California-San Francisco-625 Second Street Lease - Rosenberg SOMA Investments III LLC and LookSmart Ltd.
OFFICE LEASE
by and between
ROSENBERG SOMA INVESTMENTS III, LLC
(Landlord)
and
LOOKSMART, LTD.
(Tenant)
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TABLE OF CONTENTS
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1. The Premises 5
2. Term 5
3. Possession 7
4. Monthly Basic Rent/Parking Lot Rent 9
5. Operating Expenses 13
6. Security Deposit 19
7. Use 22
8. Payments and Notices 24
9. Brokers 24
10. Holding Over 25
11. Taxes on Tenant's Property 25
12. Condition of Premises 26
13. Alterations 26
14. Repairs 30
15. Liens 31
16. Entry by Landlord 31
17. Utilities and Services 32
18. Indemnification 32
19. Damage to Tenant's Property 33
20. Insurance 33
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21. Damage or Destruction 35
22. Eminent Domain 37
23. Bankruptcy 38
24. Defaults and Remedies 39
25. Assignment and Subletting 41
26. Quiet Enjoyment 43
27. Subordination 43
28. Estoppel Certificate 44
29. Rules and Regulations 44
30. Conflict of Laws 45
31. Successors and Assigns 45
32. Surrender of Premises 45
33. Professional Fees 45
34. Performance by Tenant 45
35. Mortgagee and Senior Lessor Protection 46
36. Definition of Landlord 46
37. Waiver 46
38. Identification of Tenant 47
39. Year 2000 47
40. Terms and Headings 47
41. Examination of Lease 47
42. Time 47
43. Prior Agreement; Amendments 47
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44. Severability 48
45. Recording 48
46. Limitation on Liability 48
47. Riders 48
48. Signs 48
49. Modification for Lender 49
50. Accord and Satisfaction 49
51. Financial Statements 49
52. Tenant as Corporation 49
53. No Partnership or Joint Venture 49
54. Rooftop Deck/Rooftop Antennae 49
55. Landlord's Representations 50
56. Arbitration 50
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SUMMARY OF BASIC LEASE INFORMATION
The undersigned hereby agree to the following terms of this Summary of
Basic Lease Information (the "Summary"). This Summary is hereby incorporated
into and made a part of the attached Office Lease (this Summary and the Office
Lease to be known collectively as the "Lease") which pertains to the office
building (the "Building") which is located at 625 Second Street, San Francisco,
California. Each reference in the Office Lease to any term of this Summary shall
have the meaning as set forth in this Summary for such term. In the event of a
conflict between the terms of this Summary and the Office Lease, the terms of
the Office Lease shall prevail. Any capitalized terms used herein and not
otherwise defined herein shall have the meaning as set forth in the Office
Lease.
TERMS OF LEASE DESCRIPTION
-------------- -----------
(a). Date: May 5, 1999
(b). Landlord: Rosenberg SOMA Investments III, LLC,
a Delaware limited liability company
(c). Address of Landlord: c/o ROK Properties, Inc.
(Paragraph 8) 501 Second Street, Suite 214
San Francisco, California 94107
with a copy to: The Rosenberg Company
580 California Street, Suite 2225
San Francisco, California 94104
(d). Tenant: LookSmart, Ltd., a Delaware
corporation
(e). Address of Tenant (Paragraph 8): Prior to Commencement Date:
LookSmart Ltd.
487 Bryant Street
San Francisco, California 94107-1516
Attention: Mr. Ed O'Dea
and
After Lease Commencement Date, to:
625 Second Street
San Francisco, California 94107
Attention: Mr. Ed O'Dea
With a copy to: Director of
Facilities
(f). Premises (Paragraph 1): All space existing on all four (4)
floors of office space in the
Building (referred to as "Floor One"
"Floor Two", "Floor Three" and
"Floor Four", respectively)
consisting of approximately 134,847
rentable square feet, and all of the
basement parking garage and basement
storage area consisting of
approximately 2,162 rentable square
feet, all as set forth in Exhibit A
hereto.
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(g). Building (Paragraph 1): 625 Second Street, San Francisco,
California.
(h). Term (Paragraph 2): Ten (10) years.
(i) Lease Commencement Date: October 15, 1999, subject to
adjustment pursuant to Paragraph 3
of the Lease.
(ii) Lease Expiration Date: In the event that the Lease
Commencement Date occurs on the
first day of a calendar month, the
Lease Expiration Date shall be the
last day of the calendar month
immediately preceding the calendar
month in which the tenth (10th)
anniversary of the Lease
Commencement Date occurs and in the
event that the Lease Commencement
Date occurs on a date other than
the first day of a calendar month,
the Lease Expiration Date shall be
the last day of the calendar month
in which the tenth (10th)
anniversary of the Lease
Commencement Date occurs.
(i). Renewal Options (Paragraph 2): Two (2) consecutive five (5) year
terms.
(j). Monthly Basic Rent (Paragraph 4):
During First Lease Year: Three Hundred Sixteen Thousand
Eight Hundred Ninety Dollars and 45
CENTS ($316,890.45)
During Second Lease Year: Three Hundred Twenty-Eight Thousand
One hundred Twenty-Seven Dollars
and 70 CENTS ($328,127.70)
During Third Lease Year: Three Hundred Thirty-Nine Thousand
Three Hundred Sixty-Four Dollars
and 95 CENTS ($339,364.95)
During Fourth Lease Year: Three Hundred Fifty-Six Thousand
Two Hundred Twenty Dollars and 82
CENTS ($356,220.82)
During Fifth Lease Year: Three Hundred Sixty-One Thousand
Eight Hundred Thirty-Nine Dollars
and 45 CENTS ($361,839.45)
During Sixth Lease Year: Three Hundred Seventy-Six Thousand
Four Hundred Forty-Seven Dollars
and 87 CENTS ($376,447.87)
During Seventh Lease Year: Three Hundred Eighty-Two Thousand
Sixty-Six Dollars and 50 CENTS
($382,066.50)
During Eighth Lease Year: Three Hundred Eighty-Seven Thousand
Six Hundred Eighty-Five Dollars and
12 CENTS ($387,685.12)
During Ninth Lease Year: Three Hundred Ninety-Three Thousand
Three Hundred Three Dollars and 75
CENTS ($393,303.75)
During Tenth Lease Year: Three Hundred Ninety-Eight Thousand
Nine Hundred Twenty-Two Dollars and
37 CENTS ($398,922.37)
(k). Parking Lot Rent (Paragraph 4.3): See Paragraph 4.3.
(l). Aggregate Monthly Basic Rent
(Paragraph 4.5): Monthly Basic Rent plus Parking Lot
Rent plus Storage Rent
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(m). Operating Expenses (Paragraph 5):
(i) Base Year: 1999, subject to Paragraph 5.3, and
subject to readjustment at the
commencement of the option terms
(see Paragraph 5.1).
(ii) Tenant's Percentage Share: 100%
(n). Security Deposit (Paragraph 6): See Paragraph 6.
(o). Prepaid Rent (Paragraph 4.1): $316,890.45, representing the first
month's Monthly Basic Rent.
(p). Broker (Paragraph 9):
Tenant Broker: Colliers International (Michael D.
McCarthy) Two Embarcadero Center,
Suite 1000 San Francisco, California
94111
Landlord Broker: ROK Properties, Inc.
501 Second Street, Suite 214
San Francisco, California 94107
(q). Work Letter (Exhibit E): Attached.
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The foregoing terms of this Summary are agreed to by Landlord and Tenant.
LANDLORD: TENANT:
Rosenberg SOMA Investments III, LLC, a LookSmart, Ltd., a Delaware
Delaware limited liability company corporation
By: /s/ Signature Illegible
By: TRC Investors III, LLC, a California
limited liability company, Manager Name: Edward M. O'DEA
Its: VP Corp Div.
By: The Rosenberg Company, a
California corporation, By: ____________________
Manager Name: __________________
Its: ___________________
By: /s/ Signature Illegible
Douglas C. Rosenberg,
President
By: /s/ Signature Illegible
Douglas C. Rosenberg,
Secretary
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The foregoing terms of this Summary are agreed to by Landlord and Tenant.
LANDLORD: TENANT:
Rosenberg SOMA Investments III, LLC, a LookSmart, Ltd., a Delaware
corporation
Delaware limited liability company
By: _____________________
By: TRC Investors III, LLC, a California Name: ___________________
limited liability company, Manager Its: ____________________
By: The Rosenberg Company, a
California corporation, By: _____________________
Manager Name: ___________________
Its: ____________________
By: /s/ Signature Illegible
Douglas C. Rosenberg,
President
By: /s/ Signature Illegible
Douglas C. Rosenberg,
Secretary
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OFFICE LEASE
This Office Lease ("LEASE"), dated May 5, 1999 (the "EFFECTIVE DATE"), is made
and entered into by and between Rosenberg SOMA Investments III, LLC, a Delaware
limited liability company ("LANDLORD") and LookSmart, Ltd., a Delaware
corporation ("TENANT").
1. The Premises.
------------
1.1 Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, the Premises designated in the Summary and as outlined on the Floor
Plan attached hereto as Exhibit "A" in the building at the address designated in
-----------
the Summary (the "BUILDING"), located on the parcel of real property (the
"SITE") under the Building, subject to those rules and regulations attached
hereto as Exhibit D, and such additional reasonable rules and regulations as
---------
Landlord may deliver in writing to Tenant from time to time. Tenant acknowledges
that Landlord has made no representation or warranty regarding the condition of
the Premises, Building, or Site except as specifically stated in this Lease. The
parties hereto agree that Tenant's leasing of the Premises is upon and subject
to the terms, covenants and conditions herein set forth and Tenant covenants as
a material part of the consideration for this Lease to keep and perform each and
all of said terms, covenants and conditions by it to be kept and performed and
that this Lease is made upon the condition of such performance.
1.2 The rights and obligations of the parties regarding the construction
of the Premises are described in Paragraphs 2 and 3 of this Lease, and in the
Work Letter ("Work Letter") attached as Exhibit E. Any inconsistency between the
---------
provisions of the Work Letter and the provisions of the balance of the Lease
shall be governed by the provisions of the Work Letter.
1.3 The Premises as described herein shall include the right of Tenant to
use the loading dock. The obligations of Tenant with respect to the Premises as
provided in this Lease shall be applicable to the loading dock as well as to the
remainder of the Premises.
1.4 References in this Lease to "rentable square feet", "rentable square
footage" and "rentable area" shall have the same meanings, and Tenant hereby
acknowledges and agrees that the rentable square footage of the Premises shall
be deemed, and is, 134,847 rentable square feet excluding the basement parking
and storage areas. No adjustment in the Monthly Basic Rent, Tenant's Percentage
Share, any monetary or other obligation of Tenant, or any other term of this
Lease shall be made by reason of any discrepancy in the rentable square footage
which is later discovered.
2. Term.
----
2.1 Subject to Paragraphs 2.2 and 3.1, the term of this Lease ("Term")
shall commence on the Lease Commencement Date, and terminate on the Lease
Expiration Date, as such terms are defined in the Summary, unless the Term is
earlier terminated as hereinafter provided. Landlord shall provide Tenant, and
Tenant's consultant's and contractors, with access to the Premises at least
three (3) weeks prior to the anticipated Lease Commencement Date for purposes of
installation by Tenant of its fixtures, equipment, wiring, furniture and other
similar matters. In connection with any such early entry by Tenant, Tenant and
its consultants and contractors shall not interfere with the completion of
construction by Landlord of the Landlord's Work and the Tenant's Improvements
(as defined below). At all times that Tenant has access to the Premises, the
provisions of this Lease shall be applicable, provided only that the obligation
of Tenant to
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pay Monthly Basic Rent, Parking Lot Rent and Operating Rent (as defined below)
shall not commence until the Lease Commencement Date.
2.2 Landlord shall substantially complete the initial, base improvements
to the Building and the Premises, as required of Landlord pursuant to the terms
of the Work Letter, ("LANDLORD'S WORK") and shall further substantially complete
the Tenant's Improvements ("TENANT'S IMPROVEMENTS") as described in the Work
Letter on or before October 15, 1999 with respect to Floor Three and Floor Four
and October 22, 1999 with respect to Floor One and Floor Two. The Lease
Commencement Date shall be October 15, 1999 as specified in the Summary,
subject, however, to adjustment pursuant to the provisions of Paragraph 3 below.
The Lease Commencement Date shall occur notwithstanding that Floor One and Floor
Two have not been delivered by Landlord to Tenant, it being acknowledged that it
is anticipated that Floor One and Floor Two will be delivered subsequent to
delivery of Floor Three and Floor Four. The actual Lease Commencement Date shall
be specified in Landlord's Notice of Lease Term Dates ("NOTICE"), in the form of
Exhibit "B" attached hereto, and shall be served upon Tenant as provided in
-----------
Paragraph 8, as soon as Landlord determines that the Landlord's Work and the
Tenant's Improvements with respect to Floor Three and Floor Four have been
substantially completed as provided in Paragraph 3.1 below. The Notice shall be
binding upon Tenant unless Tenant objects to the Notice in writing, served upon
Landlord as provided in Paragraph 8, within five (5) business days of Tenant's
receipt of the Notice.
2.3 Tenant shall have two (2) consecutive options (the "EXTENSION
OPTIONS"; each an "EXTENSION OPTION") to extend the Term, each for a five (5)
year period (the "FIRST EXTENDED TERM" and "SECOND EXTENDED TERM", respectively;
each an "EXTENDED TERM") on all the terms and conditions contained in this Lease
with the exception of the Monthly Basic Rent and the Base Year which shall be
adjusted pursuant to the provisions of Paragraphs 4.2 and 5.1 below. Upon
commencement of the First Extended Term, the only remaining option to extend the
Term shall be the Second Extended Term, and upon exercise of the option with
respect to the Second Extended Term, no further right to extend the Term shall
exist. In the event Tenant fails to timely exercise the option for the First
Extended Term, Tenant's option for the Second Extended Term shall be void. In
order to exercise an Extension Option, Tenant shall deliver written notice of
its exercise of the option ("OPTION NOTICE") to Landlord at least two hundred
twenty-five (225) days but not more than one (1) year before the expiration of
the initial Term or First Extended Term, as the case may be. The Extension
Options shall be subject to the following terms and conditions:
(a) An Extension Option may be exercised only by delivery of the
Option Notice as provided in this Paragraph and only if, as of the date of
delivery of the Option Notice, Tenant is not in default, beyond applicable cure
periods, under this Lease.
(b) The rights contained in this Paragraph shall be personal to the
originally named Tenant and may be exercised only by the originally named Tenant
(and not any assignee, sublessee, or other transferee of Tenant's interest in
this Lease other than a Permitted Transferee as defined in Paragraph 25 below)
and only if the originally named Tenant (or Permitted Transferee) occupies the
entire Premises as of the date it exercises an Extension Option in accordance
with the terms of this Paragraph.
(c) If Tenant properly exercises an Extension Option and is not in
default, beyond applicable cure periods, under this Lease at the end of the
initial Term (or the First Extended Term, as the case may be), the Term shall be
extended for the applicable Extended Term.
References in this Lease to the "Term" shall include the initial Term of
ten (10) years and shall, in
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addition, include the First Extended Term and the Second Extended Term, as
applicable.
2.4 For purposes of this Lease the term "Lease Year" shall mean each
consecutive twelve (12) month period during the Term provided that (i) the first
Lease Year commences on the Lease Commencement Date and in the case in which the
Lease Commencement Date occurs on the first (1st) day of a calendar month, the
first Lease Year ends on the last day of the twelfth (12th) calendar month
thereafter (inclusive of the calendar month in which the Lease Commencement Date
occurs) and in the case in which the Lease Commencement Date occurs on other
than the first (1st) day of a calendar month, the first Lease Year ends on the
last day of the calendar month in which the first (1st) anniversary of the Lease
Commencement Date occurs; (ii) the second and each succeeding Lease Year
commences on the first day of the next calendar month; and (iii) the last Lease
Year ends on the Lease Expiration Date or earlier date of termination.
3. Possession.
----------
3.1 Tenant agrees that in the event Landlord is unable to deliver
possession of Floor Three and Floor Four to Tenant, with Landlord's Work and the
Tenant's Improvements having been substantially completed on or before October
15, 1999, this Lease shall not be void or voidable, nor shall Landlord be liable
to Tenant for any loss or damage resulting therefrom. In the event that Landlord
fails to deliver Floor Three and Floor Four to Tenant with Landlord's Work and
Tenant's Improvements substantially completed on or before October 15, 1999, the
Lease Commencement Date shall be extended to the date on which Landlord delivers
Floor Three and Floor Four to Tenant with Landlord's Work and Tenant's
Improvements substantially completed subject to the limitations as provided in
Paragraph 3.2 below. For purposes of this Lease, Landlord's Work and Tenant's
Improvements shall be considered as having been substantially completed (i) upon
completion in all material respects of Landlord's Work and the Tenant's
Improvements with respect to Floor Three and Floor Four or Floor One and Floor
Two, as the case may be, as certified by Landlord's architect as identified in
the Work Letter ("LANDLORD'S ARCHITECT") subject only to such punch list items
as may have been identified by Landlord's Architect or by Tenant pursuant to the
provisions of Paragraph 12 below, and (ii) upon Landlord obtaining all
governmental approvals and occupancy certificates required for the legal
occupancy of the Floor Three and Floor Four or Floor One and Floor Two, as the
case may be, (collectively, "GOVERNMENT APPROVALS").
3.2 Notwithstanding the provisions of Paragraph 3.1 to the contrary, any
extension of the Lease Commencement Date in accordance with the provisions of
Paragraph 3.1 shall be reduced by the aggregate number of days of Tenant Delay
(as defined below). By way of example, if pursuant to the provisions of
Paragraph 3.1 the Lease Commencement Date occurs on October 25, 1999 but there
is an aggregate number of ten (10) days of Tenant Delay, then notwithstanding
the provisions of Paragraph 3.1, the Lease Commencement Date (and the obligation
of Tenant to pay Monthly Basic Rent [subject to the provisions of Paragraph 3.3
below], Parking Lot Rent and Operating Rent) shall commence as of October 15,
1999. A delay by Tenant ("TENANT DELAY") shall occur upon: (i) Tenant's failure
to perform any obligation of Tenant to be performed under the Work Letter on or
before the date or within the time period set forth in the Work Letter
including, without limitation, any failure by Tenant to timely satisfy a Tenant
Benchmark (as defined in the Work Letter); (ii) any change by Tenant in the
Construction Drawings (as defined in the Work Letter) which Tenant has
previously approved or a change by Tenant in the work to be performed in
connection with the Tenant's Improvements from that work otherwise specified in
the Construction Drawings, which change results in a delay in the construction
of the Tenant's Improvements; (iii) failure of Tenant to timely pay on or before
the date required all amounts required to be paid by Tenant as provided in the
Work Letter; or (iv) any other delay caused by Tenant or Tenant's Architect in
connection with the design, construction or bidding
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process with respect to the Tenant's Improvements including, without limitation,
the failure by Tenant or Tenant's Architect to promptly respond to reasonable
requests from the Contractor (as defined in the Work Letter) for clarification
and/or additional detail relating to the work to be performed pursuant to the
Construction Drawings. The period of any Tenant Delay with respect to the
matters described in clauses (i) or (iii) above, shall be the number of days
from the date on which the matter was to be performed by Tenant through and
including the day on which the matter is fully cured and performed by Tenant and
the number of days of any Tenant Delay as specified in clause (ii) and clause
(iv) above shall be equal to the number of days of delay in the performance of
the work in connection with the Tenant's Improvements resulting from the failure
by Tenant or by Tenant's consultants or representatives or the delay resulting
from any change made by Tenant as described in clause (ii). In the event that
Landlord during the construction of Tenant's Improvements asserts that a Tenant
Delay has occurred, Landlord shall give written notice of such asserted Tenant
Delay to Tenant and to Tenant's Architect as defined in the Work Letter
("TENANT'S ARCHITECT") which notice ("DELAY NOTICE") shall state specifically
the nature of the purported Tenant Delay. In the event that Landlord fails to
give a Delay Notice within five (5) business days following the occurrence of
the asserted Tenant Delay, Landlord shall be deemed to have waived such asserted
delay and shall thereafter not be entitled to assert such Tenant Delay in
connection with the provisions of this Paragraph 3.2 or Paragraph 3.3 below. In
the event that Landlord timely gives a Delay Notice and Tenant disagrees with
the assertion of the claimed delay by giving written notice of such disagreement
to Landlord within five (5) business days following the date on which the Delay
Notice is given, then within ten (10) days following the substantial completion
of the Landlord's Work and the Tenant's Improvements with respect to Floor One,
Floor Two, Floor Three and Floor Four as evidenced by the certificate of
Landlord's architect and receipt of the Government Approvals (collectively,
"COMPLETION CERTIFICATE"), Landlord's Architect and Tenant's Architect shall
attempt to come to an agreement, which agreement shall be binding on Landlord
and Tenant, as to whether any Tenant Delay has occurred and the number of days
of such Tenant Delay. A copy of the Completion Certificate shall be given by
Landlord to Tenant which, with respect to the Government Approvals, shall
consist of the certificate of occupancy. In the event that Landlord's Architect
and Tenant's Architect are unable to so agree within twenty (20) days following
the date on which the Landlord's Completion Certificate is given to Tenant then
the issue of the occurrence and the extent of any delay caused by Tenant shall
be subject to arbitration in accordance with the provisions of Paragraph 57. In
the event that Tenant fails to object to any Delay Notice given by Landlord by
timely giving written notice of such objection to Landlord, Tenant shall be
considered to have approved the Tenant Delay as set forth in the Delay Notice.
In the event that a final determination with respect to the occurrence of any
Tenant Delay as provided in this Paragraph 3.2 has not occurred on or before the
date asserted by Landlord to be the Lease Commencement Date (taking into account
any Tenant Delay as asserted by Landlord) then the Lease Commencement Date shall
be considered to have occurred on the date as provided in the Summary and in
accordance with the provisions of Paragraphs 2.2 and 3.1 subject to adjustment
as asserted by Landlord pursuant to the provisions of this Paragraph 3.2. In the
event that subsequent to such date it is finally determined that a further delay
in the occurrence of the Lease Commencement Date should have occurred by reason
of the provisions of Paragraph 3.1 and the provisions of this Paragraph 3.2,
then Tenant shall be entitled to a credit in an amount equal to the per day
amount in connection with the Monthly Basic Rent, the Parking Lot Rent and the
Operating Rent as then having been paid by Tenant for the period of the
additional delay as finally determined pursuant to the provisions of this
Paragraph 3.2. Such credit shall be applied against the next payment of Monthly
Basic Rent, Parking Lot Rent and/or Operating Rent as then due pursuant to this
Lease from Tenant to Landlord.
3.3 It is anticipated that Floor Three and Floor Four, with the Landlord's
Work and the Tenant's Improvements substantially completed, will be delivered by
Landlord to Tenant prior to delivery of Floor One and Floor Two. Notwithstanding
any provision to the contrary of this Lease, in the event that Floor One and
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Floor Two are delivered by Landlord to Tenant with the Landlord's Work and the
Tenant's Improvements substantially completed subsequent to the delivery of
Floor Three and Floor Four then, the Monthly Basic Rent otherwise payable as of
the Lease Commencement Date shall be reduced by fifty percent (50%) until such
time as Floor One and Floor Two are delivered by Landlord to Tenant with
Landlord's Work and Tenant's Improvements substantially completed in accordance
with the provisions of Paragraph 3.1. Commencing on such date (the "SUBSEQUENT
COMMENCEMENT DATE") and continuing thereafter, the full Monthly Basic Rent shall
be payable each month as otherwise provided in this Lease. The date on which the
Subsequent Commencement Date occurs (and thus the date on which the obligation
of Tenant to pay the full Monthly Basic Rent commences) shall be adjusted to a
date earlier than the date otherwise provided pursuant to this Paragraph 3.3 by
the number of days equal to the number of days of Tenant Delay occurring prior
to the Lease Commencement Date as described in Paragraph 3.2 together with the
number of days of Tenant Delay occurring on and after the Lease Commencement
Date in connection with delivery by Landlord of Floor One and Floor Two with the
Landlord's Work and the Tenant's Improvements substantially completed. The
determination of the number of days of Tenant Delay, including the number of
days of Tenant Delay occurring on and after the Lease Commencement Date shall be
made in accordance with the provisions of Paragraph 3.2 and shall be subject to
arbitration in accordance with the provisions of Paragraph 56. In connection
with any partial calendar month, the portion of the Monthly Basic Rent payable
in connection with Floor One and Floor Two (i.e. fifty percent) for each such
day of any partial calendar month shall be pro-rated on the basis of the actual
number of days in such calendar month.
3.4 Notwithstanding the anticipated delivery dates with respect Floor
Three and Floor Four of October 15, 1999 and with respect to Floor One and Floor
Two of October 22, 1999, Landlord, by giving at least six (6) weeks prior
written notice to Tenant, shall be entitled to delivery Floor Three and Floor
Four substantially complete prior to October 15, 1999 but no earlier than
October 1, 1999 and/or deliver Floor One and Floor Two substantially complete
prior to October 22, 1999 but no earlier than October 8, 1999. In the event that
Landlord gives such notice to Tenant with respect to Floor Three and Floor Four,
the Lease Commencement Date shall occur on the date set forth in such notice
given by Landlord, notwithstanding the provisions to the contrary of this Lease,
including without limitation the provisions of the Summary subject, however, to
adjustment in accordance with the provisions of Paragraphs 2.2, 3.1 and 3.2
above. In the event that Landlord gives such notice with respect to Floor One
and Floor Two, the Subsequent Commencement Date shall occur on the date set
forth by such notice given by Landlord, subject to delay, in accordance with the
provisions of Paragraph 3.3 above. In the event that Landlord gives any notice
of early delivery pursuant to the provisions of this Paragraph 3.4, Tenant
hereby agrees to accept such early delivery in connection with Floor Three and
Floor Four and/or in connection with Floor One and Floor Two.
3.5 Notwithstanding anything in the foregoing Paragraphs to the contrary,
if the Landlord's Work and the Tenant's Improvements are not substantially
completed (as evidenced by a Completion Certificate) with respect to Floor Three
and Floor Four and Floor One and Floor Two on or before January 15, 2000, then
Tenant shall have the right to terminate this Lease by written notice given to
Landlord at any time prior to the date a certificate of occupancy is obtained
for the Premises. Termination of the Lease hereunder shall be Tenant's sole
remedy in the event of a failure of delivery of possession of the Premises to
Tenant.
