance plus (ii) all commissions payable by Lessor to the
Brokers referenced in Article I.n. above in connection with this Lease;
provided, however, that the LC Amount shall be reduced by twenty percent
(20%) of the original amount thereof on each anniversary of the Commencement
Date occurring during the Term, provided that in no event shall the LC Amount
be reduced below the amount of the last month's Base Rent payable under this
Lease. All costs of obtaining, maintaining, replacing, renewing and/or
restoring the Letter of Credit in accordance with this Article 6 shall be
born by Lessee. Such Letter of Credit shall be such that it may be drawn
upon in part or in full, periodically, or at one time, upon presentation of
only the Letter of Credit, a draft from Lessor in the amount to be drawn, and
certification from Lessor that Lessor is entitled to draw upon the Letter of
Credit pursuant to the provisions of this Lease. If Lessor shall at any time
draw upon such Letter of Credit in accordance with this Article 6, Lessee
shall immediately restore such Letter of Credit to the then applicable full
LC Amount. Lessee agrees that the Letter of Credit may be presented by
Lessor for payment (1) upon the occurrence of a default by Lessee under this
Lease (after Lessee's receipt of written notice thereof from Lessor and the
expiration of any applicable cure period provided in Article 22 below), (2)
in the event Lessee has not, within fifteen (15) days prior to the expiration
of the then term of the Letter of Credit, delivered to Lessor a renewed or
replacement Letter of Credit complying with all of the requirements of this
Lease, and/or (3) in the event Lessor draws upon the Letter of Credit in the
event of Lessee's default pursuant to clause (1) above, and Lessee does not,
within ten (10) days after written demand therefor, restore the Letter of
Credit to its original amount. Lessee shall not in any manner interfere with
the payment to Lessor of the proceeds of the Letter of Credit pursuant to
this case either prior to or following presentment by Lessor pursuant hereto,
and Lessee shall be liable to Lessor for any loss suffered by Lessor as a
result of such interference, including, without limitation, any attorneys'
fees and costs. Lessee hereby agrees that it may be enjoined from
interfering or attempting to interfere, directly or indirectly, with Lessor's
negotiation of the Letter of Credit. The proceeds of the Letter of Credit
paid to Lessor upon presentment thereof shall be the Security Deposit for use
in the manner set forth in this Article 6. Notwithstanding anything to the
contrary contained herein, Lessee may at any time replace the Letter of
Credit with a cash security deposit in the amount of the then applicable LC
Amount, in which event such cash shall be held as the Security Deposit in
accordance with this Lease and Lessor shall return to Lessee the Letter of
Credit then held by Lessor.
b. The Security Deposit shall be held by Lessor as security for the
faithful performance by Lessee of all of the terms, covenants, and conditions
of this Lease to be kept and performed by Lessee during the Term. If Lessee
defaults with respect to any provisions of this Lease, including but not
limited to the provisions relating to the payment of Rent, which default is
not cured within any applicable period for cure following Lessee's receipt of
written notice thereof from Lessor pursuant to this Lease, Lessor may (but
shall not be required to) use, apply or retain all or any part of the
Security Deposit for the payment of any Rent or any other sum in default, or
for the payment of any other amount which Lessor may spend or become
obligated to spend by reason of Lessee's default or to compensate Lessor for
any loss or damage which Lessor may suffer by reason of Lessee's default (at
Lessor's option, by application of any cash portion of the Security Deposit,
to the extent of funds available from prior drawing upon the Letter of Credit
or from funds deposited by Lessee as replacement for the Letter of Credit or
for prior drawing upon the Letter of Credit and/or by drawing upon the Letter
of Credit in accordance herewith). If any portion of the Security Deposit is
so used or applied, Lessee shall, within ten (10) days after demand therefor,
deposit cash with Lessor and/or deliver to Lessor a replacement Letter of
Credit in accordance herewith, as applicable, in an amount sufficient to
restore the Security Deposit to the then required LC Amount and Lessee's
failure to do so shall be a default under this Lease. Lessor shall not be
required to keep the Security Deposit separate from its general funds, and
Lessee shall not be entitled to interest on such Security Deposit. Provided
Lessee shall not be in default under this Lease within thirty (30) days
following the later to occur of (i) the expiration of the Term or sooner
termination of this Lease, or (ii) Lessee's vacating of the Premises, any
balance of the Security Deposit then remaining with Lessor (in cash and/or in
the form of the Letter of Credit) shall be returned to Lessee. The Letter of
Credit shall inure to the benefit of Lessor and its successors and assigns.
Should Lessor convey or assign its interest in the Premises during the Term
hereof and if Lessor deposits with the assignee the then unappropriated funds
deposited by Lessee as aforesaid and, to the extent not previously presented
for payment, assigns its interest in the Letter of Credit (Lessee hereby
agreeing that if Lessor is unable to transfer the Letter of Credit to a
successor or assign due to restrictions on transferability, Lessee shall
provide a replacement Letter of Credit meeting all of the requirements of
this Paragraph in favor of such successor or assign if necessary to permit
drawing upon such Letter of Credit by such successor or assign and Lessor
shall return the Letter of Credit to Lessee that is so replaced), thereupon
Lessor shall be discharged from any further liability with respect to such
Security Deposit and, if applicable, Letter of Credit.
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7. PROJECT TAXES AND OPERATING EXPENSE ADJUSTMENTS.
a. Intentionally omitted.
b. BUILDING TAXES AND BUILDING OPERATING EXPENSES. From and after
January 1, 1999, during the term of this Lease, Lessee shall pay to Lessor,
as additional rent and without deduction or offset, Lessee's percentage share
set forth in Article l.j. ("Lessee's Percentage Share") of the amount (if
any) by which the sum of annual "Building Taxes" and "Building Operating
Expenses" (as such terms are defined below) for each year during the Term
exceed the Base Expenses amount set forth in Article l.k. above (the amount
of such excess is referred to herein as the "Excess Expenses"); provided,
however, that notwithstanding anything to the contrary contained in the
following provisions, Lessee shall not be responsible for payment of Excess
Expenses with respect to the calendar year 1999 until the reconciliation of
actual Building Taxes and Building Operating Expenses for such year to the
Base Expenses amount, at which time Excess Expenses for the calendar year
1999 shall be due by lump sum payment from Lessee to Lessor within thirty
(30) days following Lessor's delivery to Lessee of "Lessor's Statement" (as
hereinafter defined) with respect to the calendar year 1999. Lessee's
Percentage Share shall be determined by dividing the Rentable Area of the
Premises by the total Rentable Area in the Building. Lessee's Percentage
Share shall be subject to an equitable adjustment upon a condemnation, sale
by Lessor of part of the Building, reconstruction after damage or destruction
or expansion or reduction of the areas within the Building. Lessee's
Percentage Share of Excess Expenses shall be payable during the Term in equal
monthly installments on the first day of each month in advance, without
deduction, offset or prior demand.
At any time during the Term after the expiration of the calendar year
1999, Lessor may give Lessee notice of Lessor's estimate of the Excess
Expenses for the current calendar year. An amount equal to one twelfth
(1/12) of Lessee's Percentage Share of the estimated Excess Expenses shall be
payable monthly by Lessee as aforesaid, commencing on the first day of the
calendar month following thirty (30) days written notice and continuing until
receipt of any notice of adjustment from Lessor given pursuant to this
paragraph. Until notice of the estimated Excess Expenses for a subsequent
calendar year is delivered to Lessee, Lessee shall continue to pay its
Percentage Share of Excess Expenses on the basis of the prior year's
estimate. Lessor may at any time during the Term adjust estimates of the
Excess Expenses to reflect current expenditures and following Lessor's
written notice to Lessee of such revised estimate, subsequent payments by
Lessee shall be based upon such revised estimate.
If the Commencement Date is on a date other than the first day of a
calendar year, the amount of the Excess Expenses payable by Lessee in such
calendar year shall be prorated based upon a fraction, the numerator of which
is the number of days from the Commencement Date to the end of the calendar
year in which the Commencement Date falls, and the denominator of which is
three hundred sixty (360).
Within one hundred twenty (120) days after the end of each calendar year
during the Term or as soon thereafter as practicable, Lessor will furnish to
Lessee a statement ("Lessor's Statement") setting forth in reasonable detail
the actual Building Taxes and Building Operating Expenses paid or incurred by
Lessor during the preceding year and the amount of the Excess Expenses (if
any), and thereupon within thirty (30) days an adjustment will be made by
Lessee's payment to Lessor or credit to Lessee by Lessor against the Excess
Expenses next becoming due from Lessee (or in the event the Lease has
terminated and Lessee has satisfied all remaining obligations under the
Lease, a reimbursement by Lessor to Lessee), as the case may require, to the
end that Lessor shall receive the entire amount of Lessee's Percentage Share
of Excess Expenses for such calendar year and no more. If, based on Lessor's
Statement a payment from Lessee is required, Lessee shall not have the right
to withhold or defer such payment pending a review of Lessor's books and
records pursuant to the following paragraph or the resolution of any dispute
relating to Excess Expenses. If the Expiration Date is on a day other than
the last day of a calendar year, the amount of Excess Expenses payable by
Lessee for the calendar year in which Lease Termination falls shall be
prorated on the basis which the number of days from the commencement of such
calendar year to and including such Expiration Date bears to three hundred
sixty (360). The termination of this Lease shall not affect the obligations
of Lessor and Lessee pursuant to this Article 7. In the event that the sum of
Building Taxes and Building Operating Expenses for any calendar year are less
than Base Expenses, Lessee shall not receive a credit against any Rent
payable hereunder as a result thereof.
Within sixty (60) days after Lessee receives a statement of actual
Building Taxes and Building Operating Expenses paid or incurred for a
calendar year, Lessee shall have the right, upon written demand and
reasonable notice, to inspect Lessor's books and records relating to the
Excess Expenses for the calendar year covered by Lessor's Statement for the
purpose of verifying the amount set forth in such statement. Such inspection
shall be made during Lessor's normal business hours, at the place where such
books and records are customarily maintained by Lessor. In no event may any
such inspection be performed by a person or entity being compensated on a
contingency fee basis or based upon a share of any refund obtained by Lessee.
Information obtained by such inspection shall be kept in the strictest
confidence by Lessee. Unless Lessee asserts in writing a specific error
within ninety (90) days following Lessee's receipt of Lessor's Statement, the
amounts set forth in Lessor's Statement shall be conclusively deemed correct
and binding on Lessee. Lessor shall refund to Lessee any overpayment of
Excess Expenses which is determined to have been made by Lessee. In addition,
if it is determined that Lessor has overstated the sum of actual Building
Taxes and Building Operating Expenses for a particular calendar year by more
than five percent (5%) and such overstatement results in Lessor owing a
reimbursement to Lessee of more than Five Hundred Dollars ($500.00), then
Lessor shall also reimburse Lessee's reasonable third-party out of pocket
expenses incurred in conducting such inspection), within thirty (30) days
following Lessee's submission to Lessor of reasonable evidence of such
expenses.
(i) OPERATING EXPENSES. As used in this Lease, "Building Operating
Expenses" means all of the Building Service Expenses and an allocable portion
of the Project Expenses as follows:
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(A) BUILDING SERVICE EXPENSES. Building Operating Expenses shall
include all costs of operation, maintenance, repair (which for purposes of
this Lease shall be deemed to include, without limitation, replacement as and
when deemed appropriate by Lessor) and management of the Building and
Building Common Area (defined in Article 55), hereinafter collectively
referred to as "Building Service Expenses," as determined by Lessor's
standard accounting practices. Building Service Expenses as used herein
shall include, but not be limited to, all sums expended in connection with
all general maintenance, repairs, painting, cleaning, sweeping and janitorial
services; maintenance and repair of signs, indoor plants, and atriums; trash
removal; sewage; electricity, gas, water and any other utilities (including
any temporary or permanent utility surcharge or other exaction whether now or
hereafter imposed); maintenance and repair of any fire protection systems,
elevator systems, lighting systems, storm drainage systems, heating,
ventilation and air conditioning systems and other utility and/or mechanical
systems; any governmental imposition or surcharge imposed upon Lessor with
respect to the Building or assessed against the Building; all costs and
expenses pertaining to a security alarm system or other security services or
measures for the Building, if Lessor deems necessary in Lessor's sole
business judgment; materials; supplies; tools; depreciation on maintenance
and operating machinery and equipment (if owned) and rental paid for such
machinery and equipment (if rented); service agreements on equipment;
maintenance, and repair of the roof (including repair of leaks and
resurfacing) and the exterior surfaces of all improvements (including
painting); maintenance and repair of structural parts (including repair of
leaks and resurfacing) and the exterior surfaces of all improvements
(including painting); maintenance and repair of structural parts (including
foundation, floor slabs and load bearing walls); window cleaning; elevator or
escalator services; materials handling; fees for licenses and permits
relating to the Building; the cost of complying with rules, regulations and
orders of governmental authorities; Building office rent or rental value;
accounting and legal fees; the cost of contesting the validity or
applicability of any governmental enactment which may affect Building
Service Expenses; personnel to implement such services (including, without
limitation, if Lessor deems necessary, the cost of security guards,
maintenance personnel, engineers and valet attendants); public liability,
environmental impairment, property damage and fire and extended coverage
insurance on the Building (in such amounts and providing such coverage as
determined in Lessor's sole discretion and which may include, without
limitation, liability, all risk property, lessor's risk liability, war risk,
vandalism, malicious mischief, boiler and machinery, rental income,
earthquake, flood and worker's compensation insurance); compensation and
fringe benefits payable to all persons employed by Lessor in connection with
the operation, maintenance, repair and management of the Building; and a
commercially reasonable management fee not to exceed five percent (5%) of
gross receipts from the Building (including, without limitation, all rentals
and parking receipts from Building tenants and/or visitors). Lessor may
cause any or all of said services to be provided by an independent contractor
or contractors, or they may be rendered by Lessor. It is the intent of the
parties hereto that Building Service Expenses shall include every cost paid
or incurred by Lessor in connection with the operation, maintenance, repair
and management of the Building, and the specific examples of Building Service
Expenses stated in this Article 7 are in no way intended to, and shall not,
limit the costs comprising Building Service Expenses, nor shall such examples
be deemed to obligate Lessor to incur such costs or to provide such services
or to take such actions, except as may be expressly required of Lessor in
other portions of this Lease, or except as Lessor, in its sole discretion,
may elect. The maintenance of the Building shall be at the sole discretion
of Lessor and all costs incurred by Lessor in good faith shall be deemed
conclusively binding on Lessee. If less than one hundred percent (100%) of
the Rentable Area of the Building is occupied during any calendar year, then
in calculating Building Service Expenses for such year, the components of
Building Service Expenses which vary based upon occupancy level shall be
adjusted to equal Lessor's reasonable estimate of the amount of such Building
Service Expenses had one hundred percent (100%) of the total Rentable Area of
the Building been occupied during such year. Notwithstanding anything to the
contrary contained in this Lease, in no event shall Building Service Expenses
include (1) any costs relating to the structural repairs to maintain the
structural integrity of the Building (including, without limitation, the
structural repairs to the structural elements of the exterior, walls, roof,
columns, footings and floor slab of the Building), (2) costs, including permit,
license and inspection costs, incurred with respect to the installation of
tenant improvements to other tenant's leased premises within the Building or
incurred in renovating or otherwise improving, decorating, painting or
redecorating vacant leasable space within the Building, (3) costs in order to
market space to potential tenants, leasing commissions, and attorneys' fees in
connection with the negotiation and preparation of letters, deal memos,
letters of intent, leases, subleases and/or assignments or other costs in
connection with lease, sublease and/or assignment negotiations with present
or prospective tenants or other occupants of the Building, (4) costs incurred
for restoration following condemnation to the extent reimbursed by
condemnation award or for repair of damage to the Building to the extent
reimbursed by insurance proceeds or to the extent the same would have been
reimbursed by insurance proceeds had Lessor maintained the insurance required
of Lessor under this Lease (provided that insurance deductibles and uninsured
casualty damage up to $50,000.00 per occurrence (or such higher amount, not
to exceed $100,000.00, as may be then commercially reasonable as an insurance
deductible for comparable buildings in the San Mateo/Foster City area) shall
be included in Building Service Expenses), (5) reserves for future expenses
beyond anticipated expenses for the current year, (6) ground lease rental on
any underlying ground lease or interest, principal, points and/or fees on
debts or amortization on any mortgage or mortgages or any other debt
instrument encumbering the Building, (7) to the extent any employee of Lessor
spends only a portion of his or her time working with respect to the Building
(as opposed to full time work with respect to the Building), a prorated
amount of such employee's wages, salaries and compensation based on the
portion of time spent by such employee with respect to the projects other
than the Building, (8) costs of correcting any presently existing
non-compliance of the Building with applicable laws (as enforced upon the
execution of this Lease; the parties hereby acknowledging that the foregoing
reference to "as enforced" shall be deemed to relate to changes in the manner
of interpretation and/or enforcement of the requirements of current laws as
opposed to a failure of governmental authorities to have identified
pre-existing non-compliance with applicable laws in effect upon the execution
of this Lease) other than any such existing non-compliance where compliance
work is not presently required to be performed (as opposed to existing
non-compliance where compliance work is legally mandated even in the absence
of subsequent improvements, alterations or change in use), (9) costs
resulting from the negligence or wilful misconduct of Lessor, any other
Building tenant or any of their respective agents, employees or contractors,
or (10) costs of the annual premium for earthquake insurance to the extent in
excess of two hundred percent (200%) of the costs of such annual premium for
earthquake insurance for the year including the Commencement Date. In
addition, (x) if any capital expenditure (as determined in accordance
accounting
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principles customarily applied in the real estate industry) otherwise
includable in Building Service Expenses costs more than Fifty Thousand
Dollars ($50,000.00), then such capital expenditure shall be amortized over
the useful life of the applicable item as reasonably determined by Lessor,
and Building Service Expenses shall not include the entire cost of such
expenditure as is so required to be amortized in the year incurred, but shall
include annual amortization of such expenditure during each year of such
useful life; and (y) if the aggregate amount of any capital expenditures (as
determined in accordance accounting principles customarily applied in the
real estate industry) otherwise includable in Building Service Expenses and
the Building's share of Project Expenses in any year and which are not
required to be amortized as provided in clause (x) above and/or in clause (x)
of subparagraph (B) below, exceeds One Hundred Thousand Dollars
($100,000.00), then the portion of such capital expenditures in excess of the
initial such One Hundred Thousand Dollars ($100,000.00) of such capital
expenditures shall be amortized over the respective useful lives of the
applicable capital expenditure items as reasonably determined by Lessor, and
Building Service Expenses or Project Expenses, as applicable, shall not
include the entire cost of such expenditures as are so required to be
amortized in the year incurred, but shall include annual amortization of such
expenditures during each year of their respective useful lives. There shall
be no duplication of items included in Building Service Expenses and Project
Expenses.
(B) PROJECT EXPENSES. Building Operating Expenses shall include
the Building's equitable share of all direct costs of operation, maintenance,
repair and management of the Project (as opposed to expenses relating solely to
the Building or any other particular building within the Project) and/or the
Exterior Common Area, determined by Lessor's standard accounting practices
(collectively, "Project Expenses"). Such costs shall be allocated by Lessor
between the Building containing the Premises and the other buildings containing
Rentable Area located within the Project from time to time, if any, in such
manner as Lessor reasonably determines in good faith. If the Building is the
only building within the Project containing Rentable Area, then the Building's
share of Project Expenses shall equal one hundred percent (100%). Project
Expenses as used herein shall include, but not be limited to, all sums expended
in connection with all general maintenance, repairs, resurfacing, painting,
restriping, cleaning, sweeping, and janitorial services; maintenance and repair
of sidewalks, curbs, signs and other Exterior Common Areas; maintenance and
repair of sprinkler systems, planting, and landscaping; trash removal; sewage;
electricity, gas, water and any other utilities (including any temporary or
permanent utility surcharge or other exaction whether now or hereafter
imposed); maintenance and repair of directional signs and other markers and
bumpers; maintenance and repair of any fire protection systems, elevator
systems, lighting systems, storm drainage systems and other utility systems;
any governmental imposition or surcharge imposed upon Lessor or assessed
against the Exterior Common Area or the Project; materials; supplies, tools;
depreciation on maintenance and operating machinery and equipment (if owned)
and rental paid for such machinery and equipment (if rented); service
agreements on equipment; maintenance and repair of parking areas and parking
structures, if any; maintenance and repair of structural parts (including
foundation and floor slabs); elevator services, if applicable; material
handling; fees for licenses and permits relating to the Exterior Common Area;
the cost of complying with rules, regulation and orders of governmental
authorities; accounting and legal fees; the cost of contesting the validity or
applicability of any governmental enactment which may affect Project Expenses;
personnel to implement such services, including if Lessor deems necessary, the
cost of security guards and valet attendants; all annual assessments and
special assessments levied or charged against the Project and/or Lessor
pertaining to the Project by any owner's association to which the Project is
subject and/or otherwise under any matters of record to which the Project is
subject; public liability, environmental impairments, property damage and fire
and extended coverage insurance on Exterior Common Area (in such amounts and
providing such coverage as determined in Lessor's sole discretion and which may
include, without limitation, liability, all risk property, lessor's risk
liability, war risk, vandalism, malicious mischief, sprinkler leakage, boiler
and machinery, parking income, earthquake, flood and worker's compensation
insurance); compensation and fringe benefits payable to all persons employed by
Lessor in connection with the operation, maintenance, repair and management of
the Exterior Common Area; and a commercially reasonable management fee not to
exceed five percent (5%) of gross receipts from the Project (exclusive of
amounts collected from tenants of any building within the Project under their
respective leases). Lessor may cause any or all of said services to be
provided by an independent contractor or contractors, or they may be rendered
by Lessor. It is the intent of the parties hereto that Project Expenses shall
include every cost paid or incurred by Lessor in connection with the operation,
maintenance, repair and management of the Exterior Common Area, and the
specific examples of Project Expenses stated in this Article 7 are in no way
intended to, and shall not limit the costs comprising Project Expenses, nor
shall such examples be deemed to obligate Lessor to incur such costs or to
provide such services or to take such actions except as Lessor may be expressly
required in other portions of this Lease, or except as Lessor, in its sole
discretion, may elect. The maintenance of the Exterior Common Areas shall be
at the sole discretion of Lessor and all costs incurred by Lessor in good faith
shall be deemed conclusively binding on Lessee. If less than one hundred
percent (100%) of the Rentable Area of the Project is occupied during any
calendar year, then in calculating Project Expenses for such year, the
components of Project Expenses which vary based upon occupancy level shall be
adjusted to equal Lessor's reasonable estimate of the amount of such Project
Expenses had one hundred percent (100%) of the total Rentable Area of the
Project been occupied during such year. Notwithstanding anything to the
contrary contained in this lease, in no event shall Project Expenses include
(1) any costs relating to the structural repairs to maintain the structural
integrity of the Project, (2) costs, including permit, license and inspection
costs, incurred with respect to the installation of tenant improvements to
other tenant's leased premises within the Project or incurred in renovating or
otherwise improving, decorating, painting or redecorating vacant leasable space
within the Project, (3) costs in order to market space to potential tenants,
leasing commissions, and attorneys' fees in connection with the negotiation and
preparation of letters, deal memos, letters of intent, leases, subleases and/or
assignments or other costs in connection with lease, sublease and/or assignment
negotiations with present or prospective tenants or other occupants of the
Project, (4) costs incurred for restoration following condemnation to the
extent reimbursed by condemnation award or for repair of damage to the Project
to the extent reimbursed by insurance proceeds or to the extent the same would
have been reimbursed by insurance proceeds had Lessor maintained the insurance
required of Lessor under this Lease (provided that insurance deductibles and
uninsured casualty damage up to $50,000.00 per occurrence (or such higher
amount, not to exceed $100,000.00, as may be then commercially reasonable as an
insurance deductible for comparable buildings in the San Mateo/Foster City
area) shall
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be included in Project Expenses), (5) reserves for future expenses beyond
anticipated expenses for the current year, (6) ground lease rental on any
underlying ground lease or interest, principal, points and/or fees on debts
or amortization on any mortgage or mortgages or any other debt instrument
encumbering the Project, (7) to the extent any employee of Lessor spends only
a portion of his or her time working with respect to the Project (as opposed
to full time work with respect to the Project), a prorated amount of such
employee's wages, salaries and compensation based upon the portion of time
spent by such employee with respect to the projects other than the Project,
(8) costs of correcting any presently existing non-compliance of the Project
with applicable laws (as enforced upon the execution of this Lease; the
parties hereby acknowledging that the foregoing reference to "as enforced"
shall be deemed to relate to changes in the manner of interpretation and/or
enforcement of the requirements of current laws as opposed to a failure of
government authorities to have identified pre-existing non-compliance with
applicable laws in effect upon the execution of this Lease) other than any
such existing non-compliance where compliance work is not presently required
to be performed (as opposed to existing non-compliance where compliance work
is legally mandated even in the absence of subsequent improvements,
alterations or change in use), (9) costs resulting from the negligence or
wilful misconduct of Lessor, any other Project tenant or any of their
respective agents, employees or contractors, or (10) costs of the annual
premium for earthquake insurance to the extent in excess of two hundred
percent (200%) of the costs of such annual premium for earthquake insurance
for the year including the Commencement Date. In addition, (x) if the
Building's share of any capital expenditure (as determined in accordance
accounting principles customarily applied in the real estate industry)
otherwise includable in Project Expenses costs more than Fifty Thousand
Dollars ($50,000.00), then such capital expenditure shall be amortized over
the useful life of the applicable item as reasonably determined by Lessor,
and Project Expenses shall not include the entire cost of such expenditure
as is so required to be amortized in the year incurred, but shall include
annual amortization of such expenditure during each year of such useful life;
and (y) if the aggregate amount of any capital expenditures (as determined in
accordance accounting principles customarily applied in the real estate
industry) otherwise includable in the Building's share of Project Expenses
and Building Service Expenses in any year and which are not required to be
amortized as provided in clause (x) above and/or pursuant to clause (x) of
subparagraph (A) above, exceeds One Hundred Thousand Dollars ($100,000.00),
then the portion of such capital expenditures in excess of the initial such
One Hundred Thousand Dollars ($100,000.00) of such capital expenditures shall
be amortized over the respective useful lives of the applicable capital
expenditure items as reasonably determined by Lessor, and Project Expenses or
Building Service Expenses, as applicable, shall not include the entire cost
of such expenditures as are so required to be amortized in the year incurred,
but shall include annual amortization of such expenditures during each year
of their respective useful lives. There shall be no duplication of items
included in Building Service Expenses and Project Expenses.
