California-Scotts Valley-1700 Green Hills Road Net Lease Agreement - CMG Information Technologies Inc. and Borland International Inc.
NET LEASE AGREEMENT
(Multi-Tenant)
by and between
CMG INFORMATION TECHNOLOGIES, INC.,
a Delaware corporation
("Tenant")
and
BORLAND INTERNATIONAL, INC.,
a Delaware corporation
("Landlord")
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TABLE OF CONTENTS
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1. Summary of Lease Provisions.................................. 1
2. Property Leased.............................................. 3
2.1 Premises............................................... 3
2.2 Improvements........................................... 3
2.3 Acceptance of Premises................................. 3
3. Term......................................................... 5
3.1 Commencement Date...................................... 5
3.2 Delay of Commencement Date............................. 5
3.3 Early Occupancy........................................ 5
3.4 Intentionally Omitted.................................. 5
3.5 Option to Extend Lease Term............................ 5
4. Rent......................................................... 6
4.1 Rent................................................... 6
4.2 Late Charge............................................ 8
4.3 Additional Rent........................................ 8
4.4 Rent During Extended Term.............................. 9
(a) Mutual Agreement................................. 9
(b) Appraisal........................................ 9
5. Security Deposit............................................. 10
6. Use of Premises.............................................. 11
6.1 Permitted Uses......................................... 11
6.2 Tenant to Comply with Legal Requirements............... 11
6.3 Prohibited Uses........................................ 13
6.4 Hazardous Materials.................................... 14
7. Taxes........................................................ 16
7.1 Personal Property Taxes................................ 16
7.2 Other Taxes Payable Separately by Tenant............... 16
7.3 Common Taxes........................................... 17
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(a) Definition of Taxes................................... 17
(b) Common Area Charge.................................... 18
8. Insurance; Indemnity; Waiver......................................... 18
8.1 Insurance by Landlord...................................... 18
(a) Property Insurance.................................... 19
(b) Liability Insurance................................... 19
(c) Other................................................. 19
8.2 Insurance by Tenant........................................ 19
(a) Personal Property Insurance........................... 19
(b) Liability Insurance................................... 20
(c) Other................................................. 20
(d) Form of the Policies.................................. 20
8.3 Failure by Tenant to Obtain Insurance...................... 21
8.4 Indemnification............................................ 21
8.5 Claims by Tenant........................................... 22
8.6 Mutual Waiver of Subrogation............................... 22
9. Utilities............................................................ 23
10. Repairs and Maintenance.............................................. 23
10.1 Landlord's Responsibilities................................ 23
10.2 Tenant's Responsibilities.................................. 24
11. Common Area.......................................................... 25
11.1 In General................................................. 25
11.2 Parking Areas.............................................. 26
11.3 Maintenance by Landlord.................................... 27
12. Common Area Charges.................................................. 27
12.1 Definition................................................. 27
12.2 Payment of Common Area Charges by Tenant................... 28
12.3 Exclusions From Common Area Charges........................ 29
(a) Losses Caused by Others and Construction Defects...... 29
(b) Condemnation and Insurance Costs...................... 30
(c) Reimbursable Expenses................................. 30
(d) Utilities or Services................................. 30
(e) Leasing Expenses...................................... 30
(f) Reserves.............................................. 30
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(g) Mortgages........................................... 30
(h) Hazardous Materials................................. 30
(i) Management.......................................... 30
(j) Fees Paid to Affiliates............................. 31
(k) Executive Employee Compensation..................... 31
(l) Advertising and Promotional Expenses................ 31
(m) Art Objects......................................... 31
13. Alterations and Improvements.................................... 31
13.1 In General............................................... 31
13.2 Removal Upon Lease Termination........................... 32
13.3 Landlord's Improvements.................................. 33
14. Default and Remedies............................................ 33
14.1 Events of Default........................................ 33
14.2 Remedies................................................. 34
14.2.1 Termination..................................... 34
14.2.2 Continuance of Lease............................ 36
15. Damage or Destruction........................................... 36
15.1 Definition of Terms...................................... 36
15.2 Insured Casualty......................................... 37
15.2.1 Rebuilding Required............................. 37
15.2.2 Landlord's Election............................. 37
15.2.3 Continuance of Lease............................ 37
15.3 Uninsured Casualty....................................... 37
15.3.1 Landlord's Election............................. 37
15.3.2 Tenant's Ability to Continue Lease.............. 38
15.4 Tenant's Election........................................ 38
15.5 Damage or Destruction Near End of Lease Term............. 39
15.6 Termination of Lease..................................... 39
15.7 Abatement of Rentals..................................... 39
15.8 Liability for Personal Property.......................... 39
15.9 Waiver of Civil Code Remedies............................ 40
15.10 Damage or Destruction to the Building.................... 40
16. Condemnation.................................................... 40
16.1 Definition of Terms...................................... 40
16.2 Rights................................................... 41
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16.3 Total Taking........................................... 41
16.4 Partial Taking......................................... 41
17. Liens......................................................... 42
17.1 Premises to Be Free of Liens........................... 42
17.2 Notice of Lien; Bond................................... 42
18. Landlord's Right of Access to Premises........................ 42
19. Landlord's Right to Perform Tenant's Covenants................ 43
20. Lender Requirements........................................... 44
20.1 Subordination.......................................... 44
20.2 Subordination Agreements............................... 44
20.3 Intentionally Omitted.................................. 44
20.4 Attornment............................................. 44
20.5 Estoppel Certificates and Financial Statements......... 45
(a) Delivery by Tenant............................... 45
(b) Nondelivery by Tenant............................ 46
21. Holding Over.................................................. 46
22. Notices....................................................... 46
23. Attorneys' Fees............................................... 47
24. Assignment, Subletting and Hypothecation...................... 47
24.1 In General............................................. 47
24.2 Voluntary Assignment and Subletting.................... 47
(a) Notice to Landlord............................... 47
(b) Offer to Terminate............................... 48
(c) Landlord's Consent............................... 48
(d) Assumption of Obligations........................ 49
24.3 Collection of Rent..................................... 50
24.4 Corporations and Partnerships.......................... 50
24.5 Reasonable Provisions.................................. 51
24.6 Attorneys' Fees........................................ 51
24.7 Involuntary Transfer................................... 51
24.8 Hypothecation.......................................... 52
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24.9 Binding on Successors.................................... 52
25. Successors...................................................... 52
26. Landlord Default; Mortgagee Protection.......................... 52
27. Exhibits........................................................ 53
28. Surrender of Lease Not Merger................................... 53
29. Waiver.......................................................... 53
30. General......................................................... 54
30.1 Captions and Headings.................................... 54
30.2 Definitions.............................................. 54
(a) Landlord........................................... 54
(b) Agents............................................. 55
(c) Interpretation of Terms............................ 55
30.3 Copies................................................... 55
30.4 Time of Essence.......................................... 55
30.5 Severability............................................. 55
30.6 Governing Law............................................ 55
30.7 Joint and Several Liability.............................. 55
30.8 Construction of Lease Provisions......................... 55
30.9 Tenant's Financial Statements............................ 56
30.10 Withholding of Landlord's Consent........................ 56
31. Signs........................................................... 56
32. Landlord as Party Defendant..................................... 57
33. Landlord Not a Trustee.......................................... 57
34. Interest........................................................ 57
35. Surrender of Premises........................................... 57
36. Labor Disputes.................................................. 58
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37. No Partnership or Joint Venture........................... 58
38. Entire Agreement.......................................... 58
39. Submission of Lease....................................... 59
40. Quiet Enjoyment........................................... 59
41. Authority................................................. 59
42. Broker.................................................... 60
43. Lease Guaranty............................................ 60
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NET LEASE AGREEMENT
(Multi-Tenant)
For and in consideration of the rentals, covenants, and conditions
hereinafter set forth, Landlord hereby leases to Tenant, and Tenant hereby rents
from Landlord, the following described Premises for the term, at the rental and
subject to and upon all of the terms, covenants and agreements set forth in this
Net Lease Agreement ("Lease"):
1. Summary of Lease Provisions.
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1.1 Tenant: CMG Information Technologies, Inc., a Delaware
corporation ("Tenant") and a subsidiary of CMG Information Services.
1.2 Landlord: Borland International, Inc., a Delaware corporation
("Landlord").
1.3 Date of Lease, for reference purposes only: March 20, 1997.
1.4 Premises: That certain space hereinafter more particularly
described, consisting of approximately thirteen thousand one hundred (13,100)
rentable square feet, situated in the first floor of that certain building shown
cross-hatched on the site plan attached hereto as Exhibit A and located at 1700
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Green Hills Road in the City of Scotts Valley, County of Santa Cruz, State of
California. (Paragraph 2.1)
1.5 Term: Five (5) years, subject to one (1) three (3) year option
to extend. (Paragraph 3)
1.6 Commencement Date: April 7, 1997. (Paragraph 3)
1.7 Ending Date: April 6, 2002, unless sooner terminated or extended
pursuant to the terms of this Lease. (Paragraph 3)
1.8 Rent: Fifteen Thousand and 00/100 Dollars (15,000) per month for
the first year of the Term. Such Rent is to be adjusted on each anniversary of
the commencement date of the initial term and each anniversary of commencement
date of the Extended Term by changes in the Consumer Price Index as provided in
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Paragraph 4 and such Rent shall be further adjusted as of the commencement of
the three (3) year Extended Term as provided in Paragraph 4.4. (Paragraph 4)
1.9 Use of Premises: General office and computer room use.
(Paragraph 6)
1.10 Tenant's percentage share of Common Area Charges: Nineteen and
eleven one-hundredths percent (19.11%). (Paragraph 12)
1.11 Security Deposit: Fifteen Thousand and 00/100 Dollars ($15,000).
(Paragraph 5)
1.12 Addresses for Notices:
To Landlord: Borland International, Inc.
100 Borland Way
Scotts Valley, CA 95066
Attn: Paul W. Emery II, CFO
To Tenant: To the Premises
With Copy To: GMG Information Services
300 Brickstone Avenue
Andover, MA 01810
Attn: Controller
1.13 Nonexclusive Right to Use No More Than: Forty-six (46)
parking spaces within the Common Area. (Paragraph 11.2)
1.14 Summary Provisions in General. Parenthetical references in this
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Paragraph 1 to other paragraphs in this Lease are for convenience of reference,
and designate some of the other Lease paragraphs where applicable provisions are
set forth. All of the terms and conditions of each such referenced paragraph
shall be construed to be incorporated within and made a part of each of the
above referring Summary of Lease Provisions. In the event of any conflict
between any Summary of Lease Provision as set forth above and the balance of the
Lease, the latter shall control.
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2. Property Leased.
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2.1 Premises. Landlord hereby leases to Tenant and Tenant hereby
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leases from Landlord upon the terms and conditions herein set forth, those
certain premises ("Premises") referred to in Paragraph 1.4 above and shown
cross-hatched on the floor plan attached hereto as Exhibit B. In addition,
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Tenant shall have such rights in and to the Common Area (defined in Paragraph
11.1 below) as are more fully described in Paragraph 11.1 below.
The building in which the Premises are located is referred to herein as the
"Building." The "Land" shall mean and refer to all of the real property
outlined in red on Exhibit A, and shall not be limited to the parcel of real
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property on which the Building is located (if the same is a separate legal
parcel). Any reference in this Lease to the Parcel" shall be deemed a reference
to the Land. The Land, Building and any other building(s) or improvement(s) now
or hereafter located on the Land are referred to herein collectively as the
"Project."
Landlord reserves the right to grant to tenants of the Project, and to the
agents, employees, servants, invitees, contractors, guests, customers and
representatives of such tenants or to any other user authorized by Landlord,
the nonexclusive right to use the Land for pedestrian and vehicular ingress and
egress and vehicular parking.
2.2 Improvements. After Tenant completes its initial leasehold
------------
improvements in the Premises (which leasehold improvements shall be subject to
the terms of Paragraph 13.1 and 13.2 below) and Tenant so notifies Landlord in
writing of such completion, Landlord shall promptly commence and diligently
complete in a commercially reasonable manner the cleaning of the carpet within
the Premises and the painting and patching of the interior walls of the Premises
where necessary as of the Commencement Date, as reasonably determined by
Landlord and Tenant. In addition to the foregoing, Landlord shall, at its sole
cost, use commercially reasonable efforts to complete construction of the
demising wall to be installed by Landlord ("Landlord's Work") by May 3, 1997, as
extended by delays caused by Tenant or its agents or contractors and by delays
otherwise outside the control of Landlord, but Landlord's failure to complete
the Landlord's Work by such date (as so extended) shall not extend the
Commencement Date.
2.3 Acceptance of Premises. Landlord hereby warrants to Tenant that,
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to the actual knowledge of Linda Gilcrest, the existing plumbing, fire sprinkler
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system, alarm, UPS generator, lighting, air conditioning, ventilation and
heating systems within the Premises shall be in good operating condition on the
Commencement Date. If a non-compliance with said warranty exists as of the
Commencement Date, Landlord shall, except as otherwise provided in this Lease,
promptly after receipt of written notice from Tenant setting forth with
specificity the nature and extent of such non-compliance, rectify same at
Landlord's expense. If Tenant does not give Landlord written notice of a non-
compliance with this warranty within thirty (30) days after the Commencement
Date, correction of that non-compliance shall be the obligation of Tenant at
Tenant's sole cost and expense. By taking possession of the Premises, Tenant
acknowledges that it is accepting the Premises in its "as is" condition, subject
to Landlord's obligations under Section 2.2 above and subject to Landlord's
warranty set forth in this Section 2.3 above. During the term of this Lease
Tenant shall comply with the reasonable rules and regulations from time to time
promulgated by Landlord of which Tenant is noticed (and non-discriminatorily
applied) governing the use of any portion of the Project. Tenant acknowledges
that, except as otherwise set forth in this Section 2.3 above, neither Landlord
nor Landlord's agents have made any representation or warranty as to the
suitability of the Premises for the conduct of Tenant's business, the condition
of the Building or Premises, or the use or occupancy which may be made thereof
and Tenant has independently investigated and is satisfied that the Premises are
suitable for Tenants's intended use. The preceding to the contrary
notwithstanding, except as otherwise provided in Section 6.2 below, Landlord
shall be responsible for complying with the requirements of Title III of the
Americans with Disabilities Act of 1990, 42 U.S.C. section 12101 et. seq., and
the regulations promulgated thereunder (the "ADA"), as respects the common areas
within the Building and the exterior common areas. Tenant shall be responsible
for complying with ADA as respects the Premises.
Notwithstanding anything to the contrary contained in this Lease, Tenant's
acceptance of the Premises shall not be deemed a waiver of Tenant's right to
have defects in the demising wall constructed by Landlord pursuant to Paragraph
2.2 repaired at no cost to Tenant. Tenant shall give notice to Landlord
whenever any such defect becomes reasonably apparent, and Landlord shall repair
the defect as soon as practicable, however, Landlord shall be under no
obligation to repair any defect in the improvements constructed by Landlord
pursuant to Paragraph 2.2 if Tenant gives Landlord notice of such defect later
than one (1) year following substantial completion of such improvements.
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3. Term
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3.1 Commencement Date. The term of this Lease ("Lease Term") shall
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be for the period specified in Paragraph 1.5 above, commencing on the date set
forth in Paragraph 1.6 ("Commencement Date").
3.2 Delay of Commencement Date. Landlord shall not be liable for any
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damage or loss incurred by Tenant for Landlord's failure for whatever cause to
deliver possession of the Premises by a particular date (including the Commence
ment Date), nor shall this Lease be void or voidable on account of such failure
to deliver possession of the Premises.
3.3 Early Occupancy. Prior to the Commencement Date and following
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Starfish Software, Inc. waiving its right of first refusal with respect to the
Premises, Tenant shall have the right to enter the Premises for the sole
purposes of fixturizing the same and/or installing its furniture and computer
and telephone systems. If Tenant takes possession of the Premises prior to the
Commencement Date, Tenant shall do so subject to all of the terms and conditions
hereof, except that Tenant shall not be obligated to pay the Rentals provided
for herein during such period of early occupancy.
3.4 Intentionally Omitted.
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3.5 Option to Extend Lease Term. Landlord hereby grants to Tenant an
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option to extend the Lease Term for period of three (3) years ("Extended Term"),
on the following terms and conditions:
(a) Tenant shall give Landlord written notice of its exercise of
the option to extend the Lease Term no earlier than nine (9) months nor later
than six (6) months before the date the Lease Term would end but for said
exercise. Time is of the essence.
(b) Tenant may not extend the Lease Term pursuant to this
Paragraph 3.5 if Tenant is in material default of any of its obligations under
this Lease as of the date of Tenant's notice of exercise of this option, or if
Tenant shall have assigned or otherwise transferred its interest in this Lease
and/or more than twenty-five percent of the rentable square footage of the
Premises, whether or not Landlord's consent to such assignment or transfer has
been given. The preceding sentence to the contrary notwithstanding, Tenant shall
not be precluded from
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extending the Lease Term as provided herein solely because Tenant may have
assigned this Lease to a Permitted Assignee (as defined in Section 24.4). If
Tenant is in default under this Lease on the date that the Extended Term is to
commence, then Landlord may elect to terminate this Lease, notwithstanding any
notice given by Tenant of an exercise of its option to extend and such exercise
of Tenant's option to extend the Lease Term shall be void and of no force or
effect.
(c) All terms and conditions of this Lease shall apply during
the Extended Term, except that the Rent for the Extended Term shall be
determined in accordance with Paragraph 4.4 below, Tenant shall have no further
options to extend the Lease Term and Landlord shall have no obligation to
construct or install any tenant improvements as described in Exhibit C attached
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hereto.
(d) Once Tenant delivers notice of its exercise of the option to
extend the Lease Term, Tenant may not withdraw such exercise and, subject to the
provisions of this Paragraph 3.5, such notice shall operate to extend the Lease
Term. Upon the extension of the Lease Term pursuant to this Paragraph 3.5, the
term "Lease Term" as used in this Lease shall thereafter include the Extended
Term and the Lease Termination date shall be the expiration date of the Extended
Term unless sooner terminated pursuant to the terms hereof.
4. Rent.
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4.1 Rent. Tenant shall pay to Landlord as rent for the Premises
----
("Rent"), in advance, on the first day of each calendar month, commencing on the
date specified in Paragraph 1.6 and continuing throughout the initial five (5)
year Lease Term, the Rent set forth below:
The monthly Rent to be paid by Tenant to Landlord during the first year of
the initial five (5) year Lease Term shall be equal to Fifteen Thousand and
00/100 Dollars ($15,000) per month. The Rent payable under this Lease shall be
adjusted pursuant to the terms of this Paragraph 4.1 during the initial Lease
Term on each anniversary of the Commencement Date of this Lease (and on each
anniversary of the commencement date of the Extended Term, if applicable, except
that for purposes of such adjustments during the Extended Term, the phrase
"Commencement Date" as used in the definition of "Initial Index" in Paragraph
4.1(b) below shall mean the date on which the Extended Term commences). As used
herein, the term "Adjustment Date" shall mean the date of a Rent adjustment
pursuant to this Paragraph 4.1. As of each Adjustment Date, the monthly Rent
shall be increased to a sum equal to the
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product obtained by multiplying the monthly Rent for the first year of the
initial Lease Term or Extended Term, as the case may be, by a fraction, the
numerator of which is the New Index as of the applicable Adjustment Date and the
denominator of which is the Initial Index; however, in no event shall the
monthly Rent be increased on any Adjustment Date by an amount less than three
percent (3%) of the monthly Rent in effect immediately prior to the applicable
Adjustment Date and in no event shall the monthly Rent be increased on any
Adjustment Date by an amount more than six percent (6%) of the monthly Rent in
effect immediately prior to the applicable Adjustment Date. For purposes of
adjusting the Rent on the anniversaries of the Commencement Date of the initial
Lease Term and the commencement date of the Extended Term as provided in this
Paragraph 4.1, the following definitions shall apply:
(a) INDEX: the Consumer Price Index (all items) for all Urban
Consumers as published by the United States Department of Labor, Bureau of Labor
Statistics, for the San Francisco/Oakland/San Jose area (1982-84=100 base);
(b) INITIAL INDEX: the Index published for the month nearest but
prior to the Commencement Date; and
(c) NEW INDEX: the Index published nearest but prior to the
applicable Adjustment Date.
If at any time when the Rent is to be adjusted as provided above, the Index
is changed so that the base year differs from the base year used for the Initial
Index, the Index shall be converted in accordance with the conversion factor
published by the United States Department of Labor, Bureau of Labor Statistics.
In the event the Index is otherwise changed or discontinued during the Lease
Term, the most nearly comparable official price index of the United States
Government (as determined in Landlord's reasonable discretion) shall be used for
computing the adjustments to Rent. In no event shall the Rent following any
adjustment pursuant to this Paragraph 4.1 be less than the current Rent
immediately prior to the applicable Adjustment Date.
