California-San Jose-110 Rose Orchard Way Lease - Corporate Technology Centre Associates II LLC and ActiveTouch Inc.
LEASE
BY AND BETWEEN
CORPORATE TECHNOLOGY CENTRE ASSOCIATES II LLC,
A CALIFORNIA LIMITED LIABILITY COMPANY
AS LANDLORD
AND
ACTIVE TOUCH, INC.,
A CALIFORNIA CORPORATION
AS TENANT
JUNE 30, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE 1 REFERENCE......................................................1
1.1 References..........................................................1
ARTICLE 2 LEASED PREMISES, TERM AND POSSESSION...........................2
2.1 Demise Of Leased Premises...........................................2
2.2 Right To Use Outside Areas..........................................2
2.3 Lease Commencement Date And Lease Term..............................2
2.4 Delivery Of Possession..............................................2
2.5 Performance Of Tenant Improvements; Acceptance Of Possession........3
2.6 Surrender Of Possession.............................................3
ARTICLE 3 RENT, LATE CHARGES AND SECURITY DEPOSITS.......................3
3.1 Base Monthly Rent...................................................3
3.2 Additional Rent.....................................................3
3.3 Year-End Adjustments................................................4
3.4 Late Charge, And Interest On Rent In Default........................4
3.5 Payment Of Rent.....................................................4
3.6 Prepaid Rent........................................................4
3.7 Security Deposit....................................................5
ARTICLE 4 USE OF LEASED PREMISES AND OUTSIDE AREA........................5
4.1 Permitted Use.......................................................5
4.2 General Limitations On Use..........................................5
4.3 Noise And Emissions.................................................6
4.4 Trash Disposal......................................................6
4.5 Parking.............................................................6
4.6 Signs...............................................................6
4.7 Compliance With Laws And Private Restrictions.......................6
4.8 Compliance With Insurance Requirements..............................7
4.9 Landlord's Right To Enter...........................................7
4.10 Use Of Outside Areas................................................7
4.11 Environmental Protection............................................7
4.12 Rules And Regulations...............................................8
ARTICLE 5 REPAIRS, MAINTENANCE, SERVICES AND UTILITIES...................9
5.1 Repair And Maintenance..............................................9
(a) Tenant's Obligations...........................................9
(b) Landlord's Obligation..........................................9
5.2 Utilities...........................................................9
5.3 Security............................................................9
5.4 Energy And Resource Consumption.....................................9
5.5 Limitation Of Landlord's Liability.................................10
ARTICLE 6 ALTERATIONS AND IMPROVEMENTS..................................10
6.1 By Tenant..........................................................10
6.2 Ownership Of Improvements..........................................10
6.3 Alterations Required By Law........................................10
6.4 Liens..............................................................11
ARTICLE 7 ASSIGNMENT AND SUBLETTING BY TENANT...........................11
7.1 By Tenant..........................................................11
7.2 Merger, Reorganization, or Sale of Assets..........................11
7.3 Landlord's Election................................................12
</TABLE>
i.
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<S> <C>
7.4 Conditions To Landlord's Consent...................................12
7.5 Assignment Consideration And Excess Rentals Defined................13
7.6 Payments...........................................................13
7.7 Good Faith.........................................................13
7.8 Effect Of Landlord's Consent.......................................13
ARTICLE 8 LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY..............13
8.1 Limitation On Landlord's Liability And Release.....................13
8.2 Tenant's Indemnification Of Landlord...............................14
ARTICLE 9 INSURANCE.....................................................14
9.1 Tenant's Insurance.................................................14
9.2 Landlord's Insurance...............................................15
9.3 Mutual Waiver Of Subrogation.......................................15
ARTICLE 10 DAMAGE TO LEASED PREMISES.....................................15
10.1 Landlord's Duty To Restore.........................................15
10.2 Insurance Proceeds.................................................16
10.3 Landlord's Right To Terminate......................................16
10.4 Tenant's Right To Terminate........................................16
10.5 Tenant's Waiver....................................................16
10.6 Abatement Of Rent..................................................16
ARTICLE 11 CONDEMNATION..................................................16
11.1 Tenant's Right To Terminate........................................16
11.2 Landlord's Right To Terminate......................................16
11.3 Restoration........................................................17
11.4 Temporary Taking...................................................17
11.5 Division Of Condemnation Award.....................................17
11.6 Abatement Of Rent..................................................17
11.7 Taking Defined.....................................................17
ARTICLE 12 DEFAULT AND REMEDIES..........................................17
12.1 Events Of Tenant's Default.........................................17
12.2 Landlord's Remedies................................................18
12.3 Landlord's Default And Tenant's Remedies...........................19
12.4 Limitation Of Tenant's Recourse....................................19
12.5 Tenant's Waiver....................................................19
ARTICLE 13 GENERAL PROVISIONS............................................19
13.1 Taxes On Tenant's Property.........................................19
13.2 Holding Over.......................................................19
13.3 Subordination To Mortgages.........................................20
13.4 Tenant's Attornment Upon Foreclosure...............................20
13.5 Mortgagee Protection...............................................20
13.6 Estoppel Certificate...............................................20
13.7 Tenant's Financial Information.....................................20
13.8 Transfer By Landlord...............................................20
13.9 Force Majeure......................................................21
13.10 Notices............................................................21
13.11 Attorneys' Fees....................................................21
13.12 Definitions........................................................21
</TABLE>
ii.
<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<S> <C>
(a) Real Property Taxes...........................................21
(b) Landlord's Insurance Costs....................................22
(c) Property Maintenance Costs....................................22
(d) Building Maintenance Costs....................................22
(e) Property Operating Expenses...................................22
(f) Law ..........................................................22
(g) Lender........................................................22
(h) Private Restrictions..........................................22
(i) Rent..........................................................22
13.13 General Waivers....................................................22
13.14 Miscellaneous......................................................22
ARTICLE 14 CORPORATE AUTHORITY BROKERS AND ENTIRE AGREEMENT..............23
14.1 Corporate Authority................................................23
14.2 Brokerage Commissions..............................................23
14.3 Entire Agreement...................................................23
14.4 Landlord's Representations.........................................23
ARTICLE 15 OPTIONS TO EXTEND.............................................23
ARTICLE 16 TELEPHONE SERVICE.............................................25
</TABLE>
iii.
<PAGE> 5
LEASE
THIS LEASE, dated June 30, 1999 for reference purposes only, is made by
and between CORPORATE TECHNOLOGY CENTRE ASSOCIATES II LLC, a California limited
liability company ("Landlord") and ACTIVE TOUCH, INC., a California corporation
("Tenant") to be effective and binding upon the parties as of the date the last
of the designated signatories to this Lease shall have executed this Lease (the
"Effective Date of this Lease").
ARTICLE 1
REFERENCE
1.1 REFERENCES. All references in this Lease (subject to any further
clarifications contained in this Lease) to the following terms shall have the
following meaning or refer to the respective address, person, date, time period,
amount, percentage, calendar year or fiscal year as below set forth:
<TABLE>
<S> <C>
Tenant's Address for Notice: Active Touch, Inc.
110 Rose Orchard Way
San Jose, California 95112
Tenant's Representative: Neil Perrelli, Director of Infrastructure,
Business Development
Landlord's Address for Notices: c/o Menlo Equities LLC
525 University Avenue, Suite 100
Palo Alto, California 94301
Landlord's Representative: Henry Bullock/Richard Holmstrom
Phone Number: (650) 326-9300
Intended Commencement Date: August 1, 1999
Lease Term: Five (5) years
Lease Expiration Date: Expiration Date: Five (5) years from
the Lease Commencement Date, unless
earlier terminated by Landlord in
accordance with the terms of this
Lease, or extended by Tenant
pursuant to Article 15.
Options to Renew: One (1) option(s) to renew for a term
of three (3) years.
First Month's Prepaid Rent: $38,400.00
Tenant's Security Deposit: $500,000.00, subject to adjustment pursuant to
Section 3.7
Late Charge Amount: Five Percent (5%) of the Delinquent Amount
Tenant's Required Liability
Coverage: $3,000,000 Combined Single Limit
Tenant's Broker(s): Jon Condrey and Steve Condrey of Colliers
International
Property: That certain real property situated in the City
of San Jose, County of Santa Clara, State of
California, as presently improved with five (5)
building(s), which real property is shown on the
Site Plan attached hereto as Exhibit "A" and is
commonly known as or otherwise described as
follows: Technology Centre, San Jose, California.
Building: That certain building within the Property in
which the Leased Premises are located, which
building is shown outlined on Exhibit "A" hereto
(the "Building"), located on Assessor's Parcel
No. 097-82-001. The Building is commonly known
as or otherwise described as follows: 110 Rose
Orchard Way.
Outside Areas: The "Outside Areas" shall mean all areas within
Assessor's Parcel No. 097-82-001 which are located
outside the Building, such as pedestrian walkways,
parking areas, landscaped area, open areas and enclosed
trash disposal areas.
Leased Premises Premises: All the interior space within the Building,
including stairwells, connecting walkways, and atriums,
consisting of approximately 40,320 square feet and, for
purposes of this Lease, agreed to contain said number of
square feet.
Base Monthly Rent: The term "Base Monthly Rent" shall mean the following:
</TABLE>
1.
<PAGE> 6
<TABLE>
<CAPTION>
Period Monthly Amount
------ --------------
<S> <C>
Months 1-6 $38,400.00
Months 7-12 $51,200.00
Months 13-24 $66,528.00
Months 25-36 $68,544.00
Months 37-48 $70,560.00
Months 49-60 $72,576.00
</TABLE>
<TABLE>
<S> <C>
The foregoing monthly amounts are
subject to adjustment as set forth
in the Work Letter attached as
Exhibit B.
Use: Office, research and development, and other legal
related uses.
Tenant's Project
Proportionate Share: 12.95%
Tenant's Building
Proportionate Share: 100%
Exhibits: The term "Exhibits" shall mean the Exhibits of
this Lease which are described as follows:
Exhibit "A" - Site Plan showing the
Property and delineating the
Building in which the Leased
Premises are located.
Exhibit "B" - Work Letter
Exhibit "C" - Form of Tenant Estoppel Certificate
Exhibit "D" - Form of Lease Commencement Date
Certificate
</TABLE>
ARTICLE 2
LEASED PREMISES, TERM AND POSSESSION
2.1 DEMISE OF LEASED PREMISES. Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord for Tenant's own use in the conduct of Tenant's
business and not for purposes of speculating in real estate, for the Lease Term
and upon the terms and subject to the conditions of this Lease, that certain
interior space described in Article 1 as the Leased Premises, reserving and
excepting to Landlord the right to fifty percent (50%) of all assignment
consideration and excess rentals as provided in Article 7 below. Tenant's lease
of the Leased Premises, together with the appurtenant right to use the Outside
Areas as described in Paragraph 2.2 below, shall be conditioned upon and be
subject to the continuing compliance by Tenant with (i) all the terms and
conditions of this Lease, (ii) all Laws governing the use of the Leased Premises
and the Property, (iii) all Private Restrictions, easements and other matters
now of public record respecting the use of the Leased Premises and Property, and
(iv) all reasonable rules and regulations from time to time established by
Landlord.
2.2 RIGHT TO USE OUTSIDE AREAS. As an appurtenant right to Tenant's right to the
use and occupancy of the Leased Premises, Tenant shall have the right to use the
Outside Areas in conjunction with its use of the Leased Premises solely for the
purposes for which they were designated and intended and for no other purposes
whatsoever. Such purposes include, without limitation, occasional company
meetings, catered events, and other incidental uses. Tenant's right to so use
the Outside Areas shall be subject to the limitations on such use as set forth
in Article 1 and shall terminate concurrently with any termination of this
Lease.
2.3 LEASE COMMENCEMENT DATE AND LEASE TERM. Subject to Paragraph 2.4 below, the
term of this Lease shall begin, and the Lease Commencement Date shall be deemed
to have occurred, on the Intended Commencement Date, as set forth in Article 1
(the "Lease Commencement Date"). The term of this Lease shall in all events end
on the Lease Expiration Date (as set forth in Article 1). The Lease Term shall
be that period of time commencing on the Lease Commencement Date and ending on
the Lease Expiration Date (the "Lease Term").
2.4 DELIVERY OF POSSESSION. Landlord shall deliver to Tenant possession of the
Leased Premises at such time as the Tenant Improvements (as defined in Paragraph
2.5 below) are substantially completed pursuant to the Work Letter. If Landlord
is unable to so deliver possession of the Leased Premises to Tenant in the
agreed condition on or before the Intended Commencement Date, Landlord shall not
be in default under this Lease, nor shall this Lease be void, voidable or
cancelable by Tenant until the lapse of ninety (90) days after the Intended
Commencement Date (the "delivery grace period"); however, if Landlord's
inability to so deliver the Leased Premises to Tenant is caused by the existing
tenant's hold over in the Leased Premises beyond the term of its current lease
or by Landlord's gross negligence or willful misconduct, the Lease Commencement
Date shall not be deemed to have occurred until the actual date of delivery.
Additionally, the delivery grace period above set forth shall be extended for
such number of days as Landlord may be delayed in delivering possession of the
Leased Premises to Tenant by reason of Force Majeure or the action or inaction
of Tenant. If Landlord is unable to deliver possession of the Leased Premises in
the agreed condition to Tenant within the described delivery grace period
(including any extension thereof by reason of Force Majeure or the actions or
inactions of Tenant), then Tenant's sole remedy shall be to terminate this Lease
in which case Landlord shall refund to Tenant any prepaid rent and/or Security
Deposit deposited by Tenant with Landlord, and in no event shall Landlord be
liable in damages to Tenant for such delay. Tenant may not terminate
2.
<PAGE> 7
this Lease at any time after the date Landlord notifies Tenant that the Leased
Premises have been put into the agreed condition and are available for delivery
to Tenant, unless Landlord's notice is not given in good faith. After delivery
of the Leased Premises to Tenant pursuant to the terms hereof, Landlord and
Tenant shall execute a Commencement Date Certificate in the form attached as
Exhibit D, confirming the actual Lease Commencement Date.
2.5 PERFORMANCE OF TENANT IMPROVEMENTS; ACCEPTANCE OF POSSESSION. Landlord
shall, pursuant to the work letter attached hereto as Exhibit B and made a part
of this Lease (the "Work Letter"), perform the work and make the installations
in the Leased Premises substantially as set forth in the Work Letter (such work
and installations hereinafter referred to as the "Tenant Improvements"). Without
limiting the foregoing, Landlord agrees to deliver in good working order the
roof surface and all existing plumbing, lighting, heating, ventilating and air
conditioning systems within the Leased Premises. All work to be performed
pursuant to the Work Letter shall be performed by contractors licensed in the
State of California and in accordance with commercially reasonable standards. If
any dispute arises as to whether the Leased Premises are substantially completed
and ready for Tenant's occupancy, a certificate furnished by the Construction
Manager (as defined in the Work Letter) certifying the date of substantial
completion shall be conclusive of that fact and date and binding upon Landlord
and Tenant. It is agreed that by occupying the Leased Premises, Tenant formally
accepts same and acknowledges that the Leased Premises are in the condition
called for hereunder, subject to normal punchlist items specified by Tenant to
Landlord in writing within ten (10) days of such occupancy. Landlord represents
that it has obtained or will obtain, to the extent necessary, all governmental
approvals to construct the Tenant Improvements in accordance with all Laws.
2.6 SURRENDER OF POSSESSION. Immediately prior to the expiration or upon the
sooner termination of this Lease, Tenant shall remove all of Tenant's signs from
the exterior of the Building and shall remove all of Tenant's equipment, trade
fixtures, furniture, supplies, wall decorations and other personal property from
within the Leased Premises, the Building and the Outside Areas, and shall vacate
and surrender the Leased Premises, the Building, the Outside Areas and the
Property to Landlord in the same condition, broom clean, as existed at the Lease
Commencement Date, damage by casualty or condemnation (which events shall be
governed by Articles 10 and 11) and reasonable wear and tear excepted. Tenant
shall repair all damage to the Leased Premises, the exterior of the Building and
the Outside Areas caused by Tenant's removal of Tenant's property. Tenant shall
patch and refinish, to Landlord's reasonable satisfaction, all penetrations made
by Tenant or its employees to the floor, walls or ceiling of the Leased
Premises, whether such penetrations were made with Landlord's approval or not.