(ii) PROJECT TAXES. "Building Taxes" as used in this Lease, shall
mean those items of "Project Taxes" (as hereinafter defined) which relate
solely to the Building, plus an equitable share of Project Taxes which relate
to the land underlying the Project, to the Exterior Common Areas and/or to
the Project as a whole (as opposed to Project Taxes relating solely to the
Building or any other particular building within the Project), which
equitable share shall be allocated by Lessor between the Building and the
other buildings located within the Project from time to time, if any, in such
manner as Lessor reasonably determines in good faith. The term "Project
Taxes" as used in this Lease shall collectively mean (to the extent any of
the following are not paid by Lessee pursuant to Article 7.c. below) all:
real estate taxes and general or assessments (including, but not limited to,
assessments for public improvements or benefits); personal property taxes;
taxes based on vehicles utilizing parking areas on the Parcel; taxes computed
or based on rental income (including without limitation any municipal
business tax but excluding federal, state and municipal net income taxes);
Environmental Surcharges; excise taxes; gross receipts taxes; sales and/or
use taxes; employee taxes; water and sewer taxes, levies, assessments and
other charges in the nature of taxes or assessments (including, but not
limited to, assessments for public improvements or benefit); and all other
governmental, quasi-governmental or special district impositions of any kind
and nature whatsoever, regardless of whether now customary or within the
contemplation of the parties hereto and regardless of whether resulting from
increased rate and/or valuation, or whether extraordinary or ordinary,
general or special, unforeseen or foreseen, or similar or dissimilar to any
of the foregoing which during the Lease Term are laid, levied, assessed or
imposed upon Lessor and/or become a lien upon or chargeable against the
Project or the Premises, Building, Common Area and/or Parcel under or by
virtue of any present or future laws, statutes, ordinances, regulations, or
other requirements of any governmental authority or quasi-governmental
authority or special district having the direct or indirect power to tax or
levy assessments whatsoever. The term "Environmental Surcharges" shall
include any and all expenses, taxes, charges or penalties imposed by the
Federal Department of Energy, Federal Environmental Protection Agency, the
Federal Clean Air Act, or any regulations promulgated thereunder, or imposed
by any other local, state or federal governmental agency or entity now or
hereafter vested with the power to impose taxes, assessments or other types
of surcharges as a means of controlling or abating environmental pollution or
the use of energy in regard to the use, operation or occupancy of the Project
including the Premises, Building, Common Area and/or Parcel; provided,
however, that in no event shall Project Taxes or other taxes for which Lessee
is responsible pursuant to Article 7.c. below include any charge or cost
relating to remediation of Hazardous Materials upon, within, or beneath the
Project. The term "Project Taxes" shall include (to the extent the same are
not paid by Lessee pursuant to Article 7.c. below), without limitation: the
cost to Lessor of contesting the amount or validity or applicability of any
Project Taxes described above; and all taxes, assessments, levies, fees,
impositions or charges levied, imposed, assessed, measured, or based in any
manner whatsoever upon or with respect to the use, possession, occupancy,
leasing, operation or management of the Project (including, without
limitation, the Premises, Building, Common Area and/or Parcel) or in lieu of
or equivalent to any Project Taxes set forth in this article 7.b.(ii). In no
event shall Project Taxes include Lessor's net income, succession, transfer,
gift, franchise, estate or inheritance taxes. In addition, Project Taxes
shall be calculated as if real property assessments were paid in the maximum
number of installments permitted (and Project Taxes shall therefore include,
without limitation, interest payable as a result of such payment in
installments), whether or not actually so paid.
If at any time during the Term, Project Taxes are under-assessed by the
taxing authorities so that they are not computed on a fully-completed and
occupied basis in accordance with the then applicable taxing authority of the
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governmental entities having jurisdiction, Lessor shall have the right, but not
the obligation, to adjust the components of Project Taxes which vary depending
upon the occupancy level of the Project to reflect the amount that Project
Taxes would be if the Project were assessed on a fully-completed and occupied
basis, as determined in Lessor's reasonable discretion, and such adjusted
amount shall be allocated to the Project in accordance with the terms of this
Lease.
c. OTHER TAXES. Lessee shall pay the following:
(i) Lessee shall pay (or reimburse Lessor as additional rent if
Lessor is assessed), before delinquency, any and all taxes levied or assessed,
and which become payable for or in connection with any period during the Term,
upon all of the following (collectively, "Leasehold Improvements and Personal
Property"): Lessee's Alterations, Lessee Improvements, equipment, furniture,
furnishings, fixtures, merchandise, inventory, machinery, appliances and other
personal property located in the Premises; except only that which has been paid
for by Lessor or is the standard of the Building. Lessee hereby acknowledges
receipt of a copy of a schedule setting forth the improvements comprising the
standard of the Building. If any or all of the Leasehold Improvements and
Personal Property are assessed and taxed with the Project, Lessee shall pay to
Lessor such taxes within ten (10) days after delivery to Lessee by Lessor of a
statement in writing setting forth the amount applicable to the Leasehold
Improvements and Personal Property. If the Leasehold Improvements and Personal
Property are not separately assessed on the tax statement or bill, Lessor's
reasonable good faith determination of the amount of such taxes applicable to
the Leasehold Improvements and Personal Property shall be a conclusive
determination of Lessee's obligation to pay such amount as so determined by
Lessor.
(ii) Lessee shall pay (or reimburse Lessor if Lessor is assessed, as
additional rent), prior to delinquency or within ten (10) days after receipt of
a statement thereof, any and all other taxes, levies, assessments, or
surcharges payable by Lessor or Lessee and relating to this Lease, the Premises
or Lessee's activities in the Premises (other than Lessor's net income,
succession, transfer, gift, franchise, estate, or inheritance taxes), whether
or not now customary or within the contemplation of the parties hereto, now in
force or which may hereafter become effective, including but not limited to
taxes: (1) upon, allocable to, or measured by the area of the Premises or on
the Rentals payable hereunder, including without limitation any gross income,
gross receipts, excise, or other tax levied by the state, any political
subdivision thereof, city or federal government with respect to the receipt of
such Rentals; (2) upon or with respect to the use, possession, occupancy,
leasing, operation and management of the Premises or any portion thereof, (3)
upon this transaction or any document to which Lessee is a party creating or
transferring an interest or an estate in the Premises; or (4) imposed as a
means of controlling or abating environmental pollution or the use of energy,
including, without limitation, any parking taxes, levies or charges or
vehicular regulations imposed by any governmental agency; provided, however,
that in no event shall taxes, levies or other charges for which Lessee is
responsible pursuant to this Article 7.c. include any charge or cost relating
to remediation of Hazardous Materials upon, within, or beneath the Project.
Lessee shall also pay, prior to delinquency, all privilege, sales, excise, use,
business, occupation, or other taxes, assessments, license fees, or charges
levied, assessed, or imposed upon Lessee's business operations conducted at the
Premises. If any such taxes are payable by Lessor and it shall not be lawful
for Lessee to reimburse Lessor for such taxes, then the Rentals payable
hereunder shall be increased to net Lessor the net Rental after imposition of
any such tax upon Lessor as would have been payable to Lessor prior to the
imposition of any such tax.
(iii) Any payments made by Lessee directly to the applicable taxing
authority pursuant to this subsection 7.c. shall be made prior to the
applicable delinquency date for such payment, and Lessee shall deliver
evidence of such payment to Lessor within fifteen (15) days thereafter.
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8. USE.
a. In no event shall Lessee use or permit the use of the Premises for any
purpose other than general office use (which may include, without limitation,
software research, development and training, subject to compliance with
applicable laws and governmental requirements, all not involving Hazardous
Materials (other than "Standard Office Hazardous Materials", as hereinafter
defined), and all in a manner consistent with operation within a first-class
general office use building, so as not to exceed the capacity of the mechanical
and utility systems serving, and/or the floor load capacity of, the Premises or
interfere with the use or occupancy of any other occupant of the Building).
Lessor and Lessee hereby acknowledge and agree that the foregoing use
restriction is an absolute prohibition against a change in use of the Premises
as contemplated under California Civil Code Section 1997.230. Lessee shall not
do or permit to be done in or about the Premises nor bring or keep anything
therein which will in any way increase the existing rate of or affect any fire
or other insurance upon the Building or the Project or any of its contents, or
cause cancellation of any insurance policy covering the Building or the Project
or any part thereof or any of its contents. Lessee shall not, without prior
consent of Lessor, bring into the Building or the Premises or use or
incorporate in the Premises any apparatus, equipment or supplies that may cause
substantial noise, odor, or vibration or overload the Premises or the Building
or any of its utility or elevator systems or jeopardize the structural
integrity of the Building or any part thereof. Lessee and/or Lessee's agents,
officers, employees, representatives, contractors, servants, invitees and/or
guests (collectively "Lessee's Agents") shall not use, store, or dispose of any
"Hazardous Materials" (defined below) on any portion of the Project, except,
however, that nothing contained in this Lease shall be deemed to prohibit
Lessee's use of customary general office supplies typically used in an office
area in the ordinary course of business, such as copier toner, liquid paper,
glue and ink, for use in the manner for which they were designed, in such
amounts and in a manner as is normal for first-class general office use but
containing substances technically constituting Hazardous Materials under this
Lease (collectively, "Standard Office Hazardous Materials"). Without limiting
the generality of the foregoing, Lessee shall not (either with or without
negligence) cause or permit the escape, disposal or release of any Hazardous
Materials in, on or below the Premises or any other portion of the Project
(other than the disposal of Standard Office Hazardous Materials in a manner
customary for use of such Standard Office Hazardous Materials and in compliance
with both manufacturer's recommendations and all applicable laws). If any
lender or governmental agency shall ever require testing to ascertain whether
or not there has been any release or other use of Hazardous Materials at the
Premises during the Term of this Lease, then the reasonable costs thereof shall
be reimbursed by Lessee to Lessor upon demand as additional rent if such
testing is required as a result of the acts of, or if as a result of such
testing it is determined that Hazardous Materials are present on the Premises
as a result of the acts of, Lessee, any subtenant of Lessee and/or any of their
respective employees, agents, representatives, contractors and/or invitees.
In addition, Lessee shall execute such affidavits, representations and
certifications as may be reasonably required by Lessor from time to time
concerning Lessee's best knowledge and belief regarding the presence of
Hazardous Materials at the Premises. Lessee shall indemnify, defend with
counsel acceptable to Lessor, and hold Lessor and Lessor's employees, agents,
partners, officers, directors and shareholders harmless from and against any
and all claims, actions, suits, proceedings, orders, judgment, losses, costs,
damages, liabilities, penalties, or expenses (including, without limitation,
attorneys' fees) arising in connection with the breach by Lessee of Lessee's
obligations described in any of the previous four sentences, and the
obligations of Lessee pursuant hereto and under the previous four sentences
shall survive the Lease Termination. As used in this paragraph, "Hazardous
Materials" means any chemical, substance or material which has been determined
or is hereafter determined by any federal, state, or local governmental
authority to be capable of posing risk of injury to health or safety,
including, without limitation, petroleum, asbestos, polychlorinated biphenyls,
radioactive materials, radon gas, and/or biologically and/or chemically active
materials. Without limiting the generality of the foregoing, the definition of
"Hazardous Materials" shall include those definitions found in the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
42 U.S.C. 'SS''SS' 9601 et seq., the Resource Conservation and Recovery
Act of 1976, 42 U.S.C. 'SS''SS' 6901 et seq., the Hazardous Materials
Transportation Authorization Act, 49 U.S.C. 'SS''SS' 5101 et seq., the
National Environmental Policy Act, 42 U.S.C. 'SS''SS' 4321 et seq., the
Clean Water Act, 33 U.S.C. 'SS''SS' 1251 et seq., the Clean Air Act, 42
U.S.C. 'SS''SS' 7401 et seq., the Toxic Substances Control Act, 15
U.S.C. 'SS''SS' 2601 et seq., the Safe Drinking Water Act, 42 U.S.C.
'SS''SS' 300f et seq., the Occupational Safety and Health Act, 29
U.S.C. 'SS''SS' 651 et seq., Division 20 of the California Health and Safety
Code commencing at Section 24000, Division 7 of the California Water Code
commencing at Section 13000, each as amended from time to time, and all similar
federal, state and local statutes and ordinances and all rules, regulations or
policies promulgated thereunder. Lessee shall not do or permit anything to be
done in or about the Premises which will in any way obstruct or interfere with
the rights of other tenants or occupants of the Building or the Project or
injure or annoy them or use or allow the Premises to be used for any improper,
immoral, unlawful or objectionable purpose, nor shall Lessee cause, maintain or
permit any nuisance in, on or about the Premises. Lessee shall not commit or
suffer to be committed any waste in or upon the Premises.
Lessor represents and warrants to Lessee that Lessor has no actual
knowledge (without duty of investigation or imputation of knowledge) of any
Hazardous Materials presently existing in or about the Premises or other
portions of the Project at levels in violation of applicable laws or which
otherwise pose a material risk of having a material and adverse affect upon the
operation of Lessee's business from the Premises (including, without
limitation, access to and/or use of the Premises and parking areas serving the
Project). Notwithstanding anything to the contrary contained herein, Lessee
shall not be responsible (either directly or as an item of Building Service
Expenses, as an item of Project Expenses, as an item of Project Taxes or as an
item of taxes for which Lessee is responsible pursuant to Article 7.c above)
for costs related to, and Lessor hereby releases Lessee and Lessee's employees,
agents, representatives and contractors from any liability or costs related to,
the testing, remediation and/or presence of Hazardous Materials on or about the
Premises or Project except to the extent caused to be present thereon or
thereabout by Lessee, any subtenant of Lessee and/or any of their respective
employees, agents, representatives, contractors and/or invitees.
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b. EFFECT OF USE RESTRICTION. Lessor and Lessee hereby acknowledge and
agree that the use restriction set forth in subsection 8.a. above shall be
deemed reasonable in all respects and under all circumstances. Lessor and
Lessee further acknowledge and agree that, notwithstanding any provision of
this Lease to the contrary, (i) in the event Lessee requests Lessor's consent
to a proposed assignment of this Lease or subletting of the Premises, Lessor
shall be deemed reasonable in withholding its consent to such assignment or
subletting if the proposed assignee or subtenant desires to use the Premises
for any purpose other than as expressly provided in subsection 8.a. above, and
(ii) in the event of a default by Lessee under the Lease, the enforcement of
the use restriction set forth in subsection 8.a. above shall be deemed
reasonable for purposes of computing the rental loss that could be or could
have been reasonably avoided by Lessor pursuant to California Civil Code
Section 1951.2 and in connection with the exercise of Lessor's remedies under
California Civil Code Section 1951.4.
Notwithstanding the preceding to the contrary, if Lessor withholds its
consent to an assignment of the Lease or subletting of the Premises based upon
the desire of the proposed assignee or subtenant to use the Premises for any
purpose other than as expressly provided in subsection 8.a. above, or if Lessee
is in default under this Lease, then, prior to commencing or pursuing any
claim or defense against Lessor based upon the unreasonableness of the use
restriction set forth in subsection 8.a. above, Lessee shall provide Lessor
with written notice (by certified mail, postage prepaid and return receipt
requested) setting forth Lessee's objections to the enforcement of the use
restriction in such instance, the basis upon which Lessee intends to
demonstrate that the enforcement of such use restriction would be unreasonable
in such instance, and the use(s) which Lessee believes Lessor should allow
Lessee or its proposed assignee or subtenant, as the case may be, to make of
the Premises. Within thirty (30) days of Lessor's receipt of Lessee's written
notice of objection, Lessor shall provide Lessee with written notice of
Lessor's election to either (A) enforce the use restriction set forth in
subsection 8.a. above, or (B) permit a change in the use of the Premises,
provided that such proposed use shall in no event (1) require the use, storage
or disposal of Hazardous Materials (other than Standard Office Hazardous
Materials in accordance with this Lease) on or about the Premises or the
Project, (2) increase or affect any fire or other insurance covering the
Building or the Project, (3) interfere with the rights of other tenants of the
Building or Project, including, without limitation, any exclusive use rights of
such tenants, (4) be in violation of applicable federal, state or local laws,
rules, regulations, codes or ordinances, or (5) require Lessor to construct or
install, or to provide any allowance for the construction or installation of,
any tenant improvements in the Premises. Notwithstanding the preceding to the
contrary, in no event shall Lessor have any obligation to allow a change in the
use of the premises, it being expressly understood by the parties that the use
restriction set forth in subsection 8.a. above is an absolute prohibition
against a change in use of the Premises. In the event Lessor fails to provide
Lessee with written notice of its election to either enforce the use
restriction or allow a change in use of the Premises within said thirty (30)
day period, Lessor shall be deemed to have elected to enforce the use
restriction. In the event Lessor elects or is deemed to have elected to
enforce the use restriction as provided hereinabove, Lessee shall have the
right to pursue such valid claims or defenses against Lessor as may be
permitted under California Civil Code section 1997.040 and which Lessee is able
to prove.
9. COMPLIANCE WITH LAWS. Lessee shall not use the Premises or permit anything
to be done in or about the Premises which will in any way conflict with or
violate any law, statute, ordinance, order or governmental rule or regulation
or requirement of duly constituted public authorities or quasi-public
authorities now in force or which may hereafter be enacted or promulgated.
Lessee shall, at its sole cost and expense, promptly comply with all laws,
statutes, ordinances, orders and governmental or quasi-governmental rules,
regulations or requirements now in force or which may hereafter be in force and
with all recorded documents which relate to or affect the condition, use or
occupancy of the Premises, and with the requirements of any board of fire
insurance underwriters or other similar bodies now or hereafter constituted,
relating to, or affecting the condition, use or occupancy of the Premises,
excluding structural changes or changes to the integrated Building utility
and/or mechanical systems unless related to or affected by Lessee's
improvements, acts or particular use of the Premises. The judgment of any
court of competent jurisdiction or the admission of Lessee in any action
against Lessee, whether Lessor be a party thereto or not, that Lessee has
violated any law, statute, ordinance, or governmental or quasi-governmental
rule, regulation or requirement, shall be conclusive of that fact as between
the Lessor and Lessee. Lessee shall obtain, prior to taking possession of the
Premises, all permits, licenses, or other authorizations for the lawful
operation of its business at the Premises. Lessee shall indemnify, defend with
counsel acceptable to Lessor and hold Lessor and Lessor's employees, agents,
partners, officers, directors and shareholders harmless from and against any
claim, action, suit, proceeding, order, judgment, liability, penalty or expense
(including, without limitation, attorneys' fees) arising out of the failure of
Lessee to comply with the provisions of this Article. Lessee acknowledges that
Lessee has independently investigated and is satisfied that the Premises are
suitable for Lessee's intended use and that neither Lessor nor any of its
agents, employees, representatives or contractors has made any representation
or warranty as to whether the Building and/or Premises meets applicable
governmental and quasi-governmental requirements for such intended use (except
as may be specifically otherwise provided in this Lease).