Rent shall be prorated, based on thirty (30) days per month, for any
partial month during the Lease Term. Rent shall be payable without deduction,
offset, prior notice or demand in lawful money of the United States to Landlord
at the address herein specified for purposes of notice or to such other persons
or such other places as Landlord may designate in writing. Concurrently with
the execution of this Lease,
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Tenant shall deliver to Landlord two months' Rent in the amount of Thirty
Thousand and 00/100 Dollars ($30,000) to be applied to the first and last
months' Rent due under this Lease.
4.2 Late Charge. Tenant hereby acknowledges that late payment by
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Tenant to Landlord of Rent will cause Landlord to incur costs not contemplated
by this Lease, the exact amount of which will be extremely difficult to
ascertain. Such costs include, but are not limited to, processing and accounting
charges, and late charges which may be imposed on Landlord by the terms of any
mortgage or deed of trust covering the Premises. Accordingly, Tenant shall pay
to Landlord, as Additional Rent (as defined in Paragraph 4.3 below), without the
necessity of prior notice or demand, a late charge equal to ten percent (10%) of
any installment of Rent which is not received by Landlord within ten (10) days
after the due date for such installment. The preceding sentence to the contrary
notwithstanding, solely with respect to the first time a late charge would be
imposed under this Section 4.2, Tenant shall have an additional ten (10) days
(beyond the ten (10) day grace period referred to in the immediately preceding
sentence) following written notice to Tenant that an installment of Rent is past
due, to pay such delinquent installment of Rent and thereby avoid such initial
late charge being imposed by Landlord. The parties hereby agree that such late
charges represents a fair and reasonable estimate of the costs Landlord will
incur by reason of late payment by Tenant. In no event shall this provision for
a late charge be deemed to grant to Tenant a grace period or extension of time
within which to pay any installment of Rent or prevent Landlord from exercising
any right or remedy available to Landlord upon Tenant's failure to pay such
installment of Rent when due, including without limitation the right to
terminate this Lease. In the event any installment of Rent is not received by
Landlord by the thirtieth (30/th/) day after the due date for such installment,
such installment shall bear interest at the annual rate set forth in Paragraph
34 below, commencing on the thirty-first (31/st/) day after the due date for
such installment and continuing until such installment is paid in full. Interest
shall not accrue on any late charges imposed by Landlord on Tenant.
4.3 Additional Rent. All taxes, charges, costs and expenses and
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other sums which Tenant is required to pay hereunder (together with all interest
and charges that may accrue thereon in the event of Tenant's failure to pay the
same), and all damages, costs and reasonable expenses which Landlord may incur
by reason of any Default by Tenant shall be deemed to be additional rent
hereunder ("Additional Rent"). Additional Rent shall accrue commencing on the
Commencement Date. In the event of nonpayment by Tenant of any Additional Rent,
Landlord shall have the
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rights and remedies with respect thereto as Landlord has for the nonpayment of
Rent. The term "Rentals" as used in this Lease shall mean Rent and Additional
Rent.
4.4 Rent During Extended Term. If Tenant elects to extend the Lease
-------------------------
Term pursuant to Paragraph 3.5 above, the annual Rent for the first year of the
Extended Term shall be in an amount equal to the fair market rental value of the
Premises in relation to market conditions at the time of the extension
(including, but not limited to, rental rates for comparable space with
comparable tenant improvements and taking into consideration any adjustments to
rent based upon direct costs (operating expenses) and taxes, load factors,
financing charges, and/or cost of living or other rental adjustments; the
relative strength of the tenants; the size of the space; and any other factors
which affect market rental values at the time of the commencement of the
Extended Term, but without taking into consideration the value of any leasehold
improvements installed in the Premises by Tenant at Tenant's sole cost);
however, the Rent for the first year of the Extended Term shall in no event be
lower than the Rent for the last lease year of the initial five (5) year Lease
Term and the Rent for the Extended Term shall be adjusted upon each anniversary
of the commencement date of the Extended Term in accordance with Paragraph 4.1
above.
(a) Mutual Agreement. After timely receipt by Landlord of
----------------
Tenant's notice of exercise of the option to extend the Lease Term, Landlord and
Tenant shall have a period of fifteen (15) days in which to agree on the Rent
for the first year of the Extended Term. If Landlord and Tenant agree on said
Rent during that period, they shall immediately execute an amendment to this
Lease stating the Rent for the first year of the Extended Term. If Landlord and
Tenant are unable to agree on the Rent for the first year of the Extended Term
as aforesaid, then, unless Tenant rescinds said notice of exercise of the option
to extend the Lease Term by delivery of such rescission notice to Landlord
within fifteen (15) days following the expiration of the fifteen (15) day time
period set forth immediately above, the provisions of Paragraph 4.4(b) below
shall apply.
(b) Appraisal. Within ten (10) days after the expiration of the
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fifteen (15) day rescission period described in Paragraph 4.4(a) above, provided
Tenant has not timely exercised its right to rescind its exercise of the option
to extend the Lease Term, each party at its cost and by giving notice to the
other party, shall appoint an M.A.I. real estate appraiser, with at least (5)
years full-time commercial appraisal experience in Santa Clara County or Santa
Cruz County, to appraise and set the fair market rental value of the Premises.
If a party does not appoint an appraiser within ten (10) days after the other
party has given notice of the name of its
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appraiser, the single appraiser appointed shall be the sole appraiser and shall
set the fair market rental value. The cost of such sole appraiser shall be borne
equally by the parties. If two (2) appraisers are appointed by the parties as
provided in this Para graph 4.4(b), the two appraisers shall attempt to set the
fair market rental value. If they are unable to agree within twenty (20) days
after the last appraiser has been appointed, then the two (2) appraisers shall
attempt to select a third (3/rd/) appraiser meeting the qualifications stated in
this Paragraph 4.4(b) within ten (10) days after the last day the two (2)
appraisers are given to set the fair market rental value. If they are unable to
agree on the third (3/rd/) appraiser, either the parties to this Lease, by
giving ten (10) days notice to the other party, may apply to the presiding judge
of the Superior Court of Santa Cruz County for the selection of a third (3/rd/)
appraiser who meets the qualifications stated above. Each of the parties shall
bear one-half (2) of the cost of appointing the third (3/rd/) appraiser and of
paying the third (3/rd/) appraiser's fee. The third appraiser, however selected,
shall be a person who has not previously acted in any capacity for either party.
Within twenty (20) days after the selection of the third appraiser, the majority
of the appraisers shall set the fair market rental value. If the majority of the
appraisers are unable to set the fair market rental value within said twenty
(20) day period, the three (3) appraisals shall be added together and the total
divided by three (3); the resulting quotient shall be the fair market rental
value and shall be deemed incorporated herein; provided, however, that if any
appraisal differs from the median appraisal by an amount equal to more than ten
percent (10%) of such median appraisal, that appraisal shall be disregarded, and
the average of the remaining appraisals (or the remaining appraisal) shall be
the fair market rental value. In establishing the fair market rental value, the
appraiser or appraisers shall consider the factors referred to in Section 4.4
above, without regard to the existence of this Lease and without regard to the
value of any leasehold improvements installed in the Premises by Tenant at
Tenant's sole cost but taking into consideration the triple net nature of this
Lease. The appraiser shall have the right to include adjustments to the Rent
during the Extended Term as part of the fair market rental value of the
Premises.
5. Security Deposit. Concurrently with Tenant's execution of this Lease,
----------------
Tenant shall deposit with Landlord a security deposit ("Security Deposit") in
the amount set forth in Paragraph 1.11 above. The Security Deposit shall be
held by Landlord as security for the faithful performance by Tenant of each and
every term, covenant and condition of this Lease applicable to Tenant, and not
as prepayment of Rent. If Tenant shall at any time fail to keep or perform any
term, covenant or condition of this Lease applicable to Tenant, including
without limitation, the payment of Rentals of those provisions requiring Tenant
to repair damage to the
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Premises caused by Tenant or to surrender the Premises in the condition required
pursuant to Paragraph 35 below, Landlord may, but shall not be obligated to, and
without waiving or releasing Tenant from any obligation under this Lease, use,
apply or retain the whole or any part of the Security Deposit reasonably
necessary for the payment of any amount which Landlord may spend by reason of
Tenant's default or as necessary to compensate Landlord for any loss or damage
which Landlord may suffer by reason of Tenant's default. In the event Landlord
uses or applies any portion of the Security Deposit, Tenant shall, within five
(5) business days after written demand by Landlord, remit to Landlord sufficient
funds to restore the Security Deposit to its original sum. Failure by Tenant to
so remit funds shall be a Default by Tenant. Should Tenant comply with all of
the terms, covenants and conditions of this Lease applicable to Tenant, the
balance of the Security Deposit shall be returned to Tenant within fourteen (14)
days after Lease Termination and surrender of the Premises by Tenant; provided,
however, if any portion of the Security Deposit is to be applied to repair
damages to the Premises caused by Tenant or Tenant's agents, to clean the
Premises, or to remove alterations and restore the Premises pursuant to
Paragraph 13.2 below, then the balance of the Security Deposit shall be returned
to Tenant no later than thirty (30) days after the date Landlord receives
possession of the Premises.
6. Use of Premises.
---------------
6.1 Permitted Uses. Tenant shall use the Premises and the Common Area
--------------
only in conformance with applicable governmental or quasi-governmental laws,
statutes, orders, regulations, rules, ordinances and other requirements now or
hereafter in effect (collectively, "Laws") and shall use the Premises solely for
the purposes set forth in Paragraph 1.9 above, and for no other purpose without
the prior written consent of Landlord, which consent may be given or withheld by
Landlord in its sole discretion. Tenant acknowledges and agrees that the
selection of Building tenants shall be in Landlord's reasonable discretion and
Landlord in making such selection shall not be deemed to be warranting that any
use of the Building made by any such tenant is compatible or consistent with the
design of the Building or other uses of the Building. Any change in use of the
Premises or the Common Area without the prior written consent of Landlord shall
be a Default by Tenant. Tenant and Tenant's agents shall comply with the
provisions of any Declaration of Covenants, Conditions, and Restrictions
affecting the Premises and the Common Area.
6.2 Tenant to Comply with Legal Requirements. Tenant shall, at its
----------------------------------------
sole cost, promptly comply with all Laws relating to or affecting Tenant's
particular
11
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use or occupancy of the Premises or use of the Common Area, now in force, or
which may hereafter be in force, including without limitation those relating to
utility usage and load or number of permissible occupants or users of the
Premises, whether or not the same are now contemplated by the parties; with the
provisions of all recorded documents (of which Tenant has received copies)
affecting the Premises or the Common Area insofar as the same relate to or
affect Tenant's particular use or occupancy of the Premises or use of the Common
Area; and with the requirements of any board of fire underwriters (or similar
body now or hereafter constituted) relating to or affecting Tenant's particular
or occupancy of the Premises or use of the Common Area. Tenant's obligations
pursuant to this Paragraph 6.2 shall include, without limitation, maintaining or
restoring the Premises and making structural and non-structural alterations and
additions in compliance and conformity with all Laws and recorded documents
(including, without limitation, alterations or additions to the Premises,
Building or Common Area that are required pursuant to the ADA), to the extent
such compliance relates to Tenant's particular use or occupancy of the Premises
during the Lease Term or alterations, additions or improvements made to the
Premises by Tenant, or Tenant's or any of its agents', employees' or
contractors' negligence or willful misconduct. Any alterations, additions or
improvements undertaken by Tenant pursuant to this Paragraph 6.2 shall be
subject to the requirements of Paragraph 13.1 below. At Landlord's option,
Landlord may make the required alteration, addition or change, and Tenant shall
pay the cost thereof as Additional Rent. The foregoing notwithstanding, Landlord
shall make any alteration, addition or improvement required to bring the
Premises, the Building or the Common Area into compliance with legal
requirements in effect at the time the Premises, any improvements installed
therein by Landlord, the Building or the Common Area, respectively, were
originally constructed. The cost of any structural alterations or capital
improvements as may be hereafter required due to a change in laws and unrelated
to Tenant's specific use of the Premises, Tenant's alternations, additions or
improvements or Tenant's or any of its agents', employees' or contractors'
negligence or willful misconduct shall be amortized over the useful life of such
alteration, addition of improvement (with interest thereon at 10% per annum or
such higher rate of interest as may have been paid by Landlord on funds borrowed
for the purpose of constructing such structural alterations, additions or
improvements) and shall be a Common Area Charge.
Tenant shall obtain prior to taking possession of the Premises any permits,
licenses or other authorizations required for the lawful operation of its
business at the Premises. The judgment of any court of competent jurisdiction
or the admission of Tenant in any action or proceeding against Tenant,
regardless of whether Landlord is
12
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a party thereto or not, that Tenant has violated such Law or recorded document
relating to Tenant's particular use or occupancy of the Premises or use of the
Common Area shall be conclusive of the fact of such violation by Tenant.
Following the substantial completion of construction or installation of
Tenant's initial leasehold improvements in the Premises, Landlord agrees to
reasonably cooperate with Tenant, at no cost to Landlord, in Tenant's efforts
to obtain a certificate of occupancy with respect to the Premises.
6.3 Prohibited Uses. Tenant and Tenant's agents shall not commit or
---------------
suffer to be committed any waste upon the Premises. Tenant and Tenant's agents
shall not do or permit anything to be done in or about the Premises or Common
Area which will in any way obstruct or unreasonably interfere with the rights of
any other tenants of the Building, other authorized users of the Common Area, or
occupants of neighboring property, or injure them. Tenant shall not conduct or
permit any auction or sale open to the public to be held or conducted on or
about the Premises or Common Area. Tenant and Tenant's agents shall not use or
allow the Premises to be used for any unlawful, immoral or hazardous purpose or
any purpose not permitted by this Lease, nor shall Tenant or Tenant's agents
cause, maintain, or permit any nuisance in, on or about the Premises. Tenant
and Tenant's agents shall not do or permit anything to be done in or about the
Premises nor bring or keep anything in the Premises which will in any way
increase the rate of any insurance upon any portion of the Project or any of its
contents, or cause a cancellation of any insurance policy covering any portion
of the Project or any of its contents, nor shall Tenant or Tenant's agents keep,
use or sell or permit to be kept, used or sold in or about the Premises any
articles which may be prohibited by a standard form policy of fire insurance.
In the event the rate of any insurance upon any portion of the Project or any of
its contents is increased because of Tenant's particular use of the Premises or
that of Tenant's agents, Tenant shall pay, as Additional Rent, the full cost of
such increase; provided, however this provision shall in no event be deemed to
constitute a waiver of Landlord's right to declare a default hereunder by reason
of the act or conduct of Tenant or Tenant's agents causing such increase or of
any other rights or remedies of Landlord in connection therewith. Tenant and
Tenant's agents shall not place any loads upon the floor, walls or ceiling of
the Premises which would endanger the Building or the structural elements
thereof or of the Premises, nor place any harmful liquids in the drainage system
of the Building or Common Area. No waste materials or refuse shall be dumped
upon or permitted to remain upon any part of the Project except in enclosed
trash containers designated for that purpose by Landlord. No materials,
supplies, equipment, finished products (or semi-finished products), raw
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materials, or other articles of any nature shall be stored upon, or be permitted
to remain on, any portion of the Project outside the Premises.
6.4 Hazardous Materials. Neither Tenant nor Tenant's agents shall
-------------------
permit the introduction, placement, use, storage, manufacture, transportation,
release or disposition (collectively "Release") of any Hazardous Material(s)
(defined below) on or about any portion of the Project without the prior written
consent of Landlord, which consent may be withheld in the sole and absolute
discretion of Landlord without any requirement of reasonableness in the exercise
of that discretion. Notwithstanding the immediately preceding sentence to the
contrary, Tenant may use de minimis quantities of the types of materials which
are technically classified as Hazardous Materials but commonly used in domestic
or office use to the extent not in an amount, which, either individually or
cumulatively, would be a "reportable quantity" under any applicable Law. Tenant
covenants that, at its sole cost and expense, Tenant will comply with all
applicable Laws with respect to the Release by Tenant, it agents, employees,
contractors or invitees of such permitted Hazardous Materials. Any Release
beyond the scope allowed in this paragraph shall be subject to Landlord's prior
consent, which may be withheld in Landlord's sole and absolute discretion, and
shall require an amendment to the Lease in the event Landlord does consent which
shall set forth the materials, scope of use, indemnification and any other
matter required by Landlord in Landlord's sole and absolute discretion. Tenant
shall indemnify, defend and hold Landlord and Landlord's agents harmless from
and against any and all claims, losses, damages, liabilities, or expenses
arising in connection with the Release of Hazardous Material in violation of
Hazardous Materials Laws by Tenant, Tenant's agents or any other person using
the Premises with Tenant's knowledge and consent or authorization (and such
persons shall not be considered "third parties" for purposes of the following
paragraph). Tenant's obligation to defend, hold harmless and indemnify pursuant
to this Paragraph 6.4 shall survive Lease Termination.
The foregoing indemnity shall not apply to, and Tenant shall not be
responsible for, the presence of Hazardous Materials on, under, or about the
premises, Building or Common Area to the extent caused by any third parties or
by Landlord or Landlord's employees, agents, contractors or invitees. Landlord
represents to Tenant that, to the actual knowledge of Linda Gilcrest, without
investigation or inquiry, there exists no Hazardous Materials in, on or under
the Premises, Building or Land in violation applicable environmental laws,
rules, regulations or ordinances.
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As used in this Lease, the term "Hazardous Materials" means any
chemical, substance, waste or material which has been or is hereafter determined
by any federal, state or local governmental authority to be capable of posing
risk of injury to health or safety, including without limitation, those
substances included within the definition of "hazardous substances," "hazardous
materials," "toxic substances," or "solid waste" under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Hazardous Materials
Transportation Act, as amended, and in the regulations promulgated pursuant to
said laws; those substances defined as "hazardous wastes" in section 25117 of
the California Health & Safety Code, or as "hazardous substances" in section
25316 of the California Health & Safety Code, as amended, and in the regulations
promulgated pursuant to said laws; those substances listed in the United States
Department of Transportation Table (49 CFR 172.101 and amendments thereto) or
designated by the Environmental Protection Agency (or any successor agency) as
hazardous substances (see, e.g., 40 CFR Part 302 and amendments thereto); such
--- ----
other substances, materials and wastes which are or become regulated or become
classified as hazardous or toxic under any laws, including without limitation
the California Health & Safety Code, Division 20, and Title 26 of the California
Code of Regulations; and any material, waste or substance which is (i)
petroleum, (ii) asbestos,, (iii) polychlorinated biphenyls, (iv) designated as a
"hazardous substance" pursuant to section 311 of the Clean Water Act of 1977,
33 U.S.C. sections 1251 et seq. (33 U.S.C. 1321) or listed pursuant to section
-- ---
307 of the Clean Water Act of 1977 (33 U.S.C. 1317), as amended; (v) flammable
explosive; (vi) radioactive materials; or (vii) radon gas.
Landlord shall have the right, upon reasonable advance notice to
Tenant to inspect, investigate, sample and/or monitor the Premises, the Building
and Common Area, including any soil, water, groundwater, or other sampling, to
the extent reasonably necessary to determine whether Tenant is complying with
the terms of this Lease with respect to Hazardous Materials. Unless a previous
inspection has disclosed a violation by Tenant of the covenants contained in
this Paragraph 6.4, such inspections, investigations, sampling and/or monitoring
shall be performed not more often than semi-annually. In connection therewith,
Tenant shall provide Landlord with reasonable access to all portions of the
Premises; provided, however, that Landlord shall avoid any unreasonable
interference with the operation of Tenant's business on the Premises. If,
following Landlord's inspections, investigations, samplings and/or monitoring
of the Premises, Building and/or Common Area, Landlord reasonably determines dig
Tenant or any of its agents, employees or contractors has caused Hazardous
Materials to be spilled, released, discharged or
15
<PAGE>
present on, in or under the Premises, Building and/or Common Area, then all
costs reasonably incurred by Landlord in performing such inspections,
investigation, sampling and/or monitoring shall be reimbursed by Tenant to
Landlord as Additional Rent within ten (10) days after Landlord's demand for
payment.
7. Taxes.
-----
7.1 Personal Property Taxes. Tenant shall cause Tenant's trade
-----------------------
fixtures, equipment, furnishings, furniture, merchandise, inventory, machinery,
appliances and other personal property installed or located on the Premises
(collectively the "personal property) to be assessed and billed separately from
the Land and the Building. Tenant shall pay before delinquency any and all
taxes, assessments and public charges levied, assessed or imposed upon or
against Tenant's personal property. If any of Tenant's personal property shall
be assessed with the Land or the Building, Tenant shall pay to Landlord, as
Additional Rent, the amounts attributable to Tenant's personal property within
thirty (30) days after receipt of a written statement from Landlord setting
forth the amount of such taxes, assessments and public charges attributable to
Tenant's personal property. Tenant shall comply with the provisions of any Law
which requires Tenant to file a report of Tenant's personal property located on
the Premises.