Tenant shall repair or replace all stained or damaged ceiling tiles, wall
coverings and floor coverings to the reasonable satisfaction of Landlord. Tenant
shall repair all damage caused by Tenant to the exterior surface of the Building
and the paved surfaces of the Outside Areas and, where necessary, replace or
resurface same. Additionally, to the extent that Landlord shall have notified
Tenant in writing at the time the improvements were completed that it desired to
have certain improvements removed at the expiration or sooner termination of the
Lease, Tenant shall, upon the expiration or sooner termination of the Lease,
remove any such improvements constructed or installed by Landlord or Tenant and
repair all damage caused by such removal. If the Leased Premises, the Building,
the Outside Areas and the Property are not surrendered to Landlord in the
condition required by this paragraph at the expiration or sooner termination of
this Lease, Landlord may, at Tenant's expense, so remove Tenant's signs,
property and/or improvements not so removed and make such repairs and
replacements not so made or hire, at Tenant's expense, independent contractors
to perform such work. Tenant shall be liable to Landlord for all costs incurred
by Landlord in returning the Leased Premises, the Building and the Outside Areas
to the required condition, together with interest on all costs so incurred from
the date paid by Landlord at a rate equal to the greater of (a) 12%, or (b) the
sum of that rate quoted by Wells Fargo Bank, N.T. & S.A. from time to time as
its prime rate, plus two percent (2%) ("Wells Prime Plus Two"), but no event
greater than the then maximum rate of interest not prohibited or made usurious
by law until paid. Tenant shall pay to Landlord the amount of all costs so
incurred plus such interest thereon, within ten (10) days of Landlord's billing
Tenant for same. Tenant shall indemnify Landlord against loss or liability
resulting from delay by Tenant in surrendering the Leased Premises, including,
without limitation, any claims made by any succeeding Tenant or any losses to
Landlord with respect to lost opportunities to lease to succeeding tenants.
ARTICLE 3
RENT, LATE CHARGES AND SECURITY DEPOSITS
3.1 BASE MONTHLY RENT. Commencing on the Lease Commencement Date (as determined
pursuant to Paragraph 2.3 above) and continuing throughout the Lease Term,
Tenant shall pay to Landlord, without prior demand therefor, in advance on the
first day of each calendar month, the amount set forth as "Base Monthly Rent" in
Article 1 (the "Base Monthly Rent").
3.2 ADDITIONAL RENT. Commencing on the Lease Commencement Date (as determined
pursuant to Paragraph 2.3 above) and continuing throughout the Lease Term, in
addition to the Base Monthly Rent and to the extent not required by Landlord to
be contracted for and paid directly by Tenant, Tenant shall pay to Landlord as
additional rent (the "Additional Rent") the following amounts:
(a) An amount equal to all Property Operating Expenses (as defined in
Article 13) incurred by Landlord. Payment shall be made by whichever of the
following methods (or combination of methods) is (are) from time to time
designated by Landlord:
(i) Landlord may forward invoices or bills for such expenses to
Tenant, and Tenant shall, no later than the due date, pay such invoices or bills
and deliver satisfactory evidence of such payment to Landlord, and/or
3.
<PAGE> 8
(ii) Landlord may bill to Tenant, on a periodic basis not more
frequently than monthly, the amount of such expenses (or group of expenses) as
paid or incurred by Landlord, and Tenant shall pay to Landlord the amount of
such expenses within ten days after receipt of a written bill therefor from
Landlord, and/or
(iii) Landlord may deliver to Tenant Landlord's reasonable
estimate of any given expense (such as Landlord's Insurance Costs or Real
Property Taxes), or group of expenses, which it anticipates will be paid or
incurred for the ensuing calendar or fiscal year, as Landlord may determine, and
Tenant shall pay to Landlord an amount equal to the estimated amount of such
expenses for such year in equal monthly installments during such year with the
installments of Base Monthly Rent.
Landlord reserves the right to change from time to time the methods of billing
Tenant for any given expense or group of expenses or the periodic basis on which
such expenses are billed.
(b) Landlord's share of the consideration received by Tenant upon
certain assignments and sublettings as required by Article 7.
(c) Any legal fees and costs that Tenant is obligated to pay or
reimburse to Landlord pursuant to Article 13; and
(d) Any other charges or reimbursements due Landlord from Tenant
pursuant to the terms of this Lease.
Notwithstanding the foregoing, Landlord may elect by written notice to Tenant to
have Tenant pay Real Property Taxes or any portion thereof directly to the
applicable taxing authority, in which case Tenant shall make such payments and
deliver satisfactory evidence of payment to Landlord no later than ten (10) days
before such Real Property Taxes become delinquent.
3.3 YEAR-END ADJUSTMENTS. If Landlord shall have elected to bill Tenant for the
Property Operating Expenses (or any group of such expenses) on an estimated
basis in accordance with the provisions of Paragraph 3.2(a)(iii) above, Landlord
shall furnish to Tenant within three months following the end of the applicable
calendar or fiscal year, as the case may be, a statement setting forth (i) the
amount of such expenses paid or incurred during the just ended calendar or
fiscal year, as appropriate, and (ii) the amount that Tenant has paid to
Landlord for credit against such expenses for such period. If Tenant shall have
paid more than its obligation for such expenses for the stated period, Landlord
shall, at its election, either (i) credit the amount of such overpayment toward
the next ensuing payment or payments of Additional Rent that would otherwise be
due or (ii) refund in cash to Tenant the amount of such overpayment. If such
year-end statement shall show that Tenant did not pay its obligation for such
expenses in full, then Tenant shall pay to Landlord the amount of such
underpayment within ten (10) days from Landlord's billing of same to Tenant.
Tenant, at its sole cost and expense, shall have the right to audit Landlord's
books and records concerning the amount of Property Operating Costs payable by
Tenant as Additional Rent hereunder, provided such audit is conducted within
sixty (60) days after Tenant's receipt of the year-end statement described in
Section 3.2 above setting forth the annual reconciliation of the Property
Operating Expenses. The provisions of this Paragraph shall survive the
expiration or sooner termination of this Lease.
3.4 LATE CHARGE, AND INTEREST ON RENT IN DEFAULT. Tenant acknowledges that the
late payment by Tenant of any monthly installment of Base Monthly Rent or any
Additional Rent will cause Landlord to incur certain costs and expenses not
contemplated under this Lease, the exact amounts of which are extremely
difficult or impractical to fix. Such costs and expenses will include without
limitation, administration and collection costs and processing and accounting
expenses. Therefore, if any installment of Base Monthly Rent is not received by
Landlord from Tenant within ten (10) calendar days after the same becomes due,
Landlord may assess Tenant with a late charge in an amount equal to the amount
set forth in Article 1 as the "Late Charge Amount," and if any Additional Rent
is not received by Landlord within ten (10) calendar days after same becomes
due, Landlord may assess Tenant with a late charge in an amount equal to 5% of
the Additional Rent not so paid. Landlord and Tenant agree that this late charge
represents a reasonable estimate of such costs and expenses and is fair
compensation to Landlord for the anticipated loss Landlord would suffer by
reason of Tenant's failure to make timely payment. In no event shall this
provision for a late charge be deemed to grant to Tenant a grace period or
extension of time within which to pay any rental installment or prevent Landlord
from exercising any right or remedy available to Landlord upon Tenant's failure
to pay each rental installment due under this Lease when due, including the
right to terminate this Lease. If any rent remains delinquent for a period in
excess of ten (10) calendar days, then, in addition to such late charge, Tenant
shall pay to Landlord interest on any rent that is not so paid from said tenth
day at a rate equal to the greater of (a) 12%, or (b) Wells Prime Plus Two, but
no event greater than the then maximum rate of interest not prohibited or made
usurious by law until paid.
3.5 PAYMENT OF RENT. Except as specifically provided otherwise in this Lease,
all rent shall be paid in lawful money of the United States, without any
abatement, reduction or offset for any reason whatsoever, to Landlord at such
address as Landlord may designate from time to time. Tenant's obligation to pay
Base Monthly Rent and all Additional Rent shall be appropriately prorated at the
commencement and expiration of the Lease Term. The failure by Tenant to pay any
Additional Rent as required pursuant to this Lease when due shall be treated the
same as a failure by Tenant to pay Base Monthly Rent when due, and Landlord
shall have the same rights and remedies against Tenant as Landlord would have
had Tenant failed to pay the Base Monthly Rent when due.
3.6 PREPAID RENT. Tenant shall, upon execution of this Lease, pay to Landlord
the amount set forth in Article 1 as "First Month's Prepaid Rent" as prepayment
of rent for credit against the first payment of Base Monthly Rent due hereunder.
4.
<PAGE> 9
3.7 SECURITY DEPOSIT. Subject to the provisions regarding the Letter of Credit
described below in this Section 3.7, Tenant has deposited with Landlord the
amount set forth in Article 1 as the "Security Deposit" as security for the
performance by Tenant of the terms of this Lease to be performed by Tenant, and
not as prepayment of rent. In the event (i) Tenant becomes a publicly traded
company and maintains a market capitalization acceptable to Landlord, (ii)
Tenant reports net profits for three (3) consecutive quarters (as shown on its
quarterly financial statements prepared in accordance with generally accepted
accounting principles), and (iii) provided that Tenant is not then in default
(and has never been in default beyond any applicable notice and cure period) in
its payment of Base Monthly Rent or Additional Rent, the Security Deposit shall
be reduced to an amount equal to two (2) months of the Base Monthly Rent then in
effect. Provided that the conditions set forth in (i)-(iii) above are satisfied
and the Security Deposit has been accordingly reduced, and provided that Tenant
is not then in default (and has never been in default beyond any applicable
notice and cure period), then at any such time after the thirtieth (30th) month
of the Lease Term, the Security Deposit shall be reduced to amount equal to one
(1) month of the Base Monthly Rent then in effect. Notwithstanding the
foregoing, if the conditions set forth in (i)-(iii) above have not been
satisfied as of the thirtieth (30th) month of the Lease Term, and Tenant is not
then in default (and has never been in default beyond any applicable notice and
cure period), the amount of the Security Deposit shall be reduced to Two Hundred
Fifty Thousand Dollars ($250,000). Landlord may apply such portion or portions
of the Security Deposit as are reasonably necessary for the following purposes:
(i) to remedy any default by Tenant in the payment of Base Monthly Rent or
Additional Rent or a late charge or interest on defaulted rent, or any other
monetary payment obligation of Tenant under this Lease; (ii) to repair damage to
the Leased Premises, the Building or the Outside Areas caused or permitted to
occur by Tenant; (iii) to clean and restore and repair the Leased Premises, the
Building or the Outside Areas following their surrender to Landlord if not
surrendered in the condition required pursuant to the provisions of Article 2,
and (iv) to remedy any other default of Tenant to the extent permitted by Law
including, without limitation, paying in full on Tenant's behalf any sums
claimed by materialmen or contractors of Tenant to be owing to them by Tenant
for work done or improvements made at Tenant's request to the Leased Premises.
In this regard, Tenant hereby waives any restriction on the uses to which the
Security Deposit may be applied as contained in Section 1950.7(c) of the
California Civil Code and/or any successor statute. In the event the Security
Deposit or any portion thereof is so used, Tenant shall pay to Landlord,
promptly upon demand, an amount in cash sufficient to restore the Security
Deposit to the full original sum. If Tenant fails to promptly restore the
Security Deposit and if Tenant shall have paid to Landlord any sums as "Last
Month's Prepaid Rent," Landlord may, in addition to any other remedy Landlord
may have under this Lease, reduce the amount of Tenant's Last Month's Prepaid
Rent by transferring all or portions of such Last Month's Prepaid Rent to
Tenant's Security Deposit until such Security Deposit is restored to the amount
set forth in Article 1. Landlord shall not be deemed a trustee of the Security
Deposit. Landlord may use the Security Deposit in Landlord's ordinary business
and shall not be required to segregate it from Landlord's general accounts.
Tenant shall not be entitled to any interest on the Security Deposit. If
Landlord transfers the Building or the Property during the Lease Term, Landlord
may pay the Security Deposit to any subsequent owner in conformity with the
provisions of Section 1950.7 of the California Civil Code and/or any successor
statute, in which event the transferring landlord shall be released from all
liability for the return of the Security Deposit. Tenant specifically grants to
Landlord (and Tenant hereby waives the provisions of California Civil Code
Section 1950.7 to the contrary) a period of ninety (90) days following a
surrender of the Leased Premises by Tenant to Landlord within which to inspect
the Leased Premises, make required restorations and repairs, receive and verify
workmen's billings therefor, and prepare a final accounting with respect to the
Security Deposit. In no event shall the Security Deposit or any portion thereof,
be considered prepaid rent. Notwithstanding the foregoing, in lieu of a cash
Security Deposit, Tenant may deliver to Landlord a clean, unconditional,
irrevocable, transferable letter of credit in the full amount of the Security
Deposit required pursuant to Article 1 hereof (the "Letter of Credit") in form
and issued by a financial institution ("Issuer") satisfactory to Landlord in its
sole discretion. The Letter of Credit shall permit partial draws, and provide
that draws thereunder will be honored upon receipt by Issuer of a written
statement signed by Landlord or its authorized agent stating that Landlord is
entitled to draw down on the Letter of Credit pursuant to the terms of the
Lease. The Letter of Credit shall have an expiration period of one (1) year but
shall automatically renew by its terms unless affirmatively cancelled by either
Issuer or Tenant, in which case Issuer must provide Landlord thirty (30) days'
prior written notice of such expiration or cancellation. If the Letter of Credit
is cancelled or terminated, and not replaced within ten (10) days of Landlord's
receipt of notice thereof, Landlord shall be entitled to draw on the entire
amount of the Letter of Credit. Any amount drawn under the Letter of Credit
shall be held or used by Landlord in accordance with this Section 3.7. If the
Tenant fails to renew or replace the Letter of Credit as required under this
Lease at least thirty (30) days before its stated expiration date, Landlord may
draw upon the entire amount of the Letter of Credit, which amount shall be held
or used by Landlord in accordance with this Section 3.7.
ARTICLE 4
USE OF LEASED PREMISES AND OUTSIDE AREA
4.1 PERMITTED USE. Tenant shall be entitled to use the Leased Premises solely
for the "Permitted Use" as set forth in Article 1 and for no other purpose
whatsoever. Tenant shall continuously and without interruption use the Leased
Premises for such purpose for the entire Lease Term. Any discontinuance of such
use for a period of sixty (60) consecutive calendar days shall be, at Landlord's
election, a default by Tenant under the terms of this Lease. Tenant shall have
the right to use the Outside Areas in conjunction with its Permitted Use of the
Leased Premises solely for the purposes for which they were designed and
intended and for no other purposes whatsoever.
4.2 GENERAL LIMITATIONS ON USE. Tenant shall not do or permit anything to be
done in or about the Leased Premises, the Building, the Outside Areas or the
Property which does or could (i) jeopardize the structural integrity of the
Building or (ii) cause damage to any part of the Leased Premises, the Building,
the Outside Areas or the Property. Tenant shall not operate any equipment within
the Leased Premises which does or could (i) injure, vibrate or shake the Leased
Premises or the Building, (ii) damage, overload or impair the efficient
operation of any electrical, plumbing, heating, ventilating or air conditioning
systems within or servicing the Leased Premises or the
5.
