California-San Francisco-450 Rhode Island Build-To-Suit Lease - Macromedia Inc.
BUILD-TO-SUIT LEASE
******* FAMILY PARTNERSHIP,
A CALIFORNIA LIMITED PARTNERSHIP,
AND
****** *. ******* AND ******* **** *******
TRUSTEES OF THE ****** *** ******* *******
********* ***** U/A/D ********* *, ****
LANDLORD
AND
MACROMEDIA, INC.
TENANT
APRIL 20, 2000
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BUILD-TO-SUIT LEASE
THIS BUILD-TO-SUIT LEASE ("Lease") is made and entered into as of April 20, 2000
("Effective Date"), by and between ******* FAMILY PARTNERSHIP, A CALIFORNIA
LIMITED PARTNERSHIP ("******* Partnership"), and ****** *. ******* and *******
**** *******, TRUSTEES of *** ****** *** ******* ******* REVOCABLE TRUST U/A/D
********* *, **** ("******* Trust") (******* Partnership and ******* Trust are
sometimes referred to herein collectively as "Landlord"), and MACROMEDIA, INC.,
a Delaware corporation ("Tenant").
ARTICLE 1
BASIC LEASE PROVISIONS
As used in this Lease, the following Basic Lease Provisions shall have the
meanings specified for such provisions below:
1.1 BASE RENT: Two and 35/100ths Dollars ($2.35) per square foot of
Rentable Area in the Building per month, subject to adjustment as specifically
provided in this Lease.
1.2 BUILDING: The office building containing approximately 298,000
square feet of Rentable Area, subject to adjustment in accordance with the Final
Building Shell Plans (as defined in the Improvement Agreement) to be prepared by
Landlord and approved by Tenant pursuant to the Improvement Agreement.
1.3 COMMENCEMENT DATE: The date on which the Improvements have been
Substantially Completed, as such terms are defined in the Improvement Agreement.
1.4 EXPIRATION DATE: Twenty (20) years following the Commencement Date.
1.5 IMPROVEMENT AGREEMENT: The Improvement Agreement attached hereto as
EXHIBIT B and hereby incorporated into this Lease.
1.6 LANDLORD'S ADDRESS FOR NOTICES:
c/o ****** *. *******
*** *** ******* *********
** ********* ******, ***** ***
*** *********, ********** *****
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1.7 OPTION AGREEMENT: The Option Agreement of even date herewith by and
between Landlord and Tenant, pursuant to which Landlord has granted to Tenant an
option to purchase an undivided one-half (1/2) interest in the Premises.
1.8 OUTSIDE AREAS: The portion of Premises located outside of the
Building, including the Parking Areas.
1.9 PARKING AREAS: The parking structure containing approximately
215,000 square feet of area and 554 standard size parking spaces on six (6)
levels, subject to adjustment in accordance with the Final Building Shell Plans
to be prepared by Landlord and approved by Tenant pursuant to the Improvement
Agreement.
1.10 PERMITTED USE: Multimedia purposes and any other use permitted by
law.
1.11 PREMISES: Collectively, the Project and the Property, as leased by
Landlord to Tenant pursuant to this Lease.
1.12 PROJECT: The Building, the Parking Areas, the Tenant Improvements
and the other improvements to be constructed on the Property by Landlord
pursuant to this Lease, including the Improvement Agreement, as more
particularly shown on the preliminary site plan attached hereto as EXHIBIT A.
The final site plan shall be mutually agreed upon by Landlord and Tenant in
accordance with the Improvement Agreement.
1.13 PROPERTY: The real property containing approximately 80,000 square
feet of area, commonly known as 450 Rhode Island, San Francisco, California, and
more particularly described on EXHIBIT A attached hereto.
1.14 RENT: Base Rent, Taxes (as defined below) and all other amounts to
be paid by Tenant under this Lease.
1.15 RENTABLE AREA: "Rentable Area" as determined in accordance with
the Standard Method for Measuring Floor Area in Office Buildings published by
BOMA International, as ANSI/BOMA Z65.1-1996 ("BOMA Standard").
1.16 SCHEDULED COMMENCEMENT DATE: September 1, 2002.
1.17 SECURITY DEPOSIT: The security deposit in the initial amount of
one year's Base Rent, to be made by Tenant with Landlord pursuant to Section
15.9 of this Lease, subject to adjustment as specifically provided in this
Lease.
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1.18 TENANT IMPROVEMENT ALLOWANCE: Thirty-Five Dollars ($35.00) per
square foot of Rentable Area in the Building, to be paid by Landlord as provided
in the Improvement Agreement.
1.19 TENANT IMPROVEMENTS: The interior improvements to be contracted by
Landlord within the Building in accordance with the Final Tenant Improvement
Plans (as defined in the Improvement Agreement) to be prepared by Landlord and
approved by Tenant pursuant to the Improvement Agreement.
1.20 TENANT'S ADDRESS FOR NOTICES:
Prior to Commencement Date: Macromedia, Inc.
600 Townsend Street, Suite 310W
San Francisco, California 94103
Attention: General Counsel
As of Commencement Date: Macromedia, Inc.
450 Rhode Island
San Francisco, California 94107
Attention: General Counsel
1.21 TERM: Twenty (20) years from and after the Commencement Date.
The foregoing Basic Lease Provisions are incorporated into and made a part of
this Lease. Each reference in this Lease to any of the terms set forth above
shall be deemed to include the respective information set forth above opposite
such term and shall also be construed to incorporate all of the terms and
provisions provided under the particular article or section of this Lease
pertaining to such term and information. In the event of a conflict between any
provisions of the Basic Lease Provisions and any other provisions of this Lease,
the other provisions of this Lease shall prevail and be controlling.
ARTICLE 2
PREMISES
2.1 PREMISES. Landlord hereby leases to Tenant, and Tenant hereby
leases from Landlord, the Premises for the Term and subject to the terms and
provisions contained in the Basic Lease Provisions and hereinafter set forth.
During the Term, Tenant shall have the exclusive right to use and enjoy the
Premises and all elements there, including the Building, the Parking Areas and
all landscaped and other exterior areas and facilities comprising the Outside
Areas. The Rentable Area of the Building shall be determined by applying the
BOMA Standard to the Final Building Shell Plans as provided in the
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Improvement Agreement, and shall be confirmed by a field measurement taken by
Landlord and reasonably approved by Tenant immediately prior to occupancy of the
Premises by Tenant.
2.2 REPRESENTATIONS AND WARRANTIES. Landlord hereby represents and
warrants to Tenant as follows:
(a) ******* Partnership is a limited partnership duly formed,
validly existing and in good standing under the laws of the State of California.
******* Trust is a revocable trust duly formed, validly existing and in good
standing under the laws of the State of California. Landlord has all requisite
legal power and authority to enter into this Lease and to perform its
obligations hereunder. The sole general partner of ******* Partnership is ***
******* ("**"), and the sole trustees of ******* ***** are ** and ******* ****
*******. The execution, delivery and performance by Landlord under this Lease
have been duly authorized by the trustees of the ******* Trust and by the
partners in ******* Partnership, do not conflict with any agreement or
restriction binding upon Landlord, any trustee in ******* Trust, any general
partner in ******* Partnership or the Property. ** has full power and authority
to make and implement, on behalf of Landlord, all design, construction,
financing and operating decisions necessary to Landlord's full and timely
performance of its obligations under this Lease.
(b) To the best of Landlord's knowledge, the Property is zoned
M-1, and such zoning will accommodate Tenant's intended use of the Project;
however, all other land use entitlements for construction and development of the
Project for the use thereof contemplated by Tenant under this Lease must be
obtained from the appropriate governmental authorities, including, without
limitation, the San Francisco Planning Department, the San Francisco Department
of Building Inspection and the San Francisco Department of Public Works. To the
best of Landlord's knowledge, those entitlements may include, without
limitation, certification of an environmental impact report, a conditional use
permit or planned unit development authorization, and any other requirements or
conditions that may be imposed at the Planning Department staff or the Planning
Commission level. Further, the development of the Project is subject to the
discretionary review at a full hearing of the Planning Commission at the
discretion of the Planning Department staff or at the request of any interested
party. Site permits, addenda and/or building permits will need to be obtained
from the San Francisco Department of Building Inspection in order to authorize
construction of the Project. A variety of authorizations will likely be required
from the San Francisco Department of Public Works.
(c) To the best of Landlord's knowledge, no parties are in
occupancy of the Property or hold any possessory right in or to the Property or
any portion thereof, other than
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S&C Motors and Landlord. Landlord has not granted any other party the option to
purchase or lease or any right of first refusal to purchase or lease with
respect to the Property or any portion thereof. Landlord has not entered into
any other unrecorded leases, occupancy agreements, easements, rights of way,
restrictive covenants, liens, encumbrances, claims or other adverse rights
affecting the Property or any portion thereof. To the best of Landlord's
knowledge, Landlord holds fee title to the Property, subject only to those title
exceptions disclosed by the Preliminary Report dated as of June 7, 1999, issued
by Chicago Title Company under Order No. 9560528-SH ("Preliminary Report").
(d) To the best of Landlord's knowledge, except as disclosed
in the Environmental Documents (as defined below): (i) the Property is not now,
and has not been at any time in the past, a site or location for the use,
generation, production, manufacture, treatment, storage, disposal, discharge,
release or transportation of Hazardous Materials (as defined below), except that
the Property is located in an industrial area and could in the past have been
occupied by industrial users, and except that the Property has been occupied by
both Greyhound and S&C Motors, either or both of whom may have employed (and S&C
Motors continues to employ) Hazardous Materials in the normal course of their
occupancy and use, but to the best of Landlord's knowledge, and other than as
disclosed in the Environmental Documents, there are no Hazardous Materials
resulting from such parties' occupancy currently located on the Property; and
except that , as disclosed in the Environmental Documents, serpentine rock and
fill containing naturally-occurring asbestos, nickel, and other Hazardous
Materials are located on the Property; (ii) the Property is in compliance with
all Hazardous Materials Laws (as defined below), except that, as disclosed in
the Environmental Documents, any excavated materials from the Property which
contain nickel and other Hazardous Materials may require specialized handling
and/or disposal, the cost of which has been previously disclosed to Tenant in
writing, but which cost may increase or decrease as Landlord acquires additional
information; and (iii) there are, and have been, no underground or above-ground
storage tanks installed on or under, or removed from, the Property, except as
disclosed in the Environmental Documents. For the purposes of this Lease, the
term "Hazardous Materials" shall mean any oil or petroleum products, flammable
explosives, asbestos or asbestos-containing materials, urea formaldehyde
insulation, radioactive materials, or other hazardous or toxic substances,
material or waste, which is or becomes regulated by any federal, state or local
governmental authorities; the term "Hazardous Materials Laws" means all federal,
state and local statutes, ordinances, rules and regulations relating to
Hazardous Materials, including those pertaining to health, safety, industrial
hygiene or the environment, such as, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, the
Resource Conservation and Recovery Act of 1976, as amended, and any similar
state laws; and the term "Environmental Documents" means the documents listed on
Exhibit D.
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(e) Landlord has previously delivered to Tenant, and Landlord
shall continue to deliver to Tenant as soon as available, true, correct and
complete copies of all environmental reports, soils studies, plans,
specifications, seismic reports, geological studies and other documents and
information relating to the Property and/or the Project which are, or when
prepared for Landlord will be, in Landlord's possession or control, without any
representation or warranty of Landlord as to the accuracy of the contents of
such reports. Tenant shall be solely responsible for reviewing such reports and
documents and determining whether the information contained therein is reliable.
Landlord shall have no liability to Tenant with respect to the contents of such
reports and documents.
(f) To the best of Landlord's knowledge, there are no bond,
assessment or similar charges proposed or contemplated for the Property beyond
those specifically set forth in the Preliminary Report.
