California-Irvine-135 Technology Drive Lease - Irvine Co. and Phoenix Technologies Ltd.
INDUSTRIAL LEASE
(SINGLE TENANT; NET)
BETWEEN
THE IRVINE COMPANY
AND
PHOENIX TECHNOLOGIES LTD.
<PAGE>
INDEX TO INDUSTRIAL LEASE
(Single Tenant; Net)
ARTICLE I. BASIC LEASE PROVISIONS
ARTICLE II. PREMISES
Section 2.1 Leased Premises
Section 2.2 Acceptance of Premises
Section 2.3 Building Name and Address
Section 2.4 Must Take Space
Section 2.5 Landlord's Responsibilities/ADA
ARTICLE III. TERM
Section 3.1 General
Section 3.2 Delay in Possession
ARTICLE IV. RENT AND OPERATING EXPENSES
Section 4.1 Basic Rent
Section 4.2 Operating Expenses
Section 4.3 Security Deposit
ARTICLE V. USES
Section 5.1 Use
Section 5.2 Signs
Section 5.3 Hazardous Materials
ARTICLE VI. COMMON AREAS; SERVICES
Section 6.1 Utilities and Services
Section 6.2 Operation and Maintenance of Common Areas
Section 6.3 Use of Common Areas
Section 6.4 Parking
Section 6.5 Changes and Additions by Landlord
ARTICLE VII. MAINTAINING THE PREMISES
Section 7.1 Tenant's Maintenance and Repair
Section 7.2 Landlord's Maintenance and Repair
Section 7.3 Alterations
Section 7.4 Mechanic's Liens
Section 7.5 Entry and Inspection
ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT'S PROPERTY
ARTICLE IX. ASSIGNMENT AND SUBLETTING
Section 9.1 Rights of Parties
Section 9.2 Effect of Transfer
Section 9.3 Sublease Requirements
Section 9.4 Certain Transfers
(i)
<PAGE>
ARTICLE X. INSURANCE AND INDEMNITY
Section 10.1 Tenant's Insurance
Section 10.2 Landlord's Insurance
Section 10.3 Tenant's Indemnity
Section 10.4 Landlord's Nonliability
Section 10.5 Waiver of Subrogation
ARTICLE XI. DAMAGE OR DESTRUCTION
Section 11.1 Restoration
Section 11.2 Lease Governs
ARTICLE XII. EMINENT DOMAIN
Section 12.1 Total or Partial Taking
Section 12.2 Temporary Taking
Section 12.3 Taking of Parking Area
ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIAL
Section 13.1 Subordination
Section 13.2 Estoppel Certificate
Section 13.3 Financials
ARTICLE XIV. DEFAULTS AND REMEDIES
Section 14.1 Tenant's Defaults
Section 14.2 Landlord's Remedies
Section 14.3 Late Payments
Section 14.4 Right of Landlord to Perform
Section 14.5 Default by Landlord
Section 14.6 Expenses and Legal Fees
Section 14.7 Waiver of Jury Trial
Section 14.8 Satisfaction of Judgment
Section 14.9 Limitation of Actions Against Landlord
ARTICLE XV. END OF TERM
Section 15.1 Holding Over
Section 15.2 Merger on Termination
Section 15.3 Surrender of Premises; Removal of Property
ARTICLE XVI. PAYMENTS AND NOTICES
ARTICLE XVII. RULES AND REGULATIONS
ARTICLE XVIII. BROKER'S COMMISSION
ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST
ARTICLE XX. INTERPRETATION
Section 20.1 Gender and Number
Section 20.2 Headings
Section 20.3 Joint and Several Liability
Section 20.4 Successors
(ii)
<PAGE>
Section 20.5 Time of Essence
Section 20.6 Controlling Law
Section 20.7 Severability
Section 20.8 Waiver and Cumulative Remedies
Section 20.9 Inability to Perform
Section 20.10 Entire Agreement
Section 20.11 Quiet Enjoyment
Section 20.12 Survival
ARTICLE XXI. EXECUTION AND RECORDING
Section 21.1 Counterparts
Section 21.2 Corporate and Partnership Authority
Section 21.3 Execution of Lease; No Option or Offer
Section 21.4 Recording
Section 21.5 Amendments
Section 21.6 Executed Copy
Section 21.7 Attachments
ARTICLE XXII. MISCELLANEOUS
Section 22.1 Nondisclosure of Lease Terms
Section 22.2 Guaranty
Section 22.3 Changes Requested by Lender
Section 22.4 Mortgagee Protection
Section 22.5 Covenants and Conditions
Section 22.6 Security Measures
EXHIBITS
Exhibit A Description of the Premises
Exhibit B Environmental Questionnaire
Exhibit C Landlord's Disclosures
Exhibit D Insurance Requirements
Exhibit E Rules and Regulations
Exhibit X Work Letter
Exhibit Y Project Site Plan
(iii)
<PAGE>
INDUSTRIAL LEASE
(SINGLE TENANT; NET)
BETWEEN
THE IRVINE COMPANY
AND
PHOENIX TECHNOLOGIES LTD.
<PAGE>
INDUSTRIAL LEASE
(SINGLE TENANT; NET)
THIS LEASE is made as of the 1st day of October, 1996, by and between THE
IRVINE COMPANY, a Michigan corporation, hereafter called "Landlord," and
PHOENIX TECHNOLOGIES LTD., a Delaware corporation, hereinafter called
"Tenant."
ARTICLE I. BASIC LEASE PROVISIONS
Each reference in this Lease to the "Basic Lease Provisions" shall mean and
refer to the following collective terms, the application of which shall be
governed by the provisions in the remaining Articles of this Lease.
1. Premises: The Premises are more particularly described in Section 2.1.
Address of Building: 135 Technology Drive, Irvine, CA 92618
2. Project Description (if applicable): Corporate Business Center
3. Use of Premises: General
4. Estimated Commencement Date: March 1, 1997
5. Lease Term: Sixty (60) months, plus such additional days as may be
required to cause this Lease to terminate on the final day of the
calendar month.
6. Basic Rent: Fifty-Two Thousand Five Hundred Dollars ($52,500.00) per
month.
Basic Rent is subject to adjustment as follows:
Commencing on the first day of the thirteenth (13th) month of the Lease
Term, the Basic Rent shall be Sixty-Nine Thousand Seven Hundred Twenty
Dollars ($69,720.00) per month.
Commencing on the first day of the thirty-first (31st) month of the Lease
Term, the Basic Rent shall be Seventy-Six Thousand Thirty-Two Dollars
($76,032.00) per month.
7. Guarantor(s): N/A
8. Floor Area of Premises: During the first twelve (12) months of the
Term, approximately 50,000 rentable square feet; and during the remainder
of the Term, approximately 63,120 rentable square feet (see Section 2.4)
9. Security Deposit: $66,276.00
10. Broker(s): The Gibson Company
11. Additional Insureds: Insignia Commercial Group, Inc.
1
<PAGE>
12. Address for Payments and Notices:
LANDLORD TENANT
Insignia Commercial Group, Inc. Phoenix Technologies Ltd.
One Technology Drive, Suite F-207 135 Technology Drive
Irvine, CA 92618 Irvine, CA 92618
Fax No. (714) 753-1526 Fax No. (714) 440-8300
with a copy of notices to: with a copy of notices to:
IRVINE INDUSTRIAL COMPANY PHOENIX TECHNOLOGIES LTD.
P.O. Box 6370 2770 De La Cruz Blvd.
Newport Beach, CA 92658-6370 Santa Clara, California 95050
Attn: Vice President, Industrial Attn: Legal Department
Operations
Fax No. (714) 720-2161 Fax No. (408) 452-1985
13. Tenant's Liability Insurance Requirement: $1,000,000.00
14. Vehicle Parking Spaces: Two Hundred Fifty-Two (252)
15. Estimated Space Plan Approval Date: October 4, 1996
Exhibits:
A Description of Premises E Rules and Regulations
B Environmental Questionnaire X Work Letter
C Landlord's Disclosures Y Project Site Plan
D Insurance Requirements
2
<PAGE>
ARTICLE II. PREMISES
SECTION 2.1. LEASED PREMISES. Landlord leases to Tenant and Tenant
leases from Landlord the premises shown in EXHIBIT A (the "Premises"), within
the building identified in Item 1 of the Basic Lease Provisions (which
together with the underlying real property, is called the "Building"), and
containing approximately the floor area set forth in Item 8 of the Basic
Lease Provisions. The Premises is a portion of the project shown in EXHIBIT Y
(the "Project").
SECTION 2.2. ACCEPTANCE OF PREMISES. Tenant acknowledges that neither
Landlord nor any representative of Landlord has made any representation or
warranty with respect to the Premises or the Building or the suitability or
fitness of either for any purpose, including without limitation any
representations or warranties regarding zoning or other land use matters, and
that neither Landlord nor any representative of Landlord has made any
representations or warranties regarding (i) what other tenants or uses may be
permitted or intended in the Building and the Project, or (ii) any
exclusivity of use by Tenant with respect to its permitted use of the
Premises as set forth in Item 3 of the Basic Lease Provisions. Tenant
further acknowledges that neither Landlord nor any representative of Landlord
has agreed to undertake any alterations or additions or construct any
improvements to the Premises except as expressly provided in this Lease. The
taking of possession or use of the Premises by Tenant for any purpose other
than construction shall conclusively establish that the Premises and the
Building were in satisfactory condition and in conformity with the provisions
of this Lease in all respects, except for those matters which Tenant shall
have brought to Landlord's attention on a written punch list. The list shall
be limited to any items required to be accomplished by Landlord under the
Work Letter attached as EXHIBIT X, and shall be delivered to Landlord within
thirty (30) days after the term ("Term") of this Lease commences as provided
in Article III below. If no items are required of Landlord under the Work
Letter, by taking possession of the Premises Tenant accepts the improvements
in their existing condition, and waives any right or claim against Landlord
arising out of the condition of the Premises. Nothing contained in this
Section shall affect the commencement of the Term or the obligation of Tenant
to pay rent. Landlord shall diligently complete all punch list items of
which it is notified as provided above.
SECTION 2.3. BUILDING NAME AND ADDRESS. Tenant shall not utilize any
name selected by Landlord from time to time for the Building and/or the
Project as any part of Tenant's corporate or trade name. Landlord shall have
the right to change the name, address, number or designation of the Building
or Project without liability to Tenant.
SECTION 2.4. MUST TAKE SPACE. Tenant shall lease for a term starting on
the first annual anniversary of the Commencement Date and continuing for the
remainder of the Term, the balance of the Building comprising approximately
13,120 rentable square feet of space (the "Must Take Space"). Landlord shall
complete the tenant improvements for the Must Take Space as set forth in the
"Work Letter" attached hereto as Exhibit X. The Must Take Space shall be
subject to all the terms of the Lease except that the Term shall commence
twelve (12) months following the Commencement Date of this Lease. To the
extent Tenant acquires possession or commences use in any way of any portion
of the Must Take Space prior to the commencement date therefor, Tenant shall
pay Basic Rent for such portion of the Must Take Space at the same per square
foot monthly rate as for the Basic Rent for the Premises.
SECTION 2.5. LANDLORD'S RESPONSIBILITIES\ADA. It shall be Landlord's
responsibility, at its sole cost and expense, that the exterior, roof,
parking area, walkways, interior structure, all existing electrical and
mechanical systems, plumbing facilities (including restrooms), fire and life
safety equipment, air conditioning, ventilating and heating equipment which
service the Premises shall be in good working order and repair as of the
Commencement Date. It shall also be Landlord's responsibility, at its sole
cost and expense, to bring the Building into compliance with the requirements
of all governmental regulations, ordinances, and laws, which requirements
3
<PAGE>
exist as of the Commencement Date of this Lease, including without
limitation, the provisions of Title III of the Americans With Disabilities
Act ("ADA"). All other ADA compliance issues regarding the construction of
any alterations or other improvements in the Premises, the creation of a
"public access" by Tenant's use of the Premises, and in connection with the
operation of Tenant's business and employment practices in the Premises,
shall be the responsibility of Tenant at its sole cost and expense.
ARTICLE III. TERM
SECTION 3.1. GENERAL.
(a) The Term shall be for the period shown in Item 5 of the Basic Lease
Provisions. Subject to the provisions of Section 3.2 below, the Term shall
commence ("Commencement Date") on the earlier of (a) the date upon which all
relevant governmental authorities have approved the Tenant Improvements in
accordance with applicable building codes, as evidenced by written approval
thereof in accordance with the building permits issued for the Tenant
Improvements or issuance of a temporary or final certificate of occupancy for
the Premises, or (b) the date Tenant acquires possession or commences the
operation of its business in the Premises. Within ten (10) days after
possession of the Premises is tendered to Tenant, the parties shall
memorialize on a form provided by Landlord the actual Commencement Date and
the expiration date ("Expiration Date") of this Lease. Tenant's failure to
execute that form shall not affect the validity of Landlord's determination
of those dates.
(b) Provided that Tenant is not in default under any provision of this
Lease, either at the time of exercise of the extension right granted herein
or at the time of the commencement of such extension, and provided further
that Tenant is occupying the entire Premises and has not assigned or sublet
any of its interest in this Lease, Tenant may extend the Term of this Lease
for one (1) period of thirty-six (36) months. Tenant shall exercise its
right to extend the Term by and only by delivering to Landlord, not more than
twelve (12) months nor less than nine (9) months prior to the expiration date
of the Term, Tenant's irrevocable written notice of its commitment to extend
(the "Commitment Notice"). The Basic Rent payable under the Lease for the
thirty-six (36) month extension period shall be at the fair market rental,
including subsequent adjustments, for comparable space being leased by
Landlord in the Project; provided that such rate shall in no event be less
than Seventy-Two Thousand Five Hundred Eighty-Eight Dollars ($72,588.00) per
month. In the event that the parties are not able to agree on the fair
market rental within one hundred twenty (120) days prior to the expiration
date of the Term, then either party may elect, by written notice to the other
party, to cause said rental, including subsequent adjustments, to be
determined by appraisal as follows.
Within ten (10) days following receipt of such appraisal election, the
parties shall attempt to agree on an appraiser to determine the fair market
rental. If the parties are unable to agree in that time, then each party
shall designate an appraiser within ten (10) days thereafter. Should either
party fail to so designate an appraiser within that time, then the appraiser
designated by the other party shall determine the fair rental value. Should
each of the parties timely designate an appraiser, then the two appraisers so
designated shall appoint a third appraiser who shall, acting alone, determine
the fair rental value of the Premises. Any appraiser designated hereunder
shall have an M.A.I. certification with not less than five (5) years
experience in the valuation of commercial industrial buildings in Orange
County, California.
Within thirty (30) days following the selection of the appraiser, such
appraiser shall determine the fair market rental value, including subsequent
adjustments of the Premises. In determining such value, the appraiser shall
first consider rental comparables for the Project, provided that if adequate
comparables do not exist then the appraiser may consider transactions
involving similarly improved space in the Irvine Spectrum area with
appropriate adjustments for differences in location and quality of project.
In no event shall the appraiser attribute
4
<PAGE>
factors for market tenant improvement allowances or brokerage commissions to
reduce said fair market rental. The fees of the appraiser(s) shall be shared
equally by both parties.
Within twenty (20) days after the determination of the fair market
rental, Landlord shall prepare a reasonably appropriate amendment to this
Lease for the extension period and Tenant shall execute and return same to
Landlord within ten (10) days. Should the fair market rental not be
established by the commencement of the extension period, then Tenant shall
continue paying rent at the rate in effect during the last month of the
initial Term, and a lump sum adjustment shall be made promptly upon the
determination of such new rental.
If Tenant fails to timely comply with any of the provisions of this
paragraph, Tenant's right to extend the Term shall be extinguished and the
Lease shall automatically terminate as of the expiration date of the Term,
without any extension and without any liability to Landlord. Except in
connection with a "Permitted Assignment" (as defined in Section 9.4 of this
Lease), any attempt to assign or transfer any right or interest created by
this paragraph shall be void from its inception. Tenant shall have no other
right to extend the Term beyond the single thirty-six (36) month extension
created by this paragraph. Unless agreed to in a writing signed by Landlord
and Tenant, any extension of the Term, whether created by an amendment to
this Lease or by a holdover of the Premises by Tenant, or otherwise, shall be
deemed a part of, and not in addition to, any duly exercised extension period
permitted by this paragraph.
SECTION 3.2. DELAY IN POSSESSION. If Landlord, for any reason
whatsoever, cannot deliver possession of the Premises to Tenant on or before
the Estimated Commencement Date, this Lease shall not be void or voidable nor
shall Landlord be liable to Tenant for any resulting loss or damage.
However, Tenant shall not be liable for any rent and the Commencement Date
shall not occur until Landlord delivers possession of the Premises and the
Premises are in fact available for Tenant's occupancy with any Tenant
Improvements that have been approved as per Section 3.1(a) above, except that
if Landlord's failure to so deliver possession on the Estimated Commencement
Date is attributable to any action or inaction by Tenant (including without
limitation any Tenant Delay described in the Work Letter, if any, attached to
this Lease), then the Commencement Date shall not be advanced to the date on
which possession of the Premises is tendered to Tenant, and Landlord shall be
entitled to full performance by Tenant (including the payment of rent) from
the date Landlord would have been able to deliver the Premises to Tenant but
for Tenant's delay(s).
ARTICLE IV. RENT AND OPERATING EXPENSES
SECTION 4.1. BASIC RENT. From and after the Commencement Date, Tenant
shall pay to Landlord without deduction or offset, Basic Rent for the
Premises in the total amount shown (including subsequent adjustments, if any)
in Item 6 of the Basic Lease Provisions. Any rental adjustment shown in Item
6 shall be deemed to occur on the specified monthly anniversary of the
Commencement Date, whether or not that date occurs at the end of a calendar
month. The rent shall be due and payable in advance commencing on the
Commencement Date (as prorated for any partial month) and continuing
thereafter on the first day of each successive calendar month of the Term.