7.2 Other Taxes Payable Separately by Tenant. shall pay (or reimburse
----------------------------------------
Landlord, as Additional Rent, if Landlord is assessed), prior to delinquency or
within thirty (30) days after receipt of Landlord's statement thereof, any and
all taxes, levies, assessments or surcharges payable by Landlord or Tenant and
relating to this Lease or the Premises (other than Landlord's net income,
succession, transfer, gift, franchise, estate or inheritance taxes, and Taxes,
as that term is defined in Paragraph 7.3(a) below, payable as a Common Area
Charge), whether or not now customary or within the contemplation of the parties
hereto, whether or not now in force or which may hereafter become effective,
including but not limited to taxes:
(a) Upon, allocable to, or measured by the area of the Premises
or the Rentals payable hereunder, including without limitation any gross rental
receipts, excise, or other tax levied by the state, any political subdivision
thereof, city or federal government with respect to the receipt of such Rentals;
(b) Upon or with respect to the use, possession occupancy,
leasing, operation and management of the Premises or any portion thereof,
16
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(c) Upon this transaction or any document to which Tenant is a
party creating or transferring an interest or an estate in the Premises; or
(d) Imposed as a means of controlling or abating environmental
pollution or the use of energy or any natural resource (including without
limitation gas, electricity or water), including, without limitation, any
parking taxes,. levies or charges or vehicular regulations imposed by any
governmental agency. Tenant shall also pay, prior to delinquency, all privilege,
sales, excise, use, business, occupation, or other taxes, assessments, license
fees, or charges levied, assessed or imposed upon Tenant's business operations
conducted at the Premises.
In the event any such taxes are payable by Landlord and it shall not
be lawful for Tenant to reimburse Landlord for such taxes, then the Rentals
payable hereunder shall be increased to net Landlord the same net Rental after
imposition of any such tax upon Landlord as would have been payable to Landlord
prior to the imposition of any such tax.
7.3 Common Taxes.
------------
(a) Definition of Taxes. The term "Taxes" as used in this Lease
-------------------
shall collectively mean (to the extent any of the following are not paid by
Tenant pursuant to Paragraphs 7.1 and 7.2 above) all real estate taxes and
general and special assessments (including, but not limited to, assessments for
public improvements or benefit); personal property taxes; taxes based on
vehicles utilizing parking areas on the Land; taxes computed or based on rental
income or on the square footage of the Premises or the Building (including
without limitation any municipal business tax but excluding federal, state and
municipal net income taxes); environmental surcharges; excise taxes; gross
rental receipts taxes; sales and/or use taxes; employee taxes; water and sewer
taxes, levies, assessments and other charges in the nature of taxes or
assessments (including, but not limited to, assessments for public improvements
or benefit); and all other governmental, quasi-governmental or special district
impositions of any kind and nature whatsoever; regardless of whether any of the
foregoing are now customary or within the contemplation of the parties hereto
and regardless of whether resulting from increased rate and/or valuation, or
whether extraordinary or ordinary, general or special, unforeseen or foreseen,
or similar or dissimilar to any of the foregoing and which during the Lease Term
are laid, levied, assessed or imposed upon Landlord and/or become a lien upon or
chargeable against any portion of the Project under or by virtue of any present
or future laws, statutes, ordinances, regulations, or other requirements of any
governmental, quasi-govern-
17
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mental or special district authority whatsoever. The term "environmental
surcharges" shall include any and all expenses, taxes, charges or penalties
imposed by the Federal Department of Energy, Federal Environmental Protection
Agency, the Federal Clean Air Act, or any regulations promulgated thereunder, or
imposed by any other local, state or federal governmental agency or entity now
or hereafter vested with the power to impose taxes, assessments or other types
of surcharges as a means of controlling or abating environmental pollution or
the use of energy or any natural resource in regard to the use, operation or
occupancy of the Project. The term "Taxes" shall include (to the extent the same
are not paid by Tenant pursuant to Paragraphs 7.1 and 7.2 above), without
limitation, all taxes, assessments, levies, fees, impositions or charges levied,
imposed, assessed, measured, or based in any manner whatsoever upon or with
respect to the use, possession, occupancy, leasing, operation or management of
the Project or in lieu of or equivalent to any Taxes set forth in this Paragraph
7.3(a). In the event any such Taxes are payable by Landlord and it shall not be
lawful for Tenant to reimburse Landlord for such Taxes, then the Rentals payable
hereunder shall be increased to net Landlord the same net Rental after
imposition of any such Tax upon Landlord as would have been payable to Landlord
prior to the imposition of any such Tax.
Notwithstanding anything to the contrary contained in this lease,
Tenant shall not be required to pay any portion of any tax or assessment (i) in
excess of the amount which would be payable if the tax or assessment were paid
in installments over the longest possible term; or (ii) imposed on land and
improvements other than the Project.
(b) Common Area Charge. All Taxes which are levied or assessed
------------------
or which become a lien upon any portion of the Project or which become due or
accrue during the Lease Term shall be a Common Area Charge, and Tenant shall pay
as Additional Rent each month during the Lease Term 1/12th of its annual share
of such Taxes, based on Landlord's estimate thereof, pursuant to Paragraph 12
below. Tenant's share of Taxes during any partial tax fiscal year(s) within the
Lease Term shall be prorated according to the ratio which the number of days
during the Lease Term or of actual occupancy of the premises by Tenant,
whichever is greater, during such year bears to 365.
8. Insurance; Indemnity; Waiver.
----------------------------
8.1 Insurance by Landlord. Landlord may, during the Lease Term,
---------------------
procure and keep in force the following insurance, the cost of which if paid or
18
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incurred by Landlord, shall be a Common Area Charge, payable by Tenant pursuant
to Paragraph 12 below:
(a) Property Insurance. "All risk" property insurance,
------------------
including, without limitation, boiler and machinery (if applicable); sprinkler
damage; vandalism; malicious mischief; full coverage plate glass insurance; and
demolition, increased cost of construction and contingent liability from change
in building laws on the Building and the Land, including any improvements or
fixtures constructed or installed in the Building and on the Land by Landlord.
Such insurance shall be in the full amount of the replacement cost of the
foregoing, with reasonable deductible amounts, which deductible amounts shall be
a Common Area Charge, payable by Tenant pursuant to Paragraph 12. Such insurance
may also include rental income insurance, insuring that one hundred percent
(100%) of the Rentals (as the same may be adjusted hereunder) will be paid to
Landlord for a period of up to twelve (12) months if the Premises are destroyed
or damaged, or such longer period as may be required by any beneficiary of a
deed of trust or any mortgagee of any mortgage affecting the Premises. Such
insurance shall not cover any leasehold improvements installed in the Premises
by Tenant at its expense, or Tenant's equipment, trade fixtures, inventory,
fixtures or personal property located on or in the Premises;
(b) Liability Insurance. Comprehensive general liability
-------------------
(lessor's risk) insurance against any and all claims fro personal injury, death
or property damage occurring in or about the Building or the Land. Such
insurance shall have a combined single limit of not less than One Million
Dollars ($1,000,000) per occurrence and Two Million Dollars ($2,000,000)
aggregate; and
(c) Other. Such other insurance as Landlord deems necessary and
-----
prudent.
8.2 Insurance by Tenant. Tenant shall, during the Lease Term, at
-------------------
Tenant's sole cost and expense, procure and keep in force the following
insurance:
(a) Personal Property Insurance. "All risk" property insurance,
---------------------------
including, without limitation, coverage for boiler and machinery (if
applicable); sprinkler damage; vandalism; malicious mischief; and demolition,
increased cost of construction and contingent liability from changes in building
laws on all leasehold improvements installed in the Premises by Tenant at its
expense (if any), and on all equipment, trade fixtures, inventory, fixtures and
personal property located on or in the Premises, including improvements or
fixtures hereinafter constructed or installed
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<PAGE>
on the Premises. Such insurance shall be in an amount equal to the full
replacement cost of the aggregate of the foregoing and shall provide coverage
comparable to the coverage in the standard ISO all risk form, when such form is
supplemented with the coverages required above.
(b) Liability Insurance. Comprehensive general liability
-------------------
insurance for the mutual benefit of Landlord and Tenant, against any and all
claims for personal injury, death or property damage occurring in or about the
Premises and Common Area or arising out of Tenant's or Tenant's agents' use of
the Common Area, use or occupancy of the Premises or Tenant's operation on the
Premises. Such insurance shall have a combined single limit of not less than Two
Million Dollars ($2,000,000) per occurrence and Five Million Dollars
($5,000,000) aggregate. Such insurance shall contain a cross-liability
(severability of interests) clause and an extended ("broad form") liability
endorsement, including blanket contractual cover age. The minimum limits
specified above are the minimum amounts required by Landlord, and may be revised
by Landlord from time to time to meet changed circumstances, including without
limitation to reflect (i) changes in the purchasing power of the dollar, (ii)
changes indicated by the amount of plaintiffs' verdicts in personal injury
actions in the State of California, or (iii) changes consistent with the
standards required by other landlords in the county in which the Premises are
located. Such liability insurance shall be primary and not contributing to any
insurance available to Landlord, and Landlord's insurance (if any) shall be in
excess thereto. Such insurance shall specifically insure Tenant's performance of
the indemnity, defense and hold harmless agreements contained in Paragraph 8.4,
although Tenant's obligations pursuant to Paragraph 8.4 shall not be limited to
the amount of any insurance required of or carried by Tenant under this
Paragraph 8.2(b). Tenant shall be responsible for insuring that the amount of
insurance maintained by Tenant is sufficient for Tenant's purposes.
(c) Other. Such other insurance as required by law, including,
-----
without limitation, workers' compensation insurance.
(d) Form of the Policies. The policies required to be
--------------------
maintained by Tenant pursuant to Paragraphs 8.2(a), (b), and (c) above shall be
with companies, on forms, with deductible amounts (if any), and loss payable
clauses reasonably satisfactory to Landlord, shall include Landlord and the
beneficiary or mortgagee of any deed of trust or mortgage encumbering the
Premises and/or the Land as additional insureds, and shall provide that such
parties may, although additional insureds, recover for any loss suffered by
Tenant's negligence. Certified
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copies of policies or certificates of insurance shall be delivered to Landlord
prior to the Commencement Date; a new policy or certificate shall be delivered
to Landlord at least ten (10) business days prior to the expiration date of the
old policy. Tenant shall have the right to provide insurance coverage which it
is obligated to carry pursuant to the terms hereof in a blanket policy, provided
such blanket policy expressly affords coverage to the Premises and Common Area
and to Tenant as required by this Lease. Tenant shall obtain a written
obligation on the part of Tenant's insurer(s) to notify Landlord and any
beneficiary or mortgagee of a deed of trust or mortgage encumbering the Premises
and/or the Land in writing of any delinquency in premium payments and at least
thirty (30) days prior to any cancellation or modification of any policy.
Tenant's policies shall provide coverage on an occurrence basis and not on a
claims made basis. In no event shall the limits of any policies maintained by
Tenant by considered as limiting the liability of Tenant under this Lease.
8.3 Failure by Tenant to Obtain Insurance. If Tenant does not take
-------------------------------------
out the insurance required pursuant to Paragraph 8.2 or keep the same in full
force and effect, Landlord may, but shall not be obligated to, take out the
necessary insurance and pay the premium therefor, and Tenant shall repay to
Landlord, as Additional Rent, the amount to paid promptly upon demand. In
addition, Landlord may recover from Tenant and Tenant agrees to pay, as
Additional Rent, any and all reasonable expenses (including reasonable
attorneys' fees) and damages which Landlord may sustain by reason of the failure
of Tenant to obtain and maintain such insurance, it being expressly declared
that the expenses and damages of Landlord shall not be limited to the amount of
the premiums thereon.
8.4 Indemnification. Tenant shall indemnify, hold harmless, and
---------------
defend Landlord with competent counsel reasonably satisfactory to Landlord
(except for Landlord's negligence or willful misconduct, or that of its agents,
employees, contractors or invitees) against all claims, losses, damages,
expenses or liabilities for injury or death to any person or for damage to or
loss of use of any property arising out of any occurrence in, on or about the
Building, Common Area or Land, if caused or contributed to by Tenant or Tenant's
agents, or arising out of any occurrence in, upon or at the Premises or on
account of the use, condition, occupational safety or occupancy of the Premises.
Tenant's indemnification, defense and hold harmless obligations under this Lease
shall include and apply to reasonable attorney's fees, investigation costs, and
other costs actually incurred by Landlord. Tenant shall further indemnify,
defend and hold harmless Landlord from and against any and all claims, losses,
damages, liabilities or expenses arising from any breach or default in
21
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the performance of any obligation on Tenant's part to be performed under the
terms of this Lease. The provisions of this Paragraph 8.4 shall survive Lease
Termination with respect to any damage, injury, death, breach or default
occurring prior to such termination. Except as set forth in this Paragraph 8.4,
this Lease is made on the express condition that Landlord shall not be liable
for, or suffer loss by reason of, injury to person or property, from whatever
cause, in any way connected with the condition, use, occupational safety or
occupancy of the Premises specifically including, without limitation, any
liability for injury to the person or property of Tenant or Tenant's agents.
8.5 Claims by Tenant. Except as expressly provided in Paragraph 8.4,
----------------
Landlord shall not be liable to Tenant, and Tenant waives all claims against
Landlord, for injury or death to any person, damage to any property, or loss of
use of any property in any portion of the Project by and from all causes,
including without limitation, any defect in any portion of the Project and/or
any damage or injury resulting from fire, steam, electricity, gas, water or
rain, which may leak or flow from or into any part of the Premises, or from
breakage, leakage, obstruction or other defects of pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, whether the damage
or injury results from conditions arising upon the Premises or upon other
portions of the Project or from other sources. Neither Landlord nor Tenant shall
be liable for any damages arising from any act or negligence of any other tenant
or user of the Project. Tenant or Tenant's agents shall immediately notify
Landlord in writing of any known defect in the Project. The provisions of this
Paragraph 8.5 shall not apply to any damage or injury caused by Landlord's
willful misconduct or gross negligence, or that of its agents, employees,
contractors or invitees. Anything in this Lease to the contrary notwithstanding,
under no circumstances shall Landlord be liable to Tenant for lost profits or
loss of business ness or income.
8.6 Mutual Waiver of Subrogation. Landlord hereby releases Tenant,
----------------------------
and Tenant hereby releases Landlord, and their respective officers, agents,
employees and servants, from any and all claims or demands of damages, loss,
expense or injury to the Project or to the furnishings, fixtures, equipment,
inventory or other property of either Landlord or Tenant in, about or upon the
Project, which is caused by or results from perils, events or happenings which
are the subject of insurance carried by the respective parties pursuant to this
Paragraph 8 and in force at the time of any such loss, whether due to the
negligence of the other party or its agents and regardless of cause or origin;
provided, however, that such waiver shall be
22
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effective only to the extent permitted by the insurance covering such loss, to
the extent such insurance is not prejudiced thereby, and to the extent insured
against.
9. Utilities. Tenant shall pay during the Lease Term and prior to
---------
delinquency all charges for water, gas, light, heat; power, electricity,
telephone or other communication service, janitorial service, trash pick-up,
sewer and all other services supplied to Tenant or consumed by Tenant on the
Premises (collectively the "Services') and all taxes, levies, fees or surcharges
therefor. Tenant shall arrange for Services to be supplied to the Premises and
shall contract for all of the Services in Tenant's name prior to the
Commencement Date. The Commencement Date shall not be delayed by reason of any
failure by Tenant to so contract for Services. Tenant shall be responsible for
providing janitorial service to the Premises. In the event that any of the
Services are not separately billed or metered to the Premises, or if any of the
Services are not separately metered as of the Commencement Date, the cost of
such Services shall be a Common Area Charge and Tenant shall pay, as Additional
Rent, Tenant's proportionate share of such cost to Landlord as provided in
Paragraph 12 below, except that if any meter services less than the entire
Building, Tenant's proportionate share of the costs measured by such meter shall
be based upon the square footage of the gross leasable area in the Premises as a
percentage of the total square footage of the gross leasable area of the portion
of the Building serviced by such meter. If Landlord determines that Tenant is
using a disproportionate amount of any commonly metered Services or an amount in
excess of the customary amount of any Services ordinarily furnished for use of
the Premises in accordance with the uses set forth in Paragraph 6 above, then
Landlord may elect to periodically charge Tenant, as Additional Rent, a sum
equal to Landlord's estimate of the cost of Tenant's excess use of any or all
such Services. The lack or shortage of any Services due to any cause whatsoever
(except for a lack or shortage proximately caused by the negligence or willful
misconduct Landlord or that of its agents, employees, contractors or invitees)
shall not affect any obligation of Tenant hereunder, and Tenant shall faithfully
keep and observe all the terms, conditions and covenants of this Lease and pay
all Rentals due hereunder, all without diminution, credit or deduction.
10. Repairs and Maintenance.
-----------------------
10.1 Landlord's Responsibilities. Subject to the provisions of
---------------------------
Paragraph 15 below, Landlord shall maintain in reasonably good order and repair
the structural roof, roof membrane, structural and exterior walls (including
painting thereof) and foundations of the Building. In addition, Landlord shall
maintain the heating and air conditioning systems of the Premises in a manner
comparable to that
23
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maintained by other landlords of similar buildings located in Santa Cruz County
or obtain and maintain a service contract with a licensed contractor (covering
periodic inspection and servicing) for the heating and air conditioning systems
of the Pre mises. Tenant shall give prompt written notice to Landlord of any
known maintenance work required to be made by Landlord pursuant to this
Paragraph 10.1. The costs of (i) repairs and maintenance of the roof membrane,
(ii) periodic inspection and regular servicing of the heating and air
conditioning systems of the Premises, and (iii) painting the exterior of the
Premises which are the obligation of Landlord hereunder shall be a Common Area
Charge and Tenant shall pay, as Additional Rent, Tenant's share of such costs to
Landlord as provided in Paragraph 12 below. The costs of maintenance, repair,
and replacement of the structural parts of the Premises and the Building
(including foundations, floor slab, load bearing walls and roof structure) which
are the obligation of Landlord hereunder shall be at the cost and expense of
Landlord and shall not be a Common Area Charge, except for any repairs required
because of the wrongful act of Tenant or Tenant's agents, which repairs shall be
made at the expense of Tenant and as Additional Rent. Anything in this Lease to
the contrary notwithstanding, in the event the heating, ventilation and air
conditioning covering the Premises, or applicable portion thereof, needs to be
replaced during the term of this Lease as reasonably determined by Landlord (and
such replacement cost is a capital expenditure), then such replacement cost
shall be amortized at ten percent (10%) over the useful life of the of the
replaced item, and paid monthly by Tenant from the date of installation or
replacement through Lease Termination.
10.2 Tenant's Responsibilities. Except as expressly provided in
-------------------------
Paragraph 10.1 above, and subject to the provisions of Paragraph 2.3 above,
Tenant shall, at its sole cost, maintain the entire Premises and every part
thereof, including without limitation, windows, skylights, window frames, plate
glass, freight docks, doors and related hardware, interior walls and partitions,
and the electrical, plumbing, lighting, heating and air conditioning systems in
good order, condition and repair. If Tenant fails to make repairs or perform
maintenance work required of Tenant hereunder within fourteen (14) days after
written notice from Landlord specifying the need for such repairs or maintenance
work, Landlord or Landlord's agents may, in addition to all other rights and
remedies available hereunder or by law and without waiving any alternative
remedies, enter into the Premises and make such repairs and/or perform such
maintenance work. If Landlord makes such repairs and/or performs such
maintenance work, Tenant shall reimburse Landlord upon demand and as Additional
Rent, for the cost of such repairs and/or maintenance work. Landlord shall use
reasonable efforts to avoid causing any inconvenience to Tenant or interference
with the use of the Premises by Tenant or Tenant's agents
24
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during the performance of any such repairs or maintenance. Landlord shall have
no liability to Tenant for any damage, inconvenience or interference with the
use of the Premises by Tenant or Tenant's agents as a result of Landlord
performing any such repairs or maintenance (except for the gross negligence or
willful misconduct Landlord or that of its agents, employees, contractors or
invitees). Tenant shall reimburse Landlord, on demand and as Additional Rent,
for the cost of damage to the Project caused by Tenant or Tenant"s agents.