<PAGE> 10
Building, or (iii) damage or impair the efficient operation of the sprinkler
system (if any) within or servicing the Leased Premises or the Building. Tenant
shall not (i) install any equipment or antennas on or make any penetrations of
the exterior walls or roof of the Building or (ii) affix any equipment or make
any penetrations or cuts in the floors, ceiling or walls of the Leased Premises,
without Landlord's prior written consent, which consent shall not be
unreasonably withheld; provided, however, that it shall be reasonable for
Landlord to withhold its consent if Tenant's proposed installations or
penetrations impact the structural integrity of the Building. Any installations,
penetrations or cuts in the interior or exterior walls, roof, floor or ceiling
of the Building will be subject to Tenant's restoration obligations set forth in
Section 2.6. Tenant shall not place any loads upon the floors, walls, ceiling or
roof systems which could endanger the structural integrity of the Building or
damage its floors, foundations or supporting structural components. Tenant shall
not place any explosive, flammable or harmful fluids or other waste materials in
the drainage systems of the Leased Premises, the Building, the Outside Areas or
the Property. Tenant shall not drain or discharge any fluids in the landscaped
areas or across the paved areas of the Property. Tenant shall not use any of the
Outside Areas for the storage of its materials, supplies, inventory or equipment
and all such materials, supplies, inventory or equipment shall at all times be
stored within the Leased Premises. Tenant shall not commit nor permit to be
committed any waste in or about the Leased Premises, the Building, the Outside
Areas or the Property. Notwithstanding the foregoing, Landlord agrees that with
Landlord's prior written consent (which shall not be unreasonably withheld),
Tenant may install microwave antennae and other communication facilities on the
roof of the Building in locations approved by Landlord. Tenant shall remove such
microwave antennae and other communication facilities at the expiration or
sooner termination of this Lease pursuant to the repair and restoration
obligations set forth in Section 2.6 of this Lease. Tenant acknowledges and
agrees that other than installations of microwave antennae and other
communication facilities pursuant to the foregoing, Landlord hereby reserves to
itself and its designees all rights of access, use and occupancy of the Building
roof, and Tenant shall have no right of access, use or occupancy of the Building
roof except (if at all) to the extent required in order to enable Tenant to
perform Tenant's maintenance and repair obligations pursuant to this Lease
4.3 NOISE AND EMISSIONS. All noise generated by Tenant in its use of the Leased
Premises shall be confined or muffled so that it does not interfere with the
businesses of or annoy the occupants and/or users of adjacent properties. All
dust, fumes, odors and other emissions generated by Tenant's use of the Leased
Premises shall be sufficiently dissipated in accordance with sound environmental
practice and exhausted from the Leased Premises in such a manner so as not to
interfere with the businesses of or annoy the occupants and/or users of adjacent
properties, or cause any damage to the Leased Premises, the Building, the
Outside Areas or the Property or any component part thereof or the property of
adjacent property owners.
4.4 TRASH DISPOSAL. Tenant shall provide trash bins or other adequate garbage
disposal facilities within the trash enclosure areas provided or permitted by
Landlord outside the Leased Premises sufficient for the interim disposal of all
of its trash, garbage and waste. All such trash, garbage and waste temporarily
stored in such areas shall be stored in such a manner so that it is not readily
visible from outside of such areas, and Tenant shall cause such trash, garbage
and waste to be regularly removed from the Property in a clean, safe and neat
condition free and clear of all trash, garbage, waste and/or boxes, pallets and
containers containing same at all times.
4.5 PARKING. Tenant shall have the nonexclusive right to use up to 158 parking
spaces on the legal parcel on which the Building is located as shown on the site
plan attached as Exhibit A hereto and in no other location on the Property.
Tenant shall not, at any time, park or permit to be parked any recreational
vehicles, inoperative vehicles or equipment in the Outside Areas or on any
portion of the Property. Tenant agrees to assume responsibility for compliance
by its employees and invitees with the parking provisions contained herein.
4.6 SIGNS. Except for business identification signs allowed pursuant to this
Section 4.6, Tenant shall not place or install on or within any portion of the
Leased Premises, the exterior of the Building, the Outside Areas or the Property
any sign, advertisement, banner, placard, or picture which is visible from the
exterior of the Leased Premises. Tenant shall not place or install on or within
any portion of the Leased Premises, the exterior of the Building, the Outside
Areas or the Property any business identification sign which is visible from the
exterior of the Leased Premises until Landlord shall have approved in writing
and in its reasonable discretion the location, size, content, design, method of
attachment and material to be used in the making of such sign; provided,
however, that so long as such signs are normal and customary business
directional or identification signs within the Building, Tenant shall not be
required to obtain Landlord's approval. Landlord shall use commercially
reasonable efforts to obtain approval for signage on the Building and a monument
sign in the Outside Areas near Rose Orchard Way, identifying Tenant as the
occupant of the Leased Premises, which signage shall be in form reasonably
acceptable to both Landlord and Tenant, and shall comply with all City of San
Jose regulations and requirements, provided that such types of signage are
generally available to other tenants of the Property. Any sign, once approved by
Landlord, shall be installed at Tenant's sole cost and expense and only in
strict compliance with Landlord's approval, using a person approved by Landlord
to install same and in strict compliance with all requirements of the City of
San Jose. Landlord may remove any signs (which have not been approved in writing
by Landlord), advertisements, banners, placards or pictures so placed by Tenant
on or within the Leased Premises, the exterior of the Building, the Outside
Areas or the Property and charge to Tenant the cost of such removal, together
with any costs incurred by Landlord to repair any damage caused thereby,
including any cost incurred to restore the surface (upon which such sign was so
affixed) to its original condition. Tenant shall remove all of Tenant's signs,
repair any damage caused thereby, and restore the surface upon which the sign
was affixed to its original condition, all to Landlord's reasonable
satisfaction, upon the termination of this Lease.
4.7 COMPLIANCE WITH LAWS AND PRIVATE RESTRICTIONS. Tenant shall abide by and
shall promptly observe and comply with, at its sole cost and expense, all Laws
and Private Restrictions respecting the use and occupancy of the Leased
Premises, the Building, the Outside Areas or the Property including, without
limitation, all Laws governing the use and/or disposal of hazardous materials,
and shall defend with competent counsel, indemnify and hold
6.
<PAGE> 11
Landlord harmless from any claims, damages or liability resulting from Tenant's
failure to so abide, observe, or comply. Tenant's obligations hereunder shall
survive the expiration or sooner termination of this Lease.
4.8 COMPLIANCE WITH INSURANCE REQUIREMENTS. With respect to any insurance
policies required or permitted to be carried by Landlord in accordance with the
provision of this Lease, copies of which have been or will, upon Tenant's
written request therefor, be provided to Tenant, Tenant shall not conduct nor
permit any other person to conduct any activities nor keep, store or use (or
allow any other person to keep, store or use) any item or thing within the
Leased Premises, the Building, the Outside Areas or the Property which (i) is
prohibited under the terms of any such policies, (ii) could result in the
termination of the coverage afforded under any of such policies, (iii) could
give to the insurance carrier the right to cancel any of such policies, or (iv)
could cause an increase in the rates (over standard rates) charged for the
coverage afforded under any of such policies. Tenant shall comply with all
commercially reasonable requirements of any insurance company, insurance
underwriter, or Board of Fire Underwriters which are necessary to maintain, at
standard rates, the insurance coverages carried by either Landlord or Tenant
pursuant to this Lease.
4.9 LANDLORD'S RIGHT TO ENTER. Landlord and its agents shall have the right to
enter the Leased Premises during normal business hours after giving Tenant
reasonable notice and subject to Tenant's reasonable security measures for the
purpose of (i) inspecting the same; (ii) showing the Leased Premises to
prospective purchasers, mortgagees or tenants; (iii) making necessary
alterations, additions or repairs; and (iv) performing any of Tenant's
obligations when Tenant has failed to do so. Landlord shall have the right to
enter the Leased Premises during normal business hours (or as otherwise agreed),
subject to Tenant's reasonable security measures, for purposes of supplying any
maintenance or services agreed to be supplied by Landlord. In any such case,
Landlord shall use commercially reasonable efforts not to interfere with
Tenant's normal business operations. Landlord shall have the right to enter the
Outside Areas during normal business hours for purposes of (i) inspecting the
exterior of the Building and the Outside Areas; (ii) posting notices of
nonresponsibility (and for such purposes Tenant shall provide Landlord at least
ten (10) days' prior written notice of any work to be performed on the Leased
Premises); and (iii) supplying any services to be provided by Landlord. Any
entry into the Leased Premises or the Outside Areas obtained by Landlord in
accordance with this paragraph shall not under any circumstances be construed or
deemed to be a forcible or unlawful entry into, or a detainer of, the Leased
Premises, or an eviction, actual or constructive of Tenant from the Leased
Premises or any portion thereof.
4.10 USE OF OUTSIDE AREAS. Tenant, in its use of the Outside Areas, shall at all
times keep the Outside Areas in a safe condition free and clear of all
materials, equipment, debris, trash (except within existing enclosed trash
areas), inoperable vehicles, and other items which are not specifically
permitted by Landlord to be stored or located thereon by Tenant. If, in the
opinion of Landlord, unauthorized persons are using any of the Outside Areas by
reason of, or under claim of, the express or implied authority or consent of
Tenant, then Tenant, upon demand of Landlord, shall use reasonable methods to
restrain such unauthorized use.
4.11 ENVIRONMENTAL PROTECTION. Tenant's obligations under this Section 4.11
shall survive the expiration or termination of this Lease.
(a) As used herein, the term "Hazardous Materials" shall mean any toxic
or hazardous substance, material or waste or any pollutant or infectious or
radioactive material, including but not limited to those substances, materials
or wastes regulated now or in the future under any of the following statutes or
regulations and any and all of those substances included within the definitions
of "hazardous substances," "hazardous materials," "hazardous waste," "hazardous
chemical substance or mixture," "imminently hazardous chemical substance or
mixture," "toxic substances," "hazardous air pollutant," "toxic pollutant," or
"solid waste" in the (a) Comprehensive Environmental Response, Compensation and
Liability Act of 1990 ("CERCLA" or "Superfund"), as amended by the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), 42 U.S.C. Section 9601 et
seq., (b) Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C.
Section 6901 et seq., (c) Federal Water Pollution Control Act ("FSPCA"), 33
U.S.C. Section 1251 et seq., (d) Clean Air Act ("CAA"), 42 U.S.C. Section 7401
et seq., (e) Toxic Substances Control Act ("TSCA"), 14 U.S.C. Section 2601 et
seq., (f) Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et
seq., (g) Carpenter-Presley-Tanner Hazardous Substance Account Act ("California
Superfund"), Cal. Health & Safety Code Section 25300 et seq., (h) California
Hazardous Waste Control Act, Cal. Health & Safety code Section 25100 et seq.,
(i) Porter-Cologne Water Quality Control Act ("Porter-Cologne Act"), Cal. Water
Code Section 13000 et seq., (j) Hazardous Waste Disposal Land Use Law, Cal.
Health & Safety codes Section 25220 et seq., (k) Safe Drinking Water and Toxic
Enforcement Act of 1986 ("Proposition 65"), Cal. Health & Safety code Section
25249.5 et seq., (l) Hazardous Substances Underground Storage Tank Law, Cal.
Health & Safety code Section 25280 et seq., (m) Air Resources Law, Cal. Health &
Safety Code Section 39000 et seq., and (n) regulations promulgated pursuant to
said laws or any replacement thereof, or as similar terms are defined in the
federal, state and local laws, statutes, regulations, orders or rules. Hazardous
Materials shall also mean any and all other biohazardous wastes and substances,
materials and wastes which are, or in the future become, regulated under
applicable Laws for the protection of health or the environment, or which are
classified as hazardous or toxic substances, materials or wastes, pollutants or
contaminants, as defined, listed or regulated by any federal, state or local
law, regulation or order or by common law decision, including, without
limitation, (i) trichloroethylene, tetrachloroethylene, perchloroethylene and
other chlorinated solvents, (ii) any petroleum products or fractions thereof,
(iii) asbestos, (iv) polychlorinted biphenyls, (v) flammable explosives, (vi)
urea formaldehyde, (vii) radioactive materials and waste, and (viii) materials
and wastes that are harmful to or may threaten human health, ecology or the
environment.
(b) Notwithstanding anything to the contrary in this Lease, Tenant, at
its sole cost, shall comply with all Laws relating to the storage, use and
disposal of Hazardous Materials; provided, however, that Tenant shall not be
responsible for contamination of the Leased Premises by Hazardous Materials
existing as of the date the Leased Premises are delivered to Tenant (whether
before or after the Scheduled Delivery Date) unless caused by Tenant. Landlord
represents and warrants that it has no actual knowledge of Hazardous Materials
contamination at the
7.
<PAGE> 12
Property as of the date hereof, except as may be set forth in any environmental
assessment reports provided to Tenant. Tenant shall not store, use or dispose of
any Hazardous Materials except for reasonable amounts of fuel for necessary
generators at the Leased Premises, small quantities of normal cleaning,
janitorial and office supplies, and those Hazardous Materials listed in a
Hazardous Materials management plan ("HMMP") which Tenant shall deliver to
Landlord upon execution of this Lease and update at least annually with Landlord
("Permitted Materials") which may be used, stored and disposed of provided (i)
such Permitted Materials are used, stored, transported, and disposed of in
strict compliance with applicable laws, (ii) such Permitted Materials shall be
limited to the materials listed on and may be used only in the quantities
specified in the HMMP, and (iii) Tenant shall provide Landlord with copies of
all material safety data sheets and other documentation required under
applicable Laws in connection with Tenant's use of Permitted Materials as and
when such documentation is provided to any regulatory authority having
jurisdiction, in no event shall Tenant cause or permit to be discharged into the
plumbing or sewage system of the Building or onto the land underlying or
adjacent to the Building any Hazardous Materials. Tenant shall be solely
responsible for and shall defend, indemnify, and hold Landlord and its agents
harmless from and against all claims, costs and liabilities, including
attorneys' fees and costs, arising out of or in connection with Tenant's
storage, use and/or disposal of Hazardous Materials. If the presence of
Hazardous Materials on the Leased Premises caused or permitted by Tenant results
in contamination or deterioration of water or soil, then Tenant shall promptly
take any and all action necessary to clean up such contamination, but the
foregoing shall in no event be deemed to constitute permission by Landlord to
allow the presence of such Hazardous Materials. At any time prior to the
expiration of the Lease Term if Tenant has a reasonable basis to suspect that
there has been any release or the presence of Hazardous Materials in the ground
or ground water on the Leased Premises which did not exist upon commencement of
the Lease Term, Tenant shall have the right to conduct appropriate tests of
water and soil and to deliver to Landlord the results of such tests to
demonstrate that no contamination in excess of permitted levels has occurred as
a result of Tenant's use of the Leased Premises. Tenant shall further be solely
responsible for, and shall defend, indemnify, and hold Landlord and its agents
harmless from and against all claims, costs and liabilities, including
attorneys' fees and costs, arising out of or in connection with any removal,
cleanup and restoration work and materials required hereunder to return the
Leased Premises and any other property of whatever nature to their condition
existing prior to the appearance of the Hazardous Materials which occurred after
the Lease Commencement Date and while Tenant was in possession of the Leased
Premises.
(c) Upon termination or expiration of the Lease, Tenant at its sole
expense shall cause all Hazardous Materials placed in or about the Leased
Premises, the Building and/or the Property by Tenant, its agents, contractors,
or invitees, and all installations (whether interior or exterior) made by or on
behalf of Tenant relating to the storage, use, disposal or transportation of
Hazardous Materials to be removed from the property and transported for use,
storage or disposal in accordance and compliance with all Laws and other
requirements respecting Hazardous Materials used or permitted to be used by
Tenant. Tenant shall apply for and shall obtain from all appropriate regulatory
authorities (including any applicable fire department or regional water quality
control board) all permits, approvals and clearances necessary for the closure
of the Property and shall take all other actions as may be required to complete
the closure of the Building and the Property. In addition, prior to vacating the
Leased Premises, upon Landlord's request (if Landlord has reasonable cause to
believe that Hazardous Materials may be present in, around or under the Leased
Premises), Tenant shall undertake and submit to Landlord an environmental site
assessment from an environmental consulting company reasonably acceptable to
Landlord which site assessment shall evidence Tenant's compliance with this
Paragraph 4.11.
(d) At any time prior to expiration of the Lease term, subject to
reasonable prior notice (not less than forty-eight (48) hours) and Tenant's
reasonable security requirements and provided such activities do not
unreasonably interfere with the conduct of Tenant's business at the Leased
Premises, Landlord shall have the right to enter in and upon the Property,
Building and Leased Premises in order to conduct appropriate tests of water and
soil to determine whether levels of any Hazardous Materials in excess of legally
permissible levels has occurred as a result of Tenant's use thereof. Landlord
shall furnish copies of all such test results and reports to Tenant and, at
Tenant's option and cost, shall permit split sampling for testing and analysis
by Tenant. Such testing shall be at Tenant's expense if Landlord has a
reasonable basis for suspecting and confirms the presence of Hazardous Materials
in the soil or surface or ground water in, on, under, or about the Property, the
Building or the Leased Premises, which has been caused by or resulted from the
activities of Tenant, its agents, contractors, or invitees.