As used in this Section 2.2, the phrase "to the best of Landlord's knowledge"
shall be defined to mean the actual knowledge of ** as of the date of this
Lease, without any duty of investigation by ** for the purpose of making the
foregoing representations and warranties. Landlord's liability for damages for
breach of the foregoing representations and warranties shall be limited to
Landlord's interest in the Property and the Project. ** shall have no personal
liability for the representations and warranties contained in this Section 2.2,
as such representations and warranties are made by ******* Partnership and
******* Trust.
2.3 TELECOMMUNICATIONS. Tenant shall have the exclusive right, at
Tenant's sole cost and expense, to install, use, operate, maintain and repair
antennae, dishes and reflectors of any kind, size or type (including, without
limitation, television, satellite, telephone, radio, microwave, data and other
communication or related signal transmitting and receiving antennae and
reflectors) (collectively, "Antennae") on the roof of the Building or on any
other portions of the Premises selected by Tenant from time to time, subject
to Tenant's obtaining any required approvals of governmental authorities
having jurisdiction over the Premises. Landlord shall have no obligation or
duty with respect to the above, and Landlord shall not be obligated to incur
any costs relating thereto. The entitlement processing for the Antennae and
other matters described in this Section shall be Tenant's responsibility, at
Tenant's sole cost. Landlord shall reasonably cooperate with Tenant in such
entitlement processing, but shall not be obligated to participate therein,
including, without limitation, payment of any entitlement fees or costs,
preparing application documents or attending public hearings. Tenant shall
also have the right, at Tenant's sole cost and expense, to install, use,
operate, repair and maintain security cameras and related components, exhaust
ventilation and other equipment and facilities desired by Tenant on the roof
of the Building and on other portions of the Premises, subject to Tenant's
obtaining
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any required approvals of governmental authorities having jurisdiction over
the Premises. Tenant shall have access to all of such Antennae and other
equipment and facilities twenty-four (24) hours per day, seven (7) days per
week. Tenant shall repair any damage to the roof of the Building or to other
portions of the Premises caused by Tenant's installation, use, operation,
repair, maintenance and/or removal of the Antennae or any other equipment and
facilities installed by Tenant under this Section 2.4. Tenant shall pay any
tax, license or permit fees charged pursuant to any law in connection with
the installation, maintenance or operation of any Antennae and shall comply
with all laws applicable to any Antennae. Upon the expiration of this Lease,
Tenant shall remove all Antennae and other equipment described in this
Section, at Tenant's sole cost, if requested by Landlord in writing, and
Tenant's obligations shall survive the expiration of this Lease.
2.4 SIGNAGE. Tenant, at Tenant's sole cost and expense, shall be
entitled to install and maintain on the Building and in other portions of the
Premises, the signage desired by Tenant; provided, however, that the size,
design, content and other specifications of all such signage shall comply with
applicable law, and provided that Tenant shall consider the concerns of
neighboring residents or landowners. Except for such permitted signage, Tenant
shall not cause or permit to be placed any sign, advertisement, notice or other
similar matter on the exterior walls, roof or other areas of the Building
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld. Prior to the expiration of the Term, Tenant shall cause
all such signage installed by Tenant on the Premises to be removed, and shall
repair any damage caused by such removal, at Tenant's sole cost and expense.
Landlord shall include Tenant's signage in Landlord's entitlement processing for
the Project, but the entitlement processing for Tenant's signage shall be at
Tenant's sole cost, and Tenant's obligations shall survive the expiration of
this Lease. Notwithstanding the foregoing, Landlord shall prepare and execute
application documents and attend public hearings with respect to Tenant's
signage in connection with Landlord's efforts to obtain approval of the Project.
Landlord shall not be obligated to obtain, and shall not be liable for any
failure to obtain, any particular size, design, location and/or content of
Tenant's signage.
ARTICLE 3
TERM AND IMPROVEMENTS
3.1 COMMENCEMENT DATE. Upon execution by Landlord and Tenant, this
Lease shall become effective as of the Effective Date. The term of this Lease
("Term") shall commence on the Commencement Date and shall continue for a period
of twenty (20) years thereafter, unless earlier terminated in accordance with
the provisions of this Lease. Landlord shall cause the Premises to be
Substantially Completed and shall deliver possession of the Premises to Tenant
on or before the Scheduled Commencement Date set
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forth in the Basic Lease Provisions, subject to any extensions of the Scheduled
Commencement Date provided for in the Improvement Agreement. If Landlord shall
not cause the Premises to be Substantially Completed and deliver possession of
the Premises to Tenant on or before the Scheduled Commencement Date, Tenant
shall have the applicable rights provided for in Section 14 of the Improvement
Agreement by reason thereof. At such time as the Commencement Date has been
established, and upon the written request of either party, Landlord and Tenant
shall execute a written acknowledgment of the Commencement Date.
3.2 IMPROVEMENTS. Landlord shall cause the Improvements to be
constructed on the Property in accordance with the terms and provisions of the
Improvement Agreement. Landlord and Tenant shall timely perform each of their
respective covenants, agreements and obligations contained in the Improvement
Agreement, subject to any extensions provided for in the Improvement Agreement.
ARTICLE 4
RENT
4.1 BASE RENT. Throughout the Term, Tenant shall pay to Landlord as
Base Rent the amount therefor specified in the Basic Lease Provisions, as the
same shall be adjusted in accordance with the provisions of this Lease. Tenant
shall pay to Landlord the Base Rent without notice or demand in advance on or
before the first day of the first full calendar month of the Term and on or
before the first day of each and every successive calendar month thereafter
during the Term.
4.2 PAYMENT. Tenant shall pay to Landlord the Base Rent without setoff,
deduction or counterclaim, except as otherwise expressly provided in Sections
9.4, 16.1 and 17.2 of this Lease, in lawful money of the United States of
America at Landlord's notice address indicated in the Basic Lease Provisions, or
to such other person or at such other place as Landlord may from time to time
designate in writing.
4.3 PARTIAL MONTHS. If the Term commences or ends on a day other than
the first or last day of a calendar month, then the Base Rent for such month
shall be appropriately prorated based on the actual number of days contained in
such month.
4.4 RENTAL ADJUSTMENTS.
(a) The Base Rent in the amount specified in the Basic Lease
Provisions shall be subject to adjustment as provided in Section 16 of the
Improvement Agreement, all of the terms and provisions of which are hereby
incorporated into this Lease by this reference, and as provided in this Section
4.4. If the Base Rent shall be adjusted as provided in
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Section 16 in the Improvement Agreement, at such time as the actual amount of
the Base Rent has been established, and upon the written request of either
party, Landlord and Tenant shall execute a written acknowledgment of the actual
amount of the Base Rent.
(b) The Base Rent payable by Tenant to Landlord for the sixth
through tenth years of the Term shall be adjusted as of the first day of such
sixth year of the Term to equal the product of the Base Rent for the first
through fifth years of the Term (in the amount set forth in the Basic Lease
Provisions, subject to adjustment as provided in subparagraph (a) above)
multiplied by a fraction, the numerator of which shall be the Index (as defined
in subparagraph (e) below) figure published most recently prior to the first day
of the sixth year of the Term, and the denominator of which shall be the Index
figure published most recently prior to the Commencement Date. Notwithstanding
the foregoing, in no event shall the Base Rent as so adjusted be (i) greater
than one hundred thirty percent (130%), or (ii) less than one hundred ten
percent (110%), of the Base Rent for the first five years of the Term.
(c) The Base Rent payable by Tenant to Landlord for the
eleventh through fifteenth years of the Term shall be adjusted as of the first
day of such eleventh year of the Term to equal the product of the Base Rent for
the sixth through tenth years of the Term multiplied by a fraction, the
numerator of which shall be the Index figure published most recently prior to
the first day of the eleventh year of the Term, and the denominator of which
shall be the Index figure published most recently prior to the first day of the
sixth year of the Term. Notwithstanding the foregoing, in no event shall the
Base Rent as so adjusted be (i) greater than one hundred thirty percent (130%),
or (ii) less than one hundred ten percent (110%), of the Base Rent for the month
immediately preceding the date of such adjustment.
(d) The Base Rent payable by Tenant to Landlord for the
sixteenth through twentieth years of the Term shall be adjusted as of the first
day of such sixteenth year equal to the product of the Base Rent for the
eleventh through fifteenth years of the Term multiplied by a fraction, the
numerator of which shall be the Index figure published most recently prior to
the first day of the sixteenth year of the Term, and the denominator of which
shall be the Index figure published most recently prior to the first day of the
eleventh year of the Term. Notwithstanding the foregoing, in no event shall the
Base Rent as so adjusted be (i) greater than one hundred thirty percent (130%),
or (ii) less than one hundred ten percent (110%), of the Base Rent for the month
immediately preceding the date of such adjustment.
(e) As used in this Lease, the term "Index" shall mean the
"Consumer Price Index (All Items) for all Urban Consumers," as published by the
U.S. Department of Labor,
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Bureau of Labor Statistics for the San Francisco/Oakland/San Jose Metropolitan
Area (1982-1984 = 100). If publication of the Index is discontinued or the basis
of the Index changed, then such other governmental index or computation with
which it is replaced shall be used. If there shall be no such replacement
governmental index or computation, then Landlord shall reasonably select another
commonly accepted (or used) index or measurement of the increase or decrease in
the cost of living.
ARTICLE 5
TAXES
5.1 TENANT'S OBLIGATION. Tenant shall pay, in addition to Base Rent and
for each calendar year of the Term, the Taxes (as defined below) payable by
Landlord for such calendar year. Landlord shall provide to Tenant each tax bill
evidencing an obligation to pay any of the Taxes promptly upon Landlord's
receipt of any such tax bill. Tenant shall make payment of the amount of Taxes
required by each tax bill directly to the appropriate taxing authority therefor
on or before the date after which a penalty and/or interest is imposed for late
payment. Tenant shall provide Landlord with proof of payment of the Taxes.
5.2 TAXES. As used in this Lease, the term "Taxes" shall mean all AD
VALOREM taxes, assessments and charges levied upon or with respect to the
Premises, or Landlord's interest in the Premises, including all real property
taxes and general and special assessments; charges, fees, levies or assessments
for transit, housing, police, fire or other governmental services or purported
benefits to the Premises; service payments in lieu of taxes; excise taxes; gross
receipts taxes; commercial rent taxes; water and sewer taxes; any tax, fee or
excise on the act of entering into this Lease or on the use or occupancy of the
Premises or any part thereof; and all other governmental impositions of any kind
and nature whatsoever, regardless of whether now customary or within the
contemplation of the parties hereto, which may now or hereafter be levied or
assessed against Landlord by the United States of America, the State of
California, the City and County of San Francisco or any political subdivision,
public corporation, district or other political or public entity, and any other
tax, fee or other excise, however described, that may be levied or assessed as a
substitute for any other such taxes.
5.3 EXCLUSIONS. Notwithstanding the provisions of Section 5.2 above,
"Taxes" shall not include (a) any franchise, income, inheritance, estate, or
transfer or conveyance tax; (b) any special assessment or bond, or any Mello
Roos or other special tax, imposed upon or with respect to the Premises in order
to reimburse Landlord, or the City and County of San Francisco for costs the
City and County of San Francisco agreed to pay by separate agreement with
Landlord, for any of the costs of constructing the Project; or (c) any
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increase in the amount thereof resulting from a "change in ownership" (as
hereinafter defined) occurring subsequent to the date of this Lease, other than
(i) the change in ownership resulting from Landlord's transfer of an undivided
one-half interest in the Premises to Tenant pursuant to the Option Agreement, or
(ii) any subsequent changes in ownership initiated by Tenant. For the purposes
of this Lease, "change in ownership" shall have the meaning provided in Sections
61 ET SEQ. of the California Revenue and Taxation Code, as amended or recodified
from time to time, and the regulations promulgated thereunder.
5.4 ADDITIONAL TAXES. In addition to the Base Rent and other amounts
payable by Tenant hereunder, to the extent that Tenant shall not have paid any
such amounts directly to the appropriate party therefor, Tenant shall reimburse
Landlord for any and all taxes, surcharges, levies, assessments, fees and
charges paid by Landlord, whether or not now customary or within the
contemplation of the parties hereto upon, measured by or reasonably attributable
to the cost or value of Tenant's equipment, furniture, fixtures and other
personal property located in the Premises, or the cost or value of the Tenant
Improvements or any leasehold improvements or alterations, additions and
improvements to the Premises made by Tenant under Article 8 below, regardless of
whether title to such improvements shall be in Tenant or Landlord.