4. Monthly Basic Rent/Parking Lot Rent/Storage Rent.
------------------------------------------------
4.1 Tenant agrees to pay to Landlord as Monthly Basic Rent for the
Premises the Monthly Basic Rent designated in the Summary for each respective
period ("Monthly Basic Rent"), each in advance on the first day of each and
every calendar month during said Term, except that the first month's Monthly
Basic Rent
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shall be paid upon the execution hereof. In the event the Term of this Lease
ends on a day other than the last day of a calendar month, then the rental for
such period shall be prorated in the proportion that the number of days this
Lease is in effect during such period bears to thirty (30), and such rental
shall be paid at the commencement of such period. In the event that the Lease
Commencement Date occurs other than on the first day of a calendar month, and
the full first month's Monthly Basic Rent has been previously paid as provided
in this Lease, then the rent for the initial partial calendar month commencing
as of the Lease Commencement Date shall be prorated in the proportion that the
number of days this Lease is in effect during such calendar month bears to
thirty (30) and the prepaid first month's Monthly Basic Rent shall be applied to
such prorated amount with the balance of the prepaid first month's Monthly Basic
Rent being applied to reduce the payment of Monthly Basic Rent to be paid on the
first day of the first full calendar month of the Term of this Lease (and to the
extent not entirely applied by reasons of the provisions of Paragraph 3.3,
applied to reduce the payment of the subsequent month's Monthly Basic Rent until
fully applied). In addition to said Monthly Basic Rent, Tenant agrees to pay the
amount of the rental adjustments as and when provided in this Lease. Said
Monthly Basic Rent and all additional rent including, without limitation,
Parking Lot Rent, Storage Rent and Operating Rent, shall be paid to Landlord,
without any prior demand therefor and without any deduction or offset whatsoever
in lawful money of the United States of America, which shall be legal tender at
the time of payment, at the address of Landlord designated in Subparagraph (c)
of the Summary or to such other person or at such other place as Landlord may
from time to time designate in writing. Further, all charges to be paid by
Tenant hereunder, including, without limitation, payments for repairs and other
costs and expenses shall be considered additional rent for the purposes of this
Lease, and the word "rent" in this Lease shall include such additional rent as
well as Monthly Basic Rent, Parking Lot Rent, Storage Rent and Operating Rent
unless the context specifically or clearly implies that only the Monthly Basic
Rent, Parking Lot Rent, Storage Rent and/or Operating Rent is referenced. Tenant
shall deliver to Landlord as prepaid rent that amount set forth in the Summary
upon execution of this Lease.
4.2 In the event Tenant exercises either of the options to extend the Term
pursuant to the provisions of Paragraph 2.3, the Monthly Basic Rent shall be
adjusted at the commencement of each Extended Term to reflect the then-fair
market rental value of the Premises pursuant to the terms of this Paragraph. The
fair market rental value of the Premises shall be determined in good faith by
Landlord, who shall notify Tenant of such determination in writing within thirty
(30) days of receipt of the Option Notice. If Tenant does not agree with
Landlord's determination, Tenant shall deliver written notice of Tenant's
objection to Landlord within fifteen (15) days of receipt of notice from
Landlord, or Landlord's determination of the fair market rental value shall be
final. If Tenant timely objects to Landlord's determination, Landlord and Tenant
shall diligently attempt in good faith to agree on the fair market rental value
of the Premises on or before the tenth (10th) day following delivery of Tenant's
written objection to Landlord's determination (the "OUTSIDE AGREEMENT DATE"). If
Landlord and Tenant are unable to agree on the new Monthly Basic Rent by the
Outside Agreement Date, the fair market rental value of the Premises shall be
determined by appraisal. Landlord and Tenant shall first attempt to select a
mutually agreeable appraiser to conduct the appraisal, which appraiser's
conclusion shall be binding on the parties. In the event they are unable to
agree on one appraiser within ten (10) days of the Outside Agreement Date, the
parties shall each select an appraiser within twenty (20) days of the Outside
Agreement Date, who together shall attempt to determine the fair market rental
value of the Premises. If either party fails to appoint an appraiser within such
time period, the appraiser timely appointed by the other party shall be the sole
appraiser, whose determination shall be binding on both parties. If two
appraisers are timely appointed, but they are unable to agree on the fair market
rental value of the Premises within fifty (50) days of the Outside Agreement
Date, they shall mutually select a third appraiser and the three appraisers
shall each submit their appraisal of the fair market rental value of the
Premises within thirty (30) days of selection of the third appraiser. The fair
market rental value of the Premises shall be the
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average of the three appraisals; provided, however, that if either the high or
low appraisal differs from the middle appraisal by ten percent (10%) or more, it
shall be disregarded and the two remaining appraisals shall be averaged to
determine the fair market rental value. If both the high and low appraisals
differ from the middle appraisal by ten percent (10%) or more, then both shall
be disregarded, and the fair market rental value of the Premises shall be as
determined by the middle appraisal. Each party shall bear the cost of their
respective appraisers; if a third appraiser is necessary, the parties shall
share equally the cost of the third appraiser. All appraisers shall be MAI
qualified appraisers, and shall have a minimum of five (5) years experience in
the appraisal of commercial properties in the San Francisco Bay Area and no
appraiser shall have worked previously for Landlord or Tenant in any capacity.
The fair market rental value shall be based on comparable space in San
Francisco, which shall (i) not be subleased, (ii) shall be comparable in size,
location and quality with the Premises, (iii) shall be leased for a term
comparable to the subject option term (five years), and (iv) shall take into
account the value of any rent abatement, tenant improvement allowances or other
concessions given to the tenant of the comparable space. The Monthly Basic Rent
shall be adjusted to reflect the fair market rental value, as so determined. The
Base Year for each Extended Term shall be adjusted as set forth in Paragraph 5.1
below.
4.3 In addition to the Monthly Basic Rent, Tenant shall pay an additional
monthly rental amount (the "PARKING LOT RENT") for Tenant's use of the Garage
located in the basement of the Building. The Parking Lot Rent shall be payable,
in advance, on the first day of each and every calendar month during the Term
with amounts payable for any partial month to be prorated in proportion to the
number of days that this Lease is in effect during such period bears to thirty
(30) with such rental to be paid at the commencement of such period. The Garage
shall be delivered by Landlord to Tenant on or before the Lease Commencement
Date. The Garage shall constitute a portion of the Premises and shall be subject
to all terms and conditions of this Lease. During the Term, Landlord shall
provide a parking valet/attendant on all business days during the hours of 8:00
a.m. to 6:00 p.m. Tenant, at its election, shall be entitled to request Landlord
to adjust the hours during which valet/attendant parking is provided so that
such hours commence one (1) hour earlier or one (1) hour later, and end one (1)
hour earlier or one (1) hour later, as the case may be, provided that, in all
events, Landlord shall not be obligated to provide valet/attendant parking for
in excess of ten (10) hours and further provided that any adjustment in such
hours requested by Tenant shall be subject to compliance with any collective
bargaining agreements then in effect with respect to the employees providing
parking and any excess cost incurred by reason of any such adjustment in the
hours shall be borne solely by Tenant. It is agreed that the number of vehicles
which can be reasonably valet parked in the Garage is ninety (90), subject to an
increase or decrease to a maximum of one hundred (100) and a minimum of seventy
(70) which increase or decrease shall be subject to the reasonable determination
of Landlord and Tenant. Entrance to the Garage shall be pursuant to a card key
access system. Prior to the Lease Commencement Date, Landlord shall
substantially complete installation of a card key reader apparatus at the Garage
entrance facing Colin P. Kelly Street which shall allow 24 hour/7 days per week
access to the Garage via the use of magnetic card keys. The Parking Lot Rent
which Tenant shall pay to Landlord shall be the product of the sum of Two
Hundred Dollars ($200.00) multiplied by the number of vehicles which can be
reasonably valet parked in the Garage. The Parking Lot Rent shall be adjusted
upward on an annual basis, commencing on the first day (the "FIRST ADJUSTMENT
DATE") of the second Lease Year and continuing thereafter on each subsequent
anniversary of the First Adjustment Date thereafter (each, an "ADJUSTMENT DATE")
throughout the initial ten (10) year Term of this Lease, by an amount equal to
four percent (4%) of the Parking Lot Rent in effect for the month immediately
preceding the subject Adjustment Date. Thereafter during the Extended Terms (if
applicable), in the sole and absolute discretion of Landlord, the Parking Lot
Rent shall be periodically adjusted upward to reflect then-current market
conditions. In no event shall the Parking Lot Rent be decreased from the Parking
Lot Rent in effect for the month immediately preceding any adjustment.
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In the event that Landlord and Tenant are unable to agree upon the amount
of the increase or decrease in the number of vehicles which can be reasonably
valet parked in the Garage within ten business days following the written
request of either given to the other ("OUTSIDE PARKING DATE"), then the amount
of such increase or decrease shall be determined by a third party parking
company experienced in the valet parking of vehicles. The right to request a
determination by a third party parking company (or companies) as described in
this Paragraph shall be a one-time right and after exercise by either Landlord
or Tenant shall thereafter not be further exercisable by either Landlord or
Tenant. Landlord and Tenant shall first attempt to select a mutually agreeable
parking company to conduct a review of the Garage and determine on a basis
binding on both parties the amount of increase or decrease in the number of
vehicles which can be reasonably valet parked in the Garage (referred to as the
"AMOUNT OF ADJUSTMENT"). In the event Landlord and Tenant are unable to agree on
a parking company within ten (10) days of the Outside Parking Date, the parties
shall each select a parking company within twenty (20) days of the Outside
Parking Date, who together shall attempt to determine the Amount of Adjustment.
If either party fails to appoint a parking company within such time period, the
parking company timely appointed by the other party shall be the sole parking
company, whose determination shall be binding on both parties. If two parking
companies are timely appointed but they are unable to agree on the Amount of
Adjustment within forty (40) days of the Outside Parking Date, they shall
mutually select a third parking company and the three parking companies shall
each submit their determination of the Amount of Adjustment within ten (10)
business days following the selection of the third parking company. The Amount
of Adjustment shall be the average of the three determinations, provided,
however, that if either the high or low determination differs from the middle
determination by 10% or more, it shall be disregarded and the two remaining
determinations shall be averaged to determine the Amount of Adjustment. If both
the high and low determinations differ from the middle determination by 10% or
more, then both shall be disregarded, and the Amount of Adjustment shall be as
determined by the middle parking company. Each party shall bear the cost of its
respective parking company; if a third parking company is necessary, the parties
shall share equally the cost of the third parking company. All parking companies
shall have a minimum of five (5) years experience in the management and
operation of valet parking lots and/or garages and no parking company shall have
previously worked for either the Tenant or the Landlord.
If the Amount of Adjustment is determined subsequent to the Lease
Commencement Date, the Parking Lot Rent payable as of the Lease Commencement
Date shall be based upon the number of ninety (90) vehicles. In the event that
it is finally determined that an adjustment is required, then the Parking Lot
Rent payable on the first day of the next succeeding calendar month and
thereafter, shall be based upon the number of vehicles as so adjusted. In
addition, in the event that the Amount of Adjustment results in an increase in
the number of vehicles from the initially determined ninety (90), then within
twenty (20) days following receipt by Landlord and Tenant of final determination
of such Amount of Adjustment, Tenant shall pay to Landlord the amount of
additional Parking Lot Rent attributable to such adjustment based upon Two
Hundred Dollars ($200) per month per additional vehicle (pro rated if necessary
on the basis of a partial month). In the event that the Amount of Adjustment
results in a decrease in the number of vehicles from the initial ninety (90),
then Tenant shall be entitled to a credit against the next Parking Lot Rent then
due based upon such decrease in the number of vehicles at a rent of Two Hundred
Dollars ($200) per vehicle per month (with any partial month to be pro rated).
4.4 In addition to the Monthly Basic Rent and Parking Lot Rent, Tenant
shall be obligated to pay an additional monthly rental amount, (the "STORAGE
RENT") in accordance with the provisions of this Paragraph 4.4. Tenant shall be
entitled to use of the storage area within the Building ("STORAGE AREA"), which
Storage Area is described on Exhibit A attached hereto. The Storage Area
consists of Two Thousand One Hundred
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and Sixty-two (2,162) useable square feet. Notwithstanding any other provision
of this Lease to the contrary, Landlord shall have no obligation to repair or
maintain any portion of the Storage Area or provide services of any kind
whatsoever with respect to the Storage Area. Tenant shall not be obligated to
pay any Storage Rent during the first five (5) Lease Years of the Term.
Commencing as of the first day of the sixth Lease Year of the Term and
continuing on the first (1st) day of each and every calendar month thereafter,
Tenant shall be obligated to pay storage rent in the amount of Two Thousand One
Hundred and Sixty-two Dollars ($2,162) per month. The Storage Rent for each
Extended Term, if applicable, shall be as determined by Landlord in its
reasonable discretion.
4.5 The aggregate of the Monthly Basic Rent, the Parking Lot Rent and the
Storage Rent from time to time to be paid pursuant to the provisions of this
Lease may sometimes be referred to as the "AGGREGATE MONTHLY BASIC RENT". The
Aggregate Monthly Basic Rent shall be payable in advance on the first day of
each and every calendar month during the Term as provided herein in connection
with the Monthly Basic Rent, the Parking Lot Rent and the Storage Rent,
respectively.
4.6 All payments received by Landlord from Tenant for Monthly Basic Rent,
Parking Lot Rent, Storage Rent, Operating Rent or any other sums due under this
Lease shall be applied to the oldest payment obligation owed by Tenant to
Landlord. No designation by Tenant, either in a separate writing or on a check
or money order, shall modify this clause or have any force or effect.
4.7 Landlord shall use commercially reasonable efforts to make available
to Tenant, to the extent required to satisfy parking requirements associated
with the Premises, up to one hundred (100) additional parking spaces located
among the following existing parking facilities controlled by Landlord, or an
affiliate of Landlord, so long as such control exists: 96 Townsend Street; 670-
680 Second Street; 635/699 Second Street; 160 King Street and 501 Second Street,
San Francisco, California. In no event, however, shall Landlord (or any
affiliate of Landlord) be required to impair the use of any of the above
described buildings or incur any material costs by reason of provision of the
above described additional parking to Tenant. Further, in connection with the
provision of any such parking, it is agreed that Landlord, and the applicable
affiliate of Landlord, shall retain the right to terminate or otherwise limit
the parking at any particular facility to the extent required in connection with
the use of such facility for the described property and shall further have the
right to terminate any provision of such parking in the event of any sale of the
above described property by Landlord (or the applicable affiliate of Landlord).
In connection with any additional parking as made available to Tenant in
accordance with the provisions of this Paragraph 4.7, Tenant shall pay the
parking fee and any and all other charges made in connection with such parking
on a basis consistent with market rates as determined by Landlord.
5. Operating Expenses.
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5.1 For the purposes of this Subparagraph 5.1, the following terms are
defined as follows:
Tenant's Percentage Share. Tenant's Percentage Share shall mean the
-------------------------
percentage set forth in the Summary.
Base Year. Base Year shall mean the year set forth in the Summary;
---------
provided, however, that should Tenant exercise its option for the First
Extended Term and/or the Second Extended Term, then the Base Year for the
applicable Extended Term shall be revised to mean the calendar year in which the
applicable Extended Term commences.
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Operating Expenses. Operating Expenses shall consist of all costs of
------------------
operation and maintenance of the Building, the common areas and the Site as
determined by standard accounting practices, calculated assuming the Building is
ninety-five percent (95%) occupied (unless actually occupied in a greater
percentage, in which case the actual occupancy percentage shall be used),
including the following costs by way of illustration, but not limitation: real
property taxes and assessments and any taxes or assessments hereafter imposed in
lieu thereof; gross receipt taxes (whether assessed against Landlord or assessed
against Tenant and collected by Landlord, or both); the net cost and expense of
insurance for which Landlord is responsible hereunder or which Landlord or any
first mortgagee with a lien affecting the Premises reasonably deems necessary in
connection with the operation of the Building (including the deductible portion
of any insured loss); janitorial services; security; parking valet/attendant
expenses; card key parking apparatus repair and maintenance; any and all Garage-
related expenses, with all such valet/attendant, car key apparatus repair,
maintenance and other Garage-related expenses not to exceed such expenses
incurred by prudent operators of substantially similar sized garages within the
geographical location of the Premises; labor; utilities and utilities
surcharges, and any other costs levied, assessed or imposed by, or at the
direction of, or resulting from statutes or regulations or interpretations
thereof, promulgated by any federal, state, regional, municipal or local
government authority in connection with the use or occupancy of the Building or
the Premises or the parking facilities serving the Building or the Premises; the
cost (amortized over the useful life of the improvement or equipment in question
as reasonably determined by Landlord in accordance with generally accepted
accounting principles at an interest rate of ten percent (10%)) of (a) any
capital improvements made to the Building by the Landlord which are reasonably
anticipated to increase the efficiency of the Building or made to the Building
by Landlord that are required under any governmental law or regulation that was
not applicable to the Building at the time it was constructed, or (b)
replacement of any building equipment needed to operate the Building at the same
quality levels (or levels of efficiency) as prior to the replacement; costs
incurred in the management of the Building, if any (including supplies, wages
and salaries of employees used in the management, operation and maintenance of
the Building, and payroll taxes and similar governmental charges with respect
thereto); on site Building management office rental; a management fee (not to
exceed 3% of the gross revenue receivable by Landlord from time to time in
connection with the Premises pursuant to this Lease); air conditioning; waste
disposal; heating; ventilating; elevator maintenance; supplies; materials;
equipment; tools; repair and maintenance of the structural portions of the
Building and the plumbing, heating, ventilating, air conditioning and electrical
systems installed or furnished by Landlord; and maintenance, costs and upkeep of
all parking and common areas, rental of personal property used in maintenance;
costs and expenses of gardening and landscaping, maintenance of signs (other
than Tenant's signs); personal property taxes levied on or attributable to
personal property used in connection with the entire Building, including the
common areas; reasonable audit or verification fees; and costs and expenses of
repairs, resurfacing, repairing, maintenance, painting, lighting, cleaning,
window washing, refuse removal, security and similar items, including
appropriate reserves.
Notwithstanding anything contained in this Paragraph 5.1 to the contrary,
Operating Expenses shall not include any of the following:
(a) electrical, water, sewer, gas, garbage, and janitorial costs
(including janitorial supplies) with respect to the Premises which are to be
paid directly by Tenant or reimbursed to Landlord as having been separately
billed by Landlord to Tenant as provided in Paragraph 5.2 below;
(b) depreciation on the Building or equipment therein;
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(c) Landlord's executive salaries;
(d) real estate brokers' commissions;
(e) interest expense on Building financing;
(f) amortization of cost of tenant improvements in the Building;
(g) ground rent;
(h) income and franchise taxes;
(i) Landlord's cost of electricity or other service sold to tenants
to the extent Landlord is reimbursed therefore as a charge over the Monthly
Basic Rent and any additional rent payable under the lease with that tenant;
(j) third party accountants' fees, attorneys' fees and other
professional fees and costs incurred in connection with disputes or lease
negotiations with tenants or other occupants or prospective tenants or occupants
of the Building, the enforcement of any leases (including unlawful detainer
proceedings and the collection of rents), other than de minimis amounts, and
requests to assign or sublet;
(k) overhead and profit paid to subsidiaries or affiliates of the
Landlord for management or other services on or to the Building for supplies or
other materials, to the extent that the overall cost of the services, supplies
or materials provided by Landlord materially exceeds the competitive cost of the
services, supplies, or materials if obtained from an unrelated third party on an
arm's length basis;
(l) compensation paid to clerks, attendants, or other persons in
commercial concessions operated by the Landlord;
(m) rentals and other related expenses incurred in leasing air
conditioning systems, elevators, or other equipment ordinarily considered to be
of a capital nature;
(n) items and services for which Tenant reimburses the Landlord or
pays third parties or that the Landlord provides selectively to one or more
tenants of the Building other than Tenant without reimbursement;
(o) maintenance costs incurred in connection with repairs or other
work needed because of fire, windstorm, or other casualty or cause insured
against by Landlord or to the extent Landlord's insurance required under the
terms of the Lease would have provided insurance, whichever is greater;
(p) all voluntary contributions to any political or charitable
organizations or other industry related associations (e.g., BOMA);
(q) capital costs for the acquisition of sculpture, paintings or
other art objects;
(r) advertising, marketing and promotion costs;
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(s) costs associated with the operation of the corporation or other
entity which constitutes the Landlord, as distinguished from costs of operation
of the Building, including accounting and legal costs, costs of defending
lawsuits with any mortgagee, and the costs of selling, syndicating, financing,
mortgaging or hypothecating any ownership interest in Landlord, or any of the
Landlord's interests in the Building;
(t) costs that are actually reimbursed to the Landlord by insurance
companies or other third parties; provided that the Landlord shall use
commercially reasonable efforts to pursue payment from such insurance companies
or other third parties (the costs of such efforts to procure payment to be
included as an Operating Expense);
(u) reserves for capital items, bad debts, or rental losses;
(v) the costs incurred to investigate the presence of any Hazardous
Material (as defined below), costs to respond to any claim of Hazardous Material
contamination or damage, costs to remove any Hazardous Material from the
Premises, Building or Site or to remediate any Hazardous Material contamination,
any judgments or other costs incurred in connection with any Hazardous Material
exposure or release, except to the extent that the cost is caused by the
storage, use, release or disposal of the subject Hazardous Material by Tenant;
(w) fines and penalties incurred due to Landlord's operation of the
Building in violation of applicable laws or due to Landlord's failure to timely
pay real property taxes;
(x) except to the extent expressly permitted, any repairs of a
capital nature or costs for items that would normally be capitalized under
generally accepted accounting principles; and
(y) interest, charges and fees incurred with respect to mortgage
financing for the Building or Site.
As used herein, the term "real property taxes" shall include any form of
assessment, license fee, license tax, business license fee, tax, levy, charge,
or similar imposition, imposed by any authority having the direct power to tax,
including any city, county, state or federal government, or any school,
agricultural, lighting, drainage or other improvement or special assessment
district thereof, as against any legal or equitable interest of Landlord in the
Premises, including, but not limited to, the following:
(i) any tax on Landlord's "right" to rent or "right" to other income from
the Premises or as against Landlord's business of leasing the Premises;
(ii) any assessment, tax, fee, levy or charge in substitution, partially or
totally, of any assessment, tax, fee, levy or charge previously included within
the definition of real estate tax, it being acknowledged by Tenant and Landlord
that Proposition 13 was adopted by the voters of the State of California in the
June, 1978 Election and that assessments, taxes, fees, levies and charges may be
imposed by governmental agencies for such services as fire protection, street,
sidewalk and road maintenance, refuse removal and for other governmental
services formerly provided without charge to property owners or occupants. It is
the intention of Tenant and Landlord that all such new and increased
assessments, taxes, fees, levies and charges be included within the definition
of "real property taxes" for the purposes of
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this Lease;
(iii) any assessment, tax, fee, levy or charge allocable to or
measured by the area of the Premises or the rent payable hereunder, including,
without limitation, any excise tax levied by the State, City or Federal
government, or any political subdivision thereof, with respect to the receipt of
such rent, or upon or with respect to the possession, leasing, operating,
management, maintenance, alteration, repair, use or occupancy by Tenant of the
Premises, or any portion thereof;
(iv) any assessment, tax, fee, levy or charge upon this transaction
or any document to which Tenant is a party, creating or transferring an interest
or an estate in the Premises;
(v) any assessment, tax, fee, levy or charge by any governmental
agency related to any transportation plan, fund or system instituted within the
geographic area of which the Building is a part; or
(vi) reasonable legal and other professional fees, costs and
disbursements incurred in connection with proceedings to contest, determine or
reduce real property taxes.
Notwithstanding any provision of this Paragraph 5.1 expressed or implied to
the contrary, "real property taxes" shall not include Landlord's federal or
state income, franchise, inheritance, gift or estate taxes. Real property taxes
also shall not include any tax or assessment expense (i) in excess of the amount
which would be payable if such tax or assessment expense were paid in
installments over the longest possible term; or (ii) imposed on land and
improvements other than the Building and/or Site. Tenant may in good faith
contest any tax or assessment, provided that Tenant indemnifies Landlord from
any loss or liability in connection therewith and further provided that Tenant
bears the cost of any such contest including without limitation the cost of any
interest and penalties which may be assessed.
5.2 Tenant shall directly and timely pay all electrical, gas, water,
garbage and sewer costs as well as janitorial costs (including the cost of
janitorial supplies) relating to the Premises. With respect to janitorial costs
(including the cost of janitorial supplies) Tenant shall be entitled to contract
with such supplier of janitorial services as Tenant may elect (subject to the
approval of Landlord, which approval shall not be unreasonably withheld or
delayed), or in the alternative, shall be entitled to internally provide
janitorial services in connection with the Premises. In all events, Tenant shall
provide janitorial services in connection with the Premises in a commercially
reasonable fashion consistent with janitorial services provided in first class
commercial buildings in the geographical area in which the Premises is located.
The cost of all janitorial supplies in connection with the Premises shall be the
responsibility of Tenant. All such janitorial costs (including the costs of
janitorial supplies) shall be paid directly by Tenant. Upon request of the
Landlord, from time to time, but no more frequently than once during each Lease
Year, Tenant shall provide to Landlord evidence reasonably satisfactory to
Landlord of the payment of such costs. In the event that such costs are not
timely paid by Tenant, Landlord shall be entitled (but not obligated), upon ten
(10) days prior notice to Tenant, to pay such costs which payment shall promptly
be reimbursed by Tenant to Landlord within twenty (20) days after receipt of
Landlord's invoice, together with interest equal to the annual rate of the
lesser of ten percent (10%) or the maximum rate allowed by law from the date of
payment to the date of receipt by Landlord.
5.3 No later than April of each calendar year following the Lease
Commencement Date during the Term of this Lease, or as soon thereafter as
possible, Landlord shall endeavor to deliver to Tenant a statement ("ESTIMATE
STATEMENT") wherein Landlord shall estimate the Operating Expenses for the
current
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calendar year, and Tenant's Percentage Share of the excess, if any, of the
estimated Operating Expenses for the current calendar year over the Operating
Expenses for the Base Year. If Operating Expenses estimated in the Estimate
Statement of the current calendar year exceed the Operating Expenses of the Base
Year then Tenant's Percentage Share of such excess amount shall be divided into
twelve (12) equal monthly installments and Tenant shall pay to Landlord within
thirty (30) days, following the receipt of such statement, an amount equal to
one (1) monthly installment multiplied by the number of months from January in
the calendar year in which said statement is submitted to the month of such
payment, both months inclusive. Subsequent installments shall be paid
concurrently with the regular monthly rent payments for the balance of the
calendar year and shall continue until the next calendar year's Estimate
Statement is rendered. If Landlord determines that Tenant's Percentage Share of
the excess Operating Expenses for such current calendar year is greater than
that set forth in the Estimate Statement, then Landlord may, at any time, but
not more frequently than once during each calendar year, deliver a revised
Estimate Statement and Tenant shall pay to Landlord, within thirty (30) days of
the delivery of such revised Estimate Statement, the difference between such
revised Estimate Statement and the original Estimate Statement for the portion
of the current calendar year which has then expired and Tenant shall pay during
the balance of such current calendar year a fraction of the balance of such
difference as would fully amortize such excess over the remaining months of the
then current calendar year. Notwithstanding anything to the contrary set forth
in this Paragraph 5.3, or elsewhere in this Lease or the Summary, Tenant shall
have no obligation to pay Tenant's Percentage Share of the increase in Operating
Expenses over the Base Year for the first twelve full calendar (12) months
following the Lease Commencement Date. Tenant's first obligation to pay
Operating Rent shall accrue in the thirteenth full calendar (13th) month
following the Lease Commencement Date. Notwithstanding the designation of Base
Year in the Summary, for purposes of calculating Tenant's share of the increase
in real property taxes, the initial real property taxes for purposes of
determining any increase, shall be the real property taxes based on an assessed
value of the Premises, Building and Site which takes into account the
construction of Landlord's Work and the Tenant's Improvements. Tenant's
obligation to pay increases in real property taxes, if any, shall commence as of
the thirteenth (13th) full calendar month following the Lease Commencement Date
even if such increases, if any, cannot be calculated until subsequent to such
time.