(e) Landlord may voluntarily cooperate in a reasonable manner with the
efforts of all governmental agencies in reducing actual or potential
environmental damage. Tenant shall not be entitled to terminate this Lease or to
any reduction in or abatement of rent by reason of such compliance or
cooperation. Tenant agrees at all times to cooperate fully with the requirements
and recommendations of governmental agencies regulating, or otherwise involved
in, the protection of the environment.
4.12 RULES AND REGULATIONS. In the event Active Touch, Inc. is no longer the
sole tenant of the Building, Landlord shall have the right from time to time to
establish reasonable rules and regulations and/or amendments or additions
thereto respecting the use of the Leased Premises and the Outside Areas for the
care and orderly management of the Property. Upon delivery to Tenant of a copy
of such rules and regulations or any amendments or additions thereto, Tenant
shall comply with such rules and regulations. A violation by Tenant of any of
such rules and regulations shall constitute a default by Tenant under this
Lease, subject to any applicable cure period. If there is a conflict between the
rules and regulations and any of the provisions of this Lease, the provisions of
this Lease shall prevail. Landlord shall not be responsible or liable to Tenant
for the violation of such rules and regulations by any other tenant of the
Property.
4.13 RESERVATIONS. Landlord reserves the right from time to time to grant,
without the consent or joinder of Tenant, such easements, rights of way and
dedications that Landlord deems necessary, and to cause the recordation of
parcel maps and covenants, conditions and restrictions, so long as such
easements, rights of way, dedications and covenants, conditions and restrictions
do not materially and adversely affect the use of the Leased Premises by
8.
<PAGE> 13
Tenant, and do not prohibit any Permitted Use. Tenant agrees to execute any
documents reasonably requested by Landlord to effectuate any such easement
rights, dedications, maps or covenants, conditions and restrictions. Landlord
agrees to use its best efforts (but shall not be required to expend more than
$5,000 for fees, costs and other charges) to change the address of the Building
to 118 Rose Orchard Way, or such other number acceptable to Tenant, provided
that failure to obtain such address change shall not be default under this Lease
and shall not entitle Tenant to any claim, offset or termination right.
ARTICLE 5
REPAIRS, MAINTENANCE, SERVICES AND UTILITIES
5.1 REPAIR AND MAINTENANCE. Except in the case of damage to or destruction of
the Leased Premises, the Building, the Outside Areas or the Property caused by
an act of God or other peril, in which case the provisions of Article 10 shall
control, the parties shall have the following obligations and responsibilities
with respect to the repair and maintenance of the Leased Premises, the Building,
the Outside Areas, and the Property.
(a) TENANT'S OBLIGATIONS. Tenant shall, at all times during the Lease
Term and at its sole cost and expense, regularly clean and continuously keep and
maintain in good order, condition and repair the Leased Premises and every part
thereof including, without limiting the generality of the foregoing, (i) all
interior walls, floors and ceilings, (ii) all windows, doors and skylights,
(iii) all electrical wiring, conduits, connectors and fixtures, (iv) all
plumbing, pipes, sinks, toilets, faucets and drains, (v) all lighting fixtures,
bulbs and lamps and all heating, ventilating and air conditioning equipment, and
(vi) all entranceways to the Leased Premises. Tenant, if requested to do so by
Landlord, shall hire, at Tenant's sole cost and expense, a licensed heating,
ventilating and air conditioning contractor to regularly and periodically (not
less frequently than every six months) inspect and perform required maintenance
on the heating, ventilating and air conditioning equipment and systems serving
the Leased Premises, or alternatively, Landlord may, at its election, contract
in its own name for such regular and periodic inspections of and maintenance on
such heating, ventilating and air conditioning equipment and systems and charge
to Tenant, as Additional Rent, the cost thereof. Tenant, if requested to do so
by Landlord, shall hire, at Tenant's sole cost and expense, a licensed roofing
contractor to regularly and periodically (not less frequently than every twelve
(12) months) inspect and perform required maintenance on the roof of the Leased
Premises, or alternatively, Landlord may, at its election, contract in its own
name for such regular and periodic inspections of and maintenance on the roof
and charge to Tenant, as Additional Rent, the cost thereof. Tenant shall, at all
times during the Lease Term, keep in a clean and safe condition the Outside
Areas. Tenant shall, at its sole cost and expense, repair all damage to the
Leased Premises, the Building, the Outside Areas or the Property caused by the
activities of Tenant, its employees, invitees or contractors promptly following
written notice from Landlord to so repair such damages. If Tenant shall fail to
perform the required maintenance or fail to make repairs required of it pursuant
to this paragraph within a commercially reasonable period of time following
notice from Landlord to do so, then Landlord may, at its election and without
waiving any other remedy it may otherwise have under this Lease or at law,
perform such maintenance or make such repairs and charge to Tenant, as
Additional Rent, the costs so incurred by Landlord for same. All glass within or
a part of the Leased Premises, both interior and exterior, is at the sole risk
of Tenant and any broken glass shall promptly be replaced by Tenant at Tenant's
expense with glass of the same kind, size and quality.
(b) LANDLORD'S OBLIGATION. Landlord shall, at its sole cost and expense,
at all times during the Lease Term, maintain in good condition and repair the
foundation, structural roof, load-bearing and exterior walls of the Building,
except to the extent any of the repairs or maintenance are necessitated by the
actions or inactions of Tenant, or result from the failure of Tenant to comply
with the terms of the Lease. Notwithstanding anything to the contrary contained
in this Lease, and except to the extent any of the repairs or maintenance are
necessitated by the actions or inactions of Tenant, or result from the failure
of Tenant to comply with the terms of the Lease, (1) for a period of ninety (90)
days after the Lease Commencement Date, Landlord, at its sole cost and expense,
shall maintain and repair all HVAC units at the Building, mechanical,
electrical, plumbing and other Building systems, and (2) for a period of one (1)
year after the Lease Commencement Date, maintain and repair the roof membrane.
5.2 UTILITIES. Tenant shall arrange at its sole cost and expense and in its own
name, for the supply of gas and electricity to the Leased Premises. In the event
that such services are not separately metered, Tenant shall, at its sole
expense, cause such meters to be installed. Landlord shall maintain the water
meter(s) in its own name; provided, however, that if at any time during the
Lease Term Landlord shall require Tenant to put the water service in Tenant's
name, Tenant shall do so at Tenant's sole cost. Tenant shall be responsible for
determining if the local supplier of water, gas and electricity can supply the
needs of Tenant and whether or not the existing water, gas and electrical
distribution systems within the Building and the Leased Premises are adequate
for Tenant's needs. Tenant shall be responsible for determining if the existing
sanitary and storm sewer systems now servicing the Leased Premises and the
Property are adequate for Tenant's needs. Tenant shall pay all charges for
water, gas, electricity and storm and sanitary sewer services as so supplied to
the Leased Premises, irrespective of whether or not the services are maintained
in Landlord's or Tenant's name.
5.3 SECURITY. Tenant acknowledges that Landlord has not undertaken any duty
whatsoever to provide security for the Leased Premises, the Building, the
Outside Areas or the Property and, accordingly, Landlord is not responsible for
the security of same or the protection of Tenant's property or Tenant's
employees, invitees or contractors. To the extent Tenant determines that such
security or protection services are advisable or necessary, Tenant shall arrange
for and pay the costs of providing same.
5.4 ENERGY AND RESOURCE CONSUMPTION. Landlord may voluntarily cooperate in a
reasonable manner with the efforts of governmental agencies and/or utility
suppliers in reducing energy or other resource consumption within the Property.
Tenant shall not be entitled to terminate this Lease or to any reduction in or
abatement of rent
9.
<PAGE> 14
by reason of such compliance or cooperation. Tenant agrees at all times to
cooperate fully with Landlord and to abide by all reasonable rules established
by Landlord (i) in order to maximize the efficient operation of the electrical,
heating, ventilating and air conditioning systems and all other energy or other
resource consumption systems with the Property and/or (ii) in order to comply
with the requirements and recommendations of utility suppliers and governmental
agencies regulating the consumption of energy and/or other resources.
5.5 LIMITATION OF LANDLORD'S LIABILITY. Landlord shall not be liable to Tenant
for injury to Tenant, its employees, agents, invitees or contractors, damage to
Tenant's property or loss of Tenant's business or profits, nor shall Tenant be
entitled to terminate this Lease or to any reduction in or abatement of rent by
reason of (i) Landlord's failure to provide security services or systems within
the Property for the protection of the Leased Premises, the Building or the
Outside Areas, or the protection of Tenant's property or Tenant's employees,
invitees, agents or contractors, or (ii) Landlord's failure to perform any
maintenance or repairs to the Leased Premises, the Building, the Outside Areas
or the Property until Tenant shall have first notified Landlord, in writing, of
the need for such maintenance or repairs, and then only after Landlord shall
have had a reasonable period of time following its receipt of such notice within
which to perform such maintenance or repairs (other than Landlord's gross
negligence or willful misconduct), or (iii) any failure, interruption, rationing
or other curtailment in the supply of water, electric current, gas or other
utility service to the Leased Premises, the Building, the Outside Areas or the
Property from whatever cause (other than Landlord's gross negligence or willful
misconduct), or (iv) the unauthorized intrusion or entry into the Leased
Premises by third parties (other than Landlord).
ARTICLE 6
ALTERATIONS AND IMPROVEMENTS
6.1 BY TENANT. Tenant shall not make any alterations to or modifications of the
Leased Premises or construct any improvements within the Leased Premises until
Landlord shall have first approved, in writing, the plans and specifications
therefor, which approval may be withheld in Landlord's sole discretion. All such
modifications, alterations or improvements, once so approved, shall be made,
constructed or installed by Tenant at Tenant's expense (including all permit
fees and governmental charges related thereto), using a licensed contractor
first approved by Landlord, in substantial compliance with the Landlord-approved
plans and specifications therefor. All work undertaken by Tenant shall be done
in accordance with all Laws and in a good and workmanlike manner using new
materials of good quality. Tenant shall not commence the making of any such
modifications or alterations or the construction of any such improvements until
(i) all required governmental approvals and permits shall have been obtained,
(ii) all requirements regarding insurance imposed by this Lease have been
satisfied, (iii) Tenant shall have given Landlord at least five business days
prior written notice of its intention to commence such work so that Landlord may
post and file notices of non-responsibility, and (iv) if requested by Landlord,
Tenant shall have obtained contingent liability and broad form builder's risk
insurance in an amount satisfactory to Landlord in its reasonable discretion to
cover any perils relating to the proposed work not covered by insurance carried
by Tenant pursuant to Article 9. In no event shall Tenant make any modification,
alterations or improvements whatsoever to the Outside Areas or the exterior or
structural components of the Building including, without limitation, any cuts or
penetrations in the floor, roof or exterior walls of the Leased Premises unless
such modifications have been approved in writing by Landlord. As used in this
Article, the term "modifications, alterations and/or improvements" shall
include, without limitation, the installation of additional electrical outlets,
overhead lighting fixtures, drains, sinks, partitions, doorways, or the like.
Notwithstanding the foregoing, Tenant, without Landlord's prior written consent,
shall be permitted to make non-structural alterations to the Building, provided
that: (a) such alterations do not exceed $10,000 individually, (b) Tenant shall
timely provide Landlord the notice required pursuant to Paragraph 4.9 above, (c)
Tenant shall notify Landlord in writing within thirty (30) days of completion of
the alteration and deliver to Landlord a set of the plans and specifications
therefor, either "as built" or marked to show construction changes made, and (d)
Tenant shall, upon Landlord's request, remove the alteration at the termination
of the Lease and restore the Leased Premises to their condition prior to such
alteration.
6.2 OWNERSHIP OF IMPROVEMENTS. All modifications, alterations and improvements
made or added to the Leased Premises by Tenant (other than Tenant's inventory,
equipment, movable furniture, furnishings, partitions, wall decorations and
trade fixtures) shall be deemed real property and a part of the Leased Premises,
but shall remain the property of Tenant during the Lease. Any such
modifications, alterations or improvements, once completed, shall not be altered
or removed from the Leased Premises during the Lease Term without Landlord's
written approval first obtained in accordance with the provisions of Paragraph
6.1 above. At the expiration or sooner termination of this Lease, all such
modifications, alterations and improvements other than Tenant's inventory,
equipment, movable furniture, furnishings, partitions, wall decorations and
trade fixtures, shall automatically become the property of Landlord and shall be
surrendered to Landlord as part of the Leased Premises as required pursuant to
Article 2, unless Landlord shall require Tenant to remove any of such
modifications, alterations or improvements in accordance with the provisions of
Article 2, in which case Tenant shall so remove same. Landlord shall have no
obligations to reimburse Tenant for all or any portion of the cost or value of
any such modifications, alterations or improvements so surrendered to Landlord.
All modifications, alterations or improvements which are installed or
constructed on or attached to the Leased Premises by Landlord and/or at
Landlord's expense shall be deemed real property and a part of the Leased
Premises and shall be property of Landlord. All lighting, plumbing, electrical,
heating, ventilating and air conditioning fixtures, partitioning, window
coverings, wall coverings and floor coverings installed by Tenant shall be
deemed improvements to the Leased Premises and not trade fixtures of Tenant.
6.3 ALTERATIONS REQUIRED BY LAW. Tenant shall make all modifications,
alterations and improvements to the Leased Premises, at its sole cost, that are
required by any Law because of (i) Tenant's use or occupancy of the Leased
Premises, the Building, the Outside Areas or the Property, (ii) Tenant's
application for any permit or governmental approval, or (iii) Tenant's making of
any modifications, alterations or improvements to or within the
10.
<PAGE> 15
Leased Premises. If Landlord shall, at any time during the Lease Term, be
required by any governmental authority to make any modifications, alterations or
improvements to the Building or the Property, the cost incurred by Landlord in
making such modifications, alterations or improvements, including interest at a
rate equal to the greater of (a) 12%, or (b) Wells Prime Plus Two, shall be
amortized by Landlord over the useful life of such modifications, alterations or
improvements, as determined in accordance with generally accepted accounting
principles, and the monthly amortized cost of such modifications, alterations
and improvements as so amortized shall be considered a Property Maintenance
Cost. Landlord represents that Landlord has received no notice of non-compliance
with the Americans With Disabilities Act of 1990 with respect to the Building
and that Landlord has no current actual knowledge of any conditions existing at
the Building which are not in compliance with such Act.
6.4 LIENS. Tenant shall keep the Property and every part thereof free from any
lien, and shall pay when due all bills arising out of any work performed,
materials furnished, or obligations incurred by Tenant, its agents, employees or
contractors relating to the Property. If any such claim of lien is recorded
against Tenant's interest in this Lease, the Property or any part thereof,
Tenant shall bond against, discharge or otherwise cause such lien to be entirely
released within thirty (30) days after the same has been recorded. Tenant's
failure to do so shall be deemed a material default under the terms of this
Lease (subject to Section 12.1 hereof).
ARTICLE 7
ASSIGNMENT AND SUBLETTING BY TENANT
7.1 BY TENANT. Tenant shall not sublet the Leased Premises or any portion
thereof or assign its interest in this Lease, whether voluntarily or by
operation of Law, without Landlord's prior written consent which shall not be
unreasonably withheld. Any attempted subletting or assignment without Landlord's
prior written consent, at Landlord's election, shall constitute a default by
Tenant under the terms of this Lease. The acceptance of rent by Landlord from
any person or entity other than Tenant, or the acceptance of rent by Landlord
from Tenant with knowledge of a violation of the provisions of this paragraph,
shall not be deemed to be a waiver by Landlord of any provision of this Article
or this Lease or to be a consent to any subletting by Tenant or any assignment
of Tenant's interest in this Lease. Without limiting the circumstances in which
it may be reasonable for Landlord to withhold its consent to an assignment or
subletting, Landlord and Tenant acknowledge that it shall be reasonable for
Landlord to withhold its consent in the following instances:
(a) the proposed assignee or sublessee is a governmental agency;
(b) in Landlord's reasonable judgment, the use of the Leased Premises by
the proposed assignee or sublessee would involve occupancy by other than the
Permitted Use, would entail any alterations which would lessen the value of the
leasehold improvements in the Leased Premises, or would require increased
services by Landlord;
(c) with respect to an assignment, in Landlord's reasonable judgment,
the financial worth of the proposed assignee is less than that of Tenant or does
not meet the credit standards applied by Landlord;
(d) the proposed assignee or sublessee) has been in material default
under a lease, has been in litigation with a previous landlord within the last
five years, or in the five years prior to the assignment or sublease has filed
for bankruptcy protection, has been the subject of an involuntary bankruptcy, or
has been adjudged insolvent;
(e) Landlord has experienced a previous default by or is in litigation
with the proposed assignee or sublessee;
(f) in Landlord's reasonable judgment, the Leased Premises, or the
relevant part thereof, will be used in a manner that will violate any negative
covenant as to use contained in this Lease;
(g) the use of the Leased Premises by the proposed assignee or sublessee
will violate any applicable law, ordinance or regulation;
(h) the proposed assignee or sublessee is, as of the date of this Lease,
a tenant in the Building;
(i) the proposed assignment or sublease fails to include all of the
terms and provisions required to be included therein pursuant to this Article 7;
(j) Tenant is in default of any obligation of Tenant under this Lease,
or Tenant has defaulted under this Lease on three or more occasions during the
12 months preceding the date that Tenant shall request consent; or
(k) in the case of a subletting of less than the entire Leased Premises,
if the subletting would result in the division of the Leased Premises into more
than two subparcels or would require improvements to be made outside of the
Leased Premises.