5.5 CONTEST. Notwithstanding the provisions of Section 5.1 above,
Tenant shall not be required to pay any Taxes so long as Tenant contests in good
faith such Taxes or the validity, applicability or amount thereof, by an
appropriate legal proceeding which operates to prevent the collection of such
amounts and the sale of the Premises or any portion thereof by reason of such
contest; provided, however, that prior to the date on which such Taxes would
otherwise have become delinquent, Tenant shall have given to Landlord written
notice of such contest. Tenant shall prosecute any such contest with due
diligence, and Tenant shall promptly pay the amount of such Taxes finally
determined to be owing, together with all interest and penalties payable in
connection therewith. In addition, notwithstanding Tenant's right of contest,
Tenant shall cause any delinquent Taxes and penalties to be paid to the extent
reasonably required by Landlord in connection with Landlord's efforts to finance
or sell the Project.
ARTICLE 6
REPAIR, MAINTENANCE AND REPLACEMENT
6.1 TENANT'S OBLIGATIONS. Subject to the provisions of Sections 6.2 and
6.3 below, Tenant, at Tenant's sole cost and expense, shall repair, maintain and
replace the Premises (including, without limitation, the structural portions of
the Building, including the foundations, subflooring, exterior and load-bearing
walls, roof structure and membrane,
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and all other structural portions of the Building) in high quality condition and
repair, ordinary wear and tear and damage by casualty excepted. At the end of
the Term, Tenant shall surrender to Landlord the Premises in good condition and
repair, ordinary wear and tear and damage by casualty excepted. Tenant
acknowledges that Landlord has no obligation to alter, repair, maintain,
replace, remodel, improve, decorate or paint the Premises or any part thereof or
any equipment, fixtures or improvements therein, except as specified in this
Lease, including the Improvement Agreement.
6.2 LANDLORD'S OBLIGATIONS. Landlord, at Landlord's sole cost and
expense, shall complete and/or correct punch-list items in accordance with
Section 12 of the Improvement Agreement, and shall perform all work required in
order to comply with Landlord's warranty under Section 13 of the Improvement
Agreement. Notwithstanding the foregoing, Landlord shall not be obligated to
repair any damage to the Premises caused by the negligence of Tenant, its
employees or agents.
6.3 ALLOCATION OF CERTAIN COSTS.
(a) Except as otherwise provided in this Section 6.3 or
elsewhere in this Lease, Landlord and Tenant shall each bear all costs and
expenses of performing such party's repair, maintenance and replacement
obligations under this Lease.
(b) Notwithstanding anything to the contrary contained in this
Article 6 or elsewhere in this Lease, Landlord shall be solely responsible for
the timely payment of the following costs and expenses:
(i) Costs of constructing the Project, other than the
Entitlement Costs to be borne by Tenant under Section 4(B) of
the Improvement Agreement, and the Excess TI Costs, which are
to be borne by Tenant as provided in the Improvement
Agreement; costs of completing and/or correcting punch-list
items in accordance with Section 12 of the Improvement
Agreement; and costs of performing all work required in order
to comply with Landlord's warranty under Section 13 of the
Improvement Agreement;
(ii) Costs for which Landlord is entitled to, and
actually receives, reimbursement (either by an insurer,
condemnor or other person or entity);
(iii) Costs incurred in complying with Hazardous
Materials Laws (as defined below) in effect as of the
Commencement Date, unless such costs are attributable to a
condition caused by Tenant; and costs incurred in causing the
Premises to comply with any other statute, ordinance, rule or
regulation of a governmental authority in effect as of the
Commencement Date; and
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(iv) The cost of capital items, including, without
limitation, capital improvements, capital replacements or
capital equipment, all as determined in accordance with
generally accepted accounting principles, consistently applied
(collectively, "Capital Items"), except to the extent required
to be borne by Tenant under the provisions of subparagraph (c)
below.
If Tenant's performance of Tenant's repair, maintenance and/or
replacement obligations under this Lease would cause Tenant to incur
any of the foregoing costs and expenses, at Landlord's option, Landlord
shall either be obligated to (A) perform promptly such repair,
maintenance or replacement item, or (B) pay to Tenant the amount of
such cost or expense within thirty (30) days following written notice
thereof to Landlord of the actual amount thereof, together with
reasonable documentation of such amount, and Tenant shall not be
obligated to commence or perform such repair, maintenance or
replacement item until Tenant shall have received such payment from
Landlord. In the event of any disagreement between Landlord and Tenant
as to the obligation to perform any such repair, maintenance or
replacement item, or the cost or expense of performing such repair,
maintenance or replacement item, Landlord and Tenant shall meet and
confer and, acting reasonably and in good faith, attempt to resolve
such disagreement within thirty (30) days. If Landlord or Tenant shall
be unable to resolve such disagreement within thirty days, either party
shall thereafter have the right to refer the matter to arbitration in
accordance with the provisions of Section 20.24 of this Lease.
(c) Notwithstanding anything to the contrary contained in this
Article 6 or elsewhere in this Lease, the following costs and expenses of
Capital Items shall be allocated between Landlord and Tenant in the manner
provided for below:
(i) Costs of Capital Items constructed or installed
by Landlord or Tenant in or to the Premises as required by
this Lease in order to comply with applicable statutes,
ordinances, rules and regulations of governmental authorities
that were not in effect as of the Commencement Date; provided,
however, that the cost of Capital Items constructed or
installed by Landlord or Tenant in or to the Premises to
comply with Hazardous Materials Laws that were not in effect
as of the Commencement Date shall be allocated between
Landlord and Tenant as follows: Tenant shall be responsible
for the costs of such Capital Items constructed or installed
by Landlord or Tenant in or to the interior of the Premises,
and Landlord shall be responsible for the costs of such
Capital Items constructed or installed by Landlord or Tenant
in or to the Building Shell or the portion of the Premises
located outside of the Building Shell, including the
subsurface portions of the Premises. Notwithstanding the
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foregoing, any such costs which are attributable to a
condition caused by Tenant shall be borne solely by Tenant;
and
(ii) Costs of Capital Items constructed or installed
by Landlord or Tenant in or to the Premises in order to
maintain the Premises in the condition required under this
Lease.
The costs and expenses of Capital Items described in this subparagraph (c) shall
be allocated between Landlord and Tenant as follows: (A) Landlord and Tenant
shall first reasonably determine the useful life of the Capital Item in
accordance with generally accepted accounting principles consistently applied;
(B) if the useful life of the Capital Item shall be less than the period of time
remaining in the Term (including any extensions of the Term agreed to by
Landlord and Tenant), Tenant shall bear the entire cost of such Capital Item;
(C) if the useful life of the Capital Item shall extend beyond the remaining
Term (including any extensions of the Term agreed to by Landlord and Tenant),
Tenant shall bear a portion of such cost equal to the product of such cost
multiplied by a fraction, the numerator of which shall be the number of months
remaining in the Term (including any extensions of the Term agreed to by
Landlord and Tenant), and the denominator of which shall be the number of months
contained in the useful life of such Capital Item; and (D) Landlord shall bear
the balance of the cost of such Capital Item. If Landlord and Tenant shall agree
to extend the Term, the cost of any such Capital Item shall be recalculated and
reallocated based upon the extended Term of this Lease. The party whose
obligations under this Lease require the construction or installation of any
such Capital Item shall be responsible for reasonably determining the cost of
constructing or installing such Capital Item (as determined by Section 6.3(b)
above) and for the timely performance of such work in accordance with this
Lease. Landlord and Tenant shall each be obligated to pay its allocable share of
the costs and expenses of such Capital Item into a segregated account maintained
by the party performing such work within thirty (30) days following written
notice of the cost of performing such work given by the party performing such
work to the other party, together with such reasonable detail of such cost as
the other party shall reasonably require. The party performing such work shall
apply the amounts in such account to the cost of construction or installation of
such Capital Item throughout the course of performance of such work. Neither
Landlord nor Tenant shall be obligated to commence the work of construction or
installation of any Capital Item unless and until the other party shall have
paid its allocable share of such costs and expenses as provided above. If
Landlord or Tenant shall fail to advance in a timely manner such party's
allocable share of such costs and expenses within the time period required
above, the other party shall have the right to advance such amount for the
account of the non-advancing party, and the non-advancing party shall be
obligated to repay such amount, together with interest thereon at the Interest
Rate (as defined below) from the date of such advance, upon demand by the
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advancing party. In the event of any disagreement between Landlord and Tenant
concerning the costs and expenses of the Capital Item or the allocation thereof
between Landlord and Tenant, Landlord and Tenant shall meet and confer and
attempt to resolve the disagreement in the manner provided for in Section 6.3(b)
above, and shall thereafter have the right to refer the matter to arbitration as
provided in such Section 6.3(b) above.
6.4 INSPECTION. Landlord and Tenant shall each have the right
periodically to review the other party's books and records (which are to be
located in the City and County of San Francisco) pertaining to the costs and
expenses described in Section 6.3 above at any time during normal business hours
and after reasonable notice to the other party. Landlord and Tenant shall each
keep and maintain the results of any such review of the other party's books and
records privileged and confidential, and shall not disclose or disseminate any
information derived from any such review to any other person or entity without
the other party's prior written consent, except as may be required by applicable
law.
ARTICLE 7
SERVICES
7.1 UTILITY SERVICES. Landlord shall cause to be furnished to the
Premises all utilities and services shown on the Approved Plans (as defined in
the Improvement Agreement) for the Improvements prepared by Landlord and
approved by Tenant pursuant to the Improvement Agreement. Tenant shall pay
directly to the appropriate utility company or other service provider therefor
all charges for electricity, gas, water and any other utility services consumed
by Tenant on the Premises, as well as all telephone and other telecommunication
charges incurred by Tenant on the Premises. The Premises shall include separate
meters measuring the amount of the electrical, gas, water and other utility
services furnished to the Premises, to the extent provided for in the Approved
Plans. Notwithstanding the foregoing, in no event shall Tenant be obligated to
pay any hook-up, connection, stand-by, capacity or similar charges imposed by
utility companies or other service providers prior to the Commencement Date or
otherwise in connection with the commencement of utility and other services to
the Premises prior to the Commencement Date, except as otherwise provided in the
Improvement Agreement.
7.2 PREMISES HOURS. Tenant shall be entitled to have access to, and to
use, occupy, and operate the Premises, twenty-four (24) hours per day, seven (7)
days per week, throughout each and every year of the Term.
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ARTICLE 8
ALTERATIONS
8.1 GENERAL. Tenant shall not make any alterations, additions or
improvements to the Premises or any part thereof (except for telephone and
telecommunications equipment, cabling and furniture, fixtures, and equipment
which are not permanently attached to the Premises), which cost is in excess of
Two Hundred Fifty Thousand Dollars ($250,000), without Landlord's prior written
consent, which consent shall not be unreasonably withheld. Notwithstanding the
foregoing, without the prior written consent of Landlord, which consent shall
not be unreasonably withheld, Tenant shall have no right to make any
alterations, additions, or improvements to the Premises or any part thereof (a)
that affect the exterior appearance of the Building, or (b) would adversely
affect the structural integrity of the Building or the Building systems.
Landlord shall respond to Tenant's written request for Landlord's consent to any
alterations, additions or improvements within ten (10) days after Tenant submits
to Landlord construction drawings, cost estimates, a schedule therefor and any
other related documents reasonably requested by Landlord together with the
request for such consent. If necessary, Landlord shall reasonably cooperate with
Tenant, at no cost to Landlord, to obtain any governmental permits, licenses or
approvals necessary to make any such alterations, additions or improvements.
Tenant shall provide Landlord with at least fifteen (15) days prior written
notice before Tenant begins construction of any alterations, additions or
improvements, whether or not Landlord's consent is required.
8.2 EXPENSE. All alterations, additions and improvements made by Tenant
to the Premises or any part thereof subsequent to the Commencement Date shall be
made by Tenant at Tenant's sole cost and expense, in a good and workmanlike
manner and in compliance with applicable law. Upon completion of such
alterations, additions or improvements, Tenant shall furnish Landlord with
as-built drawings of the alterations, additions or improvements. Tenant shall
cause any contractor performing the work of any such alterations, additions and
improvements to carry builder's risk and liability insurance in amounts and
forms reasonably acceptable to Landlord.