No demand, notice or invoice shall be required for the payment of Basic Rent.
An installment of rent in the amount of one (1) full month's Basic Rent at
the initial rate specified in Item 6 of the Basic Lease Provisions shall be
delivered to Landlord concurrently with Tenant's execution of this Lease and
shall be applied against the Basic Rent first due hereunder.
SECTION 4.2. OPERATING EXPENSES.
(a) Tenant shall pay to Landlord, as additional rent, "Building Costs" and
"Property Taxes," as those terms are defined below, incurred by Landlord in the
operation of the Building and Project. For
5
<PAGE>
convenience of reference, Property Taxes and Building Costs shall be referred
to collectively as "Operating Expenses".
(b) Commencing prior to the start of the first full "Expense Recovery
Period" (as defined below) of the Lease, and prior to the start of each full
or partial Expense Recovery Period thereafter, Landlord shall give Tenant a
written estimate of the amount of Operating Expenses for the Expense Recovery
Period. Tenant shall pay the estimated amounts to Landlord in equal monthly
installments, in advance, with Basic Rent. If Landlord has not furnished its
written estimate for any Expense Recovery Period by the time set forth above,
Tenant shall continue to pay cost reimbursements at the rates established for
the prior Expense Recovery Period, if any; provided that when the new
estimate is delivered to Tenant, Tenant shall, at the next monthly payment
date, pay any accrued cost reimbursements based upon the new estimate. For
purposes hereof, "Expense Recovery Period" shall mean every twelve month
period during the Term (or portion thereof for the first and last lease
years) commencing July 1 and ending June 30.
(c) Within one hundred twenty (120) days after the end of each Expense
Recovery Period, Landlord shall furnish to Tenant a statement showing in
reasonable detail the actual or prorated Operating Expenses incurred by
Landlord during the period, and the parties shall within thirty (30) days
thereafter make any payment or allowance necessary to adjust Tenant's
estimated payments, if any, to Tenant's actual owed amounts as shown by the
annual statement. Any delay or failure by Landlord in delivering any
statement hereunder shall not constitute a waiver of Landlord's right to
require Tenant to pay Operating Expenses pursuant hereto. Any amount due
Tenant shall be credited against installments next coming due under this
Section 4.2, and any deficiency shall be paid by Tenant together with the
next installment. If Tenant has not made estimated payments during the
Expense Recovery Period, any amount owing by Tenant pursuant to subsection
(a) above shall be paid to Landlord in accordance with Article XVI. Should
Tenant fail to object in writing to Landlord's determination of actual
Operating Expenses within sixty (60) days following delivery of Landlord's
expense statement, Landlord's determination of actual Operating Expenses for
the applicable Expense Recovery Period shall be conclusive and binding on the
parties and any future claims to the contrary shall be barred.
(d) Even though the Lease has terminated and the Tenant has vacated the
Premises, when the final determination is made of Operating Expenses for the
Expense Recovery Period in which the Lease terminates, Tenant shall upon
notice pay the entire increase due over the estimated expenses paid.
Conversely, any overpayment made in the event expenses decrease shall be
rebated by Landlord to Tenant.
(e) If, at any time during any Expense Recovery Period, any one or more
of the Operating Expenses are increased to a rate(s) or amount(s) in excess
of the rate(s) or amount(s) used in calculating the estimated expenses for
the year, then the estimate of Operating Expenses shall be increased for the
month in which such rate(s) or amount(s) becomes effective and for all
succeeding months by an amount equal to the increase. Landlord shall give
Tenant written notice of the amount or estimated amount of the increase, the
month in which the increase will become effective, and the month for which
the payments are due. Tenant shall pay the increase to Landlord as a part of
Tenant's monthly payments of estimated expenses as provided in paragraph (b)
above, commencing with the month in which effective.
(f) The term "Building Costs" shall include all expenses of operation
and maintenance of the Building and of the Building's proportionate share of
the Project, if applicable (determined as the rentable square footage of the
Building divided by the rentable square footage of all space in the Project),
to the extent such expenses are not billed to and paid directly by Tenant,
and shall include the following charges by way of illustration but not
limitation: water and sewer charges; insurance premiums or reasonable premium
equivalents should Landlord elect to self-insure any risk that Landlord is
authorized to insure hereunder; license, permit, and inspection fees; heat;
light; power; air conditioning; supplies; materials; equipment; tools; the
cost of any environmental, insurance, tax or other consultant utilized by
Landlord in connection with the Building and/or Project; establishment
6
<PAGE>
of reasonable reserves for replacements and/or repair of Common Area
improvements (if applicable), equipment and supplies; costs incurred in
connection with compliance of any laws or changes in laws applicable to the
Building or the Project (provided that to the extent that such compliance
requires a capital investment, in accordance with generally accepted
accounting principles consistently applied, Tenant shall only be responsible
to the extent of the amortized amount thereof over the useful life of such
capital investment calculated at a market cost of funds, all as determined by
Landlord, for each such year of useful life during the Term); the cost of any
capital investments (in accordance with generally accepted accounting
principles consistently applied ) other than tenant improvements for specific
tenants, to the extent of the amortized amount thereof over the useful life
of such capital investments calculated at a market cost of funds, all as
determined by Landlord, for each such year of useful life during the Term;
costs associated with the procurement and maintenance of an intrabuilding
network cable service agreement for any intrabuilding network cable
telecommunications lines within the Project, and any other installation,
maintenance, repair and replacement costs associated with such lines; labor;
reasonably allocated wages and salaries, fringe benefits, and payroll taxes
for administrative and other personnel directly applicable to the Building
and/or Project, including both Landlord's personnel and outside personnel;
any expense incurred pursuant to Sections 6.1, 6.2, 6.4, 7.2, and 10.2; and a
reasonable overhead/management fee for the professional operation of the
Building and Project. Notwithstanding anything to the contrary contained
herein, the amount of such overhead/management fee to be charged to Tenant
shall be determined by multiplying the actual fee charged (which from time to
time may be with respect to the entire Project, a portion of the Project
only, the Building only, or the Project together with other properties owned
by Landlord and/or its affiliates) by a fraction, the numerator of which is
the total rentable square footage of the Building and the denominator of
which is the total square footage of space charged with such fee actually
leased to tenants (including Tenant). It is understood that Building Costs
shall include competitive charges for direct services provided by any
subsidiary or division of Landlord.
(g) The term "Property Taxes" as used herein shall include the
following: (i) all real estate taxes or personal property taxes, as such
property taxes may be reassessed from time to time; and (ii) other taxes,
charges and assessments which are levied with respect to this Lease or to the
Building and/or the Project, and any improvements, fixtures and equipment and
other property of Landlord located in the Building and/or the Project, except
that general net income and franchise taxes imposed against Landlord shall be
excluded; and (iii) all assessments and fees for public improvements,
services, and facilities and impacts thereon, including without limitation
arising out of any Community Facilities Districts, "Mello Roos" districts,
similar assessment districts, and any traffic impact mitigation assessments
or fees; (iv) any tax, surcharge or assessment which shall be levied in
addition to or in lieu of real estate or personal property taxes, other than
taxes covered by Article VIII; and (v) reasonable costs and expenses incurred
in contesting the amount or validity of any Property Tax by appropriate
proceedings.
SECTION 4.3. SECURITY DEPOSIT. Concurrently with Tenant's delivery of
this Lease, Tenant shall deposit with Landlord the sum, if any, stated in
Item 9 of the Basic Lease Provisions, to be held by Landlord as security for
the full and faithful performance of Tenant's obligations under this Lease
(the "Security Deposit"). Subject to the last sentence of this Section, the
Security Deposit shall be understood and agreed to be the property of
Landlord upon Landlord's receipt thereof, and may be utilized by Landlord in
its discretion towards the payment of all prepaid expenses by Landlord for
which Tenant would be required to reimburse Landlord under this Lease,
including without limitation brokerage commissions and Tenant Improvement
costs. Upon any default by Tenant, including specifically Tenant's failure
to pay rent or to abide by its obligations under Sections 7.1 and 15.3 below,
whether or not Landlord is informed of or has knowledge of the default, the
Security Deposit shall be deemed to be automatically and immediately applied,
without waiver of any rights Landlord may have under this Lease or at law or
in equity as a result of the default, as a setoff for full or partial
compensation for that default. If any portion of the Security Deposit is
applied after a default by Tenant, Tenant shall within five (5) days after
written demand by Landlord deposit cash with Landlord in an amount sufficient
to restore the Security Deposit to its original amount. Landlord shall not be
required to keep this Security Deposit separate from its general funds, and
Tenant shall not be entitled to interest on the Security Deposit. If Tenant
fully performs its obligations under this Lease, the Security
7
<PAGE>
Deposit or any balance thereof shall be returned to Tenant (or, at Landlord's
option, to the last assignee of Tenant's interest in this Lease) after the
expiration of the Term, provided that Landlord may retain the Security
Deposit to the extent and until such time as all amounts due from Tenant in
accordance with this Lease have been determined and paid in full.
ARTICLE V. USES
SECTION 5.1. USE. Tenant shall use the Premises only for the purposes
stated in Item 3 of the Basic Lease Provisions, all in accordance with
applicable laws and restrictions and pursuant to approvals to be obtained by
Tenant from all relevant and required governmental agencies and authorities.
The parties agree that any contrary use shall be deemed to cause material and
irreparable harm to Landlord and shall entitle Landlord to injunctive relief
in addition to any other available remedy. Tenant, at its expense, shall
procure, maintain and make available for Landlord's inspection throughout the
Term, all governmental approvals, licenses and permits required for the
proper and lawful conduct of Tenant's permitted use of the Premises. Tenant
shall not do or permit anything to be done in or about the Premises which
will in any way interfere with the rights of other occupants of the Building
or the Project, or use or allow the Premises to be used for any unlawful
purpose, nor shall Tenant permit any nuisance or commit any waste in the
Premises or the Project. Tenant shall not do or permit to be done anything
which will invalidate or increase the cost of any insurance policy(ies)
covering the Building, the Project and/or their contents, and shall comply
with all applicable insurance underwriters rules and the requirements of the
Pacific Fire Rating Bureau or any other organization performing a similar
function. Tenant shall comply at its expense with all present and future
laws, ordinances, restrictions, regulations, orders, rules and requirements
of all governmental authorities that pertain to Tenant or its use of the
Premises, including without limitation all federal and state occupational
health and safety requirements, whether or not Tenant's compliance will
necessitate expenditures or interfere with its use and enjoyment of the
Premises. Tenant shall comply at its expense with all present and future
covenants, conditions, easements or restrictions now or hereafter affecting
or encumbering the Building and/or Project, and any amendments or
modifications thereto, including without limitation the payment by Tenant of
any periodic or special dues or assessments charged against the Premises or
Tenant which may be allocated to the Premises or Tenant in accordance with
the provisions thereof. Tenant shall promptly upon demand reimburse Landlord
for any additional insurance premium charged by reason of Tenant's failure to
comply with the provisions of this Section, and shall indemnify Landlord from
any liability and/or expense resulting from Tenant's noncompliance.
SECTION 5.2 SIGNS. Tenant shall be permitted one (1) exterior sign on
the Building (the "Exterior Sign"). The size, design, graphics, material,
style, color and other physical aspects of the Exterior Sign shall be subject
to Landlord's written approval prior to installation (which approval may be
withheld in Landlord's discretion), any covenants, conditions or restrictions
encumbering the Premises, Landlord's approved "Signage Criteria" for the
Project, and any applicable municipal or other governmental permits and
approvals. Tenant acknowledges having received and reviewed a copy of the
current Signage Criteria for the Project. Tenant shall be responsible for the
cost of the Exterior Sign, including the fabrication, installation,
maintenance and removal thereof. If Tenant fails to maintain its Exterior
Sign, or if Tenant fails to remove same upon termination of this Lease and
repair any damage caused by such removal, Landlord may do so at Tenant's
expense. Except for the foregoing, Tenant shall have no right to maintain
identification signs in any location in, on or about the Premises, the
Building or the Project and shall not place or erect signs, displays or other
advertising materials that are visible from the exterior of the Building.
SECTION 5.3 HAZARDOUS MATERIALS.
(a) For purposes of this Lease, the term "Hazardous Materials" includes
(i) any "hazardous materials" as defined in Section 25501(k) of the California
Health and Safety Code, (ii) any other substance or
8
<PAGE>
matter which results in liability to any person or entity from exposure to
such substance or matter under any statutory or common law theory, and (iii)
any substance or matter which is in excess of permitted levels set forth in
any federal, California or local law or regulation pertaining to any
hazardous or toxic substance, material or waste.
(b) Tenant shall not cause or permit any Hazardous Materials to be brought
upon, stored, used, generated, released or disposed of on, under, from or about
the Premises (including without limitation the soil and groundwater thereunder)
without the prior written consent of Landlord. Notwithstanding the foregoing,
Tenant shall have the right, without obtaining prior written consent of
Landlord, to utilize within the Premises standard office products that may
contain Hazardous Materials (such as photocopy toner, "White Out", and the
like), PROVIDED HOWEVER, that (i) Tenant shall maintain such products in their
original retail packaging, shall follow all instructions on such packaging with
respect to the storage, use and disposal of such products, and shall otherwise
comply with all applicable laws with respect to such products, and (ii) all of
the other terms and provisions of this Section 5.3 shall apply with respect to
Tenant's storage, use and disposal of all such products. Landlord may, in its
sole discretion, place such conditions as Landlord deems appropriate with
respect to any such Hazardous Materials, and may further require that Tenant
demonstrate that any such Hazardous Materials are necessary or useful to
Tenant's business and will be generated, stored, used and disposed of in a
manner that complies with all applicable laws and regulations pertaining thereto
and with good business practices. Tenant understands that Landlord may utilize
an environmental consultant to assist in determining conditions of approval in
connection with the storage, generation, release, disposal or use of Hazardous
Materials by Tenant on or about the Premises, and/or to conduct periodic
inspections of the storage, generation, use, release and/or disposal of such
Hazardous Materials by Tenant on and from the Premises, and Tenant agrees that
any costs incurred by Landlord in connection therewith shall be reimbursed by
Tenant to Landlord as additional rent hereunder upon demand.
(c) Prior to the execution of this Lease, Tenant shall complete, execute
and deliver to Landlord an Environmental Questionnaire and Disclosure
Statement (the "Environmental Questionnaire") in the form of EXHIBIT B
attached hereto. The completed Environmental Questionnaire shall be deemed
incorporated into this Lease for all purposes, and Landlord shall be entitled
to rely fully on the information contained therein. On each anniversary of
the Commencement Date until the expiration or sooner termination of this
Lease, Tenant shall disclose to Landlord in writing the names and amounts of
all Hazardous Materials which were stored, generated, used, released and/or
disposed of on, under or about the Premises for the twelve-month period prior
thereto, and which Tenant desires to store, generate, use, release and/or
dispose of on, under or about the Premises for the succeeding twelve-month
period. In addition, to the extent Tenant is permitted to utilize Hazardous
Materials upon the Premises, Tenant shall promptly provide Landlord with
complete and legible copies of all the following environmental documents
relating thereto: reports filed pursuant to any self-reporting requirements;
permit applications, permits, monitoring reports, workplace exposure and
community exposure warnings or notices and all other reports, disclosures,
plans or documents (even those which may be characterized as confidential)
relating to water discharges, air pollution, waste generation or disposal,
and underground storage tanks for Hazardous Materials; orders, reports,
notices, listings and correspondence (even those which may be considered
confidential) of or concerning the release, investigation of, compliance,
cleanup, remedial and corrective actions, and abatement of Hazardous
Materials; and all complaints, pleadings and other legal documents filed by
or against Tenant related to Tenant's use, handling, storage, release and/or
disposal of Hazardous Materials.
(d) Landlord and its agents shall have the right, but not the obligation,
to inspect, sample and/or monitor the Premises and/or the soil or groundwater
thereunder at any time to determine whether Tenant is complying with the terms
of this Section 5.3, and in connection therewith Tenant shall provide Landlord
with full access to all relevant facilities, records and personnel. If Tenant
is not in compliance with any of the provisions of this Section 5.3, or in the
event of a release of any Hazardous Material on, under or about the Premises
caused by Tenant, its agents, employees, contractors, licensees or invitees,
Landlord and its agents shall have the right, but not the obligation, without
limitation upon any of Landlord's other rights and remedies under this Lease, to
immediately enter upon the Premises without notice and to discharge Tenant's
obligations under this Section 5.3 at Tenant's
9
<PAGE>
expense, including without limitation the taking of emergency or long-term
remedial action. Landlord and its agents shall endeavor to minimize
interference with Tenant's business in connection therewith, but shall not be
liable for any such interference. In addition, Landlord, at Tenant's
expense, shall have the right, but not the obligation, to join and
participate in any legal proceedings or actions initiated in connection with
any claims arising out of the storage, generation, use, release and/or
disposal by Tenant or its agents, employees, contractors, licensees or
invitees of Hazardous Materials on, under, from or about the Premises.