By the first day of June of each succeeding calendar year during the Term
of this Lease, or as soon thereafter as possible (but, in any event, no later
than December 31 of such succeeding calendar year), Landlord shall endeavor to
deliver to Tenant a statement ("ACTUAL STATEMENT") wherein Landlord shall state
the actual. Operating Expenses for the preceding calendar year. If the Actual
Statement reveals a greater increase in Tenant's Percentage Share of Operating
Expenses in excess of the Base Year than was estimated by Landlord in the
Estimate Statement delivered as provided herein, then within thirty (30) days
following receipt of the Actual Statement by Landlord, Tenant shall pay a lump
sum equal to said total increase over the Operating Expenses for the Base Year,
less the total of the monthly installments of increases set forth on the
Estimate Statement which were paid in the previous calendar year. If the Actual
Statement reveals that Tenant overpaid Operating Expenses for any calendar year,
any overpayment made by Tenant on the monthly installment basis provided above
shall be credited toward the next monthly rent falling due and the monthly
installment of Tenant's Percentage Share of Operating Expenses to be paid
pursuant to the then current Estimate Statement shall be adjusted to reflect
such lower expenses for the most recent calendar year, or if this Lease has been
terminated, such excess shall be credited against any amount which Tenant owes
Landlord pursuant to this Lease and, to the extent all amounts which Tenant owes
Landlord pursuant to this Lease have been paid, Landlord shall promptly pay such
excess to Tenant. Landlord shall not be entitled to deliver an Actual Statement
more than one time per calendar year. Any delay or failure by Landlord in
delivering any estimate or statement pursuant to this Paragraph shall not
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constitute a waiver of its right to require an increase in Tenant's share of the
Operating Expenses in excess of the Base Year nor shall it relieve Tenant of its
obligations pursuant to this Paragraph, except that Tenant shall not be
obligated to make any payments based on such estimate or statement until thirty
(30) days after receipt of such estimate or statement.
5.4 Even though the Term has expired and Tenant has vacated the Premises,
when the final determination is made of Tenant's Percentage Share of Operating
Expenses for the calendar year in which this Lease terminates, Tenant, within
twenty (20) days after receipt of Landlord's determination, shall pay any
increase due over the estimated expenses paid and conversely any overpayment
made in the event said expenses decrease shall be rebated by Landlord to Tenant,
within twenty (20) days after Landlord's determination.
5.5 Notwithstanding anything contained in this Paragraph 5, the rental
payable by Tenant each month shall in no event be less than the Monthly Basic
Rent specified in Paragraph 4 hereof. The excess Operating Expenses to be paid
by Tenant to Landlord pursuant to the provisions of this Paragraph 5 shall
sometimes be referred to in the aggregate as the "OPERATING RENT".
5.6 Notwithstanding any provision to the contrary contained in this Lease,
within sixty days after receipt by Tenant of Landlord's Operating Expenses for
any prior calendar year during the Term, Tenant or its authorized representative
shall have the right to inspect the books of Landlord upon reasonable notice and
during the business hours of Landlord at Landlord's office in the Building, or,
at Landlord's option, at such other location as Landlord reasonably may specify,
for the purpose of verifying the information contained in the statement. Unless
Tenant asserts specific errors within sixty (60) days after receipt of the
statement, the statement shall be deemed correct as between Landlord and Tenant.
6. Security Deposit.
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6.1 As and for security for Tenant's full and faithful performance of all
the terms, covenants and conditions of this Lease to be kept and performed by
Tenant, Tenant shall deposit with Landlord (i) cash in the amount of Three
Hundred Sixty Thousand Dollars ($360,000) and (ii) an unconditional, irrevocable
letter of credit ("LOC") in favor of Landlord in the sum of One Million Six
Hundred Forty Thousand Dollars ($1,640,000) (subject to adjustment pursuant to
Subparagraph 6.2) from a bank or other financial institution and in a form
reasonably acceptable to Landlord. If at any time during the Term, any item
constituting rent as provided herein, or any other sum payable by Tenant to
Landlord hereunder, shall be overdue and unpaid, beyond applicable cure periods,
then Landlord may, at the sole option of Landlord, but without any requirement
to do so, draw down or make a claim or demand for draw against the LOC (or at
the election of Landlord against the cash portion of the security deposit) an
amount equal to the overdue and unpaid amount, together with Landlord's actual
and reasonable expenses incurred in connection with the default, beyond any
applicable cure period, and apply such sum to payment of such overdue rent or
other sum. The LOC shall provide that any draw thereunder shall be accompanied
by a certificate of an officer of Landlord stating that Tenant is in default
under the Lease beyond the applicable notice and cure period, if any, and that
Landlord or its authorized agent is entitled to draw down on the LOC the amount
requested pursuant to the terms of this Lease. Further in the event of the
failure of Tenant to keep and perform any term, covenant or condition of this
Lease to be kept or performed by Tenant, beyond any applicable cure period,
then, at the sole option of Landlord, and after termination of this Lease,
Landlord may draw down the entire LOC (and draw against any remaining cash
portion of the security deposit), or so much thereof as may be necessary to
compensate Landlord for any loss or damage sustained or suffered
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by Landlord due to such breach on the part of Tenant. In the event that all or
any portion of the LOC is drawn down by Landlord to pay overdue rent or other
sums due and payable to Landlord by Tenant hereunder, then Tenant shall, within
ten (10) days after receipt of written demand of Landlord, promptly remit to
Landlord a sufficient amount in cash or an additional letter of credit to
restore Landlord's security to the original amount of the LOC as provided in
this Paragraph. In the event that all or any portion of the cash portion of the
security deposit is charged against by Landlord to pay overdue rent or other
sums due and payable to Landlord by Tenant hereunder, then Tenant shall, within
ten (10) days after receipt of written demand of Landlord, promptly remit to
Landlord a sufficient amount in cash to restore the cash portion of Landlord's
security deposit as drawn against by Landlord. Any failure on the part of Tenant
to restore either the cash portion of the security deposit or the LOC in
accordance with the provisions immediately above within ten (10) days following
the date on which demand for restoration is deemed given hereunder, shall
constitute a default by Tenant pursuant to this Lease. In the event Landlord
transfers the LOC and the cash portion of the security deposit to any successor
in interest of Landlord to title of the Site and Building, then, in such event,
Landlord shall be discharged from any further obligation or liability with
respect to the LOC and the cash portion of the security deposit. Tenant waives
the provisions of California Civil Code Section 1950.7 and all other provisions
of law now in force or that become in force after the date of execution of this
Lease that provide that Landlord may claim from a security deposit only those
sums reasonably necessary to remedy defaults in the payment of rent, to repair
damages caused by Tenant, or to clean the Premises. Landlord and Tenant agree
that Landlord may, in addition, claim those sums reasonably necessary to
compensate Landlord for any out-of-pocket (but not consequential) loss or damage
caused by any act or omission of Tenant or Tenant's officers, agents, employees,
independent contractors or invitees. Landlord's obligations with respect to the
cash portion of the security deposit are those of a debtor and not of a trustee,
and Landlord is entitled to commingle the cash portion of the security deposit
with Landlord's general funds. Landlord shall not be required to pay Tenant
interest on any portion of the security deposit including without limitation the
cash portion of the security deposit.
The cash portion of the security deposit shall be delivered by Tenant to
Landlord within five (5) days following execution and delivery by Landlord and
Tenant of this Lease. The LOC shall be delivered by Tenant to Landlord within
ten (10) days after execution and delivery of this Lease by Landlord and Tenant.
6.2 The LOC shall be subject to adjustment under the following
circumstances:
(a) Provided that Tenant completely and faithfully performs all
terms, conditions and obligations imposed upon Tenant by this Lease for the
first nine full calendar (9) months of the Term, and provided that Tenant is not
then in default, beyond any applicable cure period, of this Lease, the LOC may
be reduced by ten percent (10%) of its original amount at the conclusion of said
nine (9) month period. Thereafter, on each subsequent anniversary date of the
first reduction, and provided Tenant has not been in default, beyond any
applicable cure period, of this Lease since the prior reduction in the LOC, the
LOC may be further reduced by ten percent (10%) of the outstanding amount of the
LOC. Notwithstanding any provision to the contrary of this Lease including,
without limitation, the provisions of this Paragraph 6.2, in no event shall the
security deposit to be given by Tenant, pursuant to the provisions of Paragraph
6 be reduced to an amount less than a cash deposit in the amount of Three
Hundred Sixty Thousand Dollars ($360,000), Such minimum cash deposit shall be
subject to return to Tenant upon the expiration or earlier termination of this
Lease only in accordance with the provisions of Paragraph 6.5 below.
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(b) In the event that (i) Tenant becomes subject to the reporting
requirements of the Securities and Exchange Commission (after the filing of a
Form S-1 Registration Statement), and shares of Tenant become publicly traded on
a nationally recognized exchange, and (ii) the audited net worth of the Tenant
is equal to or greater than One Hundred and Twenty-five Million ($125,000,000)
for an entire calendar quarter and (iii) during the same calendar quarter the
arithmetic average market capitalization value of Tenant exceeds 1.5 Billion
Dollars, then the provisions of this Paragraph 6.2(b) shall be applicable. The
date on which all of the matters specified in clauses (i), (ii) and (iii) above
shall have occurred shall be referred to as the "Public Date". Prior to the
occurrence of the Public Date, the provisions of this Paragraph 6.2(b) shall not
be applicable.
If, on the tenth (10) month anniversary of the occurrence of the
Public Date, or at any time thereafter, Tenant provides Landlord with
satisfactory evidence (such as audited financial statements) that Tenant's
earnings before income taxes, depreciation and amortization (but including
interest) ("EBITDA") reflect a profit for the immediately preceding three (3)
consecutive calendar quarters, and Tenant's net worth is no less than Seventy-
Five Million Dollars ($75,000,000.00), then the LOC may be terminated and
Landlord shall, subject to the provisions below, thereafter hold only the cash
security deposit in the amount of Three Hundred and Sixty Thousand Dollars
($360,000). Thereafter, the LOC shall be reinstated in, or increased to, as the
case may be, an amount equal (i) to two (2) month's Monthly Basic Rent if
Tenant's net worth as determined in accordance with generally accepted
accounting principles falls below Seventy-Five Million Dollars ($75,000,000.00),
(ii) to four (4) month's Monthly Basic Rent if Tenant's net worth falls below
Fifty Million Dollars ($50,000,000.00), and (iii) to six (6) month's Monthly
Basic Rent if Tenant's net worth falls below Thirty Million Dollars
($30,000,000.00). Further, in the event that the financial statements of Tenant
at any time reflect a loss for two or more consecutive calendar quarters on the
basis of EBITDA, then the amount of the LOC otherwise then in effect shall be
increased by an amount equal to one month of Monthly Basic Rent. If the LOC has
been terminated at the time that an increase is required by the preceding
sentence, then the LOC shall be reinstated in the amount required by the
preceding sentence. All multiples of Monthly Basic Rent shall be calculated on
the then applicable Monthly Basic Rent. Notwithstanding any provisions to the
contrary contained in this Paragraph 6.2, if Tenant's net worth, after falling
below any of the variables described above in this Paragraph 6.2(b),
subsequently rises to a higher net worth threshold and remains at such higher
threshold for three consecutive months, at the end of such three month period
Tenant shall have the right to replace the LOC in the higher amount with an LOC
for the lower amount provided for with respect to the higher net worth threshold
as described above in this Paragraph 6.2(b) that Tenant has maintained for the
preceding three month period subject, however, to subsequent increase in the
amount of the LOC should Tenant's net worth again fall below such higher
threshold amount. Tenant shall from time to time promptly provide to Landlord
for each calendar quarter during the Term hereof a copy of Tenant's financial
statement (audited if available) provided that Tenant shall not be obligated to
provide Landlord with a copy of Tenant's financial statement more often than
once per calendar quarter.
6.3 If, after any default by Tenant beyond applicable cure periods and a
termination of this Lease by Landlord as set forth in Paragraph 6.1 above and
Landlord has drawn down the entire LOC, any proceeds of the LOC in excess of the
sum equal to the amount necessary to compensate Landlord for any loss or damage
sustained or suffered by Landlord due to Tenant's default, together with
Landlord's actual and reasonable expenses incurred in connection therewith,
shall be held in a separate, interest-bearing account ("Account") in Landlord's
name at such national bank as Landlord reasonably selects ("Bank"). Tenant shall
have no rights to the money in the Account, except for (i) the return rights
specified below, and (ii) the right to receive interest on the Account, as
specified herein. Landlord agrees to place on the
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signature card for the Account the following language "[name of Landlord] is
holding the funds in the Account in accordance with a Lease dated [date of
Lease] between [name of Landlord] and LookSmart, Ltd., The rights of [name of
Landlord] and LookSmart, Ltd. in and to the funds are subject to the terms of
such Lease." Within ten (10) business days after Landlord signs the signature
card (or any replacement signature card) on the Account, Landlord agrees to
provide Tenant with a copy of the signature card for the Account. Landlord
agrees to request the Bank to pay interest on the Account directly to Tenant on
a quarterly basis, and to report to the appropriate taxing authorities that such
interest has been paid to Tenant; provided, however, that if, despite Landlord's
request, the Bank will not or cannot pay the interest directly to Tenant, the
(x) the Bank shall pay interest on the Account directly to Landlord, in which
case, within ten (10) business days after Landlord receives such payment of
interest, Landlord shall pay to Tenant the interest Landlord receives from the
Bank on the Account, and (y) Landlord shall have the right to report to the
appropriate taxing authorities that such income is the income of Tenant. Tenant
represents to Landlord that Tenant's Federal Taxpayer Identification Number is
13-3904355. If the proceeds of the LOC are placed in a fixed term instrument,
such as a certificate of deposit, then Landlord shall not be liable for any
prepayment penalty if Landlord uses the Account, or a portion thereof, in
accordance with the provisions of this Paragraph 6.
6.4 Notwithstanding anything contained in this Paragraph 6 to the
contrary, if Landlord draws on the LOC an amount in excess of the amount
necessary to compensate Landlord in full for any loss or damage sustained or
suffered by Landlord due to the default of Tenant, then Tenant shall have the
right, upon ten (10) days' prior written notice to Landlord, to obtain a refund
from Landlord of any excess proceeds of the LOC which Landlord has drawn upon,
any such refund being conditioned upon Tenant simultaneously delivering to
Landlord a new replacement LOC in the amount then required, and otherwise
meeting the requirements contained in this Paragraph 6.
6.5 Upon the expiration or earlier termination of this Lease, Landlord
shall return to Tenant so much of the LOC (and the cash portion of the security
deposit) as has not been applied or entitled to be held by Landlord to be
applied to cure any and all defaults by Tenant occurring prior to the expiration
or earlier termination of this Lease and any default by Tenant pursuant to the
provisions of Paragraph 13.1(f) below.
7. Use.
---
7.1 Tenant shall use the Premises for general office purposes and purposes
incident thereto and shall not use or permit the Premises to be used for any
other purpose without the prior written consent of Landlord, which consent may
be granted or withheld in Landlord's sole discretion. Tenant shall not use or
occupy the Premises in violation of any recorded covenants, conditions and
restrictions affecting the Site or of any law or of the Certificate of Occupancy
issued for the Building, and shall upon five (5) days' written notice from
Landlord, discontinue any use of the Premises which is declared by any
governmental authority having jurisdiction to be a violation of any recorded
covenants, conditions and restrictions affecting the Site or of any law or of
said Certificate of Occupancy. Subject to the provision of Paragraph 54.2,
Tenant shall not install any radio or television antenna, loudspeaker or other
device on the roof or exterior walls of the Building. Tenant shall not interfere
with radio or television broadcasting or reception from or in the Building or
elsewhere. Tenant shall comply with any direction of any governmental authority
having jurisdiction which shall, by reason of the nature of Tenant's specific
use or alteration of the Premises, impose any duty upon Tenant or Landlord with
respect to the Premises or with respect to the use or occupation thereof. Tenant
shall not do or permit to be done anything which will invalidate or
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increase the cost of any fire, extended coverage or any other insurance policy
covering the Building and/or property located therein and shall comply with all
rules, orders, regulations and requirements of the Pacific Fire Rating Bureau or
any other organization performing a similar function. Tenant shall within twenty
(20) days after receipt of demand reimburse Landlord as additional rent for any
additional premium charged for such policy by reason of Tenant's failure to
comply with the provisions of this Paragraph 7. Tenant 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
injure them, or use or allow the Premises to be used for any unlawful purpose,
nor shall Tenant cause, maintain or permit any nuisance in, on or about the
Premises. Tenant shall not commit or suffer to be committed any waste in or upon
the Premises and shall keep the Premises in first-class repair and appearance.
Tenant shall not place a load upon the Premises exceeding the average pounds of
live load per square foot of floor area specified for the Building by Landlord's
Architect, with the partitions to be considered a part of the live load.
Landlord reserves the right to prescribe the weight and position of all safes,
files and heavy equipment which Tenant desires to place in the Premises so as to
distribute properly the weight thereof. Tenant's business machines and
mechanical equipment which cause vibration or noise that may be transmitted to
the Building structure or to any other space in the Building shall be so
installed, maintained and used by Tenant as to eliminate such vibration or
noise. Tenant shall be responsible for all structural engineering required to
accommodate the structural load. Tenant shall fasten all files, bookcases and
like furnishings to walls in a manner to prevent tipping over in the event of
earth movements. Landlord shall not be responsible for any damage or liability
for such events.
7.2 Except for the normal and proper use and storage of typical cleaning
fluids and solutions, and office equipment supplies (such as copier toner), in
amounts commensurate with Tenant's use and occupancy of the Premises, Tenant
shall not use, introduce to the Premises, generate, manufacture, produce, store,
release, discharge or dispose of, on, under or about the Premises or transport
to or from the Premises any Hazardous Material (as defined below) or allow its
employees, agents, contractors, invitees or any other person or entity to do so.
Tenant warrants that it shall not make any use of the Premises which may cause
contamination of the soil, the subsoil or ground water. Tenant shall keep and
maintain the Premises in compliance with, and shall not cause or permit the
Premises to be in violation of any and all federal, state or local laws,
ordinances, rules or regulations pertaining to health, industrial hygiene or the
environmental conditions on, under or about the Premises. Tenant shall give
immediate written notice to Landlord of (i) any action, proceeding or inquiry by
any governmental authority or any third party with respect to the presence of
any Hazardous Material on the Premises or the migration thereof from or to other
property or (ii) any spill, release or discharge of Hazardous Materials that
occurs with respect to the Premises or Tenant's operations.
(a) Tenant shall indemnify and hold harmless Landlord, its directors,
officers, employees, agents, successors and assigns (collectively "Landlord")
from and against any and all claims arising from Tenant's use of the Premises in
violation of this paragraph. The indemnity shall include all costs, fines,
penalties, judgments, losses, reasonable attorney's fees, expenses and
liabilities incurred by Landlord for any such claim or any action or proceeding
brought thereon including, without limitation, (a) all foreseeable consequential
damages including without limitation loss of rental income and diminution in
property value; and (b) the costs of any cleanup, detoxification or other
ameliorative work of any kind or nature required by any governmental agency
having jurisdiction thereof or Landlord. This indemnity shall survive the
expiration or termination of this Lease. In any action or proceeding brought
against Landlord by reason of any such claim, upon notice from Landlord if
Landlord does not elect to retain separate counsel, Tenant shall defend the same
at Tenant's expense by counsel reasonably satisfactory to Landlord.
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(b) Landlord shall indemnify and hold harmless Tenant, its directors,
officers, employees, agents, successors and assigns (collectively, "Tenant")
from and against any and all claims arising from or relating to Hazardous
Materials actually existing and present at the Building or the Site or within
the Premises as of the Lease Commencement Date. The indemnity shall include all
costs, fines, penalties, judgments, losses, reasonable attorney's fees, expenses
and liabilities incurred by Tenant for any such claim or any action or
proceeding brought thereon including, without limitation, (a) all foreseeable
consequential damages; and (b) the cost of any clean up, detoxification or other
ameliorative work of any kind or nature required by any governmental agency
having jurisdiction thereof. This indemnity shall survive the expiration or
termination of this Lease. Any action or proceeding brought against Tenant by
reason of any such claim, upon notice from Tenant, if Tenant does not elect to
retain separate counsel, Landlord shall defend the same at Landlord's expense by
counsel reasonably satisfactory to Tenant.
(c) As used herein, the term "Hazardous Material" shall mean any
substance or material which has been determined by any state, federal or local
governmental authority to be capable of posing a risk of injury to health,
safety or property, including all of those materials and substances designated
as hazardous or toxic by the city in which the Premises are located, the U.S.
Environmental Protection Agency, the Consumer Product Safety Commission, the
Food and Drug Administration, the California Water Resources Control Board, the
Regional Water Quality Control Board, San Francisco Bay Region, the California
Air Resources Board, CAL/OSHA Standards Board, Division of Occupational Safety
and Health, the California Department of Food and Agriculture, the California
Department of Health Services, and any federal agencies that have overlapping
jurisdiction with such California agencies, or any other governmental agency now
or hereafter authorized to regulate materials and substances in the environment.
Without limiting the generality of the foregoing, the term "Hazardous Material"
shall included all of those materials and substances defined as "hazardous
materials" or "hazardous waste" in Sections 66680 through 66685 of Title 22 of
the California Administrative Code, Division 4, Chapter 30, as the same shall be
amended from time to time, petroleum, petroleum-related substances and the by-
products, fractions, constituents and sub-constituents of petroleum or
petroleum-related substances, asbestos, and any other materials requiring
remediation now or in the future under federal, state or local statutes,
ordinances, regulations or policies.
8. Payments and Notices. All rents and other sums payable by Tenant to
--------------------
Landlord hereunder shall be paid to Landlord by check at the address designated
by Landlord in the Summary or at such other places as Landlord may hereafter
designate in writing. Any notice required or permitted to be given hereunder
must be in writing and may be given by personal delivery, mail, or by recognized
overnight courier. If notice is given by personal delivery, such notice shall be
deemed to be given upon delivery, if notice is given by registered or certified
mail addressed to Tenant at the address designated in the Summary or to Landlord
at both of the addresses designated in the Summary, then such notice shall be
deemed given three (3) business days following deposit in the U.S. mail, postage
prepaid, addressed to Tenant as designated in the Summary or to Landlord at both
of the addresses designated in the Summary and if given by overnight courier
shall be deemed given one (1) business day following delivery to the courier,
charges prepaid, addressed as stated above. Either party may by written notice
to the other specify a different address for notice purposes. If more than one
person or entity constitutes the "Tenant" under this Lease, service of any
notice upon any one of said persons or entities shall be deemed as service upon
all of said persons or entities.
9. Brokers. The parties recognize that the brokers who negotiated this Lease
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are the brokers whose
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names are stated in the Summary, and agree that Landlord shall be solely
responsible for the payment of brokerage commissions to said brokers, and that
Tenant shall have no responsibility therefor. As part of the consideration for
the granting of this Lease, Tenant represents and warrants to Landlord that to
Tenant's knowledge no other broker, agent or finder negotiated or was
instrumental in negotiating or consummating this Lease and that Tenant knows of
no other real estate broker, agent or finder who is, or might be, entitled to a
commission or compensation in connection with this Lease. Any broker, agent or
finder of Tenant whom Tenant has failed to disclose herein shall be paid by
Tenant. Tenant shall hold Landlord harmless from all damages and indemnify
Landlord for all said damages paid or incurred by Landlord resulting from any
claims that may be asserted against Landlord by any broker, agent or finder who
has, or has claimed to have, rendered services to Tenant undisclosed by Tenant
herein. Landlord shall hold Tenant harmless from all damages and indemnify
Tenant for all said damages paid or incurred by Tenant resulting from any claims
that may be asserted against Tenant by any broker, agent or finder who has, or
has claimed to have, rendered services to Landlord undisclosed by Landlord
herein.
10. Holding Over. If Tenant remains in possession of the Premises after
------------
expiration or earlier termination of this Lease with Landlord's express consent,
Tenant's occupancy shall be a month to month tenancy at a rent agreed upon by
Landlord and Tenant but, in no event less than the aggregate of the Monthly
Basic Rent, Parking Lot Rent, Storage Rent and Tenant's Percentage Share of the
Operating Costs payable under this Lease during the last full month before the
date of expiration or earlier termination. The month to month tenancy shall be
on the terms and conditions of this Lease except as provided in the preceding
sentence and the Lease clauses concerning extension rights. If Tenant holds over
after the expiration or earlier termination of the Term hereof without the
express written consent of Landlord, Tenant shall become a tenant at sufferance
only, at a rental rate equal to one hundred fifty percent (150%) of the Monthly
Basic Rent, Storage Rent and Parking Lot Rent which would be applicable to the
Premises upon the date of such expiration (subject to adjustment as provided
herein and prorated on a daily basis) for the first sixty (60) days of such
holdover, and two hundred percent (200%) of such aggregate amount thereafter
during the pendency of such holdover, and otherwise subject to the terms,
covenants and conditions herein specified, so far as applicable including,
without limitation, the obligation to pay increased Operating Expenses as
provided in Paragraph 5. Acceptance by Landlord of rent after such expiration or
earlier termination shall not constitute a consent to a holdover hereunder or
result in a renewal. The foregoing provisions of this Paragraph 10 are in
addition to and do not affect Landlord's right of re-entry or any rights of
Landlord hereunder or as otherwise provided by law. If Tenant fails to surrender
the Premises upon the expiration of this Lease despite demand to do so by
Landlord, Tenant shall indemnify and hold Landlord harmless from all loss or
liability arising out of such failure, including without limitation, any claim
made by any succeeding tenant founded on or resulting from such failure to
surrender. No provision of this Paragraph 10 shall be construed as implied
consent by Landlord to any holding over by Tenant. Landlord expressly reserves
the right to require Tenant to surrender possession of the Premises to Landlord
as provided in this Lease upon expiration or other termination of this Lease.
The provisions of this Paragraph 10 shall not be considered to limit or
constitute a waiver of any other rights or remedies of Landlord provided in this
Lease or at law.
11. Taxes on Tenant's Property. Tenant shall be liable for and shall pay before
--------------------------
delinquency, taxes levied against any personal property or trade fixtures placed
by Tenant in or about the Premises. If any such taxes on Tenant's personal
property or trade fixtures are levied against Landlord or Landlord's property or
if the assessed value of the Premises is increased by the inclusion therein of a
value placed upon such personal property or trade fixtures of Tenant and if
Landlord, after written notice to Tenant, pays the taxes based upon such
increased assessments, which Landlord shall have the right to do
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regardless of the validity thereof, but only under proper protest if requested
by Tenant, Tenant shall within ten (10) days after receipt of demand repay to
Landlord the taxes levied against Landlord, or the proportion of such taxes
resulting from such increase in the assessment; provided that in any such event,
at Tenant's sole cost and expense, Tenant shall have the right, in the name of
Landlord and with Landlord's full cooperation, to bring suit in any court of
competent jurisdiction to recover the amount of any such taxes so paid under
protest, any amount so recovered to belong to Tenant.