8.3 PROPERTY OF LANDLORD. All alterations, additions and improvements
made in or upon the Premises by Tenant shall immediately become Landlord's
property and, at the end of the Term, shall remain on the Premises without
compensation to Tenant. Notwithstanding the foregoing, at the end of the Term,
(a) Tenant, at its option, shall have the right to remove any furniture,
equipment, trade fixtures or personal property installed in the Premises by
Tenant or Tenant's expense, provided that Tenant shall repair any damage to the
Premises caused by such removal; and (b) Landlord shall have the right to
require that Tenant remove any such alterations, additions or improvements made
in or to the Premises by Tenant and to repair any damage to the Premises caused
by such removal, if, at
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the time Landlord consented to such alterations, additions or improvements under
Section 8.1 above, Landlord shall have advised Tenant in writing that Landlord
would require the removal of such alterations, additions or improvements at the
end of the Term.
8.4 LIENS. Tenant shall indemnify, defend and hold Landlord harmless
from and against all losses, costs, claims, damages, liabilities and causes of
action (including attorney's fees) arising out of Tenant's performance of any
work of alteration, addition or improvement in the Premises, including liens or
claims for work performed or materials furnished to or at the request of Tenant.
Tenant shall keep the Premises free from any liens arising out of any work
performed, materials furnished or obligations incurred by Tenant. Within thirty
(30) days following the date on which Tenant shall receive written notice from
Landlord or otherwise that any such lien has been recorded against the Premises,
Tenant shall either cause such lien to be satisfied or Tenant shall cause to be
recorded an appropriate lien release bond sufficient to cause such lien to be
removed as a lien on the Premises. Landlord shall have the right to post and
keep posted on the Premises any notices that may be provided by law or which
Landlord may deem to be proper for the protection of Landlord or the Premises
from such liens.
ARTICLE 9
DAMAGE AND DESTRUCTION
9.1 GENERAL. For the purposes of this Lease, the term "Casualty" shall
mean damage to or destruction of the Premises from any fire, earthquake, other
Act of God or any other cause.
9.2 REBUILDING AND RESTORATION. In the event of a Casualty, Tenant
shall rebuild and restore the Premises substantially to the condition existing
immediately prior to the date of occurrence of the damage or destruction as
promptly as reasonably possible, provided that then-existing applicable law
shall allow Tenant to restore and rebuild the Premises to substantially the same
condition as existed immediately prior to the damage or destruction. Landlord
shall cooperate with Tenant in making available to Tenant insurance proceeds, if
any, for the purpose of enabling Tenant to rebuild and restore the Premises.
9.3 TENANT'S ELECTION. Notwithstanding anything to the contrary
contained in this Article 9, Tenant shall have the right to terminate this Lease
in the event the Premises are damaged or destroyed by Casualty (a) at any time
within the last five (5) years of the Term and the cost to repair or restore the
Premises would exceed twenty-five percent (25%) of the replacement cost of the
Premises at such time, or (b) then-existing applicable law shall not allow
Tenant to restore and rebuild the Premises to substantially the same condition
as existed immediately prior to the damage or destruction. Tenant's election
shall be made by
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written notice to Landlord given within thirty (30) days following Tenant's
receipt from Tenant's architect or construction consultant of the estimate of
the time required to complete the repair and restoration of the Premises. If
Tenant does not deliver such notice within such thirty-day period, Tenant may
not later terminate this Lease by reason of such Casualty. If Tenant delivers
such notice within such thirty-day period, then Tenant shall assign to Landlord
all of Tenant's rights to the insurance proceeds with respect to such Casualty,
and this Lease shall terminate effective as of the date of such Casualty.
9.4 ABATEMENT OF RENTALS. In the event of damage to or destruction of
the Premises, the Base Rent and all other amounts payable by Tenant under this
Lease shall be proportionately reduced until the repair and restoration is
completed, based upon the extent to which the damage or destruction and/or the
making of repairs interferes with Tenant's use and enjoyment of the Premises.
All other obligations of Tenant under this Lease shall continue unaffected, all
subject to rental abatement insurance as provided in Section 11.2 below.
9.5 LIABILITY FOR PERSONAL PROPERTY. In no event shall Landlord have
any liability for, nor shall Landlord be required to repair or restore, any
injury or damage to any of Tenant's trade fixtures, equipment, furniture or
personal property located on the Premises.
9.6 WAIVER OF CERTAIN REMEDIES. Landlord and Tenant acknowledge that
the rights and obligations of the parties in the event of the damage or
destruction to the Premises are as set forth in this Article 9. Tenant hereby
expressly waives any rights to terminate this Lease upon damage or destruction
to the Premises, except as specifically provided by this Lease, including,
without limitation, any rights pursuant to the provisions of Sections 1932(2)
and 1933(4) of the California Civil Code, as amended, or any other, similar
provisions of law.
ARTICLE 10
INDEMNIFICATION
10.1 TENANT'S INDEMNITY. Tenant shall indemnify, defend and hold
Landlord harmless from and against any and all losses, costs, claims,
liabilities, damages, expenses and causes of action, including, without
limitation, reasonable attorneys' fees and costs, arising out of or in any way
connected with: (a) any default by Tenant in the observance or performance of
any of the terms, covenants and obligations contained in this Lease on Tenant's
part to be observed or performed; (b) any negligent or willful act or omission
of Tenant or of the contractors, agents, or employees of Tenant; or (c) any
other occurrence on the Premises arising out of the operations of Tenant.
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10.2 LANDLORD'S INDEMNITY. Landlord shall indemnify, defend and hold
Tenant harmless from and against any and all losses, costs, claims, liabilities,
damages, expenses, and causes of action, including, without limitation,
reasonable attorneys' fees and costs arising out of or in any way connected
with: (a) any default by Landlord in the observance or performance of any of the
terms, covenants and obligations contained in this Lease on Landlord's part to
be observed or performed; or (b) any willful act or omission, or the sole
negligence, of Landlord or of the contractors, agents or employees of Landlord.
The provisions of this Section shall not affect the provisions of Section 20.4
below.
10.3 SURVIVAL. This Article 10 shall survive the expiration or earlier
termination of this Lease with respect to any act or occurrence (and any related
damage or injury) occurring prior to such expiration or earlier termination.
ARTICLE 11
INSURANCE
11.1 LIABILITY INSURANCE. Tenant, at Tenant's sole cost and expense,
shall obtain and maintain in effect during the Term a policy of commercial
general liability insurance with a minimum combined single limit of coverage of
not less than Five Million Dollars ($5,000,000), insuring against any liability
arising out of or in connection with Tenant's use or occupancy of the Premises.
Such insurance shall name Landlord and Landlord's mortgagee, if any, as
additional insureds, and shall provide that it is primary insurance and not
"excess over" or contributory with any other insurance in force for or on behalf
of Landlord. Such insurance policy shall eliminate cross-liability and shall
contain a severability of interest clause. Landlord shall have the right,
periodically during the Term, but not more frequently than once each five (5)
years, to require that Tenant increase the minimum liability amount specified in
this Section to an amount equal to the then-prevailing minimum liability limit
required by prudent Landlords of comparable buildings in San Francisco,
California, as determined by Landlord's insurance advisor and reasonably
concurred in by Tenant's insurance advisor.
11.2 PROPERTY INSURANCE. Tenant shall obtain and maintain in effect
during the Term a policy of "special form" property insurance (including
mechanical breakdown coverage) with respect to the Property in the name of
Landlord with loss payable to Landlord, Landlord's mortgagee, if any, and
Tenant, as their interests may appear. The amount of such property insurance
shall be equal to the full replacement cost of the Premises. Such policy shall
insure against all risks of direct physical loss or damage, shall not include
coverage for the perils of flood or earthquake and shall include coverage for
any additional costs resulting from debris removal and reasonable amounts of
coverage for the enforcement of any ordinance or law regulating the
reconstruction or replacement of any
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undamaged sections of the Premises required to be demolished or removed by
reason of the enforcement of any building, zoning, safety or land use laws as
the result of a covered cause of loss. Such policy shall also contain an agreed
valuation provision in lieu of any coinsurance clause, waiver of subrogation and
inflation guard protection causing an increase in the annual property insurance
coverage amount by a factor of not less than the Index figure published most
recently prior to each anniversary of the Commencement Date. Tenant shall also
obtain and maintain in effect during the Term rental interruption insurance in
an amount equal to the Base Rent, Taxes and other amounts payable by Tenant
under this Lease for a period of one (1) year following the date of any damage
or destruction resulting from a Casualty, if available on commercially
reasonable terms. If Tenant shall be unable to obtain such insurance, Tenant
shall give to Landlord written notice thereof.
11.3 PERSONAL PROPERTY INSURANCE. Tenant, at its sole cost and expense,
shall also obtain and maintain in effect during the Term a policy of "special
form" property insurance with respect to Tenant's furniture, fixtures,
equipment, trade fixtures and personal property located on the Premises, in an
amount equal to the full replacement cost thereof.
11.4 WORKER'S COMPENSATION INSURANCE. Tenant, at its sole cost and
expense, shall obtain and maintain in effect during the Term worker's
compensation insurance policies in such forms and amounts as are required by
applicable law.
11.5 AUTOMOBILE INSURANCE. Tenant, at its sole cost and expense, shall
obtain and maintain in effect during the Term insurance covering the automobile
operations at the Premises, including, without limitation, the Parking Areas,
with a combined single limit of coverage of at least Five Million Dollars
($5,000,000), unless such coverage is provided by the policy of liability
insurance described in Section 11.1 above.
11.6 INSURANCE CRITERIA. All insurance required under this Article 11
shall be issued by good and responsible companies qualified to do business in
the State of California, and having a rating of at least A-VII or better as
rated in the most recent edition of "Best's Insurance Guide." Each policy shall
expressly provide that the policy will not be canceled or altered without thirty
(30) days' prior written notice to the insureds. All insurance under this
Article 11 shall be primary and non-contributing with any insurance which may be
carried by any other party. Tenant shall deliver to Landlord certificates of
insurance evidencing the insurance coverage that Tenant is obligated to maintain
in effect under this Article II.
11.7 WAIVER OF SUBROGATION. Landlord and Tenant each hereby waives any
and all rights to recovery against the other or the officers, employees, agents
and representatives of such other party, for losses or damage to such waiving
party or its property or the property
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of others under its control, arising from any cause insured against under the
property insurance policies required to be carried by such party under this
Lease, or otherwise actually carried by such party, to the full extent of such
insurance coverage. Such waiver shall be effective only so long as the same is
permitted by each party's insurance carrier. In the event that either party's
insurance carrier notifies such party that the waiver will not be permitted,
then such party shall so notify the other party not later than thirty (30) days
prior to the expiration of the policy containing the waiver (or upon receipt of
such notice if the notice is received within the 30-day period) and such party
shall use its reasonable efforts to obtain replacement insurance containing such
waiver, provided that such waiver is available at no or nominal additional
premium cost.
ARTICLE 12
COMPLIANCE WITH LAW
12.1 GENERAL. Each party shall promptly comply with all statutes,
ordinances, rules, regulations and requirements of governmental authorities now
in effect or which may hereafter be enacted or promulgated which relate to or
affect the exercise of such party's rights, or the performance of such party's
obligations, under this Lease.
12.2 ALLOCATION. Regardless of whether Landlord or Tenant shall be
obligated to comply with any statutes, ordinances, rules, regulations or
requirements of governmental authorities under this Article 12, the costs and
expenses of constructing or installing any alterations, additions, improvements,
replacements or repairs to the Premises required by any such compliance shall be
allocated between Landlord and Tenant to the extent required and in the manner
provided for in Section 6.3 above.