Lessor and Lessee acknowledge that, in accordance with the provisions of
the Americans with Disabilities Act of 1990 (the "ADA"), responsibility for
compliance with the terms and conditions of Title III of the ADA may be
allocated as between Lessor and Lessee. In this regard and notwithstanding
anything to the contrary contained in the Lease, Lessor and Lessee agree that
the responsibility for compliance with the ADA (including, without limitation,
the removal of architectural and communications barriers and the provision of
auxiliary aids and services to the extent required) shall be allocated as
follows: (i) Lessee shall be responsible for compliance with the previsions of
Title I of the ADA, and of Title II and Title III of the ADA as Titles II and
III relate to any construction, renovations, alterations and repairs made
within the Premises if such construction, renovations, alterations and repairs
are made by Lessee, at its expense without the assistance of Lessor; (ii)
Lessor shall be responsible for compliance with the provisions of Title II and
III of the ADA for all construction, renovations, alterations and repairs which
Lessor is required, under this Lease, to make within the Premises, whether
(pursuant to the relevant provisions of the Lease) at Lessor's or Lessee's
expense; and (iii) Lessor shall be responsible for compliance with the
provisions of Title III of the ADA for all exterior and interior areas of the
Building not included within the Premises except to the extent such
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compliance is necessitated as a result of Lessee's particular use of, or
alterations to, the Premises. Lessor agrees to indemnify, defend and hold
Lessee harmless from and against any claims, damages, costs and liabilities
arising out of Lessor's failure, or alleged failure, as the case may be, to
comply with the ADA, to the extent such compliance has been allocated to
Lessor herein, which indemnification obligation shall survive the expiration
or termination of this Lease if the Lease has not been terminated by reason
of a default by Lessee. Lessee agrees to indemnify, defend and hold Lessor
harmless from and against any claims, damages, costs and liabilities arising
out of Lessee's failure, or alleged failure, as the case may be, to comply
with the ADA to the extent such compliance has been allocated to Lessee
herein, which indemnification obligation shall survive the expiration or
termination of this Lease. Lessor and Lessee each agree that the allocation
of responsibility for ADA compliance shall not require Lessor or Lessee to
supervise, monitor or otherwise review the compliance activities of the other
with respect to its assumed responsibilities for ADA compliance as set forth
in this Article 9. Lessor shall, in complying with the ADA (to the extent
such compliance has been allocated to Lessor herein), be entitled to rely
upon representations made to, or information given to Lessor by Lessee in
regard to Lessee's use of the Premises, Lessee's employees, and other matters
pertinent to compliance with the ADA. The indemnity of Lessee set forth
above shall apply as to any liability arising against Lessor by reason of any
misrepresentations or misinformation given by Lessee to Lessor. The
allocation of responsibility for ADA compliance between Lessor and Lessee,
and the obligations of Lessor and Lessee established by such allocations,
shall supersede any other provisions of the Lease that may contradict or
otherwise differ from the requirements of this Article 9; except, however,
that in the event of any conflict between the provisions of Article 4.d.
above and the provisions of this Article 9, the provisions of Article 4.d.
above shall control.
10. ALTERATIONS AND ADDITIONS.
a. LESSEE'S ALTERATIONS. Lessee shall not make or suffer to be made
any alterations, additions, changes or improvements (collectively,
"Alterations") to or of the Premises, or any part thereof without Lessor's
prior written consent, which consent shall not, except as otherwise expressly
provided in the Lease, be unreasonably withheld; except, however, that
without Lessor's consent but upon at least fifteen (15) days prior written
notice to Lessor, Lessee may make interior, non-structural Alterations
costing less than Twenty-Five Thousand Dollars ($25,000.00) per work of
Alterations and not (1) requiring the demolition of any material existing
improvements, or (2) affecting the mechanical or utility systems serving the
Premises or the exterior appearance of the Building. Lessor may impose, as a
condition to the aforesaid consent, such requirements as Lessor may deem
necessary in its reasonable discretion, including without limitation: the
manner in which the work is done; a right of approval of the contractor by
whom the work is to be performed; the times during which such work is to be
accomplished; in the event of proposed Alterations estimated to cost more
than Fifty Thousand Dollars ($50,000.00), the requirement that Lessee post a
lien and completion bond (or its equivalent) in an amount equal to one and
one-half times any and all estimated Alterations costs and otherwise in form
satisfactory to Lessor to insure Lessor against any liability for mechanics'
and materialmen's liens and to insure completion of the work; the requirement
that Lessee reimburse Lessor, as additional rent, for Lessor's reasonable
costs incurred in reviewing any proposed Alterations, whether or not Lessor's
consent is granted; and, unless otherwise approved by Lessor at the time
Lessee makes such Alterations, the requirement that at Lease Termination,
either (i) Lessee, at its expense, will remove any and all such Alterations
installed by Lessee and shall, at its cost, promptly repair all damages to
the Project caused by such removal, or (ii) the Alterations made by Lessee
shall remain with the Premises, be a part of the realty, and belong to
Lessor. If Lessor consents to any Alterations to the Premises by Lessee, the
same shall be made by Lessee at Lessee's sole cost and expense in accordance
with plans and specifications approved by Lessor. Any Alterations made by
Lessee (whether or not Lessor's consent is required therefor) shall be
performed in accordance with all applicable laws, ordinances and codes and in
a first class workmanlike manner, and shall not weaken or impair the
structural strength or lessen the value of the Building, shall not
invalidate, diminish, or adversely affect any warranty applicable to the
Building or any other improvements located within the Project, including any
equipment therein, and shall be performed in a manner causing Lessor and
Lessor's agents and other tenants of the Building the least interference and
inconvenience practicable under the circumstances. In making any such
Alterations, Lessee shall, at Lessee's sole cost and expense:
(i) File for and secure any necessary permits or approvals from
all governmental departments or authorities having jurisdiction, and any
utility company having an interest therein,
(ii) Notify Lessor in writing at least fifteen (15) days prior to
the commencement of work on any Alteration, so that Lessor can post and
record appropriate notices of non-responsibility, and
(iii) Provide Lessor with copies of all drawings and
specifications prior to commencement of construction of any Alterations, and
provide Lessor with "as built" plans and specifications (on CAD diskette if
available) following completion of such Alterations.
In no event shall Lessee make or suffer to be made any Alteration to the
mechanical or utility systems of the Building, to the Common Area or the
structural portions of the Building or any part thereof without Lessor's
prior written consent, which consent may be withheld in Lessor's sole
discretion.
b. REMOVAL. Upon Lease Termination, Lessee shall, upon written demand
by Lessor at Lessee's sole cost and expense, forthwith and with all due
diligence remove any Alterations made by Lessee, which is then designated by
Lessor to be removed (provided that Lessor has, at the time of Lessor's
consent to such Alterations (or if no consent is required pursuant hereto,
within fifteen (15) days following Lessor's receipt of written notice from
Lessee of such Alterations not requiring Lessor's consent), notified Lessee
that such removal may be required) and Lessee shall, forthwith and with all
due diligence at its sole cost and expense, repair any damage to the Project
caused by such removal. Without limiting the generality of the foregoing,
Lessor may not require removal of any of the initial Lessee Improvements
unless at the time of Lessor's approval of the Final Working Drawings, Lessor
notified Lessee that removal thereof may be required upon Lease Termination.
Lessee shall also, upon Lease Termination
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and provided that Lessee is not then in default hereunder, remove Lessee's
movable equipment, furnishings, trade fixtures and other personal property
(excluding any Alterations made by Lessee not specifically designated by
Lessor to be removed), provided that Lessee shall, forthwith and with all due
diligence at its sole cost and expense, repair any damages to the Project
caused by such removal. Unless Lessor elects to have Lessee remove any such
Alterations, all such Alterations except for movable furniture and trade
fixtures of Lessee not affixed to the Premises, shall become the property of
Lessor upon Lease Termination (without any payment therefor) and remain upon
and be surrendered with the Premises.
c. ALTERATIONS REQUIRED BY LAW. Subject to Article 4.d. above, Lessee
shall pay to Lessor as additional rent, the cost of any structural or
non-structural alteration, addition or change to the Building and/or at
Lessor's election, shall promptly make, at Lessee's sole expense and in
accordance with the provisions of subsection 10.a. above, any structural or
non-structural alteration, addition or change to the Premises required to
comply with laws, regulations, ordinances or orders of any public agencies,
whether now existing or hereinafter promulgated, where such alterations,
additions or changes are required by reason of: Lessee's or Lessee's Agents'
acts; Lessee's particular use (as opposed to mere occupancy for general
office use) or change of use to the Premises; alterations or improvements to
the Premises made by or for Lessee; or Lessee's application for any permit or
governmental approval.
d. LESSOR'S IMPROVEMENTS. All fixtures, improvements or equipment
which are installed, constructed on or attached to the Premises, or any part
of the Project by Lessor at its expense shall be a part of the realty and
belong to Lessor.
11. REPAIRS.
a. BY LESSEE. Subject to the express provisions of this Lease, by
taking possession of the Premises, Lessee shall be deemed to have accepted
the Premises as being in good and sanitary order, condition and repair and to
have accepted the Premises in their condition existing as of the date of such
possession, subject to all applicable laws, covenants, conditions,
restrictions, easements, and other matters of public record and the Rules and
Regulations from time to time promulgated by Lessor governing the use of any
portion of the Project. Lessee shall at Lessee's sole cost and expense, keep
every part of the Premises in good condition and repair, except for ordinary
wear and tear, repairs or restoration work due to casualty damage or
condemnation governed by Article 21 or Article 24 below (except that Lessee
shall be obligated for performance of its obligations under such Articles),
and work which is specified to be the obligation of Lessor pursuant to this
Lease. If Lessee fails to maintain the Premises as required by this Lease,
Lessor may give Lessee notice to do such acts as are reasonably required to
so maintain the Premises and if Lessee fails to commence such work
immediately in an emergency or where immediate action is required to protect
the Premises or any portion of the Project, or within ten (10) days after
such notice is given under other circumstances, and diligently prosecute it
to completion, then Lessor or Lessor's agents, in addition to all of the
rights and remedies available hereunder or by law and without waiving any
alternative remedies, shall have the right to enter the Premises and to do
such acts and expend such funds at the expense of Lessee as are reasonably
required to perform such work. Any amount so expended by Lessor shall be
paid by Lessee to Lessor as additional rent, upon demand. With respect to any
work performed by Lessor pursuant to this Article 11.a., Lessor shall be
liable to Lessee only for physical damage caused to Lessee's personal
property located within the Premises to the extent such damage is caused by
Lessor's active negligence or willful misconduct and is not covered by the
insurance required to be maintained by Lessee pursuant to this Lease. In no
event shall Lessor have any liability to Lessee for any other damages, or for
any inconvenience or interference with the use of the Premises by Lessee, or
for any consequential damages, including lost profits, as a result of
performing any such work. Except as specifically provided in an addendum, if
any, to this Lease, Lessor shall have no obligation whatsoever to alter,
remodel, improve, repair, decorate or paint the Premises or any part thereof
and the parties hereto affirm that Lessor has made no representations or
warranties, express or implied, to Lessee respecting the condition of the
Premises or any part of the Project except as specifically set forth in this
Lease.
b. BY LESSOR. The costs of repairs and maintenance which are the
obligation of Lessor under this Lease or which Lessor elects to perform under
this Lease except such repairs and maintenance which are the responsibility
of Lessee hereunder, shall be an Operating Expense. Lessor shall repair and
maintain the structural portions of the Building and the basic plumbing,
air conditioning, heating, electrical and integrated Building mechanical
systems installed or furnished by Lessor, unless such maintenance or repairs
are caused in part or in whole by the act, neglect, fault or omission
of any duty by Lessee or Lessee's Agents, in which case Lessee shall pay to
Lessor the reasonable cost of such maintenance or repairs as additional rent.
Lessor shall not be liable for any failure to make any such repairs or to
perform any maintenance for which Lessor is responsible as provided above
unless Lessor fails to commence such work for a period of more than thirty
(30) days after written notice of the need of such repairs or maintenance is
given to Lessor by Lessee and the failure is due solely to causes within
Lessor's reasonable control. Except as provided in Article 21 of this Lease,
there shall be no abatement of Rentals, and in any event there shall be no
liability of Lessor by reason of any injury to or interference with Lessee's
business arising from the making of any repairs, alterations or improvements
in or to any portion of the Project or in or to fixtures, appurtenances and
equipment therein. Lessee waives the benefits of any statute now or
hereafter in effect (including, without limitation, the provisions of
subsection 1 of Section 1932, Section 1941 and Section 1942 of the California
Civil Code and any similar or dissimilar law, statute or ordinance now or
hereafter in effect) which would otherwise afford Lessee the right to make
repairs at Lessor's expense (or to deduct the cost of such repairs from
Rentals due hereunder) or to terminate this Lease because of Lessor's failure
to keep the Premises in good and sanitary order.
12. LIENS. Lessee shall keep the Premises and every portion of the Project
free from any and all mechanics', materialmen's and other liens, and claims
thereof, arising out of any work performed, materials furnished or
obligations incurred by or for Lessee. Lessee shall indemnify and defend with
counsel acceptable to Lessor and hold Lessor harmless from and against any
liens, demands, claims, actions, suits, proceedings, orders, losses, costs,
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damages, liabilities, penalties, expenses, judgments or encumbrances
(including without limitation, attorneys' fees) arising out of any work or
services performed or materials furnished by or at the direction of Lessee or
Lessee's Agents or any contractor employed by Lessee with respect to the
Premises. Should any claims of lien relating to work performed, materials
furnished or obligations incurred by Lessee be filed against, or any action
be commenced affecting the Premises, any part of the Project, and/or Lessee's
interest therein, Lessee shall give Lessor notice of such lien or action
within three (3) days after Lessee receives notice of the filing of the lien
or the commencement of the action. If Lessee does not, within twenty (20)
days following the imposition of any such lien, cause such lien to be
released of record by payment or posting of a proper bond, Lessor shall have,
in addition to all other remedies provided herein and by law, the right, but
not the obligation, to cause the same to be released by such means as it
shall deem proper, including by payment of the claim giving rise to such lien
or by posting a proper bond, or by requiring Lessee to post for Lessor's
benefit a bond, surety, or cash amount equal to one and one-half (1-1/2)
times the amount of lien and sufficient to release the Premises and Project
from the lien. All sums paid by Lessor pursuant to this Article 12 and all
expenses incurred by it in connection therewith including attorneys' fees and
costs shall be payable to Lessor by Lessee as additional rent on demand.
13. ASSIGNMENT AND SUBLETTING.
a. PROHIBITIONS IN GENERAL. Lessee shall not (whether voluntarily,
involuntarily, or by operation of law) assign this Lease or allow all or any
part of the Premises to be sublet, without Lessor's prior written consent in
each instance, which consent shall not be unreasonably withheld, subject,
nevertheless, to the provisions of this Article 13. Notwithstanding anything
to the contrary contained herein, Lessee shall have the right without
Lessor's prior consent and without being subject to Article 13.e. or 13.g.
below, but upon not less than fifteen (15) days prior written notice to
Lessor, to assign this Lease or sublet the Premises to any entity (i)
controlling, controlled by or having fifty percent (50%) or more common control
with Lessee, or (ii) resulting from a merger or consolidation with Lessee or
acquiring substantially all of the assets and/or substantially all of the
stock of Lessee; provided that any such entity shall have a tangible net
worth no less than Lessee's tangible net worth as of the execution of this
Lease, such entity shall replace the Letter of Credit (if necessary) or post
a cash Security Deposit in the then applicable LC Amount in accordance with
Article 6 above, and such entity shall assume the obligations and liabilities
of Lessee under this Lease, and no such assignment or sublease shall in any
manner release Lessee from its primary liability under this Lease. For all
purposes of this Lease, a "Permitted Transferee" shall mean an assignee or
subtenant of Lessee under an assignment or subletting which is permitted
without Lessor's prior consent pursuant to clause (i) or (ii) above. Except
as otherwise specifically provided in this Article 13, Lessee shall not
(whether voluntarily, involuntarily, or by operation of law) (1) allow all or
any part of the Premises to be occupied or used by any person or entity other
than Lessee, (2) transfer any right appurtenant to this Lease or the
Premises, (3) mortgage, hypothecate or encumber the Lease or Lessee's
interest in the Lease or Premises (or otherwise use the Lease as a security
device) in any manner, or (4) permit any person to assume or succeed to any
interest whatsoever in this Lease, without Lessor's prior written consent in
each instance, which consent may be withheld in Lessor's sole and absolute
discretion.
Any assignment, sublease, hypothecation, encumbrance, or transfer
(collectively "Transfer") without Lessor's consent shall be voidable.
Lessor's consent to any one Transfer shall not constitute a waiver of the
provisions of this Article 13 as to any subsequent Transfer nor a consent to
any subsequent Transfer. The provisions of this subsection 13.a. expressly
apply to all heirs, successors, sublessees, assigns and transferees of
Lessee. If Lessor consents to a proposed Transfer, such Transfer shall be
valid and the transferee shall have the right to take possession of the
Premises only if the Assumption Agreement described in subsection 13.c. below
is executed and delivered to Lessor, Lessee has paid the costs and fees
described in subsection 13.i. below, and an executed counterpart of the
assignment, sublease or other document evidencing the Transfer is delivered
to Lessor and such transfer document contains the same terms and conditions
as stated in Lessee's notice given to Lessor pursuant to subsection 13.d.
below, except for any such modifications Lessor has consented to in writing.
The acceptance of Rentals by Lessor from any person or entity other than
Lessee shall not be deemed to be a waiver by Lessor of any provision of this
Lease or to be a consent to any Transfer. In addition to and without
limitation upon the other provisions of this Article 13, in the event of
Lessor's consent to a Transfer to a transferee having a tangible net worth
which is less than Lessee's tangible net worth as of the execution of this
Lease then Lessor may require as a condition to such Transfer (in addition to
the other requirements under this Article 13), that the transferee post a
letter of credit as additional security for the performance of such entity's
performance of its obligations, which letter of credit shall be governed in
all respects by the provisions of Article 6 above, except that the "LC
Amount" applicable thereto shall in no event to exceed the original LC Amount
under Article 6 and such "LC Amount" applicable thereto shall not be subject
to reduction in manner in which the original LC Amount is subject to
reduction in accordance with Article 6.
b. COLLECTION OF RENT. Lessee irrevocably assigns to Lessor, as
security for Lessee's obligations under this Lease, all rent not otherwise
payable to Lessor by reason of any Transfer of all or any part of the
Premises or this Lease. Lessor, as assignee of Lessee, or a receiver for
Lessee appointed on Lessor's application, may collect such rent and apply it
toward Lessee's obligations under this Lease; provided, however, that until
the occurrence of any default by Lessee or except as provided by the
provisions of subsection 13.f. below, Lessee shall have the right to collect
such rent.
c. ASSUMPTION AGREEMENT. As a condition to Lessor's consent to any
Transfer of Lessee's interest in this Lease or the Premises, Lessee and
Lessee's assignee, sublessee, encumbrancer, hypothecate, or transferee
(collectively "Transferee"), shall execute a written Assumption Agreement,
in a form reasonably approved by Lessor, which Agreement shall include a
provision that Lessee's Transferee shall expressly assume all obligations of
Lessee under this Lease, and shall be and remain jointly and severally
liable with Lessee for the performance of all conditions, covenants, and
obligations under this Lease from the effective date of the Transfer of
Lessee's interest in this Lease (except that as to a subletting, such
Assumption Agreement shall relate only to performance of Lessee's non-rent
payment obligations under this Lease relating to the portion of the Premises
subleased). In no event shall
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Lessor have any obligation to materially amend or modify this Lease in
connection with any proposed Transfer, including, without limitation,
amending or modifying the use restriction set forth in subsection 8.a. above.
d. REQUEST FOR TRANSFER. Lessee shall give Lessor at least thirty (30)
days prior written notice of any desired Transfer and of the proposed terms
of such Transfer, including but not limited to: the name and legal
composition of the proposed Transferee; an audited financial statement of the
proposed Transferee prepared in accordance with generally accepted accounting
principles within one year prior to the proposed effective date of the
Transfer; the nature of the proposed Transferee's business to be carried on
in the Premises; the payment to be made or other consideration to be given on
account of the Transfer; and other such pertinent information as may be
requested by Lessor, all in sufficient detail to enable Lessor to evaluate
the proposed Transfer and the prospective Transferee. Lessee's notice shall
not be deemed to have been served or given until such time as Lessee has
provided Lessor with all information specified above and all additional
information requested by Lessor pursuant to this subsection 13.d. Lessee
shall immediately notify Lessor of any modification to the proposed terms of
such Transfer.
e. EXCESS CONSIDERATION. In the event of any Transfer (other than a
Transfer to a Permitted Transferee), Lessor shall receive as additional rent
hereunder, fifty percent (50%) of Lessee's "Excess Consideration" derived
from such Transfer. If Lessee shall elect to Transfer (other than to a
Permitted Transferee), Lessee shall use reasonable and good faith efforts to
secure consideration from any such Transferee which would be generally
equivalent to then-current market rent, but in no event shall Lessee's
monetary obligations to Lessor, as set forth in this Lease, be reduced. As
used herein, "Excess Consideration" shall mean all rent, additional rent, key
money, bonus money and/or other consideration (including, without limitation,
any payment in excess of fair market value for services rendered by Lessee to
the Transferee for assets, fixtures, inventory, equipment, or furniture
transferred by Lessee to the Transferee in connection with the Transfer)
received by Lessee from a Transferee and/or paid by a Transferee on behalf of
Lessee in connection with the Transfer in excess of the rent, additional rent
and other sums payable by Lessee under this Lease (on a per square foot basis
if less than all of the Premises is subject to such Transfer), less the sum
of Lessee's reasonable out-of-pocket costs incurred for brokerage
commissions, attorneys' fees and any Alterations to the Premises in
connection with such Transfer and an amount equal to the then unamortized
cost of any Lessee Improvements made by Lessee at Lessee's cost (based upon
monthly straight line amortization over the initial eighty-four (84) month
Lease Term). If part of the Excess Consideration shall be payable by the
Transferee other than in cash, then Lessor's share of such non-cash
consideration shall be in such form as is reasonably satisfactory to Lessor.
f. STANDARDS FOR CONSENT. Without otherwise limiting the criteria upon
which Lessor may withhold its consent to any proposed Transfer, the parties
hereby agree that it shall be deemed presumptively reasonable for Lessor to
withhold its consent to a proposed Transfer if:
(i) The proposed Transferee's net worth (according to generally
accepted accounting principles) is not sufficient in Lessor's reasonable
business judgment given the obligations to be performed by the proposed
Transferee pursuant to the proposed Transfer;
(ii) The proposed Transferee's use of the Premises is inconsistent
with the permitted use of the Premises set forth in this Lease or the
proposed Transferee is of a character or reputation which is not consistent
with the quality of the Building or Project;
(iii) As to a Transfer of less than all of the Premises, the space
to be Transferred is not regular in shape with appropriate means of ingress
and egress suitable for normal leasing purposes;
(iv) The proposed Transferee is a governmental agency or
instrumentality thereof or a person or entity (or an affiliate thereof)
currently leasing or occupying space within the Project or with whom Lessor
is then negotiating for the lease or occupancy of space within the Project;
(v) Lessee is in default under this Lease at the time Lessee
requests consent to the proposed Transfer; or
(vi) The proposed Transfer will result in more than a reasonable
and safe number of occupants per floor within the space proposed to be
Transferred or will result in insufficient parking for the Building.
g. Intentionally omitted.
h. CORPORATIONS AND PARTNERSHIPS. If Lessee is a partnership, a
withdrawal or substitution (whether voluntary, involuntary, or by operation
of law and whether occurring at one time or over a period of time) of any
partner(s) owning twenty-five percent (25%) or more of the partnership, any
assignment(s) of twenty-five percent (25%) or more (cumulatively) of any
interest in the capital or profits of the partnership, or the dissolution of
the partnership shall be deemed a Transfer of this Lease. Subject to the
provisions of Article 13.a. above, if Lessee is a corporation, limited
liability company or other entity, any dissolution, merger, consolidation or
other reorganization of Lessee, any sale or transfer (or cumulative sales or
transfers) of the capital stock of or equity interests in Lessee in excess of
twenty-five percent (25%) or any sale (or cumulative sales) of more than
fifty percent (50%) of the value of the assets of Lessee shall be deemed a
Transfer of this Lease. This subsection 13.h. shall not apply to corporations
the capital stock of which is publicly traded.
i. ATTORNEYS' FEES AND COSTS. Lessee shall pay, as additional rent,
Lessor's actual costs and attorneys' fees incurred for reviewing,
investigating, processing and/or documenting any requested Transfer, whether
or not Lessor's consent is granted.