(e) If the presence of any Hazardous Materials on, under, from or about
the Premises or the Project caused by Tenant or its agents, employees,
contractors, licensees or invitees results in (i) injury to any person, (ii)
injury to or any contamination of the Premises or the Project, or (iii)
injury to or contamination of any real or personal property wherever
situated, Tenant, at its expense, shall promptly take all actions necessary
to return the Premises and the Project and any other affected real or
personal property owned by Landlord to the condition existing prior to the
introduction of such Hazardous Materials and to remedy or repair any such
injury or contamination, including without limitation, any cleanup,
remediation, removal, disposal, neutralization or other treatment of any such
Hazardous Materials. Notwithstanding the foregoing, Tenant shall not, without
Landlord's prior written consent, take any remedial action in response to the
presence of any Hazardous Materials on, under or about the Premises or the
Project or any other affected real or personal property owned by Landlord or
enter into any similar agreement, consent, decree or other compromise with
any governmental agency with respect to any Hazardous Materials claims;
provided however, Landlord's prior written consent shall not be necessary in
the event that the presence of Hazardous Materials on, under or about the
Premises or the Project or any other affected real or personal property owned
by Landlord (i) imposes an immediate threat to the health, safety or welfare
of any individual or (ii) is of such a nature that an immediate remedial
response is necessary and it is not possible to obtain Landlord's consent
before taking such action. To the fullest extent permitted by law, Tenant
shall indemnify, hold harmless, protect and defend (with attorneys acceptable
to Landlord) Landlord and any successors to all or any portion of Landlord's
interest in the Premises and the Project and any other real or personal
property owned by Landlord from and against any and all liabilities, losses,
damages, diminution in value, judgments, fines, demands, claims, recoveries,
deficiencies, costs and expenses (including without limitation attorneys'
fees, court costs and other professional expenses), whether foreseeable or
unforeseeable, arising directly or indirectly out of the use, generation,
storage, treatment, release, on- or off-site disposal or transportation of
Hazardous Materials on, into, from, under or about the Premises, the Building
and the Project and any other real or personal property owned by Landlord
caused by Tenant, its agents, employees, contractors, licensees or invitees,
specifically including without limitation the cost of any required or
necessary repair, restoration, cleanup or detoxification of the Premises, the
Building and the Project and any other real or personal property owned by
Landlord, and the preparation of any closure or other required plans, whether
or not such action is required or necessary during the Term or after the
expiration of this Lease. If Landlord at any time discovers that Tenant or
its agents, employees, contractors, licensees or invitees may have caused the
release of a Hazardous Material on, under, from or about the Premises or the
Project or any other real or personal property owned by Landlord, Tenant
shall, at Landlord's request, immediately prepare and submit to Landlord a
comprehensive plan, subject to Landlord's approval, specifying the actions to
be taken by Tenant to return the Premises or the Project or any other real or
personal property owned by Landlord to the condition existing prior to the
introduction of such Hazardous Materials. Upon Landlord's approval of such
cleanup plan, Tenant shall, at its expense, and without limitation of any
rights and remedies of Landlord under this Lease or at law or in equity,
immediately implement such plan and proceed to cleanup such Hazardous
Materials in accordance with all applicable laws and as required by such plan
and this Lease. The provisions of this subsection (e) shall expressly survive
the expiration or sooner termination of this Lease.
(f) Landlord hereby discloses to Tenant, and Tenant hereby acknowledges,
certain facts relating to Hazardous Materials at the Project known by Landlord
to exist as of the date of this Lease, as more particularly described in
EXHIBIT C attached hereto. Tenant shall have no liability or responsibility
with respect to the Hazardous Materials facts described in EXHIBIT C, nor with
respect to any Hazardous Materials which Tenant proves were not caused or
permitted by Tenant, its agents, employees, contractors, licensees or invitees.
10
<PAGE>
Notwithstanding the preceding two sentences, Tenant agrees to notify its agents,
employees, contractors, licensees, and invitees of any exposure or potential
exposure to Hazardous Materials at the Premises that Landlord brings to Tenant's
attention.
ARTICLE VI. COMMON AREAS; SERVICES
SECTION 6.1. UTILITIES AND SERVICES. Tenant shall be responsible for
and shall pay promptly, directly to the appropriate supplier, all charges for
water, gas, electricity, sewer, heat, light, power, telephone, refuse pickup,
janitorial service, interior landscape maintenance and all other utilities,
materials and services furnished directly to Tenant or the Premises or used
by Tenant in, on or about the Premises during the Term, together with any
taxes thereon. Landlord shall not be liable for damages or otherwise for any
failure or interruption of any utility or other service furnished to the
Premises, and no such failure or interruption shall be deemed an eviction or
entitle Tenant to terminate this Lease or withhold or abate any rent due
hereunder. Landlord shall at all reasonable times have free access to all
electrical and mechanical installations of Landlord.
SECTION 6.2. OPERATION AND MAINTENANCE OF COMMON AREAS. During the
Term, Landlord shall operate all Common Areas within the Project. The term
"Common Areas" shall mean all areas which are not held for exclusive use by
persons entitled to occupy space, and all other appurtenant areas and
improvements provided by Landlord for the common use of Landlord and tenants
and their respective employees and invitees, including without limitation
parking areas and structures, driveways, sidewalks, landscaped and planted
areas, hallways and interior stairwells not located within the premises of
any tenant, common electrical rooms and roof access entries, common entrances
and lobbies, elevators, and restrooms not located within the premises of any
tenant.
SECTION 6.3. USE OF COMMON AREAS. The occupancy by Tenant of the
Premises shall include the use of the Common Areas in common with Landlord
and with all others for whose convenience and use the Common Areas may be
provided by Landlord, subject, however, to compliance with all rules and
regulations as are prescribed from time to time by Landlord. Landlord shall
operate and maintain the Common Areas in the manner Landlord may determine to
be appropriate. All costs incurred by Landlord for the maintenance and
operation of the Common Areas shall be included in Building Costs unless any
particular cost incurred can be charged to a specific tenant of the Project.
Landlord shall at all times during the Term have exclusive control of the
Common Areas, and may restrain any use or occupancy, except as authorized by
Landlord's rules and regulations. Tenant shall keep the Common Areas clear
of any obstruction or unauthorized use related to Tenant's operations.
Nothing in this Lease shall be deemed to impose liability upon Landlord for
any damage to or loss of the property of, or for any injury to, Tenant, its
invitees or employees. Landlord may temporarily close any portion of the
Common Areas for repairs, remodeling and/or alterations, to prevent a public
dedication or the accrual of prescriptive rights, or for any other reason
deemed sufficient by Landlord, without liability to Landlord.
11
<PAGE>
SECTION 6.4. PARKING. Tenant shall be entitled to the number of
vehicle parking spaces set forth in Item 14 of the Basic Lease Provisions,
which spaces shall be unreserved and unassigned, on those portions of the
Common Areas designated by Landlord for parking. Tenant shall not use more
parking spaces than such number. All parking spaces shall be used only for
parking by vehicles no larger than full size passenger automobiles or pickup
trucks. Tenant shall not permit or allow any vehicles that belong to or are
controlled by Tenant or Tenant's employees, suppliers, shippers, customers or
invitees to be loaded, unloaded or parked in areas other than those
designated by Landlord for such activities. If Tenant permits or allows any
of the prohibited activities described above, then Landlord shall have the
right, without notice, in addition to such other rights and remedies that
Landlord may have, to remove or tow away the vehicle involved and charge the
costs to Tenant. Parking within the Common Areas shall be limited to striped
parking stalls, and no parking shall be permitted in any driveways, access
ways or in any area which would prohibit or impede the free flow of traffic
within the Common Areas. There shall be no overnight parking of any vehicles
of any kind unless otherwise authorized by Landlord, and vehicles which have
been abandoned or parked in violation of the terms hereof may be towed away
at the owner's expense. Nothing contained in this Lease shall be deemed to
create liability upon Landlord for any damage to motor vehicles of visitors
or employees, for any loss of property from within those motor vehicles, or
for any injury to Tenant, its visitors or employees, unless ultimately
determined to be caused by the sole active negligence or willful misconduct
of Landlord, its agents, servants and employees. Landlord shall have the
right to establish, and from time to time amend, and to enforce against all
users all reasonable rules and regulations (including the designation of
areas for employee parking) that Landlord may deem necessary and advisable
for the proper and efficient operation and maintenance of parking within the
Common Areas. Landlord shall have the right to construct, maintain and
operate lighting facilities within the parking areas; to change the area,
level, location and arrangement of the parking areas and improvements
therein; to restrict parking by tenants, their officers, agents and employees
to employee parking areas; to enforce parking charges (by operation of meters
or otherwise); and to do and perform such other acts in and to the parking
areas and improvements therein as, in the use of good business judgment,
Landlord shall determine to be advisable. Any person using the parking area
shall observe all directional signs and arrows and any posted speed limits.
In no event shall Tenant interfere with the use and enjoyment of the parking
area by other tenants of the Project or their employees or invitees. Parking
areas shall be used only for parking vehicles. Washing, waxing, cleaning or
servicing of vehicles, or the storage of vehicles for 24-hour periods, is
prohibited unless otherwise authorized by Landlord. Tenant shall be liable
for any damage to the parking areas caused by Tenant or Tenant's employees,
suppliers, shippers, customers or invitees, including without limitation
damage from excess oil leakage. Tenant shall have no right to install any
fixtures, equipment or personal property in the parking areas.
SECTION 6.5. CHANGES AND ADDITIONS BY LANDLORD. Landlord reserves the
right to make alterations or additions to the Project, or to the attendant
fixtures, equipment and Common Areas. Landlord may at any time relocate or
remove any of the various buildings (other than the Building), parking areas,
and other Common Areas, and may add buildings and areas to the Project from
time to time. No change shall entitle Tenant to any abatement of rent or
other claim against Landlord, provided that the change does not deprive
Tenant of reasonable access to or use of the Premises.
ARTICLE VII. MAINTAINING THE PREMISES
SECTION 7.1. TENANT'S MAINTENANCE AND REPAIR. Tenant at its sole
expense shall comply with all applicable laws and governmental regulations
governing the Premises and make all repairs necessary to keep the Premises in
the condition as existed on the Commencement Date (or on any later date that
the improvements may have been installed), excepting ordinary wear and tear,
including without limitation the electrical and mechanical systems, any air
conditioning, ventilating or heating equipment which serves the Premises, all
walls, glass, windows, doors, door closures, hardware, fixtures, electrical,
plumbing, fire extinguisher equipment and other equipment. Any damage or
deterioration of the Premises shall not be deemed ordinary wear and tear if
12
<PAGE>
the same could have been prevented by good maintenance practices by Tenant.
As part of its maintenance obligations hereunder, Tenant shall, at Landlord's
request, provide Landlord with copies of all maintenance schedules, reports
and notices prepared by, for or on behalf of Tenant. Tenant shall obtain
preventive maintenance contracts from a licensed heating and air conditioning
contractor to provide for regular inspection and maintenance of the heating,
ventilating and air conditioning systems servicing the Premises, all subject
to Landlord's approval. All repairs shall be at least equal in quality to
the original work, shall be made only by a licensed contractor approved in
writing in advance by Landlord and shall be made only at the time or times
approved by Landlord. Any contractor utilized by Tenant shall be subject to
Landlord's standard requirements for contractors, as modified from time to
time. Tenant shall have the benefit of any manufacturer's or contractor's
warranties in favor of Landlord in connection with any repair or maintenance
obligation required of Tenant pursuant to this Section 7.1. Landlord shall
have the right at all times to inspect Tenant's maintenance of all equipment
(including without limitation air conditioning, ventilating and heating
equipment), and may impose reasonable restrictions and requirements with
respect to repairs, as provided in Section 7.3, and the provisions of Section
7.4 shall apply to all repairs. Alternatively, Landlord may elect to make
any repair or maintenance required hereunder on behalf of Tenant and at
Tenant's expense, and Tenant shall promptly reimburse Landlord for all costs
incurred upon submission of an invoice.
SECTION 7.2. LANDLORD'S MAINTENANCE AND REPAIR. Subject to Section 7.1
and Article XI, Landlord shall provide service, maintenance and repair with
respect to the roof, foundations, and footings of the Building, all
landscaping, walkways, parking areas, Common Areas, exterior patio furniture,
exterior lighting, and the exterior surfaces of the exterior walls of the
Building, except that Tenant at its expense shall make all repairs which
Landlord deems reasonably necessary as a result of the act or negligence of
Tenant, its agents, employees, invitees, subtenants or contractors. Landlord
shall have the right to employ or designate any reputable person or firm,
including any employee or agent of Landlord or any of Landlord's affiliates
or divisions, to perform any service, repair or maintenance function.
Landlord need not make any other improvements or repairs except as
specifically required under this Lease, and nothing contained in this Section
shall limit Landlord's right to reimbursement from Tenant for maintenance,
repair costs and replacement costs as provided elsewhere in this Lease.
Tenant understands that it shall not make repairs at Landlord's expense or by
rental offset. Tenant further understands that Landlord shall not be
required to make any repairs to the roof, foundations or footings unless and
until Tenant has notified Landlord in writing of the need for such repair and
Landlord shall have a reasonable period of time thereafter to commence and
complete said repair, if warranted. All costs of any maintenance and repairs
on the part of Landlord provided hereunder shall be considered part of
Building Costs, provided that to the extent that any such maintenance or
repairs require a capital investment (in accordance with generally accepted
accounting principles consistently applied), Tenant shall only be responsible
to the extent of the amortized amount thereof over the useful life of such
capital investment calculated at a market rate of funds, all as determined by
Landlord, for each such year of useful life during the Term.
SECTION 7.3. ALTERATIONS. Tenant shall make no alterations, additions
or improvements to the Premises without the prior written consent of
Landlord, which consent may be given or withheld in Landlord's sole
discretion. Notwithstanding the foregoing, Landlord shall not unreasonably
withhold its consent to any alterations, additions or improvements to the
Premises which cost less than One Dollar ($1.00) per square foot of the
improved portions of the Premises (excluding warehouse square footage) and do
not (i) affect the exterior of the Building or outside areas (or be visible
from adjoining sites), or (ii) affect or penetrate any of the structural
portions of the Building, including but not limited to the roof, or (iii)
require any change to the basic floor plan of the Premises, any change to any
structural or mechanical systems of the Premises, or any governmental permit
as a prerequisite to the construction thereof, or (iv) interfere in any
manner with the proper functioning of or Landlord's access to any mechanical,
electrical, plumbing or HVAC systems, facilities or equipment located in or
serving the Building, or (v) diminish the value of the Premises. Landlord
may impose, as a condition to its consent, any requirements that Landlord in
its discretion may deem reasonable or desirable, including but not limited to
a requirement that all work be covered by a lien and completion bond
satisfactory to Landlord and requirements as to the manner, time, and
contractor for performance of the work. Tenant shall obtain all required
permits for the work and shall perform the
13
<PAGE>
work in compliance with all applicable laws, regulations and ordinances, all
covenants, conditions and restrictions affecting the Project, and the Rules
and Regulations (hereafter defined). If any governmental entity requires, as
a condition to any proposed alterations, additions or improvements to the
Premises by Tenant, that improvements be made to the Common Areas, and if
Landlord consents to such improvements to the Common Areas, then Tenant
shall, at Tenant's sole expense, make such required improvements to the
Common Areas in such manner, utilizing such materials, and with such
contractors (including, if required by Landlord, Landlord's contractors) as
Landlord may require in its sole discretion. Under no circumstances shall
Tenant make any improvement which incorporates any Hazardous Materials,
including without limitation asbestos-containing construction materials into
the Premises. Any request for Landlord's consent shall be made in writing
and shall contain architectural plans describing the work in detail
reasonably satisfactory to Landlord. Unless Landlord otherwise agrees in
writing, all alterations, additions or improvements affixed to the Premises
(excluding moveable trade fixtures and furniture) shall become the property
of Landlord and shall be surrendered with the Premises at the end of the
Term, except that Landlord may, by notice to Tenant, require Tenant to remove
by the Expiration Date, or sooner termination date of this Lease, all or any
alterations, decorations, fixtures, additions, improvements and the like
installed either by Tenant or by Landlord at Tenant's request and to repair
any damage to the Premises arising from that removal. Except as otherwise
provided in this Lease or in any Exhibit to this Lease, should Landlord make
any alteration or improvement to the Premises for Tenant, Landlord shall be
entitled to prompt reimbursement from Tenant for all costs incurred.
SECTION 7.4. MECHANIC'S LIENS. Tenant shall keep the Premises free
from any liens arising out of any work performed, materials furnished, or
obligations incurred by or for Tenant. Upon request by Landlord, Tenant
shall promptly cause any such lien to be released by posting a bond in
accordance with California Civil Code Section 3143 or any successor statute.
In the event that Tenant shall not, within thirty (30) days following the
imposition of any lien, cause the lien to be released of record by payment or
posting of a proper bond, Landlord shall have, in addition to all other
available remedies, the right to cause the lien to be released by any means
it deems proper, including payment of or defense against the claim giving
rise to the lien. All expenses so incurred by Landlord, including Landlord's
attorneys' fees, and any consequential or other damages incurred by Landlord
arising out of such lien, shall be reimbursed by Tenant promptly following
Landlord's demand, together with interest from the date of payment by
Landlord at the maximum rate permitted by law until paid. Tenant shall give
Landlord no less than twenty (20) days' prior notice in writing before
commencing construction of any kind on the Premises so that Landlord may post
and maintain notices of nonresponsibility on the Premises.
SECTION 7.5. ENTRY AND INSPECTION. Landlord shall at all reasonable
times, upon at least 24 hours' prior written or oral notice (except in
emergencies, when no notice shall be required) have the right to enter the
Premises to inspect them, to supply services in accordance with this Lease,
to protect the interests of Landlord in the Premises, and to submit the
Premises to prospective or actual purchasers or encumbrance holders (or,
during the last one hundred and eighty (180) days of the Term or when an
uncured Tenant default exists, to prospective tenants), all without being
deemed to have caused an eviction of Tenant and without abatement of rent
except as provided elsewhere in this Lease. Landlord shall have the right,
if desired, to retain a key which unlocks all of the doors in the Premises,
excluding Tenant's vaults and safes, and Landlord shall have the right to use
any and all means which Landlord may deem proper to open the doors in an
emergency in order to obtain entry to the Premises, and any entry to the
Premises obtained by Landlord shall not under any circumstances be deemed to
be a forcible or unlawful entry into, or a detainer of, the Premises, or any
eviction of Tenant from the Premises.
ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT'S PROPERTY
Tenant shall be liable for and shall pay, at least ten (10) days before
delinquency, all taxes and assessments levied against all personal property
of Tenant located in the Premises, against all improvements to the Premises
made by Landlord or Tenant which are above Landlord's Project standard in
quality and/or quantity for comparable
14
<PAGE>
space within the Project ("Above Standard Improvements"), and against any
alterations, additions or like improvements made to the Premises by or on
behalf of Tenant. When possible Tenant shall cause its personal property,
Above Standard Improvements and alterations to be assessed and billed
separately from the real property of which the Premises form a part. If any
taxes on Tenant's personal property, Above Standard Improvements and/or
alterations are levied against Landlord or Landlord's property and if
Landlord pays the same, or if the assessed value of Landlord's property is
increased by the inclusion of a value placed upon the personal property,
Above Standard Improvements and/or alterations of Tenant and if Landlord pays
the taxes based upon the increased assessment, Tenant shall pay to Landlord
the taxes so levied against Landlord or the proportion of the taxes resulting
from the increase in the assessment. In calculating what portion of any tax
bill which is assessed against Landlord separately, or Landlord and Tenant
jointly, is attributable to Tenant's Above Standard Improvements, alterations
and personal property, Landlord's reasonable determination shall be
conclusive.
ARTICLE IX. ASSIGNMENT AND SUBLETTING
SECTION 9.1. RIGHTS OF PARTIES.
(a) Notwithstanding any provision of this Lease to the contrary, Tenant
will not, either voluntarily or by operation of law, assign, sublet,
encumber, or otherwise transfer all or any part of Tenant's interest in this
lease, or permit the Premises to be occupied by anyone other than Tenant,
without Landlord's prior written consent, which consent shall not
unreasonably be withheld in accordance with the provisions of Section
9.1.(b). No assignment (whether voluntary, involuntary or by operation of
law) and no subletting shall be valid or effective without Landlord's prior
written consent and, at Landlord's election, any such assignment or
subletting or attempted assignment or subletting shall constitute a material
default of this Lease. Landlord shall not be deemed to have given its
consent to any assignment or subletting by any other course of action,
including its acceptance of any name for listing in the Building directory.
To the extent not prohibited by provisions of the Bankruptcy Code, 11 U.S.C.
Section 101 et seq. (the "Bankruptcy Code"), including Section 365(f)(1),
Tenant on behalf of itself and its creditors, administrators and assigns
waives the applicability of Section 365(e) of the Bankruptcy Code unless the
proposed assignee of the Trustee for the estate of the bankrupt meets
Landlord's standard for consent as set forth in Section 9.1(b) of this Lease.
If this Lease is assigned to any person or entity pursuant to the provisions
of the Bankruptcy Code, any and all monies or other considerations to be
delivered in connection with the assignment shall be delivered to Landlord,
shall be and remain the exclusive property of Landlord and shall not
constitute property of Tenant or of the estate of Tenant within the meaning
of the Bankruptcy Code. Any person or entity to which this Lease is assigned
pursuant to the provisions of the Bankruptcy Code shall be deemed to have
assumed all of the obligations arising under this Lease on and after the date
of the assignment, and shall upon demand execute and deliver to Landlord an
instrument confirming that assumption.
(b) If Tenant desires to transfer an interest in this Lease, it shall
first notify Landlord of its desire and shall submit in writing to Landlord:
(i) the name and address of the proposed transferee; (ii) the nature of any
proposed subtenant's or assignee's business to be carried on in the Premises;
(iii) the terms and provisions of any proposed sublease or assignment,
including a copy of the proposed assignment or sublease form; (iv) evidence
of insurance of the proposed assignee or subtenant complying with the
requirements of EXHIBIT D hereto; (v) a completed Environmental Questionnaire
from the proposed assignee or subtenant; and (vi) any other information
requested by Landlord and reasonably related to the transfer. Except as
provided in Subsection (e) of this Section,
15
<PAGE>
Landlord shall not unreasonably withhold its consent, provided: (1) the use
of the Premises will be consistent with the provisions of this Lease and with
Landlord's commitment to other tenants of the Project; (2) the proposed
assignee or subtenant has not been required by any prior landlord, lender or
governmental authority to take remedial action in connection with Hazardous
Materials contaminating a property arising out of the proposed assignee's or
subtenant's actions or use of the property in question and is not subject to
any enforcement order issued by any governmental authority in connection with
the use, disposal or storage of a Hazardous Material; (3) at Landlord's
election, insurance requirements shall be brought into conformity with
Landlord's then current leasing practice; (4) any proposed subtenant or
assignee demonstrates that it is financially responsible by submission to
Landlord of all reasonable information as Landlord may request concerning the
proposed subtenant or assignee, including, but not limited to, a balance
sheet of the proposed subtenant or assignee as of a date within ninety (90)
days of the request for Landlord's consent and statements of income or profit
and loss of the proposed subtenant or assignee for the two-year period
preceding the request for Landlord's consent, and/or a certification signed
by the proposed subtenant or assignee that it has not been evicted or been in
arrears in rent at any other leased premises for the 3-year period preceding
the request for Landlord's consent; and (5) the proposed assignee or
subtenant is not an existing tenant of the Project or a prospect with whom
Landlord is negotiating to become a tenant at the Project. If Tenant has any
exterior sign rights under this Lease, such rights are personal to Tenant and
may not be assigned or transferred to any assignee of this Lease or subtenant
of the Premises without Landlord's prior written consent, which may be
withheld in Landlord's sole and absolute discretion.
If Landlord consents to the proposed transfer, Tenant may within ninety
(90) days after the date of the consent effect the transfer upon the terms
described in the information furnished to Landlord; provided that any
material change in the terms shall be subject to Landlord's consent as set
forth in this Section. Landlord shall approve or disapprove any requested
transfer within thirty (30) days following receipt of Tenant's written
request, the information set forth above, and the fee set forth below. Any
notice of disapproval by Landlord shall be accompanied by the basis or bases
for such disapproval, in reasonable detail.
(c) Notwithstanding the provisions of Subsection (b) above, in lieu of
consenting to a proposed assignment or subletting, Landlord may elect to (i)
sublease the Premises (or the portion proposed to be subleased), or take an
assignment of Tenant's interest in this Lease, upon the same terms as offered
to the proposed subtenant or assignee (excluding terms relating to the
purchase of personal property, the use of Tenant's name or the continuation
of Tenant's business), or (ii) terminate this Lease as to the portion of the
Premises proposed to be subleased or assigned with a proportionate abatement
in the rent payable under this Lease, effective on the date that the proposed
sublease or assignment would have become effective. Landlord may thereafter,
at its option, assign or re-let any space so recaptured to any third party,
including without limitation the proposed transferee of Tenant.
Notwithstanding the foregoing, it is understood that the elections set forth
in this Section 9.1(c) shall not be applicable to any sublease either where:
(i) the subleased area is less than fifty percent (50%) of the floor area of
the Building; or (ii) the term of the sublease is in excess of eighty percent
(80%) of the then-remaining months of the Term of the Lease.
(d) Tenant agrees that fifty percent (50%) of any amounts paid by the
assignee or subtenant, however described, in excess of (i) the Basic Rent
payable by Tenant hereunder, or in the case of a sublease of a portion of the
Premises, in excess of the Basic Rent reasonably allocable to such portion,
plus (ii) Tenant's direct out-of-pocket costs which Tenant certifies to
Landlord have been paid to provide occupancy related services to such
assignee or subtenant of a nature commonly provided by landlords of similar
space plus (iii) any real estate brokerage commission(s) payable by Tenant in
connection with such assignment or subletting, shall be the property of
Landlord and such amounts shall be payable directly to Landlord by the
assignee or subtenant or, at Landlord's option, by Tenant. At Landlord's
request, a written agreement shall be entered into by and among Tenant,
Landlord and the proposed assignee or subtenant confirming the requirements
of this subsection.
(e) Tenant shall pay to Landlord a fee of Five Hundred Dollars ($500.00)
if and when any transfer hereunder is requested by Tenant. Such fee is
hereby acknowledged as a reasonable amount to reimburse
16
<PAGE>
Landlord for its costs of review and evaluation of a proposed
assignee/sublessee, and Landlord shall not be obligated to commence such
review and evaluation unless and until such fee is paid.
SECTION 9.2. EFFECT OF TRANSFER. No subletting or assignment, even
with the consent of Landlord, shall relieve Tenant of its obligation to pay
rent and to perform all its other obligations under this Lease. Moreover,
Tenant shall indemnify and hold Landlord harmless, as provided in Section
10.3, for any act or omission by an assignee or subtenant. Each assignee,
other than Landlord, shall be deemed to assume all obligations of Tenant
under this Lease and shall be liable jointly and severally with Tenant for
the payment of all rent, and for the due performance of all of Tenant's
obligations, under this Lease. No transfer shall be binding on Landlord
unless any document memorializing the transfer is delivered to Landlord and
both the assignee/subtenant and Tenant deliver to Landlord an executed
consent to transfer instrument prepared by Landlord and consistent with the
requirements of this Article. The acceptance by Landlord of any payment due
under this Lease from any other person shall not be deemed to be a waiver by
Landlord of any provision of this Lease or to be a consent to any transfer.
Consent by Landlord to one or more transfers shall not operate as a waiver or
estoppel to the future enforcement by Landlord of its rights under this Lease.
SECTION 9.3. SUBLEASE REQUIREMENTS. The following terms and conditions
shall apply to any subletting by Tenant of all or any part of the Premises
and shall be deemed included in each sublease:
(a) Each and every provision contained in this Lease (other than with
respect to the payment of rent hereunder) is incorporated by reference into
and made a part of such sublease, with "Landlord" hereunder meaning the
sublandlord therein and "Tenant" hereunder meaning the subtenant therein.
(b) Tenant hereby irrevocably assigns to Landlord all of Tenant's
interest in all rentals and income arising from any sublease of the Premises,
and Landlord may collect such rent and income and apply same toward Tenant's
obligations under this Lease; provided, however, that until a default occurs
in the performance of Tenant's obligations under this Lease, Tenant shall
have the right to receive and collect the sublease rentals. Landlord shall
not, by reason of this assignment or the collection of sublease rentals, be
deemed liable to the subtenant for the performance of any of Tenant's
obligations under the sublease. Tenant hereby irrevocably authorizes and
directs any subtenant, upon receipt of a written notice from Landlord stating
that an uncured default exists in the performance of Tenant's obligations
under this Lease, to pay to Landlord all sums then and thereafter due under
the sublease. Tenant agrees that the subtenant may rely on that notice
without any duty of further inquiry and notwithstanding any notice or claim
by Tenant to the contrary. Tenant shall have no right or claim against the
subtenant or Landlord for any rentals so paid to Landlord.
(c) In the event of the termination of this Lease, Landlord may, at its
sole option, take over Tenant's entire interest in any sublease and, upon
notice from Landlord, the subtenant shall attorn to Landlord. In no event,
however, shall Landlord be liable for any previous act or omission by Tenant
under the sublease or for the return of any advance rental payments or
deposits under the sublease that have not been actually delivered to
Landlord, nor shall Landlord be bound by any sublease modification executed
without Landlord's consent or for any advance rental payment by the subtenant
in excess of one month's rent. The general provisions of this Lease,
including without limitation those pertaining to insurance and
indemnification, shall be deemed incorporated by reference into the sublease
despite the termination of this Lease.
SECTION 9.4. CERTAIN TRANSFERS. The sale of all or substantially all
of Tenant's assets (other than bulk sales in the ordinary course of business)
or, if Tenant is a corporation, an unincorporated association, or a
partnership, the transfer, assignment or hypothecation of any stock or
interest in such corporation, association, or partnership in the aggregate of
twenty-five percent (25%) (except for publicly traded shares of stock
constituting a transfer of twenty-five percent (25%) or more in the
aggregate, so long as no change in the controlling interest of Tenant occurs
as a result thereof) shall be deemed an assignment within the meaning and
provisions of this Article. Notwithstanding the foregoing, Landlord's
consent shall not be required for the assignment of this Lease as a result
17
<PAGE>
of a merger by Tenant with or into another entity (a "Permitted Assignment"),
so long as (i) the net worth of the successor entity after such merger is at
least equal to the greater of the net worth of Tenant as of the execution of
this Lease by Landlord or the net worth of Tenant immediately prior to the
date of such merger, evidence of which, satisfactory to Landlord, shall be
presented to Landlord prior to such merger, (ii) Tenant shall provide to
Landlord, prior to such merger, written notice of such merger and such
assignment documentation and other information as Landlord may reasonably
request in connection therewith, and (iii) all of the other terms and
requirements of this Article shall apply with respect to such assignment.
ARTICLE X. INSURANCE AND INDEMNITY
SECTION 10.1. TENANT'S INSURANCE. Tenant, at its sole cost and expense,
shall provide and maintain in effect the insurance described in EXHIBIT D.
Evidence of that insurance must be delivered to Landlord prior to the
Commencement Date.
SECTION 10.2. LANDLORD'S INSURANCE. Landlord may, at its election,
provide any or all of the following types of insurance, with or without
deductible and in amounts and coverages as may be determined by Landlord in
its discretion: "all risk" property insurance, subject to standard
exclusions, covering the Building or Project, and such other risks as
Landlord or its mortgagees may from time to time deem appropriate, including
leasehold improvements made by Landlord, and commercial general liability
coverage. Landlord shall not be required to carry insurance of any kind on
Tenant's property, including leasehold improvements, trade fixtures,
furnishings, equipment, plate glass, signs and all other items of personal
property, and shall not be obligated to repair or replace that property
should damage occur. All proceeds of insurance maintained by Landlord upon
the Building and Project shall be the property of Landlord, whether or not
Landlord is obligated to or elects to make any repairs. At Landlord's
option, Landlord may self-insure all or any portion of the risks for which
Landlord elects to provide insurance hereunder.
SECTION 10.3. TENANT'S INDEMNITY. To the fullest extent permitted by
law, Tenant shall defend, indemnify, protect, save and hold harmless
Landlord, its agents, and any and all affiliates of Landlord, including,
without limitation, any corporations or other entities controlling,
controlled by or under common control with Landlord, from and against any and
all claims, liabilities, costs or expenses arising either before or after the
Commencement Date from Tenant's use or occupancy of the Premises, the
Building or the Common Areas, or from the conduct of its business, or from
any activity, work, or thing done, permitted or suffered by Tenant or its
agents, employees, invitees or licensees in or about the Premises, the
Building or the Common Areas, or from any default in the performance of any
obligation on Tenant's part to be performed under this Lease, or from any act
or negligence of Tenant or its agents, employees, visitors, patrons, guests,
invitees or licensees. Landlord may, at its option, require Tenant to assume
Landlord's defense in any action covered by this Section through counsel
satisfactory to Landlord. Except in the event of a conflict of interest
between Landlord and Tenant, Landlord agrees that Tenant shall not be
responsible for the cost and expense of a separate counsel for Landlord in
connection with the foregoing indemnity obligation. Further, in connection
with any matter covered by the foregoing indemnity obligations, Tenant shall
have the right and authority to settle any such matter, subject to Landlord's
reasonable approval. Landlord shall cooperate with Tenant, but at no
additional cost or expense to Landlord, in connection with the foregoing
defense obligations. The provisions of this Section shall expressly survive
the expiration or sooner termination of this Lease.
SECTION 10.4. LANDLORD'S NONLIABILITY. Landlord shall not be liable to
Tenant, its employees, agents and invitees, and Tenant hereby waives all
claims against Landlord for loss of or damage to any property, or any injury
to any person, or loss or interruption of business or income, or any other
loss, cost, damage, injury or liability whatsoever (including without
limitation any consequential damages and lost profit or opportunity costs)
resulting from, but not limited to, Acts of God, acts of civil disobedience
or insurrection, acts or omissions of
18
<PAGE>
other tenants within the Project or their agents, employees, contractors,
guests or invitees, fire, explosion, falling plaster, steam, gas,
electricity, water or rain which may leak or flow from or into any part of
the Building or from the breakage, leakage, obstruction or other defects of
the pipes, sprinklers, wires, appliances, plumbing, air conditioning,
electrical works or other fixtures in the Building, whether the damage or
injury results from conditions arising in the Premises or in other portions
of the Project. It is understood that any such condition may require the
temporary evacuation or closure of all or a portion of the Building. Except
as provided in Sections 11.1 and 12.1 below, there shall be no abatement of
rent and no liability of Landlord by reason of any injury to or interference
with Tenant's business (including without limitation consequential damages
and lost profit or opportunity costs) arising from the making of any repairs,
alterations or improvements to any portion of the Building, including repairs
to the Premises, nor shall any related activity by Landlord constitute an
actual or constructive eviction; provided, however, that in making repairs,
alterations or improvements, Landlord shall interfere as little as reasonably
practicable with the conduct of Tenant's business in the Premises. Neither
Landlord nor its agents shall be liable for interference with light or other
similar intangible interests. Tenant shall immediately notify Landlord in
case of fire or accident in the Premises, the Building or the Project and of
defects in any improvements or equipment.
SECTION 10.5. WAIVER OF SUBROGATION. Landlord and Tenant each hereby
waives all rights of recovery against the other and the other's agents on
account of loss and damage occasioned to the property of such waiving party
to the extent only that such loss or damage is required to be insured against
under any "all risk" property insurance policies required by this Article X;
provided however, that (i) the foregoing waiver shall not apply to the extent
of Tenant's obligations to pay deductibles under any such policies and this
Lease, and (ii) if any loss is due to the act, omission or negligence or
willful misconduct of Tenant or its agents, employees, contractors, guests or
invitees, Tenant's liability insurance shall be primary and shall cover all
losses and damages prior to any other insurance hereunder. By this waiver it
is the intent of the parties that neither Landlord nor Tenant shall be liable
to any insurance company (by way of subrogation or otherwise) insuring the
other party for any loss or damage insured against under any "all-risk"
property insurance policies required by this Article, even though such loss
or damage might be occasioned by the negligence of such party, its agents,
employees, contractors, guests or invitees. The provisions of this Section
shall not limit the indemnification provisions elsewhere contained in this
Lease.
ARTICLE XI. DAMAGE OR DESTRUCTION
SECTION 11.1. RESTORATION.