Tenant expressly waives the benefits of any statute now or hereafter in effect
(including without limitation the provisions of subsection 1 of Section 1932,
Section 1941 and Section 1942 of the California Civil Code and any similar law,
statute or ordinance now or hereafter in effect) which would otherwise afford
Tenant the right to make repairs at Landlord's expense (or to deduct the cost of
such repairs from Rentals due hereunder) or to terminate this Lease because of
Landlord's failure to keep the Premises in good and sanitary order.
11. Common Area.
-----------
11.1 In General. Subject to the terms and conditions of this Lease and
----------
such rules and regulations as Landlord may from time to time prescribe, Tenant
and Tenant's agents shall have, in common with other tenants of the Building and
other permitted users, the nonexclusive right to use during the Lease Term the
access roads, parking areas, sidewalks, landscaped areas and other facilities on
the Land or in the Building designated by Landlord for the general use and
convenience of the occupants of the Building and other authorized users, which
areas and facilities are referred to herein as the "Common Area." This right to
use the Common Area shall terminate upon Lease Termination. Tenant acknowledges
that a portion of the first floor of the Building consists of a lobby area which
shall be part of the Common Area and that second floor tenants of the Building
and their agents, employees, guests and invitees shall have the right to use
such lobby area to gain access to the second floor of the Building. Landlord
reserves the right to promulgate such reasonable rules and regulations relating
to the use of all or any portion of the Common Area and to amend such rules and
regulations from time to time with or without advance notice, as Landlord may
deem appropriate for the best interests of the occupants of the Building and
other authorized users. Any amendments to the rules and regulations shall be
effective as to Tenant and binding on Tenant, upon delivery of a copy of such
rules and regulations to Tenant. Tenant and Tenant's agents shall observe such
rules and regulations and any failure by Tenant or Tenant's agents to observe
and comply with the rules and regulations shall be a Default by Tenant. Landlord
shall not be responsible for the nonperformance of the rules and regulations by
any tenants or occupants of the Building or other authorized users, nor
25
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shall Landlord be liable to Tenant by reason of the noncompliance with or
violation of the rules and regulations by any other tenant or user.
11.2 Parking Areas. Tenant is allocated and Tenant and Tenant's
-------------
employees and invitees shall have the nonexclusive right to use not more than
the number of parking spaces set forth in Paragraph 1.13, the location of which
may be designated from time to time by Landlord. Any location so designated by
Landlord shall be reasonably convenient for access to the Premises. Neither
Tenant nor Tenant's agents shall at any time use more parking spaces than the
number so allocated to Tenant or park or permit the parking of their vehicles in
any portion of the Land not designated by Landlord as a nonexclusive parking
area. Tenant and Tenant's agents shall not have the exclusive right to use any
specific parking space. Tenant and its agents, employees, guests and invitees
shall not park in any area designated for the exclusive use of any other tenant.
Notwithstanding the number of parking spaces designated for Tenant's
nonexclusive use, in the event by reason of any Law relating to or affecting
parking on the Land, or any other cause beyond Landlord's reasonable control,
Landlord is required to reduce the number of parking spaces on the Land,
Landlord shall have the right to proportionately reduce the number of Tenant's
parking spaces and the nonexclusive parking spaces of other tenants in the
Building. Landlord reserves the right to promulgate such reasonable rules and
regulations relating to the use of such parking areas on the Land as Landlord
may deem appropriate. Landlord furthermore reserves the right, after having
given Tenant reasonable notice, to have any vehicles owned by Tenant or Tenant's
agents which are parked in violation of the provisions of this Paragraph 11.2 or
in violation of Landlord's rules and regulations relating to parking, to be
towed away at Tenant's cost. In the event Landlord elects or is required by any
law to limit or control parking on the Land, by validation of parking tickets or
any other method, Tenant agrees to participate in such validation or other
program under such reasonable rules and regulations as are from time to time
established by Landlord. Provided that Tenant's use, occupancy and enjoyment of
the Premises or access to the Premises is not unreasonably interfered with,
Landlord shall have the right to close, at reason able times, all or any portion
of the parking areas for any reasonable purpose, including without limitation,
the prevention of a dedication thereof, or the accrual of rights of any person
or public therein. Tenant and Tenant's agents shall not at any time park or
permit the parking of (i) trucks or other vehicles (whether owned by Tenant or
other persons) adjacent to any loading areas so as to interfere in any manner
with the use of such areas, (ii) Tenant's or Tenant's agents' vehicles or
trucks, or the vehicles or trucks of Tenant's suppliers or others, in any
portion of the
26
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Common Area not designated by Landlord for such use by Tenant or (iii) any
inoperative vehicles or equipment on any portion of the Common Area.
11.3 Maintenance by Landlord. Landlord shall maintain the Common Area
-----------------------
in good repair and condition and shall manage the Common Area to reasonable and
customary standards. The expenditures for such maintenance shall be at the
reasonable discretion of Landlord. The cost of such maintenance, operation and
management shall be a "Common Area Charge," and Tenant shall pay to Landlord, as
Additional Rent, Tenant's share of such costs as provided in Paragraph 12 below.
12. Common Area Charges.
-------------------
12.1 Definition. "Common Area Charge" or "Common Area Charges" as used
----------
in this Lease shall mean and include all items identified in other paragraphs of
this Lease as a Common Area Charge and the total cost paid or incurred by
Landlord for the operation, maintenance, repair, and management of the Project
which costs shall include, without limitation: the cost of Services and
utilities supplied to the Project (to the extent the same are not separately
charged or metered to tenants of the Building); water; sewage; trash removal;
fuel; electricity; heat; lighting systems; fire protection systems; storm
drainage and sanitary sewer systems; periodic inspection and regular servicing
of the heating and air conditioning systems of the Premises; maintaining,
repairing and replacing the roof membrane; property and liability insurance
covering the Building and the Land and any other insurance carried by Landlord
pursuant to Paragraph 8 above; window cleaning; cleaning, sweeping, striping,
resurfacing of parking and driveway areas; cleaning the Common Area following
storms or other severe weather; clearing and repairing of sidewalks, curbs,
stairways; costs related to irrigation systems and Project signs; fees for
licenses and permits required for the operation of the Project; the cost of
complying with Laws, including, without limitation, maintenance, alterations and
repairs required in connection therewith (subject to the provisions of Paragraph
12.3 hereof); costs related to landscape maintenance; and the cost of contesting
the validity or applicability of any governmental enactments which may affect
Common Area Charges. If the Project contains more than one (1) building at any
time during the Lease Term, then the term "Common Area Charges shall mean and
include all of the Common Area Charges allocable to the Building and a
proportionate share (based on the square footage of gross leasable area in the
Building as a percentage of the total of square footage of gross leasable area
of the buildings in the Project at the time in question) of all Common Area
Charges which are related to the Project in general
27
<PAGE>
and are not allocated to any one building in the Project. Common Area Charges
shall also include a management fee to Landlord in an amount not to exceed that
customarily charged or paid by owners of comparable buildings in Santa Cruz
County. The cost of (i) capital repair items (i.e., items which Landlord is
required to capitalize and not expense in the current year for federal income
tax purposes), (ii) replacement of the roof membrane, (iii) resurfacing the
parking lot, and (iv) repainting the exterior of the Building, shall be
amortized at ten percent (10%) over the useful life of the repair or item, and
be paid monthly by Tenant from the date of installation or repair through Lease
Termination.
The specific examples of Common Area Charges stated in this Paragraph 12.1
are in no way intended to and shall not limit the costs comprising Common Area
Charges, nor shall such examples be deemed to obligate Landlord to incur such
costs or to provide such services or to take such actions except as Landlord may
be expressly required in other portions of this Lease, or except as Landlord, in
its reasonable discretion, may elect. All reasonable costs incurred by Landlord
in good faith for the operation, maintenance, repair and management of the
Project shall be deemed conclusively binding on Tenant.
Notwithstanding anything to the contrary contained in this Lease, within
thirty (30) days after receipt by Tenant of Landlord's statement of Common Area
Charges prepared pursuant to Paragraph 12.2 hereof for any prior annual period
during the Lease Term, Tenant or its authorized representative shall have the
right to inspect the books of Landlord during the business hours of Landlord at
Landlord's office or, at Landlord's option, such other location as Landlord
reasonably may specify, for the purpose of verifying the information contained
in the statement. Unless Tenant asserts specific errors within thirty (30) days
after receipt of the statement, the statement shall be deemed correct as between
Landlord and Tenant, except as to individual components subsequently determined
to be in error by future audit.
12.2 Payment of Common Area Charges by Tenant. Prior to the
----------------------------------------
Commencement Date, and annually thereafter, Landlord shall deliver to Tenant an
estimate of Common Area Charges for the succeeding year. Tenant's payment of
Common Area Charges shall be based upon Landlord's estimate of Common Area
Charges and shall be payable in equal monthly installments in advance on the
first day of each calendar month commencing on the date specified in Paragraph
1.6 and continuing throughout the Lease Term. Tenant shall pay to Landlord, as
Additional
28
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Rent and without deduction or offset, an amount equal to Tenant's percentage
share (stated in Paragraph 1.10 above) of the Common Area Charges.
Landlord shall revise its estimate of Common Area Charges on an annual
basis, and Landlord may adjust the amount of Tenant's monthly installment in the
event of a material change in Common Area Charges during any year. Landlord
shall furnish Tenant an annual statement (and a statement within, one hundred
eighty (180) days after Lease Termination) showing the actual Common Area
Charges for the period to which Landlord's estimate pertains and shall
concurrently either bill Tenant for the balance due (payable upon demand by
Landlord) or credit Tenant's account for the excess previously paid.
Alternatively, Common Area Charges actually incurred or paid by Landlord
but not theretofore billed to Tenant, as invoiced by Landlord shall be payable
by Tenant within ten (10) days after receipt of Landlord's invoice, but not more
often than once each calendar month.
Notwithstanding the foregoing provisions of this Paragraph 12, Landlord and
Tenant agree that if Landlord incurs any costs for insurance, Services, repairs
or maintenance exclusively for or to the Premises or for less than all the
tenants of the Building and such costs are Common Area Charges, or if any
improvements installed in the Premises by Tenant or Landlord are valued by the
assessor disproportionately higher than those of any other tenants in the
Building, then Tenant's share of such Common Area Charges shall be equitably
increased by Landlord to reflect the portion of any such costs or taxes incurred
by Landlord in regard to the Premises, and Tenant shall pay the same to Landlord
as Additional Rent.
12.3 Exclusions From Common Area Charges. Notwithstanding anything to
-----------------------------------
the contrary contained in this Lease, in no event shall Tenant have any
obligation to perform, to pay directly, or to reimburse Landlord for, all or any
portion of the following repairs, maintenance, improvements, replacements,
premiums, claims, losses, fees, commissions, charges, disbursements, attorneys'
fees, experts' fees, costs and expenses (collectively, "Costs"):
(a) Losses Caused by Others and Construction Defects. Costs
------------------------------------------------
occasioned by the act, omission or violation of Law by Landlord, any other
occupant of the Project, or their respective agents, employees or contractors,
or costs arising out of the failure to construct the Building, Premises, tenant
improvements installed
29
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by Landlord pursuant to Paragraph 2.2, or Common Areas in accordance with Laws
and private restrictions applicable at the time of construction thereof.
(b) Condemnation and Insurance Costs. Costs occasioned by the
--------------------------------
exercise of the power of eminent domain, or increases in insurance Costs caused
by the activities of other occupant(s) of the Project.
(c) Reimbursable Expenses. Costs for which Landlord has a right
---------------------
of reimbursement from others, or Costs which Tenant pays directly to a third
person.
(d) Utilities or Services. Costs (i) arising from the
---------------------
disproportionate use of any utility or service supplied by Landlord to any other
occupant of the Project; or (ii) associated with utilities and services of a
type not provided to Tenant.
(e) Leasing Expenses. Costs incurred in connection with
----------------
negotiations or disputes with other occupant(s) of the Project, and Costs
arising from the violation by Landlord or any occupant of the Project (other
than Tenant) of the terms and conditions of any lease or other agreement.
(f) Reserves. Depreciation, amortization or other expense
--------
reserves.
(g) Mortgages. Interest, charges and fees incurred on debt
---------
payments or mortgages and rent under ground leases.
(h) Hazardous Materials. Costs incurred to investigate the
-------------------
presence of any Hazardous Material, Costs to respond to any claim of Hazardous
Material contamination or damage, Costs to remove any Hazardous Material from
the Premises, Building or Project or to remediate any Hazardous Material
contamination, and any judgments or other Costs incurred in connection with any
Hazardous Material exposure or release, except to the extent such Costs are
incurred by Landlord in accordance with Paragraph 6.4 or incurred by Landlord
or caused by reason of the storage, use or disposal of the Hazardous Material in
question by Tenant, its agents, employees, contractors or invitees.
(i) Management. Any fee, profit or compensation retained by
----------
Landlord or its affiliates for management and administration of the Project in
excess of the management fee and accounting fee specified in Paragraph 12.1.
30
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(j) Fees Paid to Affiliates. Overhead and profit increment paid
-----------------------
to subsidiaries or affiliates of Landlord for services on or to the real
property, to the extent only that the cost of such services exceed competitive
costs of such services were they not so rendered by a subsidiary or affiliate.
(k) Executive Employee Compensation. Wages, salaries or other
-------------------------------
compensation paid to any executive employees above the grade of building
manager, except that if any such employee performs a service which would have
been performed by an outside consultant, the compensation paid to such employee
for performing such service shall be included in Common Area Charges, to the
extent only that the cost of such service does not exceed competitive costs of
such service had such service been rendered by an outside consultant.
(l) Advertising and Promotional Expenses. Advertising and
------------------------------------
promotional expenses.
(m) Art Objects. Costs for sculpture, painting or other objects
-----------
of art.
13. Alterations and Improvements.
----------------------------
13.1 In General. Tenant shall not make, or permit to be made, any
----------
alterations, removals, changes, enlargements, improvements or additions
(collectively "Alterations") in, on, about or to the Premises, or any part
thereof, including Alterations required pursuant to Paragraph 6.2, without the
prior written consent of Landlord (which consent shall not be unreasonably
withheld) and without acquiring and complying with the conditions of all permits
required for such Alterations by any governmental authority having jurisdiction
thereof. The term "Alterations" as used in this Paragraph 13 shall also include
all heating, lighting, electrical (including all wiring, conduit outlets, drops,
buss ducts, main and subpanels), air conditioning and partitioning in the
Premises made by Tenant regardless of how affixed to the Premises. As a
condition to the giving of its consent, Landlord may impose such reasonable
requirements as Landlord reasonably may deem necessary, including without
limitation, the manner in which the work is done; a right of approval of the
contractor by whom the work is to be performed; the times during which the work
is to be accomplished; the requirement that Tenant post a completion bond in an
amount and form reasonably satisfactory to Landlord, and the requirement that
Tenant reimburse Landlord, as Additional Rent for Landlord's actual costs for
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outside consultants incurred in reviewing any proposed Alteration, whether or
not Landlord's consent is granted. In the event Landlord consents to the making
of any Alterations by Tenant, the same shall be made by Tenant at Tenant's sole
cost and expense, in accordance with the plans and specifications approved by
Landlord and in a manner causing Landlord and Landlord's agents and other
tenants of the Building the least interference and inconvenience practicable
under the circumstances. Tenant shall give written notice to Landlord five (5)
business days prior to employing any laborer or contractor to perform services
related to, or receiving materials for use upon the Premises, and prior to the
commencement of any work of improvement on the Premises. Any Alterations to the
Premises made by Tenant shall be made in accordance with applicable Laws and
in a first-class workmanlike manner. In making any such Alterations, Tenant
shall, at Tenant's sole cost and expense, file for and secure and comply with
any and all permits or approvals required by any governmental departments or
authorities having jurisdiction thereof and any utility company having an
interest therein. In no event shall Tenant make any structural changes to the
Premises or make any changes to the Premises which would weaken or impair the
structural integrity of the Building or adversely affect or alter the building
systems within the Building.
13.2 Removal Upon Lease Termination. At the time Tenant requests
------------------------------
Landlord's consent to any Alterations in, on, about or to the Premises, or any
portion thereof, Tenant shall request a decision from Landlord in writing as to
whether Landlord will require Tenant, at Tenant's expense, to remove any such
Alterations and restore the Premises to their prior condition at Lease
Termination. Following receipt of written notice from Tenant requesting a
decision, Landlord may elect to have all or a portion of such Alterations
removed from the Premises at Lease Termination, and Tenant shall, at its sole
cost and expense, remove at Lease Termination such Alterations designated by
Landlord for removal and repair all damage to the Project arising from such
removal. Landlord shall within five (5) business days following receipt of
Tenant's request for a decision as to whether Tenant will be required to remove
any Alterations at Lease Termination, respond in writing to Tenant with
Landlord's decision. If Landlord fails to respond to Tenant's request for a
decision as provided above within such five (5) business day time period, then
Landlord shall be deemed to have decided to require Tenant to remove at Lease
Termination all Alterations which were the subject of Tenant's request for a
decision by Landlord as stated above. In the event Tenant fails to so request
Landlord's decision or fails to remove any such Alterations designated or deemed
designated by Landlord for removal, Landlord may remove any Alterations made to
the Premises by Tenant, restore the Premises to their prior condition and repair
all damage to the
32
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Premises and Common Area arising from such removal, and may recover from Tenant
all reasonable costs and expenses incurred thereby, together with an amount
equal to the fair rental value of the Premises for the period of time required
for Landlord to accomplish such removal and restoration. Tenant's obligation to
pay such costs and expenses to Landlord shall survive Lease Termination. Unless
Landlord elects (or is deemed to have elected) to have Tenant remove (or, upon
Tenant's failure to obtain Landlord's decision, Landlord removes) any such
Alterations, all such Alterations, except for moveable furniture, personal
property and equipment, and trade fixtures of Tenant not affixed to the
Premises, shall become the property of Landlord upon Lease Termination (without
any payment therefor) and remain upon and be surrendered with the Premises at
Lease Termination.
13.3 Landlord's Improvements. All fixtures, improvements or
-----------------------
equipment which are installed, constructed on or attached to the Premises,
Building or Common Area by Landlord shall be a part of the realty and belong to
Landlord.
14. Default and Remedies.
--------------------
14.1 Events of Default. The term "Default by Tenant"' as used in this
-----------------
Lease shall mean the occurrence of any of the following events:
(a) Tenant's failure to pay when due any Rentals;
(b) Commencement and continuation for at least sixty (60) days
of any case, action or proceeding by, against or concerning Tenant under any
federal or state bankruptcy, insolvency or other debtor's relief law, including
without limitation, (i) a case under Title 11 of the United States Code
concerning Tenant whether under Chapter 7, 11, or 13 of such Title or under any
other Chapter, or (ii) a case, action or proceeding seeking Tenant's financial
reorganization or an arrangement with any of Tenant's creditors;
(c) Voluntary or involuntary appointment of a receiver, trustee,
keeper or other person who takes possession for more than sixty (60) days of
substantially all of Tenant's assets or of any asset used in Tenant's business
on the Premises, regardless of whether such appointment is as a result of
insolvency or any other cause;
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(d) Execution of an assignment for the benefit of creditors of
substantially all assets of Tenant available by law for the satisfaction of
judgment creditors;
(e) Commencement of proceedings for winding up or dissolving
(whether voluntary or involuntary) the entity of Tenant, if Tenant is a
corporation or a partnership;
(f) Levy of a writ of attachment or execution on Tenant's
interest under this Lease, if such writ continues for a period of thirty (30)
days;
(g) Transfer or attempted Transfer of this Lease or the Premises
by Tenant contrary to the provisions of Paragraph 24 below; or
(h) Breach by Tenant of any term, covenant, condition, warranty,
or other provision contained in this Lease or of any other obligation owing or
due to Landlord.