ARTICLE 13
ASSIGNMENT AND SUBLETTING
13.1 LANDLORD CONSENT. Neither Tenant nor Tenant's legal
representatives, nor Tenant's successors-in-interest, by operation of law or
otherwise, shall assign this Lease or sublease the Premises or any part thereof
(except to the extent permitted under Section 13.2 below), or mortgage, pledge,
transfer or hypothecate its leasehold interest (collectively, an "Assignment")
without Landlord's prior written consent, which, based on the standards set
forth in Section 13.7 below, shall not be unreasonably withheld. Any such
Assignment without Landlord's prior written consent shall be void and shall
constitute an Event of Default under Article 15 of this Lease.
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13.2 PERMITTED TRANSACTIONS.
(a) Landlord's consent shall not be required for any
Assignment to a Permitted Affiliate, as defined below ("Permitted Assignment"),
provided that (i) at the time of the Permitted Assignment, no Event of Default
exists or would exist with notice or passage of time; (ii) Landlord is provided
with written notice of the proposed Permitted Assignment describing the
transaction in reasonable detail; (iii) the Permitted Affiliate agrees in
writing to be bound by the terms of this Lease; and (iv) Landlord is provided
with a copy of the Proposed Assignment. The Permitted Assignment shall not
constitute a release of Tenant from further performance by Tenant under this
Lease, and Tenant shall remain liable and responsible for Base Rent and all
other obligations of Tenant under this Lease.
(b) Landlord's consent shall not be required for Tenant's
subleasing of up to 100,000 square feet of rentable area of the Premises from
time to time throughout the Term, but Landlord's consent shall be required for
any subleases exceeding such limit.
13.3 PERMITTED AFFILIATE. The term "Permitted Affiliate" means a person
or entity that controls, is controlled by or is under common control with
Tenant; a person or entity with which Tenant shall merge or consolidate; and/or
a person or entity who acquires all or substantially all of the assets of
Tenant. "Control" means the direct or indirect ownership of more than fifty
percent (50%) of the voting securities of an entity or the possession of the
right to vote more than fifty percent (50%) of the voting interest in the
ordinary direction of the entity's affairs.
13.4 NOTICE TO LANDLORD. Tenant shall give Landlord written notice of
its desire to make any Assignment for which Landlord's consent is required under
this Article 13. At the time of giving such notice, Tenant shall provide
Landlord with a copy of the proposed Assignment (including the sublease
documents or the financing documents, as applicable), which shall include a
covenant by the proposed assignee or sublessee, as applicable, in favor of
Landlord to abide by the terms of this Lease (applicable to the subleased
premises, in the case of a sublease), and such information as Landlord may
reasonably request concerning the proposed assignee, sublessee or lender, to
assist Landlord in making an informed judgment regarding the financial
condition, reputation, operation and general desirability of the proposed
assignee, sublessee, or lender, as applicable. Landlord shall then have a period
of ten (10) business days following receipt of such notice within which to
notify Tenant in writing of Landlord's decision.
13.5 APPROVED ASSIGNMENTS. In the event of any approved Assignment or
any Permitted Assignment, the rights of the assignee or sublessee thereunder
shall be subject to
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all of the terms, conditions and provisions of this Lease, including, without
limitation, restrictions on use and the covenant to pay Base Rent. If the
Landlord consents to any Assignment for which Landlord's consent is required
under this Article 13, Tenant shall have the right thereafter to enter into such
Assignment with the proposed assignee or sublessee upon the terms and conditions
set forth in the notice provided to Landlord. If Tenant shall default in the
payment of Base Rent to Landlord, then Landlord shall be authorized to collect
any rent due under any subleases directly from the sublessees, and payment of
rent by such sublessees shall satisfy their obligation to pay rent to Tenant
under their respective sublease.
13.6 NO WAIVER. Consent by Landlord to a particular Assignment shall
not be deemed to be a consent to any other or subsequent transaction. Whether or
not Landlord consents to any such Assignment, Tenant shall pay Landlord an
administrative fee and any reasonable attorneys' fees or accountants' fees and
costs actually incurred by Landlord in connection with such proposed
transaction, in an aggregate amount not to exceed two thousand dollars ($2,000).
Such $2,000 limitation shall be adjusted every five (5) years throughout the
Term in the manner provided for adjustment of Base Rent in Section 4.4 above.
13.7 STANDARD FOR CONSENT. Subject to the foregoing provisions, any
consents required by Landlord under this Article 13 shall not be unreasonably
withheld or delayed. In considering a proposed Assignment, it shall not be
unreasonable for Landlord to consider (a) the financial condition of the
proposed assignee, sublessee or lender, as applicable; (b) the character and
reputation of the assignee, sublessee or lender, as applicable; (c) the proposed
use of the Premises by the proposed assignee or sublessee, as applicable, (d)
whether an Event of Default shall have occurred and be continuing as of the date
on which Tenant shall request Landlord's consent to such Assignment; and (e) any
other reasonable economic and non-economic factors, in considering whether to
give its consent.
13.8 EXCESS SUBLEASE RENTAL. If at any time Tenant shall enter into a
sublease or subleases which, in the aggregate, cover in excess of fifty percent
(50%) of the Rentable Area of the Premises (such portion of the Premises in
excess of fifty percent (50%) of the rentable area of the Premises being
referred to herein as the "Excess Area"), then Tenant shall pay to Landlord, as
and when received from the subtenant or subtenants under such subleases, fifty
percent (50%) of the Excess Sublease Rental (as defined below) attributable to
the Excess Area. For the purposes of this Lease, "Excess Sublease Rental" shall
mean the rentals and other economic consideration received by Tenant as a result
of such sublease or subleases and with respect to the Excess Area (less
reasonable, bona fide finders' fees or leasing commissions payable to a third
party in connection with such sublease or subleases, less reasonable attorneys'
fees and costs paid in connection with such sublease or subleases
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(such tenant improvement costs to be amortized over the term of such sublease or
subleases), and less tenant improvement costs paid by Tenant in connection with
such subleases, all as allocable to Excess Area), whether denominated as rent or
otherwise, which exceed, in the aggregate, the Base Rent, Taxes and any other
amounts which Tenant is obligated to pay to Landlord under this Lease (prorated
to reflect obligations allocable to the Excess Area). Tenant's payment of such
portion of the Excess Sublease Rental to Landlord shall not affect or reduce any
other obligation of Tenant under this Lease. At Landlord's request, Tenant shall
deliver to Landlord such evidence of the rentals and other economic
consideration received by Tenant as a result of any such sublease, and the
amounts deducted therefrom for purposes of calculating Landlord' share of such
rentals and other economic consideration, as Landlord shall reasonably require
from time to time.
ARTICLE 14
ENTRY BY LANDLORD
14.1 ENTRY. Landlord shall have the right to enter the Premises at any
reasonable time after giving Tenant not less than twenty-four (24) hours prior
written notice (except in the event of emergency, in which case such notice as
shall be reasonable under the circumstances shall be given) to: (a) inspect the
Premises; (b) exhibit the Premises to prospective purchasers, lenders or, during
the last six (6) months prior to the Expiration Date, tenants; (c) determine
whether Tenant is performing all of its obligations hereunder; (d) post notices
of non-responsibility; and (e) make repairs, alterations or improvements
required of Landlord hereunder to any portion of the Building, provided all such
work will be done as promptly as reasonably practicable and so as to cause as
little interference to Tenant as reasonably practicable. Subject to the
foregoing and Landlord's indemnification obligations under Section 10.2 of this
Lease, Tenant hereby waives any claim for damages for any injury to or
interference with Tenant's business, any loss of occupancy or quiet enjoyment of
the Premises or any other loss occasioned by such entry.
14.2 ACCESS. At all times, Landlord shall have and retain a key with
which to unlock all of the doors of the Premises (excluding Tenant's vaults,
safes and secure or proprietary areas designated in writing by Tenant). Landlord
shall have the right to use any and all means which Landlord may deem reasonable
under the circumstances to open such doors in an emergency in order to obtain
entry into the Premises, and any entry to the Premises obtained by Landlord by
any such means shall not be construed or deemed to be a forcible or unlawful
entry into or a detainer of the Premises or an eviction, actual or constructive,
of Tenant from the Premises or any portion thereof.
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ARTICLE 15
DEFAULT
15.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events (each, an "Event of Default") shall constitute a default under
this Lease by Tenant:
(a) Tenant fails to pay any Base Rent, Taxes or any other
amount payable by Tenant under this Lease as and when the same becomes due and
payable, and such failure continues for more than five (5) days after Landlord
gives written notice thereof to Tenant; or
(b) Tenant fails to perform or observe any other agreement,
covenant or obligation contained in this Lease to be performed by Tenant as and
when performance is due, and such failure continues for more than thirty (30)
days after Landlord gives written notice thereof to Tenant; provided, however,
that if any such failure to perform by Tenant is not reasonably susceptible of
cure within such thirty-day period, then such failure to perform shall not
constitute an Event of Default provided that Tenant shall commence to cure such
failure to perform within such thirty-day period and shall thereafter prosecute
such cure diligently to completion; or
(c) Tenant (i) files, or consents by answer or otherwise to
the filing against Tenant of, a petition for relief, reorganization or
arrangement or any other petition in bankruptcy or to take advantage of any
bankruptcy or insolvency law of any jurisdiction; (ii) makes a general
assignment for the benefit of its creditors; (iii) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers for
Tenant or any substantial part of its property; or (iv) takes action for the
purpose of any of the foregoing; or
(d) A court or governmental authority of competent
jurisdiction, without consent by Tenant, enters an order appointing a custodian,
receiver, trustee or other officer with similar powers with respect to Tenant or
with respect to any substantial part of its property, or constituting an order
for relief or approving a petition for relief, reorganization management or any
other petition in bankruptcy or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution, winding up or
liquidation of Tenant, or if any such petition is filed against Tenant and such
petition is not be dismissed within ninety (90) days; or
(e) This Lease or any estate of Tenant hereunder is levied
upon under any attachment or execution and such attachment or execution is not
vacated within ninety (90) days.
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15.2 RIGHT TO TERMINATE. If an Event of Default shall occur, Landlord
at any time thereafter shall have the right to terminate this Lease by written
notice given to Tenant. Upon such termination, Landlord shall have the right to
recover from Tenant:
(a) The worth at the time of award of all unpaid Rent which
had been earned at the time of termination;
(b) The worth at the time of award of the amount by which all
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;
(c) The worth at the time of award of the amount by which all
unpaid rent for the balance of the term of this Lease after the time of award
exceeds the amount of such rental loss that Tenant proves could be reasonably
avoided; and
(d) All other amounts necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform its obligations
under this Lease or which in the ordinary course of things would be likely to
result therefrom, including, without limitation, any penalties or fees incurred
by Landlord and charged by the applicable lender with respect to the
Construction Loan and/or the Landlord Financing in any way resulting from
Tenant's failure to pay Base Rent. The "worth at the time of award" of the
amounts referred to in subparagraphs (a) and (b) above shall be computed by
allowing interest at the maximum annual interest rate allowed by law. The "worth
at the time of award" of the amount referred to in subparagraph (c) above shall
be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus 1%.
15.3 RIGHT OF ENTRY. In the event of any termination of this Lease by
reason of an Event of Default, Landlord shall have the immediate right to enter
upon and repossess the entire Premises (without regard to whether Tenant holds
title to any interest therein), and any personal property of Tenant may be
removed from the Premises and stored in any public warehouse at the risk and
expense of Tenant.
15.4 CONTINUATION AFTER DEFAULT. If an Event of Default shall occur,
this Lease shall continue in effect for so long as Landlord does not terminate
Tenant's right to possession, and Landlord shall have the right to enforce all
of its rights and remedies under this Lease, including the right to recover all
rent as it becomes due under this Lease. It is the intention of the parties that
Landlord shall have the remedy described in California Civil Code Section
1951.4, which provides that a lessor may continue the lease in effect after the
lessee's breach and abandonment and recover rent as it becomes due, if the
lessee has the right to
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sublease or assign, subject only to reasonable limitations. Acts of maintenance
or preservation or efforts to relet the Premises, the appointment of a receiver
upon initiative of Landlord to protect Landlord's interest under this Lease or
any other acts of Landlord, shall not constitute a termination of Tenant's right
to possession unless written notice of termination is given by Landlord to
Tenant.