(a) If the Building is damaged, Landlord shall repair that damage as
soon as reasonably possible, at its expense, unless: (i) Landlord reasonably
determines that the cost of repair is not covered by Landlord's fire and
extended coverage insurance plus such additional amounts Tenant elects, at
its option, to contribute, excluding however the deductible (for which Tenant
shall be responsible for Tenant's proportionate share); (ii) Landlord
reasonably determines that the Premises cannot, with reasonable diligence, be
fully repaired by Landlord (or cannot be safely repaired because of the
presence of hazardous factors, including without limitation Hazardous
Materials, earthquake faults, and other similar dangers) within two hundred
seventy (270) days after the date of the damage; (iii) Tenant has defaulted
in one or more of its material obligations under this Lease and such default
is continuing at the time of such damage; or (iv) the damage occurs during
the final twelve (12) months of the Term. Should Landlord elect not to
repair the damage for one of the preceding reasons, Landlord shall so notify
Tenant in writing within sixty (60) days after the damage occurs and this
Lease shall terminate as of the date of that notice.
(b) Unless Landlord elects to terminate this Lease in accordance with
subsection (a) above, this Lease shall continue in effect for the remainder
of the Term; provided that so long as Tenant is not in default under this
Lease, if the damage is so extensive that Landlord reasonably determines that
the Premises cannot, with
19
<PAGE>
reasonable diligence, be repaired by Landlord (or cannot be safely repaired
because of the presence of hazardous factors, earthquake faults, and other
similar dangers) so as to allow Tenant's substantial use and enjoyment of the
Premises within two hundred seventy (270) days after the date of damage, then
Tenant may elect to terminate this Lease by written notice to Landlord within
the sixty (60) day period stated in subsection (a).
(c) Commencing on the date of any damage to the Building, and ending on
the sooner of the date the damage is repaired or the date this Lease is
terminated, the rental to be paid under this Lease shall be abated in the
same proportion that the floor area of the Building that is rendered unusable
by the damage from time to time bears to the total floor area of the
Building, but only to the extent that any business interruption insurance
proceeds are received by Landlord therefor from Tenant's insurance described
in EXHIBIT D.
(d) Notwithstanding the provisions of subsections (a), (b) and (c) of
this Section, and subject to the provisions of Section 10.5 above, the cost
of any repairs shall be borne by Tenant, and Tenant shall not be entitled to
rental abatement or termination rights, if the damage is due to the fault or
neglect of Tenant or its employees, subtenants, invitees or representatives.
In addition, the provisions of this Section shall not be deemed to require
Landlord to repair any improvements or fixtures that Tenant is obligated to
repair or insure pursuant to any other provision of this Lease.
(e) Tenant shall fully cooperate with Landlord in removing Tenant's
personal property and any debris from the Premises to facilitate all inspections
of the Premises and the making of any repairs. Notwithstanding anything to the
contrary contained in this Lease, if Landlord in good faith believes there is a
risk of injury to persons or damage to property from entry into the Building or
Premises following any damage or destruction thereto, Landlord may restrict
entry into the Building or the Premises by Tenant, its employees, agents and
contractors in a non-discriminatory manner, without being deemed to have
violated Tenant's rights of quiet enjoyment to, or made an unlawful detainer of,
or evicted Tenant from, the Premises. Upon request, Landlord shall consult with
Tenant to determine if there are safe methods of entry into the Building or the
Premises solely in order to allow Tenant to retrieve files, data in computers,
and necessary inventory, subject however to all indemnities and waivers of
liability from Tenant to Landlord contained in this Lease and any additional
indemnities and waivers of liability which Landlord may require.
SECTION 11.2. LEASE GOVERNS. Tenant agrees that the provisions of this
Lease, including without limitation Section 11.1, shall govern any damage or
destruction and shall accordingly supersede any contrary statute or rule of
law.
ARTICLE XII. EMINENT DOMAIN
SECTION 12.1. TOTAL OR PARTIAL TAKING. If all or a material portion of
the Premises is taken by any lawful authority by exercise of the right of
eminent domain, or sold to prevent a taking, either Tenant or Landlord may
terminate this Lease effective as of the date possession is required to be
surrendered to the authority. In the event title to a portion of the
Premises is taken or sold in lieu of taking, and if Landlord elects to
restore the Premises in such a way as to alter the Premises materially,
either party may terminate this Lease, by written notice to the other party,
effective on the date of vesting of title. In the event neither party has
elected to terminate this Lease as provided above, then Landlord shall
promptly, after receipt of a sufficient condemnation award, proceed to
restore the Premises to substantially their condition prior to the taking,
and a proportionate allowance shall be made to Tenant for the rent
corresponding to the time during which, and to the part of the Premises of
which, Tenant is deprived on account of the taking and restoration. In the
event of a taking, Landlord shall be entitled to the entire amount of the
condemnation award without deduction for any estate or interest of Tenant;
provided that nothing in this Section shall be deemed to give Landlord any
interest in, or prevent Tenant from seeking any award against the taking
authority for, the taking of personal property and fixtures belonging to
Tenant or for relocation or business interruption expenses recoverable from
the taking authority.
20
<PAGE>
SECTION 12.2. TEMPORARY TAKING. No temporary taking of the Premises
shall terminate this Lease or give Tenant any right to abatement of rent, and
any award specifically attributable to a temporary taking of the Premises
shall belong entirely to Tenant. A temporary taking shall be deemed to be a
taking of the use or occupancy of the Premises for a period of not to exceed
one hundred eighty (180) days.
SECTION 12.3. TAKING OF PARKING AREA. In the event there shall be a
taking of the parking area such that Landlord can no longer provide
sufficient parking to comply with this Lease, Landlord may substitute
reasonably equivalent parking in a location reasonably close to the Building;
provided that if Landlord fails to make that substitution within one hundred
eighty (180) days following the taking and if the taking materially impairs
Tenant's use and enjoyment of the Premises, Tenant may, at its option,
terminate this Lease by written notice to Landlord. If this Lease is not so
terminated by Tenant, there shall be no abatement of rent and this Lease
shall continue in effect.
ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS
SECTION 13.1. SUBORDINATION. At the option of Landlord, this Lease
shall be either superior or subordinate to all ground or underlying leases,
mortgages and deeds of trust, if any, which may hereafter affect the
Premises, and to all renewals, modifications, consolidations, replacements
and extensions thereof; provided, that so long as Tenant is not in default
under this Lease, this Lease shall not be terminated or Tenant's quiet
enjoyment of the Premises disturbed in the event of termination of any such
ground or underlying lease, or the foreclosure of any such mortgage or deed
of trust, to which Tenant has subordinated this Lease pursuant to this
Section. In the event of a termination or foreclosure, Tenant shall become a
tenant of and attorn to the successor-in-interest to Landlord upon the same
terms and conditions as are contained in this Lease, and shall execute any
instrument reasonably required by Landlord's successor for that purpose.
Tenant shall also, upon written request of Landlord, execute and deliver all
instruments as may be required from time to time to subordinate the rights of
Tenant under this Lease to any ground or underlying lease or to the lien of
any mortgage or deed of trust (provided that such instruments include the
nondisturbance and attornment provisions set forth above), or, if requested
by Landlord, to subordinate, in whole or in part, any ground or underlying
lease or the lien of any mortgage or deed of trust to this Lease.
SECTION 13.2. ESTOPPEL CERTIFICATE.
(a) Tenant shall, at any time upon not less than ten (10) days prior
written notice from Landlord, execute, acknowledge and deliver to Landlord,
in any form that Landlord may reasonably require, a statement in writing (i)
certifying that this Lease is unmodified and in full force and effect (or, if
modified, stating the nature of the modification and certifying that this
Lease, as modified, is in full force and effect) and the dates to which the
rental, additional rent and other charges have been paid in advance, if any,
and (ii) acknowledging that, to Tenant's knowledge, there are no uncured
defaults on the part of Landlord, or specifying each default if any are
claimed, and (iii) setting forth all further information that Landlord may
reasonably require. Tenant's statement may be relied upon by any prospective
purchaser or encumbrancer of the Premises.
(b) Notwithstanding any other rights and remedies of Landlord, Tenant's
failure to deliver any estoppel statement within the provided time shall be
conclusive upon Tenant that (i) this Lease is in full force and effect,
without modification except as may be represented by Landlord, (ii) there are
no uncured defaults in Landlord's performance, and (iii) not more than one
month's rental has been paid in advance.
SECTION 13.3 FINANCIALS.
(a) On request of Landlord, Tenant shall provide to Landlord from time
to time (but no more
21
<PAGE>
than four times in any calendar year), at no expense to Landlord, copies of
all financial statements filed by Tenant with the U.S. Securities and
Exchange Commission (the "SEC") on Form 10-Q or Form l0-K during such
calendar year, or if Tenant is not obligated to file financial statements
with the SEC, copies of fiscal quarterly and annual balance sheets and income
statements prepared by or for Tenant, which financial statements shall be
either audited by independent auditors or certified by Tenant's chief
executive officer. All such financial statements that may be delivered by
Tenant to Landlord (the "Statements") will accurately and fully reflect in
all material respects Tenant's consolidated financial condition as of the
date thereof and Tenant's consolidated results of operations for the period
then ended.
(b) Tenant acknowledges that Landlord is relying on the Statements in
its determination to enter into this Lease, and Tenant represents to
Landlord, which representation shall be deemed made on the date of this Lease
and again on the Commencement Date, that no material change in the financial
condition of Tenant, as reflected in the Statements, has occurred since the
date Tenant delivered the Statements to Landlord.
ARTICLE XIV. DEFAULTS AND REMEDIES
SECTION 14.1. TENANT'S DEFAULTS. In addition to any other event of
default set forth in this Lease, the occurrence of any one or more of the
following events shall constitute a default by Tenant:
(a) The failure by Tenant to make any payment of rent or additional rent
required to be made by Tenant, as and when due, where the failure continues
for a period of seven (7) days after written notice from Landlord to Tenant;
provided, however, that any such notice shall be in lieu of, and not in
addition to, any notice required under California Code of Civil Procedure
Section 1161 and 1161(a) as amended. For purposes of these default and
remedies provisions, the term "additional rent" shall be deemed to include
all amounts of any type whatsoever other than Basic Rent to be paid by Tenant
pursuant to the terms of this Lease.
(b) Assignment, sublease, encumbrance or other transfer of the Lease by
Tenant, either voluntarily or by operation of law, whether by judgment,
execution, transfer by intestacy or testacy, or other means, without the
prior written consent of Landlord.
(c) The discovery by Landlord that any financial statement provided by
Tenant, or by any affiliate, successor or guarantor of Tenant, was materially
false.
(d) The failure of Tenant to timely and fully provide any subordination
agreement, estoppel certificate or financial statements in accordance with
the requirements of Article XIII.
(e) The failure or inability by Tenant to observe or perform any of the
express or implied covenants or provisions of this Lease to be observed or
performed by Tenant, other than as specified in any other subsection of this
Section, where the failure continues for a period of thirty (30) days after
written notice from Landlord to Tenant or such shorter period as is specified
in any other provision of this Lease; provided, however, that any such notice
shall be in lieu of, and not in addition to, any notice required under
California Code of Civil Procedure Section 1161 and 1161(a) as amended.
However, if the nature of the failure is such that more than thirty (30) days
are reasonably required for its cure, then Tenant shall not be deemed to be
in default if Tenant commences the cure within thirty (30) days, and
thereafter diligently pursues the cure to completion.
(f) (i) The making by Tenant of any general assignment for the benefit
of creditors; (ii) the filing by or against Tenant of a petition to have
Tenant adjudged a Chapter 7 debtor under the Bankruptcy Code or to have debts
discharged or a petition for reorganization or arrangement under any law
relating to bankruptcy (unless, in the case of a petition filed against
Tenant, the same is dismissed within thirty (30) days); (iii) the
22
<PAGE>
appointment of a trustee or receiver to take possession of substantially all
of Tenant's assets located at the Premises or of Tenant's interest in this
Lease, if possession is not restored to Tenant within thirty (30) days; (iv)
the attachment, execution or other judicial seizure of substantially all of
Tenant's assets located at the Premises or of Tenant's interest in this
Lease, where the seizure is not discharged within thirty (30) days; or (v)
Tenant's convening of a meeting of its creditors for the purpose of effecting
a moratorium upon or composition of its debts. Landlord shall not be deemed
to have knowledge of any event described in this subsection unless
notification in writing is received by Landlord, nor shall there be any
presumption attributable to Landlord of Tenant's insolvency. In the event
that any provision of this subsection is contrary to applicable law, the
provision shall be of no force or effect.
SECTION 14.2. LANDLORD'S REMEDIES.
(a) In the event of any default by Tenant, or in the event of the
abandonment of the Premises by Tenant, then in addition to any other remedies
available to Landlord, Landlord may exercise the following remedies:
(i) Landlord may terminate Tenant's right to possession of the
Premises by any lawful means, in which case this Lease shall terminate and
Tenant shall immediately surrender possession of the Premises to Landlord.
Such termination shall not affect any accrued obligations of Tenant under
this Lease. Upon termination, Landlord shall have the right to reenter the
Premises and remove all persons and property. Landlord shall also be
entitled to recover from Tenant:
(1) The worth at the time of award of the unpaid rent and
additional rent which had been earned at the time of termination;
(2) The worth at the time of award of the amount by which the
unpaid rent and additional rent which would have been earned after
termination until the time of award exceeds the amount of such loss that
Tenant proves could have been reasonably avoided;
(3) The worth at the time of award of the amount by which the
unpaid rent and additional rent for the balance of the Term after the time of
award exceeds the amount of such loss that Tenant proves could be reasonably
avoided;
(4) Any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things would
be likely to result from Tenant's default, including, but not limited to, the
cost of recovering possession of the Premises, refurbishment of the Premises,
marketing costs, commissions and other expenses of reletting, including
necessary repair, the unamortized portion of any tenant improvements and
brokerage commissions funded by Landlord in connection with this Lease,
reasonable attorneys' fees, and any other reasonable costs; and
(5) At Landlord's election, all other amounts in addition to
or in lieu of the foregoing as may be permitted by law. The term "rent" as
used in this Lease shall be deemed to mean the Basic Rent and all other sums
required to be paid by Tenant to Landlord pursuant to the terms of this
Lease. Any sum, other than Basic Rent, shall be computed on the basis of the
average monthly amount accruing during the twenty-four (24) month period
immediately prior to default, except that if it becomes necessary to compute
such rental before the twenty-four (24) month period has occurred, then the
computation shall be on the basis of the average monthly amount during the
shorter period. As used in subparagraphs (1) and (2) above, the "worth at
the time of award" shall be computed by allowing interest at the rate of ten
percent (10%) per annum. As used in subparagraph (3) above, the "worth at
the time of award" shall be computed by discounting the amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of
award plus one percent (1%).
23
<PAGE>
(ii) Landlord may elect not to terminate Tenant's right to
possession of the Premises, in which event Landlord may continue to enforce
all of its rights and remedies under this Lease, including the right to
collect all rent as it becomes due. Efforts by the Landlord to maintain,
preserve or relet the Premises, or the appointment of a receiver to protect
the Landlord's interests under this Lease, shall not constitute a termination
of the Tenant's right to possession of the Premises. In the event that
Landlord elects to avail itself of the remedy provided by this subsection
(ii), Landlord shall not unreasonably withhold its consent to an assignment
or subletting of the Premises subject to the reasonable standards for
Landlord's consent as are contained in this Lease.
(b) Landlord shall be under no obligation to observe or perform any
covenant of this Lease on its part to be observed or performed which accrues
after the date of any default by Tenant unless and until the default is cured
by Tenant, it being understood and agreed that the performance by Landlord of
its obligations under this Lease are expressly conditioned upon Tenant's full
and timely performance of its obligations under this Lease. The various
rights and remedies reserved to Landlord in this Lease or otherwise shall be
cumulative and, except as otherwise provided by California law, Landlord may
pursue any or all of its rights and remedies at the same time.
(c) No delay or omission of Landlord to exercise any right or remedy
shall be construed as a waiver of the right or remedy or of any default by
Tenant. The acceptance by Landlord of rent shall not be a (i) waiver of any
preceding breach or default by Tenant of any provision of this Lease, other
than the failure of Tenant to pay the particular rent accepted, regardless of
Landlord's knowledge of the preceding breach or default at the time of
acceptance of rent, or (ii) a waiver of Landlord's right to exercise any
remedy available to Landlord by virtue of the breach or default. The
acceptance of any payment from a debtor in possession, a trustee, a receiver
or any other person acting on behalf of Tenant or Tenant's estate shall not
waive or cure a default under Section 14.1. No payment by Tenant or receipt
by Landlord of a lesser amount than the rent required by this Lease shall be
deemed to be other than a partial payment on account of the earliest due
stipulated rent, nor shall any endorsement or statement on any check or
letter be deemed an accord and satisfaction and Landlord shall accept the
check or payment without prejudice to Landlord's right to recover the balance
of the rent or pursue any other remedy available to it. No act or thing done
by Landlord or Landlord's agents during the Term shall be deemed an
acceptance of a surrender of the Premises, and no agreement to accept a
surrender shall be valid unless in writing and signed by Landlord. No
employee of Landlord or of Landlord's agents shall have any power to accept
the keys to the Premises prior to the termination of this Lease, and the
delivery of the keys to any employee shall not operate as a termination of
the Lease or a surrender of the Premises.
SECTION 14.3. LATE PAYMENTS.
(a) Any rent due under this Lease that is not received by Landlord
within five (5) days of the date when due shall bear interest at the maximum
rate permitted by law from the date due until fully paid. The payment of
interest shall not cure any default by Tenant under this Lease. In addition,
Tenant acknowledges that the late payment by 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 and impracticable to ascertain.
Those costs may include, but are not limited to, administrative, processing
and accounting charges, and late charges which may be imposed on Landlord by
the terms of any ground lease, mortgage or trust deed covering the Premises.