14.2 Remedies. Upon any Default by Tenant, Landlord shall have the
--------
following remedies, in addition to all other rights and remedies provided by
law, to which Landlord may resort cumulatively, or in the alternative:
14.2.1 Termination. Upon any Default by Tenant, Landlord
-----------
shall have the right (but not the obligation) to give written notice to Tenant
of such default and terminate this Lease and Tenant's right to possession of the
Premises if (i) such default is in the payment of Rentals and is not cured
within ten (10) days following delivery of written notice from Landlord that
such Rentals are past due, or, (ii) with respect to the defaults referred to in
subparagraphs 14.1 (d), (e), (g) and (h), such default is not cured within
thirty (30) days after any such notice (or if a default under subparagraph
14.1(h) cannot be reasonably cured within thirty (30) days, if Tenant does not
commence to cure the default within the thirty (30) day period or does not
diligently and in good faith prosecute the cure to completion), or, (iii) with
respect to the defaults specified in subparagraphs 14.1(b), (c) and (f) such
default is not cured within the respective time periods specified in those
subparagraphs. The parties agree that any notice given by Landlord to Tenant
pursuant to this Paragraph 14.2.1 shall be sufficient notice for purposes of
California Code of Civil Procedure Section 1161 and Landlord shall not be
required to give any additional notice in order to be entitled to commence an
unlawful detainer proceeding. Upon termination
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of this Lease and Tenant's right to possession of the Premises, Landlord shall
have the right to recover from Tenant:
(a) The worth at the time of award of the unpaid Rentals which
had been earned at the time of termination;
(b) The worth at the time of award of the amount by which the
Rentals 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 (computed by discounting at
the discount rate of the Federal Reserve Bank of San Francisco at the time of
award plus one percent) of the amount by which the Rentals for the balance of
the Lease Term after the time of award exceed the amount of such rental loss
that Tenant proves could be reasonably avoided;
(d) Any other amounts necessary to compensate Landlord for all
detriment proximately caused by the Default by Tenant or which in the ordinary
course of events would likely result, including without limitation the
following:
(i) Expenses in retaking possession of the Premises;
(ii) Expenses for cleaning, repairing or restoring the
Premise;
(iii) Any unamortized real estate brokerage commission paid
in connection with this Lease;
(iv) Expenses for removing, transporting, and storing any
of Tenant's property left at the Premises (although Land lord shall have no
obligation to remove, transport, or store any such property);
(v) Expenses of reletting the Premises, including without
limitation, brokerage commissions and reasonable attorneys' fees;
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(vi) Reasonable attorneys' fees and court costs; and
(vii) Costs of carrying the Premises such as repairs,
maintenance, taxes and insurance premiums, utilities and security
precautions (if any).
(e) The "worth at the time of award" of the amounts referred to
in subparagraphs (a) and (b) of this Paragraph 14.2.1 is computed by allowing
interest at an annual rate equal to the greater of: ten percent (10%); or five
percent (5%) plus the rate established by the Federal Reserve Bank of San
Francisco, as of the twenty-fifth (25th) day of the month immediately preceding
the Default by Tenant, on advances to member banks under Sections 13 and 13(a)
of the Federal Reserve Act, as now in effect or hereafter from time to time
amended, not to exceed the maximum rate allowable by law.
14.2.2 Continuance of Lease. Upon any Default by Tenant and
--------------------
unless and until Landlord elects to terminate this Lease pursuant to Paragraph
14.2.1 above, this Lease shall continue in effect after the Default by Tenant
and Landlord may enforce all its rights and remedies under this Lease, including
without limitation, the right to recover payment of Rentals as they become due.
Neither efforts by Landlord to mitigate damages caused by a Default by Tenant
nor the acceptance of any Rentals shall constitute a waiver by Landlord of any
of Landlord's rights or remedies, including the rights and remedies specified in
Paragraph 14.2.1 above.
15. Damage or Destruction.
---------------------
15.1 Definition of Terms. For the purposes of this Lease, the term:
-------------------
(a) "Insured Casualty" means damage to or destruction of the Premises from a
cause actually insured against, or required by this Lease to be insured against,
for which the insurance proceeds paid or made available to Landlord are
sufficient to rebuild or restore the Premises under then existing building codes
to the condition existing immediately prior to the damage or destruction; and
(b) "Uninsured Casualty" means damage to or destruction of the Premises from a
cause not actually insured against, or not required to be insured against, or
from a cause actually insured against but for which the insurance proceeds paid
or made available to Landlord are for any reason insufficient to rebuild or
restore the Premises under then existing building codes to the condition
existing immediately prior to the damage or destruction, or from a cause
actually insured against but for which the insurance proceeds are not paid or
36
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made available to Landlord within ninety (90) days of the event of damage or
destruction.
15.2 Insured Casualty.
----------------
15.2.1 Rebuilding Required. In the event of an Insured Casualty
-------------------
where the extent of damage or destruction is less than twenty percent (20%) of
the then full replacement cost of the Premises, Landlord shall rebuild or
restore the Premises to the condition existing immediately prior to the damage
or destruction, provided the damage or destruction was not a result of a
negligent or willful act of Tenant, and that there exist no governmental codes
or regulations that would interfere with Landlord's ability to so rebuild or
restore.
15.2.2 Landlord's Election. In the event of an Insured Casualty
-------------------
where the extent of damage or destruction is equal to or greater than twenty
percent (20%) of the then full replacement cost of the Premises, Landlord may,
at its option and at its sole discretion, rebuild or restore the Premises to the
condition existing immediately prior to the damage or destruction, or terminate
this Lease. Landlord shall notify Tenant in writing within sixty (60) days after
the event of damage or destruction of Landlord's election to either rebuild or
restore the Premises or terminate this Lease.
15.2.3 Continuance of Lease. If Landlord is required to rebuild
--------------------
or restore the Premises pursuant to Paragraph 15.2.1 or if Landlord elects to
rebuild or restore the Premises pursuant to Paragraph 15.2.2, this Lease shall
remain in effect and Tenant shall have no claim against Landlord for
compensation for inconvenience or loss of business during any period of repair
or restoration.
15.3 Uninsured Casualty.
------------------
15.3.1 Landlord's Election. In the event of an Uninsured
-------------------
Casualty, Landlord may, at its option and at its sole discretion (i) rebuild or
restore the Premises as soon as reasonably possible at Landlord's expense
(unless the damage or destruction was caused by a negligent or willful act of
Tenant, in which event Tenant shall pay all costs of rebuilding or restoring),
in which event this Lease shall continue in full force and effect or (ii)
terminate this Lease, in which event Landlord shall give written notice to
Tenant within sixty (60) days after the event of damage or destruction of
Landlord's election to terminate this Lease as of the date of
37
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the event of damage or destruction, and if the damage or destruction was caused
by a negligent or willful act of Tenant, Tenant shall be liable therefor to
Landlord.
15.3.2 Tenant's Ability to Continue Lease. If Landlord elects
----------------------------------
to terminate this Lease and the extent of damage or destruction is less than
twenty percent (20%) of the then full replacement cost of the Premises or the
proceeds paid or made available to Landlord are for any reason insufficient to
rebuild or restore the Premises under then existing building codes to the
condition existing immediately prior to the damage or destruction, and if there
exist no governmental codes or regulations that would interfere with Landlord's
ability to so repair or restore, then Tenant may nevertheless cause the Lease to
continue in effect by (i) notifying Landlord in writing within ten (10) days
after Landlord's notice of termination of Tenant's agreement to pay all costs of
rebuilding or restoring not covered by insur ance, and (ii) providing Landlord
with reasonable security (acceptable to Landlord in its sole discretion) for or
assurance of such payment. Tenant shall pay to Landlord in cash no later than
thirty (30) days prior to the date of commencement of construction the
reasonable estimated cost of rebuilding or restoring. In the event Tenant fails
to pay such cost to Landlord by the date specified, Landlord may immediately
terminate the Lease and recover from Tenant all reasonable costs incurred by
Landlord in preparation for construction. If the actual cost of rebuilding or
restoring exceeds the estimated cost of such work, Tenant shall pay the
difference to Landlord in cash upon notification by Landlord of the final cost.
If the cost of rebuilding or restoring is less than the estimated cost of such
work, Tenant shall be entitled to a refund of the difference upon completion of
the rebuilding or restoring and determination of final cost.
15.4 Tenant's Election. Notwithstanding anything to the contrary
-----------------
contained in this Paragraph 15, Tenant may elect to terminate this Lease in the
event the Premises are damaged or destroyed and, in the reasonable opinion of
Landlord's architect or construction consultants, the restoration of the
Premises cannot be substantially completed within one hundred eighty (180) days
after the event of damage or destruction. Tenant's election shall be made by
written notice to Landlord within ten (10) days after Tenant receives from
Landlord the estimate of the time needed to complete repair or restoration of
the Premises. If Tenant does not deliver said notice within said ten (10) day
period, Tenant may not later terminate this Lease even if substantial completion
of the rebuilding or restoration occurs subsequent to said one hundred eighty
(180) day period, provided that Landlord is proceeding with diligence to rebuild
or restore the Premises. If Tenant delivers said notice within said
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ten (10) day period, this Lease shall terminate as of the date of the event of
damage or destruction.
15.5 Damage or Destruction Near End of Lease Term. Notwithstanding
--------------------------------------------
anything to the contrary contained in this Paragraph 15, in the event the
Premises are materially damaged or destroyed in whole or in part from any cause
during the last twelve (12) months of the Lease Term, Landlord or Tenant may, at
its option, terminate this Lease as of the date of the event of damage or
destruction by giving written notice to the other of its election to do so
within thirty (30) days after the event of such damage or destruction. For
purposes of this Paragraph 15.5, if Tenant has been granted an option to extend
or renew the Lease Term pursuant to another provision of this Lease, then the
damage or destruction shall be deemed to have occurred during the last twelve
(12) months of the Lease Term if Tenant fails to exercise its option to extend
or renew within twenty (20) days after the event of damage or destruction.
15.6 Termination of Lease. If the Lease is terminated pursuant to
--------------------
this Paragraph 15, the unused balance of the Security Deposit shall be refunded
to Tenant. The current Rent shall be proportionately reduced during the period
following the event of damage or destruction until the date on which Tenant
surrenders the Premises, based upon the extent to which the damage or
destruction interferes with Tenant's business conducted in the Premises, as
reasonably determined by Landlord and Tenant, to the extent such loss is covered
as an insured peril by the insurance carried by Landlord pursuant to Paragraph
8.1. All other Rentals due hereunder shall continue unaffected during such
period. The proceeds of insurance carried by Tenant pursuant to Paragraph 8.2
shall be paid to Landlord and Tenant as their interests appear.
15.7 Abatement of Rentals. If the Premises are to be rebuilt or
--------------------
restored pursuant to this Paragraph 15, the then current Rentals shall be
proportionately reduced during the period of repair or restoration, based upon
the extent to which the making of repairs interferes with Tenant's business
conducted in the Premises, as reasonably determined by Landlord and Tenant, to
the extent such loss is covered as an insured peril by the insurance carried, or
required to be carried, by Landlord pursuant to Paragraph 8.1.
15.8 Liability for Personal Property. Except for the negligent acts
-------------------------------
or willful misconduct Landlord or that of its agents, employees, contractors or
invitees, in no event shall Landlord have any liability for, nor shall it be
required to repair or
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restore, any injury or damage to any Alterations to the Premises made by Tenant,
trade fixtures, equipment, merchandise, furniture, or any other property
installed by Tenant or at the expense of Tenant. If Landlord or Tenant do not
elect to terminate this Lease pursuant to this Paragraph 15, Tenant shall be
obligated to promptly rebuild or restore the same to the condition existing
immediately prior to the damage or destruction in accordance with the provisions
of Paragraph 13.1.
15.9 Waiver of Civil Code Remedies. Landlord and Tenant acknowledge
-----------------------------
that the rights and obligations of the parties upon damage or destruction of the
Premises are as set forth herein; therefore Tenant hereby expressly waives any
rights to terminate this Lease upon damage or destruction of the Premises,
except as specifically provided by this Lease, including without limitation any
rights pursuant to the provisions of Subdivision 2 of Section 1932 and
Subdivision 4 of Section 1933 of the California Civil Code, as amended from time
to time, and the provisions of any similar law hereinafter enacted, which
provisions relate to the termination of the hiring of a thing upon its
substantial damage or destruction.
15.10 Damage or Destruction to the Building. The foregoing
-------------------------------------
notwithstanding, in the event the Building is damaged or destroyed to the extent
of more than twenty-five percent (25%) of the then replacement cost thereof,
Landlord may elect to terminate this Lease, whether or not the Premises are
injured.
16. Condemnation.
------------
16.1 Definition of Terms. For the purposes of this Lease, the term:
-------------------
(a) "Taking" means a taking of the Premises, Common Area or Building or damage
related to the exercise of the power of eminent domain and includes, without
limitation, a voluntary conveyance, in lieu of court proceedings, to any agency,
authority, public utility, person or corporate entity empowered to condemn
property; (b) "Total Taking" means the Taking of the entire Premises or so much
of the Premises, Building or Common Area as to prevent or substantially impair
the use thereof by Tenant for the uses herein specified; provided, however, that
in no event shall the Taking of less than twenty percent (20%) of the Premises
or fifty percent (50%) of the Building and Common Area be considered a Total
Taking; (c) "Partial Taking" means the Taking of only a portion of the Premises,
Building or Common Area which does not constitute a Total Taking; (d) "Date of
Taking" means the date upon which the title to the Premises, Building or Common
Area or a portion thereof, passes to and vests in the condemnor or the effective
date of any order for possession if issued prior to the date title vests in the
condemnor; and (e) "Award" means the
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<PAGE>
amount of any award made, consideration paid, or damages ordered as a result of
a Taking.
16.2 Rights. The parties agree that in the event of a Taking all
------
rights between them or in and to an Award shall be as set forth herein.
16.3 Total Taking. In the event of a Total Taking during the Lease
------------
Term: (a) the rights of Tenant under this Lease and the leasehold estate of
Tenant in and to the Premises shall cease and terminate as of the Date of
Taking; (b) Landlord shall refund to Tenant any prepaid Rent and the unused
balance of the Security Deposit; (c) Tenant shall pay Landlord any Rentals due
Landlord under the Lease, prorated as of the Date of Taking; (d) to the extent
the Award is not payable to the beneficiary or mortgagee of a deed of trust or
mortgage affecting the Premises, Tenant shall receive from the Award those
portions of the Award attributable to trade fixtures of Tenant; and (e) the
remainder of the Award shall be paid to and be the property of Landlord. Nothing
contained in this Paragraph 16.3 shall be deemed to deny Tenant its right to
recover awards made by the condemning authority for moving costs, relocation
costs, and costs attributable to goodwill and leasehold improvements installed
by Tenant.
16.4 Partial Taking. In the event of a Partial Taking during the Lease
--------------
Term: (a) the rights of Tenant under the Lease and the leasehold estate of
Tenant in and to the portion of the Premises taken shall cease and terminate as
of the Date of Taking; (b) from and after the Date of Taking the Rent shall be
an amount equal to the product obtained by multiplying the then current Rent by
the quotient obtained by dividing the fair market value of the Premises
immediately after the Taking by the fair market value of the Premises
immediately prior to the Taking; (c) to the extent the Award is not payable to
the beneficiary or mortgagee of a deed of trust or mortgage affecting the
Premises, Tenant shall receive from the Award the portions of the Award
attributable to trade fixtures of Tenant; and (d) the remainder of the Award
shall be paid to and be the property of Landlord. Each party waives the
provisions of California Code of Civil Procedure Section 1265.130 allowing
either party to petition the Superior Court to terminate this Lease in the event
of a Partial Taking. Nothing contained in this Paragraph 16.4 shall be deemed to
deny Tenant its right to recover awards made by the condemning authority for
moving costs, relocation costs, and costs attributable to goodwill and
leasehold improvements installed by Tenant.
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17. Liens.
-----
17.1 Premises to Be Free of Liens. Tenant shall pay for all labor and
----------------------------
services performed for, and all materials used by or furnished to Tenant,
Tenant's agents, or any contractor employed by Tenant with respect to the
Premises. Tenant shall indemnify, defend and hold Landlord harmless from and
keep the Project free from any liens, claims, demands, encumbrances, or
judgments, including all costs, liabilities and attorneys' fees with respect
thereto, created or suffered by reason of any labor or services performed for,
or materials used by or furnished to Tenant or Tenant's agents or any contractor
employed by Tenant with respect to the Premises. Landlord shall have the right,
at all times, to post and keep posted on the Premises any notices permitted or
required by law, or which Landlord shall deem proper for the protection of
Landlord and the Premises, Building, Common Area and Land, and any other party
having an interest therein, from mechanics' and materialmen's liens, including
without limitation a notice of nonresponsibility. In the event Tenant is
required to post an improvement bond with a public agency in connection with any
work performed by Tenant on or to the Premises, Tenant shall include Landlord as
an additional obligee.
17.2 Notice of Lien; Bond. Should any claims of lien be filed against,
--------------------
or any action be commenced affecting the Premises, Tenant's interest in the
Premises or any other portion of the Project, Tenant shall give Landlord notice
of such lien or action within ten (10) days after Tenant receives notice of the
filing of the lien or the commencement of the action. In the event that Tenant
shall not, within twenty (20) days following the imposition of any such lien,
cause such lien to be released of record by payment or posting of a proper bond,
Landlord shall have, in addition to all other remedies provided herein and by
law, the right, but not the obligation, to cause the same to be released by such
means as Landlord shall deem proper, including payment of the claim giving rise
to such lien or posting of a proper bond. All such sums paid by Landlord and all
expenses incurred by Landlord in connection therewith, including attorneys' fees
and costs, shall be payable to Landlord by Tenant as Additional Rent on demand.
18. Landlord's Right of Access to Premises. Landlord reserves and shall
--------------------------------------
have the right and Tenant and Tenant's agents shall permit Landlord and
Landlord's agent to enter the Premises, upon reasonable advance notice and at
any reasonable time during normal business hours (except in the event of an
emergency) and subject to any security measures of Tenant that are applied to
visitors to the Premises on a
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non-discriminatory basis for the purpose of (i) inspecting the Premises, (ii)
performing Landlord's maintenance and repair responsibilities set forth herein,
(iii) posting notices of nonresponsibility, (iv) placing upon the Premises at
any time "For Sale" signs, (v) placing on the Premises ordinary "For Lease"
signs at any time within one hundred eighty (180) days prior to Lease
Termination, or at any time Tenant is in uncured default hereunder, or at such
other times as agreed to by Landlord and Tenant (vi) protecting the Premises in
the event of an emergency and (vii) exhibiting the Premises to prospective
purchasers or lenders at any reasonable time or to prospective tenants within
one hundred eighty (180) days prior to Lease Termination. In the event of an
emergency, Landlord shall have the right to use any and all means which Landlord
reasonably may deem proper to gain access to the Premises. Any entry to the
Premises by Landlord or Landlord's agents in accordance with this Paragraph 18
or any other provision of this Lease shall not under any circumstances be
construed or deemed to be a forcible or unlawful entry into, or a detainer of
the Premises, or an eviction of Tenant from the Premises or any portion thereof
nor give Tenant the right to abate the Rentals payable under this Lease. Except
to the extent caused by the negligence or willful misconduct of Landlord, its
agents, employees, contractors or invitees, Tenant hereby waives any claims for
damages for any injury or inconvenience to or interference with Tenant's
business, any loss of occupancy or quiet enjoyment of the Premises, and any
other loss occasioned by Landlord's or Landlord's agents' entry into the
Premises as permitted by this Paragraph 18 or any other provision of this Lease.
Notwithstanding anything to the contrary contained in this Lease, Landlord and
Landlord's agents, except in the case of emergency, shall provide Tenant with
twenty-four (24) hours' notice prior to entry of the Premises. Any entry by
Landlord and Landlord's agents shall not impair Tenant's operations more than
reasonably necessary, and Tenant shall have the right to have an employee
accompany Landlord at all times that Landlord is present on the Premises.
19. Landlord's Right to Perform Tenant's Covenants. Except as otherwise
----------------------------------------------
expressly provided herein, if Tenant shall at any time fail to make any payment
or perform any other act required to be made or performed by Tenant under this
Lease, Landlord may upon ten (10) days written notice to Tenant, but shall not
be obligated to and without waiving or releasing Tenant from any obligation
under this Lease, make such payment or perform such other act to the extent that
Landlord may deem desirable, and in connection therewith, pay expenses and
employ counsel. All reasonable sums so paid by Landlord and all penalties,
interest and reasonable costs in connection therewith shall be due and payable
by Tenant as Additional Rent upon demand.
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20. Lender Requirements.
-------------------
20.1 Subordination. This Lease, at Landlord's option, shall be subject
-------------
and subordinate to the lien of any mortgages or deeds of trust (including all
advances thereunder, renewals, replacements, modifications, supplements,
consolidations, and extensions thereof) in any amount(s) whatsoever now or
hereafter placed on or against or affecting the Premises, Building or Land, or
Landlord's interest or estate therein without the necessity of the execution and
delivery of any further instruments on the part of Tenant to effectuate such
subordination; provided, however, Tenant shall not be required to subordinate
its interests under this Lease to any future mortgage or deed of trust affecting
the Premises unless such mortgagee or beneficiary under such mortgage or deed
of trust agrees in writing that this Lease shall not be terminated or modified
in any material way in the event of any foreclosure so long as Tenant is not in
default under this Lease. As to any mortgagee or beneficiary under a mortgage or
deed of trust affecting the Premises as of the Date of this Lease, Landlord
agrees to exercise commercially reasonable best efforts to obtain from such
currently existing mortgagee(s) or beneficiary(ies) Tenant non-disturbance
rights for the benefit of Tenant, however, the effectiveness of this Lease is
not conditioned upon Landlord obtaining such non-disturbance rights from such
existing mortgagee(s) or beneficiary(ies). If any mortgagee or beneficiary
shall elect to have this Lease prior to the lien of its mortgage or deed of
trust, and shall give written notice thereof to Tenant, this Lease shall be
deemed prior to such mortgage or deed of trust, whether this Lease is dated
prior or subsequent to the date of such mortgage or deed of trust or the date of
the recording thereof.