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j. MISCELLANEOUS. Regardless of Lessor's consent, no Transfer shall
release Lessee of Lessee's obligations under this Lease or alter the primary
liability of Lessee to pay the Rentals and to perform all other obligations
to be performed by Lessee hereunder. The acceptance of Rentals by Lessor
from any other person shall not be deemed to be a waiver by Lessor of any
provision hereof. Upon default by any assignee of Lessee or any successor of
Lessee in the performance of any of the terms hereof, Lessor may proceed
directly against Lessee without the necessity of exhausting remedies against
said assignee or successor. Lessor may consent to subsequent assignments or
subletting of this Lease or amendments or modifications to this Lease with
any assignee of Lessee, without notifying Lessee, or any successor of Lessee,
and without obtaining its or their consent thereto and such action shall not
relieve Lessee of liability under this Lease.
k. REASONABLE PROVISIONS. Lessee acknowledges that, but for Lessee's
identity, financial condition and ability to perform the obligations of
Lessee under the Lease, Lessor would not have entered into this Lease nor
demised the Premises in the manner set forth in this Lease, and that in
entering into this Lease, Lessor has relied specifically on Lessee's
identity, financial condition, responsibility and capability of performing
the obligations of Lessee under the Lease. Lessee acknowledges that Lessor's
rights under this Article 13, including, without limitation, the right to
withhold consent to certain Transfers in Lessor's sole and absolute
discretion, are reasonable, agreed upon and bargained for rights of Lessor
and that the Rentals set forth in the Lease have taken into consideration
such rights. Lessee expressly agrees that the provisions of this Article 13
are not unreasonable standards or conditions for purposes of Section
1951.4(b)(2) of the California Civil Code, as amended from time to time,
under the Federal Bankruptcy Code or for any other purpose.
14. HOLD HARMLESS. Lessee shall to the fullest extent permitted by law,
indemnify, defend with counsel acceptable to Lessor, and hold Lessor and
Lessor's employees, agents, partners, officers, directors and shareholders
harmless from and against any and all claims, damages, losses, liabilities,
penalties, judgments, and costs and expenses (including, without limitation,
attorneys' fees) and any suit, action or proceeding brought pursuant thereto
(collectively, "Claims"), including, without limitation, Claims for property
damage, or personal injury including death, arising out of (i) Lessee's use
of the Premises or any part thereof, or any activity, work or other thing
done by Lessee or any of Lessee's Agents in the Premises, (ii) any activity,
work or other thing done or permitted by Lessee or any of Lessee's Agents in
the Premises, or any part thereof, (iii) any breach or default in the
performance of any obligation on Lessee's part to be performed under the
terms of this Lease, (including, without limitation, a failure to maintain
insurance as provided in Article 16), or (iv) any negligence or wilful
misconduct of Lessee or Lessee's Agents; provided, however, that Lessee shall
not be required to indemnity Lessor pursuant hereto for Claims to the extent
(1) arising as a result of Lessor's default under this Lease, or the
negligence or wilful misconduct of Lessor or any of Lessor's employees,
agents or contractors, and (2) not covered by the insurance required to be
maintained by Lessee pursuant to this Lease.
The indemnity herein shall extend to the costs and expenses incurred by
Lessor for administrative expenses, consultant fees, expert costs,
investigation expenses and costs incurred in settling indemnified claims,
whether such costs occurred before or after any litigation is commenced. The
obligations of Lessee pursuant to this Article 14 and elsewhere in this Lease
with respect to indemnification of Lessor shall survive the Lease
Termination and shall continue in effect until any and all claims, actions or
causes of action with respect to any of the matters indemnified against are
fully and finally barred by the applicable statute of limitations. In no
event shall any of insurance provisions set forth in Article 16 of this Lease
be construed as any limitation on the scope of indemnification set forth
herein.
Lessee as a material part of the consideration to Lessor hereby assumes
all risk of damage or loss to property or injury or death to person in, upon
or about all portions of the Project from any cause except as hereinafter
stated. Lessor or its agents shall not be liable for any damage or loss to
property entrusted to employees of any part of the Project nor for loss or
damage to any property by theft or otherwise, nor for any injury or death or
damage or loss to persons or property resulting from any accident, casualty
or condition occurring in or about any portion of the Project, or to any
equipment, appliances or fixtures therein, or from any other cause
whatsoever. Lessee's assumption of risk and the exculpation of Lessor
pursuant hereto is unqualified with the single exception that it shall not
apply to, and Lessor shall indemnify, defend and hold harmless Lessee from
and against, the portion of any claim, damage or loss to the extent arising
out of Lessor's default under this Lease or the negligence or willful
misconduct of Lessor or any of Lessor's employees, agents or contractors, and
not covered by the insurance required to be maintained by Lessee pursuant to
this Lease. Lessor or its agents shall not be liable for interference with
the light or other incorporeal hereditaments, nor shall Lessor be liable for
any latent defect in the Premises or in the Building. Notwithstanding any
other provision of this Lease, in no event shall Lessor have any liability
for loss of business (including, without limitation, lost profits) by Lessee.
Lessee shall give prompt written notice to Lessor in case of fire or
accidents in the Premises or in the Building or of defects therein or in the
fixtures or equipment.
If, by reason of any act or omission of Lessee or Lessee's Agents,
Lessor is made a party defendant to any litigation concerning this Lease or
any part of the Project or otherwise, Lessee shall indemnify, defend with
counsel acceptable to Lessor, and hold Lessor harmless from any liability and
damages incurred by (or threatened against) Lessor as a party defendant,
including without limitation all damages, costs and expenses, including
attorneys' fees.
15. SUBROGATION. Notwithstanding anything to the contrary contained in this
Lease, Lessor releases Lessee and Lessee's officers, directors, agents,
employees, partners and shareholders from any and all claims or demands for
damages, loss, expense or injury arising out of any perils to the extent
covered by first party property damage insurance carried by Lessor (or which
would have been so covered if Lessor had maintained the first party property
damage insurance required to be maintained by Lessor pursuant to this Lease),
or that are due to the negligence of Lessee or Lessee's officers, directors,
agents, employees, partners and shareholders and regardless of cost or origin,
to the extent such waiver is permitted by Lessor's insurers and does not
prejudice the insurance required to be carried by Lessor under this Lease.
Lessee releases Lessor and Lessor's officers, directors, agents,
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employees, partners and shareholders from any and all claims or demands for
damages, loss, expense or injury arising out of any perils to the extent
covered by the first party property damage insurance carried by Lessee (or
which would have been so covered if Lessee had maintained the first party
property damage insurance required to be maintained by Lessee pursuant to
this Lease), whether due to the negligence of Lessor or its officers,
directors, agents, employees, partners and shareholders and regardless of
cost or origin, to the extent such waiver is permitted by Lessee's insurers
and does not prejudice the insurance required to be carried by Lessee under
this Lease. Lessor and Lessee shall each use reasonable efforts to seek to
obtain insurance provider approval of the waiver set forth herein and each
party shall promptly notify the other in the event it is unable to obtain
such approval.
16. LESSEE'S INSURANCE.
a. Lessee shall, at Lessee's expense, obtain and keep in force during
the Term a policy of commercial general liability insurance, including the
broad form endorsement, insuring Lessor and Lessee against any liability
arising out of the ownership, use, occupancy, maintenance, repair or
improvement of the Premises and all areas appurtenant thereto. Such
insurance shall provide single limit liability coverage of not less than
Three Million Dollars ($3,000,000.00) per occurrence for bodily injury or
death and property damage. Such insurance shall name Lessor and, at Lessor's
request, Lessor's mortgagee, each as an additional insured, and shall provide
that Lessor and any such mortgagee, although an additional insured, may
recover for any loss suffered by Lessor or Lessor's agents by reason of
Lessee's or Lessee's Agent's negligence. All such insurance shall be primary
and non-contributing with respect to any insurance maintained by Lessor and
shall specifically insure Lessee's performance of the indemnity and hold
harmless agreements contained in Article 14 above although Lessee's
obligations pursuant to Article 14 shall not be limited to the amount of any
insurance required of or carried by Lessee under this Article 16 and Lessee
is responsible for ensuring that the amount of liability insurance carried by
Lessee is sufficient for Lessee's purposes. Lessee may carry said insurance
under a blanket policy provided that such policy conforms with the
requirements specified in this Article and the coverage afforded Lessor is
not diminished thereby.
b. Lessee acknowledges and agrees that insurance coverage carried by
Lessor will not cover Lessee's property within the Premises or within the
Building. Lessee shall, at Lessee's expense, obtain and keep in force during
the Term a policy of "All Risk" property insurance, including without
limitation, coverage for earthquake and flood (at Lessee's option); boiler
and machinery (if applicable); sprinkler damage; vandalism; malicious
mischief; and demolition, increased cost of construction and contingent
liability from changes in building laws on all leasehold improvements
installed in the Premises by Lessee at its expense (if any), and on all
equipment, trade fixtures, inventory, fixtures and personal property located
on or in the Premises, including improvements or fixtures hereinafter
constructed or installed on the Premises. Such insurance shall be in an
amount equal to the full replacement cost of the aggregate of the foregoing
and shall provide coverage comparable to the coverage in the Standard ISO All
Risk form, when such form is supplemented with the coverage required above.
c. If Lessee fails to procure and maintain any insurance required to be
procured and maintained by Lessee pursuant to this Lease, Lessor may, but
shall not be required to, procure and maintain all or any portion of the same,
at the expense of Lessee. Lessor's election pursuant to this subsection
16.c. to procure and maintain all or any portion of the insurance which
Lessee fails to procure and maintain is acknowledged by Lessee to be for
Lessor's sole benefit. Lessee acknowledges that any insurance procured and
maintained by Lessor pursuant to this subsection 16.c. may not be sufficient
to adequately protect Lessee. Any personal property insurance procured and
maintained by Lessor for Lessee's equipment, trade fixtures, inventory,
fixtures and personal property located on or in the Premises, including
improvements or fixtures hereinafter constructed or installed on the
Premises, may not sufficiently cover the replacement cost thereof. Any
insurance procured and maintained by Lessor pursuant to this subsection 16.c.
may provide for less coverage than is required to be maintained by Lessee
pursuant to this Lease. Lessee acknowledges and agrees that Lessee is and
shall remain solely responsible for procuring insurance sufficient for
Lessee's purposes, notwithstanding the fact that Lessor has procured or
maintained any insurance pursuant to this subsection 16.c. Any insurance
required to be maintained by Lessee hereunder shall be in companies with a
security rating of A or better, and a financial size category rating of X or
better, in the then most recently published "Best's Insurance Guide". Prior
to occupancy of the Premises (and thereafter annually with respect to
renewals, not later than thirty (30) days prior to expiration of then
existing policies), Lessee shall deliver to Lessor copies of the policies of
insurance required to be kept by Lessee hereunder, or certificates evidencing
the existence and amount of such insurance, with evidence satisfactory to
Lessor of payment of premiums. No policy shall be cancelable or subject to
reduction of coverage except after thirty (30) days prior written notice to
Lessor.
d. Not more frequently than once every year, Lessee shall increase the
amounts of insurance as reasonably recommended by Lessor's insurance broker
provided that the amount of insurance recommended by such broker shall not
exceed the amount customarily required of tenants in comparable projects
located in San Mateo, California. Any limits set forth in this Lease on the
amount or type of coverage required by Lessee's insurance shall not limit the
liability of Lessee under this Lease.
e. As an item of Building Service Expenses, Lessor hereby agrees to
maintain in effect during the Term of this Lease a policy or policies of "all
risk" insurance (or its then equivalent coverage) in an amount not less than
the replacement cost of the Building (exclusive of footings, foundations and
excavation) and Lessor shall also have the right (but not the obligation) to
maintain such other insurance coverages in such other amounts as Lessor
determines to be appropriate.
17. SERVICES AND UTILITIES. Provided that Lessee is not in default
hereunder and subject to the rules and regulations of the Building of which
the Premises are a part, Lessor agrees to furnish to the Premises during the
hours of 7:00 a.m. to 6:00 p.m., Monday through Friday, other than recognized
Building holidays (collectively, "Building Hours"), heating and
air-conditioning service which is required in Lessor's good faith judgment
for the comfortable use and occupation of the Premises, and at all times
electricity for normal lighting, water and elevator
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service which are required in Lessor's good faith judgment for the
comfortable use and occupation of the Premises. During recognized business
days for the Building, and subject to the reasonable rules and regulations of
the Building and Project, Lessor shall furnish to the Premises and the Common
Areas, janitorial service consistent with the standards of janitorial service
provided to tenants in comparable buildings in the San Mateo/Foster City
area, window washing, fluorescent tube replacement and toilet supplies;
provided, however, Lessor shall not be required to provide janitorial
services for any portion of the Premises to the extent required as a result
of the preparation or consumption of food or beverages (provided that nothing
in this paragraph shall be construed as a consent by Lessor to the
preparation or consumption of such food or beverages unless otherwise
expressly provided elsewhere in this Lease). Lessor shall also maintain and
keep lighted during such hours and after-hours (at levels sufficient for
after-hours usage) the common stairs, common entries and toilet rooms in the
Building. Lessor shall not be liable for, and Lessee shall not be entitled
to, any reduction of Rentals by reason of Lessor's failure to furnish any of
the foregoing when such failure is caused by casualty, Act of God, accident,
breakage, repairs, strikes, lockouts or other labor disturbances or labor
disputes of any character, or by any other cause, similar or dissimilar,
beyond the reasonable control of Lessor. Lessor shall not be liable under
any circumstances for injury to or death of or loss or damage to persons or
property or damage to Lessee's business, however occurring, through or in
connection with or incidental to failure to furnish any of the foregoing.
Wherever heat generating machines or equipment are used in the Premises which
affect the temperature otherwise maintained by the air conditioning system,
Lessor reserves the right to install supplementary air conditioning units in
the Premises and the cost thereof, including the cost of installation and the
cost of operation and maintenance thereof, shall be paid by Lessee to Lessor
upon demand by Lessor as additional rent. The costs of all utilities and
services furnished by Lessor to Lessee pursuant to this Article 17 which are
not specified as being reimbursed or paid directly by Lessee shall be
included as items of Building Operating Expenses.
Lessee will not, without the prior written consent of Lessor, use or
permit the use of any apparatus or device in or upon the Premises (including,
but without limitation thereto, machines using in excess of 120 volts), which
will in any way increase the amount of gas, electricity or water usually
furnished or supplied for the use of the Premises as general office space
(which, as to electricity consumption, the parties hereby agree to mean not
more than four (4) watts per square foot of usable area on a demand load
basis); nor will Lessee connect or permit connection of any apparatus or
device for the purpose of using gas, electric current or water with electric
current, gas or water supply lines, except for electricity through existing
electrical outlets in the Premises. If Lessee requires water or electric
current in excess of that usually furnished or supplied for the use of the
Premises as general office space (including, without limitation, as a result
of use at times other than during Building Hours), Lessee shall first procure
the written consent of Lessor to the use thereof (which consent may be
granted or withheld in Lessor's reasonable discretion, except that no such
consent shall be required for mere operation by Lessee during times other
than Building Hours) and Lessor may cause a water or gas meter or electric
current meter to be installed in the Premises so as to measure the amount of
water, gas and electric current consumed for any such use. The cost of any
such meters and of installation, maintenance and repair thereof shall be paid
for by the Lessee and Lessee agrees to pay to Lessor, as additional rent,
promptly upon demand therefor by Lessor for all such water, gas and electric
current consumed as shown by said meters, at the rates charged for such
services by the local public utility furnishing the same, plus any additional
expense incurred in keeping account of the water, gas and electric current so
consumed. If a separate meter is not installed, such excess cost for such
water, gas and electric current will be conclusively established by an
estimate made by a utility company or electrical engineer selected by Lessor.
If requested by Lessee in writing at least one (1) business day in
advance, heating, ventillation and air conditioning ("HVAC") service shall be
provided to the Premises other than during Building Hours (for a minimum
period of three (3) consecutive hours at a time, except for after-hours HVAC
service immediately following Building Hours, at which time the minimum
period shall be one (1) hour), provided that Lessee shall pay to Lessor for
each such hour of HVAC service during non-Building Hours, the then prevailing
charge by Lessor for such service (which shall equal Lessor's determination
in Lessor's reasonable business judgment of the actual cost of providing such
non-Building Hours HVAC service, including, without limitation, costs of
maintenance, labor and administration), which is presently Thirty-Five
Dollars ($35.00) per hour per zone. Amounts payable by Lessee hereunder
shall be paid as additional rent within thirty (30) days following Lessee's
receipt of Lessor's billing therefor. However, if Lessee requires
twenty-four (24) hour per day HVAC service, Lessor shall have the right to
install a separate meter, at Lessee's expense, to measure such usage, and
Lessee shall be responsible for all costs of such non-Building Hours usage in
accordance herewith.
Notwithstanding anything to the contrary contained in this Lease, during
the Term of the Lease, if Lessee is actually prevented from using all or a
material portion of the Premises as a result of an interruption in essential
utility services to the Premises which is solely the fault of Lessor or
Lessor's employees, agents or contractors, which prevention from use is not
cured within seven (7) consecutive days following Lessor's receipt of written
notice thereof from Lessee stating Lessee's intent to receive an abatement,
then monthly Base Rent and Lessee's obligation for payment of Lessee's
Percentage Share of Excess Expenses shall thereafter be equitably abated
based upon the portion of the Premises which Lessee is so prevented from
using, until and to the extent that Lessee is no longer so prevented from
using such portion of the Premises as a result of the applicable interruption
in essential utility services. Notwithstanding the foregoing, the provisions
of Article 21 below and not the provisions of this paragraph shall govern in
the event of casualty damage to the Premises or Project and the provisions of
Article 24 below and not the provisions of this paragraph shall govern in the
event of condemnation of all or a part of the Premises or Project.
18. RULES AND REGULATIONS. Lessee shall faithfully observe and comply with
the rules and regulations that Lessor shall from time to time promulgate for
the Building and the Project. Lessor reserves the right from time to time to
make all reasonable modifications to said rules and regulations; provided
that any modification of the rules and regulations attached hereto as Exhibit
"D" shall be reasonable, shall not materially interfere with Lessee's use of
the Premises or Lessee's parking rights under this Lease, and shall not
materially increase the obligations or materially decrease the rights of
Lessee as set forth in this Lease. The additions and modifications to these
rules and regulations shall be binding upon Lessee upon delivery of a copy
of them to Lessee. Lessor shall not be responsible
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to Lessee for the non-performance of any said rules by any other tenants or
occupants. The current "Rules and Regulations" are attached hereto as
Exhibit "D". In the event of a conflict between the specific provisions of
this Lease and such Rules and Regulations, the specific provisions of this
Lease shall prevail.
19. HOLDING OVER. If Lessee remains in possession of the Premises or any
part thereof after Lease Termination, with the express written consent of
Lessor, such occupancy shall be a tenancy from month to month at a Base Rent
in the amount of one hundred fifty percent (150%) of the Base Rent in effect
immediately preceding such Lease Termination, plus all other rental charges
payable hereunder, and upon all the terms hereof applicable to a month to
month tenancy. In such case, either party may thereafter terminate this
Lease at any time upon giving not less than thirty (30) days written notice
to the other party. For any possession of the Premises after the Lease
Termination without Lessor's consent, Lessee shall be liable for all
detriment proximately caused by Lessee's possession, including without
limitation, attorneys' fees, costs and expenses, claims of any succeeding
tenant founded on Lessee's failure to vacate and for payment to Lessor of
Base Rent in an amount equal to the greater of (a) one hundred fifty percent
(150%) of the Base Rent in effect immediately preceding such Lease
Termination, or (b) the fair market rental value for the Base Rent for the
Premises, together with such other Rentals provided in this Lease to the date
Lessee actually vacates the Premises, and such other remedies as are provided
by law, in equity or under this Lease.
20. ENTRY BY LESSOR. Lessor reserves and shall at any and all reasonable
times have the right to enter the Premises, inspect the same, supply
janitorial service and any other service to be provided by Lessor to Lessee
hereunder, to submit said Premises to prospective purchasers, mortgagees,
lenders or tenants, to post notices of nonresponsibility, and to alter,
improve or repair the Premises and any portion of the Building that Lessor
may deem necessary or desirable, without any abatement of Rentals, and may
for such purposes erect scaffolding and other necessary structures where
reasonably required by the character of the work to be performed, provided
that the entrance to the Premises shall not be unreasonably blocked thereby,
and further provided that the business of the Lessee shall not be interfered
with unreasonably. Lessor shall use reasonable efforts to provide Lessee
with such prior oral or written notice of any such entry as is reasonably
practicable under the circumstances, except in the event of an emergency or
entry for scheduled provision of services to the Premises. In no event shall
Lessor have any liability to Lessee for, and Lessee hereby waives any claim
for, damages or for any injury or inconvenience to or interference with
Lessee's business, any loss of occupancy or quiet enjoyment of the Premises,
and any other damage or loss occasioned thereby. For each of the aforesaid
purposes, Lessor shall at all times have and retain a key with which to
unlock all of the doors in, upon and about the Premises, excluding Lessee's
vaults, safes and files, and Lessor shall have the right to use any and all
means which Lessor may deem proper to open said doors in an emergency in
order to obtain entry to the Premises, without liability to Lessee except for
any failure to exercise due care for Lessee's property under the
circumstances of each entry. Any entry to the Premises obtained by Lessor by
any of said means or otherwise shall not under any circumstances be construed
or deemed to be a forcible or unlawful entry into, or a detainer of, the
Premises, or an eviction of Lessee from the Premises or any portion thereof.
With respect to any entry by Lessor into the Premises, Lessor shall be liable
to Lessee solely for physical damage caused to Lessee's personal property
located within the Premises to the extent such damage is caused by Lessor's
active negligence or willful misconduct and which is not covered by the
insurance required to be maintained by Lessee pursuant to this Lease, and
only with respect to an entry in an non-emergency situation.
21. RECONSTRUCTION. If the Premises are damaged and rendered substantially
untenantable, or if the Building is damaged (regardless of damage to the
Premises) or destroyed, Lessor may, within ninety (90) days after the
casualty, notify Lessee of Lessor's election not to repair, in which event
this Lease shall terminate at the expiration of the ninetieth (90th) day. If
Lessor elects to repair the damage or destruction, this Lease shall remain in
effect and the then current Base Rent and Lessee's Percentage Share of Excess
Expenses shall be proportionately reduced during the period of repair. The
reduction shall be based upon the extent to which the making of repairs
interferes with Lessee's business conducted in the Premises, as reasonably
determined by Lessor. All other Rentals due hereunder shall continue
unaffected, and Lessee shall have no claim against Lessor for compensation
for inconvenience or loss of business during any period of repair or
reconstruction. Lessee shall continue the operation of its business on the
Premises during any period of reconstruction or repair to the extent
reasonably practicable from the standpoint of prudent business management.