7.2 MERGER, REORGANIZATION, OR SALE OF ASSETS. Any dissolution, merger,
consolidation or other reorganization of Tenant, or the sale or other transfer
in the aggregate over the Lease Term of a controlling percentage of the capital
stock of Tenant (except in the case of an initial public offering by Tenant, or
a merger or acquisition described in the last sentence of this Section 7.2), or
the sale or transfer of all or a substantial portion of the assets of Tenant,
shall be deemed a voluntary assignment of Tenant's interest in this Lease. The
phrase "controlling percentage" means the ownership of and the right to vote
stock possessing more than fifty percent of
11.
<PAGE> 16
the total combined voting power of all classes of Tenant's capital stock issued,
outstanding and entitled to vote for the election of directors. If Tenant is a
partnership, a withdrawal or change, voluntary, involuntary or by operation of
Law, of any general partner, or the dissolution of the partnership, shall be
deemed a voluntary assignment of Tenant's interest in this Lease.
Notwithstanding the foregoing, so long as Tenant remains primarily liable on
this Lease, Tenant shall have the right to assign this Lease or sublease the
Leased Premises or any part thereof to any wholly-owned subsidiary or an
affiliate of Tenant, without the consent of Landlord. Further, Tenant shall have
the absolute right to assign this Lease in the event of a merger or acquisition
where Tenant is acquired by or merged into another entity, without the need for
the consent of the Landlord, so long as the acquiring or surviving entity has a
net worth of at least that of Tenant as of the Lease Commencement Date.
7.3 LANDLORD'S ELECTION. If Tenant shall desire to assign its interest under the
Lease or to sublet the Leased Premises, Tenant must first notify Landlord, in
writing, of its intent to so assign or sublet, at least thirty (30) days in
advance of the date it intends to so assign its interest in this Lease or sublet
the Leased Premises but not sooner than one hundred eighty days in advance of
such date, specifying in detail the terms of such proposed assignment or
subletting, including the name of the proposed assignee or sublessee, the
property assignee's or sublessee's intended use of the Leased Premises, current
financial statements (including a balance sheet, income statement and statement
of cash flow, all prepared in accordance with generally accepted accounting
principles) of such proposed assignee or sublessee, and such other information
as Landlord may reasonably request. Landlord shall have a period of ten (10)
business days following receipt of such notice and the required information
within which to do one of the following: (i) consent to such requested
assignment or subletting subject to Tenant's compliance with the conditions set
forth in Paragraph 7.4 below, or (ii) refuse to so consent to such requested
assignment or subletting, provided that such consent shall not be unreasonably
refused, or (iii) terminate this Lease as to the portion (including all) of the
Leased Premises that is the subject of the proposed assignment or subletting.
Any such termination shall relieve Tenant from any Base Monthly Rent or
Additional Rent obligations for the period after the termination date to the
extent of the portion of the Leased Premises so terminated. During such ten (10)
business day period, Tenant covenants and agrees to supply to Landlord, upon
request, all necessary or relevant information which Landlord may reasonably
request respecting such proposed assignment or subletting and/or the proposed
assignee or sublessee.
7.4 CONDITIONS TO LANDLORD'S CONSENT. If Landlord elects to consent, or shall
have been ordered to so consent by a court of competent jurisdiction, to such
requested assignment or subletting, such consent shall be expressly conditioned
upon the occurrence of each of the conditions below set forth, and any purported
assignment or subletting made or ordered prior to the full and complete
satisfaction of each of the following conditions shall be void and, at the
election of Landlord, which election may be exercised at any time following such
a purported assignment or subletting but prior to the satisfaction of each of
the stated conditions, shall constitute a material default by Tenant under this
Lease until cured by satisfying in full each such condition by the assignee or
sublessee. The conditions are as follows:
(a) Landlord having approved in form and substance the assignment or
sublease agreement and any ancillary documents, which approval shall not be
unreasonably withheld by Landlord if the requirements of this Article 7 are
otherwise complied with.
(b) Each such sublessee or assignee having agreed, in writing
satisfactory to Landlord and its counsel and for the benefit of Landlord, to
assume, to be bound by, and to perform the obligations of this Lease to be
performed by Tenant which relate to space being subleased.
(c) Tenant having fully and completely performed all of its obligations
under the terms of this Lease through and including the date of such assignment
or subletting.
(d) Tenant having reimbursed to Landlord all reasonable costs and
reasonable attorneys' fees incurred by Landlord in conjunction with the
processing and documentation of any such requested subletting or assignment.
(e) Tenant having delivered to Landlord a complete and fully-executed
duplicate original of such sublease agreement or assignment agreement (as
applicable) and all related agreements.
(f) Tenant having paid, or having agreed in writing to pay as to future
payments, to Landlord fifty percent (50%) of all assignment consideration or
excess rentals to be paid to Tenant or to any other on Tenant's behalf or for
Tenant's benefit for such assignment or subletting as follows:
(i) If Tenant assigns its interest under this Lease and if all
or a portion of the consideration for such assignment is to be paid by the
assignee at the time of the assignment, that Tenant shall have paid to Landlord
and Landlord shall have received an amount equal to fifty percent (50%) of the
assignment consideration so paid or to be paid (whichever is the greater) at the
time of the assignment by the assignee; or
(ii) If Tenant assigns its interest under this Lease and if
Tenant is to receive all or a portion of the consideration for such assignment
in future installments, that Tenant and Tenant's assignee shall have entered
into a written agreement with and for the benefit of Landlord satisfactory to
Landlord and its counsel whereby Tenant and Tenant's assignee jointly agree to
pay to Landlord an amount equal to fifty percent (50%) of all such future
assignment consideration installments to be paid by such assignee as and when
such assignment consideration is so paid.
(iii) If Tenant subleases the Leased Premises, that Tenant and
Tenant's sublessee shall have entered into a written agreement with and for the
benefit of Landlord satisfactory to Landlord and its counsel whereby Tenant and
Tenant's sublessee jointly agree to pay to Landlord fifty percent (50%) of all
excess rentals to be paid by such sublessee as and when such excess rentals are
so paid.
12.
<PAGE> 17
7.5 ASSIGNMENT CONSIDERATION AND EXCESS RENTALS DEFINED. For purposes of this
Article, including any amendment to this Article by way of addendum or other
writing, the term "assignment consideration" shall mean all consideration to be
paid by the assignee to Tenant or to any other party on Tenant's behalf or for
Tenant's benefit as consideration for such assignment, after deduction for
reasonable attorneys' fees, market rate leasing commissions incurred by Tenant
and, subject to the limitation set forth in the final sentence of this Section
7.5, tenant inducement costs, but without deduction for any other costs or
expenses whatsoever incurred by Tenant in connection with such assignment, and
the term "excess rentals" shall mean all consideration to be paid by the
sublessee to Tenant or to any other party on Tenant's behalf or for Tenant's
benefit for the sublease of all or a portion of the Leased Premises in excess of
the rent due to Landlord under the terms of this Lease for the portion so
subleased for the same period, after deduction for reasonable attorneys' fees,
market rate leasing commissions incurred by Tenant and, subject to the
limitation set forth in the final sentence of this Section 7.5, tenant
inducement costs, but without deduction for any other costs or expenses
whatsoever incurred by Tenant in connection with such sublease. Tenant agrees
that the portion of any assignment consideration and/or excess rentals arising
from any assignment or subletting by Tenant which is to be paid to Landlord
pursuant to this Article now is and shall then be the property of Landlord and
not the property of Tenant. Notwithstanding anything to the contrary contained
herein, tenant inducement costs may be deducted from assignment consideration or
excess rentals only up to a maximum of $40,320 in the aggregate (for all
assignments of this Lease or subleases of the Leased Premises) over the term of
this Lease.
7.6 PAYMENTS. All payments required by this Article to be made to Landlord shall
be made in cash in full as and when they become due. At the time Tenant,
Tenant's assignee or sublessee makes each such payment to Landlord, Tenant or
Tenant's assignee or sublessee, as the case may be, shall deliver to Landlord an
itemized statement in reasonable detail showing the method by which the amount
due Landlord was calculated and certified by the party making such payment as
true and correct.
7.7 GOOD FAITH. The rights granted to Tenant by this Article are granted in
consideration of Tenant's express covenant that all pertinent allocations which
are made by Tenant between the rental value of the Leased Premises and the value
of any of Tenant's personal property which may be conveyed or leased generally
concurrently with and which may reasonably be considered a part of the same
transaction as the permitted assignment or subletting shall be made fairly,
honestly and in good faith. Tenant hereby agrees that Tenant's breach of the
foregoing covenant shall be a material default by Tenant under this Lease
(subject to Section 12. 1 hereof).
7.8 EFFECT OF LANDLORD'S CONSENT. No subletting or assignment, even with the
consent of Landlord, shall relieve Tenant of its personal and primary obligation
to pay rent and to perform all of the other obligations to be performed by
Tenant hereunder. Consent by Landlord to one or more assignments of Tenant's
interest in this Lease or to one or more sublettings of the Leased Premises
shall not be deemed to be a consent to any subsequent assignment or subletting.
If Landlord shall have been ordered by a court of competent jurisdiction to
consent to a requested assignment or subletting, or such an assignment or
subletting shall have been ordered by a court of competent jurisdiction over the
objection of Landlord, such assignment or subletting shall not be binding
between the assignee (or sublessee) and Landlord until such time as all
conditions set forth in Paragraph 7.4 above have been fully satisfied (to the
extent not then satisfied) by the assignee or sublessee, including, without
limitation, the payment to Landlord of all agreed assignment considerations
and/or excess rentals then due Landlord.
ARTICLE 8
LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY
8.1 LIMITATION ON LANDLORD'S LIABILITY AND RELEASE. Landlord shall not be liable
to Tenant for, and Tenant hereby releases Landlord and its partners, principals,
members, officers, agents, employees, lenders, attorneys, and consultants from,
any and all liability, whether in contract, tort or on any other basis, for any
injury to or any damage sustained by Tenant, Tenant's agents, employees,
contractors or invitees, any damage to Tenant's property, or any loss to
Tenant's business, loss of Tenant's profits or other financial loss of Tenant
resulting from or attributable to the condition of, the management of, the
repair or maintenance of, the protection of, the supply of services or utilities
to, the damage in or destruction of the Leased Premises, the Building, the
Property or the Outside Areas, including without limitation (i) the failure,
interruption, rationing or other curtailment or cessation in the supply of
electricity, water, gas or other utility service to the Property, the Building
or the Leased Premises; (ii) the vandalism or forcible entry into the Building
or the Leased Premises; (iii) the penetration of water into or onto any portion
of the Leased Premises; (iv) the failure to provide security and/or adequate
lighting in or about the Property, the Building or the Leased Premises, (v) the
existence of any design or construction defects within the Property, the
Building or the Leased Premises; (vi) the failure of any mechanical systems to
function properly (such as the HVAC systems); (vii) the blockage of access to
any portion of the Property, the Building or the Leased Premises, except that
Tenant does not so release Landlord from such liability to the extent such
damage was proximately caused by Landlord's gross negligence, willful
misconduct, or Landlord's failure to perform an obligation expressly undertaken
pursuant to this Lease after a reasonable period of time shall have lapsed
following receipt of written notice from Tenant to so perform such obligation.
In this regard, Tenant acknowledges that it is fully apprised of the provisions
of Law relating to releases, and particularly to those provisions contained in
Section 1542 of the California Civil Code which reads as follows:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him
must have materially affected his settlement with the
debtor."
Notwithstanding such statutory provision, and for the purpose of implementing a
full and complete release and discharge, Tenant hereby (i) waives the benefit of
such statutory provision and (ii) acknowledges that, subject to the exceptions
specifically set forth herein, the release and discharge set forth in this
paragraph is a full and complete
13.
<PAGE> 18
settlement and release and discharge of all claims and is intended to include in
its effect, without limitation, all claims which Tenant, as of the date hereof,
does not know of or suspect to exist in its favor.
8.2 TENANT'S INDEMNIFICATION OF LANDLORD. Subject to Section 9.3 hereof, Tenant
shall defend with competent counsel satisfactory to Landlord any claims made or
legal actions filed or threatened against Landlord with respect to the violation
of any Law, or the death, bodily injury, personal injury, property damage, or
interference with contractual or property rights suffered by any third party
occurring within the Leased Premises or resulting from Tenant's use or occupancy
of the Leased Premises, the Building or the Outside Areas, or resulting from
Tenant's activities in or about the Leased Premises, the Building, the Outside
Areas or the Property, and Tenant shall indemnify and hold Landlord, Landlord's
partners, principals, members, employees, agents and contractors harmless from
any loss liability, penalties, or expense whatsoever (including any loss
attributable to vacant space which otherwise would have been leased, but for
such activities) resulting therefrom, except to the extent proximately caused by
the gross negligence or willful misconduct of Landlord. This indemnity and any
other indemnity agreements contained in this Lease are not intended to and shall
not relieve any insurance carrier of its obligations under policies required to
be carried by Landlord or Tenant, respectively, pursuant to this Lease to the
extent that such policies cover any such indemnified claims. This indemnity
agreement shall survive the expiration or sooner termination of this Lease.
8.3 LANDLORD'S INDEMNIFICATION OF TENANT. Landlord shall indemnify, defend, and
hold harmless Tenant with competent counsel satisfactory to Tenant from and
against any claims made or legal actions filed or threatened against Tenant (to
the extent proximately caused by the gross negligence or willful misconduct of
Landlord or Landlord's failure to perform an obligation expressly undertaken
pursuant to this Lease after a reasonable period of time shall have lapsed
following receipt of written notice from Landlord to so perform such obligation)
with respect to the violation of any Law, or the death, bodily injury, personal
injury, property damage, or interference with contractual or property rights
suffered by any third party. This indemnity agreement shall survive the
expiration or sooner termination of this Lease.
ARTICLE 9
INSURANCE
9.1 TENANT'S INSURANCE. Tenant shall maintain insurance complying with all of
the following:
(a) Tenant shall procure, pay for and keep in full force and effect, at
all times during the Lease Term, the following:
(i) Comprehensive general liability insurance insuring Tenant
against liability for personal injury, bodily injury, death and damage to
property occurring within the Leased Premises, or resulting from Tenant's use or
occupancy of the Leased Premises, the Building, the Outside Areas or the
Property, or resulting from Tenant's activities in or about the Leased Premises
or the Property, with coverage in an amount equal to Tenant's Required Liability
Coverage (as set forth in Article 1), which insurance shall contain a "broad
form liability" endorsement insuring Tenant's performance of Tenant's
obligations to indemnify Landlord as contained in this Lease.
(ii) Fire and property damage insurance in so-called "fire and
extended coverage" form insuring Tenant against loss from physical damage to
Tenant's personal property, inventory, trade fixtures and improvements within
the Leased Premises with coverage for the full actual replacement cost thereof;
(iii) Plate glass insurance, at actual replacement cost;
(iv) Pressure vessel insurance, if applicable;
(v) Product liability insurance (including, without limitation,
if food and/or beverages are distributed, sold and/or consumed within the Leased
Premises, to the extent obtainable, coverage for liability arising out of the
distribution, sale, use or consumption of food and/or beverages (including
alcoholic beverages, if applicable) at the Leased Premises for not less than
Tenant's Required Liability Coverage (as set forth in Article 1);
(vi) Workers' compensation insurance and any other employee
benefit insurance sufficient to comply with all laws; and
(vii) With respect to making of alterations or the construction
of improvements or the like undertaken by Tenant, contingent liability and
builder's risk insurance, in an amount and with coverage reasonably satisfactory
to Landlord.