20.2 Subordination Agreements. Tenant shall execute and deliver,
------------------------
without charge therefor, such further instruments evidencing subordination of
this Lease to the lien of any mortgages or deeds of trust affecting the
Premises, Building or Land as may be required by Landlord within ten (10) days
following Landlord's request therefor; provided that such mortgagee or
beneficiary under such mortgage or deed of trust agrees in writing that this
Lease shall not be terminated or modified in any material way in the event of
any foreclosure so long as Tenant is not in default under this Lease. Failure of
Tenant to execute such instruments evidencing subordination of this Lease shall
constitute a Default by Tenant hereunder.
20.3 Intentionally Omitted.
---------------------
20.4 Attornment. In the event of foreclosure or exercise of the power
----------
of sale under any mortgage or deed of trust made by Landlord and covering the
44
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Premises, Building or Land, Tenant shall attorn to the purchaser upon any such
foreclosure or sale and recognize such purchaser as the Landlord under this
Lease, provided such purchaser expressly agrees in writing to be bound by the
terms of the Lease, including, but not limited to, the quiet enjoyment
provisions of Paragraph 40.
20.5 Estoppel Certificates and Financial Statements.
----------------------------------------------
(a) Delivery by Tenant. Tenant shall, within ten (10) business
------------------
days following request by Landlord therefor and without charge, execute and
deliver to Landlord any and all documents, estoppel certificates and current
financial statements of Tenant reasonably requested by Landlord in connection
with the sale or financing of the Premises, Building or Land, or requested by
any lender making a loan affecting the Premises, Building or Land. Landlord may
require that Tenant in any estoppel certificate shall (i) certify that this
Lease is unmodified and in full force and effect (or, if modified, state the
nature of such modification and certify that this Lease, as so modified, is in
full force and effect) and has not been assigned, (ii) certify the date to which
Rentals are paid in advance, if any, (iii) acknowledge that there are not to
Tenant's knowledge, any uncured defaults on the part of Landlord hereunder, or
specify such defaults if claimed, (iv) evidence the status of this Lease as may
be required either by a lender making a loan to Landlord to be secured by a deed
of trust or mortgage covering the Premises, Building or Land or a purchaser of
the Premises, Building or Land from Landlord, (v) warrant that in the event any
beneficiary of any security instrument encumbering the Premises, Building or
Land forecloses on the security instrument or sells the Premises, Building or
Land pursuant to any power of sale contained in such security instrument, such
beneficiary shall not be liable for the Security Deposit, unless the Security
Deposit actually has been received by the beneficiary from Landlord, (vi)
certify the date Tenant entered into occupancy of the Premises and that Tenant
is conducting business at the Premises, (vii) certify that all improvements to
be constructed on the Premises by Landlord have been substantially completed
except for punch list items which do not prevent Tenant from using the Premises
for its intended use, and (viii) certify such other matters relating to the
Lease and/or Premises as may be reasonably requested by a lender making a loan
to Landlord or a purchaser of the Premises, Building or Land from Landlord. Any
such estoppel certificate may be conclusively relied upon by any prospective
purchaser or encumbrancer of the Premises, Building or Land. Any financial
statements of Tenant shall include an opinion of a certified public accountant
(if available) and a balance sheet and profit and loss statement for the most
recent fiscal year, or a reasonable substitute for the form of such financial
informa-
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tion, all prepared in accordance with generally accepted accounting principles
consistently applied.
(b) Nondelivery by Tenant. Tenant's failure to deliver an estoppel
---------------------
certificate as required pursuant to Paragraph 20.5(a) above shall be conclusive
upon Tenant that (i) this Lease is in full force and effect, without
modification except as may be represented by Landlord and has not been assigned,
(ii) there are now no uncured defaults in Landlord's performance, (iii) no
Rentals have been paid in advance except those that are set forth in this Lease,
(iv) no beneficiary of any security instrument encumbering the Premises,
Building or Land shall be liable for the Security Deposit in the event of a
foreclosure or sale under such security instrument, unless the Security Deposit
actually has been received by the beneficiary from Landlord, (v) the
improvements to be constructed on the Premises by Landlord have been
substantially completed except for punch list items which do not prevent Tenant
from using the Premises for its intended use, and (vi) Tenant has entered into
occupancy of the Premises on such date as may be represented by Landlord and is
open and conducting business at the Premises. Tenant's failure to deliver any
financial statements, estoppel certificates or other documents as required
pursuant to Paragraph 20.5(a) above shall be a Default by Tenant.
21. Holding Over. This Lease shall terminate without further notice at
------------
the expiration of the Lease Term. Any holding over by Tenant after Lease
Termination shall not constitute a renewal or extension of the Lease Term, nor
give Tenant any rights in or to the Premises except as expressly provided in
this Lease. Any holding over after Lease Termination with the consent of
Landlord shall be construed to be a tenancy from month to month, at one hundred
fifty percent (150%) of the monthly Rent for the month preceding Lease
Termination in addition to all Additional Rent payable hereunder, and shall
otherwise be on the terms and conditions herein specified insofar as applicable.
If Tenant remains in possession of the Premises after Lease Termination without
Landlord's consent, Tenant shall indemnify, defend and hold Landlord harmless
from and against any loss, damage, expense, claim or liability resulting from
Tenant's failure to surrender the Premises, including without limitation, any
claims made by any succeeding tenant based on delay in the availability of the
Premises.
22. Notices. Any notice required or desired to be given under this Lease
-------
shall be in writing, and all notices shall be given by personal delivery or
mailing. All notices personally given on Tenant may be delivered to any person
apparently in charge at the Premises, on any corporate officer or agent of
Tenant if Tenant is a
46
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corporation, or on any one signatory party if more than one party signs this
Lease on behalf of Tenant; any notice so given shall be binding upon all
signatory parties as if served upon each such party personally. Any notice given
pursuant to this Paragraph 22 shall be deemed to have been given when personally
delivered, or if mailed, when three (3) business days have elapsed from the time
when such notice was deposited in the United States mail, certified or
registered mail and postage prepaid, addressed to the party at the last address
given for purposes of notice pursuant to the provisions of this Paragraph 22. At
the date of execution of this Lease, the addresses of Land lord and Tenant are
set forth in Paragraph 1.12 above.
23. Attorneys' Fees. In the event either party hereto shall bring any
---------------
action or legal proceeding for damages for an alleged breach of any provision of
this Lease, to recover Rentals, to enforce an indemnity, defense or hold
harmless obligation, to terminate the tenancy of the Premises, or to enforce,
protect, interpret, or establish any term, condition, or covenant of this Lease
or right or remedy of either party, the prevailing party shall be entitled to
recover, as a part of such action or proceeding, reasonable attorneys' fees and
court costs, including reasonable attorneys' fees and costs for appeal, as may
be fixed by the court or jury. Notwithstanding anything to the contrary
contained in this Lease, "prevailing party" as used in this paragraph shall
include the party who dismisses an action for recovery hereunder in exchange for
sums allegedly due, performance of covenants allegedly breached or
considerations substantially equal to the relief sought in the action.
24. Assignment, Subletting and Hypothecation.
----------------------------------------
24. In General. Tenant shall not voluntarily sell, assign or transfer
----------
all or any part of Tenant's interest in this Lease or in the Premises or any
part thereof, sublease all or any part of the Premises, or permit all or any
part of the Premises to be used by any person or entity other than Tenant or
Tenant's employees, except as specifically provided in this Paragraph 24.
24.2 Voluntary Assignment and Subletting.
-----------------------------------
(a) Notice to Landlord. Tenant shall, by written notice, advise
------------------
Landlord of Tenant's desire on a stated date (which date shall not be less than
fifteen (15) days nor more than ninety (90) days after the date of Tenant's
notice) to assign this Lease or to sublet all or any part of the Premises for
any part of the Lease Term. Said notice shall state that the notice constitutes
an offer to terminate the Lease pursuant to Paragraph 24.2(b) if the notice
applies to a proposed assignment of the
47
<PAGE>
Lease or Tenant's interest herein. Tenant's notice shall state the name, legal
composition and address of the proposed assignee or subtenant, and Tenant shall
provide the following information to Landlord with said notice: a true and
complete copy of the proposed assignment agreement or sublease; a financial
statement of the proposed assignee or subtenant prepared in accordance with
generally accepted accounting principles within one year prior to the proposed
effective date of the assignment or sublease; the nature of the proposed
assignee's or subtenant's business to be carried on in the Premises; the
payments to be made or other consideration to be given on account of the
assignment or sublease; a current financial statement of Tenant; and such other
pertinent information as may be requested by Landlord, all in sufficient detail
to enable Landlord to evaluate the proposed assignment or sublease and the
prospective assignee or subtenant. Tenant's notice shall not be deemed to have
been served or given until such time as Tenant has provided Landlord with all
information reasonably requested by Landlord pursuant to this Paragraph 24.2.
Tenant shall immediately notify Landlord of any modification to the proposed
terms of such assignment or sublease. Tenant may withdraw its notice at any time
prior to or after exercise by Landlord of Landlord's right to terminate as
described in Paragraph 24.2(b).
(b) Offer to Terminate. If Tenant notifies Landlord of its desire to
------------------
assign this Lease or Tenant's interest herein, Tenant's notice shall constitute
an offer to terminate this Lease and Landlord shall have the right, to be
exercised by giving written notice to Tenant within fifteen (15) days after
receipt of Tenant's notice, to terminate the Lease. If Landlord elects to
terminate, then within ten (10) days after receipt of Landlord's election,
Tenant shall have the right to rescind its request to assign, and this Lease
shall continue in full force and effect. If Tenant does not rescind its request,
this Lease shall terminate on the date stated in the notice given by Tenant
pursuant to Paragraph 24.2(a), subject to any obligations which have accrued and
are unfulfilled as of such date.
(c) Landlord's Consent. If Landlord does not exercise its right to
------------------
terminate pursuant to Paragraph 24.2(b) within fifteen (15) days after receipt
of Tenant's notice or if Tenant proposes a sublease, Landlord shall not
unreasonably withhold or delay its consent to the proposed assignment or
subletting, on the terms and conditions specified in said notice. Landlord shall
exercise good faith efforts to respond to any request for Landlord's consent to
a proposed assignment or sublease not later than fifteen (15) days after
receiving Tenant's notice of a proposed assignment or subletting as described
in Paragraph 24.2(a) above. If Tenant's notice fails to state that it
constitutes an offer to terminate the Lease as may be required pursuant to
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<PAGE>
Paragraph 24.2(a), such notice shall be deemed insufficient for the purposes of
this Paragraph 24.2, and Landlord may withhold its consent to the proposed
assignment in Landlord's absolute discretion. Without otherwise limiting the
criteria upon which Landlord may withhold its consent to any proposed assignment
or sublease, if Landlord withholds its consent where Tenant is in default at the
time of the giving of Tenant's notice or at any time thereafter, or where the
net worth of the proposed assignee (according to generally accepted accounting
principles) is less than the greater of (i) the net worth of Tenant immediately
prior to the assignment (ii) or the net worth of Tenant at the time this Lease
is executed, such withholding of consent shall be presumptively reasonable.
Fifty percent (50%) of any and all rent paid by an assignee or subtenant in
excess of the Rentals to be paid under this Lease (prorated in the event of a
sublease of less than the entire Premises), after Tenant's deduction therefrom
of all reasonable costs to effect the assignment or subletting, including
without limitation, brokerage commissions, attorneys' fees, and the cost of
leasehold improvements or alterations installed or redecorating performed by
Tenant for the sublessee, shall be paid directly to Landlord, as Additional
Rent, at the time and place specified in this Lease. For the purposes of this
Paragraph 24, the term "rent" shall include any consideration of any kind
received, or to be received, by Tenant from an assignee or subtenant, if such
sums are related to Tenant's interest in this Lease or in the Premises,
including, but not limited to key money, bonus money, and payments (in excess of
the fair market value thereof) for. Tenant's assets, fixtures, trade fixtures,
inventory, accounts, goodwill, equipment, furniture, general intangibles, and
any capital stock or other equity ownership interest of Tenant. Any assignment
or subletting without Landlord's consent shall be voidable at Landlord's option,
and shall constitute a Default by Tenant. Landlord's consent to any one
assignment or sublease shall not constitute a waiver of the provisions of this
Paragraph 24 as to any subsequent assignment or sublease nor a consent to any
subse quent assignment or sublease; further, Landlord's consent to an assignment
or sublease shall not release Tenant from Tenant's obligations under this Lease,
and Tenant shall remain jointly and severally liable with the assignee or
subtenant
(d) Assumption of Obligations. In the event Landlord consents to any
-------------------------
assignment, such consent shall be conditioned upon the assignee expressly
assuming and agreeing to be bound by each of Tenant's covenants, agreements and
obligations contained in this Lease, pursuant to a written assignment and
assumption agreement in a form reasonably approved by Landlord. Landlord's
consent to any assignment or sublease shall be evidenced by Landlord's signature
on said assignment and assumption agreement or on said sublease or by a
separate written consent. In the event Landlord consents to a proposed
assignment or sublease, such assign-
49
<PAGE>
ment or sublease shall be valid and the assignee or subtenant shall have the
right to take possession of the Premises only if an executed original of the
assignment or sublease is delivered to Landlord, and such document contains the
same terms and conditions as stated in Tenant's notice to Landlord given
pursuant to Paragraph 24.2(a) above, except for any such modifications to which
Landlord has consented in writing.
24.3 Collection of Rent. Tenant hereby irrevocably gives to and
------------------
confers upon Landlord, as security for Tenant's obligations under this Lease,
the right, power and authority to collect all rents from any assignee or
subtenant of all or any part of the Premises as permitted by this Paragraph 24,
or otherwise, and Landlord, as assignee of Tenant, or a receiver for Tenant
appointed on Landlord's application, may collect such rent and apply it toward
Tenant's obligations under this Lease; provided, however, that until the
occurrence of any Default by Tenant, subject to applicable cure periods, or
except as provided by the provisions of Paragraph 24.2(c) above, Tenant shall
have the right to collect such rent. Upon the occurrence of any Default by
Tenant, Landlord may at any time without notice in Landlord's own name sue for
or otherwise collect such rent, including rent past due and unpaid, and apply
the same, less costs and expenses of operation and collection, including
reasonable attorneys' fees, toward Tenant's obligations under this Lease.
Landlord's collection of such rents shall not constitute an acceptance by
Landlord of attornment by such subtenants. In the event of a Default by Tenant,
Landlord shall have all nights provided by this Lease and by law, and Landlord
may, upon re-entry and taking possession of the Premises, eject all parties in
possession or eject some and not others, or eject none, as Landlord shall
determine in Landlord's sole discretion.
24.4 Corporations and Partnerships. If Tenant is a partnership, any
-----------------------------
withdrawal or substitution (whether voluntary, involuntary, or by operation of
law and whether occurring at one time or over a period of time) of any
partner(s) owning fifty percent (50%) or more (cumulatively) of the partnership,
any assignment(s) of fifty percent (50%) or more (cumulatively) of any interest
in the capital or profits of the partnership, or the dissolution of the
partnership shall be deemed an assignment of this Lease requiring the prior
written consent of Landlord. If Tenant is a corporation, any dissolution,
merger, consolidation or other reorganization of Tenant any sale or transfer (or
cumulative sales or transfers) of the capital stock of Tenant in excess of fifty
percent (50%), or any sale (or cumulative sales) of all of the assets of Tenant
shall be deemed an assignment of this Lease requiring the prior written consent
of Landlord. Any such withdrawal or substitution of partners or assignment of
any interest in or dissolution of a partnership tenant, and any such sale of
stock or
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<PAGE>
assets of a corporate tenant without the prior written consent of Landlord shall
be a Default by Tenant hereunder. The foregoing notwithstanding, the sale or
transfer of any or all of the capital stock of a corporation, the capital stock
of which is now or hereafter becomes publicly traded, shall not be deemed an
assignment of this Lease.
Notwithstanding anything to the contrary contained in this Lease, Tenant,
without Landlord's prior written consent (but with notice to Landlord), may
sublet the Premises or assign this Lease to (i) a subsidiary, affiliate,
division or corporation controlled by or under common control with Tenant; (ii)
a successor corporation related to Tenant by merger, consolidation, non-
bankruptcy reorganization or government action; or (iii) a purchaser of
substantially all of Tenant's assets located at the Premises, provided that in
either of the latter two instances the successor or purchaser has a net worth
not less than the net worth of Tenant at the time that Tenant executes this
Lease (each, a "Permitted Assignee"). Notwithstanding that a Transfer is made to
a Permitted Assignee, Tenant shall not be released from any of its obligations
under this Lease and such Permitted Assignee shall be required to assume all of
Tenant's obligations hereunder as a condition to such transfer being permitted
without Landlord's prior written consent.
24.5 Reasonable Provisions. Tenant expressly agrees that the
---------------------
provisions of this Paragraph 24 are not unreasonable standards or conditions for
purposes of Section 1951.4(b)(2) of the California Civil Code, as amended from
time to time, under bankruptcy laws, or for any other purpose.
24.6 Attorneys' Fees. Tenant shall pay, as Additional Rent, Land
---------------
lord's reasonable attorneys' fees for reviewing, investigating, processing
and/or documenting any requested assignment or sublease, whether or not
Landlord's consent is granted.
24.7 Involuntary Transfer. No interest of Tenant in this Lease shall
--------------------
be assignable involuntarily or by operation of law, including, without
limitation, the transfer of this Lease by testacy or intestacy. Each of the
following acts shall be considered an involuntary assignment:
(a) If Tenant is or becomes bankrupt or insolvent, makes an
assignment for the benefit of creditors, or a proceeding under any bankruptcy
law is instituted in which Tenant is the bankrupt; or, if Tenant is a
partnership or consists of more than one person or entity, if any partner of the
partnership or other person or
51
<PAGE>
entity is or becomes bankrupt or insolvent or makes an assignment for the
benefit of creditors;
(b) Levy of a writ of attachment or execution on this Lease;
(c) Appointment of a receiver with authority to take possession
of the Premises in any proceeding or action to which Tenant is a party; or
(d) Foreclosure of any lien affecting Tenant's interest in the
Premises, which lien was not consented to by Landlord pursuant to Paragraph
24.8.
An involuntary assignment shall constitute a Default by Tenant and Landlord
shall have the right to terminate this Lease, in which case this Lease shall not
be treated as an asset of Tenant. In the event the Lease is not terminated, the
provisions of Paragraph 24.2(c) regarding rents paid by an assignee or subtenant
shall apply. If a writ of attachment or execution is levied on this Lease, or if
any involuntary proceeding in bankruptcy is brought against Tenant or a
receiver is appointed, Tenant shall have sixty (60) days in which to cause the
attachment or execution to be removed, the involuntary proceeding dismissed, or
the receiver removed.
24.8 Hypothecation. Tenant shall not hypothecate, mortgage or encumber
-------------
Tenant's interest in this Lease or in the Premises or otherwise use this Lease
as a security device in any manner without the consent of Landlord, which
consent Landlord may withhold in its sole and absolute discretion. Consent by
Landlord to any such hypothecation or creation of a lien or mortgage shall not
constitute consent to an assignment or other transfer of this Lease following
foreclosure of any permitted lien or mortgage.
24.9 Binding on Successors. The provisions of this Paragraph 24
---------------------
expressly apply to all heirs, successors, sublessees, assignees and transferees
of Tenant.
25. Successors. Subject to the provisions of Paragraph 24 above and
----------
Paragraph 30.2(a) below, the covenants, conditions, and agreements contained in
this Lease shall be binding on the parties hereto and on their respective heirs,
successors and assigns.
26. Landlord Default; Mortgagee Protection. Landlord shall not be in
--------------------------------------
default under this Lease unless Tenant shall have given Landlord written notice
of
52
<PAGE>
the breach and, within thirty (30) days after notice, Landlord has not cured the
breach or, if the breach is such that it cannot reasonably be cured under the
circumstances within thirty (30) days, has not commenced diligently to prosecute
the cure to completion. Any money judgment obtained by Tenant based upon
Landlord's breach of this Lease shall be satisfied only out of the proceeds of
the sale or disposition of Landlord's interest in the Premises (whether by
Landlord or by execution of judgment). In the event of any default on the part
of Landlord under this Lease, Tenant shall give notice by registered or
certified mail to any beneficiary of a deed of trust or any mortgagee of a
mortgage affecting the Premises, Building or Land whose address shall have been
furnished to Tenant, and shall offer such beneficiary or mortgagee a reasonable
opportunity to cure the default, including time to obtain possession of the
Premises by power of sale or judicial foreclosure, if such should prove
necessary to effect a cure.