Upon Lessor's election to repair, Lessor shall diligently repair the damage to
the extent of insurance proceeds available to Lessor. Lessor shall not be
required to repair or replace, whether injured or damaged by fire or other
cause, any items required to be insured by Lessee under this Lease including
Lessee's fixtures, equipment, merchandise, personal property, inventory,
panels, decoration, furniture, railings, floor covering, partitions or any
other improvements, alterations, additions, or property made or installed by
Lessee to the Premises. Lessee hereby waives all claims for loss or damage
to the foregoing. Lessee waives any rights to terminate this Lease if the
Premises are damaged or destroyed, including without limitation any rights
pursuant to the provisions of Subdivision 2 of Section 1932 and Subdivision 4
of Section 1933 of the Civil Code of California, as amended from time to
time, and the provisions of any similar law hereinafter enacted. If the
Lease is terminated by Lessor pursuant to this Article 21, the unused balance
of the Security Deposit and any Rentals unearned as of the effective date of
termination shall be refunded to Lessee. Lessee shall pay to Lessor any
Rentals or other charges due Lessor under the Lease, prorated as of the
effective date of termination.
Notwithstanding the foregoing, if less than thirty-three percent (33%)
of the Rentable Area of the Building is damaged from an insured casualty and
the insurance proceeds actually available to Lessor for reconstruction (net
of costs to recover such proceeds and after all claimants thereto including
lienholders have been satisfied or waive their respective claims) plus
applicable deductible amounts under such insurance policies ("Net Insurance
Proceeds") are sufficient to completely restore the Building or in the event
of a casualty due to a cause which is not covered by the insurance
maintained by Lessor (and which would not have been so covered if Lessor had
maintained the insurance required to be maintained by Lessor pursuant to this
Lease) but costing less than $500,000 to repair, Lessor agrees to make such
reparations and continue this Lease in effect. If, upon damage of less than
thirty-three percent (33%) of the Rentable Area of the Building there are not
sufficient insurance proceeds actually available (when added to
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applicable deductible amounts) to allow Lessor to completely restore the
Building, or in the event of a casualty due to a cause which is not covered
by the insurance maintained by Lessor (and which would not have been so
covered if Lessor had maintained the insurance required to be maintained by
Lessor pursuant to this Lease) but costing $500,000 or more to repair, then
Lessor shall not be obligated to repair the Building and the provisions of
the first paragraph of this Article shall control. Notwithstanding anything
to the contrary contained in this Article, Lessor shall not be permitted to
terminate this Lease following casualty damage to portions of the Project
other than the Premises unless Lessor also concurrently terminates the leases
of all similarly affected Building tenants.
Lessee shall not be entitled to any compensation or damages from Lessor
for loss of the use of the whole or any part of the Premises, or for any
damage to Lessee's business, or any inconvenience or annoyance occasioned by
such damage, or by any repair, reconstruction or restoration by Lessor, or by
any failure of Lessor to make any repairs, reconstruction or restoration
under this Article or any other provision of this Lease. However,
notwithstanding anything to the contrary contained in this Lease, in the
event of material casualty damage to the Premises not resulting in
termination of this Lease, Lessor shall deliver written notice to Lessee
within ninety (90) days following such casualty damage or occurrence setting
forth Lessor's good faith estimate of the time required for completion of
repair and/or restoration of the Premises, and if such estimated time exceeds
two hundred seventy (270) days from the occurrence of the casualty, Lessee
may elect to terminate this Lease by written notice to Lessor within fifteen
(15) days following Lessee's receipt of such notice. In addition, if such
repair is not substantially completed so as to permit Lessee's resumption of
business from the Premises without material interference from any uncompleted
repair work within two hundred forty (240) days from the occurrence of the
casualty (or such longer period as may have been estimated in Lessor's
written notice to Lessee pursuant hereto), then Lessee shall thereafter have
the right to terminate this Lease upon thirty (30) days prior written notice
to Lessor (provided that if such repair work is so substantially completed
prior to the expiration of such thirty (30) day period, then Lessee's
election to terminate shall be nullified and this Lease shall continue in
full force and effect).
22. DEFAULT. The occurrence of any one or more of the following events
shall constitute a material default and breach of this Lease by Lessee:
a. Lessee's failure to pay when due Base Rent or any other Rentals or
other sums payable hereunder where such failure is not cured within five (5)
days following Lessor's delivery of written notice thereof (which notice
shall be in lieu of, and not in addition to, any notice required under
applicable laws, including, without limitation, notices required under
California Code of Civil Procedure Section 1161 or any similar or successor
statute, provided such notice is served in the manner required under
California Code of Civil Procedure Section 1162 or any successor statute);
b. Lessee's abandonment of the Premises;
c. Commencement, and continuation for at least thirty (30) days, of any
case, action, or proceeding by, against, or concerning Lessee, or any
guarantor of Lessee's obligations under this Lease ("Guarantor"), under any
federal or state bankruptcy, insolvency, or other debtor's relief law,
including without limitation, (i) a case under Title II of the United States
Code concerning Lessee, or a Guarantor, whether under Chapter 7, 11, or 13 of
such Title or under any other Chapter, or (ii) a case, action, or proceeding
seeking Lessee's or a Guarantor's financial reorganization or an arrangement
with any of Lessee's or a Guarantor's creditors;
d. Voluntary or involuntary appointment of a receiver, trustee, keeper,
or other person who takes possession for more than thirty (30) days of
substantially all of Lessee's or a Guarantor's assets, or of any asset used
in Lessee's business on the Premises, regardless of whether such appointment
is as a result of insolvency or any other cause;
e. Execution of an assignment for the benefit of creditors of
substantially all assets of Lessee or a Guarantor available by law for the
satisfaction of judgment creditors;
f. Commencement of proceedings for winding up or dissolving (whether
voluntary or involuntary) the entity of Lessee or a Guarantor, if Lessee or
such Guarantor is a corporation, partnership, limited liability company or
other entity;
g. Levy of a writ of attachment or execution on Lessee's interest under
this Lease, if such writ continues for a period of ten (10) days;
h. Intentionally omitted;
i. With respect to any report that Lessee is required to submit
hereunder, the wilful submission by Lessee of a report which Lessee knows to
be materially inaccurate;
j. The use or occupancy of the Premises for any use or purpose not
specifically allowed by the terms of this Lease; or
k. Breach by Lessee of any term, covenant, condition, warranty, or
provision contained in this Lease or of any other obligation owing or due to
Lessor other than as described in subsections 22.a., b., c., d., e., f., g.,
h., i. or j. of this Article 22, where such failure shall continue for a
period of thirty (30) days after written notice thereof by Lessor to Lessee;
provided, however, that if the nature of Lessee's default is such that more
than thirty (30) days are reasonably required for its cure, Lessee shall not
be deemed to be in default if Lessee commences such cure within said thirty
(30) day period and thereafter diligently prosecutes such cure to completion,
and if Lessee provides Lessor with such security as Lessor may require to
fully compensate Lessor for any loss or liability to which
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Lessor might be exposed; provided that any such notice from Lessor shall be
in lieu of, and not in addition to, any notice required under applicable
laws, including, without limitation, notices required under California Code
of Civil Procedure Section 1161 or any similar or successor statute, provided
such notice is served in the manner required under California Code of Civil
Procedure Section 1162 or any successor statute.
23. REMEDIES UPON DEFAULT. Upon any default or breach by Lessee which is
not cured within any applicable period for cure provided for in Article 22
above, at any time thereafter, with or without notice or demand, and without
limiting Lessor in the exercise of any right or remedy which Lessor may have
hereunder or otherwise at law or in equity by reason of such default or
breach Lessor may do the following:
a. TERMINATION OF LEASE. Lessor may terminate this Lease by notice to
Lessee or any other lawful means, in which case this Lease shall terminate
and Lessee shall immediately surrender possession of the Premises to Lessor.
In such event Lessor shall be entitled to recover from Lessee:
(i) The worth at the time of award of the unpaid Rentals which
had been earned at the time of termination;
(ii) The worth at the time of award of the amount by which the
unpaid Rentals which would have been earned after termination until the time
of award exceeds the amount of such rental loss that Lessee proves could have
been reasonably avoided;
(iii) The worth at the time of award (computed by discounting at
the discount rate of the Federal Reserve Bank of San Francisco at the time of
award plus one percent) of the amount by which the unpaid Rentals for the
balance of the Term after the time of award exceeds the amount of such rental
loss that Lessee proves could be reasonably avoided; and
(iv) Any other amounts necessary to compensate Lessor for
detriment proximately caused by the default by Lessee or which in the
ordinary course of events would likely result, including without limitation
the reasonable costs and expenses incurred by Lessor for:
(A) Retaking possession of the Premises;
(B) Cleaning and making repairs and alterations (including
installation of leasehold improvements, whether or not the same shall be
funded by a reduction of rent, direct payment or otherwise) necessary to
return the Premises to good condition and preparing the Premises for
reletting;
(C) Removing, transporting, and storing any of Lessee's
property left at the Premises (although Lessor shall have no obligation to
remove, transport, or store any of the property);
(D) Reletting the Premises, including without limitation,
brokerage commissions, advertising costs, and attorneys' fees;
(E) Attorneys' fees, expert witness fees and court costs;
(F) Any unamortized real estate brokerage commissions paid
in connection with this Lease; and
(G) Costs of carrying the Premises, such as repairs,
maintenance, taxes and insurance premiums, utilities and security
precautions, if any.
The "worth at the time of award" of the amounts referred to in Articles
23.a.(i) and 23.a.(ii) is computed by allowing interest at an annual rate
equal to the greater of: ten percent (10%); or five percent (5%) plus the
rate established by the Federal Reserve Bank of San Francisco, as of the 25th
day of the month immediately preceding the default by Lessee, on advances to
member banks under Section 13 and 13(a) of the Federal Reserve Act, as then
in effect or hereafter from time to time amended (the "Stipulated Rate").
The computation of the amount of rental loss that could be or could have been
reasonably avoided by Lessor pursuant to California Civil Code section 1951.2
shall take into account the use restrictions set forth in Article 8.a. above
except to the extent that Lessee proves that under all circumstances the
enforcement of the use restriction would be unreasonable.
b. CONTINUATION OF LEASE. Lessor shall have the remedy described in
California Civil Code Section 1951.4 (Lessor may continue Lease in effect
after Lessee's breach and abandonment and recover rent as it becomes due, if
Lessee has right to sublet or assign, subject only to reasonable
limitations), the parties hereby agreeing and acknowledging that Lessee has
the right to sublet or assign under this Lease subject only to reasonable
limitations. The use restriction provided in Article 8.a. above shall apply
to Lessor's remedies under California Civil Code Section 1951.4 except to the
extent that Lessee proves that under all circumstances enforcement of the
use restriction would be unreasonable.
c. OTHER REMEDIES. Lessor may pursue any other remedy now or hereafter
available to Lessor under the laws or judicial decisions of the State in
which the Premises are located.
d. GENERAL. The following shall apply to Lessor's remedies:
(i) No entry upon or taking of possession of the Premises or any
part thereof by Lessor, nor any letting or subletting thereof by Lessor for
Lessee, not any appointment of a receiver, nor any other act of Lessor,
whether acceptance of keys to the Premises or otherwise, shall constitute or
be construed as an election by Lessor to
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terminate this Lease or Lessee's right to possession of the Premises unless a
written notice of such election be given to Lessee by Lessor.
(ii) If Lessor elects to terminate this Lease or Lessee's right to
possession hereunder, Lessee shall surrender and vacate the Premises in
broom-clean condition, and Lessor may re-enter and take possession of the
Premises and may eject all parties in possession or eject some and not others
or eject none. Any personal property of or under the control of Lessee
remaining on the Premises at the time of such re-entry may be considered and
treated by Lessor as abandoned.
24. EMINENT DOMAIN. If a portion of the Premises materially and adversely
affecting the operation of Lessee's business from the Premises is taken or
appropriated for any public or quasi-public use under the power of eminent
domain, or conveyed in lieu thereof, Lessee shall have the right, at its
option, to terminate this Lease by written notice to Lessor given within ten
(10) days of the date of such taking, appropriation or conveyance. If any
substantial part of the Building or the Project other than the Premises is so
taken, appropriated or conveyed, Lessor shall have the right at its option to
terminate this Lease. Notwithstanding anything to the contrary contained in
this Article, Lessor shall not be permitted to terminate this Lease following
condemnation to portions of the Project other than the Premises unless Lessor
also concurrently terminates the leases of all similarly affected Building
tenants. If this Lease is terminated as provided above: (i) the termination
shall be effective as of the date upon which title to the Premises, the
Building, the Project, or a portion thereof, passes to and vests in the
condemnor or the effective date of any order for possession if issued prior
to the date title vests in the condemnor; (ii) Lessor shall refund to Lessee
any prepaid but unearned Rentals and the unused balance of the Security
Deposit; and (iii) Lessee shall pay to Lessor any Rentals or other charges
due Lessor under the Lease, prorated as of the date of taking.
In the event of any such taking, appropriation or conveyance in lieu
thereof, (i) Lessor shall be entitled to the entirety of any and all income,
rent, award, or any interest therein whatsoever which may be paid or made
(the "Award") in connection therewith (including, without limitation, any
Award attributable to the value of any unexpired Term of this Lease), and
Lessee shall have no claim against Lessor for (and hereby assigns to Lessor
any claim which Lessee may have for) any Award attributable to the value of
any unexpired Term of this Lease, and Lessee shall be entitled to make a
claim for any separate award attributable to any taking of Lessee's trade
fixtures and any amount allocable to the then unamortized cost of any Lessee
Improvements made by Lessee at Lessee's cost (based upon monthly straight
line amortization over the initial eighty-four (84) month Lease Term); and
(ii) if this Lease is not terminated as provided above, the Rental thereafter
to be paid hereunder for the Premises shall be reduced in the same ratio that
the percentage of the area of the Premises so taken, appropriated or conveyed
bears to the total area of the Premises immediately prior to the taking,
appropriation or conveyance. In addition, if any Rentable Area in the
Building containing the Premises is so taken, appropriated or conveyed and
this Lease is not terminated by Lessor, Lessee's Percentage Share of Excess
Expenses shall be adjusted pursuant to Article 7.
Notwithstanding this Article 24 above, upon a temporary taking of all or
any portion of the Premises, the Lease shall remain in effect and Lessee
shall continue to pay and be liable for all Rentals under this Lease. Upon
such temporary taking, Lessee shall be entitled to any Award for the
temporary use of the portion of the Premises taken which is attributable to
the period prior to the date of Lease Termination, and Lessor shall be
entitled to any portion of the Award for such use attributable to the period
after Lease Termination. As used in this paragraph, a temporary taking shall
mean a taking for a period of two hundred seventy (270) days or less and does
not include a taking which is to last for an indefinite period and/or which
will terminate only upon the happening of a specified event unless it can be
determined at the time of the taking when such event will occur.
25. OFFSET STATEMENT; MODIFICATIONS FOR LENDER. Lessee shall at any time
and from time to time within fifteen (15) days following request from Lessor
execute, acknowledge and deliver to Lessor a statement in writing, (i)
certifying that this Lease is unmodified and in full force and effect (or, if
modified, stating the nature of such modification and certifying that this
Lease as so modified is in full force and effect), (ii) acknowledging that
there are not, to Lessee's knowledge, any uncured defaults on the part of the
Lessor hereunder, or specifying such defaults if any are claimed, (iii)
certifying the date Lessee entered into occupancy of the Premises and that
Lessee is open and conducting business at the Premises, (iv) certifying the
date to which Rentals and other charges are paid in advance, if any, (v)
evidencing the status of this Lease as may be required either by a lender
making a loan affecting or a purchaser of the Premises, or part of the
Project from Lessor, (vi) certifying that all improvements to be constructed
on the Premises by Lessor are substantially completed (if applicable),
except for any punch list items which do not prevent Lessee from using the
Premises for its intended use, and (vii) certifying such other matters
relating to this Lease and/or the Premises as may be requested by Lessor or a
lender making a loan to Lessor or a purchaser of the Premises, or any part of
the Project from Lessor. Any such statement may be relied upon by any
prospective purchaser or encumbrancer of all or any portion of the Project,
or any interest therein. Lessee shall, within fifteen (15) days following
request of Lessor, deliver such other documents including Lessee's financial
statements as are reasonably requested in connection with the sale of, or
loan to be secured by, any portion of the Project, or any interest therein;
provided that if and for so long as Lessee is a corporation whose stock is
traded on a public exchange, delivery of Lessee's annual 10-K as supplemented
by an subsequent 10-Q filings with the SEC shall be sufficient to satisfy
Lessee's requirement for delivery of financial statements pursuant hereto.
If in connection with obtaining financing for all or any portion of the
Project, any lender shall request modifications of this Lease as a condition
to Lessor obtaining such financing, Lessee will not unreasonably withhold,
delay or condition its consent thereto, provided that such modifications do
not increase the financial obligations of Lessee hereunder or materially and
adversely affect the leasehold interest hereby created or Lessee's rights
hereunder.
26. PARKING. Lessee shall have the right to use the number of
non-exclusive parking spaces located within the Project as designated in
Article 1.1. without charge during the Term; except, however, notwithstanding
anything
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to the contrary contained in this Lease, if a charge, fee, tax or other
imposition is assessed against Lessor or the Project by applicable
governmental authorities based upon use of parking spaces at the Project or
is required by applicable governmental authorities to be assessed by Lessor
upon users of parking spaces at the Project, then Lessee shall pay its
equitable share of such charge, fee, tax or other imposition to Lessor
monthly in advance as additional rent. Use of all parking spaces shall be
subject to rules and regulations established by Lessor which may be altered
at any time and from time to time during the Term. The location of all
parking spaces may be designated from time to time by Lessor. Neither Lessee
nor Lessee's Agents shall at any time use more parking spaces than the number
so allocated to Lessee or park or permit the parking of their vehicles in any
portion of the Parcel not designated by Lessor as a non-exclusive parking
area. Lessee and Lessee's Agents shall not have the exclusive right to use
any specific parking space, except as expressly stated in this Article 26.
Notwithstanding the number of parking spaces designated for Lessee's
non-exclusive use, in the event by reason of any rule, regulation, order,
law, statute or ordinance of any governmental or quasi-governmental authority
relating to or affecting parking on the Parcel, or any cause beyond Lessor's
reasonable control, Lessor is required to reduce the number of parking spaces
on the Parcel, Lessor shall have the right to proportionately reduce the
number of Lessee's parking spaces and the non-exclusive parking spaces of
other tenants of the Building. Lessor reserves the right in its reasonable
discretion: to determine whether parking facilities are becoming overcrowded
and in such event to re-allocate parking spaces among Lessee and other
tenants of the Project provided that there is no reduction in the parking
made available to Lessee pursuant to this Lease pursuant to Article 1.1.
above; to have any vehicles owned by Lessee or Lessee's Agents which are
parked in violation of the provisions of this Article 26 or Lessor's rules
and regulations relating to parking, towed away at Lessee's cost, after
having given Lessee reasonable notice. In the event Lessor elects or is
required by any law to limit or control parking on the Parcel, by validation
of parking tickets or any other method, Lessee agrees to participate in such
validation or other program under such reasonable rules and regulations as
are from time to time established by Lessor. Lessor shall have the right to
close all or any portion of the parking areas at reasonable times for any
purpose, including, without limitation, the prevention of a dedication
thereof, or the accrual of rights in any person or the public therein.
Employees of Lessee shall be required to park in areas designated for
employee parking, if any. The parking areas shall not be used by Lessee or
Lessee's Agents for any purpose other than the parking of motor vehicles and
the ingress and egress of pedestrians and motor vehicles.
27. AUTHORITY. If Lessee is a corporation, partnership, limited liability
company or other entity, Lessee represents and warrants that each individual
executing this Lease on behalf of said entity is duly authorized to execute
and deliver this Lease on behalf of said entity in accordance with a duly
adopted resolution of the Board of Directors of said corporation or in
accordance with the by-laws of said corporation or on behalf of said
partnership in accordance with the partnership agreement of such partnership
or otherwise on behalf of said entity in accordance with the organizational
documents governing such entity, and that this Lease is binding upon said
entity in accordance with its terms. If Lessee is a corporation or other
entity, Lessee shall, upon execution of this Lease, deliver to Lessor a
certified copy of a resolution of the Board of Directors of said corporation
or other evidence of organizational approval authorizing or ratifying the
execution of this Lease. If Lessee fails to deliver such resolution or other
evidence to Lessor upon execution of this Lease, Lessor shall not be deemed
to have waived its right to require delivery of such resolution or other
evidence, and at any time during the Term Lessor may request Lessee to
deliver the same, and Lessee agrees it shall thereafter promptly deliver such
resolution or other evidence to Lessor. If Lessee is a corporation or other
entity, Lessee hereby represents, warrants, and covenants that (i) Lessee is
a valid and existing corporation or other entity; (ii) Lessee is qualified to
do business in California; (iii) all fees and all franchise and corporate
taxes of Lessee are paid to date, and will be paid when due; (iv) all
required forms and reports will be filed when due; and (v) the signers of
this Lease are properly authorized to execute this Lease on behalf of Lessee
and to bind Lessee hereto.
28. SURRENDER OF PREMISES.
a. CONDITION OF PREMISES. Lessee shall, upon Lease Termination,
surrender the Premises in the condition required pursuant to subsection 10.b.
above, and otherwise in broom clean, trash free, and in the same condition as
received and with approved Lessee Improvements and Alterations (unless
required to be removed at the time of approval of such Lessee Improvements or
Alterations pursuant to this Lease), reasonable wear and tear, and casualties
and condemnation excepted. By written notice to Lessee, Lessor may elect to
cause Lessee to remove from the Premises or cause to be removed, at Lessee's
expense, any logos, signs, notices, advertisements or displays placed on the
Premises by Lessee. If the Premises is not so surrendered as required by
this Article 28, Lessee shall indemnify, defend and hold harmless Lessor from
and against any loss or liability resulting from Lessee's failure to comply
with the provisions of this Article 28, including, without limitation, any
claims made by any succeeding tenant or losses to Lessor due to lost
opportunities to lease to succeeding tenants, and the obligations of Lessee
pursuant hereto shall survive the Lease Termination.
b. REMOVAL OF PERSONAL PROPERTY. Lessee shall remove all its personal
property from the Premises upon Lease Termination, and shall immediately
repair all damage to the Premises, Building and Common Area caused by such
removal. Any personal property remaining on the Premises after Lease
expiration or sooner termination may be packed, transported, and stored at a
public warehouse at Lessee's expense. If after Lease Termination and, within
ten (10) days after written demand by Lessor, Lessee fails to remove Lessee's
personal property or, if removed by Lessor, fails to pay the removal
expenses, the personal property may be deemed abandoned property by Lessor
and may be disposed of as Lessor deems appropriate. Lessee shall repair any
damage to the Premises caused by or in connection with the removal of any
personal property, including without limitation, the floor and patch and
paint the walls, when required by Lessor, to Lessor's reasonable satisfaction,
all at Lessee's sole cost and expense. The provisions of this Article 28
shall survive Lease Termination.