Accordingly, if any rent due from Tenant shall not be received by Landlord or
Landlord's designee within five (5) days after the date due, then Tenant
shall pay to Landlord, in addition to the interest provided above, a late
charge in a sum equal to the greater of five percent (5%) of the amount
overdue or Two Hundred Fifty Dollars ($250.00) for each delinquent payment.
Acceptance of a late charge by Landlord shall not constitute a waiver of
Tenant's default with respect to the overdue amount, nor shall it prevent
Landlord from exercising any of its other rights and remedies.
(b) Following each second consecutive installment of rent that is not
paid within five (5) days following notice of nonpayment from Landlord,
Landlord shall have the option (i) to require that beginning with the first
payment of rent next due, rent shall no longer be paid in monthly
installments but shall be payable quarterly three (3) months in advance
and/or (ii) to require that Tenant increase the amount, if any, of the
Security
24
<PAGE>
Deposit by one hundred percent (100%). Should Tenant deliver to Landlord, at
any time during the Term, two (2) or more insufficient checks, the Landlord
may require that all monies then and thereafter due from Tenant be paid to
Landlord by cashier's check.
SECTION 14.4. RIGHT OF LANDLORD TO PERFORM. All covenants and
agreements to be performed by Tenant under this Lease shall be performed at
Tenant's sole cost and expense and without any abatement of rent or right of
set-off. If Tenant fails to pay any sum of money, other than rent, or fails
to perform any other act on its part to be performed under this Lease, and
the failure continues beyond any applicable grace period set forth in Section
14.1, then in addition to any other available remedies, Landlord may, at its
election make the payment or perform the other act on Tenant's part.
Landlord's election to make the payment or perform the act on Tenant's part
shall not give rise to any responsibility of Landlord to continue making the
same or similar payments or performing the same or similar acts. Tenant
shall, promptly upon demand by Landlord, reimburse Landlord for all sums paid
by Landlord and all necessary incidental costs, together with interest at the
maximum rate permitted by law from the date of the payment by Landlord.
Landlord shall have the same rights and remedies if Tenant fails to pay those
amounts as Landlord would have in the event of a default by Tenant in the
payment of rent.
SECTION 14.5. DEFAULT BY LANDLORD. Landlord shall not be deemed to be
in default in the performance of any obligation under this Lease unless and
until it has failed to perform the obligation within thirty (30) days after
written notice by Tenant to Landlord specifying in reasonable detail the
nature and extent of the failure; provided, however, that if the nature of
Landlord's obligation is such that more than thirty (30) days are required
for its performance, then Landlord shall not be deemed to be in default if it
commences performance within the thirty (30) day period and thereafter
diligently pursues the cure to completion.
SECTION 14.6. EXPENSES AND LEGAL FEES. All sums reasonably incurred by
Landlord in connection with any event of default by Tenant under this Lease
or holding over of possession by Tenant after the expiration or earlier
termination of this Lease, including without limitation all reasonable costs,
expenses and actual accountants, appraisers, attorneys and other professional
fees, and any collection agency or other collection charges, shall be due and
payable by Tenant to Landlord on demand, and shall bear interest at the rate
of ten percent (10%) per annum. Should either Landlord or Tenant bring any
action in connection with this Lease, the prevailing party shall be entitled
to recover as a part of the action its reasonable attorneys' fees, and all
other costs. The prevailing party for the purpose of this paragraph shall be
determined by the trier of the facts.
SECTION 14.7. WAIVER OF JURY TRIAL. LANDLORD AND TENANT EACH
ACKNOWLEDGES THAT IT IS AWARE OF AND HAS HAD THE ADVICE OF COUNSEL OF ITS
CHOICE WITH RESPECT TO ITS RIGHTS TO TRIAL BY JURY, AND EACH PARTY DOES
HEREBY EXPRESSLY AND KNOWINGLY WAIVE AND RELEASE ALL SUCH RIGHTS TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO
AGAINST THE OTHER (AND/OR AGAINST ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
OR SUBSIDIARY OR AFFILIATED ENTITIES) ON ANY MATTERS WHATSOEVER ARISING OUT
OF OR IN ANY WAY CONNECTED WITH THIS LEASE, TENANT'S USE OR OCCUPANCY OF THE
PREMISES, AND/OR ANY CLAIM OF INJURY OR DAMAGE.
SECTION 14.8. SATISFACTION OF JUDGMENT. The obligations of Landlord do
not constitute the personal obligations of the individual partners, trustees,
directors, officers or shareholders of Landlord or its constituent partners.
Should Tenant recover a money judgment against Landlord, such judgment shall
be satisfied only out of the proceeds of sale received upon execution of such
judgment and levied thereon against the right, title and interest of Landlord
in the Project and out of the rent or other income from such property
receivable by Landlord or out of consideration received by Landlord from the
sale or other disposition of all or any part of Landlord's right, title or
interest in the Project, and no action for any deficiency may be sought or
obtained by Tenant.
25
<PAGE>
SECTION 14.9. LIMITATION OF ACTIONS AGAINST LANDLORD. Any claim, demand
or right of any kind by Tenant which is based upon or arises in connection
with this Lease shall be barred unless Tenant commences an action thereon
within six (6) months after the date that the act, omission, event or default
upon which the claim, demand or right arises, has occurred.
ARTICLE XV. END OF TERM
SECTION 15.1. HOLDING OVER. This Lease shall terminate without further
notice upon the expiration of the Term, and any holding over by Tenant after
the expiration shall not constitute a renewal or extension of this Lease, or
give Tenant any rights under this Lease, except when in writing signed by
both parties. If Tenant holds over for any period after the expiration (or
earlier termination) of the Term without the prior written consent of
Landlord, such possession shall constitute a tenancy at sufferance only; such
holding over with the prior written consent of Landlord shall constitute a
month-to-month tenancy commencing on the first (1st) day following the
termination of this Lease. In either of such events, possession shall be
subject to all of the terms of this Lease, except that the monthly Basic Rent
shall be the greater of (a) two hundred percent (200%) of the Basic Rent for
the month immediately preceding the date of termination or (b) the then
currently scheduled Basic Rent for comparable space in the Building. If
Tenant fails to surrender the Premises upon the expiration of this Lease
despite demand to do so by Landlord, Tenant shall indemnify and hold Landlord
harmless from all loss or liability, including without limitation, any claims
made by any succeeding tenant relating to such failure to surrender.
Acceptance by Landlord of rent after the termination shall not constitute a
consent to a holdover or result in a renewal of this Lease. The foregoing
provisions of this Section are in addition to and do not affect Landlord's
right of re-entry or any other rights of Landlord under this Lease or at law.
SECTION 15.2. MERGER ON TERMINATION. The voluntary or other surrender
of this Lease by Tenant, or a mutual termination of this Lease, shall
terminate any or all existing subleases unless Landlord, at its option,
elects in writing to treat the surrender or termination as an assignment to
it of any or all subleases affecting the Premises.
SECTION 15.3. SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Upon the
Expiration Date or upon any earlier termination of this Lease, Tenant shall
quit and surrender possession of the Premises to Landlord in as good order,
condition and repair as when received or as hereafter may be improved by
Landlord or Tenant, reasonable wear and tear and repairs which are Landlord's
obligation excepted, and shall, without expense to Landlord, remove or cause
to be removed from the Premises all personal property and debris, except for
any items that Landlord may by written authorization allow to remain. Tenant
shall repair all damage to the Premises resulting from the removal, which
repair shall include the patching and filling of holes and repair of
structural damage, provided that Landlord may instead elect to repair any
structural damage at Tenant's expense. If Tenant shall fail to comply with
the provisions of this Section, Landlord may effect the removal and/or make
any repairs, and the cost to Landlord shall be additional rent payable by
Tenant upon demand. If Tenant fails to remove Tenant's personal property
from the Premises upon the expiration of the Term, Landlord may remove,
store, dispose of and/or retain such personal property, at Landlord's option,
in accordance with then applicable laws, all at the expense of Tenant. If
requested by Landlord, Tenant shall execute, acknowledge and deliver to
Landlord an instrument in writing releasing and quitclaiming to Landlord all
right, title and interest of Tenant in the Premises.
ARTICLE XVI. PAYMENTS AND NOTICES
All sums payable by Tenant to Landlord shall be paid, without deduction
or offset, in lawful money of the United States to Landlord at its address
set forth in Item 12 of the Basic Lease Provisions, or at any other place as
26
<PAGE>
Landlord may designate in writing. Unless this Lease expressly provides
otherwise, as for example in the payment of rent pursuant to Section 4.1, all
payments shall be due and payable within five (5) days after demand. All
payments requiring proration shall be prorated on the basis of a thirty (30)
day month and a three hundred sixty (360) day year. Any notice, election,
demand, consent, approval or other communication to be given or other
document to be delivered by either party to the other may be delivered in
person or by courier or overnight delivery service to the other party, or may
be deposited in the United States mail, as either first class mail or duly
registered or certified, postage prepaid, return receipt requested, and
addressed to the other party at the address set forth in Item 12 of the Basic
Lease Provisions, or if to Tenant, at that address or, from and after the
Commencement Date, at the Premises (whether or not Tenant has departed from,
abandoned or vacated the Premises), or may be delivered by telegram, telex or
telecopy, provided that receipt thereof is telephonically confirmed. Either
party may, by written notice to the other, served in the manner provided in
this Article, designate a different address. If any notice or other document
is sent by mail, it shall be deemed served or delivered twenty-four (24)
hours after mailing. If more than one person or entity is named as Tenant
under this Lease, service of any notice upon any one of them shall be deemed
as service upon all of them.
ARTICLE XVII. RULES AND REGULATIONS
Tenant agrees to observe faithfully and comply strictly with the Rules
and Regulations, attached as EXHIBIT E, and any reasonable and
nondiscriminatory amendments, modifications and/or additions as may be
adopted and published by written notice to tenants by Landlord for the
safety, care, security, good order, or cleanliness of the Premises, and
Project and Common Areas (if applicable). Landlord shall not be liable to
Tenant for any violation of the Rules and Regulations or the breach of any
covenant or condition in any lease by any other tenant or such tenant's
agents, employees, contractors, quests or invitees. One or more waivers by
Landlord of any breach of the Rules and Regulations by Tenant or by any other
tenant(s) shall not be a waiver of any subsequent breach of that rule or any
other. Tenant's failure to keep and observe the Rules and Regulations shall
constitute a default under this Lease. In the case of any conflict between
the Rules and Regulations and this Lease, this Lease shall be controlling.
ARTICLE XVIII. BROKER'S COMMISSION
The parties recognize as the broker(s) who negotiated this Lease the
firm(s), if any, whose name(s) is (are) stated in Item 10 of the Basic Lease
Provisions, and agree that Landlord shall be responsible for the payment of
brokerage commissions to those broker(s) unless otherwise provided in this
Lease. Tenant warrants that it has had no dealings with any other real
estate broker or agent in connection with the negotiation of this Lease, and
Tenant agrees to indemnify and hold Landlord harmless from any cost, expense
or liability (including reasonable attorneys' fees) for any compensation,
commissions or charges claimed by any other real estate broker or agent
employed or claiming to represent or to have been employed by Tenant in
connection with the negotiation of this Lease. The foregoing agreement shall
survive the termination of this Lease. If Tenant fails to take possession of
the Premises or if this Lease otherwise terminates prior to the Expiration
Date as the result of failure of performance by Tenant, Landlord shall be
entitled to recover from Tenant the unamortized portion of any brokerage
commission funded by Landlord in addition to any other damages to which
Landlord may be entitled.
ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST
In the event of any transfer of Landlord's interest in the Premises, the
transferor shall be automatically
27
<PAGE>
relieved of all obligations on the part of Landlord accruing under this Lease
from and after the date of the transfer, provided that any funds held by the
transferor in which Tenant has an interest shall be turned over, subject to
that interest, to the transferee and Tenant is notified of the transfer as
required by law. No holder of a mortgage and/or deed of trust to which this
Lease is or may be subordinate, and no landlord under a so-called
sale-leaseback, shall be responsible in connection with the Security Deposit,
unless the mortgagee or holder of the deed of trust or the landlord actually
receives the Security Deposit. It is intended that the covenants and
obligations contained in this Lease on the part of Landlord shall, subject to
the foregoing, be binding on Landlord, its successors and assigns, only
during and in respect to their respective successive periods of ownership.
ARTICLE XX. INTERPRETATION
SECTION 20.1. GENDER AND NUMBER. Whenever the context of this Lease
requires, the words "Landlord" and "Tenant" shall include the plural as well
as the singular, and words used in neuter, masculine or feminine genders
shall include the others.
SECTION 20.2. HEADINGS. The captions and headings of the articles and
sections of this Lease are for convenience only, are not a part of this Lease
and shall have no effect upon its construction or interpretation.
SECTION 20.3. JOINT AND SEVERAL LIABILITY. If more than one person or
entity is named as Tenant, the obligations imposed upon each shall be joint
and several and the act of or notice from, or notice or refund to, or the
signature of, any one or more of them shall be binding on all of them with
respect to the tenancy of this Lease, including, but not limited to, any
renewal, extension, termination or modification of this Lease.
SECTION 20.4. SUCCESSORS. Subject to Articles IX and XIX, all rights
and liabilities given to or imposed upon Landlord and Tenant shall extend to
and bind their respective heirs, executors, administrators, successors and
assigns. Nothing contained in this Section is intended, or shall be
construed, to grant to any person other than Landlord and Tenant and their
successors and assigns any rights or remedies under this Lease.
SECTION 20.5. TIME OF ESSENCE. Time is of the essence with respect to
the performance of every provision of this Lease.
SECTION 20.6. CONTROLLING LAW. This Lease shall be governed by and
interpreted in accordance with the laws of the State of California.
SECTION 20.7. SEVERABILITY. If any term or provision of this Lease, the
deletion of which would not adversely affect the receipt of any material
benefit by either party or the deletion of which is consented to by the party
adversely affected, shall be held invalid or unenforceable to any extent, the
remainder of this Lease shall not be affected and each term and provision of
this Lease shall be valid and enforceable to the fullest extent permitted by
law.
SECTION 20.8. WAIVER AND CUMULATIVE REMEDIES. One or more waivers by
Landlord or Tenant of any breach of any term, covenant or condition contained
in this Lease shall not be a waiver of any subsequent breach of the same or
any other term, covenant or condition. Consent to any act by one of the
parties shall not be deemed to render unnecessary the obtaining of that
party's consent to any subsequent act. No breach by Tenant of this Lease
shall be deemed to have been waived by Landlord unless the waiver is in a
writing signed by Landlord. The rights and remedies of Landlord under this
Lease shall be cumulative and in addition to any and all other rights and
remedies which Landlord may have.
SECTION 20.9. INABILITY TO PERFORM. In the event that either party
shall be delayed or hindered
28
<PAGE>
in or prevented from the performance of any work or in performing any act
required under this Lease by reason of any cause beyond the reasonable
control of that party, then the performance of the work or the doing of the
act shall be excused for the period of the delay and the time for performance
shall be extended for a period equivalent to the period of the delay. The
provisions of this Section shall not operate to excuse Tenant from the prompt
payment of rent or from the timely performance of any other obligation under
this Lease within Tenant's reasonable control.
SECTION 20.10. ENTIRE AGREEMENT. This Lease and its exhibits and other
attachments cover in full each and every agreement of every kind between the
parties concerning the Premises, the Building, and the Project, and all
preliminary negotiations, oral agreements, understandings and/or practices,
except those contained in this Lease, are superseded and of no further
effect. Tenant waives its rights to rely on any representations or promises
made by Landlord or others which are not contained in this Lease. No verbal
agreement or implied covenant shall be held to modify the provisions of this
Lease, any statute, law, or custom to the contrary notwithstanding.
SECTION 20.11. QUIET ENJOYMENT. Upon the observance and performance of
all the covenants, terms and conditions on Tenant's part to be observed and
performed, and subject to the other provisions of this Lease, Tenant shall
peaceably and quietly hold and enjoy the Premises for the Term without
hindrance or interruption by Landlord or any other person claiming by or
through Landlord.
SECTION 20.12. SURVIVAL. All covenants of Landlord or Tenant which
reasonably would be intended to survive the expiration or sooner termination
of this Lease, including without limitation any warranty or indemnity
hereunder, shall so survive and continue to be binding upon and inure to the
benefit of the respective parties and their successors and assigns.
ARTICLE XXI. EXECUTION AND RECORDING
SECTION 21.1. COUNTERPARTS. This Lease may be executed in one or more
counterparts, each of which shall constitute an original and all of which
shall be one and the same agreement.
SECTION 21.2. CORPORATE AND PARTNERSHIP AUTHORITY. If Tenant is a
corporation or partnership, each individual executing this Lease on behalf of
the corporation or partnership represents and warrants that he is duly
authorized to execute and deliver this Lease on behalf of the corporation or
partnership, and that this Lease is binding upon the corporation or
partnership in accordance with its terms. Tenant shall, at Landlord's
request, deliver a certified copy of its board of directors' resolution or
partnership agreement or certificate authorizing or evidencing the execution
of this Lease.
SECTION 21.3. EXECUTION OF LEASE; NO OPTION OR OFFER. The submission of
this Lease to Tenant shall be for examination purposes only, and shall not
constitute an offer to or option for Tenant to lease the Premises. Execution
of this Lease by Tenant and its return to Landlord shall not be binding upon
Landlord, notwithstanding any time interval, until Landlord has in fact
executed and delivered this Lease to Tenant, it being intended that this
Lease shall only become effective upon execution by Landlord and delivery of
a fully executed counterpart to Tenant.
SECTION 21.4. RECORDING. Tenant shall not record this Lease without the
prior written consent of Landlord. Tenant, upon the request of Landlord,
shall execute and acknowledge a "short form" memorandum of this Lease for
recording purposes.
SECTION 21.5. AMENDMENTS. No amendment or termination of this Lease
shall be effective unless in writing signed by authorized signatories of
Tenant and Landlord, or by their respective successors in interest. No
29
<PAGE>
actions, policies, oral or informal arrangements, business dealings or other
course of conduct by or between the parties shall be deemed to modify this
Lease in any respect.