27. Exhibits. All exhibits attached to this Lease shall be deemed to be
--------
incorporated herein by the individual reference to each such exhibit, and all
such exhibits shall be deemed to be a part of this Lease as though set forth in
full in the body of the Lease.
28. Surrender of Lease Not 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, terminate all or any existing subleases or
subtenants, or may, at the option of Landlord, operate as an assignment to
Landlord of any or all such subleases or subtenants.
29. Waiver. The waiver by Tenant of any breach by Landlord of any term,
------
covenant or condition herein contained (or the acceptance by Tenant of any
performance by Landlord after the time the same shall become due) shall not be
deemed to be a waiver of such term, covenant or condition or any subsequent
breach thereof or of any other term, covenant or condition herein contained,
unless otherwise expressly agreed to by Tenant in writing. The waiver by
Landlord of any breach by Tenant of any term, covenant or condition herein
contained (or the acceptance by Landlord of any performance by Tenant after the
time the same shall become due) shall not be deemed to be a waiver of such term,
covenant or condition or any subsequent breach thereof or of any other term,
covenant or condition herein con tained, unless otherwise expressly agreed to by
Landlord in writing. The acceptance by Landlord of any sum less than that which
is required to be paid by Tenant shall be deemed to have been received only on
account of the obligation for which it is paid (or for which it is allocated by
Landlord, in Landlord's reasonable discretion,
53
<PAGE>
if Tenant does not designate the obligation as to which the payment should be
credited), and shall not be deemed an accord and satisfaction notwithstanding
any provisions to the contrary written on any check or contained in any letter
of transmittal. The acceptance by Landlord of any sum tendered by a purported
assignee or transferee of Tenant shall not be deemed a consent by Landlord to
any assignment or transfer of Tenant's interest herein. No custom or practice
which may arise between the parties hereto in the administration of the terms of
this Lease shall be construed as a waiver or diminution of Landlord's right to
demand performance by Tenant in strict accordance with the terms of this Lease.
30. General.
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30.1 Captions and Headings. The captions and paragraph headings used
---------------------
in this Lease are for convenience of reference only. They shall not be construed
to limit or extend the meaning of any part of this Lease, and shall not be
deemed relevant in resolving any question of interpretation or construction of
any paragraph of this Lease.
30.2 Definitions.
-----------
(a) Landlord. The term Landlord as used in this Lease, so far as the
--------
covenants or obligations on the part of Landlord are concerned, shall be limited
to mean and include only the owner at the time in question of the fee title to
the Premises. In the event of any transfer(s) of such interest the Landlord
herein named (and in case of any subsequent transfers or conveyances, the then
grantor) shall have no further liability under this Lease to Tenant except as to
matters of liability which have accrued and are unsatisfied as of the date of
such transfer, it being intended that the covenants and obligations contained in
this Lease on the part of Landlord shall be binding on Landlord and its
successors and assigns only during and in respect of their respective periods of
ownership of the fee; provided that any funds in the possession of Landlord or
the then grantor and as to which Tenant has an interest, less any deductions
permitted by law or this Lease, shall be turned over or credited to the grantee.
The covenants and obligations contained in this Lease on the part of Landlord
shall, subject to the provisions of this Paragraph 30.2(a), be binding upon each
Landlord and such Landlord's heirs, personal representatives, successors and
assigns only during its respective period of ownership. Except as provided in
this Paragraph 30.2(a), this Lease shall not be affected by any transfer of
Landlord's interest in the Premises, and Tenant shall attorn to any transferee
of Landlord
54
<PAGE>
provided that all of Landlord's obligations hereunder are assumed in writing by
such transferee.
(b) Agents. For purposes of this Lease and without otherwise
------
affecting the definition of the word "agent" or the meaning of an "agency," the
term "agents" shall be deemed to include the agents, employees, officers,
directors, servants, invitees, contractors, successors, representatives,
subcontractors, guests, customers, suppliers, partners, affiliated companies,
and any other person or entity related in any way to the respective party,
Tenant or Landlord.
(c) Interpretation of Terms. The words "Landlord" and "Tenant" as
-----------------------
used herein shall include the plural as well as the singular. Words in the
neuter gender include the masculine and feminine and words in the masculine or
feminine gender include the neuter.
30.3 Copies. Any executed copy of this Lease shall be deemed an
------
original for all purposes.
30.4 Time of Essence. Time is of the essence as to each and every
---------------
provision in this Lease requiring performance within a specified time.
30.5 Severability. In case any one or more of the provisions contained
------------
herein shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Lease, but this Lease shall be construed as if such
invalid, illegal or unenforceable provision had not been contained herein.
However, if Tenant's obligation to pay the Rentals is determined to be invalid
or unenforceable, this Lease at the option of Landlord shall terminate.
30.6 Governing Law. This Lease shall be construed and enforced in
-------------
accordance with the laws of the State of California.
30.7 Joint and Several Liability. If Tenant is more than one person or
---------------------------
entity, each such person or entity shall be jointly and severally liable for the
obligations of Tenant hereunder.
30.8 Construction of Lease Provisions. Although printed provisions of
--------------------------------
this Lease were prepared by Landlord, this Lease shall not be construed either
for
55
<PAGE>
or against Tenant or Landlord, but shall be construed in accordance with the
general tenor of the language to reach a fair and equitable result.
30.9 Tenant's Financial Statements. Tenant hereby warrants that all
-----------------------------
financial statements delivered by Tenant to Landlord are true, correct, and
complete, and prepared in accordance with generally accepted accounting
principles. Tenant acknowledges and agrees that Landlord is relying on such
financial statements in accepting this Lease, and that a breach of Tenant's
warranty as to such financial statements shall constitute a Default by Tenant.
Notwithstanding anything to the contrary contained in this Lease, Landlord shall
keep confidential all such financial information received from Tenant except
that Landlord may provide such financial information to Landlord's lenders or
prospective lenders with respect to the Premises.
30.10 Withholding of Landlord's Consent. Notwithstanding any other
---------------------------------
provision of this Lease where Tenant is required to obtain the consent (whether
written or oral) of Landlord to do any act, or to refrain from the performance
of any act, Tenant agrees that if Tenant is in default with respect to any term,
condition, covenant or provision, of this Lease, then Landlord shall be deemed
to have acted reasonably in withholding its consent if said consent is, in fact,
withheld.
31. Signs. Tenant shall not place or permit to be placed any sign or
-----
decoration on the Land or the exterior of the Building or that would be visible
from the exterior of the Building or Premises, without the prior written consent
of Landlord, which consent may be given or withheld in Landlord's sole
discretion. Tenant may place "for lease" signs in connection with efforts to
assign or sublease the Premises, subject to the prior written consent of
Landlord, which consent shall not be unreasonably withheld; provided that all
such signs shall be removed not later than the one hundred eightieth (180th) day
prior to Lease Termination. In no event shall any such sign revolve, rotate,
move or create the illusion of revolving, rotating or moving or be internally
illuminated and there shall be no exterior spotlighting or other illumination on
any such sign. Tenant upon written notice by Landlord, shall immediately remove
any of Tenant's signs or decorations that are visible from the exterior of the
Building or Premises or that Tenant has placed or permitted to be placed on the
Land or the exterior of the Building without the prior written consent of
Landlord, or which remain beyond the one hundred eightieth (180th) day prior to
Lease Termination. If Tenant fails to so remove such sign or decoration within
five (5) days after Landlord's written notice, Landlord may enter the Premises
and remove such sign or decoration and Tenant shall pay Landlord, as Additional
Rent upon demand, the cost of such removal. All signs placed on the Premises,
Building or
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<PAGE>
Land by Tenant shall comply with all recorded documents affecting the Premises,
including but not limited to any Declaration of Conditions, Covenants and
Restrictions; and applicable statutes, ordinances, rules and regulations of
governmental agencies having jurisdiction thereof. At Landlord's option, Tenant
shall at Lease Termination remove any sign which it has placed on the Premises,
Land or the Building, and shall, at its sole cost, repair any damage caused by
the installation or removal of such sign.
32. Landlord as Party Defendant. If, by reason of any act or omission by
---------------------------
Tenant or Tenant's agents, employees or contractors, Landlord is made a party
defendant concerning this Lease, or any portion of the Project, Tenant shall
indemnify Landlord against all liability actually incurred (or threatened
against) Landlord as a party defendant, including all damages, costs and
reasonable attorneys' fees.
33. Landlord Not a Trustee. Landlord shall not be deemed to be a trustee
----------------------
of any funds paid to Landlord by Tenant (or held by Landlord for Tenant)
pursuant to this Lease, including without limitation the Security Deposit.
Landlord shall not be required to keep any such funds separate from Landlord's
general funds or segregated from any funds paid to Landlord by (or held by
Landlord for) other tenants of the Building. Any funds held by Landlord pursuant
to this Lease shall not bear interest.
34. Interest. Any payment due from Tenant to Landlord, except for Rent
--------
received by Landlord within thirty (30) days after the same is due, shall bear
interest from the date due until paid, at an annual rate equal to the greater
of: ten percent (10%); or five percent (5%) plus the rate established by the
Federal Reserve Bank of San Francisco, as of the twenty-fifth (25th) day of the
month immediately preceding the due date, on advances to member banks under
Sections 13 and 13(a) of the Federal Reserve Act, as now in effect or hereafter
from time to time amended. In addition, Tenant shall pay all costs and
reasonable attorneys' fees incurred by Landlord in the collection of such
amounts.
35. Surrender of Premises. On the last day of the Lease Term or upon the
---------------------
sooner termination of this Lease, Tenant shall, to the reasonable satisfaction
of Landlord, surrender the Premises to Landlord in good condition and repair
(reasonable wear and tear, acts of God, casualty, condemnation, Hazardous
Materials other than those stored, used or disposed of by Tenant, its agents,
employees, contractors or invitees, and alterations concerning which Landlord
has not reserved the right to require removal excepted. Tenant shall remove all
of Tenant's personal property and trade fixtures from the Premises, and all
property not so removed
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<PAGE>
shall be deemed abandoned by Tenant. Furthermore, Tenant shall immediately
repair all damage to the Project caused by any such removal. If the Premises are
not so surrendered at Lease Termination, Tenant shall indemnify, defend and hold
Landlord harmless from and against any loss, damage, expense, claim or liability
resulting from delay by Tenant in so surrendering the Premises including,
without limitation, any claims made by any succeeding tenant or losses to
Landlord due to lost opportunities to lease to succeeding tenants.
36. Labor Disputes. In the event Tenant shall in any manner be involved
--------------
in or be the object of a labor dispute which subjects the Premises or any part
of the Project to any picketing, work stoppage or other concerted activity which
in the reasonable opinion of Landlord is detrimental to the operation of the
Project or its tenants, Landlord shall have the right to require Tenant, at
Tenant's own expense and within a reasonable period of time, to use Tenant's
best efforts to either resolve such labor dispute or terminate or control any
such picketing, work stoppage or other conceited activity to the extent
necessary to eliminate any interference with the operation of the Project. To
the extent such labor dispute interferes with the performance of Landlord's
duties hereunder, Landlord shall be excused from the perfor mance of such
duties. Failure by Tenant to use its best efforts to so resolve such dispute or
terminate or control such picketing, work stoppage or other concerted activity
within a reasonable period of time shall constitute a Default by Tenant
hereunder. Nothing contained in this Paragraph 36 shall be construed as placing
Landlord in an employer/employee relationship with any of Tenant's employees or
with any other employees who may be involved in such labor dispute.
37. No Partnership or Joint Venture. Nothing in this Lease shall be
-------------------------------
construed as creating a partnership or joint venture between Landlord, Tenant,
or any other party, or cause Landlord to be responsible for the debts or
obligations of Tenant or any other party.
38. Entire Agreement. Any agreements, warranties, or representations not
----------------
expressly contained herein shall in no way bind either Landlord or Tenant, and
Landlord and Tenant expressly waive all claims for damages by reason of any
statement, representation, warranty, promise or agreement, if any, not contained
in this Lease. This Lease supersedes and cancels any and all previous
negotiations, arrangements, brochures, agreements and understandings, whether
written or oral, between Landlord and its agents and Tenant and its agents with
respect to the Project or this Lease. This Lease constitutes the entire
agreement between the parties hereto and no addition to, or modification of, any
term or provision of this Lease shall be
58
<PAGE>
effective until and unless set forth in a written instrument signed by both
Landlord and Tenant.
39. Submission of Lease. Submission of this instrument for Tenant's
-------------------
examination or execution does not constitute a reservation of space nor an
option to lease. This instrument shall not be effective until executed by both
Landlord and Tenant (and approved by Landlord's lender holding a security
interest in the Building if required). Execution of this Lease by Tenant shall
constitute an offer by Tenant to lease the Premises, which offer shall be deemed
accepted by Landlord when this Lease is executed by Landlord and delivered to
Tenant.
40. Quiet Enjoyment. Landlord covenants and agrees with Tenant that upon
---------------
Tenant paying Rentals and performing its covenants and conditions under the
Lease, Tenant shall and may peaceably and quietly have, hold and enjoy the
Premises for the Lease Term, subject, however, to the terms of this Lease and of
any mort gages or deeds of trust affecting the Premises, and the rights reserved
by Landlord hereunder. Any purchaser upon any foreclosure or exercise of the
power of sale under any mortgage or deed of trust made by Landlord and covering
the Premises, Building or Land to whom Tenant attorns pursuant to Paragraph 20.4
above shall be bound by the terms of this Paragraph 40.
41. Authority. The undersigned parties hereby warrant that they have
---------
proper authority and are empowered to execute this Lease on behalf of the
Landlord and Tenant, respectively. If Tenant is a corporation (or partnership),
each individual executing this Lease on behalf of said corporation (or
partnership) represents and warrants that he is duly authorized to execute and
deliver this Lease on behalf of said corporation in accordance with a duly
adopted resolution of the Board of Directors of said corporation or in
accordance with the by-laws of said corporation (or on behalf of said
partnership in accordance with the partnership agreement of such partnership),
and that this Lease is binding upon said corporation (or partnership) in
accordance with its terms. If Tenant is a corporation, and this Lease is not
executed by two corporate officers, Tenant shall, upon execution of this Lease,
deliver to Landlord evidence of the authority of the individual executing this
Lease on behalf of Tenant to execute this Lease on behalf of Tenant. In the
event Tenant should fail to deliver such evidence to Landlord upon execution of
this Lease, Landlord shall not be deemed to have waived its right to require
delivery of such evidence, and at any time during the Lease Term Landlord may
request Tenant to deliver the same, and Tenant agrees it shall thereafter
promptly deliver such evidence to Landlord. If Tenant is a corporation, Tenant
warrants that:
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(a) Tenant is a valid and existing corporation;
(b) Tenant is qualified to do business in California;
(c) All fees and all franchise and corporate taxes are paid to
date, and will be paid when due;
(d) All required forms and reports will be filed when due; and
(e) The signers of this Lease are properly authorized to execute
this Lease.
42. Broker. Landlord and Tenant each represent and warrant to the other
------
that it has had no dealings with any person, firm, broker or finder other than
Colliers Parrish International, Inc. ("CP"), Wayne Mascia and Associates ("WM")
and Lynch, Murphy, Walsh & Partners ("LM"), in connection with the negotiation
of this Lease and/or the consummation of the transaction contemplated hereby,
and that no broker or other person, firm or entity other than CP (and WM or LM
if either is to be paid a commission by Tenant or CP) is entitled to a
commission or finder's fee in connection with said transaction. Landlord agrees
to pay CP a brokerage commission in connection with this Lease pursuant to the
terms of a separate written agreement between Landlord and CP. Landlord shall
not be obligated to pay a brokerage commission to LM or WM. Tenant shall
indemnify, defend and hold Landlord harmless from and against liability for
compensation or charges which may be claimed by LM and/or WM by reason of any
dealings or actions of Tenant, including any costs, expenses and/or attorneys'
fees reasonably incurred with respect thereto. Landlord and Tenant do each
hereby agree to indemnify, defend and hold the other harmless from and against
liability for compensation or charges which may be claimed by any unnamed
broker, finder or other similar party by reason of any dealings or actions of
the indemnifying party including any costs, expenses and/or attorneys' fees
reasonably incurred with respect thereto. The obligations to indemnify, defend
and hold harmless as set forth in the immediately preceding sentence shall
survive the termination of this Lease.
43. Lease Guaranty. Concurrently with the execution of the Lease by
--------------
Tenant, Tenant shall cause CMG Information Services, Inc. to execute a Lease
Guaranty in the form and content of Exhibit C attached hereto and made a part
---------
hereof. The execution of such Lease Guaranty by an authorized officer of CMG
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Information Services, Inc. is a condition precedent to the effectiveness of
Landlord's obligations under this Lease.
IN WITNESS WHEREOF, the parties have executed this Lease as of the date set
forth below.
Dated: [undated] , 1997
LANDLORD:
BORLAND INTERNATIONAL, INC.
a Delaware corporation
By: /s/ James M. Schmidt
---------------------------------
Its: Vice President, Human Resources
--------------------------------
TENANT:
CMG INFORMATION TECHNOLOGIES, INC,
a Delaware corporation
By: /s/ Andrew J. Hajducky
--------------------------------
Its: CFO
-------------------------------
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EXHIBITS
--------
A. Site Plan Paragraph 1.4 (Building C shown cross-hatched and the
Land outlined in red pursuant to Paragraph 2.1)
B. Floor Plan Paragraph 2.1 (Premises shown cross-hatched)
C. Lease Guaranty Paragraph 43
62
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EXHIBIT A
[Site Plan]
63
<PAGE>
EXHIBIT B
[Floor Plan]
64
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EXHIBIT C
LEASE GUARANTY
--------------
A. WHEREAS, a certain Net Lease Agreement (Multi-Tenant) dated
_________________, 1997, by and between BORLAND INTERNATIONAL, INC., a Delaware
corporation ("Landlord') and CMG INFORMATION TECHNOLOGIES, INC., a Delaware
corporation ("Tenant"), covering approximately 13,100 rentable square feet on
the first floor of that certain building commonly known as 1700 Green Hills
Road, Scotts Valley, California, and more particularly described in said Lease
(the "Premises"), has been executed by the Tenant, a copy of which is attached
hereto (the "Lease"); and
B. WHEREAS, as a condition to its execution of the Lease, and in
consideration of Landlord's entering into the lease with Tenant, Landlord
requires that CMG Information Services, a Delaware corporation ("Guarantor"),
guaranty the full performance of all the obligations of Tenant under the Lease;
and
C. WHEREAS, Guarantor desires that Landlord enter into the Lease with
Tenant;
NOW THEREFORE, in consideration of the execution of the Lease by Landlord
and for other valuable consideration, Guarantor directly and unconditionally
hereby guarantees the full performance by Tenant of each and every term,
covenant and condition of the Lease and every obligation of Tenant under the
Lease of any kind or nature whatsoever and the payment of all rentals, operating
expenses, common area charges, and other sums to be paid by Tenant thereunder.
Guarantor further agrees as follows:
1. This Guaranty shall inure to the benefit of Landlord, its
successors, assigns and heirs and shall remain and continue in full force and
effect as to any and all renewals, modifications, amendments (whether written or
oral or established by course of conduct), extensions or assignments of the
Lease, whether or not Guarantor shall have received any notice of or consented
to such renewals, modifications, amendments, extensions or assignments; and that
no renewal, modification amendment, extension or assignment of the Lease shall
in any manner release, discharge or diminish the obligations of Guarantor
hereunder. This Guaranty shall guarantee the performance of the Lease as it may
be renewed, extended, amended or
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modified. This paragraph modifies the provisions of California Civil Code
Section 2819.
2. Guarantor represents that Tenant has agreed to indemnify
Guarantor for Guarantor's obligations hereunder so that the Lease may be
renewed, modified, amended, extended or assigned, and Tenant or any persons or
entities comprising Tenant, may be released from Tenant's obligations under the
Lease, without notice to Guarantor, and Guarantor shall nevertheless remain
liable to Landlord under this Guaranty.
3. This Guaranty is a continuing guaranty and shall terminate only
upon the payment by Tenant of all the rentals and other sums reserved in the
Lease and upon performance by Tenant of all duties and obligations therein
contained through the expiration of the term of the Lease and any and all
renewals and extensions thereof, including the payment and performance of all
obligations of Tenant which may survive the expiration or termination of the
Lease, including any period which Tenant may remain in possession of and occupy
the Premises as a holdover tenant. Landlord may enforce all such obligations and
indemnification against Guarantor without giving previous notice to Tenant or
Guarantor, or without making any demand on either of them. Guarantor may not
revoke this Guaranty.