(b) Each policy of liability insurance required to be carried by Tenant
pursuant to this paragraph or actually carried by Tenant with respect to the
Leased Premises or the Property: (i) shall, except with respect to insurance
required by subparagraph (a)(vi) above, name Landlord, and such others as are
designated by Landlord, as additional insureds; (ii) shall be primary insurance
providing that the insurer shall be liable for the full amount of the loss, up
to and including the total amount of liability set forth in the declaration of
coverage, without the right of contribution from or prior payment by any other
insurance coverage of Landlord; (iii) shall be in a form satisfactory to
Landlord; (iv) shall be carried with companies reasonably acceptable to Landlord
with Best's ratings of at least A and XI; (v) shall provide that such policy
shall not be subject to cancellation, lapse or change except after at least
thirty days prior written notice to Landlord, and (vi) shall contain a so-called
"severability" or "cross liability" endorsement. Each policy of property
insurance maintained by Tenant with respect to the Leased Premises or the
14.
<PAGE> 19
Property or any property therein (i) shall provide that such policy shall not be
subject to cancellation, lapse or change except after at least thirty days prior
written notice to Landlord and (ii) shall contain a waiver and/or a permission
to waive by the insurer of any right of subrogation against Landlord, its
partners, principals, members, officers, employees, agents and contractors,
which might arise by reason of any payment under such policy or by reason of any
act or omission of Landlord, its partners, principals, members, officers,
employees, agents and contractors.
(c) Prior to the time Tenant or any of its contractors enters the Leased
Premises, Tenant shall deliver to Landlord, with respect to each policy of
insurance required to be carried by Tenant pursuant to this Article, a copy of
such policy (appropriately authenticated by the insurer as having been issued,
premium paid) or a certificate of the insurer certifying in form satisfactory to
Landlord that a policy has been issued, premium paid, providing the coverage
required by this Paragraph and containing the provisions specified herein. With
respect to each renewal or replacement of any such insurance, the requirements
of this Paragraph must be complied with not less than thirty days prior to the
expiration or cancellation of the policies being renewed or replaced. Landlord
may, at any time and from time to time, inspect and/or copy any and all
insurance policies required to be carried by Tenant pursuant to this Article. If
Landlord's Lender, insurance broker, advisor or counsel reasonably determines at
any time that the amount of coverage set forth in Paragraph 9.1(a) for any
policy of insurance Tenant is required to carry pursuant to this Article is not
adequate, then Tenant shall increase the amount of coverage for such insurance
to such greater amount as Landlord's Lender, insurance broker, advisor or
counsel reasonably deems adequate.
9.2 LANDLORD'S INSURANCE. With respect to insurance maintained by Landlord:
(a) Landlord shall maintain, as the minimum coverage required of it by
this Lease, fire and property damage insurance in so-called "fire and extended
coverage" form insuring Landlord (and such others as Landlord may designate)
against loss from physical damage to the Building with coverage of not less than
one hundred percent (100%) of the full actual replacement cost thereof and
against loss of rents for a period of not less than six months. Such fire and
property damage insurance, at Landlord's election but without any requirements
on Landlord's behalf to do so, (i) may be written in so-called "all risk" form,
excluding only those perils commonly excluded from such coverage by Landlord's
then property damage insurer; (ii) may provide coverage for physical damage to
the improvements so insured for up to the entire full actual replacement cost
thereof; (iii) may be endorsed to cover loss or damage caused by any additional
perils against which Landlord may elect to insure, including earthquake and/or
flood; and/or (iv) may provide coverage for loss of rents for a period of up to
twelve months. Landlord shall not be required to cause such insurance to cover
any of Tenant's personal property, inventory, and trade fixtures, or any
modifications, alterations or improvements made or constructed by Tenant to or
within the Leased Premises. Landlord shall use commercially reasonable efforts
to obtain such insurance at competitive rates.
(b) Landlord shall maintain comprehensive general liability insurance
insuring Landlord (and such others as are designated by Landlord) against
liability for personal injury, bodily injury, death, and damage to property
occurring in, on or about, or resulting from the use or occupancy of the
Property, or any portion thereof, with combined single limit coverage of at
least Three Million Dollars ($3,000,000). Landlord may carry such greater
coverage as Landlord or Landlord's Lender, insurance broker, advisor or counsel
may from time to time determine is reasonably necessary for the adequate
protection of Landlord and the Property.
(c) Landlord may maintain any other insurance which in the opinion of
its insurance broker, advisor or legal counsel is prudent to carry under the
given circumstances, provided such insurance is commonly carried by owners of
property similarly situated and operating under similar circumstances.
9.3 MUTUAL WAIVER OF SUBROGATION. Landlord hereby releases Tenant, and Tenant
hereby releases Landlord and their respective partners, principals, members,
officers, agents, employees, shareholders and directors and servants, from any
and all liability for loss, damage or injury to the property of the other in or
about the Leased Premises or the Property which is caused by or results from a
peril or event or happening which is covered by insurance actually carried and
in force at the time of the loss by the party sustaining such loss; provided,
however, that such waiver shall be effective only to the extent permitted by the
insurance covering such loss and to the extent such insurance is not prejudiced
thereby.
ARTICLE 10
DAMAGE TO LEASED PREMISES
10.1 LANDLORD'S DUTY TO RESTORE. If the Leased Premises, the Building or the
Outside Area are damaged by any peril after the Effective Date of this Lease,
Landlord shall restore the same, as and when required by this paragraph, unless
this Lease is terminated by Landlord pursuant to Paragraph 10.3 or by Tenant
pursuant to Paragraph 10.4. If this Lease is not so terminated, then upon the
issuance of all necessary governmental permits, Landlord shall commence and
diligently prosecute to completion the restoration of the Leased Premises, the
Building or the Outside Area, as the case may be, to the extent then allowed by
law, to substantially the same condition in which it existed as of the Lease
Commencement Date. Landlord's obligation to restore shall be limited to actual
receipt of insurance proceeds and to the improvements constructed by Landlord.
Landlord shall have no obligation to restore any Improvements made by Tenant to
the Leased Premises or any of Tenant's personal property, inventory or trade
fixtures. Upon completion of the restoration by Landlord, Tenant shall forthwith
replace or fully repair all improvements constructed by Tenant to like or
similar conditions as existed at the time immediately prior to such damage or
destruction.
15.
<PAGE> 20
10.2 INSURANCE PROCEEDS. All insurance proceeds available from the fire and
property damage insurance carried by Landlord shall be paid to and become the
property of Landlord. If this Lease is terminated pursuant to either Paragraph
10.3 or 10.4, all insurance proceeds available from insurance carried by Tenant
which cover loss of property that is Landlord's property or would become
Landlord's property on termination of this Lease shall be paid to and become the
property of Landlord, and the remainder of such proceeds shall be paid to and
become the property of Tenant. If this Lease is not terminated pursuant to
either Paragraph 10.3 or 10.4, all insurance proceeds available from insurance
carried by Tenant which cover loss to property that is Landlord's property shall
be paid to and become the property of Landlord, and all proceeds available from
such insurance which cover loss to property which would only become the property
of Landlord upon the termination of this Lease shall be paid to and remain the
property of Tenant. The determination of Landlord's property and Tenant's
property shall be made pursuant to Paragraph 6.2.
10.3 LANDLORD'S RIGHT TO TERMINATE. Landlord shall have the option to terminate
this Lease in the event any of the following occurs, which option may be
exercised only by delivery to Tenant of a written notice of election to
terminate within thirty days after the date of such damage or destruction:
(a) The Building is damaged by any peril covered by valid and
collectible insurance actually carried by Landlord and in force at the time of
such damage or destruction (an "insured peril") to such an extent that the
estimated cost to restore the Building exceeds the lesser of (i) the insurance
proceeds available from insurance actually carried by Landlord, or (ii) fifty
percent of the then actual replacement cost thereof;
(b) The Building is damaged by an uninsured peril, which peril Landlord
was not required to insure against pursuant to the provisions of Article 9 of
this Lease.
(c) The Building is damaged by any peril and, because of the laws then
in force, the Building (i) cannot be restored at reasonable cost or (ii) if
restored, cannot be used for the same use being made thereof before such damage.
10.4 TENANT'S RIGHT TO TERMINATE. If the Leased Premises, the Building or the
Outside Area are damaged by any peril and Landlord does not elect to terminate
this Lease or is not entitled to terminate this Lease pursuant to this Article,
then as soon as reasonably practicable, Landlord shall furnish Tenant with the
written opinion of Landlord's architect or construction consultant as to when
the restoration work required of Landlord may be complete. Tenant shall have the
option to terminate this Lease in the event any of the following occurs, which
option may be exercised only by delivery to Landlord of a written notice of
election to terminate within seven days after Tenant receives from Landlord the
estimate of the time needed to complete such restoration:
(a) If the time estimated to substantially complete the restoration
exceeds nine (9) months from and after the date of the damage; or
(b) If more than twenty five percent (25%) of the Leased Premises are
destroyed and the damage occurs within twelve months of the last day of the
Lease Term (or the end of the Extension Period, if Tenant has exercised the
extension option as provided in Article 15).
10.5 TENANT'S WAIVER. Landlord and Tenant agree that the provisions of Paragraph
10.4 above, captioned "Tenant's Right To Terminate", are intended to supersede
and replace the provisions contained in California Civil Code, Section 1932,
Subdivision 2, and California Civil Code, Section 1934, and accordingly, Tenant
hereby waives the provisions of such Civil Code Sections and the provisions of
any successor Civil Code Sections or similar laws hereinafter enacted.
10.6 ABATEMENT OF RENT. In the event of damage to the Leased Premises which does
not result in the termination of this Lease, the Base Monthly Rent (and any
Additional Rent) shall be temporarily abated during the period of restoration in
proportion to the degree to which Tenant's use of the Leased Premises is
impaired by such damage. In addition, in the event the Lease is terminated
pursuant to this Article 10, Tenant's obligation to pay Rent shall terminate as
of the date of such lease termination.
ARTICLE 11
CONDEMNATION
11.1 TENANT'S RIGHT TO TERMINATE. Except as otherwise provided in Paragraph 11.4
below regarding temporary takings, Tenant shall have the option to terminate
this Lease if, as a result of any taking, (i) all of the Leased Premises is
taken, or (ii) twenty-five percent (25%) or more of the Leased Premises is taken
and the part of the Leased Premises that remains cannot, within a reasonable
period of time, be made reasonably suitable for the continued operation of
Tenant's business. Tenant must exercise such option within a reasonable period
of time, to be effective on the later to occur of (i) the date that possession
of that portion of the Leased Premises that is condemned is taken by the
condemnor or (ii) the date Tenant vacated the Leased Premises.
11.2 LANDLORD'S RIGHT TO TERMINATE. Except as otherwise provided in Paragraph
11.4 below regarding temporary takings, Landlord shall have the option to
terminate this Lease if, as a result of any taking, (i) all of the Leased
Premises is taken, (ii) twenty-five percent (25%) or more of the Leased Premises
is taken and the part of the Leased Premises that remains cannot, within a
reasonable period of time, be made reasonably suitable for the continued
operation of Tenant's business, or (iii) because of the laws then in force, the
Leased Premises may not be used for the same use being made before such taking,
whether or not restored as required by Paragraph 11.3 below.
16.
<PAGE> 21
Any such option to terminate by Landlord must be exercised within a reasonable
period of time, to be effective as of the date possession is taken by the
condemnor.
11.3 RESTORATION. If any part of the Leased Premises or the Building is taken
and this Lease is not terminated, then Landlord shall, to the extent not
prohibited by laws then in force, repair any damage occasioned thereby to the
remainder thereof to a condition reasonably suitable for Tenant's continued
operations and otherwise, to the extent practicable, in the manner and to the
extent provided in Paragraph 10.1.
11.4 TEMPORARY TAKING. If a portion of the Leased Premises is temporarily taken
for a period of one year or less and such period does not extend beyond the
Lease Expiration Date, this Lease shall remain in effect. If any portion of the
Leased Premises is temporarily taken for a period which exceeds one year or
which extends beyond the Lease Expiration Date, then the rights of Landlord and
Tenant shall be determined in accordance with Paragraphs 11.1 and 11.2 above.
11.5 DIVISION OF CONDEMNATION AWARD. Any award made for any taking of the
Property, the Building, or the Leased Premises, or any portion thereof, shall
belong to and be paid to Landlord, and Tenant hereby assigns to Landlord all of
its right, title and interest in any such award; provided, however, that Tenant
shall be entitled to receive any portion of the award that is made specifically
(i) for the taking of personal property, inventory or trade fixtures belonging
to Tenant, (ii) for the interruption of or loss to Tenant's business or its
moving costs, or (iii) for the value of any leasehold improvements installed and
paid for by Tenant. The rights of Landlord and Tenant regarding any condemnation
shall be determined as provided in this Article, and each party hereby waives
the provisions of Section 1265.130 of the California Code of Civil Procedure,
and the provisions of any similar law hereinafter enacted, allowing either party
to petition the Supreme Court to terminate this Lease and/or otherwise allocate
condemnation awards between Landlord and Tenant in the event of a taking of the
Leased Premises.
11.6 ABATEMENT OF RENT. In the event of a taking of the Leased Premises which
does not result in a termination of this Lease (other than a temporary taking),
then, as of the date possession is taken by the condemning authority, the Base
Monthly Rent shall be reduced in the same proportion that the area of that part
of the Leased Premises so taken (less any addition to the area of the Leased
Premises by reason of any reconstruction) bears to the area of the Leased
Premises immediately prior to such taking.
11.7 TAKING DEFINED. The term "taking" or "taken" as used in this Article 11
shall mean any transfer or conveyance of all or any portion of the Property to a
public or quasi-public agency or other entity having the power of eminent domain
pursuant to or as a result of the exercise of such power by such an agency,
including any inverse condemnation and/or any sale or transfer by Landlord of
all or any portion of the Property to such an agency under threat of
condemnation or the exercise of such power.
ARTICLE 12
DEFAULT AND REMEDIES
12.1 EVENTS OF TENANT'S DEFAULT. Tenant shall be in default of its obligations
under this Lease if any of the following events occur:
(a) Tenant shall have failed to pay Base Monthly Rent or any Additional
Rent when due; provided, however, that once but only once in any twelve (12)
month period during the Lease Term, Tenant shall be entitled to written notice
of non-receipt of Base Monthly Rent or Additional Rent from Landlord, and Tenant
shall not be in default for such delinquency if such installment of Base Monthly
Rent or Additional Rent is received by Landlord within five (5) business days
after Tenant's receipt of such notice from Landlord; or
(b) Tenant shall have done or permitted to be done any act, use or thing
in its use, occupancy or possession of the Leased Premises or the Building or
the Outside Areas which is prohibited by the terms of this Lease or Tenant shall
have failed to perform any term, covenant or condition of this Lease (except
those requiring the payment of Base Monthly Rent or Additional Rent, which
failures shall be governed by subparagraph (a) above) within thirty (30) days
after written notice from Landlord to Tenant specifying the nature of such
failure and requesting Tenant to perform same or within such longer period as is
reasonably required in the event such default is curable but not within such
thirty (30) day period, provided, however, that if the nature of such failure
reasonably requires more than thirty (30) days to cure, then Tenant shall not be
in default if Tenant commences such cure within such thirty (30) day period and
thereafter diligently prosecutes such cure to completion, if the breach is
capable of being cured; or
(c) Tenant shall have sublet the Leased Premises or assigned or
encumbered its interest in this Lease in violation of the provisions contained
in Article 7, whether voluntarily or by operation of law; or
(d) Tenant shall have abandoned the Leased Premises; or
(e) Tenant or any guarantor of this Lease shall have permitted or
suffered the sequestration or attachment of, or execution on, or the appointment
of a custodian or receiver with respect to, all or any substantial part of the
property or assets of Tenant (or such guarantor) or any property or asset
essential to the conduct of Tenant's (or such guarantor's) business, and Tenant
(or such guarantor) shall have failed to obtain a return or release of or bond
against the same within thirty days thereafter, or prior to sale pursuant to
such sequestration, attachment or levy, whichever is earlier; or
17.