12. Condition of Premises. Other than with respect to the completion of
---------------------
Landlord's construction obligations set forth in the Work Letter, which shall be
done in a good and workmanlike manner in accordance with all applicable law
(including, without limitation, the Americans With Disabilities Act of 1990) and
in accordance with the provisions of the Work Letter, using materials and
equipment of good quality, Tenant acknowledges that neither Landlord nor any
agent of Landlord has made any representation or warranty of any kind whatsoever
with respect to the Premises or the Building or with respect to the suitability
of either for the conduct of Tenant's business. The acceptance of possession of
the Premises by Tenant after receipt of the Notice, without objection within the
time prescribed for such objection, shall conclusively establish that the
Premises and the Building were at such time in satisfactory condition. Tenant
acknowledges and agrees that Tenant is relying solely upon Tenant's own
inspection of the Premises, and Tenant is not relying on any representation or
warranty from the Landlord regarding the Premises or the Building, except as
specifically set forth in this Lease or the Work Letter, including, without
limitation, any representation or warranty as to the physical condition, design
or layout of the Premises. Notwithstanding the foregoing, as of the Lease
Commencement Date, the heating, ventilating and air conditioning system, and the
electrical, plumbing, sewer, life safety and, if applicable, security systems
(collectively, "Building Systems") serving Floor Three and Floor Four or Floor
One and Floor Two, as the case may be, shall be in good working order and
repair. In connection with delivery of possession of Floor Three and Floor Four
or Floor One and Floor Two, as the case may be, to Tenant with Landlord's Work
and the Tenant's Improvements having been substantially completed, Tenant,
together with Tenant's Architect and a representative of Landlord and Landlord's
Architect, shall conduct a walk through of the applicable portion of the
Premises and prepare a punch list setting forth a description of any and all of
Landlord's Work and/or Tenant's Improvements remaining to be completed or
defective and requiring repair or replacement as reasonably determined by
Tenant's Architect and Landlord's Architect. Landlord shall, following the
preparation of such punch list, diligently pursue completion or repair of the
punch list items and upon completing or repairing all such punch list items,
Landlord shall be considered to have fulfilled its obligations in connection
with construction of both the Landlord's Work and the Tenant's Improvements.
Landlord shall for a period of thirty (30) days following delivery of possession
of Floor Three and Floor Four or Floor One and Floor Two, as the case may be, to
Tenant, perform any repairs required in connection with the Building Systems so
as to maintain such systems in good working order and repair, provided, however,
that Landlord shall have no obligation to make any repairs in connection with
any portion of the Building Systems damaged by Tenant or any of Tenant's
contractors, employees or agents.
13. Alterations.
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13.1 Tenant may, at any time and from time to time during the Term of this
Lease, at its sole cost and expense, make alterations, additions, installations,
substitutions, improvements and decorations (hereinafter collectively called
"Changes" and individually, a "Change") in and to the Premises, excluding
structural changes, on the following conditions, and providing such Changes will
not result in a violation of or require a change in the Certificate of Occupancy
applicable to the Premises:
<PAGE>
(a) The outside appearance, character or use of the Building shall
not be affected, and no Changes shall weaken or impair the structural strength
or, in the reasonable opinion of Landlord, lessen the value of the Building or
create the potential for unusual expenses to be incurred upon the removal of
Changes and the restoration of the Premises upon the termination of this Lease.
(b) No part of the Building outside of the Premises shall be
physically affected.
(c) The proper functioning of any of the mechanical, electrical,
sanitary and other service systems or installations of the Building ("Service
Facilities") shall not be adversely affected and there shall be no construction
which might interfere with Landlord's free access to the Service Facilities or
interfere with the moving of Landlord's equipment to or from the enclosures
containing the Service Facilities.
(d) In performing the work involved in making such Changes, Tenant
shall be bound by and observe all of the conditions and covenants contained in
this Paragraph 13.
(e) All work shall be done at such times and in such manner as
Landlord from time to time may reasonably designate.
(f) At the date upon which the Term of this Lease shall end, or the
date of any earlier termination of this Lease, Tenant shall remove all Changes
with respect to which Landlord has given notice to Tenant requiring such removal
as provided in Paragraph 13.2 below and restore or repair the Premises in
accordance with the direction of Landlord as described in Paragraph 13.2 below.
Such removal and restoration or repair shall be made not later than the date of
expiration of this Lease or thirty (30) days following any earlier termination
of this Lease. If Tenant fails to complete the removal and restoration or
repair, as the case may be, before the expiration of the Term, or in the case of
any earlier termination of this Lease, within thirty (30) days following the
occurrence of such termination, Landlord may complete the removal and
restoration or repair and charge the cost of such to Tenant. At the expiration
or earlier termination of this Lease, Tenant shall, in addition, at the option
of Landlord, be required to remove and restore any Change (including a Minor
Change, as defined below) with respect to which Tenant has failed to give notice
to Landlord in accordance with the provisions of Paragraph 13.2 below. Any such
removal and restoration by Tenant shall be made within thirty (30) days
following the request by Landlord (which request by Landlord in the case of
expiration of this Lease, shall not be given later than thirty (30) days prior
to such expiration and, in the case of earlier termination of this Lease, shall
not be given later than the date of such earlier termination) and Landlord may
complete the removal and restoration of any such Change and charge the cost to
Tenant in the event that Tenant fails to timely complete such removal and
restoration.
13.2 Before proceeding with any Change (exclusive only of changes to items
constituting Tenant's personal property and non-structural Changes not costing
in the aggregate more than Twenty-five Thousand Dollars ($25,000) per work of
improvement and not requiring any building permit or other like permit from any
applicable governmental agency), Tenant shall submit to Landlord plans and
specifications for the work to be done, which shall in all cases require
Landlord's prior written approval which shall not be unreasonably withheld or
delayed. In connection with any nonstructural changes not costing in the
aggregate, more than Twenty-five Thousand Dollars ($25,000) per work of
improvement and not requiring any building permit or like permit from any
applicable governmental agency ("MINOR
27
<PAGE>
CHANGE"), Tenant shall deliver to Landlord at least ten (10) business days prior
to commencement of such Minor Change, a general description of the proposed
Change including a copy of any plans and specifications available. Landlord's
consent shall not be required in connection with any proposed Minor Change
although construction of any such Minor Change by Tenant shall otherwise be
performed in accordance with the provisions of this Paragraph 13. At the time
Tenant requests the consent of Landlord to a proposed Change (other than a Minor
Change) Landlord, in connection with granting any such consent shall advise
Tenant as to whether Landlord will require Tenant upon the expiration of this
Lease or any earlier termination of this Lease to remove any such Change and, in
the event that Landlord elects to require such removal, whether Landlord will
require Tenant to (i) restore the Premises to its condition prior to the making
of such Change or, (ii) merely to remove the Change and repair any damages
resulting from such removal. In connection with any Minor Change of which
Landlord receives notice from Tenant, Landlord shall advise Tenant as to whether
Landlord will require removal of such Change at the expiration or earlier
termination of this Lease and in connection with any required removal, as to
whether Landlord will require restoration or merely repair as described above.
In connection with any Change requiring Landlord's approval, Landlord may confer
with consultants in connection with the review of the plans and specifications.
If Landlord or such consultant(s) shall disapprove of any of the Tenant's plans
Tenant shall be advised of the reasons of such disapproval. In any event, Tenant
agrees to pay to Landlord, as additional rent, the reasonable cost of such
consultation and review (but not in excess of $1,000 per request) within twenty
(20) days after receipt of invoices either from Landlord or such consultant(s).
Any Change for which approval has been received shall be performed strictly in
accordance with the approved plans and specifications, and no material
amendments or additions to such plans and specifications shall be made without
the prior written consent of Landlord which shall not be unreasonably withheld
or delayed Minor Changes shall generally be performed in accordance with the
notice given by Tenant to Landlord.
13.3 If the proposed Change requires approval by or notice to the lessor of
a superior lease or the holder of a mortgage, no Change shall proceed until such
approval has been received, or such notice has been given, as the case may be,
and all applicable conditions and provisions of said superior lease or mortgage
with respect to the proposed Change or alteration have been met or complied with
at Tenant's expense; and Landlord, if it approves the Change, will promptly
request such approval or give such notice, as the case may be.
13.4 Tenant shall submit to Landlord the name and address of each
contractor intended to be used by Tenant in connection with construction of
Changes and Landlord's approval thereof shall not be unreasonably withheld or
delayed. No contractor which is reasonably unacceptable to Landlord shall be
engaged by Tenant. All costs and expenses incurred in Changes shall be timely
paid by Tenant after each billing therefor. If Landlord approves the
construction of specific interior improvements in the Premises by contractors or
mechanics selected by Tenant and approved by Landlord, then Tenant's contractors
shall obtain on behalf of Tenant and at Tenant's sole cost and expense, (i) all
necessary governmental permits and certificates for the commencement and
prosecution of Tenant's Changes and for final approval thereof upon completion,
and (ii) at Landlord's request, a completion and lien indemnity bond, or other
surety, reasonably satisfactory to Landlord, for the Changes. In the event
Tenant shall request any changes in the work to be performed after the
submission of the plans referred to in this Paragraph 13, such additional
changes shall be subject to the same approvals and notices as the changes
initially submitted by Tenant.
13.5 All Changes and the performance thereof shall at all times comply with
(i) all laws, rules, orders, ordinances, directions, regulations and
requirements of all governmental authorities, agencies,
28
<PAGE>
offices, departments, bureaus and boards having jurisdiction thereof, (ii) all
rules, orders, directions, regulations and requirements of the Pacific Fire
Rating Bureau, or of any similar insurance body or bodies, and (iii) all
reasonable rules and regulations of Landlord, and Tenant shall cause Changes to
be performed in compliance therewith and in good and first class workmanlike
manner, using materials and equipment at least equal in quality and class to the
existing improvements and installations of the Building. Changes shall be
performed in such manner as not to delay or impose any additional expense upon
Landlord in construction, maintenance or operation of the Building, and shall be
performed by contractors or mechanics approved by Landlord and submitted to
Tenant pursuant to this Paragraph, who shall coordinate their work in
cooperation with any other work being performed with respect to the Building.
Throughout the performance of Changes, Tenant, at its expense, shall carry, or
cause to be carried, workmen's compensation insurance in statutory limits, and
general liability insurance for any occurrence in or about the Building, of
which Landlord and its managing agent shall be named as parties insured, in such
limits as Landlord may reasonably prescribe, with insurers reasonably
satisfactory to Landlord all in compliance with Subparagraph 20.2.
Notwithstanding any provision of this Lease to the contrary, in no event shall
Landlord be required to undertake any alteration or any improvements of any kind
whatsoever in connection with the Premises or the Building as a result of or in
connection with any Changes being made by Tenant and specifically, but without
limitation, Landlord shall not be required to make any improvements or
alteration of any kind whatsoever in order to comply with any applicable laws,
orders, ordinances, regulations or building codes which may be required in
connection with Changes being made by Tenant.
13.6 Tenant further covenants and agrees that any mechanic's lien filed
against the Premises or against the Building for work claimed to have been done
for, or materials claimed to have been furnished to Tenant, will be discharged
by Tenant, by bond or otherwise, within twenty (20) days after the receipt of
notice of filing thereof, at the cost and expense of Tenant. All alterations,
decorations, additions or improvements upon the Premises, made by either party,
including (without limiting the generality of the foregoing) all wallcovering,
built-in cabinet work, paneling and the like, shall, unless Landlord elects
otherwise, at the time set forth in Paragraph 13.1(f) above, become the property
of Landlord, and shall remain upon, and be surrendered with the Premises, as a
part thereof, at the end of the Term hereof. Notwithstanding any provision to
the contrary contained in this Paragraph 13.6, Tenant shall not be required to
remove or restore any Changes which Landlord agreed in accordance with the
provisions of Subparagraph 13.1(f) need not be removed or restored. In no event
shall Tenant be obligated to remove the Landlord's Work or the Tenant's
Improvements upon the expiration or earlier termination of this Lease.
13.7 All articles of personal property and all business and trade fixtures,
machinery and equipment, furniture and movable partitions owned by Tenant or
installed by Tenant at its expense in the Premises shall be and remain the
property of Tenant and may be removed by Tenant at any time during the Term
provided Tenant is not in default hereunder, and provided that Tenant shall
repair any damage caused by such removal. If Tenant shall fail to remove all of
its effects from said Premises upon termination of this Lease for any cause
whatsoever, Landlord may, at its option, remove the same in any manner that
Landlord shall choose, and store said effects without liability to Tenant for
loss thereof, and Tenant agrees to pay Landlord within ten (10) days after
receipt of demand any and all expenses incurred in such removal, including court
costs and reasonable attorneys' fees and storage charges on such effects for any
length of time that the same shall be in Landlord's possession or Landlord may,
at its option, without notice, sell said effects, or any of the same, at private
sale and without legal process, for such price as Landlord may obtain and apply
the proceeds of such sale against any amounts due under this Lease from Tenant
to Landlord and against the expense incident to the removal and sale of said
effects.
29
<PAGE>
13.8 Subject to Landlord's agreement to minimize any disturbance of
Tenant's use of the Premises, Landlord reserves the right at any time and from
time to time without the same constituting an actual or constructive eviction
and without incurring any liability to Tenant therefor or otherwise affecting
Tenant's obligations under this Lease, to make such changes, alterations,
additions, improvements, repairs or replacements in or to the Site or the
Building (including the Premises if required so to do by any law or regulation)
and the fixtures and equipment thereof, as well as in or to the street
entrances, halls, passages and stairways thereof, on ninety (90) days advance
written notice to Tenant, and/or to change the name by which the Building is
commonly known, as Landlord may deem necessary or desirable. Nothing contained
in this Paragraph 13, shall be deemed to relieve Tenant of any duty, obligation
or liability of Tenant with respect to making any repair, replacement or
improvement or complying with any law, order or requirement of any government or
other authority and nothing contained in this Paragraph 13, shall be deemed or
construed to impose upon Landlord any obligation, responsibility or liability
whatsoever, for the care, supervision or repair of the Building or any part
thereof other than as otherwise provided in this Lease. Landlord's exercise of
the foregoing rights shall not materially increase Tenant's obligations nor
diminish Tenant's rights under this Lease, or interfere with Tenant's parking
rights.
13.9 The construction of the improvements to the Premises to be constructed
pursuant to the provisions of the Work Letter attached to this Lease as Exhibit
E shall be governed by the terms of such Work Letter and not by the provisions
of this Paragraph 13.
14. Repairs.
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14.1 Subject to the provisions of Paragraph 12, by entry hereunder, Tenant
accepts the Premises as being in good and sanitary order, condition and repair.
Tenant shall, when and if needed, at Tenant's sole cost and expense, maintain
and make all repairs to the Premises and every part thereof, to keep, maintain
and preserve the Premises in first class condition, excepting ordinary wear and
tear, casualties, condemnation and acts of God. Any such maintenance and repairs
shall be performed by Landlord's contractor, or a contractor or contractors
reasonably approved in advance in writing by Landlord. All costs and expenses
incurred in such maintenance and repair shall be paid by Tenant within twenty
(20) days after receipt of billing by Landlord or such contractor or
contractors. Tenant shall upon the expiration or sooner termination of the Term
hereof surrender the Premises to Landlord in the same condition as when
received, reasonable wear and tear, casualties, condemnation, Hazardous
Materials not existing, released or disbursed by Tenant or any of its employees,
agents, contractors or invitees, acts of God and Changes not required to be
removed excepted. Landlord shall have no obligation to alter, remodel, improve,
repair, decorate or paint the Premises or any part thereof and the parties
hereto affirm that Landlord has made no representations to Tenant respecting the
condition of the Premises or the Building except as specifically herein set
forth or in the Tenant's Work Letter. Notwithstanding anything set forth above
in this Paragraph to the contrary, Tenant shall have no obligation to install,
maintain, repair or replace any of the structural elements or systems of the
Building (including, without limitation, the Building Systems, as defined
above), unless such work is required due to Tenant's specific use or misuse of
the Premises. Notwithstanding any provision to the contrary contained in this
Lease, as part of its maintenance and repair obligations, Tenant shall not be
required to construct or pay the cost of (i) complying with any laws existing as
of the Commencement Date, including without limitation, all Hazardous Materials
Laws (as defined below) regarding the presence of Hazardous Materials, unless
the same are stored, used or disposed of by Tenant, its agents, invitees or
employees on, in, under or about the Premises; or (ii) the correction of any
condition existing on the Premises as of the Commencement Date;
30
<PAGE>
or (iii) the correction of any latent or structural defect in the Premises
during the Term, as it may be extended.
14.2 Anything contained in Subparagraph 14.1 above to the contrary
notwithstanding, Landlord shall repair and maintain the structural portions of
the Building, including the basic plumbing, heating, ventilating, air
conditioning and electrical systems installed or furnished by Landlord, unless
such maintenance and repairs are caused in part or in whole by the act, neglect,
fault of or omission of any duty by Tenant, its agents, servants, employees or
invitees, in which case Tenant shall pay to Landlord as additional rent, the
reasonable cost of such maintenance and repairs. Landlord shall not be liable
for any failure to make any such repairs, or to perform any maintenance unless
such failure shall persist for an unreasonable time after written notice of the
need of such repairs or maintenance is given by Tenant to Landlord. Except as
provided in Paragraph 21 hereof there shall be no abatement of rent and no
liability of Landlord by reason of any injury to or interference with Tenant's
business arising from the making of any repairs, alterations or improvements in
or to any portion of the Building or the Premises or in or to fixtures,
appurtenances and equipment therein. Tenant hereby waives the provisions of
California Civil Code Sections 1932(1), 1941 and 1942 and of any similar law,
statute or ordinance now or hereafter in effect. Notwithstanding anything to the
contrary contained in this Paragraph 14, Tenant shall maintain and repair at its
sole cost and expense, and with maintenance contractors approved by Landlord,
all non-base building facilities, including lavatory, shower, toilet, washbasin
and kitchen facilities and heating and air conditioning systems, including all
plumbing connected to said facilities or systems installed by Tenant or on
behalf of Tenant (including, without limitation, the Tenant's Improvements) or
existing in the Premises at the time of delivery of possession of the Premises
to Tenant by Landlord exclusive only of normal wear and tear. The provisions of
the immediately preceding sentence shall not apply to the Building basic heating
and air conditioning system or to the basic plumbing system (excluding lavatory,
shower, toilet, washbasin, and kitchen facilities actually located within the
Premises as well as base building facilities installed by Tenant or at Tenant's
request as a part of the Tenant's Improvements).
15. Liens. Tenant shall not permit any mechanic's, materialmen's or other
-----
liens to be filed against the real property of which the Premises form a part
nor against the Tenant's leasehold interest in the Premises. Landlord shall have
the right at all reasonable times to post and keep posted on the Premises any
notices which it deems necessary for protection from such liens. If any such
liens are filed and Tenant fails to remove such liens within twenty (20) days
after receipt of notice of attachment thereof, Landlord may, without waiving its
rights and remedies based on such breach of Tenant and without releasing Tenant
from any of its obligations, cause such liens to be released by any means it
shall deem proper, including payment in satisfaction of the claim giving rise to
such lien. Tenant shall pay to Landlord at once, upon notice by Landlord, any
sum paid by Landlord to remove such liens, together with interest at the maximum
rate per annum permitted by law from the date of such payment by Landlord.
16. Entry by Landlord. Upon reasonable prior notice, Landlord reserves and
-----------------
shall at any and all reasonable times (except in the case of emergency, in which
case, Landlord shall have the right for immediate entry without notice) have the
right to enter the Premises for any valid purpose including without limitation
to inspect the same, to supply any service to be provided by Landlord to Tenant
hereunder, to submit said Premises to prospective purchasers or
mortgagors/lenders or, during the last nine (9) months of the Term of this
Lease, to prospective tenants, to post notices of nonresponsibility, to alter,
improve or repair the Premises or any other portion of the Building, all without
being deemed guilty of any eviction of Tenant and without abatement of rent, and
may, in order to carry out such purposes, erect scaffolding and other necessary
structures where reasonably required by the character of the work to be
<PAGE>
performed, provided that the business of Tenant shall be interfered with as
little as is reasonably practicable. Notwithstanding any provision to the
contrary contained in this Lease, any entry by Landlord or Landlord's agents
shall not impair Tenant's operations more than reasonably necessary, and Tenant
shall have the right to have an employee accompany Landlord and/or its agents at
all times that Landlord and/or its agents are present on the Premises except in
the case of an emergency in which event Landlord shall be entitled to enter the
Premises regardless of whether an employee is available to accompany Landlord.
Tenant hereby waives any claim for damages for any injury or inconvenience to or
interference with Tenant's business, any loss of occupancy or quiet enjoyment of
the Premises, and any other loss occasioned thereby except to the extent caused
by the gross negligence or willful misconduct of Landlord, its agents, employees
or contractors. For each of the aforesaid purposes, Landlord shall at all times
have and retain a key with which to unlock all of the doors in, upon and about
the Premises excluding Tenant's vaults, safes, and security areas, and Landlord
shall have the means which Landlord may deem proper to open said doors in an
emergency in order to obtain entry to the Premises, and any entry to the
Premises obtained by Landlord 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 Tenant from the
Premises or any portion thereof, and any damages caused on account thereof shall
be paid by Tenant except to the extent caused by the gross negligence or willful
misconduct of Landlord, its agents, employees or contractors. It is understood
and agreed that no provision of this Lease shall be construed as obligating
Landlord to perform any repairs, alterations or decorations except as otherwise
expressly agreed herein to be performed by Landlord. Landlord shall attempt in
the exercise of its rights under this Paragraph 16 to minimize any disturbance
of Tenant's use and possession of the Premises and to provide as much notice to
Tenant as may be reasonably possible prior to any such exercise of Landlord's
rights under this Paragraph 16.
17. Utilities and Services. Consistent with the provisions of Paragraph 5.2,
----------------------
Tenant is directly paying for and obtaining all utilities in connection with the
Premises as well as all janitorial services (including the cost of all
janitorial supplies). Landlord shall not be liable for, and Tenant shall not be
entitled to any abatement or reduction of rent by reason of the unavailability
or partial unavailability of utility service to the Premises. The cost of all
such utility services as being paid directly by Tenant, shall not be considered
to be a part of the Operating Expenses. Tenant hereby waives the provisions of
California Civil Code Section 1932(1) or any other applicable existing or future
law, ordinance or governmental regulation permitting the termination of this
Lease due to the interruption or failure of or inability to provide any services
required to be provided by Landlord hereunder. Landlord shall allow Tenant
access to the Premises on a twenty-four (24) hour per day basis, subject to
events beyond Landlord's reasonable control.
18. Indemnification.
---------------
18.1 To the fullest extent permitted by law, and except to the extent
caused by the gross negligence or willful misconduct of Landlord, its agents,
employees or contractors, Tenant hereby agrees to defend, indemnify, protect and
hold Landlord harmless against and from any and all loss, cost, damage or
liability arising in whole or in part from Tenant's use of the Premises or the
conduct of its business or from any activity, work, or thing done, permitted or
suffered by Tenant, its agents, contractors, employees or invitees in or about
the Premises, Building and/or Site, and hereby agrees to further indemnify and
hold harmless Landlord against and from any and all loss, cost, damage or
liability arising in whole or in part from any breach or default in the
performance of any obligation on Tenant's part to be performed under the terms
of this Lease or arising from any act, neglect, fault or omission of Tenant, or
of its agents,
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employees or invitees, and from and against all costs, reasonable attorneys'
fees, expenses and liabilities incurred for such claim or any action or
proceeding brought thereon. In case any action or proceeding is brought against
Landlord by reason of any such claim, Tenant upon notice from Landlord hereby
agrees to defend the same at Tenant's expense by counsel reasonably approved in
writing by Landlord. Tenant, as a material part of the consideration to
Landlord, hereby assumes all risk of damage to property or injury to persons in,
upon or about the Premises from any cause whatsoever except to the extent caused
by Landlord's gross negligence, intentional misconduct or the failure of
Landlord to observe any of the terms and conditions of this Lease where such
failure has persisted for an unreasonable period of time after written notice of
such failure, and Tenant hereby waives all its claims in respect thereof against
Landlord.
18.2 Landlord shall indemnify Tenant and hold it harmless from any loss by
reason of injury to person or property to the extent such injury is caused by
the gross negligence or intentional misconduct of Landlord or its agents,
employees or contractors, including without limitation any liability or injury
to the person or property of Landlord, its officers, directors, partners,
employees, agents, invitees or guests. Nothing herein shall relieve Tenant of
liability for its own willful acts or negligence.
19. Damage to Tenant's Property. Notwithstanding the provisions of Paragraph
---------------------------
18 to the contrary, except to the extent caused by the gross negligence or
willful misconduct of Landlord, its agents, employees or contractors, Landlord
or its agents shall not be liable for any damage to property entrusted to
employees of the Building (except by reason of the gross negligence of such
employees), nor for loss of or damage to any property by theft or otherwise, nor
for any injury or damage to persons or property resulting from fire, explosion,
falling plaster, steam, gas, electricity, water or rain which may leak from any
part of the Building or from the pipes, appliances or plumbing works therein or
from the roof, street or sub-surface or from any other place or resulting from
dampness or any other patent or latent cause whatsoever. Landlord or its agents
shall not be liable for interference with the light, air, view or intangible
characteristics or qualities of the Premises. Tenant shall give prompt notice to
Landlord in case of fire or accidents in the Premises or in the Building or of
defects known to Tenant therein or in the fixtures or equipment located therein.
Further, neither Landlord nor any partner, director, officer, agent, servant,
member or employee of Landlord shall be liable: (i) for any such damage caused
by other tenants or persons in, upon or about the Building, or caused by
operations in the construction of any private, public or quasi-public work (the
limitations of liability set forth in this clause (i) shall not apply to any
damage or liability caused by the gross negligence or intentional misconduct of
Landlord or its agents, employees or contractors); or (ii) for consequential
damages, including lost profits, of Tenant or any person claiming through or
under Tenant.
20. Insurance.
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20.1 During the Term hereof, Tenant, at its sole expense, shall obtain and
keep in force the following insurance:
(a) Commercial general liability insurance naming the Landlord as an
additional insured against any and all claims for bodily injury and property
damage occurring in, or about the Premises arising out of Tenant's use and
occupancy of the Premises. Such insurance shall have a combined single limit of
not less than Three Million Dollars ($3,000,000.00) per occurrence with a Six
Million Dollar ($6,000,000.00) aggregate limit. Such liability insurance shall
be primary and not contributing to any insurance available to Landlord and
Landlord's insurance shall be in excess thereto. In no event shall the limits of
such insurance be considered as limiting the liability of Tenant under this
33
<PAGE>
Lease.
(b) Personal property insurance insuring all equipment, trade
fixtures, inventory, fixtures and personal property located on or in the
Premises for perils covered by the causes of loss - special form (all risk) and
in addition, coverage for boiler and machinery (if applicable). Such insurance
shall be written on a replacement cost basis in an amount equal to the full
replacement value of the aggregate of the foregoing less any applicable
deductible.
(c) Workers' compensation insurance in accordance with statutory
law.
(d) Loss of income and extra expense insurance in such amounts as
will reimburse Tenant for direct or indirect loss of earnings attributable to
all perils commonly insured against by prudent tenants or attributable to
prevention of access to the Premises or to the Building as result of such
perils.
(e) Any other form or forms of insurance as Tenant, Landlord, or
Landlord's mortgagees or ground or primary lessors may reasonably require from
time to time (with additions not to be required more than once in any Lease
Year) in form, in amounts, and for insurance risks against which a prudent
tenant of a comparable size and in a comparable business would protect itself.