15.5 LANDLORD'S RIGHT TO CURE DEFAULTS. All agreements, covenants and
provisions to be performed or observed by either party under this Lease (unless
otherwise specified herein) shall be at such party's sole cost and expense. If
Tenant fails to pay any amount, other than rent, required to be paid by Tenant
hereunder or fails to perform any other act on Tenant's part to be performed
hereunder, Landlord has the right, but shall not be obligated, and without
waiving or releasing Tenant from any obligations of Tenant, to make any such
payment or to perform any such other act on Tenant's part to be made or
performed as provided in this Lease. All sums so paid by Landlord and all
necessary incidental costs are deemed additional rent hereunder and shall be
payable by Tenant to Landlord on demand, together with interest on all such sums
from the date of expenditure by Landlord to the date of repayment by Tenant at
the Interest Rate (as defined below). In addition to all other rights and
remedies of Landlord, Landlord shall have the same rights and remedies in the
event of the nonpayment of such amounts by Tenant as in the case of a default in
the payment of Base Rent. Any amount owing from Landlord to Tenant under this
Lease shall accrue interest from the date of expenditure by Tenant or the date
owing by Landlord, as applicable, to the date of repayment by Landlord at the
Interest Rate.
15.6 TENANT'S RIGHT TO CURE DEFAULTS. In the event that Landlord shall
fail to perform any covenant, agreement or obligation to be performed by
Landlord under this Lease, within a reasonable period of time following notice
of such failure by Tenant to Landlord (which reasonable period of time shall be
thirty (30) days, unless such failure to perform is not reasonably susceptible
of cure within thirty (30) days, in which case Landlord shall have such
additional period of time to cure such failure to perform as may be necessary,
provided that Landlord is proceeding diligently), then Tenant shall have the
right to take whatever action is necessary in order to remedy Landlord's failure
to perform, at Landlord's sole cost and expense, provided that Tenant shall give
Landlord, and to any mortgagee of the Premises whose address has been provided
to Tenant in writing, written notice of Tenant's intent to take such action at
least five (5) days prior to taking any such action (in addition to the minimum
thirty (30) day notice period described above), and provided that Landlord
itself shall not have taken appropriate action within such 5-day period. If
within ten (10) days following Tenant's written demand for payment of Tenant's
costs incurred in taking any such action on Landlord's behalf (including a
reasonably detailed statement), Landlord shall not have paid such amount, then
such amount shall thereafter accrue interest at the Interest Rate, and Tenant
shall have the right to recover such
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amount from Landlord. Tenant shall not have the right to deduct any disputed
amounts from Rent or to terminate this Lease for Landlord's failure to act as
required by this Section.
15.7 CUMULATIVE REMEDIES. The remedies provided for in this Lease are
cumulative and are in addition to all other remedies available to Landlord and
Tenant at law or in equity by statute or otherwise.
15.8 LATE CHARGES; INTEREST. Tenant acknowledges that late payment by
Tenant to Landlord of Base Rent will cause Landlord to incur costs not
contemplated by this Lease, the exact amount of such costs being extremely
difficult and impracticable to ascertain. Such costs include, without
limitation, processing and accounting charges, and late charges that may be
imposed on Landlord by the terms of any indebtedness secured by an encumbrance
covering the Premises. Therefore if Tenant shall fail to pay any installment of
Base Rent when due, and such failure shall continue for ten (10) days
thereafter, Tenant shall pay to Landlord on demand an additional sum equal to
five percent (5%) of the overdue amount as a late charge. The parties agree that
this late charge represents a fair and reasonable estimate of the costs that
Landlord will incur by reason of such late payment by Tenant. Acceptance of any
late charge 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. In addition, each installment of Base Rent
and any other amount payable by Tenant to Landlord under this Lease which shall
not have been paid within thirty (30) days after the same shall have become due
and payable shall bear interest at the Interest Rate from the date that the same
became due and payable until paid, whether or not any demand shall be made
therefor.
15.9 SECURITY DEPOSIT.
(a) Concurrently with the execution of this Lease by the
parties, Tenant shall deliver to Landlord a portion of the Security Deposit
provided for in the Basic Lease Provisions in an amount equal to fifty percent
(50%) thereof, and within ten (10) days following the date on which Landlord
shall give to Tenant written notice that Landlord has obtained the site permit
entitling Landlord to commence construction of the Project, Tenant shall deliver
to Landlord the remaining fifty percent (50%) of the Security Deposit. Tenant
shall have the right, at any time and from time to time, to make the Security
Deposit in cash, by letter of credit ("Letter of Credit') or through pledge in
favor of Landlord of short-term investments such as deposit or money market
amounts and commercial paper maintained by Tenant in accordance with its
investment policy ("Pledged Investments"). The agreement creating the pledge of
the Pledged Investments shall be reasonably acceptable to Landlord and the
mortgagee of the Premises, if any. If at any time after the
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making of the Security Deposit, Tenant shall desire to substitute cash, a Letter
of Credit and/or Pledged Investments for the Security Deposit then held by
Landlord, upon Tenant's delivery thereof to Landlord, Landlord shall release and
return to Tenant the cash, Letter of Credit and/or Pledged Investments then held
by Landlord as the Security Deposit. The Letter of Credit shall be issued for an
initial term of one year, and Tenant shall cause the Letter of Credit to be
renewed for successive twelve-month periods throughout the Term not less than
thirty (30) days prior to each expiration date of the Letter of Credit. Any
Letter of Credit shall entitle Landlord to make a draw thereunder upon
presentation of a sight draft in the amount of the draw, together with a signed
certification from Landlord under penalty of perjury stating that an Event of
Default under this Lease has occurred and is continuing, and that by reason
thereof, Landlord is entitled to make the requested draw under the Letter of
Credit.
(b) The Security Deposit shall be held by Landlord as security
for the faithful performance by Tenant of all of the covenants, agreements and
obligations under this Lease to be performed by Tenant during the Term. If
Tenant shall fail to pay Base Rent or other amounts payable by Tenant to
Landlord under this Lease, or if Tenant shall otherwise default with respect to
any provision of this Lease, Landlord shall have the right, but shall not be
obligated, to use, apply or retain all or any portion of the Security Deposit
for the payment of rental or any other amount which Landlord may expend or
become obligated to expend by reason of Tenant's default, to repair damages to
the Premises caused by Tenant or to compensate Landlord for any other loss or
damage which Landlord may suffer by reason of Tenant's default. If the Security
Deposit shall have been made by Letter of Credit or with Pledged Investments,
Landlord shall be entitled to make a draw under the Letter of Credit, or to
realize from the Pledged Investments, the amount described in the preceding
sentence, and to use, apply or retain such amount as provided therein. If
Landlord shall so use or apply any portion of the Security Deposit, Tenant
shall, within ten (10) days after Landlord's written demand therefor, deposit
with Landlord cash, a Letter of Credit or Pledged Investments in the amount so
used or applied by Landlord. Landlord shall not be required to keep the Security
Deposit separate from Landlord's other funds, and Tenant shall not be entitled
to any interest on the Security Deposit. Except as otherwise required by
subparagraph (c) below, Landlord shall return any cash, Pledged Investments
and/or Letter of Credit then held by Landlord on account of the Security Deposit
to Tenant within thirty (30) days following the expiration of this Lease, less
any amounts applied by Landlord in accordance with its rights under this Lease
or applicable law. In the event that Landlord shall transfer its interest in the
Premises, Landlord shall transfer any cash, Pledged Investments and/or Letter of
Credit then held by Landlord on account of the Security Deposit to Landlord's
transferee, and Landlord shall thereupon be released from all liability to
Tenant for return of the Security Deposit.
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(c) Provided that no Event of Default shall have occurred and
be continuing at such time, effective as of (i) the date which is ninety (90)
days following the date on which Tenant shall have accepted possession of the
Premises and commenced the payment of Base Rent under this Lease, and provided
that Tenant's consolidated net worth as determined in accordance with generally
accepted accounting principals consistently applied for the six (6) months
preceding such 90-day period shall be equal to or greater than Tenant's
consolidated net worth as of the Effective Date, the Security Deposit shall be
reduced to an amount equal to two (2) months' Base Rent (provided that the
Security Deposit shall also be reduced to two (2) months' Base Rent as of any
later date on which the foregoing Tenant net worth test shall be satisfied for a
period of six (6) months), (ii) the date which is five (5) years following the
date on which Tenant shall have accepted possession of the Premises and
commenced the payment of Base Rent under this Lease, and provided that Tenant's
consolidated net worth as determined in accordance with generally accepted
accounting principals consistently applied for the six (6) months preceding such
date shall be equal to or greater than Tenant's consolidated net worth as of the
Effective Date, the Security Deposit shall be reduced to zero (provided that the
Security Deposit shall also be reduced to zero as of any later date on which the
foregoing Tenant net worth test shall be satisfied for a period of six (6)
months), and (iii) the date on which Tenant shall exercise Tenant's option to
acquire an undivided one-half interest in the Premises from Landlord pursuant to
the Option Agreement and shall provide Landlord with the Option Security (as
defined in the Option Agreement), if prior to the date specified in the
foregoing clause (i), the Security Deposit shall also be reduced to zero. On
each such date, or as soon thereafter as may be practicable, Landlord shall
cause to be returned to Tenant any cash, Letter of Credit and/or Pledged
Investments then held by Landlord on account of the Security Deposit which are
in excess of the reduced amount of the Security Deposit as of such date.
Landlord's obligation so to return to Tenant any Letter of Credit or Pledged
Investments then held by Landlord shall be conditioned upon Landlord's receipt
of cash, a Letter of Credit, an amended Letter of Credit and/or Pledged
Investments in any such reduced amount of the Security Deposit which is in
excess of zero.
ARTICLE 16
FINANCING
16.1 OPERATION OF PROPERTY. Except as otherwise provided in this
Section 16.1, from and after the date of this Lease, Landlord shall not
mortgage, pledge, hypothecate, encumber or lease the Property without Tenant's
prior written consent, which consent shall not be unreasonably withheld or
conditioned upon the payment of fees or the satisfaction of any unreasonable
conditions; provided, however, that prior to the Commencement Date, Tenant shall
have the right, in Tenant's sole discretion, to withhold Tenant's consent to any
mortgage, pledge, hypothecation, encumbrance or lease. In addition, Landlord
shall not
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have the right to sell or convey the Property prior to the Commencement Date
without Tenant's prior written consent, which consent may be withheld in
Tenant's sole discretion, except that Tenant's consent shall not be required for
any sale, conveyance or transfer of all or any part of Landlord's interest in
the Premises for estate planning purposes to (a) an entity or entities
controlled by or under common control with Landlord (or either of *******
Partnership or ******* Trust) or ** or (b) to **'s family members; provided,
however, that in the case of any such sale, conveyance or transfer, ** shall
directly manage and control the transferee. Tenant's consent shall not be
required for (i) the existing deeds of trust encumbering the Property ("Existing
Deeds of Trust"); (ii) the Construction Loan (as defined in, and subject to the
provisions of, the Improvement Agreement) and any deed of trust securing the
Construction Loan; or (iii) the permanent financing, and any deed of trust
securing the permanent financing, obtained by Landlord in order to refinance the
Construction Loan and finance Landlord's cost of owning the Premises ("Landlord
Financing"); provided, however, that the Landlord Financing shall comply with,
and is subject to, the applicable provisions of the Option Agreement. In the
event that Tenant is entitled to and does exercise its cure rights provided for
in the Option Agreement with respect to the Landlord Financing, Tenant shall be
entitled to offset any such amounts expended by Tenant against the Base Rent.