<PAGE> 22
(f) Tenant or any guarantor of this Lease shall have made a general
assignment of all or a substantial part of its assets for the benefit of its
creditors; or
(g) Tenant or any guarantor of this Lease shall have allowed (or sought)
to have entered against it a decree or order which: (i) grants or constitutes an
order for relief, appointment of a trustee, or condemnation or a reorganization
plan under the bankruptcy laws of the United States; (ii) approves as properly
filed a petition seeking liquidation or reorganization under said bankruptcy
laws or any other debtor's relief law or similar statute of the United States or
any state thereof; or (iii) otherwise directs the winding up or liquidation of
Tenant; provided, however, if any decree or order was entered without Tenant's
consent or over Tenant's objection, Landlord may not terminate this Lease
pursuant to this Subparagraph if such decree or order is rescinded or reversed
within sixty (60) days after its original entry; or
(h) Tenant or any guarantor of this Lease shall have availed itself of
the protection of any debtor's relief law, moratorium law or other similar law
which does not require the prior entry of a decree or order.
12.2 LANDLORD'S REMEDIES. In the event of any default by Tenant, and without
limiting Landlord's right to indemnification as provided in Article 8.2,
Landlord shall have the following remedies, in addition to all other rights and
remedies provided by law or otherwise provided in this Lease, to which Landlord
may resort cumulatively, or in the alternative:
(a) Landlord may, at Landlord's election, keep this Lease in effect and
enforce, by an action at law or in equity, all of its rights and remedies under
this Lease including, without limitation, (i) the right to recover the rent and
other sums as they become due by appropriate legal action, (ii) the right to
make payments required by Tenant, or perform Tenant's obligations and be
reimbursed by Tenant for the cost thereof with interest at the then maximum rate
of interest not prohibited by law from the date the sum is paid by Landlord
until Landlord is reimbursed by Tenant, and (iii) the remedies of injunctive
relief and specific performance to prevent Tenant from violating the terms of
this Lease and/or to compel Tenant to perform its obligations under this Lease,
as the case may be.
(b) Landlord may, at Landlord's election, terminate this Lease by giving
Tenant written notice of termination, in which event this Lease shall terminate
on the date set forth for termination in such notice. Any termination under this
subparagraph shall not relieve Tenant from its obligation to pay to Landlord all
Base Monthly Rent and Additional Rent then or thereafter due, or any other sums
due or thereafter accruing to Landlord, or from any claim against Tenant for
damages previously accrued or then or thereafter accruing. In no event shall any
one or more of the following actions by Landlord, in the absence of a written
election by Landlord to terminate this Lease constitute a termination of this
Lease:
(i) Appointment of a receiver or keeper in order to protect
Landlord's interest hereunder;
(ii) Consent to any subletting of the Leased Premises or
assignment of this Lease by Tenant, whether pursuant to the provisions hereof or
otherwise; or
(iii) Any action taken by Landlord or its partners, principals,
members, officers, agents, employees, or servants, which is intended to mitigate
the adverse effects of any breach of this Lease by Tenant, including, without
limitation, any action taken to maintain and preserve the Leased Premises on any
action taken to relet the Leased Premises or any portion thereof for the account
of Tenant and in the name of Tenant.
(c) In the event Tenant breaches this Lease and abandons the Leased
Premises, Landlord may terminate this Lease, but this Lease shall not terminate
unless Landlord gives Tenant written notice of termination. If Landlord does not
terminate this Lease by giving written notice of termination, Landlord may
enforce all its rights and remedies under this Lease, including the right and
remedies provided by California Civil Code Section 1951.4 ("lessor may continue
lease in effect after lessee's breach and abandonment and recover rent as it
becomes due, if lessee has right to sublet or assign, subject only to reasonable
limitations"), as in effect on the Effective Date of this Lease.
(d) In the event Landlord terminates this Lease, Landlord shall be
entitled, at Landlord's election, to the rights and remedies provided in
California Civil Code Section 1951.2, as in effect on the Effective Date of this
Lease. For purposes of computing damages pursuant to Section 1951.2, an interest
rate equal to the lesser of (1) Wells Primes Plus Two or (2) the maximum rate of
interest then not prohibited by law shall be used where permitted. Such damages
shall include, without limitation:
(i) The worth at the time of award of the amount by which the
unpaid rent for the balance of the term after the time of award exceeds the
amount of such rental loss that Tenant proves could be reasonably avoided,
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco, at the time of the award plus one percent (1%); and
(ii) Any other amount necessary to compensate Landlord for all
detriment proximately caused by Tenant's failure to perform Tenant's obligations
under this Lease, or which in the ordinary course of things would be likely to
result therefrom, including without limitation, the following: (i) expenses for
cleaning, repairing or restoring the Leased Premises, (ii) reasonable expenses
for altering, remodeling or otherwise improving the Leased Premises for the
purpose of reletting for the remainder of the Lease Term, including removal of
existing leasehold improvements and/or installation of additional leasehold
improvements (regardless of how the same is funded, including reduction of rent,
a direct payment or allowance to a new tenant, or otherwise), (iii) broker's
fees allocable to the remainder of the term of this Lease, advertising costs and
other expenses of reletting the Leased Premises; (iv) costs of carrying and
maintaining the Leased Premises, such as taxes, insurance premiums, utility
18.
<PAGE> 23
charges and security precautions, (v) expenses incurred in removing, disposing
of and/or storing any of Tenant's personal property, inventory or trade fixtures
remaining therein; (vi) reasonable attorney's fees, expert witness fees, court
costs and other reasonable expenses incurred by Landlord (but not limited to
taxable costs) in retaking possession of the Leased Premises, establishing
damages hereunder, and releasing the Leased Premises; and (vii) any other
expenses, costs or damages otherwise incurred or suffered as a result of
Tenant's default.
12.3 LANDLORD'S DEFAULT AND TENANT'S REMEDIES. In the event Landlord fails to
perform its obligations under this Lease, Landlord shall nevertheless not be in
default under the terms of this Lease until such time as Tenant shall have first
given Landlord written notice specifying the nature of such failure to perform
its obligations, and then only after Landlord shall have had thirty (30) days
(or a shorter reasonable period in the case of an emergency) following its
receipt of such notice within which to perform such obligations; provided that,
if longer than thirty (30) days is reasonably required in order to perform such
obligations, Landlord shall have such longer period. In the event of Landlord's
default as above set forth, then, and only then, Tenant may then proceed in
equity or at law to compel Landlord to perform its obligations and/or to recover
damages proximately caused by such failure to perform (except as and to the
extent Tenant has waived its right to damages as provided in this Lease).
12.4 LIMITATION OF TENANT'S RECOURSE. Tenant's recourse shall be limited to
Landlord's interest in the Property or insurance proceeds from the damage or
destruction of the Property. In addition, if Landlord is a corporation, trust,
partnership, joint venture, limited liability company, unincorporated
association, or other form of business entity, Tenant agrees that (i) the
obligations of Landlord under this Lease shall not constitute personal
obligations of the officers, directors, trustees, partners, joint venturers,
members, owners, stockholders, or other principals of such business entity, and
(ii) Tenant shall have no recourse to the assets of such officers, directors,
trustees, partners, joint venturers, members, owners, stockholders or
principals. Additionally, if Landlord is a partnership or limited liability
company, then Tenant covenants and agrees:
(a) No partner or member of Landlord shall be sued or named as a party
in any suit or action brought by Tenant with respect to any alleged breach of
this Lease (except to the extent necessary to secure jurisdiction over the
partnership and then only for that sole purpose);
(b) No service of process shall be made against any partner or member of
Landlord except for the sole purpose of securing jurisdiction over the
partnership; and
(c) No writ of execution will ever be levied against the assets of any
partner or member of Landlord other than to the extent of his or her interest in
the assets of the partnership or limited liability company constituting
Landlord.
Tenant further agrees that each of the foregoing covenants and agreements shall
be enforceable by Landlord and by any partner or member of Landlord and shall be
applicable to any actual or alleged misrepresentation or nondisclosure made
regarding this Lease or the Leased Premises or any actual or alleged failure,
default or breach of any covenant or agreement either expressly or implicitly
contained in this Lease or imposed by statute or at common law.
12.5 TENANT'S WAIVER. Landlord and Tenant agree that the provisions of Paragraph
12.3 above are intended to supersede and replace the provisions of California
Civil Code Sections 1932(1), 1941 and 1942, and accordingly, Tenant hereby
waives the provisions of California Civil Code Sections 1932(1), 1941 and 1942
and/or any similar or successor law regarding Tenant's right to terminate this
Lease or to make repairs and deduct the expenses of such repairs from the rent
due under this Lease.
ARTICLE 13
GENERAL PROVISIONS
13.1 TAXES ON TENANT'S PROPERTY. Tenant shall pay before delinquency any and all
taxes, assessments, license fees, use fees, permit fees and public charges of
whatever nature or description levied, assessed or imposed against Tenant or
Landlord by a governmental agency arising out of, caused by reason of or based
upon Tenant's estate in this Lease, Tenant's ownership of property, improvements
made by Tenant to the Leased Premises or the Outside Areas, improvements made by
Landlord for Tenant's use within the Leased Premises or the Outside Areas,
Tenant's use (or estimated use) of public facilities or services or Tenant's
consumption (or estimated consumption) of public utilities, energy, water or
other resources (collectively, "Tenant's Interest"). Upon demand by Landlord,
Tenant shall furnish Landlord with satisfactory evidence of these payments. If
any such taxes, assessments, fees or public charges are levied against Landlord,
Landlord's property, the Building or the Property, or if the assessed value of
the Building or the Property is increased by the inclusion therein of a value
placed upon Tenant's Interest, regardless of the validity thereof, Landlord
shall have the right to require Tenant to pay such taxes, and if not paid and
satisfactory evidence of payment delivered to Landlord at least ten days prior
to delinquency, then Landlord shall have the right to pay such taxes on Tenant's
behalf and to invoice Tenant for the same. Tenant shall, within the earlier to
occur of (a) thirty (30) days of the date it receives an invoice from Landlord
setting forth the amount of such taxes, assessments, fees, or public charge so
levied, or (b) the due date of such invoice, pay to Landlord, as Additional
Rent, the amount set forth in such invoice. Failure by Tenant to pay the amount
so invoiced within such time period shall be conclusively deemed a default by
Tenant under this Lease. Tenant shall have the right to bring suit in any court
of competent jurisdiction to recover from the taxing authority the amount of any
such taxes, assessments, fees or public charges so paid.
13.2 HOLDING OVER. This Lease shall terminate without further notice on the
Lease Expiration Date (as set forth in Article 1). Any holding over by Tenant
after expiration of the Lease Term shall neither constitute a renewal nor
19.
<PAGE> 24
extension of this Lease nor give Tenant any rights in or to the Leased Premises
except as expressly provided in this Paragraph. Any such holding over to which
Landlord has consented shall be construed to be a tenancy from month to month,
on the same terms and conditions herein specified insofar as applicable, except
that the Base Monthly Rent shall be increased to an amount equal to one hundred
fifty percent (150%) of the Base Monthly Rent payable during the last full month
immediately preceding such holding over.
13.3 SUBORDINATION TO MORTGAGES. This Lease is subject to and subordinate to all
ground leases, mortgages and deeds of trust which affect the Building or the
Property and which are of public record as of the Effective Date of this Lease,
and to all renewals, modifications, consolidations, replacements and extensions
thereof. However, if the lessor under any such ground lease or any lender
holding any such mortgage or deed of trust shall advise Landlord that it desires
or requires this Lease to be made prior and superior thereto, then, upon written
request of Landlord to Tenant, Tenant shall promptly execute, acknowledge and
deliver any and all customary or reasonable documents or instruments which
Landlord and such lessor or lender deems necessary or desirable to make this
Lease prior thereto. Tenant hereby consents to Landlord's ground leasing the
land underlying the Building or the Property and/or encumbering the Building or
the Property as security for future loans on such terms as Landlord shall
desire, all of which future ground leases, mortgages or deeds of trust shall be
subject to and subordinate to this Lease. However, if any lessor under any such
future ground lease or any lender holding such future mortgage or deed of trust
shall desire or require that this Lease be made subject to and subordinate to
such future ground lease, mortgage or deed of trust, then Tenant agrees, within
ten days after Landlord's written request therefor, to execute, acknowledge and
deliver to Landlord any and all documents or instruments reasonably requested by
Landlord or by such lessor or lender as may be necessary or proper to assure the
subordination of this Lease to such future ground lease, mortgage or deed of
trust, but only if such lessor or lender agrees to recognize Tenant's rights
under this Lease and agrees not to disturb Tenant's quiet possession of the
Leased Premises so long as Tenant is not in default under this Lease. If
Landlord assigns the Lease as security for a loan, Tenant agrees to execute such
documents as are reasonably requested by the lender and to provide reasonable
provisions in the Lease protecting such lender's security interest which are
customarily required by institutional lenders making loans secured by a deed of
trust. Landlord shall request a non-disturbance agreement from the holder of the
current deed of trust on the Property; provided, however, that failure to obtain
such non-disturbance agreement shall not be default under this Lease and shall
not entitle Tenant to any claim, offset or termination right.
13.4 TENANT'S ATTORNMENT UPON FORECLOSURE. Tenant shall, upon request, attorn
(i) to any purchaser of the Building or the Property at any foreclosure sale or
private sale conducted pursuant to any security instruments encumbering the
Building or the Property, (ii) to any grantee or transferee designated in any
deed given in lieu of foreclosure of any security interest encumbering the
Building or the Property, or (iii) to the lessor under an underlying ground
lease of the land underlying the Building or the Property, should such ground
lease be terminated; provided that such purchaser, grantee or lessor recognizes
Tenant's rights under this Lease.
13.5 MORTGAGEE PROTECTION. In the event of any default on the part of Landlord,
Tenant will give notice by registered mail to any Lender or lessor under any
underlying ground lease who shall have requested, in writing, to Tenant that it
be provided with such notice, and Tenant shall offer such Lender or lessor a
reasonable opportunity to cure the default, including time to obtain possession
of the Leased Premises by power of sale or judicial foreclosure or other
appropriate legal proceedings if reasonably necessary to effect a cure.
13.6 ESTOPPEL CERTIFICATE. Tenant will, following any request by Landlord,
promptly execute and deliver to Landlord an estoppel certificate in the form
attached as Exhibit C (i) certifying that this Lease is unmodified and in full
force and effect, or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect, (ii)
stating the date to which the rent and other charges are paid in advance, if
any, (iii) acknowledging that there are not, to Tenant's knowledge, any uncured
defaults on the part of Landlord hereunder, or specifying such defaults if any
are claimed, and (iv) certifying such other information about this Lease as may
be reasonably requested by Landlord, its Lender or prospective lenders,
investors or purchasers of the Building or the Property. Tenant's failure to
execute and deliver such estoppel certificate within ten (10) days after
Landlord's written request therefor, at Landlord's option, shall be a material
default by Tenant under this Lease, and Landlord shall have all of the rights
and remedies available to Landlord as Landlord would otherwise have in the case
of any other material default by Tenant, including the right to terminate this
Lease and sue for damages proximately caused thereby, it being agreed and
understood by Tenant that Tenant's failure to so deliver such estoppel
certificate in a timely manner could result in Landlord being unable to perform
committed obligations to other third parties which were made by Landlord in
reliance upon this covenant of Tenant. Landlord and Tenant intend that any
statement delivered pursuant to this paragraph may be relied upon by any Lender
or purchaser or prospective Lender or purchaser of the Building, the Property,
or any interest in them.
13.7 TENANT'S FINANCIAL INFORMATION. Tenant shall, within ten business days
after Landlord's request therefor, deliver to Landlord a copy of Tenant's (and
any guarantor's) current financial statements (including a balance sheet, income
statement and statement of cash flow, all prepared in accordance with generally
accepted accounting principles) and any such other information reasonably
requested by Landlord regarding Tenant's financial condition. Landlord shall be
entitled to disclose such financial statements or other information to its
Lender, to any present or prospective principal of or investor in Landlord, or
to any prospective Lender or purchaser of the Building, the Property, or any
portion thereof or interest therein. Any such financial statement or other
information which is marked "confidential" or "company secrets" (or is otherwise
similarly marked by Tenant) shall be confidential and shall not be disclosed by
Landlord to any third party except as specifically provided in this paragraph,
unless the same becomes a part of the public domain without the fault of
Landlord.