SECTION 21.6. EXECUTED COPY. Any fully executed photocopy or similar
reproduction of this Lease shall be deemed an original for all purposes.
SECTION 21.7. ATTACHMENTS. All exhibits, amendments, riders and addenda
attached to this Lease are hereby incorporated into and made a part of this
Lease.
ARTICLE XXII. MISCELLANEOUS
SECTION 22.1. NONDISCLOSURE OF LEASE TERMS. Tenant acknowledges and
agrees that the terms of this Lease are confidential and constitute
proprietary information of Landlord. Disclosure of the terms could adversely
affect the ability of Landlord to negotiate other leases and impair
Landlord's relationship with other tenants. Accordingly, Tenant agrees that
it, and its partners, officers, directors, employees and attorneys, shall not
intentionally and voluntarily disclose the terms and conditions of this Lease
to any other tenant or apparent prospective tenant of the Project, either
directly or indirectly, without the prior written consent of Landlord,
provided, however, that Tenant may disclose the terms to prospective
subtenants or assignees under this Lease. Notwithstanding the foregoing,
Tenant may disclose this Lease as required by law or judicial order, which
disclosure may include filing a copy of the Lease as an exhibit to Tenant's
filings under federal securities laws.
SECTION 22.2. GUARANTY. As a condition to the execution of this Lease
by Landlord, the obligations, covenants and performance of the Tenant as
herein provided shall be guaranteed in writing by the Guarantor(s) listed in
Item 7 of the Basic Lease Provisions, if any, on a form of guaranty provided
by Landlord.
SECTION 22.3. CHANGES REQUESTED BY LENDER. If, in connection with
obtaining financing for the Project, the lender shall request reasonable
modifications in this Lease as a condition to the financing, Tenant will not
unreasonably withhold or delay its consent, provided that the modifications
do not materially increase the obligations of Tenant or materially and
adversely affect the leasehold interest created by this Lease.
SECTION 22.4. MORTGAGEE PROTECTION. No act or failure to act on the part
of Landlord which would otherwise entitle Tenant to be relieved of its
obligations hereunder or to terminate this Lease shall result in such a
release or termination unless (a) Tenant has given notice by registered or
certified mail to any beneficiary of a deed of trust or mortgage covering the
Premises whose address has been furnished to Tenant and (b) such beneficiary
is afforded a reasonable opportunity to cure the default by Landlord (which
in no event shall be less than sixty (60) days), including, if necessary to
effect the cure, time to obtain possession of the Premises by power of sale
or judicial foreclosure provided that such foreclosure remedy is diligently
pursued. Tenant agrees that each beneficiary of a deed of trust or mortgage
covering the Premises is an express third party beneficiary hereof, Tenant
shall have no right or claim for the collection of any deposit from such
beneficiary or from any purchaser at a foreclosure sale unless such
beneficiary or purchaser shall have actually received and not refunded the
deposit, and Tenant shall comply with any written directions by any
beneficiary to pay rent due hereunder directly to such beneficiary without
determining whether an event of default exists under such beneficiary's deed
of trust.
SECTION 22.5. COVENANTS AND CONDITIONS. All of the provisions of this
Lease shall be construed to be conditions as well as covenants as though the
words specifically expressing or imparting covenants and conditions were used
in each separate provision.
SECTION 22.6. SECURITY MEASURES. Tenant hereby acknowledges that
Landlord shall have no obligation whatsoever to provide guard service or
other security measures for the benefit of the Premises or the Project.
Tenant assumes all responsibility for the protection of Tenant, its agents,
invitees and property from acts of
30
<PAGE>
third parties. Nothing herein contained shall prevent Landlord, at its sole
option, from providing security protection for the Project or any part
thereof, in which event the cost thereof shall be included within the
definition of Building Costs.
LANDLORD: TENANT:
THE IRVINE COMPANY, PHOENIX TECHNOLOGIES LTD.,
a Michigan corporation a Delaware corporation
By: /s/Clarence W. Barker By: /s/Robert J. Riopel
-------------------------------- -----------------------------------
Clarence W. Barker, Name: Robert J. Riopel
President, Irvine Industrial Title: VP, Finance
Company, a division of The
Irvine Company
By: /s/Richard G. Sim By: /s/Scott C. Neely
-------------------------------- -----------------------------------
Richard G. Sim Name: Scott C. Neely
Executive Vice President Title: VP, General Counsel
The Irvine Co. and Secretary
31
<PAGE>
EXHIBIT A
DESCRIPTION OF THE PREMISES
[Drawing of Premises]
<PAGE>
EXHIBIT B
IRVINE INDUSTRIAL COMPANY
HAZARDOUS MATERIALS SURVEY FORM
The purpose of this form is to obtain information regarding the use of
hazardous substances on Irvine Industrial Company property. Prospective
tenants and contractors should answer the questions in light of their
proposed operations on the premises. Existing tenants and contractors should
answer the questions as they relate to ongoing operations on the premises and
should update any information previously submitted.
If additional space is needed to answer the questions, you may attach
separate sheets of paper to this form. When completed, the form should be
sent to the following address:
___________________________________
___________________________________
___________________________________
___________________________________
(insert address of Property
Management Company)
Your cooperation in this matter is appreciated. If you have any
questions, please do not hesitate to call [insert name of Property Manager]
at [insert phone number] for assistance.
1. GENERAL INFORMATION
Name of Responding Company: ______________________________________________
Check all that apply: Tenant ( ) Contractor ( ) Prospective ( )
Existing ( )
Mailing Address: _________________________________________________________
Contact Person & Title: __________________________________________________
Telephone Number: ( ) __________ - ___________________________
Address of Leased Premises: ______________________________________________
Length of Lease or Contract Term: ________________________________________
Describe the proposed operations to take place on the property, including
principal products manufactured or services to be conducted. Existing
tenants and contractors should describe any proposed changes to
ongoing operations.
__________________________________________________________________________
__________________________________________________________________________
2. STORAGE OF HAZARDOUS MATERIALS
2.1 Will any hazardous materials be used or stored on-site?
1
<PAGE>
Wastes Yes ( ) No ( )
Chemical Products Yes ( ) No ( )
Biological Hazards/ Yes ( ) No ( )
Infectious Wastes Yes ( ) No ( )
Radioactive Materials Yes ( ) No ( )
2.2 List any hazardous materials to be used or stored, the quantities that
will be on-site at any given time, and the location and method of
storage (e.g., bottles in storage closet on the premises).
LOCATION AND METHOD
Waste/Products of Storage Quantity
______________ _____________ _________
______________ _____________ _________
______________ _____________ _________
______________ _____________ _________
2.3 Is any underground storage of hazardous substances proposed or
currently conducted on the premises? Yes ( ) No ( )
If yes, describe the materials to be stored, and the size and
construction of the tank. Attach copies of any permits obtained for
the underground storage of such substances. ____________________
___________________________________________________________________
3. SPILLS
3.1 During the past year, have any spills occurred on the premises?
Yes ( ) No ( )
If so, please describe the spill and attach the results of any
testing conducted to determine the extent of such spills.
3.2 Were any agencies notified in connection with such spills?
Yes ( ) No ( )
If so, attach copies of any spill reports or other correspondence
with regulatory agencies.
3.3 Were any clean-up actions undertaken in connection with the spills?
Yes ( ) No ( )
If so, briefly describe the actions taken. Attach copies of any
clearance letters obtained from any regulatory agencies involved and
the results of any final soil or groundwater sampling done upon
completion of the clean-up work.
4. WASTE MANAGEMENT
4.1 List the waste, if any, generated or to be generated at the
premises, whether it is as hazardous waste, biological or
radioactive hazard, its hazard class and the quantity generated on a
monthly basis.
Waste Hazard Class Quantity/Month
_____________ _________________ _________________
_____________ _________________ _________________
_____________ _________________ _________________
_____________ _________________ _________________
2
<PAGE>
4.2 Describe the method(s) of disposal for each waste. Indicate where
and how often disposal will take place. ___________________________
___________________________________________________________________
4.3 Is any treatment or processing of hazardous, infectious or
radioactive wastes currently conducted or proposed to be conducted
at the premises? Yes ( ) No ( )
If yes, please describe any existing or proposed treatment methods.
___________________________________________________________________
4.4 Attach copies of any hazardous waste permits or licenses issued to
your company with respect to its operations on the premises.
5. WASTEWATER TREATMENT/DISCHARGE
5.1 Do you discharge industrial wastewater to:
___ storm drain? ___ sewer?
___ surface water? ___ no industrial discharge
5.2 Is your industrial wastewater treated before discharge?
Yes ( ) No ( )
If yes, describe the type of treatment conducted.
5.3 Attach copies of any wastewater discharge permits issued to your
company with respect to its operations on the premises.
6. AIR DISCHARGES
6.1 Do you have any air filtration systems or stacks that discharge into
the air? Yes ( ) No ( )
6.2 Do you operate any equipment that require air emissions permits?
Yes ( ) No ( )
6.3 Attach copies of any air discharge permits pertaining to these
operations.
7. HAZARDOUS MATERIALS DISCLOSURES
7.1 Does your company handle an aggregate of at least 500 pounds, 55
gallons or 200 cubic feet of hazardous material at any given time?
If so, state law requires that you prepare a hazardous materials
management plan. Yes ( ) No ( )
7.2 Has your company prepared a hazardous materials management plan
('business plan') pursuant to state and Orange County Fire
Department requirements? Yes ( ) No ( )
If so, attach a copy of the business plan.
7.3 Are any of the chemicals used in your operations regulated under
Proposition 65? Yes ( ) No ( )
If so, describe the actions taken, or proposed actions to be taken,
to comply with Proposition 65 requirements.
3
<PAGE>
7.4 Is your company subject to OSHA Hazard Communication Standard
Requirements?
Yes ( ) No ( )
If so, describe the procedures followed to comply with these
requirements.
8. ENFORCEMENT ACTIONS, COMPLAINTS
8.1 Has your company ever been subject to any agency enforcement
actions, administrative orders, or consent decrees?
Yes ( ) No ( )
If so, describe the actions and any continuing compliance
obligations imposed as a result of these actions.
8.2 Has your company ever received requests for information, notice or
demand letters, or any other inquiries regarding its operations?
Yes ( ) No ( )
8.3 Have there ever been, or are there now pending, any lawsuits against
your company regarding any environmental or health and safety
concerns? Yes ( ) No ( )
8.4 Has an environmental audit ever been conducted at your company's
current facility?
Yes ( ) No ( )
If so, discuss the results of the audit.
8.5 Have there been any problems or complaints from neighbors at your
company's current facility? Yes ( ) No ( )
________________________________________
________________________________________
By: ____________________________________
Name: ______________________________
Title: _____________________________
Date: ______________________________
4
<PAGE>
EXHIBIT C
LANDLORD'S DISCLOSURES
The capitalized terms used and not otherwise defined in this Exhibit
shall have the same definitions as set forth in the Lease. The provisions of
this Exhibit shall supersede any inconsistent or conflicting provisions of
the Lease.
1. Landlord has been informed that the El Toro Marine Corps Air Station
(MCAS) has been listed as a Federal Superfund site as a result of chemical
releases occurring over many years of occupancy. Various chemicals including
jet fuel, motor oil and solvents have been discharged in several areas
throughout the MCAS site. A regional study conducted by the Orange County
Water District has estimated that groundwaters beneath more than 2,900 acres
have been impacted by Trichloroethlene (TCE), an industrial solvent. There is
a potential that this substance may have migrated into the ground water
underlying the Premises. The U.S. Environmental Protection Agency, the Santa
Ana Region Quality Control Board, and the Orange County Health Care Agency
are overseeing the investigation/cleanup of this contamination. To the
Landlord's current actual knowledge, the ground water in this area is used
for irrigation purposes only, and there is no practical impediment to the use
or occupancy of the Premises due to the El Toro discharges.
<PAGE>
EXHIBIT D
TENANT'S INSURANCE
The following standards for Tenant's insurance shall be in effect at the
Premises. Landlord reserves the right to adopt reasonable nondiscriminatory
modifications and additions to those standards. Tenant agrees to obtain and
present evidence to Landlord that it has fully complied with the insurance
requirements.
1. Tenant shall, at its sole cost and expense, commencing on the date
Tenant is given access to the Premises for any purpose and during the entire
Term, procure, pay for and keep in full force and effect: (i) commercial
general liability insurance with respect to the Premises and the operations
of or on behalf of Tenant in, on or about the Premises, including but not
limited to personal injury, owned and nonowned automobile, blanket
contractual, independent contractors, broad form property damage (with an
exception to any pollution exclusion with respect to damage arising out of
heat, smoke or fumes from a hostile fire), fire and water legal liability,
products liability (if a product is sold from the Premises), liquor law
liability (if alcoholic beverages are sold, served or consumed within the
Premises), and severability of interest, which policy(ies) shall be written
on an "occurrence" basis and for not less than the amount set forth in Item
13 of the Basic Lease Provisions, with a combined single limit (with a
$50,000 minimum limit on fire legal liability) per occurrence for bodily
injury, death, and property damage liability, or the current limit of
liability carried by Tenant, whichever is greater, and subject to such
increases in amounts as Landlord may determine from time to time; (ii)
workers' compensation insurance coverage as required by law, together with
employers' liability insurance; (iii) with respect to improvements,
alterations, and the like required or permitted to be made by Tenant under
this Lease, builder's all-risk insurance, in an amount equal to the
replacement cost of the work; (iv) insurance against fire, vandalism,
malicious mischief and such other additional perils as may be included in a
standard "all risk" form in general use in Orange County, California,
insuring Tenant's leasehold improvements, trade fixtures, furnishings,
equipment and items of personal property of Tenant located in the Premises,
in an amount equal to not less than ninety percent (90%) of their actual
replacement cost (with replacement cost endorsement); and (v) business
interruption insurance in amounts satisfactory to cover one (1) year of loss.
In no event shall the limits of any policy be considered as limiting the
liability of Tenant under this Lease.
2. In the event Landlord consents to Tenant's use, generation or
storage of Hazardous Materials on, under or about the Premises pursuant to
Section 5.3 of this Lease (other than standard office products that may
contain Hazardous Materials, such as photocopy toner, "white out", and the
like), Landlord shall have the continuing right to require Tenant, at
Tenant's sole cost and expense (provided the same is available for purchase
upon commercially reasonable terms), to purchase insurance specified and
approved by Landlord, with coverage not less than Five Million Dollars
($5,000,000.00), insuring (i) any Hazardous Materials shall be removed from
the Premises, (ii) the Premises shall be restored to a clean, healthy, safe
and sanitary condition, and (iii) any liability of Tenant, Landlord and
Landlord's officers, directors, shareholders, agents, employees and
representatives, arising from such Hazardous Materials.
3. All policies of insurance required to be carried by Tenant pursuant
to this EXHIBIT D containing a deductible exceeding Ten Thousand Dollars
($10,000.00) per occurrence must be approved in writing by Landlord prior to
the issuance of such policy. Tenant shall be solely responsible for the
payment of all deductibles.
4. All policies of insurance required to be carried by Tenant pursuant
to this EXHIBIT D shall be written by responsible insurance companies
authorized to do business in the State of California and with a Best's rating
of not less than "A" subject to final acceptance and approval by Landlord.
Any insurance required of Tenant may be furnished by Tenant under any blanket
policy carried by it or under a separate policy, so long as (i) the Premises
are specifically covered (by rider, endorsement or otherwise), and (ii) the
policy otherwise complies with the provisions of this EXHIBIT D. A true and
exact copy of each paid up policy evidencing the insurance (appropriately
authenticated by the insurer) or a certificate of insurance, certifying that
the policy has been issued,
1
<PAGE>
provides the coverage required by this EXHIBIT D and contains the required
provisions, shall be delivered to Landlord prior to the date Tenant is given
the right of possession of the Premises. Proper evidence of the renewal of
any insurance coverage shall also be delivered to Landlord not less than
thirty (30) days prior to the expiration of the coverage. Landlord may at
any time, and from time to time, inspect and/or copy any and all insurance
policies required by this Lease.
5. Each policy evidencing insurance required to be carried by Tenant
pursuant to this EXHIBIT D shall contain the following provisions and/or
clauses satisfactory to Landlord: (i) a provision that the policy and the
coverage provided shall be primary and that any coverage carried by Landlord
shall be noncontributory with respect to any policies carried by Tenant
except as to workers' compensation insurance; (ii) a provision including
Landlord, the Additional Insureds identified in Item 11 of the Basic Lease
Provisions, and any other parties in interest designated by Landlord as an
additional insured, except as to workers' compensation insurance; (iii) a
waiver by the insurer of any right to subrogation against Landlord, its
agents, employees, contractors and representatives which arises or might
arise by reason of any payment under the policy or by reason of any act or
omission of Landlord, its agents, employees, contractors or representatives;
and (iv) a provision that the insurer will not cancel or change the coverage
provided by the policy without using its reasonable efforts to give Landlord
thirty (30) days prior written notice.
6. In the event that Tenant fails to procure, maintain and/or pay for,
at the times and for the durations specified in this EXHIBIT D, any insurance
required by this EXHIBIT D, or fails to carry insurance required by any
governmental authority, Landlord may at its election procure that insurance
and pay the premiums, in which event Tenant shall repay Landlord all sums
paid by Landlord, together with interest at the maximum rate permitted by law
and any related costs or expenses incurred by Landlord, within ten (10) days
following Landlord's written demand to Tenant.
2
<PAGE>
EXHIBIT E
RULES AND REGULATIONS
This Exhibit sets forth the rules and regulations governing Tenant's use
of the Premises leased to Tenant pursuant to the terms, covenants and
conditions of the Lease to which this Exhibit is attached and therein made
part thereof. In the event of any conflict or inconsistency between this
Exhibit and the Lease, the Lease shall control.