20.2 The policies required to be maintained by Tenant shall be with
companies rated AX or better in the most current issue of Best's Insurance
Reports. Insurers shall be licensed to do business in the state in which the
Premises are located and domiciled in the USA. Any deductible amounts under any
insurance policies required hereunder shall not exceed Ten Thousand Dollars
($10,000). Certificates of insurance shall be delivered to Landlord prior to the
Lease Commencement Date and annually thereafter at least thirty (30) days prior
to the expiration date of the old policy. Tenant shall have the right to provide
insurance coverage which it is obligated to carry pursuant to the terms hereof
in a blanket policy, provided such blanket policy expressly affords coverage to
the Premises and to Landlord as required by this Lease. Each policy of insurance
shall provide that Landlord and Landlord's managing agent (and any mortgagee or
lender) are additional insureds and shall provide notification to Landlord at
least thirty (30) days prior to any cancellation or modification to reduce the
insurance coverage.
20.3 During the Term hereof, Landlord shall insure the Building
(excluding any property which Tenant is obligated to insure under Subparagraph
20.1(b) hereof but including the Landlord's Work and Tenant's Improvements)
against damage with All Risk insurance in the amount of the full replacement
cost of the Building and shall maintain public commercial liability insurance,
all in such amounts and with such deductibles as Landlord considers appropriate
and consistent with the provisions of Paragraph 20.8. Landlord may, but shall
not be obligated to, obtain and carry any other form or forms of insurance as it
or Landlord's mortgagees may determine advisable. Landlord shall not be required
to maintain earthquake coverage. Notwithstanding any contribution by Tenant to
the cost of insurance premiums, as provided herein, Tenant acknowledges that it
has no right to receive any proceeds from any insurance policies carried by
Landlord.
20.4 Tenant will not knowingly keep, use, sell, or offer for sale in,
or upon, the Premises any article which may be prohibited by any insurance
policy periodically in force covering the Building. If Tenant's occupancy or
business in, or on, the Premises, whether or not Landlord has consented to the
same, results in any increase in premiums for the insurance periodically carried
by Landlord with respect to the Building, Tenant shall pay any such increase in
premiums as additional rent within twenty (20) days
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after being billed therefor by Landlord. In determining whether increased
premiums are a result of Tenant's use of the Premises, a schedule issued by the
organization computing the insurance rate on the Building or the Premises
showing the various components of such rate, shall be conclusive evidence of the
several items and charges which make up such rate. Tenant shall promptly comply
with all reasonable requirements of the insurance authority or any present or
future insurer relating to the Premises.
20.5 If any of Landlord's insurance policies shall be canceled or
cancellation shall be threatened or the coverage thereunder reduced or
threatened to be reduced in any way because of the specific use of the Premises
or any part thereof by Tenant or any assignee or sub-tenant of Tenant or by
anyone Tenant permits on the Premises and, if Tenant fails to remedy the
condition giving rise to such cancellation, threatened cancellation, reduction
of coverage, threatened reduction of coverage, increase in premiums, or
threatened increase in premiums, within 72 hours after receipt of notice
thereof, Landlord may, at its option, either terminate this Lease or enter upon
the Premises and attempt to remedy such condition, and Tenant shall promptly pay
the cost thereof to Landlord as additional rent. Landlord shall not be liable
for any damage or injury caused to any property of Tenant or of others located
on the Premises resulting from such entry. If Landlord is unable, or elects not,
to remedy such condition, then Landlord shall have all of the remedies provided
for in this Lease in the event of a default by Tenant. Notwithstanding the
foregoing provisions of this Subparagraph 20.5, if Tenant fails to remedy as
aforesaid, Tenant shall be in default of its obligation hereunder and Landlord
shall have no obligation to remedy such default.
20.6 Landlord and Tenant hereby mutually waive their respective rights
of recovery against each other for any loss of, or damage to, either parties'
property, to the extent that such loss or damage is insured by an insurance
policy required to be in effect at the time of such loss or damage. Each party
shall obtain any special endorsements, if required by its insurer whereby the
insurer waives its rights of subrogation against the other party. The provisions
of this clause shall not apply in those instances in which waiver of subrogation
would cause either party's insurance coverage to be voided or otherwise made
uncollectible.
20.7 In the event Tenant does not purchase the insurance required by
this Lease or keep the same in full force and effect, Landlord may, but shall
not be obligated to, purchase the necessary insurance and pay the premium. The
Tenant shall repay to Landlord, as additional rent the amount so paid promptly
upon demand. In addition, Landlord may recover from Tenant and Tenant agrees to
pay, as additional rent, any and all reasonable expense (including attorneys'
fees) and damages which Landlord may sustain by reason of the failure of Tenant
to obtain and maintain such insurance.
20.8 Landlord shall maintain insurance coverage comparable to insurance
coverage maintained by prudent landlords of buildings in the area in which the
Building is located that are comparable to the Building, and which in any event
includes fire and extended coverage insurance for the Building and commercial
liability coverage.
21. Damage or Destruction.
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21.1 In the event that the Premises is damaged by fire or other
casualty which is covered under insurance pursuant to the provisions of the
foregoing paragraph, Landlord shall restore such damage provided that: (i) the
destruction of the Building does not exceed fifty percent (50%) of the then
replacement value of the Building; (ii) insurance proceeds are available
(inclusive of any deductible amounts) to pay one hundred percent (100%) of the
cost of restoration; and (iii) in the reasonable
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judgment of Landlord, the restoration can be completed within three hundred and
sixty-five (365) days after the date of the damage or casualty under the laws
and regulations of the state, federal, county and municipal authorities having
jurisdiction. Landlord shall notify Tenant whether or not the Premises will be
restored under this paragraph within thirty (30) days of the occurrence of the
casualty. The deductible amount of any insurance coverage shall be paid by
Tenant. If such conditions apply so as to require Landlord to restore such
damage pursuant to this paragraph, this Lease shall continue in full force and
effect, unless otherwise agreed in writing by Landlord and Tenant. Tenant shall
be entitled to a proportionate reduction of Monthly Basic Rent, Parking Lot
Rent, Storage Rent and Operating Rent at all times during which Tenant's use of
the Premises is interrupted, such proportionate reduction to be based on the
extent to which the damage and restoration efforts actually interfere with
Tenant's business in the Premises. Tenant's right to a reduction of Rent
hereunder shall be Tenant's sole and exclusive remedy in connection with any
such damage. Notwithstanding the foregoing, if Landlord elects to terminate this
Lease pursuant to this Subparagraph 21.1, if within thirty (30) days after
receipt of Landlord's notice Tenant elects to provide the funds necessary to
make up the shortage (or absence) of insurance proceeds and provides Landlord
with reasonable assurance thereof, Landlord shall restore the Premises as
provided in this Subparagraph provided that the Premises are reasonably subject
to restoration within three hundred and sixty-five (365) days following the date
on which the casualty occurs. Tenant in connection with such election, shall
have the right to exercise the first or second (as applicable) option to extend
the Term provided by Paragraph 2.3 above, provided that Tenant otherwise meets
all requirements necessary for such exercise.
21.2 In the event that the Building is damaged by casualty and Landlord
is not required to restore such damage in accordance with the provisions of the
immediately preceding paragraph, Landlord shall have the option to either (i)
repair or restore such damage, with the Lease continuing in full force and
effect, but Monthly Basic Rent, Parking Lot Rent, Storage Rent and Operating
Rent to be proportionately abated as provided above; or (ii) give notice to
Tenant at any time within thirty (30) days after the occurrence of such damage
terminating this Lease as of a date to be specified in such notice which date
shall not be less than thirty (30) nor more than sixty (60) days after the date
on which such notice of termination is given. In the event of the giving of such
notice of termination, this Lease shall expire and all interest of Tenant in the
Premises shall terminate on the date so specified in such notice and the rent,
reduced by any proportionate reduction in Monthly Basic Rent, Parking Lot Rent,
Storage Rent and Operating Rent as provided for above, shall be paid to the date
of such termination. Notwithstanding the foregoing, if within thirty (30) days
after receipt of Landlord's notice, Tenant elects to advance to Landlord the
funds necessary to make up the shortage (or absence) in insurance proceeds and
provides Landlord with reasonable assurance thereof and the restoration can be
completed in a two hundred seventy (270) day period, as reasonably determined by
Landlord, Landlord shall restore the Premises as provided in the immediately
preceding paragraph. Tenant in connection with any such election, shall have the
right to exercise the first or second (as applicable) option to extend the Term
provided by Paragraph 2.3 above, provided that Tenant otherwise satisfies all
requirements in connection with such exercise.
21.3 Notwithstanding the foregoing, either Landlord or Tenant may
terminate this Lease if the Building damaged by fire or other casualty (and
Landlord's reasonably estimated cost of restoration of the Premises exceeds ten
percent (10%) of the then replacement value of the Building) and such damage or
casualty occurs during the last twelve (12) months of the Term of this Lease (or
the Term of any renewal option, if applicable) by giving the other notice
thereof at any time within thirty (30) days following the occurrence of such
damage or casualty. Such notice shall specify the date of such termination,
which date shall not be less than thirty (30) nor more than sixty (60) days
following the date on which such notice of
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termination is given. In the event of the giving of such notice of termination,
this Lease shall expire and all interest of Tenant in the Premises shall
terminate on the date so specified in such notice and the Rent shall be paid to
the date of such termination. Notwithstanding the foregoing to the contrary,
Landlord shall not have the right to terminate this Lease if damage or casualty
occurs during the last twelve (12) months of the Term if Tenant timely exercises
its option to extend the Term of this Lease (if any) within thirty (30) days
after the date of such damage or casualty.
21.4 In the event that the destruction to the Premises cannot be
restored as required herein under applicable laws and regulations within two
hundred seventy (270) days of the damage or casualty, notwithstanding the
availability of insurance proceeds, or if Landlord commences the restoration but
does not substantially complete the restoration within three hundred (300) days,
in either case Tenant shall have the right to terminate this Lease by giving the
Landlord notice thereof within thirty (30) days of date of the occurrence of
such casualty, or within thirty (30) days after the end of the three hundred
(300) day period, as applicable, specifying the date of termination which shall
not be less than thirty (30) days nor more than sixty (60) days following the
date on which such notice of termination is given. In the event of the giving of
such notice of termination, this Lease shall expire and all interest of Tenant
in the Premises shall terminate on the date so specified in such notice and the
rent, reduced by any proportionate reduction in Monthly Basic Rent, Parking Lot
Rent, Storage Rent and Operating Rent as provided for above, shall be paid to
the date of such termination.
21.5 Upon any termination of this Lease under any of the provisions of
this Paragraph 21, the parties shall be released thereby without further
obligation to the other from the date possession of the Premises is surrendered
to Landlord except for items which have already accrued and are then unpaid.
21.6 Tenant shall not be released from any of its obligations under
this Lease except to the extent and upon the conditions expressly stated in this
Paragraph 21. Notwithstanding anything to the contrary contained in this
Paragraph 21, should Landlord be delayed or prevented from repairing or
restoring the damaged Premises within three hundred (300) days after the
occurrence of such damage or destruction by reason of acts of God, war,
governmental restrictions, inability to procure the necessary labor or
materials, or other cause beyond the control of Landlord, Landlord shall be
relieved of its obligation to make such repairs or restoration and Tenant shall
be released from its obligations under this Lease as of the end of said three
hundred (300) day period.
21.7 It is hereby understood that if Landlord is obligated to or elects
to repair or restore as herein provided, Landlord shall be obligated to make
repairs or restoration only of those portions of the Building and the Premises
which were originally provided at Landlord's expense (including, without
limitation, Landlord's Work or the Tenant's Improvements) or which were insured
by either party and the proceeds of such insurance have been received by
Landlord, and the repair and restoration of items not provided at Landlord's
expense shall be the obligation of Tenant.
21.8 Tenant hereby waives California Civil Code Sections 1932(2) and
1933(4), providing for termination of hiring upon destruction of the thing hired
and Sections 1941 and 1942, providing for repairs to and of Premises.
22. Eminent Domain.
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22.1 In case the whole of the Premises, or such part thereof as shall
substantially interfere with
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Tenant's use and occupancy thereof, shall be taken for any public or
quasi-public purpose by any lawful power or authority by exercise of the right
of appropriation, condemnation or eminent domain, or sold to prevent such
taking, either party shall have the right to terminate this Lease effective as
of the date possession is required to be surrendered to said authority. Tenant
shall not assert any claim against Landlord or the taking authority for any
compensation because of such taking (provided that Tenant may present a separate
claim for Tenant's relocation costs, moving expenses, loss of goodwill, the
unamortized cost of any Changes paid for by Tenant and lost personal property,
so long as such claim does not diminish any award otherwise available to
Landlord), and Landlord shall be entitled to receive the entire amount of any
award without deduction for any estate or interest of Tenant. In the event the
amount of property or the type of estate taken shall not substantially interfere
with the conduct of Tenant's business, Landlord shall be entitled to the entire
amount of the award without deduction for any estate or interest of Tenant. If
this Lease is not so terminated, Landlord shall promptly proceed to restore the
Premises to substantially their same condition prior to such partial taking, and
a proportionate allowance shall be made to Tenant for the rent corresponding to
the time during which, and to the part of the Premises of which, Tenant shall be
so deprived on account of such taking and restoration. Nothing contained in this
Paragraph shall be deemed to give Landlord any interest in any award separately
made to Tenant for the taking of personal property and trade fixtures belonging
to Tenant or for relocation costs incurred by Tenant in relocating Tenant's
business, moving expenses, loss of goodwill and the unamortized cost of any
Changes paid for by Tenant.
22.2 In the event of taking of the Premises or any part thereof for
temporary use, (i) this Lease shall be and remain unaffected thereby and rent
shall not abate, and (ii) Tenant shall be entitled to receive for itself such
portion or portions of any award made for such use with respect to the period of
the taking which is within the Term, provided that if such taking shall remain
in force at the expiration or earlier termination of this Lease, Tenant shall
then pay to Landlord a sum equal to the reasonable cost of performing Tenant's
obligations under Paragraph 14 with respect to surrender of the Premises and
upon such payment shall be excused from such obligations. For purpose of this
Subparagraph 22.2, a temporary taking shall be defined as a taking for a period
of 270 days or less.
22.3 Landlord and Tenant each hereby waive the provisions of California
Code of Civil Procedure Section 1265.130 and any other applicable existing or
future law, ordinance or governmental regulation providing for, or allowing
either party to petition the courts of the state of California for, a
termination of this lease upon a partial taking of the Premises and/or the
Building.
23. Bankruptcy. If Tenant shall file a petition in bankruptcy under any
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Chapter of federal bankruptcy law as then in effect, or if Tenant be adjudicated
a bankrupt in involuntary bankruptcy proceedings and such adjudication shall not
have been vacated within sixty (60) days from the date thereof, or if a receiver
or trustee be appointed of Tenant's property and the order appointing such
receiver or trustee not be set aside or vacated within sixty (60) days after the
entry thereof, or if Tenant shall assign Tenant's estate or effects for the
benefit of creditors, or if this Lease shall otherwise by operation of law pass
to any person or persons other than Tenant, then and in any such event Landlord
may, if Landlord so elects, with or without notice of such election and with or
without entry or action by Landlord, forthwith terminate this Lease.
Notwithstanding any other provisions of this Lease, Landlord, in addition to any
and all rights and remedies allowed by law or equity, shall upon such
termination be entitled to recover damages in the amount provided in
Subparagraph 24.2 below and neither Tenant nor any person claiming through or
under Tenant or by virtue of any statute or order of any court shall be entitled
to possession of the Premises but shall forthwith quit and surrender the
Premises to Landlord. Nothing herein contained shall
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limit or prejudice the right of Landlord to prove and obtain as damages by
reason of any such termination an amount equal to the maximum allowed by any
statute or rule of law in effect at the time when, and governing the proceedings
in which, such damages are to be proved, whether or not such amount be greater,
equal to, or less than the amount of damages recoverable under the provisions of
this Paragraph 23.
24. Defaults and Remedies.
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24.1 The occurrence of any one or more of the following events shall
constitute a default hereunder by Tenant:
(a) The vacation or abandonment of the Premises by Tenant.
Abandonment is herein defined to include, but is not limited, to, any absence by
Tenant from the Premises for ten (10) days or longer while in default of any
provision of this Lease.
(b) The failure by Tenant to make any payment of Basic Rent,
Parking Lot Rent, Storage Rent, Operating Rent, other rent or sums deemed herein
as additional rent, or any other payment required to be made by Tenant hereunder
as and when due, where such failure continues for a period of five (5) business
days after written notice thereof from Landlord to Tenant.
(c) The failure by Tenant to observe or perform any of the
express or implied covenants or provisions of this Lease to be observed or
performed by Tenant, other than as specified in Subparagraph 24.1(a) or 24.1(b)
above, where such failure shall continue for a period of thirty (30) days after
written notice thereof from Landlord to Tenant; provided, however, that any such
notice shall be in lieu of, and not in addition to, any notice required under
California Code of Civil Procedure 1161; provided, further, that if the nature
of Tenant's default is such that more than thirty (30) days are reasonably
required for its cure, then Tenant shall not be deemed to be in default if
Tenant shall commence such cure within said thirty-day period and thereafter
diligently and without interruption prosecute such cure to completion.
(d) (1) The making by Tenant of any general assignment for the
benefit of creditors; (2) the filing by or against Tenant of a petition to have
Tenant adjudged a bankrupt or a petition for reorganization or arrangement under
any law relating to bankruptcy (unless, in the case of a petition filed against
Tenant, the same is dismissed within sixty (60) days); (3) the appointment of a
trustee or receiver to take possession of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease, where possession
is not restored to Tenant within sixty (60) days; or (4) the attachment,
execution or other judicial seizure of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease where such seizure
is not discharged within sixty (60) days.
(e) The failure by Tenant within ten (10) days after receipt of
written demand of Landlord to restore the security deposit by deposit of
additional cash or an additional letter of credit as required pursuant to the
provisions of Paragraph 6.1 of this Lease.
24.2 In the event of any such default by Tenant, in addition to any
other remedies available to Landlord at law or in equity, Landlord shall have
the immediate option to terminate this Lease and all rights of Tenant hereunder.
Upon such termination of Tenant's right to possession of the Premises, this
Lease shall terminate and Landlord shall be entitled to recover damages from
Tenant as provided in California Civil Code Section 1951.2 or any other
applicable existing or future law, ordinance or
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regulation providing for recovery of damages for such breach, including but not
limited to the following:
(a) the worth at the time of award of any unpaid rent which
had been earned at the time of such termination; plus
(b) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; plus
(c) the worth at the time of award of the amount by which the
unpaid rent for the balance of the Term after the time of award exceeds the
amount of such rental loss that Tenant proves could be reasonably avoided; plus
(d) any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform his obligations
under this Lease or which in the ordinary course of things would be likely to
result therefrom.
As used in Subparagraphs 24.2(a) and 24.2(b) above, the "worth at the
time of award" is computed by allowing interest at the maximum rate permitted by
law per annum. As used in Subparagraph 24.2(c) above, the worth at the time of
award is computed by discounting to present value such amount at the discount
rate of the Federal Reserve Bank of San Francisco at the time of award plus one
percent (1%).
24.3 If a default exists under this Lease, Landlord shall also have the
remedy described in California Civil Code Section 1951.4 (Landlord may continue
this Lease in effect after Tenant has breached this Lease and abandoned the
Premises and recover rent as it becomes due; provided, however that Tenant has
the right to sublet or assign this Lease, subject only to reasonable
limitations). Acts of maintenance or preservation or efforts to relet the
Premises or the appointment of a receiver upon initiative of Landlord to protect
Landlord's interest under this Lease shall not constitute a termination of
Tenant's right to possession.
24.4 During the continuance of a default beyond applicable cure
periods, Landlord may enter the Premises without terminating this Lease and,
upon five (5) days prior written notice to Tenant, remove all Tenant's personal
property, any Changes and trade fixtures from the Premises and store them at
Tenant's risk and expense. If Landlord removes such property from the Premises
and stores it at Tenant's risk and expense, and if Tenant fails to pay the cost
of such removal and storage after written demand therefor and/or to pay any rent
then due, then after the property has been stored for a period of thirty
(30)-days or more Landlord may sell such property at public or private sale, in
the manner and at such times and places as Landlord deems commercially
reasonable following reasonable notice to Tenant of the time and place of such
sale. The proceeds of any such sale shall be applied first to the payment of the
expenses for removal and storage of the property, the preparation for and the
conducting of such sale, and for reasonable attorneys' fees and other legal
expenses incurred by Landlord in connection therewith; and the balance shall be
applied to any past due amount owing hereunder.
Tenant hereby waives all claims for damages that may be caused by
Landlord's reentering and taking possession of the Premises or removing and
storing Tenant's personal property pursuant to this Paragraph 24, and Tenant
shall hold Landlord harmless from and against any loss, cost or damage resulting
from any such act. No reentry by Landlord shall constitute or be construed as a
forcible entry by
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Landlord.
24.5 All rights, options' and remedies of Landlord contained in this
Lease shall be construed and held to be cumulative, and no one of them shall be
exclusive of the other, and Landlord shall have the right to pursue any one or
all of such remedies or any other remedy or relief which may be provided by law,
whether or not stated in this Lease. No waiver of any default of Tenant
hereunder shall be implied from any acceptance by Landlord of any rent or other
payments due hereunder or any omission by Landlord to take any action on account
of such default if such default persists or is repeated, and no express waiver
shall affect defaults other than as specified in said waiver. The consent or
approval or Landlord to or of any act by Tenant requiring Landlord's consent or
approval shall not be deemed to waive or render unnecessary Landlord's consent
or approval to or of any subsequent similar acts by Tenant.
24.6 If Landlord is in default of any obligations under this Lease, and
fails to commence to cure within thirty (30) days after receipt of written
notice from Tenant which notice shall specify the nature of Landlord's default,
Tenant shall be entitled to exercise any and all remedies available to Tenant at
law or in equity except to the extent expressly waived by Tenant pursuant to
this Lease.
25. Assignment and Subletting. Tenant shall not voluntarily assign or
-------------------------
encumber its interest in this Lease or in the Premises, or sublease all or any
part of the Premises, or allow any other person or entity to occupy or use all
or any part of the Premises, without first obtaining Landlord's prior written
consent, which consent shall not be unreasonably withheld or delayed. Any
assignment, encumbrance or sublease without Landlord's prior written consent
shall be voidable, at Landlord's election, and shall constitute a default. If
Tenant is a partnership, a withdrawal or change, voluntary, involuntary or by
operation of law of any partner, or the dissolution of the partnership, shall be
deemed a voluntary assignment. If Tenant consists of more than one person, a
purported assignment, voluntary or involuntary or by operation of law from one
person to the other shall be deemed a voluntary assignment. If Tenant is a
nonpublic corporation, any dissolution of Tenant, or sale or other transfer of a
controlling percentage of the capital stock of Tenant, or the sale of at least
seventy percent (70%) of the value of the assets of Tenant shall be deemed a
voluntary assignment. If Tenant is a publicly traded corporation, any sale or
other transfer of a controlling percentage of the capital stock of Tenant in one
transaction or a series of related transactions to one person or entity or two
or more affiliated entities and/or persons shall be deemed a voluntary
assignment which requires Landlord's consent. Except as set forth in the
sentence immediately above, the transfer of publicly traded shares of Tenant,
whether or not in the aggregate constituting a transfer of a controlling
percentage of the capital stock of Tenant, shall not constitute a voluntary
assignment. No consent to any assignment, encumbrance, or sublease shall
constitute a further waiver of the provisions of this Paragraph. No later than
thirty (30) days prior to the effective date of the proposed assignment or
sublease, Tenant shall notify Landlord in writing of Tenant's intent to assign,
encumber, or sublease, the name of the proposed assignee or sublessee,
information concerning the financial responsibility of the proposed assignee or
sublessee and the terms of the proposed assignment or subletting, and Landlord
shall, within fifteen (15) days of receipt of such written notice as well as any
additional information requested by Landlord concerning the proposed assignee's
or sublessee's financial responsibility, elect one of the following:
(i) Consent to such proposed assignment,
encumbrance or sublease;
(ii) Refuse such consent, which refusal shall be on
reasonable grounds, including but not limited to those matters set forth
hereinbelow;
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(iii) In the case of an assignment, elect to
terminate this Lease. In the case of a sublease elect to terminate this Lease
with respect to that portion of the Premises being requested for sublease
consideration, but only in the event that a request to sublet would have the
result of in excess of fifty percent (50%) of the rentable square feet of the
Premises being subject to sublease at any time during the Term. In the event
that Landlord elects to terminate the Lease by reason of a proposed assignment
or by reason of a proposed sublease as described immediately above, Landlord
shall give notice of such election ("Recapture Notice") to Tenant within fifteen
(15) days after receipt of written notice from Tenant of the proposed assignment
or sublease as well as any additional information requested by Landlord
concerning the proposed assignee's or sublesee's financial responsibility. In
the case of a proposed sublease (and not a proposed assignment), in the event
that Landlord gives a Recapture Notice, Tenant shall be entitled to rescind its
proposed sublease (and thus avoid termination of the Lease) by giving written
notice to Landlord of such recission within five (5) days following receipt by
Tenant of the Recapture Notice. In the event that Tenant fails to give such
notice within such five (5) days, Tenant shall be considered to have waived its
right to give such recission notice. The Recapture Notice, if given, shall in
addition to stating Landlord's election to terminate this Lease, state a date of
termination of the Lease which, in no event, shall be earlier than thirty (30)
days following the date on which the Recapture Notice is given nor later than 90
days following the date on which the Recapture Notice is given.
Without limiting the other instances in which it may be reasonable for
Landlord to withhold its consent to an assignment or subletting, Landlord and
Tenant acknowledge that it shall be reasonable for Landlord to withhold its
consent in the following instances: (i) if at the time consent is requested or
at any time prior to the granting of consent, Tenant is in default, beyond any
applicable cure period, under this Lease or would be in default under this Lease
but for the pendency of any grace or cure period under Paragraph 24 above; (ii)
if the proposed assignee or sublessee is a governmental agency; (iii) if, in
Landlord's reasonable judgment, the use of the Premises by the proposed assignee
or sublessee (1) would be inconsistent with Paragraph 7 of this Lease, (2) would
contemplate any alterations which would lessen the value of the leasehold
improvements in the Premises, (3) would result in more than a reasonable number
of occupants per floor, or (4) would materially require increased services by
Landlord; (iv) if the proposed assignee's or sublessee's credit, character and
business or professional standing does not meet the commercially reasonable
standards of Landlord; (v) the proposed assignee has a net worth of less than
the net worth of Tenant as of the date of this Lease (in the approximate amount
of One Hundred Twenty-Five Million Dollars [$125,000,000]); or (vi) if Landlord
is currently marketing space in the Building to such proposed assignee or
sublessee.
Landlord may require that the rent payable by such assignee or
sublessee be at the then current rental rates for the Premises or comparable
premises in the Building and may require that the assignee remit directly to
Landlord on a monthly basis all monies due to Tenant by said assignee. Payments
with respect to any sublease, so long as the Tenant is not in default hereunder,
may be made directly to Tenant and Tenant shall then promptly pay to Landlord
any amount due Landlord in connection with such sublease. In the event that
Landlord shall consent to any assignment or sublease under the provisions of
this Paragraph 25, Tenant shall pay Landlord's reasonable processing costs and
attorneys' fees incurred in giving such consent, not to exceed one thousand
dollars ($1,000) per request for consent. If for any proposed assignment or
sublease Tenant receives rent or other consideration, either initially or over
the term of the assignment or sublease, in excess of the rent and monthly
amortization of Transfer Costs (defined below) called for hereunder, or, in case
of the sublease of a portion of the Premises, in excess of the monthly
amortization of all Transfer Costs and such rent fairly allocable to such
portion, after
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appropriate adjustments to assure that all other payments called for hereunder
are taken into account, Tenant shall pay to Landlord as additional rent
hereunder fifty percent (50%) of all of the excess of each such payment of rent
or other consideration received by Tenant promptly after its receipt. As used
herein, "Transfer Costs" shall mean the aggregate of (i) commercially reasonable
brokerage commissions and attorneys' fees incurred by Tenant in negotiating and
documenting such assignment or sublease and (ii) the actual third party costs
incurred by Tenant in connection with constructing improvements to the Premises
directly related to the assignment or sublease subject, however, to a maximum
cost of ten dollars ($10) per rentable square foot. Such Transfer Costs are to
be amortized (without interest) for the purposes of Tenant's recovery of same
from excess consideration, on a straight-line basis over the remaining initial
Term of this Lease as of the effective date of such assignment or subletting.