16.2 SUBORDINATION OF LEASE. This Lease shall be subject and
subordinate at all times to the lien of all mortgages and deeds of trust in any
amount or amounts whatsoever (including all advances thereunder, renewals,
replacement, modifications, supplements, and extensions thereof) now or
hereafter placed on or against the Premises, or on or against Landlord's
interest or estate therein, all without the necessity of having further
instruments executed on the part of Tenant to effectuate such subordination;
provided that each mortgagee or beneficiary under any such mortgage or deed of
trust, shall agree in writing not to terminate or disturb Tenant's possession of
the Premises under this Lease in the event of foreclosure of such mortgage or
deed of trust or deed in lieu thereof, as the case may be, so long as an Event
of Default with respect to Tenant shall not have occurred and be continuing at
such time. Within twenty (20) days following Landlord's written request
therefor, Tenant shall execute and deliver such further instruments evidencing
such subordination of this Lease to the lien of any such mortgages or deeds of
trust as may be required by Landlord, and evidencing Tenant's agreement to
attorn to any such mortgagee or beneficiary under any mortgage or deed of trust
in the event of foreclosure or a deed in lieu of foreclosure, or other purchaser
or grantee in respect thereof, provided that any such instruments contain
written non-disturbance agreements from such mortgagees or beneficiaries in the
form provided above.
16.3 SUBORDINATION OF DEED OF TRUST. Notwithstanding anything to the
contrary set forth above, any mortgagee or beneficiary under any mortgage or
deed of trust may at any
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time subordinate its mortgage or deed of trust to this Lease in whole or in
part, without any need to obtain Tenant's consent, by execution of a written
document subordinating such mortgage or deed of trust to this Lease to the
extent set forth in such document, and thereupon the Lease shall be deemed prior
to such mortgage or deed of trust to the extent set forth in such document
without regard to their respective dates of execution, delivery and/or
recording. In that event, to the extent set forth in such document, such
mortgage or deed of trust shall have the same rights with respect to this Lease
as would have existed if this Lease had been executed, and a memorandum thereof
recorded, prior to the execution, delivery and recording of the mortgage or deed
of trust.
16.4 APPROVAL BY MORTGAGEES. Tenant hereby acknowledges that the
provisions of this Lease may be subject to the approval of the Construction
Lender (as defined in the Improvement Agreement) and/or any lender providing the
Landlord Financing; Tenant shall reasonably cooperate with Landlord in good
faith in Landlord's efforts to obtain the Construction Loan and Landlord
Financing on satisfactory terms and at a reasonably competitive rate. In
connection therewith, if the Construction Lender or the lender providing the
Landlord Financing shall require reasonable and necessary modifications to this
Lease as a condition to providing such financing on satisfactory terms and at a
reasonably competitive rate, upon Landlord's written request, Tenant shall not
unreasonably withhold its consent to such modifications; provided, however, that
no such modification shall change the size, location or dimension of the
Premises or increase the amount of the rent or other amounts payable by Tenant
under this Lease or materially affect Tenant's rights or increase Tenant's
obligations hereunder.
ARTICLE 17
EMINENT DOMAIN
17.1 TAKING OF PREMISES. If all or any part of the Premises shall be
taken as a result of the exercise of the power of eminent domain or any
agreement in lieu thereof, this Lease shall terminate as to the part so taken as
of the date of taking and, in the case of a partial taking, Tenant shall have
the right to terminate this Lease as to the balance of the Premises by giving
written notice to Landlord within thirty (30) days after such date; provided,
however, that a condition to the exercise by Tenant of such right to terminate
is that not less than twenty-five percent (25%) of the Premises shall have been
taken and the portion of the Premises remaining is not reasonably suitable for
Tenant's continued occupancy for the uses permitted under this Lease, taking
into account the business operations conducted by Tenant on the Premises. If
Landlord and Tenant cannot agree on whether the portion of the Premises
remaining is not reasonably suitable for Tenant's continued occupancy, then
either party shall have the right to refer such matter to arbitration in
accordance with the provisions of Section 20.24 of this Lease. The proceeds of
any
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condemnation award or any conveyance in lieu thereof shall belong to and be paid
to Landlord, except that Tenant shall be entitled to petition or apply for and
to receive from the condemning authority a separate award (provided that such
separate award does not reduce the amount of Landlord's award) including any or
all of the following:
(a) A sum attributable to the taking of the alterations,
additions or improvements made to the Premises by Tenant at its expense, and/or
the taking of any furniture, fixtures, equipment, trade fixtures or personal
property which Tenant has the right to remove from the Premises pursuant to the
provisions of this Lease;
(b) A sum equal to the present value of any excess of the
prevailing market rental value of the Premises for the remainder of the Term,
exclusive of the alterations, additions or improvements for which Tenant is
compensated under subparagraph (a) above, over the discounted sum of the Base
Rent and Taxes payable for the remainder of the Term; provided, however, that
Tenant's rights under this subparagraph (b) shall be subordinate to the rights
of the Construction Lender or the lender providing the Landlord Financing, and
the appropriation of such proceeds by any such lender shall not give Tenant any
recourse against Landlord by reason thereof;
(c) A sum attributable to that portion of the award
constituting severance damages for the restoration of the Premises, compensation
to Tenant for business interruption, relocation or moving expenses; and
(d) A sum to compensate Tenant for loss of goodwill.
17.2 ABATEMENT OF RENT. If any portion of the Premises shall be taken
in eminent domain or by conveyance in lieu thereof, and this Lease shall not be
terminated as provided in this Article 17 by reason thereof, as of the date of
such taking, the Base Rent and other applicable amounts payable by Tenant under
this Lease shall be equitably reduced in proportion to such taking.
17.3 ADDITIONAL PROVISIONS. Each party agrees to execute and deliver to
the other party all instructions and directions to the condemning authority that
may be required to effectuate the provisions of this Article 17. Each party
waives the provisions of California Code of Civil Procedure Section 1265.130,
and any successor statute, allowing either party to file a petition to terminate
this Lease for a partial taking.
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ARTICLE 18
WAIVER
18.1 GENERAL. The waiver by Landlord or Tenant of any breach of any
agreement, covenant or provision in this Lease will not be deemed to be a waiver
of any subsequent breach of the same or any other agreement, covenant or
provision of this Lease, nor will any custom or practice which may grow up
between Landlord and Tenant in the administration of this Lease be construed to
waive or to lessen the right of Landlord or Tenant to insist upon the
performance by Landlord or Tenant in strict accordance with this Lease. The
subsequent acceptance of Rent hereunder by Landlord or the payment of Rent by
Tenant will not be deemed to be a waiver of any preceding breach by Landlord or
Tenant of any agreement, covenant or provision in this Lease, other than the
failure of Tenant to pay the particular Rent so accepted, regardless of
Landlord's or Tenant's knowledge of such preceding breach at the time of
acceptance or payment of such rent.
18.2 PAYMENT UNDER PROTEST. If at any time a dispute arises regarding
any amount or sum of money to be paid by one party to the other under the
provisions hereof, the party against whom the obligation to pay is asserted
shall have the right to make payment "under protest", and any such payment will
not be regarded as a voluntary payment. In addition, the right on the part of
such party to institute suit for the recovery of such sum will survive. If it is
adjudged that there was no legal obligation on the part of such party to pay
such sum or any part thereof, such party will be entitled to recover such sum or
so much thereof as it was not legally required to pay under the provisions of
this Lease, with interest thereon at the Interest Rate.
18.3 WORK UNDER PROTEST. If at any time a dispute arises between the
parties hereto regarding any work to be performed by either of them under the
provisions hereof, the party against whom the obligation to perform the work is
asserted may perform such work and pay the cost thereof "under protest". The
performance of such work in no event shall be regarded as a voluntary
performance, and the right on the part of such party to institute suit for the
recovery of the costs of such work will survive. If it is adjudged that there
was no legal obligation on the part of such party to perform the same or any
part thereof, such party will be entitled to recover the cost of such work or
the cost of so much thereof as such party was not legally required to perform
under the provisions of this Lease, with interest thereon at the Interest Rate.
18.4 NOTIFICATION. Whenever a payment is made or work is done "under
protest", as provided in this Article 18, the party doing so, before making any
such payment or doing any such work, must notify the other party in writing that
it is doing so "under protest".
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ARTICLE 19
HAZARDOUS MATERIALS
19.1 TENANT'S USE. Tenant, at its sole cost and expense, shall comply
with all Hazardous Materials Laws with respect to Tenant's storage, use,
transportation, release and/or disposal of Hazardous Materials on or about the
Premises. Tenant shall not store, use, transport, release or dispose of any
Hazardous Materials in, on, from or about the Premises without the prior written
consent of Landlord; provided, however, that the foregoing provision shall not
apply to materials or substances such as office supplies, cleaning fluids and
other such materials used in the ordinary course of Tenant's business in
customary and reasonable amounts and used in compliance with all Hazardous
Materials Laws. Without limiting any other provision of this Lease, Tenant shall
provide Landlord with reasonable access to the Premises upon not less than three
(3) days prior written notice (except in the event of an emergency, in which
case such notice as shall be reasonable under the circumstances shall be given)
in order to enable Landlord to conduct any inspection, monitoring, remediation
or removal related to the presence or the alleged presence of Hazardous
Materials on the Premises; provided that such access or activities shall not
unreasonably interfere with Tenant's use or enjoyment of the Premises taking
into account all of the facts and circumstances.
19.2 NOTICES. Each party shall immediately notify the other in writing
of: (a) any enforcement, clean-up, removal or other governmental or regulatory
action instituted, completed or threatened pursuant to any Hazardous Materials
Laws; (b) any claim made or threatened by any person against Tenant, Landlord or
the Premises relating to damage, contribution, cost recovery, compensation, loss
or injury resulting from or claimed to result from any Hazardous Materials; and
(c) any reports made to any governmental agency arising out of or in connection
with any Hazardous Materials in or removed from the Premises, including any
complaints, notices, warnings or asserted violations in connection therewith.
Each party also shall supply to the other as promptly as possible copies of all
claims, reports, complaints, notices, warnings or asserted violations relating
in any way to the Premises. Each party shall deliver promptly to the other
copies of hazardous waste manifests reflecting the legal and proper disposal of
Hazardous Materials removed from the Premises.
19.3 INDEMNITY. Tenant shall indemnify, defend and hold Landlord
harmless from and against any and all claims, liabilities, losses, expenses,
costs and damages (including attorneys' fees and costs), arising from or caused
in whole or in part, directly or indirectly, by: (a) the presence in, on, under
or about the Premises or discharge in or from the Premises of any Hazardous
Materials placed in, under or about, the Premises by Tenant or at Tenant's
direction, excluding any improvements constructed by Landlord (subject to
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Section 6.3 above); or (b) Tenant's use, storage, transportation, disposal,
release, discharge or generation of Hazardous Materials to, in, on, under, about
or from the Premises; or (c) Tenant's failure to comply with any Hazardous
Materials Law applicable hereunder to Tenant. Landlord shall indemnify, defend
and hold Tenant harmless from and against any and all claims, liabilities,
losses, expenses, costs and damages (including attorneys' fees and costs),
arising from or caused in whole or in part, directly or indirectly, by (x) the
presence in, on, under or about the Premises, or discharge in or from the
Premises, of any Hazardous Materials not placed, in, on, under or about the
Premises by Tenant or otherwise the responsibility of Tenant under this Article
19, excluding, however: (i) any naturally-occurring asbestos that may be
contained in any serpentine rock located on the Premises or any other
naturally-occurring materials; or (ii) any condition disclosed in the
Environmental Documents; (y) Landlord's use, storage, transportation, disposal,
release, threatened release, discharge or generation of Hazardous Materials to,
in, on, under, about or from the Premises; or (z) Landlord's failure to comply
with any Hazardous Materials Law, unless related to the either of the items
described in the foregoing clause (i) or (ii) above. The obligations of each
party pursuant to this Section 19.3 includes, without limitation, and whether
foreseeable or unforeseeable, all costs of any required or necessary repair,
cleanup, detoxification or decontamination of the Premises, and the preparation
and implementation of any closure, remedial action or other required plans in
connection therewith, which obligations shall survive the expiration or earlier
termination of this Lease.
ARTICLE 20
MISCELLANEOUS
20.1 HOLDING OVER. If Tenant shall remain in possession of the
Premises, without the consent of Landlord, after the expiration or earlier
termination of this Lease, such occupancy shall be a tenancy from month-to-month
and all of the terms, covenants and agreements hereof shall otherwise continue
to apply and bind Landlord and Tenant so long as Tenant shall remain in
possession, except that the Base Rent shall be calculated in accordance with the
following table, prorated on a daily basis for each day that Tenant remains in
possession:
HOLDOVER MONTH PERCENTAGE OF BASE RENT FOR LAST MONTH OF TERM
-------------- ----------------------------------------------
1 125%
2 130%
3 135%
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4 140%
5 145%
6 150%
Landlord's right to recover Base Rent in the foregoing amounts shall be without
prejudice to Landlord's other rights and remedies by reason of any such holding
over by Tenant.