4. Landlord may terminate the Lease upon default by Tenant of any
term, covenant or condition of the Lease. Guarantor shall indemnify Landlord for
all losses and/or damages sustained by Landlord as a result of such termination.
Such termination, however, shall not extinguish, release or, in any way, affect
or diminish the obligations of Guarantor, as provided hereunder. Upon such
termination of the Lease, Landlord may retake possession of the Premises and
relet them for Landlord's benefit. In no event is Landlord obligated to lease
the Premises to Guarantor after such termination. Upon any termination of the
Lease, as a result of Tenants default thereunder, Guarantor's guaranty shall
extend to the payment to Landlord of all damages payable by Tenant as set forth
in the Lease.
5. This Guaranty shall not be released, extinguished, modified or,
in any way, affected or diminished by failure, on the part of Landlord, to
enforce any or all of the rights or remedies of Landlord or to grant any
indulgences or extensions of time to Tenant for the performance of any term,
covenant or condition of the Lease. This Guaranty shall remain in full force and
effect notwithstanding the failure of Landlord to insist in any one or more
instances, upon a strict performance or observance of the terms, covenants or
conditions of the Lease or to exercise any
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rights therein contained. Receipt by Landlord of rent or other performance from
Tenant, after breach by Tenant, with the knowledge of such breach, shall not be
deemed a waiver of such breach. Any reference herein to any liability of Tenant
under the tenants, covenants and conditions of the Lease shall, at the same
time, refer to the obligations of Guarantor hereunder. Landlord may settle or
compromise with Tenant all or any part of Tenant's liability or obligations
under the Lease, exchange, release or surrender any security which it may hold,
and/or waive compliance with any of the terms or provisions contained in the
Lease, all without in any way affecting the obligations of Guarantor under this
Guaranty.
6. Landlord may, at Landlord's option, proceed immediately and
directly against Guarantor in order to enforce this Guaranty. The liability of
Guarantor under this Guaranty shall be primary and it shall not be necessary
for Landlord, in order to enforce its rights hereunder, upon the default by
Tenant, to first give Guarantor notice of Tenant's default or institute suit or
pursue or exhaust Its legal remedies against Tenant.
7. If Landlord should seek to enforce any of its rights provided in
this Guaranty, and demand payment from Guarantor, such demand and payment in
response thereto shall not release, extinguish, exonerate or, in any way, affect
or diminish Guarantor's continuing obligations under this Guaranty.
8. If any action or proceeding should be commenced by Landlord
against Guarantor to enforce any of the terms, covenants or conditions of this
Guaranty, Landlord shall be entitled to recover from Guarantor hereunder, in any
such action or proceeding in which it shall prevail, all attorneys' fees, costs
and expenses.
9. Landlord may, notice, assign, or otherwise transfer, hypothecate,
encumber or dispose of in whole or in part, any of Landlord's rights, claims or
interests in the Lease or the Premises or assign this Guaranty in whole or in
part, and no assignment, hypothecation encumbrance, disposition, or other
transfer of the Lease, the Premises or this Guaranty shall operate to extinguish
or diminish, in any way, the obligations of Guarantor hereunder.
10. Until all terms, covenants and conditions in the Lease, on
Tenant's part to be performed and observed, are fully performed and observed,
Guarantor:
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<PAGE>
(a) shall have no right of subrogation against Tenant by reason
of any payments or acts of performance by Guarantor in compliance with the
obligations of Guarantor hereunder;
(b) waives any right to enforce any remedy which Guarantor now or
hereafter shall have against Tenant by reason of any one or more payments or
acts of performance, by Guarantor in compliance with the obligations of
Guarantor hereunder; and
(c) shall subordinate any liability or indebtedness of Tenant,
now or hereafter held by Guarantors, to the obligations of Tenant to Landlord
under the Lease.
11. Guarantor hereby waives:
(a) all statutes of limitations as a defense to any action
brought against Guarantor by Landlord to enforce this Guaranty, to the fullest
extent permitted by law;
(b) all defenses based upon any legal disability of Tenant or any
discharge or limitation of liability of Tenant, to Landlord, whether consensual
or arising by operation of law or any bankruptcy, insolvency or debtor relief
proceeding or from any other cause;
(c) the right to require Landlord to proceed against Tenant or to
pursue any other remedy in Landlord's power,
(d) any right to participate in any security now or later held by
Landlord;
(e) all presentments, demands for performance, notice of
nonperformance, protests, notices of protest, dishonor or acceptance of this
Guaranty and all notices of the existence, creation or incurring of new or
additional obligations.
12. The obligations of Guarantor hereunder are direct, unconditional
and independent of those of Tenant under the Lease. Guarantor shall punctually
perform its obligations hereunder upon demand by Landlord.
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<PAGE>
13. If Guarantor consists of more than one person or entity, the
obligations of each person or entity constituting Guarantor shall be joint and
several. Each signatory who executes this Guaranty hereby represents that is has
done so independently of the execution hereof by any other signatory, and that
in executing this Guaranty, each signatory is not relying upon the execution
hereof by any other signatory. Each signatory shall be bound by this Guaranty
regardless of whether any other signatory executes this Guaranty. The granting
of a release of liability hereunder of less than all of the signatories hereto
shall be effective with respect to the liability hereunder of those specifically
so released but shall in no way affect the liability hereunder of any of the
signatories not so expressly released. Any prior or subsequent guaranty by
Guarantor or by any other guarantor of Tenant's obligations to Landlord shall
not be deemed to be in lieu of or to superseded or terminate this Guaranty but
shall be construed as an additional or supplementary guaranty unless otherwise
expressly provided therein.
14. All rights that Landlord has under this Guaranty are cumulative,
and in addition to any other rights that Landlord may otherwise have.
15. The provisions of this Guaranty are severable, and if any
provision herein is invalid, the balance of this Guaranty shall remain in force
and effect to the fullest extent permitted by law.
16. Guarantor hereby waives his, her or its rights to be exonerated
hereunder pursuant to the provisions of California Civil Code Section 2819
and/or 2845 and/or 2850 and pursuant to any other statute or rule of law of
similar import.
17. This Guaranty shall continue and remain unconditionally
unaffected by any assignment of the Lease by Tenant, any sublease by Tenant of
the Premises, or any change in the entity comprising Tenant. Upon any assignment
of the Lease, sublease or Transfer, Guarantor shall continue to remain liable
and obligated for the full guarantee of the performance by Tenant's successor of
each and every term, covenant and condition of the Lease and every payment and
obligation of such successor under the Lease. "Tenant" as used in this Guaranty
shall include all successors, transferees and assigns of Tenant.
18. This Guaranty shall remain and continue in full force and effect,
notwithstanding:
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(a) The commencement or continuation of any case, action, or
proceeding by, against or concerning Tenant, under any federal or state
bankruptcy, insolvency, or other debtor's relief law, including without
limitation: (i) a case under Title 11 of the United States Code concerning
Tenant, whether under Chapter 7, 11 or 13 of such Title or under any other
Chapter or, (ii) a case, action or proceeding seeking Tenant's financial
reorganization or an arrangement with any of Tenant's creditors;
(b) The voluntary or involuntary appointment of a receiver,
trustee, keeper or other person who takes possession of substantially all of
Tenant's assets or of any asset used in Tenant's business on the Premises,
regardless of whether such appoiritnient is as a result of insolvency or other
cause;
(c) The execution of an assignment for the benefit of creditors
of substantially all assets of Tenant available by law for the satisfaction of
judgment creditors.
19. Upon demand by Landlord, Guarantor shall deliver to Landlord and
to any prospective purchaser of the Premises, mortgagee and/or beneficiary under
a deed of trust affecting the Premises, or other lender designated by Landlord,
an estoppel certificate, executed and acknowledged by Guarantor, to the effect
that this Guaranty is in full force and effect, and has not been amended or
terminated; and Guarantor shall certify such other matters relating to the Lease
and/or the Premises and/or this Guaranty as may be reasonably requested by a
lender making a loan to Landlord in connection with the Premises or a purchaser
of the Premises from Landlord.
20. This Guaranty shall remain in full force and effect
notwithstanding the receipt by Landlord of any additional security, whether from
Guarantor, Tenant or a third party, securing the performance of any of the
terms, covenants, or conditions of the Lease, including the obligation to pay
the rentals as provided in the Lease. The release by Landlord of any security
obtained from Guarantor, Tenant or a third party, securing the performance of
any of the terms, covenants or conditions of the Lease, including the covenant
to pay the rentals, shall not release, extinguish or, in any way, affect or
diminish the obligations of Guarantor hereunder, and Guarantor hereby waives the
right to require Landlord to proceed against or exhaust any security that
Landlord holds from Tenant, Guarantor, or a third party.
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21. This Guaranty shall remain in full force and effect,
notwithstanding that other guarantors from time to time may guarantee or
otherwise become responsible for the performance of the terms, covenants and
conditions of the Lease.
22. This Guaranty shall be governed and construed under the laws of
the State of California. This Guaranty shall be binding upon Guarantor, his
successors and assigns. Guarantor hereby consents to personal jurisdiction in
the Superior Court of the State of California for the County of Santa Cruz and
the United States District Court of the Northern District of California and
hereby agrees that any action to enforce this Guaranty or arising out of or in
connection with this Guaranty shall be brought in such courts.
23. Unless otherwise defined in this Guaranty, capitalized terms used
herein shall have the same meaning and definition as set forth for such terms in
the Lease.
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IN WITNESS WHEREOF, the undersigned Guarantor has executed this Guaranty as
of ___________________________ 1997.
GUARANTOR
CMG INFORMATION SERVICES,
a Delaware corporation
By: /s/ Andrew J. Hajducky
-----------------------------
Its: CFO
----------------------------------------
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FIRST AMENDMENT TO NET LEASE AGREEMENT
This First Amendment to Net Lease Agreement ("Amendment") is dated as of
June 1, 1998, by and between Borland International, Inc., a Delaware corporation
dba INPRISE Corporation ("Landlord") and NaviSite Internet Services, a Delaware
corporation (formerly known as CMG Information Technologies, Inc.) ("Tenant").
RECITALS
--------
A. Landlord and Tenant have entered into a Net Lease Agreement dated as
of March 20, 1997 (the "Lease") covering that certain space, consisting of
approximately thirteen thousand one hundred (13,100) rentable square feet,
situated in the first floor of that certain building (the "Building") located at
1700 Green Hills Road in the City of Scotts Valley, County of Santa Cruz, State
of California (the "Premises").
B. Landlord desires to lease to Tenant, and Tenant desires to lease from
Landlord, pursuant to the terms and conditions set forth below, an additional
approximately one thousand seventeen (1,017) rentable square feet on the first
floor of the Building adjacent to the Premises. Upon leasing such additional
space on the first floor of the Building, Tenant will be leasing approximately
fourteen thousand one hundred seventeen (14,117) rentable square feet on the
first floor of the Building.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below, the parties hereto agree as follows:
1. Additional Space.
----------------
(a) Demise of Additional Space. Landlord hereby leases to Tenant and
--------------------------
Tenant hereby leases from Landlord that certain space, consisting of
approximately one thousand seventeen (1,017) rentable square feet located
adjacent to the Premises and more particularly identified on Exhibit "A"
----------
attached hereto and made a part hereof (the "Additional Space"). Except to the
extent that such meaning would be clearly inconsistent with the terms of this
Amendment, wherever the term "Premises" is used in the Lease, such terms shall
include the Additional Space.
(b) Term. The term of the Lease with respect to the Additional Space
----
shall commence on June 1, 1998 (the "Additional Space Commencement Date") and
shall be coterminus with the lease of the balance of the Premises. In the
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event Tenant elects, pursuant to Paragraph 3.5 of the Lease, to extend the term
of the Lease, such election shall also operate as to extend the term of the
Lease as to the Premises and the Additional Space at a rental as described in
---
Paragraph 4.4 of the Lease.
(c) Early Occupancy of Additional Space. Prior to the Additional
-----------------------------------
Space Commencement Date, Tenant shall have the right, subject to the terms of
this subparagraph 1(c), to enter the Premises solely for the purpose of
fixturizing the Additional Space, installing the door referred to in paragraph
1(d) below and installing furniture, furnishings and telephones, if applicable,
in the Additional Space. Tenant's right of early occupancy with respect to such
Additional Space shall be subject to all of the terms and conditions of the
Lease, as amended hereby, except that Tenant shall not be obligated to pay Rent
or Tenant's pro rata share of Common Area Charges (with respect to the
Additional Space only) prior to the Additional Space Commencement Date.
(d) Tenant Improvements in Additional Space. Prior to the Additional
---------------------------------------
Space Commencement Date, Tenant shall, at Tenant's sole cost, construct or
install a door separating the Additional Space from the restrooms located
adjacent to the Additional Space in the location shown on Exhibit B attached
---------
hereto. The provisions of Section 13.1 and 13.2 of the Lease shall apply to any
other alterations or improvements that Tenant desires to construct or install,
or cause to be constructed or installed, in the Additional Space. The parties
hereto acknowledge and agree that Landlord shall have no obligation to improve
the Additional Space and shall have no obligation to provide any allowance for
the cost of construction of any improvements with respect to the Additional
Space, and Tenant shall accept such Additional Space in its "as is" condition.
(e) Rent. Tenant shall pay to Landlord as monthly rent for the
----
Additional Space ("Additional Space Rent"), in advance, without offset,
deduction or demand, on the first day of each month, commencing on the
Additional Space Commencement Date and continuing throughout the term of the
Lease (until adjusted pursuant to the terms of subparagraph 1(f) below), the sum
of One Thousand Two Hundred Twenty and 40/100 Dollars ($1,220.40) per month
(NNN). Additional Space Rent shall be prorated, based on a thirty (30) day
month, for any partial month during the term of the Lease following the
Additional Space Rent Commencement Date. The Additional Space Rent shall be
adjusted pursuant to the terms of subparagraph 1(f) below and also shall be
adjusted pursuant to the terms of Paragraph 4.4 in the event
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Tenant exercises its option to extend the Lease Term as provided in Paragraph
3.5 of the Lease.
(f) Cost of Living Adjustments. The Additional Space Rent payable
--------------------------
hereunder shall be adjusted pursuant to this subparagraph 1(f) on each
anniversary of the Commencement Date of the Lease with respect to the original
Premises (and on each anniversary of the commencement date of the Extended Term,
if applicable). The Additional Space Rent as adjusted shall be payable monthly
pursuant to the terms of subparagraph 1(e) above until the next adjustment under
this subparagraph 1(f). As used herein, the term "Adjustment Date" shall mean
the date of an Additional Space Rent adjustment under this subparagraph 1(f).
The first such Adjustment Date shall be April 7, 1999. As of each Adjustment
Date, the monthly Additional Space Rent shall be increased to an amount equal to
the product obtained by multiplying the monthly Additional Space Rent in effect
as of the Additional Space Commencement Date or commencement date of the
Extended Term, as the case may be, by a fraction, the numerator of which is the
New Index as of the applicable Adjustment Date and the denominator of which is
the Initial Index; however, in no event shall the monthly Additional Space Rent
be increased on any Adjustment Date by an amount less than three percent (3%) of
the monthly Additional Space Rent in effect immediately prior to the applicable
Adjustment Date and in no event shall the monthly Additional Space Rent be
increased on any Adjustment Date by an amount more than six percent (6%) of the
monthly Additional Space Rent in effect immediately prior to the applicable
Adjustment Date. For the purposes of adjusting the Additional Space Rent as
provided in this subparagraph 1(f), the following definitions shall apply:
(i) INDEX: The Consumer Price Index (all items) for all Urban
Consumers as published by the United States Department of Labor, Bureau of Labor
Statistics, for the San Francisco/Oakland/San Jose Metropolitan Area (1982-
84=100);
(ii) INITIAL INDEX: the Index published for these month nearest but
prior to the Additional Space Commencement Date (except that during the Extended
Term, the "Initial Index" shall mean the Index published for the month nearest
but prior to the date on which the Extended Term commences);
(c) NEW INDEX: The Index published nearest but prior to the
applicable Adjustment Date.
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If, at any time when the Additional Space Rent is to be adjusted as provided
above, the Index is changed so that the base year differs from the base year
used for the Initial Index, the Index shall be converted in accordance with the
conversion factor published by the United States Department of Labor, Bureau of
Labor Statistics. In the event the Index is otherwise changed or discontinued
during the term of this Lease with respect to the Additional Space, the most
nearly comparable official price index of the United States Government (as
determined in Landlord's reasonable discretion) shall be used for computing the
adjustments to the Additional Space Rent.
2. Prepaid Rent. Concurrently with the execution of this Amendment,
------------
Tenant shall pay to Landlord the sum of One Thousand Two Hundred Twenty and
40/100 Dollars ($1,220.40), which is to be applied by Landlord to the first
month's rent due under this Amendment for Additional Space Rent.
3. Additional Security Deposit. Concurrently with the execution of this
---------------------------
Amendment, Tenant shall pay to Landlord an additional of One Thousand Two
Hundred Twenty and 40/100 Dollars ($1,220.40), which is to be added to the
Security Deposit previously delivered to Landlord and applied in accordance with
the terms of Paragraph 5 of the original Lease.
4. Additional Parking Spaces. Effective as of the Additional Space
-------------------------
Commencement Date, Paragraph 1.13 of the Lease is hereby amended to provide that
Tenant shall be entitled to the non-exclusive right to use no more than
forty-nine (49) parking spaces within the Common Area.
5. Tenant's Percentage Share of Common Area Charges. Effective as of the
------------------------------------------------
Additional Space Commencement Date, Tenant's percentage share of Common Area
Charges as provided in Paragraph 1.10 of the Lease shall be increased to twenty
and sixty-three hundredths percent (20.63%).
6. Commissions. Landlord and Tenant each represent and warrant to the
-----------
other that it has no dealings with any person, firm, broker or finder in
connection with the negotiation of this Amendment and/or the consummation of the
transaction contemplated hereby, and that no broker nor other person, firm or
entity is entitled to a commission or finder's fee in connection with the lease
of the Additional Space. Landlord and Tenant do each hereby agree to indemnify,
defend and hold the other harmless from and against liability for compensation
or charges which may be claimed by any broker, finder or other similar party by
reason of any dealings or actions of the indemnifying party including any costs,
expenses and/or attorneys' fees
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reasonably incurred with respect thereto. The obligation to indemnify, defend
and hold harmless as set forth in the immediately preceding sentence shall
survive the termination of the Lease.
7. Notices . Paragraph 1.12 of the Lease is hereby amended, in part, to
-------
provide that notices to Landlord are to be sent to the attention of "Director of
Facilities" and not to the attention of Paul W. Emery II, CFO.
8. Definitions. Except as otherwise provided herein, the capitalized
-----------
terms used herein shall have the definitions set forth in the Lease.
9. Lease Terms. Except as otherwise modified herein, the terms and
-----------
conditions of the Lease shall remain unmodified and in full force and effect.
In the event of any inconsistency or conflict between the terms of this
Amendment and the original Lease, the terms of this Amendment shall control.
10. Counterparts. This Amendment may be executed in counterparts, each of
------------
which shall be deemed an original, and which together shall constitute one
instrument.
11. Lease Guaranty. This Amendment shall be of no force or effect unless
--------------
and until consented to by CMG Information Services as set forth below.
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
set forth above.
LANDLORD:
BORLAND INTERNATIONAL, INC.,
a Delaware corporation, dba INPRISE Corporation
By: /s/ James M. Schmidt
------------------------------------------------
James M. Schmidt
Its: Vice-President, Human Resources
By: ________________________________________________
Its: ________________________________________________
TENANT:
NAVISITE INTERNET SERVICES,
a Delaware corporation (formerly known as CMG
Information Technologies, Inc.)
By: /s/ Robert B. Eisenberg
------------------------------------------------
Its: President
-----------------------------------------------
By: ______________________________________________
Its: ______________________________________________
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The undersigned, CMG Information Services, a Delaware corporation, hereby
consents to the Amendment above and acknowledges and agrees that (i) its Lease
Guaranty dated April 7, 1997, with respect to the Tenant's obligations under the
Lease referred to above shall be applicable to such Lease, as amended by the
Amendment above, and (ii) the aforesaid Lease Guaranty shall remain in full
force and effect and the undersigned shall remain liable under such Lease
Guaranty.
CMG INFORMATION SERVICES,
a Delaware corporation
By: /s/ Andrew J. Hajducky
-----------------------------------------------
Its: Chief Financial Officer
-----------------------------------------------
By: _______________________________________________
Its: _______________________________________________
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EXHIBIT A
[1700 Green Hills Road First Floor - Site Plan]
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EXHIBIT B
[1700 Green Hills - First Floor Layout Drawing]
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