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29. LESSOR DEFAULT AND MORTGAGEE PROTECTION. Lessor shall not be in default
under this Lease unless Lessee shall have given Lessor written notice of the
breach, and, within thirty (30) days after notice, Lessor has not cured the
breach or, if the breach is such that it cannot reasonably be cured under the
circumstances within thirty (30) days, has not commenced diligently to
prosecute the cure to completion. The liability of Lessor pursuant to this
Lease shall be limited to Lessor's interest in the Building and any money
judgment obtained by Lessee based upon Lessor's breach of this Lease or
otherwise relating to this Lease or the Premises, shall be satisfied only out
of the proceeds of the sale or disposition of Lessor's interest in the
Building (whether by Lessor or by execution of judgment). Lessee agrees that
the obligations of Lessor under this Lease do not constitute personal
obligations of the individual partners, whether general or limited,
members, directors, officers or shareholders of Lessor, and Lessee shall
not seek recourse against the individual partners, members, directors,
officers or shareholders of Lessor or any of their personal assets for
satisfaction of any liability with respect to this Lease. Upon any breach by
Lessor under this Lease, Lessee shall give notice by registered mail to any
beneficiary or mortgagee of a deed of trust or mortgage encumbering the
Premises, and/or any portion of the Project, whose address shall have been
furnished to it, and shall offer such beneficiary or mortgagee a reasonable
opportunity to cure the breach, including time to obtain possession of the
Premises, and/or Project, or any portion thereof, by appointment of a
receiver or (if appointment of a receiver is not permitted under the
circumstances) by power of sale or judicial foreclosure, if such should prove
necessary to effect a cure.
30. RIGHTS RESERVED BY LESSOR. Lessor reserves the right from time to time,
without abatement of Rentals and without limiting Lessor's other rights under
this Lease: (i) to install, use, maintain, repair and replace pipes, ducts,
conduits, wires and appurtenant meters and equipment for service to other
parts of the Project above the ceiling surfaces, below the floor surfaces,
within the walls and in the central core areas, and to relocate any pipes,
ducts, conduits, wires and appurtenant meters and equipment included in the
Premises which are located in the Premises or located elsewhere outside the
Premises, and to expand any building within the Project; (ii) to designate
other land outside the current boundaries of the Project be a part of the
Project, in which event the Parcel shall be deemed to include such additional
land, and the Common Areas shall be deemed to include Common Areas upon
such additional land; (iii) to add additional buildings and/or other
improvements ('including, without limitation, additional parking structures
or extension of existing parking structures) to the Project, which may be
located on land added to the Project pursuant to clause (ii) above; (iv) to
make changes to the Common Areas, including, without limitation, changes in
the location, size, shape and number of driveways, entrances, parking spaces,
parking areas, loading and unloading areas, ingress, egress, direction of
traffic, landscape areas and walkways; (v) to close temporarily any of the
Common Areas for maintenance purposes so long as reasonable access to the
Premises remains available; (vi) to use the Common Areas while engaged in
making additional improvements, repairs or alterations to the Building or the
Project, or any portion thereof; (vii) to grant the right to the use of the
Exterior Common Area to the occupants of other improvements located on the
Parcel; (viii) to designate the name, address, or other designation of the
Building and/or Project, without notice or liability to Lessee; (ix) to close
entrances, doors, corridors, elevators, escalators or other Building
facilities or temporarily abate their operation; (x) to change or revise the
business hours of the Building; and (xi) to do and perform such other acts
and make such other changes in, to or with respect to the Common Areas, the
Building or any other portion of the Project as Lessor deems to be
appropriate in the exercise of its reasonable business judgment. In the
exercise of its rights under this Article, Lessor shall not materially
increase the obligations imposed on Lessee pursuant to this Lease or
materially diminish the rights granted to Lessee under this Lease, and Lessor
shall use reasonable efforts to minimize any unreasonable interference with
the operation of Lessee's business from the Premises.
31. EXHIBITS. Exhibits and riders, if any, signed by the Lessor and the
Lessee and endorsed on or affixed to this Lease are a part hereof.
32. WAIVER. No covenant, term or condition in this Lease or the breach
thereof shall be deemed waived, except by written consent of the party
against whom the waiver is claimed. Any waiver of the breach of any
covenant, term or condition herein shall not be deemed to be a waiver of any
preceding or succeeding breach of the same or any other covenant, term or
condition. Acceptance by Lessor of any performance by Lessee after the time
the same shall have become due shall not constitute a waiver by Lessor of the
breach or default of any covenant, term or condition unless otherwise
expressly agreed to by Lessor in writing. The acceptance by Lessor of any
sum less than that which is required to be paid by Lessee shall be deemed to
have been received only on account of the obligation for which it is paid (or
for which it is allocated by Lessor, in Lessor's absolute discretion, if
Lessee does not designate the obligation as to which the payment should be
credited), and shall not be deemed an accord and satisfaction notwithstanding
any provisions to the contrary written on any check or contained in a letter
of transmittal. Lessor's efforts to mitigate damages caused by any default
by Lessee shall not constitute a waiver of Lessor's right to recover damages
for any default by Lessee. No custom or practice which may arise between the
parties hereto in the administration of the terms hereof shall be construed
as a waiver or diminution of Lessor's right to demand performance by Lessee
in strict accordance with the terms of this Lease.
33. NOTICES. All notices, consents and demands which may or are to be
required or permitted to be given by either party to the other hereunder
shall be in writing. All notices, consents and demands by Lessor to Lessee
shall be personally delivered, sent by overnight courier providing receipt of
delivery (such as Federal Express), or sent by United States Certified
Mail, postage prepaid return receipt requested, addressed to Lessee as
designated in Article 1.m., or to such other place as Lessee may from time to
time designate in a notice to Lessor pursuant to this Article 33. All notices
and demands by Lessee to Lessor shall be personally delivered, sent by
overnight courier providing receipt of delivery (such as Federal Express) or
sent by United States Certified Mail, postage prepaid return receipt
requested (provided that a copy of any such notice or demand so sent by
United States Certified Mail shall be concurrently sent by facsimile
transmission), addressed to Lessor as designated in Article 1.m., or to such
other person or place as Lessor may from time to time designate in a notice
to Lessee pursuant to this Article 33.
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Notices sent by overnight courier shall be deemed delivered upon the next
business day following deposit with such overnight courier for next business
day delivery. Mailed notices shall be deemed delivered two (2) business days
after deposit in the United States mail as required by this Article 33.
34. JOINT OBLIGATIONS. If Lessee consists of more than one person or
entity, the obligations of each Lessee under this Lease shall be joint and
several.
35. MARGINAL HEADINGS. The captions of paragraphs and articles of this
Lease are not a part of this Lease and shall have no effect upon the
construction or interpretation of any part hereof.
36. TIME. Time is of the essence of this Lease and each and all of its
provisions in which performance is a factor except as to the delivery of
possession of the Premises to Lessee.
37. SUCCESSORS AND ASSIGNS. The covenants and conditions herein contained,
subject to the provisions of Article 13, apply to and bind the heirs,
successors, executors, administrators, legal representatives and assigns of
the parties hereto.
38. RECORDATION. Upon request by Lessor, Lessee shall execute and
acknowledge a short form of this Lease in form for recording which may be
recorded at Lessor's election. Lessee shall not record this Lease or a short
form or memorandum hereof without the prior written consent of Lessor.
39. QUIET POSSESSION. Upon Lessee paying the Rentals reserved hereunder and
observing and performing all of the covenants, conditions and provisions on
Lessee's part to be observed and performed hereunder, Lessee shall have quiet
possession of the Premises for the entire Term, subject to all the provisions
of this Lease and subject to any ground or underlying leases, mortgages or
deeds of trust now or hereafter affecting the Premises or the Building and
the rights reserved by Lessor hereunder.
40. LATE CHARGES; ADDITIONAL RENT AND INTEREST.
a. LATE CHARGES. Lessee acknowledges that late payment by Lessee to
Lessor of Rentals or other sums due hereunder will cause Lessor to incur
costs not contemplated by this Lease, the exact amount of which are
impracticable or extremely difficult to ascertain. Such costs include, but
are not limited to, processing and accounting charges, and late charges which
may be imposed upon Lessor by the terms of any mortgage or trust deed
covering the Premises or any part of the Project. Accordingly, if any
installment of Rentals or any other sum due from Lessee is not received by
Lessor or Lessor's designee within five (5) (days after the due date, then
Lessee shall pay to Lessor, in each case, a late charge equal to five percent
(5%) of such overdue amount; provided, however, that with respect to the
first and second such late payment in any twelve (12) month period during the
Term, such late charge shall not be payable unless such late payment by
Lessee shall not be cured within five (5) days following Lessee's receipt of
written notice from Lessor of such late payment. The parties agree that such
late charge represents a fair and reasonable estimate of the cost that Lessor
will incur by reason of late payment by Lessee. Acceptance of any late
charges by Lessor shall in no event constitute a waiver of Lessee's default
with respect to such overdue amount, nor prevent Lessor from exercising any
of its other rights and remedies under this Lease.
b. RENTALS, ADDITIONAL RENT AND INTEREST. All taxes, charges, costs,
expenses, and other amounts which Lessee is required to pay hereunder,
including without limitation Lessee's Percentage Share of Excess Expenses,
and all interest and charges (including late charges) that may accrue thereon
upon Lessee's failure to pay the same and all damages, costs and expenses
which Lessor may incur by reason of any default by Lessee shall be deemed to
be additional rent hereunder. Upon nonpayment by Lessee of any additional
rent, Lessor shall have all the rights and remedies with respect thereto as
Lessor has for the nonpayment of Base Rent. The term "Rentals" as used in
this Lease is Base Rent and all additional rent. Any payment due from Lessee
to Lessor (including but not limited to Base Rent and all additional rent)
which is not paid within three (3) business days of when due shall bear
interest from the date when due until paid, at an annual rate equal to the
maximum rate that Lessor is allowed to contract for by law. Payment of such
interest shall not excuse or cure any default by Lessee. In addition, Lessee
shall pay all costs and attorneys' fees incurred by Lessor in collection of
such amounts. All Rentals and other moneys due under this Lease shall
survive the Lease Termination. Interest on Rentals past due as provided
herein shall be in addition to the late charges levied pursuant to 40.a.
above. All Rentals shall be paid to Lessor, in lawful money of the United
States of America which shall be legal tender at the time of payment, at the
address of Lessor a provided herein, or to such other person or at such other
place as Lessor may from time to time designate in writing. If at any time
during the Term Lessee pays any Rentals by check which is returned for
insufficient funds, Lessor shall have the right, in addition to any other
rights or remedies Lessor may have hereunder, to require that Rentals
thereafter be paid in cash or by cashier's or certified check.
41. PRIOR AGREEMENTS. This Lease contains all of the agreements of the
parties hereto with respect to the Premises, this Lease or any matter covered
or mentioned in this Lease, and no prior agreements or understanding
pertaining to any such matters shall be effective for any purpose. No
provision of this Lease may be amended or added to except by an agreement in
writing signed by the parties hereto or their respective successors in
interest. This Lease shall not be effective or binding on Lessor until fully
executed by Lessor.
42. INABILITY TO PERFORM. This Lease and the obligations of the Lessee
hereunder shall not be affected or impaired because the Lessor is unable to
fulfill any of its obligations hereunder or is delayed in doing so, if such
inability or delay is caused by reason strike, labor troubles, Acts of God,
or any other cause, similar or dissimilar beyond the reasonable control of
the Lessor.
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43. ATTORNEYS' FEES. If either party to this agreement shall bring an
action to interpret or enforce this agreement or for any relief against the
other, including, but not limited to, declaratory relief or a proceeding in
arbitration, the losing party shall pay to the prevailing party a reasonable
sum for attorney's fees, expert witness fees and other costs incurred in such
action or proceeding. Additionally, the prevailing party shall be entitled
to all additional attorney's fees and costs incurred in enforcing and
collecting any such judgment or award. Any judgment or order entered in such
action shall contain a specific provision providing for the recovery of
attorney's fees and costs incurred in enforcing such award or judgment.
44. SALE OF PREMISES BY LESSOR. Upon a sale or conveyance by the Lessor
herein named (and in case of any subsequent transfers or conveyances, the
then grantor) of Lessor's interest in the Building, other than a transfer for
security purposes only, the Lessor herein named (and in case of any
subsequent transfers or conveyances, the then grantor) shall be relieved,
from and after the date of such transfer, of all obligations and liabilities
accruing thereafter on the part of Lessor, provided that the transferee
assumes the remaining obligations of Lessor under this Lease and any funds
in the hands of Lessor or the then grantor at the time of transfer and in
which Lessee has an interest, less any deductions permitted by law or this
Lease, shall be delivered to Lessor's successor. Following such sale or
conveyance by Lessor or the then grantor, Lessee agrees to look solely to the
responsibility of the successor-in-interest of Lessor in and to this Lease as
to obligations assumed by such successor-in-interest. This Lease shall not
be affected by any such sale or conveyance and Lessee agrees to attorn to the
purchaser or assignee.
45. SUBORDINATION/ATTORNMENT. This Lease shall automatically be subject and
subordinate to all ground or underlying leases which now exist or may
hereafter be executed affecting any portion of the Project and to the lien of
any mortgages or deeds of trust (including all advances thereunder, renewals,
replacements, modifications, supplements, consolidations, and extensions
thereof) in any amount or amounts whatsoever now or hereafter placed on or
against any portion of the Project, or on or against Lessor's interest or
estate therein, or on or against any ground or underlying lease, without the
necessity of the execution and delivery of any further instruments on the
part of Lessee to effectuate such subordination. Lessee covenants and agrees
to execute and deliver upon demand and without charge therefor, such further
instruments, in commercially reasonable form, evidencing the subordination
of this Lease to such ground or underlying leases and/or to the lien of any
such mortgages or deeds of trusts as may be required by Lessor or a lender
making a loan affecting the Project; provided that such mortgagee or
beneficiary under such mortgage or deed of trust or lessor under such ground
or underlying lease agrees in writing in commercially reasonable form that so
long as Lessee is not in default under this Lease (beyond any applicable
period for cure as provided in Article 22 of this Lease), this Lease shall
not be terminated in the event of any foreclosure or termination of any
ground or underlying lease. If any mortgagee, beneficiary or lessor elects
to have this Lease prior to the lien of its mortgage, deed of trust or lease,
and shall give written notice thereof to Lessee, this Lease shall be deemed
prior to such mortgage, deed of trust or lease, whether this Lease is dated
prior or subsequent to the date of said mortgage, deed of trust, or lease or
the date of the recording thereof.
If any proceedings are brought to terminate any ground or underlying
leases or for foreclosure, or upon the exercise of the power of sale, under
any mortgage or deed of trust covering any portion of the Project, Lessee
shall attorn to the lessor or purchaser upon any such termination, foreclosure
or sale and recognize such lessor or purchaser as the Lessor under this
Lease. So long as Lessee is not in default hereunder and attorns as required
above, this Lease shall remain in full force and effect for the full term
hereof after any such termination, foreclosure or sale.
Notwithstanding anything to the contrary contained in the foregoing, (i)
it shall be a condition to Lessee's obligation to subordinate or attorn to any
mortgagee or trust deed beneficiary to whose mortgage or deed of trust this
Lease is hereafter subordinated, that such mortgagee or trust deed
beneficiary enters into with Lessee an agreement of subordination,
non-disturbance and attornment in commercially reasonable form, and (ii)
Lessor shall use commercially reasonable efforts to obtain from any existing
mortgagee or trust deed beneficiary under a mortgage or deed of trust
encumbering the Project or Building as of the execution of this Lease,
non-disturbance protection for Lessee (which shall be deemed to include an
election by such mortgagee or beneficiary to subordinate its lien to this
Lease) on commercially reasonable terms within thirty (30) days following the
execution of this Lease.
46. NAME. Lessee shall not use any name, picture or representation of the
Building or Project for any purpose other than as an address of the business
to be conducted by the Lessee in the Premises.
47. SEVERABILITY. Any provision of this Lease which proves to be invalid,
void or illegal shall in no way affect, impair or invalidate any other
provision of this Lease and all such other provisions shall remain in full
force and effect; however, if Lessee's obligation to pay the Rentals is
determined to be invalid or unenforceable, this Lease shall terminate at the
option of Lessor.
48. CUMULATIVE REMEDIES. Except has otherwise expressly provided in this
Lease, no remedy or election hereunder shall be deemed exclusive but shall,
wherever possible, be cumulative with all other remedies at law or in equity.
49. CHOICE OF LAW. This Lease shall be governed by the laws of the State of
California.
50. SIGNS. Lessee shall not inscribe, paint, affix or place any sign,
awning, canopy, advertising matter, decoration or lettering upon any portion
of the Premises, including, without limitation, any exterior door, window or
wall, without Lessor's prior written consent. Subject in all events to the
requirements of the City of San Mateo and other applicable governmental
requirements and any other restrictions of record or to which the Project is
subject, (a) Lessee shall be entitled to Building standard identification of
Lessee upon the common Building lobby directory board sign to be installed by
Lessor in the Building lobby; (b) Lessor shall, at Lessor's sole cost,
install Building standard
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signage identifying Lessee on the Premises entry doors; and (c) Lessee, at
Lessee's cost, shall be entitled to standard identification on the Building
monument sign, subject to compliance with applicable governmental
requirements. The exact location, size, materials, coloring and lettering of
all Lessee signage (including, without limitation, any such monument signage)
shall be subject to Lessor's prior written approval.
51. GENDER AND NUMBER. Wherever the context so requires, each gender shall
include any other gender, and the singular number shall include the plural
and vice-versa.
52. CONSENTS. Whenever the consent of Lessor is required herein, the giving
or withholding of such consent in any one or any number of instances shall
not limit or waive the need for such consent in any other or future
instances. Any consent given by Lessor shall not be binding upon Lessor
unless in writing and signed by Lessor or Lessor's agents. Notwithstanding
any other provision of this Lease, where Lessee is required to obtain the
consent of Lessor to do any act, or to refrain from the performance of any
act, Lessee agrees that if Lessee is in default with respect to any term,
condition, covenant or provision of this Lease, then Lessor shall be deemed
to have acted reasonably in withholding its consent if said consent is, in
fact, withheld.
53. BROKERS. Lessor shall be responsible, pursuant to separate written
agreement, for the payment of the commission in connection with this Lease
owing to the brokers designated in Article 1.n. above. Lessor warrants that
it has had no dealing with any real estate broker or agents in connection
with the negotiation of this Lease excepting only the broker or agent
designated in Article 1.n., and that it knows of no other real estate broker
or agent who is entitled to or can claim a commission in connection with this
Lease. Lessor agrees to indemnify, defend and hold Lessee harmless from and
against any and all claims, demands, losses, liabilities, lawsuits,
judgments, and costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) with respect to any alleged leasing commission
or equivalent compensation alleged to be owing on account of Lessor's
dealings with any such other real estate broker or agent. Lessee warrants
that it has had no dealing with any real estate broker or agents in
connection with the negotiation of this Lease excepting only the broker or
agent designated in Article 1.n., and that it knows of no other real estate
broker or agent who is entitled to or can claim a commission in connection
with this Lease. Lessee agrees to indemnify, defend and hold Lessor harmless
from and against any and all claims, demands, losses, liabilities, lawsuits,
judgments, and costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) with respect to any alleged leasing commission
or equivalent compensation alleged to be owing on account of Lessee's
dealings with any such other real estate broker or agent.
54. SUBSURFACE AND AIRSPACE. This Lease confers on Lessee no rights either
with respect to the subsurface of the Parcel or with regard to airspace above
the top of the Building or above any paved or landscaped areas on the Parcel
or Common Area and Lessor expressly reserves the right to use such subsurface
and airspace areas, including without limitation the right to perform
construction work thereon and in regard thereto. Any diminution or shutting
off of light, air or view by any structure which may be erected by Lessor on
those portions of the Parcel, Common Area and/or Building reserved by Lessor
shall in no way affect this Lease or impose any liability on Lessor. Lessor
shall have the exclusive right to use all or any portion of the roof, side
and rear walls of the Premises and Building for any purpose. Lessee shall
have no right whatsoever to the exterior of the exterior walls or the roof of
the Premises or any portion of the Project outside the Premises except as
provided in Article 55 of this Lease.
55. COMMON AREA. For purposes of the Lease, "Common Area" shall collectively
mean the following:
a. EXTERIOR COMMON AREA. That portion of the Parcel other than the land
comprising the property, and all facilities and improvements on such portion
for the non-exclusive use of Lessee in common with other authorized users,
including, but not limited to, vehicle parking areas, driveways, sidewalks,
landscaped areas, and the facilities and improvements necessary for the
operation thereof (the "Exterior Common Area"); and
b. BUILDING COMMON AREA. That portion of the Building in which the
Premises are located, and all of the facilities therein, set aside by Lessor
for the non-exclusive use of Lessee in common with other authorized users,
including, but not limited to, entrances, lobbies, halls, atriums, corridors,
toilets and lavatories, passenger elevators and service areas (the "Building
Common Area").
Subject to the limitations and restrictions contained in this Lease, and
the Rules and Regulations, Lessor grants to Lessee and Lessee's Agents the
nonexclusive right to use the Common Area in common with Lessor, Lessor's
agent, other occupants of the Building and Project, other authorized users
and their agents, subject to the provisions of this Lease. The right to use
the Common Area shall terminate upon Lease Termination.
56. LABOR DISPUTES. If Lessee becomes involved in or is the object of a
labor dispute which subjects the Premises or any part of the Project to any
picketing, work stoppage, or other concerted activity which in the reasonable
opinion of Lessor is in any manner detrimental to the operation of any part
of the Project, or its tenants, Lessor shall have the right to require
Lessee, at Lessee's own expense and within a reasonable period of time
specified by Lessor, to use Lessee's reasonable efforts to either resolve
such labor dispute or terminate or control any such picketing, work stoppage
or other concerted activity to the extent necessary to eliminate any
interference with the operation of the Projector its tenants. To the extent
such labor dispute interferes with the performance of Lessor's duties
hereunder, Lessor shall be excused from the performance of such duties and
Lessee hereby waives any and all claims against Lessor for damages or losses
in regard to such duties. Nothing contained in this Article 56 shall be
construed as placing Lessor in an employer-employee relationship with any of
Lessee's employees or with any other employees who may be involved in such
labor dispute. Lessee shall indemnify, defend and hold harmless Lessor from
and against any and all liability (including, without limitation, attorneys'
fees and expenses) arising from any labor dispute in which Lessee is involved
and which affects any part of the Project.
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57. REASONABLENESS. Whenever the consent or approval of the Lessor or Lessee
is required under this Lease, such consent or approval shall not be
unreasonably withheld, conditioned or delayed, unless a different standard
for the granting or withholding of such approval of consent is specifically
set forth in this Lease.