1. Tenant shall not place anything or allow anything to be placed near
the glass of any window, door, partition or wall which may appear unsightly
from outside the Premises.
2. The walls, walkways, sidewalks, entrance passages, courts and
vestibules shall not be obstructed or used for any purpose other than ingress
and egress of pedestrian travel to and from the Premises, and shall not be
used for loitering or gathering, or to display, store or place any
merchandise, equipment or devices, or for any other purpose. The walkways,
entrance passageways, courts, vestibules and roof are not for the use of the
general public and Landlord shall in all cases retain the right to control
and prevent access thereto by all persons whose presence in the judgment of
the Landlord shall be prejudicial to the safety, character, reputation and
interests of the Building and its tenants, provided that nothing herein
contained shall be construed to prevent such access to persons with whom
Tenant normally deals in the ordinary course of Tenant's business unless such
persons are engaged in illegal activities. No tenant or employee or invitee
of any tenant shall be permitted upon the roof of the Building.
3. No awnings or other projection shall be attached to the outside
walls of the Building. No security bars or gates, curtains, blinds, shades
or screens shall be attached to or hung in, or used in connection with, any
window or door of the Premises without the prior written consent of Landlord.
Neither the interior nor exterior of any windows shall be coated or
otherwise sunscreened without the express written consent of Landlord.
4. Tenant shall not mark, nail, paint, drill into, or in any way deface
any part of the Premises or the Building. Tenant shall not lay linoleum,
tile, carpet or other similar floor covering so that the same shall be
affixed to the floor of the Premises in any manner except as approved by
Landlord in writing. The expense of repairing any damage resulting from a
violation of this rule or removal of any floor covering shall be borne by
Tenant.
5. The toilet rooms, urinals, wash bowls and other plumbing apparatus
shall not be used for any purpose other than that for which they were
constructed and no foreign substance of any kind whatsoever shall be thrown
therein. The expense of any breakage, stoppage or damage resulting from the
violation of this rule shall be borne by the tenant who, or whose employees
or invitees, caused it.
6. Landlord shall direct electricians as to the manner and location of
any future telephone wiring. No boring or cutting for wires will be allowed
without the prior consent of Landlord. The locations of the telephones, call
boxes and other office equipment affixed to the Premises shall be subject to
the prior written approval of Landlord.
7. The Premises shall not be used for manufacturing or for the storage
of merchandise except as such storage may be incidental to the permitted use
of the Premises. No exterior storage shall be allowed at any time without
the prior written approval of Landlord. The Premises shall not be used for
cooking or washing clothes without the prior written consent of Landlord, or
for lodging or sleeping or for any immoral or illegal purposes.
8. Tenant shall not make, or permit to be made, any unseemly or
disturbing noises or
1
<PAGE>
disturb or interfere with occupants of this or neighboring buildings or
premises or those having business with them, whether by the use of any
musical instrument, radio, phonograph, noise, or otherwise. Tenant shall not
use, keep or permit to be used, or kept, any foul or obnoxious gas or
substance in the Premises or permit or suffer the Premises to be used or
occupied in any manner offensive or objectionable to Landlord or other
occupants of this or neighboring buildings or premises by reason of any
odors, fumes or gases.
9. No animals shall be permitted at any time within the Premises.
10. Tenant shall not use the name of the Building or the Project in
connection with or in promoting or advertising the business of Tenant, except
as Tenant's address, without the written consent of Landlord. Landlord shall
have the right to prohibit any advertising by any Tenant which, in Landlord's
reasonable opinion, tends to impair the reputation of the Project or its
desirability for its intended uses, and upon written notice from Landlord any
Tenant shall refrain from or discontinue such advertising.
11. Canvassing, soliciting, peddling, parading, picketing, demonstrating
or otherwise engaging in any conduct that unreasonably impairs the value or
use of the Premises or the Project are prohibited and each Tenant shall
cooperate to prevent the same.
12. No equipment of any type shall be placed on the Premises which in
Landlord's opinion exceeds the load limits of the floor or otherwise
threatens the soundness of the structure or improvements of the Building.
13. No air conditioning unit or other similar apparatus shall be
installed or used by any Tenant without the prior written consent of Landlord.
14. No aerial antenna shall be erected on the roof or exterior walls of
the Premises, or on the grounds, without in each instance, the prior written
consent of Landlord. Any aerial or antenna so installed without such written
consent shall be subject to removal by Landlord at any time without prior
notice at the expense of the Tenant, and Tenant shall upon Landlord's demand
pay a removal fee to Landlord of not less than $200.00.
15. The entire Premises, including vestibules, entrances, doors,
fixtures, windows and plate glass, shall at all times be maintained in a
safe, neat and clean condition by Tenant. All trash, refuse and waste
materials shall be regularly removed from the Premises by Tenant and placed
in the containers at the locations designated by Landlord for refuse
collection. All cardboard boxes must be "broken down" prior to being placed
in the trash container. All styrofoam chips must be bagged or otherwise
contained prior to placement in the trash container, so as not to constitute
a nuisance. Pallets may not be disposed of in the trash container or
enclosures. The burning of trash, refuse or waste materials is prohibited.
16. Tenant shall use at Tenant's cost such pest extermination contractor
as Landlord may direct and at such intervals as Landlord may require.
17. All keys for the Premises shall be provided to Tenant by Landlord
and Tenant shall return to Landlord any of such keys so provided upon the
termination of the Lease. Tenant shall not change locks or install other
locks on doors of the Premises, without the prior written consent of
Landlord. In the event of loss of any keys furnished by Landlord for Tenant,
Tenant shall pay to Landlord the costs thereof.
18. No person shall enter or remain within the Project while intoxicated
or under the influence of liquor or drugs. Landlord shall have the right to
exclude or expel from the Project any person who, in the absolute discretion
of Landlord, is under the influence of liquor or drugs.
2
<PAGE>
Landlord reserves the right to amend or supplement the foregoing Rules
and Regulations and to adopt and promulgate additional rules and regulations
applicable to the Premises. Notice of such rules and regulations and
amendments and supplements thereto, if any, shall be given to the Tenant.
3
<PAGE>
EXHIBIT X
INDUSTRIAL WORK LETTER
DOLLAR ALLOWANCE
The Tenant Improvement work (herein "Tenant Improvements") shall consist of
any work, including work in place as of the date hereof, required to complete
the initial Premises and the "Must Take Space" (collectively, hereinafter
referred to as the "Premises") pursuant to the Tenant's approved plans and
specifications. All of the Tenant Improvement work shall be performed by a
contractor selected by Landlord and in accordance with the procedures and
requirements set forth below.
I. ARCHITECTURAL AND CONSTRUCTION PROCEDURES.
A. Tenant and Landlord have approved, or shall approve within the time
period set forth below, both (i) a detailed space plan for the
Premises, prepared by Landlord's architect, which includes interior
partitions, ceilings, interior finishes, interior doors, suite
entrance, floor coverings, window coverings, lighting, electrical and
telephone outlets, plumbing connections, heavy floor loads and other
special requirements ("Preliminary Plan"), and (ii) an estimate,
prepared by Landlord's contractor, of the cost for which Landlord will
complete or cause to be completed the Tenant Improvements
("Preliminary Cost Estimate"). Tenant shall approve or disapprove
each of the Preliminary Plan and the Preliminary Cost Estimate by
signing copies of the appropriate instrument and delivering same to
Landlord within ten (10) days of its receipt by Tenant. If Tenant
disapproves any matter, Tenant shall specify in detail the reasons for
disapproval and Landlord shall attempt to modify the Preliminary Plan
and the Preliminary Cost Estimate to incorporate Tenant's suggested
revisions in a mutually satisfactory manner. Notwithstanding the
foregoing, however, Tenant shall approve in all respects a Preliminary
Plan and Preliminary Cost Estimate not later than the date set forth
in Item 15 of the Basic Lease Provisions ("Plan Approval Date"), it
being understood that Tenant's failure to do so shall constitute a
"Tenant Delay" for purposes of this Lease.
B. On or before the Plan Approval Date, Tenant shall provide in writing
to Landlord or Landlord's architect all specifications and information
requested by Landlord for the preparation of final construction
documents and costing, including without limitation Tenant's final
selection of wall and floor finishes, complete specifications and
locations (including load and HVAC requirements) of Tenant's
equipment, and details of all "Non-Standard Improvements" (as defined
below) to be installed in the Premises (collectively, "Programming
Information"). Tenant's failure to provide the Programming
Information by the Plan Approval Date shall constitute a Tenant Delay
for purposes of this Lease. Tenant understands that final
construction documents for the Tenant Improvements shall be predicated
on the Programming Information, and accordingly that such information
must be accurate and complete.
C. Except as otherwise specified by Tenant in the Preliminary Plan or
authorized by Landlord, the Tenant Improvements shall incorporate
Landlord's building standard materials and specifications
("Standards"). No deviations from the Standards may be required by
Tenant with respect to doors and frames, finish hardware, entry
graphics, the ceiling system, light fixtures and switches, mechanical
systems, life and safety systems, and/or window coverings; provided
that Landlord may, in its sole discretion, authorize in writing one or
more of such deviations, in which event Tenant shall be solely
responsible for the cost of replacing same with the applicable
Standard item(s) upon the expiration or termination of this Lease.
All other non-standard items ("Non-Standard Improvements") shall be
subject to the reasonable prior approval of Landlord. Landlord shall
in no event be required to approve any Non-Standard Improvement if
1
<PAGE>
Landlord determines that such improvement (i) is of a lesser quality
than the corresponding Standard, (ii) fails to conform to applicable
governmental requirements, (iii) requires building services beyond the
level normally provided to other tenants, (iv) would delay
construction of the Tenant Improvements beyond the Estimated
Commencement Date and Tenant declines to accept such delay in writing
as a Tenant Delay, or (v) would have an adverse aesthetic impact from
the exterior of the Premises.
D. Upon Tenant's approval of the Preliminary Plan and Preliminary Cost
Estimate and delivery of the complete Programming Information,
Landlord's architect and engineers shall prepare and deliver to Tenant
working drawings and specifications ("Working Drawings and
Specifications"), and Landlord's contractor shall prepare a final
construction cost estimate ("Final Cost Estimate") for the Tenant
Improvements in conformity with the Working Drawings and
Specifications. Tenant shall have ten (10) days from the receipt
thereof to approve or disapprove the Working Drawings and
Specifications and the Final Cost Estimate. Tenant shall not
unreasonably withhold or delay its approval, and any disapproval or
requested modification shall be limited to items not contained in the
approved Preliminary Plan or Preliminary Cost Estimate. In no event
shall Tenant disapprove the Final Cost Estimate if it does not exceed
the approved Preliminary Cost Estimate. Should Tenant disapprove the
Working Drawings and Specifications and the Final Cost Estimate, such
disapproval shall be accompanied by a detailed list of revisions. Any
revision requested by Tenant and accepted by Landlord shall be
incorporated into a revised set of Working Drawings and Specifications
and Final Cost Estimate, and Tenant shall approve same in writing
within ten (10) days of receipt without further revision. Tenant's
failure to comply in a timely manner with any of the requirements of
this paragraph shall constitute a Tenant Delay. Without limiting the
rights of Landlord for Tenant Delays as set forth herein, in the event
Tenant has not approved both the Working Drawings and Specifications
and the Final Cost Estimate within sixty (60) days following the date
of this Lease, then Landlord may, at its option, elect to terminate
this Lease by written notice to Tenant. In the event Landlord elects
to effect such a termination, Tenant shall, within ten (10) days
following demand by Landlord, pay to Landlord any costs incurred by
Landlord in connection with the preparation or review of plans,
construction estimates, price quotations, drawings or specifications
under this Work Letter and for all costs incurred in the preparation
and execution of this Lease, including any leasing commissions.
E. In the event that Tenant requests in writing a revision in the
approved Working Drawings and Specifications ("Change"), Landlord
shall advise Tenant by written change order as soon as is practical of
any increase in the Completion Cost and/or any Tenant Delay such
Change would cause. Tenant shall approve or disapprove such change
order in writing within ten (10) days following its receipt from
Landlord. Landlord shall have the right to decline Tenant's request
for a Change for any of the reasons set forth in Article II.C above
for Landlord's disapproval of a Non-Standard Improvement. It is
understood that Landlord shall have no obligation to interrupt or
modify the Tenant Improvement work pending Tenant's approval of a
change order.
F. Notwithstanding any provision in the Lease to the contrary, if Tenant
fails to comply with any of the time periods specified in this Work
Letter, fails otherwise to approve or reasonably disapprove any
submittal within ten (10) days, fails to approve in writing both the
Preliminary Plan and Preliminary Cost Estimate for the Tenant
Improvements by the Plan Approval Date, fails to provide all of the
Programming Information requested by Landlord by the Plan Approval
Date, fails to approve in writing the Working Drawings and
Specifications and the Final Cost Estimate within the time provided
herein, requests any Changes, furnishes inaccurate or erroneous
specifications or other information, or otherwise delays in any manner
the completion of the Tenant Improvements (including without
limitation by specifying materials that are not readily available) or
the issuance of an occupancy certificate (any of the foregoing being
referred to in this Lease as a "Tenant Delay"), then Tenant shall bear
any resulting additional construction cost or other expenses, and the
Commencement Date of this Lease shall be deemed to have occurred for
all
2
<PAGE>
purposes, including Tenant's obligation to pay rent, as of the date
Landlord reasonably determines that it would have been able to deliver
the Premises to Tenant but for the collective Tenant Delays. In no
event, however, shall such date be earlier than the Estimated
Commencement Date set forth in the Basic Lease Provisions. Should
Landlord determine that the Commencement Date should be advanced in
accordance with the foregoing, it shall so notify Tenant in writing.
Landlord's determination shall be conclusive unless Tenant notifies
Landlord in writing, within ten (10) days thereafter, of Tenant's
election to contest same by arbitration with the Judicial Arbitration
and Mediation Service in Orange County, California. Pending the
outcome of such arbitration proceedings, Tenant shall make timely
payment of all rent due under this Lease based upon the Commencement
Date set forth in the aforesaid notice from Landlord.
G. Landlord shall permit Tenant and its agents to enter the Premises
prior to the Commencement Date of the Lease in order that Tenant may
perform any work to be performed by Tenant hereunder through its own
contractors, subject to Landlord's prior written approval, and in a
manner and upon terms and conditions and at times satisfactory to
Landlord's representative. The foregoing license to enter the
Premises prior to the Commencement Date is, however, conditioned upon
Tenant's contractors and their subcontractors and employees working in
harmony and not interfering with the work being performed by Landlord.
If at any time that entry shall cause disharmony or interfere with
the work being performed by Landlord, this license may be withdrawn by
Landlord upon twenty-four (24) hours written notice to Tenant. That
license is further conditioned upon the compliance by Tenant's
contractors with all requirements imposed by Landlord on third party
contractors, including without limitation the maintenance by Tenant
and its contractors and subcontractors of workers' compensation and
public liability and property damage insurance in amounts and with
companies and on forms satisfactory to Landlord, with certificates of
such insurance being furnished to Landlord prior to proceeding with
any such entry. The entry shall be deemed to be under all of the
provisions of the Lease except as to the covenants to pay rent. Such
entry by Tenant shall not trigger the occurrence of the "Commencement
Date" as provided in Section 3.1(a) of the Lease. Landlord shall not
be liable in any way for any injury, loss or damage which may occur to
any such work being performed by Tenant, the same being solely at
Tenant's risk. In no event shall the failure of Tenant's contractors
to complete any work in the Premises extend the Commencement Date of
this Lease beyond the date that Landlord has completed its Tenant
Improvement work and tendered the Premises to Tenant.
H. Tenant hereby designates Sloan Wood, Telephone No. (408) 452-6880, as
its representative, agent and attorney-in-fact for the purpose of
receiving notices, approving submittals and issuing requests for
Changes, and Landlord shall be entitled to rely upon authorizations
and directives of such person(s) as if given directly by Tenant.
Tenant may amend the designation of its construction representative(s)
at any time upon delivery of written notice to Landlord.
II. COST OF TENANT IMPROVEMENTS
A. Landlord shall complete, or cause to be completed, the Tenant
Improvements, at the construction cost shown in the approved Final
Cost Estimate (subject to the provisions of this Work Letter), in
accordance with final Working Drawings and Specifications approved by
both Landlord and Tenant. Landlord shall pay towards the final
construction costs ("Completion Cost") as incurred a maximum of One
Million One Hundred Sixty-Five Thousand Eight Dollars ($1,165,080.00)
and Tenant shall be fully responsible for the remainder ("Tenant's
Contribution").
B. The Completion Cost shall include all direct costs of Landlord in
completing the Tenant Improvements, including but not limited to the
following: (i) payments made to architects, engineers, contractors,
subcontractors and other third party consultants in the performance of
the work, (ii) salaries and fringe
3
<PAGE>
benefits of persons, if any, in the direct employ of Landlord
performing any part of the construction work, (iii) permit fees and
other sums paid to governmental agencies, (iv) costs of all materials
incorporated into the work or used in connection with the work,
including Tenant's proportionate share of the cost of certain exterior
patio furniture, and (v) keying and signage costs. The Completion
Cost shall also include an administrative/ supervision fee to be paid
to Landlord's management agent for the Building in the amount of five
percent (5%) of all such direct costs.
C. Prior to start of construction of the Tenant Improvements, Tenant
shall pay to Landlord in full the amount of the Tenant's Contribution
set forth in the approved Final Cost Estimate. If the actual
Completion Cost of the Tenant Improvements is greater than the Final
Cost Estimate because of modifications or extras not reflected on the
approved working drawings, or because of delays caused by Tenant, then
Tenant shall be responsible for all such additional costs, including
any additional architectural fee. The balance of any sums not
otherwise paid by Tenant shall be due and payable on or before the
Commencement Date of this Lease. If Tenant defaults in the payment of
any sums due under this Work Letter, Landlord shall (in addition to
all other remedies) have the same rights as in the case of Tenant's
failure to pay rent under the Lease.
4