20.2 LANDLORD'S INTEREST. The term "Landlord" as used herein shall mean
only the owner or owners at the times in question of fee title to the Premises.
In the event of a sale, conveyance or assignment by Landlord of Landlord's
interest in the Premises, Landlord shall be relieved, from and after the date of
such sale, conveyance or assignment, of any liability thereafter accruing upon
any of the agreements, obligations or covenants of Landlord under the Lease,
provided that the successor-in-interest of Landlord shall agree in writing to
assume such agreements, obligations and covenants of Landlord. In such event
Tenant agrees to look solely to the successor-in-interest of Landlord in and to
this Lease, provided that any funds in the hands of Landlord, in which Tenant
has an interest, and provided that any Letter of Credit and Pledged Investments,
shall be delivered to such successor-in-interest. This Lease shall not be
affected by any such sale, conveyance, or assignment, however, and Tenant agrees
to attorn to the purchaser or assignee, such attornment to be effective and
self-operative without the execution of any further instruments on the part of
any of the parties to this Lease.
20.3 QUIET ENJOYMENT. Landlord hereby covenants in favor of Tenant
that, provided that Tenant shall pay all rent and perform all other covenants,
agreements and obligations of Tenant under this Lease, Tenant shall have and
enjoy quiet possession of the Premises throughout the Term without any hindrance
or interruption by Landlord or any person claiming by, through or under
Landlord, subject to the terms and conditions of this Lease.
20.4 LANDLORD'S LIABILITY. To the extent that Landlord shall have
liability under this Lease, the liability of Landlord under this Lease or
otherwise in connection with the Premises or the Building shall be limited to
Landlord's interest in the Building, and in no event shall any other assets of
Landlord or any assets of any constituent partner or member of Landlord be
subject to any liability arising out of or in connection with this Lease, or the
Building. Notwithstanding anything to the contrary contained in this Lease, in
no event shall Landlord be liable for any consequential damages, special damages
or lost profits sustained by Tenant.
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20.5 NO MERGER. 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, either terminate any or all existing subleases or
operate as an assignment to Landlord of any or all of such subleases.
20.6 SURRENDER OF PREMISES. At the expiration of the Term or upon
earlier termination of this Lease, Tenant shall surrender to Landlord possession
of the Premises, in the same condition as received, reasonable wear and tear and
damage by casualty excepted. Any personal property of Tenant not removed from
the Premises shall be deemed to have been abandoned by Tenant and shall
thereupon become the property of Landlord.
20.7 ESTOPPEL CERTIFICATE. At any time and from time to time, but in no
event later than twenty (20) days following a request therefor by the other
party, each party shall execute, acknowledge and deliver to the other party, a
certificate certifying: (a) the Commencement and Expiration Dates of this Lease;
(b) whether there are then existing any defaults by Tenant or Landlord in the
performance of its obligations under this Lease (and, if so, specifying the
same); (c) that this Lease is unmodified and in full force and effect (or, if
there have been modifications, that this Lease is in full force and effect, as
modified, and stating the date and nature of each modification); (d) the
capacity of the person executing such certificate, and that such person is duly
authorized to execute the same on behalf of such party; (e) the date, if any, to
which rent and other sums payable hereunder have been paid; (f) that no notice
has been received by such party of any default which has not been cured, except
as to defaults specified in the certificate; (g) the amount of any Security
Deposit and prepaid rent; and (h) such other matters as the other party may
request. Any such certificate may be relied upon by any prospective purchaser
of, or any existing or prospective mortgagee or beneficiary under any deed of
trust affecting, the Premises or any part thereof, and by any other party
specified by the requesting party.
20.8 NOTICES. All notices and other communications which may or are
required or permitted to be given by either party to the other hereunder shall
be in writing and shall be deemed to have been given when personally delivered
or transmitted by private nationally recognized overnight courier service, or
forty-eight (48) hours after deposit in the United States mail, certified or
registered, with return receipt requested, postage prepaid, and addressed as
follows: prior to the date on which Tenant accepts possession of the Premises,
at Tenant's address prior to occupancy set out in the Basic Lease Provisions,
and thereafter to Tenant at the address for Tenant set out in the Basic Lease
Provisions, or to such other place as Tenant may from time to time designate in
a notice to Landlord; to Landlord at the address specified in the Basic Lease
Provisions, or to such other place as Landlord may from time to time designate
in a notice to Tenant.
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20.9 SUCCESSORS. Subject to the provisions of Article 13 of this Lease,
all of the terms, covenants and conditions contained in this Lease shall be
binding upon, and shall inure to the benefit of, the heirs, executors,
administrators, successors and assigns of the parties hereto.
20.10 ATTORNEYS' FEES. In the event of any action or proceeding brought
by either party against the other under this Lease, the prevailing party shall
be entitled to recover court costs and the fees of its attorneys in such action
or proceeding (whether at the administrative, trial or appellate levels or by
arbitration) in such amount as the court or administrative body may award. The
"prevailing party" shall be the party which obtains substantially the result
sought, whether by settlement, judgment, dismissal or arbitration award.
20.11 WAIVER. The failure of Landlord to exercise its rights in
connection with any breach by Tenant of any provision of this Lease shall not be
deemed to be a waiver of such provision or any subsequent breach or violation of
the same or any other provision of this Lease. The subsequent acceptance of rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
or violation by Tenant of any provision 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 or violation at the time of acceptance of
such rent.
20.12 CAPTIONS. The captions and headings of the Articles and Sections
in this Lease are for convenience only and shall not in any way limit or be
deemed to construe or interpret the terms and provisions of this Lease.
20.13 TIME OF ESSENCE. Time is of the essence of this Lease and of all
provisions hereof, except as otherwise provided herein.
20.14 INTEREST RATE. As used herein, the term "Interest Rate" shall
mean a per annum rate of interest equal to three percent (3%) plus the rate most
recently announced by Wells Fargo Bank, N.A. (or any successor thereof), at its
main office in San Francisco, California, as its "Prime Rate", serving as the
basis upon which effective rates of interest are calculated for those loans
making reference thereto, but in no event in excess of the maximum applicable
usury limitation.
20.15 GOVERNING LAW. This Lease shall be governed by, and construed and
enforced in accordance with, the laws of the State of California. Landlord and
Tenant agree to submit to jurisdiction in the City and County of San Francisco
for any legal proceedings.
20.16 ENTIRE AGREEMENT. The terms of this Lease are intended by the
parties as a final expression of their agreement with respect to such terms as
are included in this Lease
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and shall supersede any prior agreements, memoranda or other written
communications regarding this Lease. The parties further intend that this Lease
constitutes the complete and exclusive statement of its terms and that no
extrinsic evidence whatsoever may be introduced in any judicial proceedings, if
any, involving this Lease. Notwithstanding the foregoing, nothing contained
herein shall limit or affect in any manner the provisions of the Option
Agreement.
20.17 INVALIDITY. If any provision of this Lease or the application
thereof to any person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such provision
to persons or circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each provision of this Lease
shall be valid and be enforceable to the full extent permitted by law.
20.18 AUTHORITY. If Tenant executes this Lease as a corporation, a
partnership or limited liability company, each of the persons executing this
Lease on behalf of Tenant does hereby covenant and warrant that Tenant is a duly
authorized and existing entity, that Tenant has full right and authority to
enter into this Lease, and that each and all of the persons on behalf of Tenant
are authorized to do so. Upon Landlord's request, Tenant shall provide Landlord
with evidence reasonably satisfactory to Landlord confirming the foregoing
covenants and warranties.
20.19 NO OFFER. No contractual or other rights shall exist between
Landlord and Tenant with respect to the Premises until both have executed and
delivered this Lease, notwithstanding that Landlord has delivered to Tenant an
unexecuted copy of this Lease. The submission of this Lease to Tenant shall not
constitute the grant of an option for the Tenant to lease, or otherwise create
any interest by Tenant in, the Premises. The execution of this Lease by Tenant
and return to Landlord shall not be binding upon Landlord, notwithstanding any
time interval, until Landlord has in fact executed and delivered this Lease to
Tenant.
20.20 BROKERS. Each party hereto represents and warrants that it has
dealt with no broker, finder or salesperson in connection with this Lease, and
each party hereto shall indemnify, defend and hold the other party harmless from
and against and all losses, costs, claims, damages, liabilities or causes of
action (including attorney's fees) arising out of or relating to any breach of
the foregoing representation and warranty or arising out of or relating to any
claim made by any broker, finder or salesperson claiming to have dealt with the
indemnifying party.
20.21 AMENDMENTS. This Lease may not be modified or amended except by
an instrument executed by both parties hereto.
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20.22 MEMORANDUM OF LEASE. Concurrently with their execution of this
Lease, Landlord and Tenant shall execute, acknowledge and deliver a memorandum
of this Lease in the form of EXHIBIT C attached hereto, and shall cause such
memorandum to be recorded in the San Francisco County, California Official
Records at Landlord's expense.
20.23 TITLE INSURANCE. If Tenant shall so require by written notice to
Landlord given within thirty (30) days following the date of this Lease, Tenant
shall have the right to obtain an owner's title insurance policy insuring Tenant
that Tenant holds a valid leasehold estate in the Property under this Lease,
subject only to such exceptions to title as Tenant shall approve. Such title
insurance policy shall be in such liability amount and shall be issued by such
title insurance company as Tenant shall require. Tenant shall pay the premium
and endorsement charges for such title insurance policy. Such title insurance
policy shall not be a condition to Tenant's obligations under this Lease.
20.24 ARBITRATION. Whenever in this Lease it is provided that a matter
shall be decided by arbitration, or if the parties shall otherwise agree to
arbitration, the matter shall be decided by expedited arbitration before a
single arbitrator mutually decided upon by Landlord and Tenant within thirty
(30) days following the date of any party's demand for arbitration. The
arbitrator shall be an impartial individual who is acceptable to Landlord and
Tenant, who is experienced in real estate law and has offices located in the
Counties of San Francisco, Alameda, Marin, Contra Costa or San Mateo, and who
has not been previously employed by either Landlord or Tenant. If the parties
shall be unable to agree upon the arbitrator, the arbitrator shall be selected
in accordance with the applicable procedures of the Commercial Arbitration Rules
of the American Arbitration Association. The arbitration shall take place within
fifteen (15) days after the date of selection of the arbitrator. The arbitrator
shall be obligated to render his or her decision within five (5) business days
following the date on which the arbitration shall be concluded, or as soon
thereafter as such arbitrator can reasonably render such decision. Such
arbitration shall be held under the auspices of the San Francisco office of the
American Arbitration Association, unless the American Arbitration Association
refuses to administer the matter, in which case it shall be administered by the
arbitrator.
20.25 CONSENTS, APPROVALS. If under this Lease, (a) a party shall have
the right to consent to or approve any matter, and (b) the time period within
which such party shall be obligated to grant or withhold its consent or approval
to such matter shall not be specified in this Lease, then unless such party
shall notify the other party that such party does not consent to or approve such
matter within five (5) days following its receipt of a written request for
consent or approval from the other party, such party shall be deemed to have
consented to or approved such matter for which consent or approval shall have
been requested.
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20.26 EXHIBITS. Attached hereto are EXHIBITS A, B, C and D, each of
which is hereby incorporated herein by reference.
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the day and year first above written.
LANDLORD: ******* FAMILY PARTNERSHIP,
a California limited partnership
By: /s/
-----------------------------
****** *. *******
General Partner
/s/ ****** *. *******
------------------------------------
****** *. *******, TRUSTEE
/S/ ******* *** *******
------------------------------------
******* **** *******,
TRUSTEE
TENANT: MACROMEDIA, INC.,
a Delaware corporation
By: /s/ Loren Hillberg
-----------------------------
Title: Vice President
--------------------------
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