Landlord's waiver or consent to any assignment or subletting shall not relieve
Tenant from any obligation under this Lease.
Notwithstanding any provision to the contrary of this Paragraph 25,
Tenant, without Landlord's prior written consent, may sublet all or any portion
of the Premises or assign this Lease to (i) a corporation controlling,
controlled by or under common control with Tenant; (ii) a successor corporation
related to Tenant by merger, consolidation or non-bankruptcy reorganization
provided that if Tenant is not the surviving corporation, then the surviving
corporation shall have a minimum net worth as of the date of sublease or
assignment at least equal to that of Tenant immediately prior to completion of
the subject merger, consolidation or reorganization; or (iii) a purchaser of
substantially all of Tenant's assets, provided that immediately following such
purchase, such purchaser shall have a net worth at least equal to that of Tenant
immediately prior to completion of the subject purchase. In connection with any
such assignment or sublease, Tenant shall not be relieved of any liability or
obligations pursuant to this Lease. The entities described in clauses (i), (ii)
and (iii) above shall sometimes be referred to as a "PERMITTED TRANSFEREE". In
connection with any transfer to a Permitted Transferee, Tenant shall give
Landlord at least thirty (30) days prior written notice of such intended
transfer and shall provide to Landlord such information and copies of such
documents as Landlord may reasonably request in connection with such proposed
transfer. Notwithstanding any provision of this Lease to the contrary including,
without limitation, any provision of this Paragraph 25, no assignment or
sublease of this Lease shall relieve Tenant of any of its obligations or
liability pursuant to this Lease. Landlord acknowledges that Tenant intends to
sublease not more than fifty thousand square feet of the Premises within the
first twelve (12) months of the Term.
26. Quiet Enjoyment. Landlord covenants and agrees that, conditioned upon
---------------
Tenant paying the rent required under this Lease and paying all other charges
and performing all of the covenants and provisions to be observed and performed
by Tenant under this Lease, and subject to the terms and conditions of this
Lease, Tenant shall and may peaceably and quietly have, hold and enjoy the
Premises in accordance with this Lease.
27. Subordination. Without the necessity of any additional document being
-------------
executed by Tenant for the purpose of effecting a subordination, and at the
election of Landlord or any mortgagee with a lien on the Building or any ground
lessor with respect to the Building, this lease shall be subject and subordinate
at all times to: (a) all ground leases or underlying leases which may now exist
or hereafter be executed affecting the Building or the land upon which the
Building is situated or both, and (b) the lien of any mortgage or deed of trust
which may now exist or hereafter be executed in any amount for which the
Building, land, ground leases or underlying leases, or Landlord's interest or
estate in any of said items is specified as security. Notwithstanding the
foregoing, Landlord shall have the right to subordinate or cause to be
subordinated any such ground leases or underlying leases or any such liens to
this lease. In the event that any ground lease or underlying lease terminates
for any reason or any mortgage or deed of trust is
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foreclosed or a conveyance in lieu of foreclosure is made for any reason, Tenant
shall, if requested by the ground lessor, mortgagee or beneficiary, as
applicable, attorn to and become the Tenant of the successor in interest to
Landlord and in such event Tenant's right to possession of the Premises shall
not be disturbed if Tenant is not in default beyond acceptable cure periods and
so long as Tenant shall pay the rent and all other amounts required to be paid
to Landlord pursuant to the terms hereof and observe and perform all of the
provisions of this Lease, unless the Lease is otherwise terminated pursuant to
its terms. Tenant convenants and agrees to execute and deliver, upon demand by
Landlord and in the form reasonably requested by Landlord, any additional
documents evidencing the priority or subordination of this Lease with respect of
any such ground leases or underlying leases or the lien of any such mortgage or
deed of trust. Should Tenant fail to sign and return any such documents within
ten (10) business days of receipt, Tenant shall be in default, and Landlord may,
at Landlord's option, terminate this Lease provided written notice of such
termination is received by Tenant prior to Landlord's receipt of such documents.
In connection with any subordination by Tenant of its leasehold interest to any
future ground lease, or the lien of any mortgage or deed of trust, Tenant shall
be entitled to obtain a non-disturbance agreement in a form reasonably
satisfactory to Tenant providing that Tenant's right to occupancy of the
Premises shall not be disturbed in the event of any termination of the ground
lease or any foreclosure of the lien of the deed of trust or mortgage. Landlord
shall take such action as is reasonable (without cost to Landlord) so as to
cause a non-disturbance agreement to be available to Tenant in connection with
any subordination by Tenant of its leasehold interest. In connection with the
execution of this Lease by Landlord and Tenant, Landlord shall use its best
efforts (without cost to Landlord) to cause a Subordination and Non-Disturbance
Agreement to be made available to Tenant in a form reasonably acceptable to
Tenant within twenty (20) days following the execution and delivery of this
Lease by Landlord and Tenant in connection with any lender or lenders with
respect to any deed of trust currently constituting a lien against the Building
and Site.
28. Estoppel Certificate.
--------------------
28.1 Within ten (10) business days following receipt of Landlord's
written request, Tenant shall execute and deliver to Landlord a statement, in a
form substantially similar to the form of Exhibit "C" attached hereto,
-----------
certifying; (i) the Lease Commencement Date; (ii) the fact that this Lease is
unmodified and in full force and effect (or, if there have been modifications
hereto, that this Lease is in full force and effect, as modified, and stating
the date and nature of such modifications); (iii) the date to which the rent and
other sums payable under this Lease have been paid; (iv) the fact that there are
no current defaults under this Lease by either Landlord or Tenant except as
specified in such statement; and (v) such other matters reasonably requested by
the requesting party. Landlord and Tenant intend that any statement delivered
pursuant to this Paragraph 28 may be relied upon by any mortgagee, beneficiary,
purchaser or prospective purchaser of the Building or any interest therein.
28.2 Tenant's failure to deliver such statement within such time shall
be conclusive upon Tenant (i) that this Lease is in full force and effect,
without modification except as may be represented by the requesting party, (ii)
that there are no uncured defaults in the requesting party's performance, and
(iii) that not more than one (1) month's rent has been paid in advance.
29. Rules and Regulations. Tenant shall faithfully observe and comply with
---------------------
the "Rules and Regulations," a copy of which is attached hereto and marked
Exhibit "D", and all reasonable and nondiscriminatory modifications thereof and
-----------
additions thereto from time to time put into effect by Landlord that do not
increase any obligations or diminish any rights of Tenant. In the event of any
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conflict between the terms of this Lease and the Rules and Regulations, the
terms of this Lease shall prevail.
30. Conflict of Laws. This Lease shall be governed by and construed
----------------
pursuant to the laws of the State of California.
31. Successors and Assigns. Except as otherwise provided in this Lease, all
----------------------
of the covenants, conditions and provisions of this Lease shall be binding upon
and shall inure to the benefit of the parties hereto and their respective heirs,
personal representative, successors and assigns.
32. Surrender of Premises. The voluntary or other surrender of this Lease
---------------------
by Tenant, or a mutual cancellation thereof, shall not work a merger, and shall,
at the option of Landlord, operate as an assignment to it of any or all
subleases or subtenancies. Upon the expiration or termination of this Lease,
Tenant shall peaceably surrender the Premises and all alterations and additions
thereto broom-clean, in good order, repair and condition, reasonable wear and
tear, casualty, condemnation, acts of God, Hazardous Materials not stored, used,
released or disposed of by Tenant, its agents, employees, invites or contractors
and Changes with respect to which Landlord has not reserved the right to require
removal excepted. The delivery of keys to any employee of Landlord or to
Landlord's agent or any employee thereof shall not be sufficient to constitute a
termination of this Lease or a surrender of the Premises.
33. Professional Fees.
-----------------
33.1 In the event that Landlord or Tenant should bring suit for the
possession of the Premises, for the recovery of any sum due under this Lease, or
because of the breach of any provisions of this Lease, or for any other relief
against Tenant or Landlord hereunder, or should either party bring suit against
the other with respect to matters arising from or growing out of this Lease,
then all costs and expenses, including without limitation, its reasonable
professional fees such as appraisers', accountants' and attorneys' fees,
incurred by the prevailing party therein shall be paid by the other party, which
obligation on the part of the other party shall be deemed to have accrued on the
date of the commencement of such action and shall be enforceable whether or not
the action is prosecuted to judgment.
33.2 Should Landlord, without gross negligence or willful misconduct by
Landlord, be named as a defendant in any suit brought against Tenant in
connection with or arising out of Tenant's occupancy hereunder, Tenant shall pay
to Landlord its costs and expenses incurred in such suit, including without
limitation, its actual and reasonable professional fees such as appraiser's,
accountants' and attorneys' fees.
34. Performance by Tenant. All covenants and agreements to be performed by
---------------------
Tenant under any of the terms of this Lease shall be performed by Tenant at
Tenant's sole cost and expense and without any abatement of rent, except as
expressly set forth in this Lease. Tenant acknowledges that the late payment by
Tenant to Landlord of any sums due under this Lease will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of such cost being
extremely difficult and impractical to fix. Such costs include, without
limitation, processing and accounting charges, and late charges that may be
imposed on Landlord by the terms of any encumbrance and note secured by any
encumbrance covering the Premises or the Building of which the Premises are a
part. Therefore if, following five (5) business days after Landlord has notified
Tenant that such amount has not been received, any monthly installment of
Monthly Basic Rent is not received by Landlord, or if Tenant fails to pay any
other sum of money due hereunder and such failure continues for ten (10) days
after receipt by Tenant of notice thereof from
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Landlord, Tenant shall pay to Landlord, as additional rent, ten percent (10%) of
the overdue amount as a late charge. Such overdue amount shall also bear
interest, as additional rent, at the maximum rate permissible by law calculated,
as appropriate, from the date either (a) the monthly installment of Monthly
Basic Rent, or other amount, is due, or (b) of receipt of said notice, until the
date of payment to Landlord. Landlord's acceptance of any late charge or
interest shall not constitute a waiver of Tenant's default with respect to the
overdue amount or prevent Landlord from exercising any of the other rights and
remedies available to Landlord under this Lease or any law now or hereafter in
effect. Further, in the event such late charge is imposed by Landlord for three
(3) consecutive months for whatever reason, Landlord shall have the option to
require that, beginning with the first payment of rent due following the
imposition of the third consecutive late charge, rent shall no longer be paid in
monthly installments but shall be payable three (3) months in advance.
35. Mortgagee and Senior Lessor Protection. No act or failure to act on the
--------------------------------------
part of Landlord which would entitle Tenant under the terms of this Lease, or by
law, to be relieved of Tenant's obligations hereunder or to terminate this
Lease, shall result in a release of such obligations or a termination of this
Lease unless (a) Tenant has given notice by registered or certified mail to
Landlord and to any beneficiary of a deed of trust or mortgage covering the
Building and to the lessor under any master or ground lease covering the
Building, the Site or any interest therein whose identity and address shall have
been furnished to Tenant, and (b) Tenant offers such beneficiary, mortgagee or
lessor a reasonable opportunity (but in no event less than thirty (30) days) to
cure the default, including time to obtain possession of the Premises by power
of sale or of judicial foreclosure, if such should prove necessary to effect a
cure. Landlord shall, from time to time, give Tenant written notice of the
identity and address of the beneficiary of any deed of trust or mortgage
covering the Building and/or the lessor under any master or ground lease.
36. Definition of Landlord. The term "Landlord" as used in this Lease, so
----------------------
far as covenants or obligations on the part of Landlord are concerned, shall be
limited to mean and include only the owner or owners, at the time in question,
of the fee title to, or a lessee's interest in a ground lease of the Site or
master lease of the Building. In the event of any transfer, assignment or other
conveyance or transfer of any such title or interest, Landlord herein named (and
in case of any subsequent transfers or conveyances, the then grantor) shall be
automatically freed and relieved from and after the date of such transfer,
assignment or conveyance of all liability with respect to the performance of any
covenants or obligations on the part of Landlord contained in this Lease
thereafter to be performed and, without further agreement, the transferee of
such title or interest shall be deemed to have agreed to observe and perform any
and all obligations of Landlord hereunder, during its ownership of the Premises.
Landlord may transfer its interest in the Premises without the consent of Tenant
and such transfer or subsequent transfer shall not be deemed a violation on
Landlord's part of any of the terms and conditions of this Lease.
37. Waiver. The failure of Landlord or Tenant to seek redress for violation
------
of, or to insist upon strict performance of, any term, covenant or condition of
this Lease or the Rules and Regulations attached hereto as Exhibit "D", shall
-----------
not be deemed a waiver of such violation or prevent a subsequent act which would
have originally constituted a violation from having all the force and effect of
an original violation, nor shall the failure of Landlord to enforce any of said
Rules and Regulations against any other tenant of the Building be deemed a
waiver of any such Rule or Regulation, nor shall any custom or practice which
may become established between the parties in the administration of the terms
hereof be deemed a waiver of, or in any way affect, the right of either party to
insist upon the performance by the other in strict accordance with said terms.
The subsequent acceptance or payment of rent hereunder by Landlord or Tenant
shall not be deemed to be a waiver of any preceding breach by Tenant or Landlord
of any term,
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covenant or condition of this Lease, other than the failure of Tenant to pay the
particular rent so accepted, regardless of Landlord's knowledge of such
preceding breach at the time of acceptance of such rent.
38. Identification of Tenant. Unless the provisions of Paragraph 52 herein
------------------------
below are applicable to this Lease, then if more than one person executes this
Lease as Tenant, (a) each of them is jointly and severally liable for the
keeping, observing and performing of all of the terms, covenants, conditions,
provisions and agreements of this Lease to be kept, observed and performed by
Tenant, and (b) the term "Tenant" as used in this Lease shall mean and include
each of them jointly and severally and the act of or notice from, or notice or
refund to, or the signature of, any one or more of them, with respect to the
tenancy or this Lease, including, but not limited to, any renewal, extension,
expiration, termination or modification of this Lease, shall be binding upon
each and all of the persons executing this Lease as Tenant with the same force
and effect as if each and all of them had so acted or so given or received such
notice or refund or so signed.
39. Year 2000. Notwithstanding any covenant or provision contained in the
---------
Lease to the contrary, Landlord shall have no liability or responsibility
whatsoever to Tenant for (i) any disruption or interruption in Tenant's
business, (ii) any disruption or interruption in Tenant's use or possession of
the Premises, or (iii) any other damage or consequence suffered or experienced
by Tenant, arising from or relating in any way to the malfunction, shut down or
other abnormal behavior of any computer or computer controlled system which
provides utilities or services to the Premises, or controls any systems serving
the Premises (whether such computer is within the control of Landlord or
otherwise) resulting from the inability or failure of any such computer or
computer controlled system to recognize the year 2000, and distinguish said year
from the year 1900 (sometimes referred to as the "Y2K problem", or the "failure
to be year 2000 complaint"). In connection with the construction of the
Landlord's Work and the Tenant's Improvements, Landlord shall request that the
Contractor (as defined in the Work Letter) take such action as is commercially
reasonable so that the systems being installed are year 2000 complaint.
40. Terms and Headings. The words "Landlord" and "Tenant" as used herein
------------------
shall include the plural as well as the singular. Words used in any gender
include other genders. If there be more than one Tenant, i.e., if two or more
persons or entities are jointly referred to in this Lease as "Tenant," the
obligations hereunder imposed upon Tenant shall be joint and several. The
Paragraph headings of this Lease are not a part of this Lease and shall have no
effect upon the construction or interpretation of any part hereof.
41. Examination of Lease. Submission of this instrument for examination or
--------------------
signature by Tenant does not constitute a reservation of or option for Lease,
and it is not effective as a Lease or otherwise until execution by and delivery
to both Landlord and Tenant.
42. Time. Time is of the essence with respect to the performance of every
----
provision of this Lease in which time or performance is a factor. For purposes
of this Lease, the term "business day" shall refer to any day other than a
Saturday, Sunday or a legal holiday for national banks in the location where the
Building is located.
43. Prior Agreement; Amendments. This Lease contains all of the agreements
---------------------------
of the parties hereto with respect to any matter covered or mentioned in this
Lease, and no prior agreement or understanding, oral or written, express or
implied, pertaining to any such matter 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.
The parties acknowledge that all prior agreements, representations and
negotiations are deemed superseded by the execution of this Lease to the extent
they
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are not incorporated herein.
44. Severability. Any provision of this Lease which shall prove to be
------------
invalid, void or illegal in no way affects, impairs or invalidates any other
provision hereof, and such other provisions shall remain in full force and
effect.
45. Recording. Neither Landlord nor Tenant shall record this Lease nor a
---------
short memorandum thereof without the consent of the other and if such recording
occurs, it shall be at the sole cost and expense of the party requesting the
recording, including any documentary transfer taxes or other expenses related to
such recordation.
46. Limitation on Liability. The obligations of Landlord under this Lease
-----------------------
do not constitute personal obligations of the individual partners, directors,
officers, members or shareholders of Landlord, and Tenant shall not seek
recourse against the individual partners, directors, officers, members or
shareholders of Landlord or any of their personal assets for satisfaction of any
liability in respect to this Lease. In consideration of the benefits accruing
hereunder, Tenant and all successors and assigns covenant and agree that in the
event of any actual or alleged failure, breach or default hereunder by Landlord,
the sole and exclusive remedy shall be against Landlord's interest in the
Building in the rental stream and sales proceeds thereof.
47. Riders. Clauses, plats and riders, if any, signed by Landlord and
------
Tenant and affixed to this Lease are a part hereof.
48. Signs. Tenant shall not place any sign upon the Premises or the
-----
Building without Landlord's prior written consent which consent in the case of
interior signage within the Building, shall not be unreasonably withheld or
delayed and which consent, in the case of exterior signage with respect to the
Building (except as specifically provided in this Paragraph 48) may be given or
withheld by Landlord in its discretion. Notwithstanding the sentence immediately
above, Tenant shall have the exclusive right to display its identity through
signage on the exterior of the Building without any additional compensation to
Landlord except during the Extended Terms as provided below. All such exterior
signage shall be subject to the approval of Landlord, which approval shall not
be unreasonably withheld or delayed. All signs shall be constructed, erected and
affixed to the Premises at Tenant's sole cost and expense, and Tenant shall be
responsible for the removal of such signage, and the repair of any damage to the
Building caused thereby, at the end of the Term. All signs shall be in full
compliance with all applicable ordinances, statutes and regulations imposed by
all applicable governmental authorities. During the Extended Terms, Landlord may
impose a reasonable signage rental fee, and adjust such fee periodically as
Landlord reasonably determines, based on the then-current rental value for
comparable signage. Tenant's rights to utilize the Building facades for signage
is limited to signage related to the business of Tenant only (and in the event
of an assignment or sublease pursuant to the provisions of this Lease, the
business of such assignee or sublessee). Tenant shall have no right to sublet
the signage space, nor otherwise earn a profit therefrom. Following the full
execution and delivery of this Lease by both Landlord and Tenant, Tenant shall
be entitled to place a banner at the roof line on the exterior facade of the
Building announcing the intended occupancy of the Building by Tenant. The
wording of such banner shall be subject to reasonable review by Landlord. Any
and all publicity or public announcements of any kind with respect to the
execution of this Lease or any other matter relating to the Lease (exclusive of
the banner described immediately above) to be made by Tenant shall be subject to
the prior written consent of Landlord, which consent shall not be unreasonably
withheld or delayed. Following the full execution and delivery of this Lease by
Landlord
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and Tenant, Landlord, at its cost, shall remove any existing signage on the
exterior of the Building.
49. Modification for Lender. If in connection with obtaining construction,
-----------------------
interim or permanent financing for the Building, the lender shall request
reasonable modifications in this Lease as a condition to such financing, Tenant
will not unreasonably withhold, delay or defer its consent thereto, provided
that such modifications do not increase the obligations of Tenant hereunder or
materially adversely affect the leasehold interest hereby created or Tenant's
rights hereunder, including Tenant's parking rights.
50. Accord and Satisfaction. No payment by Tenant or receipt by Landlord
-----------------------
of a lesser amount than the rent payment herein stipulated shall be deemed to be
other than on account of the rent, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment as rent be deemed an
accord and satisfaction and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such rent or pursue any
other remedy provided in this Lease. Tenant agrees that each of the foregoing
covenants and agreements shall be applicable to any covenant or agreement either
expressly contained in this lease or imposed by any statute or at common law.
51. Financial Statements. At any time during the Term of this Lease, and
--------------------
if requested by Landlord in connection with a potential sale or financing of the
Building, Tenant shall, upon ten (10) days prior written notice from Landlord,
provide Landlord with a current financial statement and financial statements of
the two (2) years prior to the current financial statement year. Except in
connection with a request by Landlord in connection with a potential sale or
financing, Landlord shall limit its requests for financial statements to once
per calendar quarter. Such statements shall be prepared in accordance with
generally accepted accounting principles and, if such is the normal practice of
Tenant, shall be audited by an independent certified public accountant. Landlord
shall use commercially reasonable efforts to protect the confidentiality of any
such statement and to request that any proposed buyer or lender similarly treat
the information contained in such statement as being confidential in nature,
such that such information shall only be disclosed to the consultants, analysts
or counsel as may be reasonably necessary in order to evaluate a potential
purchase of, or loan upon, the Building.
52. Tenant as Corporation. If Tenant executes this Lease as a corporation,
---------------------
then Tenant and the persons executing this Lease on behalf of Tenant represent
and warrant that the individuals executing this Lease on Tenant's behalf are
duly authorized to execute and deliver this Lease on its behalf in accordance
with a duly adopted resolution of the board of directors of Tenant, a copy of
which is to be delivered to Landlord on execution hereof, and in accordance with
the By-Laws of Tenant and that this Lease is binding upon Tenant in accordance
with its terms.
53. No Partnership or Joint Venture. Nothing in this Lease shall be
-------------------------------
deemed to constitute Landlord and Tenant as partners or joint venturers. It is
the express intent of the parties hereto that their relationship with regard to
this Lease be and remain that of landlord and tenant.
54. Rooftop Deck/Rooftop Antennae.
-----------------------------
54.1 Subject to Landlord's prior approval of the plans and
specifications, which approval shall not be unreasonably withheld or delayed,
Tenant shall have the right to construct a roof deck on the Building. Any such
improvement to the Building shall be done at Tenant's sole cost, by licensed,
bonded contractors reasonably approved by Landlord, and in strict compliance
with all applicable rules, regulations, ordinances and other requirements of
every nature imposed by any governmental authority
49
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with jurisdiction over the Building. Tenant shall obtain all applicable permits
and approvals as may also be required for such construction.
54.2 Subject to Landlord's prior approval, which approval shall not be
unreasonably withheld or delayed, Tenant may install, at Tenant's sole cost, an
antennae or satellite dish on the roof of the Building. Any such improvement to
the Building shall be done at Tenant's sole cost, by licensed, bonded
contractors reasonably approved by Landlord, and in strict compliance with all
applicable rules, regulations, ordinances and other requirements of every nature
imposed by any governmental authority with jurisdiction over the Building.
Tenant shall obtain all applicable permits and approvals as may also be required
for such modifications.
55. Landlord's Representations. Notwithstanding any provision to the
--------------------------
contrary of this Lease, Landlord represents and warrants to Tenant that, to the
best of Landlord's knowledge: (i) the Premises, the Building and the Site as of
the date of this Lease are in compliance in all material respects with all laws
regarding Hazardous Materials ("Hazardous Materials Laws"). Landlord further
represents and warrants that, to the best of Landlord's knowledge, no litigation
has been filed or threatened, nor are any settlements pending with any
governmental or private party, concerning the actual or alleged presence of
Hazardous Materials in or on the Premises, Building or Site, nor has Landlord
received any written notice of any violation, or any alleged violation, of any
Hazardous Materials Laws, pending claims or pending investigations with respect
to the presence of Hazardous Materials on or in the Premises, Building or Site.
In addition to Landlord's indemnification of Tenant pursuant to the provisions
of Paragraph 7.2(b) above, except to the extent that the Hazardous Material in
question was released, emitted, used, stored, manufactured, transported or
discharged by Tenant or any of its agents, employees, contractors or invitees,
Tenant shall not be responsible for and Tenant is hereby released from any
claim, remediation obligation, investigation obligation, removal obligation,
monetary obligation, liability, cause of action, penalty, attorneys' fees,
costs, expenses or damages owing or alleged to be owing to any third party with
respect to any Hazardous Materials present in or on the Premises, the Building
or the Site, or the soil, ground water or surface water thereof, without regard
to whether the Hazardous Materials were present in or on the Premises, the
Building or the Site as of the Lease Commencement Date or whether the presence
of the Hazardous Materials was caused by any person other than Landlord. In no
event, however, shall the indemnification obligations of Landlord in connection
with the Hazardous Materials be more expansive than the indemnification
obligation of Landlord as set forth in Paragraph 7.2(b) above. Landlord's
representations and warranties under this Paragraph 56 and Landlord's
indemnification obligation under Paragraph 7.2(b) shall survive termination of
this Lease.
56. Arbitration. Any dispute pursuant to the provisions of Paragraph 3.2
-----------
which is not resolved pursuant to such Paragraph shall be finally settled by
binding arbitration in accordance with and under the rules of practice and
procedure for arbitration hearings of Judicial Arbitration and Mediation
Services, Inc. ("JAMS"), or its successor in San Francisco, California. The
parties may agree upon a retired judge from the JAMS panel. If they are unable
to agree, JAMS shall provide a list of available judges containing one more
judge than there are parties to the arbitration and each party may strike one.
The remaining judge shall serve as the arbitrator. The arbitrator shall have the
authority to grant injunctive and/or other equitable relief. The arbitrator
shall not have the power to commit errors of law or legal reasoning and the
appropriate court shall have the authority to review the award for errors of
fact, law or legal reasoning. The award may also be vacated or corrected
pursuant to the California Code of Civil Procedure for any such error. If and
when a demand for arbitration is made by either party, the parties agree to
execute a submission agreement, provided by JAMS, setting forth the rights of
the parties and the rules and
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procedures to be followed at the arbitration hearing; provided, however, that
(i) the arbitration shall take place in San Francisco California; (ii) the
arbitrator shall apply the rules of evidence and substantive law of the State of
California; (iii) the arbitrator shall render written findings of fact and
conclusions of law; (iv) the parties shall be entitled to conduct such
pre-hearing discovery as would otherwise be permitted under California law; (v)
the arbitrator shall have the authority to entertain and decide motions before
the arbitration hearing as otherwise would be permitted in a court of law,
including, by way of example, motions to compel discovery and motions for
summary judgment; and (vi) remedies which the arbitrator shall have the
authority to grant shall be limited to the same remedies which could otherwise
be imposed by a court of law. Such arbitration shall be the sole remedy
available to the parties with respect to disputes involving the matters
described in Paragraph 3.2.