58. LESSEE'S FINANCIAL STATEMENTS. Lessee hereby warrants that all financial
statements delivered by Lessee to Lessor prior to the execution of this Lease
by Lessee, or that shall be delivered in accordance with the terms hereof,
are or shall be at the time delivered true, correct, and complete, and
prepared in accordance with generally accepted accounting principles. Lessee
acknowledges and agrees that Lessor is relying on such financial statements
in accepting this Lease, and that a breach of Lessee's warranty as to such
financial statements shall constitute a default by Lessee.
59. LESSOR NOT A TRUSTEE. Lessor shall not be deemed to be a trustee of any
funds paid to Lessor by Lessee (or held by Lessor for Lessee) pursuant to
this Lease. Lessor shall not be required to keep any such funds separate
from Lessor's general funds or segregated from any funds paid to Lessor by
(or held by Lessor for) other tenants of the Building. Any funds held by
Lessor pursuant to this Lease shall not bear interest.
60. MERGER. The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, shall not work a merger, and shall, at the
option of the Lessor, terminate all or any existing subleases or
substancies, or may, at the option of Lessor, operate as an assignment to
it of any or all such subleases or subtenancies.
61. NO PARTNERSHIP OR JOINT VENTURE. Nothing in this Lease shall be
construed as creating a partnership or joint venture between Lessor, Lessee,
or any other party, or cause Lessor to be responsible for the debts or
obligations of Lessee or any other party.
62. LESSOR'S RIGHT TO PERFORM LESSEE'S COVENANTS. Except as otherwise
expressly provided herein, if Lessee fails at any time to make any payment or
perform any other act on its part to be made or performed under this Lease
and such failure continues for ten (10) days (or such longer period of time
as may be reasonably necessary to perform the cure of such failure, so long
as such cure is promptly commenced and diligently prosecuted to completion)
after written notice from Lessor to Lessee (provided that no such notice
shall be required in the event of an emergency), Lessor may, but shall not be
obligated to, and without waiving or releasing Lessee from any obligation
under this Lease, make such payment or perform such other act to the extent
that Lessor may deem desirable, and in connection therewith, pay expenses and
employ counsel. All sums so paid by Lessor and all penalties, interest and
costs in connection therewith shall be due and payable by Lessee to Lessor as
additional rent upon demand.
63. PLANS. Lessee acknowledges that any plan of the Project which may have
been displayed or furnished to Lessee or which may be a part of Exhibit "A"
or Exhibit "B" is tentative; Lessor may from time to time change the shape,
size, location, number, and extent of the improvements shown on any such plan
and eliminate or add any improvements to the Project, in Lessor's sole
discretion.
64. RIGHT OF FIRST OPPORTUNITY.
a. During the Term of this Lease (including, without limitation, the
Extended Term, if applicable), Lessor shall notify Lessee ("Lessor's Notice")
if either or both Suite 310 (consisting of approximately 15,654 square feet
of Rentable Area) on the third floor of the Building and/or Suite 115 on the
first floor of the Building become available for Lease (subject to any rights
which any then existing tenants of such space may have to lease such space
pursuant to lease transactions hereafter entered into in accordance with this
Article 64, and any rights held by Inktomi Corporation as the existing tenant
of such space, Lessor hereby representing and warranting to Lessee that no
current tenant other than Inktomi has any existing rights to the lease of
such Suite 115 or Suite 310). Such Lessor's Notice shall provide the basic
business terms on which Lessor is willing to rent such space (including,
without limitation, Base Rent, improvement allowances and other economic
concessions) and shall be given to Lessee prior to such space being made
available to any third party (other than any existing tenant having prior
rights to such space). Lessee is hereby granted the right of first
opportunity to lease such space on the terms as outlined in Lessor's Notice
to Lessee. No court arbitrator or third party shall have the right to
challenge the terms and conditions set forth in Lessor's Notice to Lessee.
Lessee shall have ten (10) days following receipt of such Lessor's Notice
within which to indicate in writing its desire to lease the space under the
terms and conditions stated in such Lessor's Notice. If Lessee rejects or
fails to accept Lessor's offer within such ten (10) day period, Lessor shall
have the right at any time within nine (9) months thereafter to enter into a
lease for such available space which was the subject of the offer made to
Lessee in Lessor's notice to any one or more third parties on any terms,
covenants and conditions desired by Lessor, and Lessee shall have no further
right to lease such space, provided that such lease is entered into within
nine (9) months following Lessee's receipt of the applicable Lessor's Notice
and the net effective rent payable under such lease is not less than ninety
percent (90%) of the net effective rent proposed in the applicable Lessor's
Notice. If Lessee rejects or fails to accept Lessor's offer as set forth in
Lessor's Notice within such ten (10) day period, but Lessor thereafter
desires to lease such space which was the subject of such Lessor's Notice to
one or more third parties more than nine (9) months following Lessee's
receipt of the applicable Lessor's Notice or at a net effective rent less
than ninety percent (90%) of the net effective rent proposed in the
applicable Lessor's Notice, then Lessor shall first deliver a new Lessor's
Notice with respect to such space to Lessee and Lessee shall again have its
right of first opportunity with respect thereto in the manner set forth above.
b. Lessor's ability to plan for the orderly transaction of its rental
business, to accommodate the needs of other existing and potential tenants,
and to enjoy the benefits of increasing rentals at such times as Lessor is
able to do so in its sole and absolute discretion, are fundamental elements
of Lessor's willingness to provide Lessee with the right of first opportunity
contained herein. Accordingly, Lessee hereby acknowledges that strict
compliance with the
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<PAGE>
notification provisions contained herein, and Lessee's strict compliance with
the time period for such notification contained herein, are material elements
of the bargained for exchange between Lessor and Lessee and are material
elements of Lessee's consideration paid to Lessor in exchange for the grant
of the right of first opportunity. Therefore, Lessee's failure to adhere
strictly and completely to the provisions and time frame contained in this
provision shall render the right of first opportunity automatically null,
void and of no further force or effect as to the applicable Lessor's Notice,
without notice, acknowledgement, or any action of any nature or sort,
required of Lessor. Lessee acknowledges that no other act or notice, other
than the express written notice set forth hereinabove, shall act to put
Lessor on notice of Lessee's acceptance of Lessor's offer as set forth in
Lessor's Notice, and Lessee hereby waives any claims to the contrary,
notwithstanding any other actions of Lessee during the Term of this Lease or
any statements, written or oral, of Lessee to Lessor to the contrary during
the Term of this Lease. In addition, the right of first opportunity granted
pursuant hereto shall not be applicable (and Lessor shall not be required to
deliver any Lessor's Notice), when Lessee is in default under this Lease
(after the expiration of any applicable period for cure provided in Article
22 above). The right of first opportunity granted pursuant hereto is
personal to original Lessee signatory to this Lease and cannot be assigned,
transferred or conveyed to, or exercised for the benefit of, any other person
or entity (voluntarily, involuntarily, by operation of law or otherwise)
including, without limitation, any assignee or subtenant permitted under
Article 13 other than a Permitted Transferee.
65. WAIVER OF JURY. LESSOR AND LESSEE HEREBY WAIVE THEIR RESPECTIVE RIGHT TO
TRIAL BY JURY ON ANY CAUSE OF ACTION, CLAIM, COUNTER-CLAIM OR CROSS-COMPLAINT
IN ANY ACTION, PROCEEDING AND/OR HEARING BROUGHT BY EITHER LESSOR AGAINST
LESSEE OR LESSEE AGAINST LESSOR ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN
ANY WAY CONNECTED WITH THIS LEASE.
66. JOINT PARTICIPATION. Lessor and Lessee hereby acknowledge that both
parties have been represented by counsel in connection with this Lease and
that both parties have participated in the negotiation and drafting of all of
the terms and provisions hereof. By reason of this joint participation, no
term or provision of this Lease will be construed against either party as the
"drafter" thereof, which terms and provisions shall include, without
limitation, Article 14 hereof.
67. COUNTERPARTS. This Lease may be executed in any number of counterparts,
each of which shall be deemed to be an original, but any number of which,
taken together, shall be deemed to constitute one and the same instrument.
IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR SUBMISSION TO YOUR
ATTORNEY FOR APPROVAL. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE
LESSOR BY THE REAL ESTATE BROKER OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE
TRANSACTIONS RELATING THERETO.
IN WITNESS WHEREOF, the parties hereto have entered into this Lease as of the
date first written above.
LESSOR: LESSEE:
NORFOLK ATRIUM, a California NETGRAVITY, INC., a Delaware
limited partnership corporation
By: NAPA RIVER DEVCO, INC., By: John Danner
a California corporation, its ---------------------------------
general partner
Print Name: John Danner
By: PROM MANAGEMENT GROUP, INC., ------------------
a California corporation, dba Its: CEO
Maxim Property Management, -------------------------
agent for owner
Date: 8/7, 1998
By: Dennis L. Randall, Jr. By: Stephen E. Recht
------------------------------ ---------------------------------
Print Name: Dennis L. Randall, Jr. Print Name: Stephen E. Recht
---------------------- -------------------------
Its: Assistant Secretary Its: Vice President Finance
----------------------------- & Administration
Date: 8/7, 1998 Chief Financial Officer
--------------------------------
Date: 8/7, 1998
By: Vicki R. Mullins
------------------------------
Print Name: Vicki R. Mullins
----------------------
Its: Executive Vice President and
Chief Financial Officer
-----------------------------
Date: 8/7, 1998
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<PAGE>
EXHIBIT "A"
FLOOR PLAN OF THE PREMISES
[Graphic of
floorplan of the Premises]
<PAGE>
EXHIBIT "B"
DEPICTION OF THE PROJECT
[Graphical depiction
of the Project]
<PAGE>
EXHIBIT "C"
WORK LETTER
1. AS IS LEASE. Except as otherwise specifically provided in the Lease of
which this Exhibit is a part, the lease of the Premises (including, without
limitation, HVAC, fire/life safety and other utility and mechanical systems
within the Premises) by Lessee pursuant hereto shall be on an entirely "as
is" basis.
2. LESSEE IMPROVEMENTS.
(a) LESSEE IMPROVEMENT ALLOWANCE. Lessee shall be entitled to a
one-time tenant improvement allowance (the "Lessee Improvement Allowance") in
an amount up to Eight and 50/100ths Dollars ($8.50) per square foot of
Rentable Area within the Premises, which Lessee Improvement Allowance shall
be used for the costs relating to the initial construction of Lessee's
improvements which are permanently affixed to the Premises (the "Lessee
Improvements"). In no event shall Lessor be obligated to make disbursements
pursuant to this Exhibit in a total amount which exceeds the Lessee
Improvement Allowance.
(b) DISBURSEMENT OF THE LESSEE IMPROVEMENT ALLOWANCE.
(i) LESSEE IMPROVEMENT ALLOWANCE ITEMS. The Lessee Improvement
Allowance shall be disbursed by Lessor only for the following items and costs
(collectively the "Lessee Improvement Allowance Items"): plan check, permit
and license fees relating to construction of the Lessee Improvements, and the
cost of design and construction of the Lessee Improvements.
(ii) DISBURSEMENT OF LESSEE IMPROVEMENT ALLOWANCE. During the
construction of the Lessee Improvements, Lessor shall make monthly
disbursements of the Lessee Improvement Allowance for Lessee Improvement
Allowance Items for the benefit of Lessee and shall authorize the release of
monies for the benefit of Lessee as follows.
(1) MONTHLY DISBURSEMENTS. On or before the occurrence of a
uniform date designated by Lessor (the "Submittal Date") for each calendar
month during the construction of the Lessee Improvements, Lessee shall
deliver to Lessor: (A) a request for payment of the "Contractor" (as
hereinafter defined) approved by Lessee, in substantially the form of AIA
Document G702, showing the schedule, by trade, of percentage of completion of
the Lessee Improvements in the Premises, detailing the portion of the work
completed and the portion not completed, and demonstrating that the
relationship between the cost of the work completed and the cost of the work
to be completed complies with the terms of the "Construction Budget" (as
hereinafter defined), (B) invoices from all of "Lessee's Agents" (as
hereinafter defined) for labor rendered and materials delivered to the
Premises evidencing costs not previously paid from the Lessee Improvement
Allowance for Lessee Improvement Allowance Items at least in the amount
requested; (C) executed conditional mechanic's lien releases from all of
Lessee's Agents requesting payment as a part of such submittal which shall
comply with the appropriate provisions of California Civil Code Section
3262(d)(1), together with executed unconditional mechanic's lien releases
from all of Lessee's Agents with respect to prior requests for payment
theretofore paid by Lessor (to the extent not previously delivered to Lessor
by Lessee) which shall comply with the appropriate provisions of California
Civil Code Section 3262(d)(2); and (D) all other information reasonably
requested by Lessor. Lessee's request for payment shall be deemed (as
between Lessor and Lessee) to constitute Lessee's acceptance and approval of
the work furnished and/or the materials supplied as set forth in Lessee's
payment request. On or before the date occurring thirty (30) days after the
Submittal Date, and assuming Lessor receives all of the information described
in items (A) through (D), above, Lessor shall deliver a check to Lessee made
payable to Lessee, in payment of the lesser of: (1) "Lessor's Share" (as
hereinafter defined) of the amount so requested by Lessee, as set forth in
clause (A) above, less a ten percent (10%) retention (the aggregate amount of
such retentions to be known as the "Final Retention"), and (2) the balance of
any remaining available portion of the Lessee Improvement Allowance (not
including the Final Retention), provided that Lessor does not dispute any
request for payment based on non-compliance of any work with the "Approved
Working Drawings" (as hereinafter defined). Lessor's payment of such amounts
shall not be deemed Lessor's approval or acceptance of the work furnished or
materials supplied as set forth in Lessee's payment request. As used herein,
the term "Lessor's Share" shall mean a fraction, the numerator of which is
the Lessee Improvement Allowance, and the denominator of which is the then
estimated amount of "Final Costs" (as hereinafter defined). Lessor's Share
shall be subject to adjustment from time to time based upon then applicable
Final Costs, and in any event, payment of the Final Retention shall be based
upon actual Final Costs, as adjusted pursuant to this Exhibit "C".
(2) FINAL RETENTION. Subject to the provisions of this Exhibit,
a check for the Final Retention payable to Lessee shall be delivered by
Lessor to Lessee within thirty (30) days following (A) the completion of
construction of the Lessee Improvements, (B) Lessee's delivery to Lessor of
properly executed conditional final mechanics' lien releases in compliance
with California Civil Code Section 3262(d)(3) and invoices from all of
Lessee's Agents for labor rendered and materials delivered to the Premises
evidencing costs not previously paid from the Lessee Improvement Allowance
for Lessee Improvement Allowance Items at least in the amount requested; (C)
Lessee's delivery to Lessor of copies of signed-off permits and stamped set
of Approved Working Drawings evidencing governmental approval of the
completion of the Lessee Improvements; and (D) Architect's delivery to Lessor
of a certificate, in form reasonably acceptable to Lessor, certifying that
the construction of the Lessee Improvements has been substantially completed;
provided that Lessor has determined that no substandard work exists which
adversely affects the mechanical, electrical, plumbing, heating, ventilating
and air conditioning, life-safety or other systems of the Building, the
curtain wall of the Building, the structur of exterior appearance of the
Building, or any other tenant's use of such other tenant's leased premises in
the Building. Concurrently with Lessor's payment of the Final Retention,
Lessee shall deliver to Lessor properly executed
<PAGE>
unconditional final mechanics lien releases in compliance with both
California Civil Code Section 3262(d)(4) from all of Lessee's Agents for
labor rendered and materials delivered to the Premises in connection with the
Lessee Improvements.
(iii) OTHER TERMS. Lessor shall only be obligated to make
disbursements from the Lessee Improvement Allowance to the extent costs are
incurred by Lessee for Lessee Improvement Allowance Items. All Lessee
Improvement Allowance Items for which the Lessee Improvement Allowance has
been made available shall be deemed Lessor's property under the terms of this
Lease. Lessee shall not be entitled to the use of (as a credit against rent
or otherwise) any portion of the Lessee Improvement Allowance which is not
used in payment of Lessee Improvement Allowance Items.
(c) STANDARD LESSEE IMPROVEMENT PACKAGE. Lessor has established
certain specifications (the "Specifications") for the Building standard
components to be used in the construction of the Lessee Improvements in the
Premises, which Specifications are maintained in the office of the Building
and are open to inspection. The quality of Lessee Improvements shall be
equal to or of greater quality than the quality of the Specifications in
effect upon the Lessor's approval of the "Final Working Drawings" (as
hereinafter defined), provided that Lessor may, at Lessor's option, require
the Lessee Improvements to comply with certain Specifications if necessary to
ensure the good working order of integrated Building mechanical or utility
systems or the first-class appearance of the Building exterior.
3. CONSTRUCTION DRAWINGS.
(a) SELECTION OF ARCHITECT/CONSTRUCTION DRAWINGS. Lessee shall
retain an architect/space planner (the "Architect") approved by Lessor, which
approval shall not be unreasonably withheld, to prepare the Construction
Drawings. Lessee shall retain engineering consultants (the "Engineers")
approved by Lessor, which approval shall not be unreasonably withheld, to
prepare all plans and engineering working drawings relating to the
structural, mechanical, electrical, plumbing, HVAC, life-safety, and
sprinkler work in the Premises in connection with the Lessee Improvements.
The plans and drawings to be prepared by Architect and the Engineers
hereunder shall be known collectively as the "Construction Drawings". All
Construction Drawings shall be professionally prepared consistent with
drawings for comparable construction projects at comparable buildings in the
San Mateo/Foster City area, using one-eighth (1/8th) inch scale CAD drawings.
Lessor's review of the Construction Drawings as set forth in this SECTION 3,
shall be for its sole purpose and shall not imply Lessor's review of the
same, or obligate Lessor to review the same, for quality, design, compliance
with Applicable Law or other like matters. Accordingly, notwithstanding that
any Construction Drawings are reviewed by Lessor or its space planner,
architect, engineers and consultants, and notwithstanding any advice or
assistance which may be rendered to Lessee by Lessor or Lessor's space
planner, architect, engineers, and consultants, Lessor shall have no
liability whatsoever in connection therewith and shall not be responsible for
any omissions or errors contained in the Construction Drawings, and Lessee's
waiver and indemnity set forth in the Lease shall specifically apply to the
Construction Drawings. Furthermore, Lessee and Architect shall verify, in
the field, the dimensions and conditions as shown on the relevant portions of
any existing plans for the Premises and/or Building, and Lessee and
Architect shall be solely responsible for the same, and Lessor shall have no
responsibility in connection therewith.
(b) FINAL SPACE PLAN. Lessee shall supply Lessor with four (4) copies
signed by Lessee of its final space plan for the Premises before any
architectural working drawings or engineering drawings have been commenced.
The final space plan (the "Final Space Plan") shall include a layout and
designation of all offices, rooms and other partitioning, their intended use,
and equipment to be contained therein. Lessor may request clarification or
more specific drawings for special use items not included in the Final Space
Plan. Lessor shall advise Lessee within five (5) business days after
Lessor's receipt of the Final Space Plan for the Premises if the same is
unsatisfactory or incomplete in any respect, provided that Lessor's approval
of the Final Space Plan shall not be unreasonably withheld or conditioned.
If Lessee is so advised, the parties shall promptly meet and reasonably reach
agreement upon the Final Space Plan, correcting any deficiencies therein.
(c) FINAL WORKING DRAWINGS. After the approval of the Final Space
Plan by Lessor and Lessee, Lessee shall promptly cause the Architect and the
Engineers to complete the architectural and engineering drawings for the
Premises, and Architect shall compile a fully coordinated set of
architectural, structural, mechanical, electrical and plumbing working
drawings in a form which is complete to allow subcontractors to bid on the
work and to obtain all applicable permits (collectively, the "Final Working
Drawings") and shall submit the same to Lessor for Lessor's approval. Lessee
shall supply Lessor with four (4) copies signed by Lessee of such Final
Working Drawings. Lessor shall advise Lessee within five (5) business days
after Lessor's receipt of the Final Working Drawings for the Premises if the
same is unsatisfactory or incomplete in any respect, provided that Lessor's
approval of the Final Working Drawings shall not be unreasonably withheld or
conditioned. If Lessee is so advised, the parties shall promptly meet and
reasonably reach agreement upon the Final Working Drawings, correcting any
deficiencies therein.
(d) APPROVED WORKING DRAWINGS. The Final Working Drawings shall be
approved by Lessor (the "Approved Working Drawings") prior to the
commencement of construction of the Premises by Lessee. After approval by
Lessor of the Final Working Drawings, Lessee may submit the same to the City
in which the Project is located for all applicable building permits. Lessee
hereby agrees that neither Lessor nor Lessor's consultants shall be
responsible for obtaining any building permit or certificate of occupancy for
the Premises and that obtaining the same shall be Lessee's responsibility;
provided, however, that Lessor shall cooperate with Lessee in executing
permit applications and performing other ministerial acts reasonably
necessary to enable Lessee to obtain any such permit or certificate of
occupancy. No changes, modifications or alterations in the Approved Working
Drawings may be made without the prior written consent of Lessor, which
consent shall not be unreasonably withheld and shall be granted or
<PAGE>
withheld (with written explanation of the reasons for withholding of consent)
within three (3) business days following Lessor's receipt of Lessee's written
request therefor.
4. CONSTRUCTION OF THE LESSEE IMPROVEMENTS.
(a) LESSEE'S SELECTION OF CONTRACTORS.
(i) THE CONTRACTOR. Lessee shall retain a licensed general
contractor (the "Contractor"), reasonably approved in advance by Lessor as
contractor for the construction of the Lessee Improvements.
(ii) LESSEE'S AGENTS. For purposes of this Exhibit only,
"Lessee's Agents" shall mean, collectively, all subcontractors, laborers,
materialmen, and suppliers used by Lessee in the construction of the Lessee
Improvements and the Contractor. Lessor shall have the right to approve
(which approval shall not be unreasonably withheld, conditioned or delayed)
the subcontractors retained by Lessee and/or the Contractor for any
mechanical, electrical, plumbing, structural, life-safety, HVAC or other
integrated utility system work in the Premises as a part of the Lessee
Improvements.
(b) CONSTRUCTION OF LESSEE IMPROVEMENTS BV LESSEE'S AGENTS.
(i) CONSTRUCTION CONTRACT: COST BUDGET. Prior to Lessee's
execution of the construction contract and general conditions with Contractor
(the "Contract"), Lessee shall submit the Contract and the bids of the
Contractor and all subcontractors for major trades and materials suppliers
for construction of the Lessee Improvements, to Lessor for its approval,
which approval shall be limited to ensuring compliance with the provisions of
this Lease. Prior to the commencement of the construction of the Lessee
Improvements, and after Lessee has accepted all bids for the Lessee
Improvements, Lessee shall provide Lessor with a detailed breakdown, by
trade, of the final costs to be incurred and/or which have been incurred for
Lessee Improvement Allowance Items (the "Final Costs") and a construction
budget (the "Construction Budget") based upon such Final Costs. Lessee shall
be solely responsible for the amount (the "Over-Allowance Amount") equal to
the difference between the amount of the Construction Budget (as such
Construction Budget may be modified from time to time pursuant hereto) and
the amount of the Lessee Improvement Allowance. In the event that, after the
Construction Budget has been delivered by Lessor to Lessee, the estimated or
actual costs for Lessee Improvement Allowance Items shall increase or
decrease, the Final Costs and Construction Budget shall be modified to
reflect such additional or reduced costs.