57. Other Available Space. Landlord shall give written notice to Tenant
---------------------
at any time that Landlord (or any affiliate of Landlord) has available for
lease, space in a building controlled by Landlord in the immediate geographical
area surrounding the Building, which space is suitable for occupancy by Tenant
as additional space. In no event, however, shall Landlord be in default pursuant
to this Lease in the event that Landlord fails to give any such notice to Tenant
and in no event shall this paragraph be construed as granting to Tenant an
option or first right of refusal or any other right of any kind whatsoever with
respect to any such additional space or controlled building.
IN WITNESS WHEREOF, the parties have executed and delivered this Lease
on the day and year first above written.
LANDLORD: TENANT:
Rosenberg SOMA Investments III, LLC, a LookSmart, Ltd., a
Delaware limited liability company Delaware corporation
By: TRC Investors III, LLC, a California
limited liability company, Manager By: /s/ Signature Illegible
By: The Rosenberg Company, a Name: Edward M. O'DEA
California corporation, Manager
Its: VP Corp Dev.
By: /s/ Signature Illegible
Douglas C. Rosenberg By: _______________________
President Name: ___________________________
Its: ____________________________
By: /s/ Signature Illegible
Douglas C. Rosenberg
Secretary
51
<PAGE>
[EXHIBIT OMITTED]
First Floor
<PAGE>
6.7 Incorporated into the Lease. For all purposes, this Work
---------------------------
Letter shall be and is hereby deemed a part of the Lease, and to the extent
necessary, they shall together be construed as one and the same document.
IN WITNESS WHEREOF, the parties have executed and delivered this Work
Letter on the day and year first above written.
LANDLORD: TENANT:
Rosenberg SOMA Investments III, LLC, a LookSmart, Ltd., a Delaware
Delaware limited liability company corporation
By: The Rosenberg Company, a
California corporation, Manager
By: ___________________________
By: /s/ Signature Illegible Name: _________________________
Douglas C. Rosenberg, Its: __________________________
President
By: ___________________________
By: /s/ Signature Illegible Name: _________________________
Douglas C. Rosenberg, Its: __________________________
Secretary
Page 14
<PAGE>
[EXHIBIT OMITTED]
Second Floor
<PAGE>
[EXHIBIT OMITTED]
Third Floor
<PAGE>
[EXHIBIT OMITTED]
FOURTH FLOOR
<PAGE>
[EXHIBIT OMITTED]
GARAGE
<PAGE>
EXHIBIT B
---------
LANDLORD'S NOTICE OF LEASE TERM DATES
-------------------------------------
To: LookSmart, Ltd., a Delaware corporation
Date: _______, 1999
Re: The Office Lease ("Lease") dated March _______, 1999 between
LookSmart, Ltd., a Delaware corporation, ("Tenant"), and Rosenberg SOMA
Investments III, LLC, a Delaware limited liability company, ("Landlord"),
concerning that certain premises (the "Premises") consisting of all four (4)
floors of office space, all of the basement parking garage and basement storage
area located in that certain building (the "Building") commonly known as 625
Second Street, San Francisco, CA.
In accordance with the Lease, Landlord and Tenant confirm as follows:
1. The Premises and the Building have been delivered to and accepted by
Tenant; Tenant acknowledges that all Tenant Improvements and other Landlord's
Work required under the Lease have been satisfactorily completed.
2. The Lease Commencement Date is _________, 1999; the Lease Expiration
Date is _________, 2009.
3. Tenant's obligation to pay Aggregate Monthly Basic Rent under the
Lease shall commence on the Lease Commencement Date, as specified in Paragraph 2
above.
4. Aggregate Monthly Basic Rent and Operating Rent (when accrued
pursuant to Paragraph 5.3 of the Lease) are due and payable in advance on the
first day of each and every month during the Term of Lease. All payments shall
be made payable to Landlord and
<PAGE>
delivered care of ROK Properties, Inc., 501 Second Street, Ste. 214, San
Francisco, CA 94107.
AGREED AND ACCEPTED
-------------------
LANDLORD: TENANT:
Rosenberg SOMA Investments III, LLC, a LookSmart, Ltd., a
Delaware limited liability company Delaware corporation
By: TRC Investors III, LLC, a California By: _____________________________
limited liability company, Manager Name: ___________________________
Its: ____________________________
By: The Rosenberg Company, a
California corporation, Manager By: _____________________________
Name: ___________________________
By: ________________________ Its: ____________________________
Douglas C. Rosenberg
President
By: __________________________
Douglas C. Rosenberg
Secretary
<PAGE>
EXHIBIT C
---------
SAMPLE FORM OF
--------------
TENANT ESTOPPEL CERTIFICATE
---------------------------
The undersigned, _________________________ ("LANDLORD"), with a mailing, address
c/o ______________________________________________ and ______________________
("TENANT"), hereby certify to_______________________, a ____________________
as follows:
1. Attached hereto is a true, correct and complete copy of that certain
lease dated _____________________ between Landlord and Tenant (the
"LEASE"), which demises premises which are located on the second (2nd)
floor of the Building located at ________________________.
The Lease is now in full force and effect and has not been amended,
modified or supplemented, except as set forth in Paragraph 4 below.
2. The term of the Lease commenced on _______________________.
3. The term of the Lease shall expire on _______________________.
4. The Lease has: (Initial one)
() not been amended, modified, supplemented, extended, renewed or
assigned.
() been amended, modified, supplemented, extended, renewed or
assigned by the following described agreements, copies of which are
attached hereto:
__________________________________________________
__________________________________________________
5. Tenant has accepted, is now in possession of and is now conducting
business in said Premises.
6. Tenant and Landlord acknowledge that the Lease will be assigned to and
that no modification, adjustment, revision or cancellation of the
Lease or amendments thereto shall be effective unless written consent
of is obtained, and that until further notice, payments under the
Lease may continue as heretofore.
7. The amount of Basic Annual Rent is $_______________
Basic Annual Rent shall be increased based upon operating expense
increases and as follows:
__________________________________________________.
8. The amount of security deposits (if any) is $ ________________
No other security deposits have been made.
<PAGE>
9. Tenant is paying the full lease rental, which has been paid in full as
of the date hereof. No rent under the Lease has been paid for more
than thirty (30) days in advance of its due date.
10. All Work required to be performed by Landlord under the Lease has been
completed and all required contributions by Landlord to Tenant on
account of Tenant Improvements have been received.
11. There are no defaults on the part of the Landlord or Tenant under
the Lease.
12. Tenant has no defense as to its obligations under the Lease and claims
no set-off or counterclaim against Landlord.
13. Tenant has no right to any concessions (rental or otherwise) or
similar compensation in connection with renting the space it occupies,
except as provided in the Lease.
14. The Lease, amended as noted in Item 4 above, represents the entire
agreement between Landlord and Tenant as to this leasing.
All provisions of the Lease and the amendments thereto (if any)
referred to above are hereby ratified.
DATED: ___________________, 19__
TENANT: LANDLORD:
------- ---------
_____________________, _____________________,
a______________________ a____________________
By:_____________________ By:___________________
Name:___________________ Name:_________________
Its:___________________ Its:__________________
<PAGE>
EXHIBIT D
---------
RULES AND REGULATIONS
---------------------
1. Subject to Paragraph 48 of the Lease, no sign, placard, picture,
advertisement, name or notice shall be installed or displayed on any part of the
outside or inside of the Building without the prior written consent of Landlord,
which shall not be unreasonably withheld or delayed. Landlord shall have the
right to remove, at Tenant's expense and without notice, any sign installed or
displayed in violation of this rule. All approved signs or lettering on doors,
windows and walls shall be printed, painted, affixed or inscribed at the expense
of Tenant by a person reasonably approved by Landlord, using materials, style
and format reasonably acceptable to Landlord.
2. Landlord shall have the right to approve the window coverings in all
exterior and atrium window offices of the Premises, which approval shall not be
unreasonably withheld or delayed. No awning shall be permitted on any part of
the Premises. Tenant shall not place anything against or near glass partitions
or doors or windows which may appear unsightly from outside the Premises.
3. Tenant shall not obstruct any sidewalks, halls passages, exits,
entrances, elevators or stairways of the Building in a manner which would
violate any applicable code or ordinance.
4. Landlord will furnish Tenant, free of charge, with 10 keys to each
door lock in the Premises and 90 parking garage entry cards. Landlord may make a
reasonable charge for any additional keys or parking entry cards. Tenant shall
not make or have made additional keys or cards without Landlord's prior consent.
Tenant may install a security system at the Premises at Tenant's expense, in
which event Tenant shall provide Landlord with a key and/or entry card for
purposes of Landlord's entry to the Premises as provided in the Lease. Tenant,
upon the termination of its tenancy, shall deliver to Landlord the keys for all
doors and all parking cards which have been furnished to Tenant, and in the
event of loss of any keys or card keys so furnished, shall pay Landlord
therefor.
5. If Tenant requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain, and comply with, Landlord's reasonable
instructions in their installation.
6. No equipment, materials, furniture, packages, supplies, merchandise
or other property will be received in the Building or carried in the elevators
except between such hours and in such elevators as may be designated by
Landlord.
7. Tenant shall not place a load upon any floor of the Premises which
<PAGE>
exceeds the load per square foot which such floor was designed to carry and
which is allowed by law. Landlord shall have the right to prescribe the weight,
size and position of all equipment, materials, furniture or other property
brought into the Building. Heavy objects, if such objects are considered
necessary by Tenant, as reasonably determined by Landlord, shall stand on such
platforms as determined by Landlord to be necessary to properly distribute the
weight. The persons employed to move such equipment in or out of the Building
must be reasonably acceptable to Landlord. Landlord will not be responsible for
loss of, or damage to, any such equipment or other property from any cause, and
all damage done to the Building by maintaining or moving such equipment or other
property shall be repaired at the expense of Tenant.
8. Tenant shall not use or keep in the Premises any kerosene, gasoline
or inflammable or combustible fluid or material other than those limited
quantities necessary for the operation or maintenance of office equipment.
Tenant shall not use or permit to be used in the Premises any foul or noxious
gas or substance, or permit or allow the Premises to be occupied or used in an
unlawful manner by reason of noise, odors or vibrations, nor shall Tenant bring
into or keep in or about the Premises any birds or animals, except animals
assisting disabled persons.
9. Tenant shall not use any method of heating or air conditioning other
than that reasonably approved by Landlord. No space heaters of any type are to
be used within the Premises. Landlord reserves the right to remove space heaters
found during normal inspection of Premises.
10. Heat and air conditioning shall be provided as set forth in the
Lease.
11. Landlord reserves the right, exercisable without notice and without
liability to Tenant, to change the name and street address of the Building.
12. Landlord reserves the right to exclude from the building between
the hours of 6:00 p.m. and 7:00 a.m. the following day, or such other hours as
may be established from time to time by Landlord, and on Saturdays, Sundays and
legal holidays, any person unless that person is known to the person or employee
in charge of the Building and has a pass or is properly identified. Tenant shall
be responsible for all persons for whom it requests passes and shall be liable
to Landlord for all acts of such persons. Landlord shall not be liable for
damages for any error with regard to the admission to or exclusion from the
Building of any person. Landlord reserves the right to prevent access to the
Building in case of invasion, mob, riot, public excitement or other commotion by
closing the doors or by other appropriate action.
13. Tenant shall close and lock the doors of its Premises and entirely
shut off all water faucets or other water apparatus, and, except with regard to
Tenant's computers and other equipment which requires utilities on a twenty-four
hour basis, all electricity, gas or air outlets before Tenant and its employees
leave the Premises. Tenant shall be responsible for any damage or injuries
sustained by Landlord for noncompliance with this rule.
2
<PAGE>
14. The toilet rooms, toilets, urinals, wash bowls and other apparatus
shall not be used for any purpose other than that for which they were
constructed and no foreign substance of any kind whatsoever shall be thrown
therein. The expense of any breakage, stoppage or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose employees or
invitees, shall have caused it.
15. Tenant shall not sell, or permit the sale at retail, of newspapers,
magazines, periodicals, theater tickets or any other goods or merchandise to the
general public in or on the Premises. Tenant shall not use the Premises for any
business or activity other than that specifically provided for in Tenant's
Lease.
16. Tenant shall not mark, drive nails, screw or drill into the
partitions, woodwork or plaster or in any way deface the Premises or any part
thereof, except to install normal wall hangings, and to secure files and
bookcases and other furniture that could fall over. Landlord reserves the right
to direct electricians as to where and how telephone and telegraph wires are to
be introduced to the Premises. Tenant shall not cut or bore holes for wires.
Tenant shall not affix any floor covering to the floor of the Premises in any
manner except as reasonably approved by Landlord. Tenant shall repair any damage
resulting from noncompliance with this rule.
17. Tenant shall not install, maintain or operate upon the Premises any
vending machine without the written consent of Landlord.
18. Landlord reserves the right to exclude or expel from the Building
any person who, in Landlord's reasonable judgment, is intoxicated or under the
influence of liquor or drugs or who is in violation of any of the Rules and
Regulations of the Building.
19. Tenant shall 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 storage and disposal shall be made in
accordance with directions issued from time to time by Landlord.
20. The Premises shall not be used for the storage of merchandise held
for sale to the general public, or for lodging or for manufacturing of any kind,
nor shall the Premises be used for any improper, immoral or objectionable
purpose. No cooking shall be done or permitted by any tenant on the Premises,
except that use by tenant of Underwriters' Laboratory-approved equipment for
brewing coffee, tea, hot chocolate and similar beverages shall be permitted, and
the use of a microwave oven shall 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.
21. Except for mail carts and hand trucks, Tenant shall not bring any
vehicles
3
<PAGE>
of any kind into the Building except the Garage. Tenant shall comply with all
reasonable rules and regulations with respect to the use of the Garage as
Landlord may from time to time deliver to Tenant in writing.
22. Without the written consent of Landlord, Tenant shall not use the
name of the Building in connection with or in promoting or advertising the
business of Tenant except as Tenant's address.
23. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by any governmental agency or reasonably
established by Landlord.
24. Tenant 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.
25. The requirements of Tenant will be attended to only upon appropriate
application to the office of the Building by an authorized individual. Employees
of Landlord shall not perform any work or do anything outside of their regular
duties unless under special instructions from Landlord, and no employee of
Landlord will admit any person (tenant or otherwise) to any office without
specific instructions from Landlord.
26. Landlord may waive any one or more of these Rules and Regulations for
the benefit of Tenant, but no such waiver by Landlord shall be construed as a
permanent or continuing waiver of such Rules and Regulations in favor of Tenant,
nor prevent Landlord from thereafter enforcing any such Rules and Regulations
against Tenant.
27. These Rules and Regulations are in addition to the terms, covenants,
agreements and conditions of the Lease. In the event these Rules and Regulations
conflict with any provision of the Lease, the Lease shall control.
28. Landlord reserves the right to make such other and reasonable Rules
and Regulations as, in its judgment, may from time to time be needed for safety
and security, for care and cleanliness of the Building and for the preservation
of good order therein, provided such rules and regulations do not materially
increase Tenant's obligation hereunder or diminish Tenant's rights hereunder.
Tenant agrees to abide by all such Rules and Regulations hereinabove stated and
any additional rules and regulations which are adopted.
29. Tenant shall be responsible for the observance of all of the foregoing
rules by Tenant's employees, agents, clients, customers, invitees and guests.
30. Smoking is prohibited in all enclosed areas of the Building without
limitation. When smoking outside the Building, ash receptacles must be used and
provided by
4
<PAGE>
the smoker if not provided by Landlord. Smokers must not leave any ashtrays,
smoking material or debris in the area where they have been smoking, except in
ash receptacles.
5
<PAGE>
EXHIBIT E
---------
WORK LETTER
-----------
625 SECOND STREET, SAN FRANCISCO, CALIFORNIA
TENANT WORK LETTER
This Tenant Work Letter ("WORK LETTER") is entered into effective MAY 5th
1999, and shall set forth the terms and conditions controlling the construction
of the Premises. Unless otherwise defined herein, all capitalized terms shall
have the meanings ascribed to them in that certain lease between LookSmart,
Ltd., a Delaware corporation ("TENANT") and Rosenberg SOMA Investments III, LLC,
a Delaware limited liability company ("LANDLORD") dated ________, 1999 (the
"LEASE").
SECTION 1
SELECTION OF CONTRACTOR
1.1 Selection of General Contractor. Tenant acknowledges and agrees that
-------------------------------
Landlord shall engage Cannon Constructors ("CONTRACTOR") to act as the general
contractor for construction of all Landlord's Work (as defined below) and the
Tenant's Improvements (as defined below) to be performed to the Building.
Landlord shall enter into separate contracts with Contractor for the
construction of Landlord's Work and the Tenant's Improvements (sometimes
referred to collectively as the "IMPROVEMENT WORK"). The contract between
Landlord and Contractor with respect to the Landlord's Work shall separately
reference and describe the Landlord's Work and the costs and charges therefor,
and the contract for the Tenant's Improvements shall separately reference and
describe the Tenant's Improvements and the costs and charges therefor. Landlord
shall use commercially reasonable efforts to cause the Improvement Work to be
substantially completed with respect to Floor Three and Floor Four not later
than October 15, 1999 and with respect to Floor One and Floor Two not later than
October 22, 1999. It is acknowledged, that substantial completion of the
Tenant's Improvements is dependant, in part, on the timely performance by
Landlord of those matters required of Landlord in connection with construction
of the Tenant's Improvements and on the timely performance by Tenant of those
matters required by Tenant in connection with construction of the Tenant's
Improvements, including without limitation, those certain Tenant Benchmarks as
defined and set forth in Paragraph 5.2 below. Tenant's failure to meet a Tenant
Benchmark shall constitute a Tenant Delay and shall be subject to Paragraph 3.2
and 3.3 of the Lease. For purposes of the Lease and this Work Letter,
"substantial completion" of the Improvement Work shall mean the date on which
all of the following have occurred: (i) Landlord has substantially completed the
Improvement Work with respect to Floor Three and Floor Four or with respect to
Floor One and Floor Two, as the case may be, in accordance with this Work
Letter, as certified by Landlord's Architect (as defined below) subject only to
completion of punch list items and such other items as do not materially affect
the ability of Tenant to occupy and use the Premises for general office
purposes; and (ii) Landlord has obtained all governmental approvals and
occupancy certificates required for the legal occupancy of Floor Three and Floor
Four or Floor One and Floor Two, as the case may be. Upon substantial completion
of the Improvement Work with respect to Floor Three and Floor Four or with
respect to Floor One and Floor Two, as the case may be, Landlord shall give
Page 1
<PAGE>
written notice thereof to Tenant. Within three (3) business days after Tenant's
receipt of such written notice, a representative of Tenant, a representative of
Landlord and Tenant's Architect (as defined below) and Landlord's Architect
shall conduct a physical inspection and walk through of the Premises for the
purpose of determining which components of the Improvement Work with respect to
Floor Three and Floor Four or with respect to Floor One and Floor Two, as the
case may be, if any, have not been completed, and which require additional work
or repair. Within three (3) business days thereafter, Tenant's Architect and
Landlord's Architect shall prepare a punch list setting forth such components of
the Improvement Work. Landlord shall thereafter diligently pursue completion
and/or repair of the punch list items. Upon completion of all such punch list
items, Landlord shall be considered to have completely fulfilled its obligations
in connection with the Improvement Work with respect to Floor Three and Floor
Four or Floor One and Floor Two, as the case may be, subject to the provisions
of Paragraph 12 of the Lease. Notwithstanding any provision to the contrary
contained in the Lease or in this Work Letter, Tenant's acceptance of the
Improvement Work or submission of a "punch list" with respect to Improvement
Work shall not be deemed a waiver of Tenant's right to have latent defects in
Improvement Work repaired at no cost to Tenant. Tenant shall give written notice
to Landlord whenever any such defect becomes reasonably apparent and Landlord
shall repair such defect as soon as practicable so long as Tenant gives such
notice to Landlord within one (1) year following substantial completion of the
Improvement Work (as defined in Section 1.1) with respect to Floor Three and
Floor Four or Floor One and Floor Two, as the case may be. Notwithstanding the
above provisions, Landlord shall have no obligation to repair any defect in the
Tenant's Improvements resulting from or relating to design defects attributable
to Tenant's Architect or any one or more of Tenant's Engineers (as defined
below). Subsequent to one (1) year following substantial completion of the
Improvement Work, the repair obligation of Landlord with respect to latent
defects shall be as otherwise set forth in the Lease. Following such one year
period Landlord, upon the request of Tenant shall assign to Tenant without
representation of any kind Landlord's rights, if any, against Contractor in
connection with any latent defects with respect to construction of the Tenant's
Improvements. Landlord, at no cost to Landlord, shall reasonably cooperate with
Tenant in connection with any action commenced by Tenant against the Contractor
with respect to any latent defects in connection with the Tenant's Improvements.
In connection with any assignment of such rights against Contractor to Tenant,
Tenant shall agree to indemnify, defend and hold Landlord harmless from any and
all costs, obligations or liabilities of any kind whatsoever (including
reasonable attorneys' fees) arising out of or relating to any action taken by
Tenant with respect to the Contractor pursuant to such assignment.
1.2 General Contractor's Contract for Improvements. As a condition of
----------------------------------------------
Contractor's contract with Landlord for the construction of the
Tenant's Improvements (the "Construction Contract"), Contractor shall solicit
and employ commercially reasonable effort to obtain bids reasonably satisfactory
to Tenant for each component of work contemplated by the Construction Drawings
(as defined below) to be performed pursuant to subcontract. Contractor shall
provide Landlord and Tenant with a copy of all such bids related to the Tenant's
Improvements. Contractor shall also provide Landlord and Tenant with an itemized
breakdown of all general conditions proposed under the Construction Contract
Page 2
<PAGE>
related to the Tenant's Improvements. All general conditions shall be subject to
Landlord's approval and to Tenant's approval as provided below in this
paragraph. Contractor shall be limited to three and one-half percent (3 1/2%) of
the total cost of construction of the Tenant's Improvements incurred by
Contractor as Contractor's profit in connection with construction of the
Tenant's Improvements. The proposed form of Construction Contract shall set
forth the cost of construction for Tenant's Improvements (either on fixed basis
or on a guaranteed maximum basis) and relate to the construction of the Tenant's
Improvements in accordance with the Construction Drawings. A copy of the
proposed form of Construction Contract shall be delivered by Landlord to Tenant.
Within five (5) business days following delivery by Landlord to Tenant of (i) a
copy of the proposed form of Construction Contract; (ii) a copy of all bids of
subcontractors in connection with the Construction Contract; and (iii) an
itemized breakdown of the general conditions proposed in the Construction
Contract, Tenant shall deliver written approval or disapproval of all such items
to Landlord. If Tenant disapproves any such items, Tenant's notice to Landlord
shall specify the basis for the disapproval. In the event that Tenant approves
all of such items, Landlord shall proceed with construction of the Tenant's
Improvements in accordance with the Construction Contract as so approved. In the
event that Tenant disapproves any such items, Landlord shall reasonably attempt
to satisfy any such objections of Tenant and shall give Tenant written notice of
suggested resolutions which in each case Tenant shall approve or disapprove in
writing within one (1) business day after receipt. Landlord may elect not to
proceed with construction of the Tenant's Improvements pursuant to the
Construction Contract until all objections as raised by Tenant have been fully
satisfied and Tenant has given written approval of the Construction Contract in
full, including without limitation all of the above described items. In the
alternative, Landlord shall be entitled to proceed with construction of the
Tenant's Improvements pursuant to the Construction Contract even if Tenant's
final approval to all components of the Construction Contract has not yet been
obtained provided that Landlord gives written notice to Tenant of its intent to
so proceed and Tenant fails to object to such notice within two (2) business
days following receipt by giving written notice to Landlord of such objection.
SECTION 2
LANDLORD'S WORK
2.1 Scope of Landlord's Work. The following work and improvements
------------------------
("LANDLORD'S WORK") shall be specified in construction drawings (and
specifications) prepared by Landlord's Architect ("LANDLORD'S DRAWINGS") and
shall be constructed at Landlord's sole cost. Prior to Landlord's entry into the
Construction Contract for construction of the Tenant's Improvements, Landlord
shall provide Tenant with a copy of Landlord's Drawings. Landlord shall not be
required to enter into the Construction Contract for the construction of the
Tenant's Improvements until and unless Tenant has given written approval of
Landlord's Drawings. The Landlord's Drawings shall set forth the scope of the
Landlord's Work and shall include, but not be limited to, the improvements set
forth below.
2.1.1 Installation of the primary heating, ventilating, and air-
conditioning system ("HVAC") for the Building, stubbed out to each floor, ready
for local distribution.
Page 3
<PAGE>
2.1.2 Installation of one hour rated electrical closets on each floor
with 480 volt, 3 phase electrical power supply with distribution of 450 amps. to
each floor of the Building as specified in the Construction Drawings.
2.1.3 Installation of life-safety systems as required by applicable
building codes on an unimproved basis (i.e., an unoccupied building), including
all strobes (to the extent required by applicable building code), sprinkler
systems, emergency exit systems (including required lighting and signage) and
other required fire safety systems.
2.1.4 Installation of the main telephone terminal panel with
appropriately sized services in the telephone/electrical room specified in the
Construction Drawings, and installation of telephone closets on each floor of
the Building, ready for secondary line branching throughout each floor.
2.1.5 Construction of Men's and Women's restrooms on each floor of
the Building, as specified in the Landlord's Drawings, with the exception of the
basement.
2.1.6 Construction of lighted and gated basement parking and
installation of a card key access system.
2.1.7 Installation of two (2) new passenger elevators serving all
floors, as specified in the Landlord's Drawings.
2.1.8 Installation of new or refurbished windows throughout the
Building including new windows to be installed into the south side of the
Building.
2.1.9 Performance of all work necessary for the Building to comply
with all applicable seismic regulations, the Americans with Disabilities Act of
1980 (except with respect to those compliances associated exclusively with the
Tenant's Improvements) and all applicable path of travel regulations.
2.1.10 Installation of a least one (1) fiber optic system to a
location in the Garage ready for distribution throughout the Building provided
that Tenant selects Landlord's pre-existing provider in connection with such
fibre optic system.
2.1.11 Sandblasting of substantially all interior brick and wood
surfaces followed by air blasting of such surfaces with clear seal only to be
applied to sand blasted brick.
SECTION 3
TENANT'S IMPROVEMENTS
3.1 Scope of Tenant's Improvements. The physical improvements to the
------------------------------
Premises and the Building (in addition to Landlord's Work) set forth and
described in the Construction
Page 4
<PAGE>
Drawings shall constitute the "TENANT'S IMPROVEMENTS". For purposes of this Work
Letter, the "TENANT IMPROVEMENT ALLOWANCE ITEMS" shall consist of the following:
(i) all costs incurred in connection with or arising from the Construction
Contract; (ii) all fees and costs of Tenant's Architect and Tenant's Engineers
(as defined below): (iii) all space planning costs (subject to the limitations
of paragraph 3.4); (iv) the cost of Tenant's security system to be installed at
the Premises; (v) Landlord's supervision/construction management fee (as
described in Paragraph 4.3 below); (vi) all costs related to obtaining all
necessary construction and other permits necessary for construction of the
Tenant's Improvements; (vii) all fees and costs associated with the hiring of an
expediter, if any, to assist in obtaining all building and planning department
consents and approvals with respect to the Tenant's Improvements; (viii) the
cost of other items related to the design and construction of the Tenant's
Improvements; and (ix) all other costs and expenses incurred in connection with
the Construction Contract or construction of the Tenant's Improvements. Tenant
shall be responsible for the full amount of all such costs in connection with
the Tenant's Improvements, all of which shall be paid in accordance with the
provisions of this Work Letter. Tenant shall be responsible for the full amount
of all such costs in connection with the Tenant's Improvements, all of which
shall be paid in accordance with the provisions of this Work Letter. The Tenant
Improvement Allowance Items shall include fifty percent (50%) of the cost of the
technology cabling to be installed within the Premises, which cost Landlord may
pay and if paid by Landlord, Tenant agrees that such technology cabling will
remain in the Premises upon the termination of the Lease. Notwithstanding
anything to the contrary contained in the Lease or this Work Letter, the cost of
the Tenant's Improvements and the Tenant Improvement Allowance Items shall not
include (and Tenant shall have no responsibility for) the following components:
(i) costs attributable to Landlord's Work or improvements installed "off-site"
(such as streets, curbs, gutters, traffic lights, lights for parking and street
lighting); (ii) costs incurred to remove hazardous materials from the Building
unless the presence of such materials was caused by Tenant or its agents,
contractors, employees or invitees in violation of hazardous materials laws (as
such may exist from time to time); (iii) attorneys' fees incurred in connection
with the Construction Contract (or any subcontracts), or attorneys' fees,
experts' fees and other costs of legal and arbitration proceedings to resolve
construction disputes with third parties except for attorney's fees and other
costs incurred in connection with construction disputes relating to or arising
out of decisions made, actions taken or positions taken by Tenant's Architect;
(iv) loan fees, mortgage brokerage fees, interest and other costs of financing
construction costs; (v) costs incurred as a consequence of a delay by Landlord
or construction defects except for construction defects arising or relating in
whole or in part to services provided or decisions made by Tenant's Architect or
any other consultant or contractor engaged by Tenant; (vi) restoration costs in
excess of insurance proceeds as a consequence of a casualty during construction,
unless the casualty is caused by Tenant, its agents, contractors, employees or
invitees; (vii) costs recovered by Landlord by reason of warranties or
insurance; and (viii) penalties and late charges attributable to the failure to
pay construction costs in accordance with the Construction Contract, except to
the extent such penalties and late charges arise due to delays caused by Tenant,
its agents, contractors, employees or invitees including, without limitation,
Tenant's Architect.
Page 5
<PAGE>
3.2 Tenant Improvement Allowance. Tenant shall be entitled to a one-time
----------------------------
tenant improvement allowance (the "TENANT IMPROVEMENT ALLOWANCE") in the amount
of Thirty-One and 50/100 Dollars ($31.50) per rentable square foot of office
space within the Premises. For purposes of calculation of the total Tenant
Improvement Allowance, the maximum amount of the Improvement Loan (as defined
below) and Landlord's obligation to advance space planning costs, the rentable
square feet of the Premises shall be 134,847. The Tenant Improvement Allowance
shall be exclusively applied toward the costs of completing the Tenant's
Improvements. Landlord shall be entitled to employ the Tenant's Improvement
Allowance in connection with payment of the Tenant Improvement Allowance Items.
In no event shall Landlord be obligated to make disbursements pursuant to this
Work Letter, or otherwise for the construction of the Tenant's Improvements, in
excess of the Tenant Improvement Allowance, except as provided in Paragraph 3.3.
Tenant shall be solely responsible for all costs incurred in constructing the
Tenant's Improvements in excess of the Tenant Improvement Allowance, whether
resulting from cost overruns, changes to the Construction Drawings requested by
Tenant (or made necessary by reason of design or other issues in connection with
the Construction Drawings prepared by Tenant's Architect or Tenant's Engineers)
or otherwise.
3.3 Additional Funds for Tenant's Improvements. Notwithstanding the
------------------------------------------
limitation on the Tenant Improvement Allowance to be provided by Landlord in the
immediately preceding Paragraph, Tenant may request that Landlord loan Tenant
additional funds (the "IMPROVEMENT LOAN") to be used to complete the Tenant's
Improvements, if reasonably necessary, in the event the Tenant Improvement
Allowance is insufficient to pay in full the cost of the Tenant's Improvements,
taking into account any changes to the Construction Drawings made by Tenant
(which shall be at Tenant's sole cost). In the event that the Tenant Improvement
Allowance is insufficient as described above, Landlord shall loan to Tenant an
additional amount not to exceed Three and 50/100 Dollars ($3.50) per rentable
square foot of office space within the Premises. The obligation of Landlord to
make the Improvement Loan shall be conditioned on (i) exhaustion of the Tenant
Improvement Allowance in connection with Tenant Improvement Allowance Items,
(ii) Tenant contributing an amount equal to the Improvement Loan ("MATCHING
FUNDS") and (iii) the Improvement Loan and Matching Funds being applied only
towards hard construction costs as set forth in the Construction Contract, fees
and costs of Tenant's Architect and Tenant's Engineers and fifty percent (50%)
of the costs of the technology cabling to be installed within the Premises
(provided that such technology cabling remains in the Premises at the
termination of the Lease). If, at the time the Construction Contract is approved
by Tenant, the costs of the Tenant Improvement Allowance Items are reasonably
anticipated to be in excess of the Tenant Improvement Allowance, then as a
condition to Landlord's obligation to execute the Construction Contract, Tenant
shall fund the full amount of the reasonably anticipated Matching Funds to
Landlord as provided below. The amount of the Improvement Loan shall be
evidenced by an installment promissory note (the "NOTE") made by Tenant in favor
of Landlord in a form reasonably acceptable to Landlord and Tenant. The Note
shall provide for interest at the rate of nine percent (9%) per annum, for a
term of ten (10) years commencing as of the Lease Commencement Date and for
equal monthly installment payments of principal and interest due on the first
day of each calendar month, which
Page 6
<PAGE>
payments shall be sufficient to fully amortize the principal amount of the
Improvement Loan over the ten (10) year term of the Note. In the event that at
the time the Construction Contract is finally approved by Tenant, it is not
anticipated that any amount in excess of the Tenant Improvement Allowance will
be required in connection with the cost of the Tenant Improvements, then to the
extent that excess costs are thereafter incurred, Landlord shall be required to
make the Improvement Loan in the maximum amount as described above, subject
however, to the conditions provided in Clauses (i), (ii) and (iii) above. In
connection with any such excess costs anticipated to be incurred and the
requirement for Matching Funds or additional Matching Funds to be contributed by
Tenant, such funds shall be deposited with Landlord as described below.
Tenant shall solely be responsible for bearing the cost of the Tenant's
Improvements in excess of the Tenant Improvement Allowance and the Improvement
Loan. In the event it becomes reasonably apparent from the Construction Drawings
and Construction Contract that the cost of the Tenant's Improvements will exceed
the Tenant Improvement Allowance, the Improvement Loan and the Matching Funds,
within ten (10) business days following final approval of the Construction
Contract by Tenant, Tenant shall deposit with Landlord (to be held in an
interest bearing account by Landlord) an amount equal to the cost of the
Tenant's Improvements in excess of the Tenant Improvement Allowance, the
Improvement Loan and the Matching Funds as reasonably determined by Landlord.
Tenant shall, in addition, within ten (10) business days following final
approval of the Construction Contract, deposit the Matching Funds with Landlord
to be held in an interest bearing account by Landlord. The amount so deposited
by Tenant ("TENANT'S FUNDS") shall be disbursed and/or employed in accordance
with Paragraph 3.5 below; provided however, that Tenant's Funds shall not be
used or applied towards the cost of completing the Tenant's Improvements until
such time as the Tenant Improvement Allowance has been exhausted in accordance
with the provisions of this Work Letter. In the event that following final
approval of the Construction Contract by Tenant, additional funds are required
by reason of additional costs attributable to change orders or other reasons
approved by Tenant (or Tenant's Architect), which approval shall not be
unreasonably withheld or delayed, Landlord may, thereafter, from time to time
upon written notice to Tenant, require that Tenant deposit additional funds with
Landlord (within ten (10) business days following receipt by Tenant of the
request for an additional deposit) to be held by Landlord in an interest bearing
account as a part of the Tenant's Funds in an amount as reasonably determined by
Landlord equal to such excess amount of costs to be incurred in connection with
construction of the Tenant's Improvements. Any and all interest accruing on the
Tenant's Funds shall accrue for the benefit of Tenant. In the event that Tenant
fails to deposit additional funds with Landlord within ten (10) business days
following receipt by Tenant of the request for an additional deposit as
described above, then Landlord may, at the sole option of Landlord, but without
any requirement to do so, draw down from the cash portion of the security
deposit made by Tenant pursuant to the provisions of Paragraph 6.1 of the Lease
the amount of additional deposit requested by Landlord which Tenant has failed
to timely make. In the event of any such withdrawal by Landlord, the funds so
withdrawn shall be held by Landlord as a portion of the Tenant's Funds and
disbursed by Landlord as otherwise provided herein. Further, in the event of any
draw by Landlord against the cash
Page 7
<PAGE>
portion of the security deposit. Tenant shall be obligated to restore such drawn
amount to the security deposit within ten (10) days after receipt of written
demand of Landlord requiring such restoration in accordance with the provisions
of Paragraph 6.1 of the Lease. Within ten (10) business days following
completion of construction of the Tenant's Improvements and payment in full of
all costs incurred by Landlord in connection with such construction, any
Tenant's Funds then held by Landlord, together with any accrued interest then
held, shall be disbursed by Landlord to Tenant.
3.4 Cost of Initial Space Planning. In connection with the Tenant's
------------------------------
Improvements, Landlord shall advance the cost of initial space planning for the
Premises up to the maximum amount of Ten Cents ($0.10) per rentable square foot
of office space within the Premises, which amount actually advanced by Landlord
shall be debited against the Tenant Improvement Allowance otherwise available.
3.5 Landlord's Disbursement Process. During the construction of the
-------------------------------
Tenant's Improvements, Landlord shall make monthly disbursement of the Tenant
Improvement Allowance (and to the extent necessary, the Improvement Loan, the
Matching Funds and Tenant's Funds) for Tenant Improvement Allowance Items for
the benefit of Tenant and shall authorize the release of monies for the benefit
of Tenant as follows:
3.5.1 Monthly Disbursements. On or before the first day of each
---------------------
calendar month during the construction of the Tenant's Improvements (or such
other date as Landlord may designate), and before Landlord shall be required to
disburse any funds hereunder, Contractor shall deliver to Landlord: (i) a
request for payment of Contractor (and others as appropriate), approved by
Tenant's Architect (which approval shall not be unreasonably withheld or
delayed), in a form to be provided by Landlord, showing the schedule, by trade,
of percentage of completion of the Tenant's Improvements in the Building,
detailing the portion of the work completed and the portion not completed; (ii)
invoices from Contractor (and others as appropriate), for labor rendered and
materials delivered to the Building; (iii) executed mechanic's lien releases
from Contractor (and all others requesting payment) which shall comply with the
appropriate provisions, as reasonably determined by Landlord, of California
Civil Code Section 3262(d); and (iv) all other information reasonably requested
by Landlord. Tenant's Architect's approval of any request for payment shall be
deemed Tenant's acceptance and approval of the work furnished and/or the
materials supplied as set forth in the subject payment request. Tenant's
Architect and Tenant's Representative (as defined below) shall approve or
disapprove any request for payment within three (3) business days following
receipt of Tenant's Architect of such request and, in connection with any
disapproval of the request, shall specifically state the reason for disapproval.
In connection with any disapproval, Tenant's Architect shall, thereafter,
respond within two (2) business days following receipt by Tenant's Architect of
any revised request for payment. Within five (5) business days following written
approval by Tenant's Architect, Landlord shall deliver a check made payable to
Contractor (or other party as appropriate) in payment of: (A) amounts so
requested by Contractor, as set forth in this Paragraph, less a retention in
accordance with the provisions of the Construction Contract (the aggregate
amount of such retentions to be
Page 8
<PAGE>
known as the "FINAL RETENTION"), provided that Landlord does not dispute any
request for payment based on non-compliance of any work with the approved
Construction Drawings, or due to any substandard work, or for any other reason.
Landlord's payment of such amounts shall not be deemed Landlord's approval or
acceptance of the work furnished or materials supplied as set forth in the
subject payment request. In addition to the disbursement described immediately
above, Landlord shall be entitled to disburse funds in payment of obligations
incurred by Landlord for Tenant Improvement Allowance Items as Landlord may,
from time to time, deem appropriate. Landlord shall provide to Tenant and
Tenant's Architect, copies of invoices in connection with any such disbursements
within five (5) business days following disbursement. Tenant shall, in addition,
be entitle to submit, from time to time, invoices of Tenant's Architect and
Tenant's Engineers, which invoices shall be approved by Tenant. Landlord shall
pay such invoices as approved by Tenant within thirty (30) days following
receipt by Landlord of approved invoices, but no more often than once per
calendar month.
In no event shall Landlord have any obligation to make disbursements
in excess of the aggregate of; (i) the Tenant Improvement Allowance, (ii) the
Improvement Loan, (iii) the Matching Funds as having been deposited by Tenant
with Landlord, and (iv) the Tenant's Funds as having been deposited by Tenant
with Landlord (exclusive of Matching Funds).
3.5.2 Final Retention. Subject to the provisions of this Work Letter,
---------------
a check for the Final Retention payable to Contractor shall be delivered by
Landlord to Contractor following the completion of construction of the Tenant's
Improvements, provided that (i) Contractor delivers to Landlord properly
executed mechanics lien releases in compliance with both California Civil Code
Section 3262(d)(2) and either Section 3262(d)(3) or Section 3262(d)(4), (ii)
Landlord 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 structure or exterior
appearance of the Building, and (iii) Tenant's Architect delivers to Landlord a
certificate, in a form reasonably acceptable to Landlord, certifying that the
construction of the Tenant's Improvements in the Building has been substantially
completed.
3.6 Unused Allowance. In the event that there remains any unused portion
----------------
of the Tenant Improvement Allowance following disbursements by Landlord in
connection with the Tenant's Improvements, any such amount shall be retained by
Landlord. Tenant shall have no entitlement to any excess of the Tenant
Improvement Allowance not in good faith consumed in the construction of the
Tenant's Improvements.
SECTION 4
CONSTRUCTION DRAWINGS; SUPERVISION OF WORK
4.1 Selection of Architect/Construction Drawings. Tenant hereby selects
--------------------------------------------
Keith Hooks, Hooks Design and Architecture ("TENANT'S ARCHITECT") to prepare the
Construction
Page 9
<PAGE>
Drawings and Landlord hereby consents to such selection of Tenant's Architect.
Tenant shall enter into a written contract with Tenant's Architect reasonably
acceptable to Landlord. To the extent required or appropriate, Tenant also shall
select engineering consultants reasonably acceptable to Landlord ("TENANT'S
ENGINEERS") to prepare and/or review plans and drawings relating to the Tenant's
Improvements. The plans and specifications to be prepared by Tenant's Architect
and Tenant's Engineers shall be known collectively as the "CONSTRUCTION
DRAWINGS". In connection with the preparation of the Construction Drawings,
Tenant shall submit to Landlord, the schematic plans ("SCHEMATIC PLANS") prior
to and in connection with the Construction Drawings, which Schematic Plans shall
be subject to the approval of Landlord which approval shall not be unreasonably
withheld or delayed. Following the approval by Landlord of the final Schematic
Plans, the Construction Drawings shall be prepared and a copy delivered to
Landlord. The Construction Drawings shall be subject to Landlord's written
approval, which shall not be unreasonably withheld or delayed. The Construction
Drawings shall be full and complete and sufficient to obtain all necessary
governmental permits and approvals required in connection with the construction
of the Tenant's Improvements. Tenant's Architect shall respond within three (3)
business days upon receipt of any written request of Landlord or Contractor for
clarification or further definition in connection with the Construction
Drawings. Tenant and Tenant's Architect shall verify in the field the actual
dimensions and surface conditions of the Building, and Tenant and Tenant's
Architect shall be solely responsible therefor and shall rely exclusively
thereon. Landlord shall have no responsibility whatsoever for determination of
the dimensions and conditions of the Building, and makes no representations in
connection therewith. Landlord's review of the Construction Drawings as set
forth in this Paragraph shall be for its sole purpose and shall not imply
Landlord's review of the same, or obligate Landlord to review the same, for
quality, design, code compliance or other like matters. Accordingly,
notwithstanding that any Construction Drawings are reviewed by Landlord or its
architect, engineers and consultants (if any), and notwithstanding any advice or
assistance which may be rendered to Tenant by Landlord or Landlord's Architect,
engineers, and consultants (if any), Landlord shall have no liability whatsoever
in connection therewith and shall not be responsible for any omissions or errors
contained in the Construction Drawings. No changes, modifications or alterations
in the Construction Drawings may be made without the prior written consent of
Landlord, which shall not be unreasonably withheld or delayed. Any delay in the
completion of construction of the Tenant's Improvements resulting from any
defect or omission in the Construction Drawings including, without limitation,
the failure of the Construction Drawings to satisfy or to comply with any
applicable law, code or regulations shall constitute a Tenant Delay for purposes
of Paragraph 3.2 of the Lease.
4.2 Permits. Prior to the commencement of construction of the Tenant's
-------
Improvements, Landlord, with the assistance and cooperation of Tenant's
Architect, shall submit the Construction Drawings as approved by Landlord to the
appropriate municipal authorities and Landlord shall obtain all applicable
building permits necessary to allow the Contractor to commence and fully
complete the construction of the Tenant's Improvements
Page 10
<PAGE>
(the "PERMITS"). Tenant shall reasonably cooperate with Landlord in taking such
action as may be reasonably required so as to enable Landlord to obtain all such
Permits and approvals.
4.3 Landlord's Supervision Fee. In connection with Landlord's review and
--------------------------
supervision of construction of the Tenant's Improvements as provided in this
Work Letter, Landlord has designated Douglas C. Rosenberg ("LANDLORD'S
SUPERVISOR") to serve as its representative and supervisor of the construction
of the Tenant's Improvements and all related matters, and in connection with
such function, Landlord shall be entitled to a supervision fee equal to Twenty-
five Thousand Dollars ($25,000), which fee shall be payable incrementally from
time to time from the Tenant Improvement Allowance, Improvement Loan, Matching
Funds and Tenant's Funds. The supervision fee shall be payable at least once
each calendar month and shall generally be payable on a basis consistent with
the percentage of the total cost for the Tenant's Improvements then having been
incurred as approved by Landlord's Architect in accordance with Paragraph 3.5.1
above.
SECTION 5
TENANT'S COVENANTS AND BENCHMARKS; LEASE COMMENCEMENT DATE
5.1 Tenant Indemnity. Tenant hereby indemnifies Landlord from any loss,
----------------
claims, damages, actions or courses of action (including, without limitation,
reasonable attorney's fees) arising from or relating to the actions of Tenant's
agents, employees or contractors in the Premises or the Building or in the event
Tenant shall conduct additional work to the Premises separate and apart from the
Tenant Improvements prior to substantial completion of the Tenant Improvements,
such as fixture installation or workstation set up, Tenant shall do so in strict
compliance with any and all rules and regulations related thereto that
Contractor or Landlord shall reasonably impose. Tenant shall only have the right
to conduct such activities prior to substantial completion provided that such
activities do not interfere with Landlord's completion of the Tenant's
Improvements.
5.2 Tenant's Benchmarks. The obligations of Tenant in connection with the
-------------------
Tenant's Improvements include the following (each a "TENANT BENCHMARK" and
collectively, the "TENANT BENCHMARKS") which Tenant Benchmarks, notwithstanding
any provision to the contrary of this Work Letter or the Lease, are to be
completed by the date indicated below:
Description of Tenant Benchmark Date of
------------------------------- -------
Completion
----------
(i) Tenant's written approval and delivery to Landlord and the May 17, 1999
Contractor of final schematic drawings.
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<PAGE>
<TABLE>
<S> <C>
(ii) Tenant's written approval and delivery to Landlord and June 7, 1999
the Contractor of final design development drawings and
written identification of long lead architectural items, light
fixtures and other mechanical, electrical and plumbing items
(and written agreement on specifications for each of
such
items).
(iii) Delivery by Tenant to Landlord of final approval and 4 business days
release of the long lead architectural items described following receipt
immediately above. Landlord will provide to Tenant pricing by Tenant of the
information and availability information in connection with the Long Lead
long lead items ("LONG LEAD SUBMISSION") for purposes of Submission
obtaining Tenant's final approval with respect to
all such items.
(iv) Delivery by Tenant to Landlord and the Contractor of July 2, 1999
complete construction drawings and specifications (collectively,
the ("CONSTRUCTION DRAWINGS").
(iv) Final written approval by Tenant of the bid pricing of the 4 business days
Tenant's Improvements (and the guaranteed maximum price) as following receipt
set forth in the Construction Drawings which bid pricing shall by Tenant of the
be set forth in a submission by Landlord and the Contractor to Pricing
Tenant ("PRICING SUBMISSION") and authorization to proceed Submission
with construction of the Tenant's Improvements. Tenant may
authorize the Contractor to proceed with portions of the Tenant's
Improvements prior to approval of the Pricing Submission in its
entirety, but in any event approval of the Pricing Submission in
its entirety shall be made within the four business days as
provided herein.
</TABLE>
SECTION 6
MISCELLANEOUS
6.1 Early Access. Prior to the anticipated Lease Commencement Date and at
------------
such time as construction of the Improvement Work allows, and as the status of
such construction is appropriate, Landlord shall provide Tenant and Tenant's
consultants and contractors with access to the Premises for the purpose of
installation by Tenant, at its cost (subject to payment of fifty percent [50%]
of such cabling costs as provided above) of Tenant's technology cabling within
the Premises. Landlord shall attempt to provide access to Tenant at least three
(3) weeks prior to the anticipated Lease Commencement Date. In connection with
any such early entry by Tenant, Tenant and its consultants and contractors shall
not interfere with the completion of construction by Landlord and any delay in
completion of the Improvement Work resulting from the early access by Tenant and
its contractors or consultants shall
Page 12
<PAGE>
constitute a Tenant Delay for purposes of Section 3.2 of the Lease. In
connection with any early access to the Premises by Tenant, the provisions of
the Lease shall be applicable provided only that the obligation of Tenant to pay
Monthly Basic Rent, Parking Lot Rent and Operating Rent shall not commence until
the Lease Commencement Date. Any and all contractors and consultants acting on
behalf of Tenant in connection with any such early access shall generally follow
the directives of the Contractor in connection with their performance of work
with respect to the Premises so as to facilitate the continuing and orderly
performance by the Contractor of its work
6.2 Tenant's Representative. Tenant has designated Matt Oliver as its sole
-----------------------
representative with respect to the matters set forth in this Work Letter, who
shall have full authority and responsibility to act on behalf of the Tenant as
required in this Work Letter.
6.3 Landlord's Representative. Landlord has designated Landlord's
-------------------------
Supervisor, as defined above, as its sole representative with respect to the
matters set forth in this Work Letter, who, until further notice to Tenant,
shall have full authority and responsibility to act on behalf of the Landlord as
required in this Work Letter.
6.4 Time of the Essence. Unless otherwise indicated, all references herein
-------------------
to a "number of days" shall mean and refer to calendar days. If any item
requiring approval is timely disapproved by Landlord or Tenant, the procedure
for preparation of the document and approval thereof shall be repeated until the
document is approved by Landlord or Tenant, as the case may be. Unless otherwise
provided in this Work Letter, Landlord's approval or Tenant's approval of any
submittals required to be approved by the other shall be given or withheld
within three (3) business days after receipt by the approving party of the
submittal. In connection with any disapproved matter, any resubmittal by
Landlord or Tenant, as the case may be, shall be approved or disapproved within
two (2) business days and this procedure shall continue until Landlord's or
Tenant's approval, as the case may be, of any submittal or resubmittal has been
approved. For purposes of this Paragraph 6.3, references to submittals to and
approvals by Tenant, shall be equally applicable to submittals to and approvals
by Tenant's Architect.
6.5 Hazardous Materials. Landlord shall be responsible for the lawful
-------------------
treatment and/or disposal of all hazardous or toxic materials (as such terms may
be defined from time to time by any governmental authority with jurisdiction)
existing at the Building prior to the Lease Commencement Date which are
disrupted or disturbed in connection with construction of the Improvement Work,
with the exception of any such materials which were introduced to the Building
or at the Site by Tenant or any of Tenant's representatives, agents, contractors
or invitees.
6.6 Landlord's Architect. Landlord hereby designates SMP/SHG Incorporated
--------------------
("LANDLORD'S ARCHITECT") to act as architect on behalf of Landlord in connection
with this Work Letter and the Lease.
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<PAGE>
6.7 Incorporated into the Lease. For all purposes, this Work Letter shall
---------------------------
be and is hereby deemed a part of the Lease, and to the extent necessary, they
shall together be construed as one and the same document.
IN WITNESS WHEREOF, the parties have executed and delivered this Work
Letter on the day and year first above written.
LANDLORD: TENANT:
Rosenberg SOMA Investments III, LLC, a LookSmart, Ltd., a Delaware
Delaware limited liability company corporation
By: The Rosenberg Company, a
California corporation, Manager
By: /s/ Signature Illegible
Name: Edward M.O'DEA
By: /s/ Signature Illegible
Douglas C. Rosenberg, Its: VP Corp Div.
President
By: __________________________
By: /s/ Signature Illegible Name: _______________________
Douglas C. Rosenberg, Its: ________________________
Secretary
Page 14
<PAGE>
procedures to be followed at the arbitration hearing; provided, however, that
(i) the arbitration shall take place in San Francisco California; (ii) the
arbitrator shall apply the rules of evidence and substantive law of the State of
California; (iii) the arbitrator shall render written findings of fact and
conclusions of law; (iv) the parties shall be entitled to conduct such pre-
hearing discovery as would otherwise be permitted under California law; (v) the
arbitrator shall have the authority to entertain and decide motions before the
arbitration hearing as otherwise would be permitted in a court of law,
including, by way of example, motions to compel discovery and motions for
summary judgment; and (vi) remedies which the arbitrator shall have the
authority to grant shall be limited to the same remedies which could otherwise
be imposed by a court of law. Such arbitration shall be the sole remedy
available to the parties with respect to disputes involving the matters
described in Paragraph 3.2.
57. Other Available Space. Landlord shall give written notice to Tenant at any
---------------------
time that Landlord (or any affiliate of Landlord) has available for lease, space
in a building controlled by Landlord in the immediate geographical area
surrounding the Building, which space is suitable for occupancy by Tenant as
additional space. In no event, however, shall Landlord be in default pursuant to
this Lease in the event that Landlord fails to give any such notice to Tenant
and in no event shall this paragraph be construed as granting to Tenant an
option or first right of refusal or any other right of any kind whatsoever with
respect to any such additional space or controlled building.
IN WITNESS WHEREOF, the parties have executed and delivered this Lease on
the day and year first above written.
LANDLORD: TENANT:
Rosenberg SOMA Investments III, LLC, a LookSmart, Ltd., a
Delaware limited liability company Delaware corporation
By: TRC Investors III, LLC, a California
limited liability company, Manager
By: ________________________
By: The Rosenberg Company, a Name: _______________________
California corporation, Manager Its: ___________________
By: /s/ Signature Illegible
Douglas C. Rosenberg By: ____________________
President Name: ________________________
Its: ________________________
By: /s/ Signature Illegible
Douglas C. Rosenberg
Secretary
51