(ii) LESSEE'S AGENTS.
(1) LESSOR'S GENERAL CONDITIONS FOR LESSEE'S AGENTS AND
LESSEE IMPROVEMENT WORK. Lessee's and Lessee's Agent's construction of the
Lessee Improvements shall comply with the following: (A) the Lessee
Improvements shall be constructed in accordance with the Approved Working
Drawings in all material respects; (B) Lessee and Lessee's Agents shall not,
in any way, interfere with, obstruct, or delay, any other work in the
Building; (C) Lessee's Agents shall submit schedules of all work relating to
the Lessee Improvements to Contractor; and (D) Lessee shall abide by all
reasonable rules made by Lessor's Building contractor or Lessor's Building
manager with respect to the use of freight, loading dock and service
elevators, storage of materials, coordination of work with the contractors of
other tenants, and any other matter in connection with the construction of
the Lessee Improvements.
(2) CONSTRUCTION WARRANTIES. Lessee shall use reasonable
efforts to obtain customary construction warranties of not less than one (1)
year from Lessee's Agents with respect to the Lessee Improvements. Lessee
shall cooperate with Lessor to ensure that Lessor will receive the benefit of
any construction warranties obtained by Lessee from Lessee's Agents with
respect to the Lessee Improvements to the extent reasonably practicable.
(3) INSURANCE REQUIREMENTS.
(A) GENERAL COVERAGES. All of Lessee's Agents shall
carry worker's compensation insurance covering all of their respective
employees, and shall also carry public liability insurance, including
property damage, all with limits, in form and with companies as are required
to be carried by Lessee as set forth in the Lease, and the policies therefor
shall insure Lessor and Lessee, as their interests may appear, as well as the
Contractor and subcontractors.
(B) SPECIAL COVERAGES. Lessee shall carry "Builder's
All Risk" insurance in an amount approved by Lessor covering the construction
of the Lessee Improvements, it being understood and agreed that the Lessee
Improvements shall be insured by Lessor pursuant to the Lease immediately
upon completion thereof. All of Lessee's Agents shall carry excess liability
and Products and Completed Operation Coverage insurance, each in amounts not
less than $1,000,000 per incident, $2,000,000 in aggregate, and in form and
which companies as are required to be carried by Lessee as set forth in
Article 16 of the Lease of which this Exhibit is a part.
(C) GENERAL TERMS. Certificates for all insurance
carried pursuant to this Section 4(b)(ii)(3) shall be delivered to Lessor
before the commencement of construction of the Lessee Improvements and before
the Contractor's equipment is moved onto the site. All such policies of
insurance must contain a provision that the company writing said policy will
give Lessor at least thirty (30) days prior written notice of any cancellation
or lapse of the effective date or any reduction in the amounts of such
insurance. In the event that the Lessee Improvements are damaged by any cause
covered by Lessee's "Builder's All Risk" insurance during the course of the
construction thereof. Lessee shall promptly repair the same at Lessee's sole
cost and expense (provided that whether or not so covered by lessee's
"Builder's All Risk" insurance, Lessor shall in no event be responsible for
the repair of
<PAGE>
the Lessee Improvements damaged by casualty during the course of construction
thereof). Lessee's Agents shall maintain all of the foregoing insurance
coverage in force until the Lessee Improvements are fully completed and
accepted by Lessor, except for any Products and Completed Operation Coverage
insurance required by Lessor of the Contractor, which is to be maintained for
five (5) years following completion of the work and acceptance by Lessor and
Lessee. All first party property damage insurance maintained by Lessee's
Agents shall preclude subrogation claims by the insurer against anyone
insured thereunder. Such insurance shall provide that it is primary
insurance as respects the owner and that any other insurance maintained by
owner is excess and noncontributing with the insurance required hereunder.
The requirements for the foregoing insurance shall not derogate from the
provisions for indemnification of Lessor by Lessee under the Lease of which
this Exhibit is a part.
(iii) GOVERNMENTAL COMPLIANCE. The Lessee Improvements shall
comply in all respects with the following: (1) all applicable Laws and other
state, federal, city or quasi-governmental laws, codes, ordinances and
regulations, as each may apply according to the rulings of the controlling
public official, agent or other person; (2) applicable standards of the
American Insurance Association and the National Electrical Code; and (3)
building material manufacturer's specifications.
(iv) INSPECTION BY LESSOR. Lessor shall have the right to
inspect the Lessee Improvements at all times, provided however, that Lessor's
failure to inspect the Lessee Improvements shall in no event constitute a
waiver of any of Lessor's rights hereunder nor shall Lessor's inspection of
the Lessee Improvements constitute Lessor's approval of the same. Should
Lessor disapprove any portion of the Lessee Improvements as a result of their
materially deviating from the Approved Working Drawings, then Lessor shall
notify Lessee in writing of such disapproval and shall specify the items
disapproved. Any defects or material deviations from the Approved Working
Drawings in the Lessee Improvements shall be rectified by Lessee at no
expense to Lessor, provided however, that in the event such a defect or
deviation exists and such defect or deviation adversely affects the
mechanical, electrical, plumbing, heating, ventilating and air conditioning
or life-safety systems of the Building, the structure or exterior appearance
of the Building or any other tenant's use of such other tenant's leased
premises, and the same is not cured within thirty (30) days following
Lessee's receipt of written notice thereof from Lessor (or such longer period
of time after receipt of such notice as may be reasonably required to
complete such cure so long as such cure is promptly commenced and diligently
prosecuted to completion), provided that no such notice and opportunity for
cure shall be required in an emergency situation, Lessor may, take such
action as Lessor reasonably deems necessary, at Lessee's expense and without
incurring any liability on Lessor's part, to correct any such defect or
deviation, including, without limitation, causing the cessation of
performance of the construction of the Lessee Improvements until such time as
the defect or deviation is corrected to Lessor's reasonable satisfaction.
(v) MEETINGS. Commencing upon the execution of this Lease (or
later as reasonably determined by Lessor), Lessee shall hold bi-weekly
meetings at a reasonable time, with the Architect and the Contractor
regarding the progress of the preparation of Construction Drawings and the
construction of the Lessee Improvements, which meetings shall be held at a
location reasonably acceptable to Lessor, and Lessor and/or its agents shall
receive prior notice of, and shall have the right to attend, all such
meetings, and, upon Lessor's request, certain of Lessee's Agents shall attend
such meetings. One such meeting each month shall include the review of
Contractor's current request for payment.
(c) NOTICE OF COMPLETION; UPDATED APPROVED WORKING DRAWINGS. At
the conclusion of construction, (i) Lessee shall cause the Architect and
Contractor to update the Approved Working Drawings as necessary to reflect
all changes made to the Approved Working Drawings during the course of
construction; (ii) Lessee shall cause a Notice of Completion to be recorded
in the office of the Recorder of the County where the Building is located in
accordance with Section 3093 of the Civil Code of the State of California or
any successor statute, and deliver a copy thereof to Lessor, provided that if
Lessee fails to do so, Lessor may execute and file the same on behalf of
Lessee as Lessee's agent for such purpose, at Lessee's sole cost and expense;
and (iii) Lessee shall deliver to Lessor two (2) sets of sepia and CAD
diskette of such as-built drawings for the Premises with the completed Lessee
Improvements and a copy of all warranties, guaranties, and operating manuals
and information relating to the improvements, equipment, and systems in the
Premises, and shall cause the Architect and Contractor to certify to the best
of their knowledge that the "record-set" of as-built drawings are true and
correct, which certification shall survive the expiration or termination of
this Lease.
(d) COORDINATION BY LESSEE'S AGENTS WITH LESSOR. Concurrently with
Lessee's delivery of the Construction Budget to Lessor under SECTION 4(b)(i)
above, Lessee shall furnish Lessor with a schedule setting forth the projected
date of the completion of the Lessee Improvements and showing the critical
time deadlines for each phase, item or trade relating to the construction of
the Lessee Improvements.
5. COMMENCEMENT DATE.
(a) COMMENCEMENT DATE. The "Commencement Date" shall occur for all
purposes of this Lease upon the earlier to occur of (i) October 12, 1998;
which date shall be extended on a day for day basis to the extent of any
"Lessor Delay" and/or "Force Majeure Delay" (as such terms are hereinafter
defined) which causes the "Substantial Completion of the Lessee Improvements"
(as hereinafter defined) to occur after October 12, 1998, or (ii) the
Substantial Completion of the Lessee Improvements.
(b) LESSOR DELAY. As used herein, the term "Lessor Delay" shall mean
any delay in the Substantial Completion of the Lessee Improvements resulting
from (i) any breach of this Lease by lessor (including, without limitation,
any failure of Lessor to perform in accordance with the time frames specified
for Lessor's performance under this Exhibit); and/or (ii) the negligence or
wilful misconduct of Lessor or its employees or agents; provided that no
Lessor Delay shall be deemed to commence or occur unless and until the matter
giving rise to such Lessor Delay is not cured by Lessor within one (1)
business day following Lessor's receipt of written notice thereof from Lessee.
<PAGE>
(c) FORCE MAJEURE DELAY. As used herein, the term "Force Majeure
Delay" shall mean any delay in the Substantial Completion of the Lessee
Improvements resulting from Acts of God or any other cause beyond the
reasonable control of the Lessee, provided that (i) in no event shall delays
caused by Lessee's Agents be deemed to constitute a Force Majeure Delay for
purposes hereof, and (ii) in no event shall delays in permit processing,
obtaining other governmental approvals or other government related matters be
deemed to constitute a Force Majeure Delay for purposes hereof except that if
it takes more than three (3) weeks for Lessee to obtain necessary building
permits for the construction of the Lessee Improvements after Lessee's
submittal of all necessary fees, plans, specifications and other materials
required by the applicable governmental authority in order to issue such
building permits, with Lessee using its continued reasonable efforts and
diligence to obtain such permits, then the period of time after such three
(3) week period until issuance of such building permits shall be deemed to
constitute a Force Majeure Delay. If Lessee contends that a Force Majeure
Delay has occurred, Lessee shall notify Lessor in writing promptly following
each of (1) Lessee's first learning of the occurrence of the event giving
rise to such Force Majeure Delay, and (ii) the date upon which such Force
Majueure Delay ends. Notwithstanding anything to the contrary contained
herein, if Lessee does not provide Lessor with written notice of the
occurrence of a Force Majeure Delay within five (5) business days after
Lessee's first learning of the occurrence of the event giving rise to such
Force Majeure Delay, then Lessee shall not be entitled to the benefit of the
period of Force Majeure Delay accruing between the expiration of such five
(5) business day period and the date upon which Lessor receives such written
notice from Lessee of the occurrence of the event giving rise to such Force
Majeure Delay.
(d) SUBSTANTIAL COMPLETION OF THE LESSEE IMPROVEMENTS. For purposes
of the Lease of which this Exhibit is a part, the "Substantial Completion of
the Lessee Improvements" shall mean completion of construction of the Lessee
Improvements in the Premises pursuant to the Approved Working Drawings with
the exception of any punch list items, any funiture or equipment (even if the
same requires installation or electrification by Lessee's Agents), and any
tenant improvement finish items and materials which are selected by Lessee
but which are not available within a reasonable time (given the anticipated
date of the Lease Commencement Date), and Lessee's receipt of any
governmentally-required permits and/or approvals to allow occupancy of the
Premises (provided that Lessee shall use reasonable efforts and diligence in
good faith to obtain such permits and/or approvals as soon as reasonably
possible).
6. MISCELLANEOUS.
(a) LESSEE'S REPRESENTATIVE. Lessee has designated Chris Krook as
its sole representative with respect to the matters set forth in this
Exhibit, who, until further notice to Lessor, shall have full authority and
responsibility to act on behalf of the Lessee as required in this Exhibit.
(b) LESSOR'S REPRESENTATIVE. Lessor has designated Dennis Randall as
its sole representative with respect to the matters set forth in this
Exhibit, who, until further notice to Lessee, shall have full authority and
responsibility to act on behalf of the Lessor as required in this Exhibit.
(c) LESSEE'S LEASE DEFAULT. Notwithstanding any provision to the
contrary contained in this Lease, in the event of a default by Lessee under
this Lease (which default is not cured within the applicable period for cure
following Lessee's receipt of written notice from Lessor pursuant to Lease
Article 22) at any time on or before the Substantial Completion of the Lessee
Improvements, then in addition to all other rights and remedies granted to
Lessor pursuant to the Lease, Lessor shall have the right to withhold payment
of all or any portion of the Lessee Improvement Allowance and/or Lessor may
cause Contractor to cease the construction of the Premises (in which case,
Lessee shall be responsible for any delay in the Substantial Completion of
the Lessee Improvements caused by such work stoppage and such delay shall not
be deemed a Lessor Delay).
(d) MISCELLANEOUS. During the period of construction of the Lessee
Improvements prior to the Commencement Date, (i) Lessee or Lessee's Agents
shall not be charged for, directly or indirectly, HVAC usage during Building
Hours (provided that such HVAC provided to the Premises need only be at such
levels as are commercially reasonable for a tenant improvement construction
site), electricity, water, or freight elevator or loading dock usage in
connection with the construction of the Lessee Improvements or for Lessor's
construction management or general overhead costs in connection with the
design and construction of the Lessee Improvements, and (ii) the Contractor
and all of its subcontractors shall not be charged for parking in the Project
parking facility in connection with construction of the Lessee Improvements
prior to the Commencement Date. None of Lessee's Agents shall be entitled to
(1) display identification or other signage at the Project, (2) use passenger
elevators at the Project, (3) access the main Building lobby (unless
otherwise approved in advance by Lessor) and shall only access the Premises
through means reasonably designated by Lessor (provided that notwithstanding
any access by fire stairwells adjacent to the Premises, such fire stairwells
shall at all times be kept unobstructed and in compliance with applicable
laws), or (4) park anywhere except in such areas of the Project parking
facilities as are designated by Lessor. Notwithstanding anything to the
contrary contained herein, Lessor shall be liable for increased costs of
performance of the Lessee Improvements which may result form the presence of
any currently existing Hazardous Materials within the Building.
<PAGE>
EXHIBIT "D"
RULES AND REGULATIONS
1. No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed or printed or affixed on or to any part of the outside
or inside of the Building without prior written consent of Lessor. Lessor
shall have the right to remove any such sign, placard, picture,
advertisement, name or notice without notice to and at the expense of Lessee.
All approved signs or lettering on doors shall be printed, painted, affixed
or inscribed at the expense of Lessee by a person approved of by Lessor.
Lessee shall not place anything or allow anything to be places near the glass
of any exterior window, door, partition or wall which may appear unsightly
from outside the Premises. Lessee shall not, without prior written consent
of Lessor cover or otherwise sunscreen any window.
2. The sidewalks, halls, passages, exits, entrances, elevators and
stairways shall not be obstructed by Lessee or used by Lessee for any purpose
other than for ingress or egress from its Premises.
3. Lessor will furnish Lessee, free of charge, with two keys to each door
lock in the Premises. Lessor may make a reasonable charge for any additional
keys. Lessee shall return all keys issued for the Premises. Lessee shall
pay to Lessor the costs of re-keying the Premises if all keys are not
returned. Without Lessor's prior approval and otherwise complying with the
provisions of this Lease governing the making of Alterations, Lessee shall
not alter any lock or install any new or additional locks or any bolts on any
doors or windows of the Premises.
4. The Common Area 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 and the expense of any breakage, stoppage or damage resulting from
the violation of this rule shall be borne by the Lessee who, or whose agents,
officers, employees, contractors, servants, invitees or guests shall have
caused it.
5. Lessee shall not overload the floor of the Premises or in any way
deface the Premises or any part thereof. Lessor shall have the right to
prescribe the weight, size and position of all safes and other heavy
equipment brought into the Building and also the time and manner of moving
the same in and out of the Building. Safes and other heavy objects shall, if
considered necessary by Lessor, stand on supports of such thickness as is
necessary to properly distribute the weight. Lessor will not be responsible
for loss of or damage to any such safe or property from any cause and all
damage done to the Building by moving or maintaining any such safe or other
property shall be repaired at the expense of Lessee.
6. No furniture, freight or equipment of any kind shall be brought into
the Building without prior notice to Lessor and all moving of the same into
or out of the Building shall be done at such time and in such manner as
Lessor shall designate. Unless otherwise agreed to in writing by Lessor, any
such movement of furniture, freight, or equipment shall be made during
non-business hours for the Building.
7. Lessee shall have the right to use the loading facilities provided at
the Building, if any, in common with the other tenants. All Lessee
deliveries of bulk items shall be through the Building loading facilities, if
any. Freight elevator(s) will be available for use by all tenants in the
Building, subject to such reasonable scheduling as Lessor, in its discretion,
deems appropriate. Lessor shall have the right at its sole discretion to
prohibit Lessee's delivery through the main lobbies.
8. Lessee shall not use, keep or permit to be used or kept, any foul or
noxious gas or substance in the Premises, or permit or suffer the Premises to
be occupied or used in a manner offensive or objectionable to Lessor or other
occupants of the Building by reason of noise, odors and/or vibrations, or
interfere in any way with other tenants or those having business therein, nor
shall any animals or birds be in or kept in or about the Premises or
Building (other than "seeing-eye" dogs or other animals providing assistance
to disabled persons).
9. The Premises will not be used for lodging, storage of merchandise,
washing clothes, or manufacturing of any kind, nor shall the Premises be used
for any improper, immoral or objectionable purpose. No cooking will be done
or permitted on the Premises without Lessor's consent, except the use by
Lessee of Underwriters Laboratory approved equipment for brewing coffee, tea,
hot chocolate and similar beverages shall be permitted, and the use of a
microwave oven for employees use will be permitted, provided that such
equipment and use is in accordance with all applicable federal, state, county
and city laws, codes, ordinances, rules and regulations.
10. Lessee shall not use or keep in the Premises or the Building any
kerosene, gasoline or inflammable or combustible fluid or material, or any
method of heating or air conditioning other than supplied by Lessor.
11. Lessor shall approve in writing the method of attachment of any
objects affixed to walls, ceilings or doors. Lessor will direct electricians
as to where and how telephone and telegraph wires are to be introduced. No
boring or cutting for the wires will be allowed without the consent of
Lessor. The location of telephones, call boxes and other office equipment
affixed to the Premises shall be subject to the approval of Lessor. Lessee
shall not install any wiring above the ceiling tiles that does not comply
with the fire codes. Any such wiring shall be removed immediately at the
expense of Lessee. Lessee will not affix any floor covering to the floor of
the Premises in any manner except as approved by Lessor.
12. All cleaning and janitorial services for the Building and the
premises will be provided exclusively through Lessor, and except with the
written consent of Lessor, no person or persons other than those approved by
Lessor will be employed by Lessee or permitted to enter the Building for the
purpose of cleaning the same.
<PAGE>
13. Lessee will store all its trash and garbage within its Premises or
in other facilities provided by Lessor. Lessee will not place in any trash
box or receptacle any material which cannot be disposed of in the ordinary
and customary manner of trash and garbage disposal. All garbage and refuse
disposal is to be made in accordance with directions issued from time to time
by Lessor.
14. On Saturdays, Sundays and legal holidays, and on other days between
the hours of 6:00 p.m. and 7:00 a.m. the following day, access to the
Building, or to the halls, corridors, elevators or stairways in the
Building, or to the Premises may be refused unless the person seeking access
is known to the person or employee of the Building in charge and has a pass
or is properly identified. Lessor shall in no case be liable for damages for
any error with regard to the admission to or exclusion from the Building of
any person. In case of invasion, mob, not, public excitement or other
commotion, Lessor reserves the right to prevent access to the Building during
the continuance of the same by closing the doors or otherwise, for the safety
of the tenants and protection of the Building and of property in the Building.
15. Lessee will not waste electricity, water or air conditioning and
agrees to cooperate fully with Lessor to assure the most effective operation
of the Building's heating and air conditioning and to comply with any
governmental energy-saving rules, laws or regulations of which Lessee has
actual notice, and will refrain from attempting to adjust controls. Lessee
will keep corridor doors closed, and shall keep all window coverings pulled
down.
16. Lessor reserves the right to exclude or expel from the Building any
person who, in the judgment of Lessor, is intoxicated or under the influence
of liquor or drugs, or who shall in any manner do any act in violation of any
of the rules and regulations of the Building.
17. No vending machine or machines of any description shall be
installed, maintained or operated upon the Premises without the written
consent of Lessor.
18. Lessor shall have the right, exercisable without notice and without
liability to Lessee to change the name and street address of the Building or
the Project.
19. Lessee shall not disturb, solicit or canvass any occupant of the
Building or Project and shall cooperate to prevent the same.
20. Lessor shall have the right to control and operate the public
portions of the Building and the public facilities, and heating and air
conditioning, as well as facilities furnished for the common use of the
tenants, in such manner as it deems best for the benefit of the tenants
generally.
21. All entrance doors in the Premises shall be left locked when the
Premises are not in use and all doors opening to public corridors shall be
kept closed except for normal ingress or egress from the Premises.
22. Without the written consent of Lessor, Lessee shall not use the name
of the Building or Project in connection with or in promoting or advertising
the business of Lessee except at Lessee's address.
23. Lessee shall place pads under all desk chairs, or have carpet
coasters to protect carpeting.
24. The current "Building Hours" are between 7:00 a.m. to 6:00 p.m. on
weekdays, Monday through Friday, except generally recognized Building
holidays.
25. Lessee will not install any radio or television antenna,
loudspeaker, satellite dishes or other devices on the roof(s) or exterior
walls of the Building or the Project. Lessee will not interfere with radio
or television broadcasting or reception from or in the Project or elsewhere.
If Lessee desires telegraphic, telephonic, burglar alarm, satellite dishes,
antennae or similar services, it will first obtain Lessor's approval, and
comply with, Lessor's reasonable rules and requirements applicable to such
services, which may include (without limitation) separate licensing by, and
fees paid to, Lessor.
26. Lessee agrees to comply with all safety, fire protection and
evacuation procedures and regulations established by Lessor or any
governmental agency.
27. Lessee assumes any and all responsibility for protecting its
Premises from theft, robbery and pilferage, which includes keeping doors
locked and other means of entry to the Premises closed.
28. Lessor may prohibit smoking in the Building and/or any other portion
of the Project and may require Lessee and any of its employees, agents,
clients, customers, invitees and guests who desire to smoke, to smoke within
designated smoking areas within the project, if any such smoking areas are
provided.
29. Lessee's requirements will be attended to by Lessor only upon
appropriate application to Lessor's management office for the Project by an
authorized individual of Lessee. Employees of Lessor will not perform any
work or do anything outside of their regular duties unless under special
instructions from Lessor, and no employee of Lessor will admit any person
(Lessee or otherwise) to any office without specific instructions from Lessor.
30. In the event of any conflict between these Rules and Regulations and
the Lease of which they are a part, the other provisions of the Lease shall
prevail. Lessor may waive any one or more of these Rules and Regulations for
the benefit of Lessee or any other tenant, but no such waiver by Lessor will
be construed as a waiver of such Rules and Regulations in favor of Lessee or
any other tenant, nor prevent Lessor from thereafter enforcing any such Rules
and Regulations against any or all of the tenants of the Project.