13.8 TRANSFER BY LANDLORD. Landlord and its successors in interest shall have
the right to transfer their interest in the Building, the Property, or any
portion thereof at any time and to any person or entity. In the event of any
such transfer, the Landlord originally named herein (and in the case of any
subsequent transfer, the transferor), from the
20.
<PAGE> 25
date of such transfer, (i) shall be automatically relieved, without any further
act by any person or entity, of all liability for the performance of the
obligations of the Landlord hereunder which may accrue after the date of such
transfer and (ii) shall be relieved of all liability for the performance of the
obligations of the Landlord hereunder which have accrued before the date of
transfer if its transferee agrees to assume and perform all such prior
obligations of the Landlord hereunder, and shall be relieved of liability for
return of the Security Deposit if the Security Deposit has been transferred to
such transferee in accordance with Section 3.7. Tenant shall attorn to any such
transferee. After the date of any such transfer, the term "Landlord" as used
herein shall mean the transferee of such interest in the Building or the
Property.
13.9 FORCE MAJEURE. The obligations of each of the parties under this Lease
(other than the obligations to pay money) shall be temporarily excused if such
party is prevented or delayed in performing such obligations by reason of any
strikes, lockouts or labor disputes; government restrictions, regulations,
controls, action or inaction; civil commotion; or extraordinary weather, fire or
other acts of God.
13.10 NOTICES. Any notice required or desired to be given by a party regarding
this Lease shall be in writing and shall be personally served, or in lieu of
personal service may be given by reputable overnight courier service, postage
prepaid, addressed to the other party as follows:
IF TO LANDLORD: Corporate Technology Centre Associates II LLC
c/o Menlo Equities LLC
525 University Avenue, Suite 100
Palo Alto, California 94301
Attention: Henry Bullock/Richard Holmstrom
with a copy to: Cooley Godward LLP
One Maritime Plaza, 20th Floor
San Francisco, California 94111
Attention: Paul Churchill
IF TO TENANT: Active Touch, Inc.
110 Rose Orchard Way
San Jose, California 95112
Attention: Chief Financial Officer
with a copy to: Pillsbury Madison & Sutro LLP
2550 Hanover Street
Palo Alto, California 94304
Attention: John S. Wesolowski
Any notice given in accordance with the foregoing shall be deemed received upon
actual receipt or refusal to accept delivery.
13.11 ATTORNEYS' FEES. In the event any party shall bring any action,
arbitration proceeding or legal proceeding alleging a breach of any provision of
this Lease, to recover rent, to terminate this Lease, or to enforce, protect,
determine or establish any term or covenant of this Lease or rights or duties
hereunder of either party, the prevailing party shall be entitled to recover
from the non-prevailing party as a part of such action or proceeding, or in a
separate action for that purpose brought within one year from the determination
of such proceeding, reasonable attorneys' fees, expert witness fees, court costs
and other reasonable expenses incurred by the prevailing party.
13.12 DEFINITIONS. Any term that is given a special meaning by any provision in
this Lease shall, unless otherwise specifically stated, have such meaning
wherever used in this Lease or in any Addenda or amendment hereto. In addition
to the terms defined in Article 1, the following terms shall have the following
meanings:
(a) REAL PROPERTY TAXES. The term "Real Property Tax" or "Real Property
Taxes" shall each mean Tenant's Project Percentage Share of (i) all taxes,
assessments, levies and other charges of any kind or nature whatsoever, general
and special, foreseen and unforeseen (including all instruments of principal and
interest required to pay any general or special assessments for public
improvements and any increases resulting from reassessments caused by any change
in ownership or new construction), now or hereafter imposed by any governmental
or quasi-governmental authority or special district having the direct or
indirect power to tax or levy assessments, which are levied or assessed for
whatever reason against the Property or any portion thereof, or Landlord's
interest herein, or the fixtures, equipment and other property of Landlord that
is an integral part of the Property and located thereon, or Landlord's business
of owning, leasing or managing the Property or the gross receipts, income or
rentals from the Property, (ii) all charges, levies or fees imposed by any
governmental authority against Landlord by reason of or based upon the use of or
number of parking spaces within the Property, the amount of public services or
public utilities used or consumed (e.g. water, gas, electricity, sewage or waste
water disposal) at the Property, the number of person employed by tenants of the
Property, the size (whether measured in area, volume, number of tenants or
whatever) or the value of the Property, or the type of use or uses conducted
within the Property, and all costs and fees (including attorneys' fees)
reasonably incurred by Landlord in contesting any Real Property Tax and in
negotiating with public authorities as to any Real Property Tax, and (iii) all
tax increases due to improvements made to the Leased Premises by Tenant or by
Landlord on behalf of Tenant. If, at any time during the Lease Term, the
taxation or assessment of the Property prevailing as of the Effective Date of
this Lease shall be altered so that in lieu of or in addition to any the Real
Property Tax described above there shall be levied, awarded or imposed (whether
by reason of a change in the method of taxation or assessment, creation of a new
tax or charge, or any other cause) an alternate, substitute, or additional use
or charge (i) on the value, size, use or occupancy of the
21.
<PAGE> 26
Property or Landlord's interest therein or (ii) on or measured by the gross
receipts, income or rentals from the Property, or on Landlord's business of
owning, leasing or managing the Property or (iii) computed in any manner with
respect to the operation of the Property, then any such tax or charge, however
designated, shall be included within the meaning of the terms "Real Property
Tax" or "Real Property Taxes" for purposes of this Lease. If any Real Property
Tax is partly based upon property or rents unrelated to the Property, then only
that part of such Real Property Tax that is fairly allocable to the Property
shall be included within the meaning of the terms "Real Property Tax" or "Real
Property Taxes." Notwithstanding the foregoing, the terms "Real Property Tax" or
"Real Property Taxes" shall not include estate, inheritance, transfer, gift or
franchise taxes of Landlord or the federal or state income tax imposed on
Landlord's income from all sources.
(b) LANDLORD'S INSURANCE COSTS. The term "Landlord's Insurance Costs"
shall mean Tenant's Project Proportionate Share of the costs to Landlord to
carry and maintain the policies of fire and property damage insurance for the
Building and the Property and general liability and any other insurance required
or permitted to be carried by Landlord pursuant to Article 9, together with any
deductible amounts paid by Landlord upon the occurrence of any insured casualty
or loss.
(c) PROPERTY MAINTENANCE COSTS. The term "Property Maintenance Costs"
shall mean Tenant's Project Proportionate Share of all costs and expenses
(except Landlord's Insurance Costs, Real Property Taxes and Building Maintenance
Costs) paid or incurred by Landlord in protecting, operating, maintaining,
repairing and preserving the Property and all parts thereof, including without
limitation, (i) market rate professional management fees, (ii) the amortizing
portion of any costs incurred by Landlord in the making of any modifications,
alterations or improvements required by any governmental authority as set forth
in Article 6, which are so amortized during the Lease Term, and (iii) such other
reasonable costs as may be paid or incurred with respect to operating,
maintaining, and preserving the Property, such as repairing and resurfacing
paved areas, repairing and replacing structural parts of the Building, and
repairing and replacing, when necessary, electrical, plumbing, heating,
ventilating and air conditioning systems serving the Building, provided that the
cost of any capital improvement shall be amortized over the useful life of such
improvement and the amortizing portion of the cost shall be included in Property
Maintenance Costs.
(d) BUILDING MAINTENANCE COSTS. The term "Building Maintenance Costs"
shall mean Tenant's Building Proportionate Share of all capital expenditures
allocable to the Building and all other costs as may be incurred with respect to
operating, maintaining and preserving the Building, including, without
limitation, repair and resurfacing the exterior surfaces of the Building,
repairing and replacing structural parts of the Building, and repairing and
replacing, when necessary, electrical, plumbing, heating, ventilating and air
conditioning systems serving the Building, provided that the cost of any capital
improvement shall be amortized over the useful life of such improvement and the
amortizing portion of the cost shall be included in Building Maintenance Costs.
(e) PROPERTY OPERATING EXPENSES. The term "Property Operating Expenses"
shall mean and include all Real Property Taxes, plus all Landlord's Insurance
Costs, plus all Property Maintenance Costs and Building Maintenance Costs.
(f) LAW. The term "Law" shall mean any judicial decisions and any
statute, constitution, ordinance, resolution, regulation, rule, administrative
order, or other requirements of any municipal, county, state, federal, or other
governmental agency or authority having jurisdiction over the parties to this
Lease, the Leased Premises, the Building or the Property, or any of them, in
effect either at the Effective Date of this Lease or at any time during the
Lease Term, including, without limitation, any regulation, order, or policy of
any quasi-official entity or body (e.g. a board of fire examiners or a public
utility or special district).
(g) LENDER. The term "Lender" shall mean the holder of any promissory
note or other evidence of indebtedness secured by the Property or any portion
thereof.
(h) PRIVATE RESTRICTIONS. The term "Private Restrictions" shall mean (as
they may exist from time to time) any and all covenants, conditions and
restrictions, private agreements, easements, and any other recorded documents or
instruments affecting the use of the Property, the Building, the Leased
Premises, or the Outside Areas.
(i) RENT. The term "Rent" shall mean collectively Base Monthly Rent and
all Additional Rent.
13.13 GENERAL WAIVERS. One party's consent to or approval of any act by the
other party requiring the first party's consent or approval shall not be deemed
to waive or render unnecessary the first party's consent to or approval of any
subsequent similar act by the other party. No waiver of any provision hereof, or
any waiver of any breach of any provision hereof, shall be effective unless in
writing and signed by the waiving party. The receipt by Landlord of any rent or
payment with or without knowledge of the breach of any other provision hereof
shall not be deemed a waiver of any such breach. No waiver of any provision of
this Lease shall be deemed a continuing waiver unless such waiver specifically
states so in writing and is signed by both Landlord and Tenant. No delay or
omission in the exercise of any right or remedy accruing to either party upon
any breach by the other party under this Lease shall impair such right or remedy
or be construed as a waiver of any such breach theretofore or thereafter
occurring. The waiver by either party of any breach of any provision of this
Lease shall not be deemed to be a waiver of any subsequent breach of the same or
any other provisions herein contained.
13.14 MISCELLANEOUS. Should any provisions of this Lease prove to be invalid or
illegal, such invalidity or illegality shall in no way affect, impair or
invalidate any other provisions hereof, and such remaining provisions shall
remain in full force and effect. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor. Any copy of this Lease which is executed by the parties shall be deemed
an original for all purposes. This Lease shall, subject to the provisions
regarding assignment, apply to and
22.
<PAGE> 27
bind the respective heirs, successors, executors, administrators and assigns of
Landlord and Tenant. The term "party" shall mean Landlord or Tenant as the
context implies. If Tenant consists of more than one person or entity, then all
members of Tenant shall be jointly and severally liable hereunder. This Lease
shall be construed and enforced in accordance with the Laws of the State in
which the Leased Premises are located. The captions in this Lease are for
convenience only and shall not be construed in the construction or
interpretation of any provision hereof. When the context of this Lease requires,
the neuter gender includes the masculine, the feminine, a partnership,
corporation, limited liability company, joint venture, or other form of business
entity, and the singular includes the plural. The terms "must," "shall," "will,"
and "agree" are mandatory. The term "may" is permissive. When a party is
required to do something by this Lease, it shall do so at its sole cost and
expense without right of reimbursement from the other party unless specific
provision is made therefor. Where Landlord's consent is required hereunder, the
consent of any Lender shall also be required. Landlord and Tenant shall both be
deemed to have drafted this Lease, and the rule of construction that a document
is to be construed against the drafting party shall not be employed in the
construction or interpretation of this Lease. Where Tenant is obligated not to
perform any act or is not permitted to perform any act, Tenant is also obligated
to restrain any others reasonably within its control, including agents,
invitees, contractors, subcontractors and employees, from performing such act.
Landlord shall not become or be deemed a partner or a joint venturer with Tenant
by reason of any of the provisions of this Lease.
ARTICLE 14
CORPORATE AUTHORITY
BROKERS AND ENTIRE AGREEMENT
14.1 CORPORATE AUTHORITY. If Tenant is a corporation, each individual executing
this Lease on behalf of such corporation represents and warrants that Tenant is
validly formed and duly authorized and existing, that Tenant is qualified to do
business in the State in which the Leased Premises are located, that Tenant has
the full right and legal authority to enter into this Lease, and that he or she
is duly authorized to execute and deliver this Lease on behalf of Tenant in
accordance with its terms. Tenant shall, within thirty days after execution of
this Lease, deliver to Landlord a certified copy of the resolution of its board
of directors authorizing or ratifying the execution of this Lease and if Tenant
fails to do so, Landlord at its sole election may elect to terminate this Lease.
Tenant is not an employee benefit plan as defined in Section 3(3) of the
Employment Retirement Income Security Act of 1974, as amended, nor a plan as
defined in Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended,
and Tenant's assets do not constitute "plan-assets" of one or more such plans
within the meaning of the Department of Labor Regulation Section 2510.3-101.
14.2 BROKERAGE COMMISSIONS. Tenant represents, warrants and agrees that it has
not had any dealings with any real estate broker(s), leasing agent(s), finder(s)
or salesmen, other than Tenant's Brokers (as named in Article 1) with respect to
the lease by it of the Leased Premises pursuant to this Lease, and that it will
indemnify, defend with competent counsel, and hold Landlord harmless from any
liability for the payment of any real estate brokerage commissions, leasing
commissions or finder's fees claimed by any other real estate broker(s), leasing
agent(s), finder(s), or salesmen to be earned or due and payable by reason of
Tenant's agreement or promise (implied or otherwise) to pay (or to have Landlord
pay) such a commission or finder's fee by reason of its leasing the Leased
Premises pursuant to this Lease. Landlord agrees and acknowledges that it has
the sole obligation and responsibility to pay its broker (Gregg Von Thaden and
Don Reimann of Colliers International) and Landlord will indemnify, defend with
competent counsel and hold Tenant harmless from any liability for the payment of
any real estate brokerage commissions, leasing commissions, or finder's fees
claimed by any other real estate broker(s), leasing agent(s), finder(s), or
salesmen to be earned or due and payable by reason of Landlord's agreement or
promise (implied or otherwise) to pay (or have Tenant pay) such a commission or
finder's fees by reason of the leasing of the Leased Premises pursuant to this
Lease.
14.3 ENTIRE AGREEMENT. This Lease and the Exhibits (as described in Article 1),
which Exhibits are by this reference incorporated herein, constitute the entire
agreement between the parties, and there are no other agreements, understandings
or representations between the parties relating to the lease by Landlord of the
Leased Premises to Tenant, except as expressed herein. No subsequent changes,
modifications or additions to this Lease shall be binding upon the parties
unless in writing and signed by both Landlord and Tenant.
14.4 LANDLORD'S REPRESENTATIONS. Tenant acknowledges that neither Landlord nor
any of its agents made any representations or warranties respecting the
Property, the Building or the Leased Premises, upon which Tenant relied in
entering into the Lease, which are not expressly set forth in this Lease. Tenant
further acknowledges that neither Landlord nor any of its agents made any
representations as to (i) whether the Leased Premises may be used for Tenant's
intended use under existing Law, or (ii) the suitability of the Leased Premises
for the conduct of Tenant's business, or (iii) the exact square footage of the
Leased Premises, and that Tenant relies solely upon its own investigations with
respect to such matters. Tenant expressly waives any and all claims for damage
by reason of any statement, representation, warranty, promise or other agreement
of Landlord or Landlord's agent(s), if any, not contained in this Lease or in
any Exhibit attached hereto.
ARTICLE 15
OPTIONS TO EXTEND
15.1 So long as Active Touch, Inc. is the Tenant hereunder and occupies the
entirety of the Leased Premises, and subject to the condition set forth in
clause (b) below, Tenant shall have one option to extend the term of this Lease
with respect to the entirety of the Premises, for a period of three (3) years
from the expiration of the Lease Term (the "Extension Period"), subject to the
following conditions:
23.
<PAGE> 28
(a) The option to extend shall be exercised, if at all, by notice of
exercise given to Landlord by Tenant not more than twelve months nor less than
seven months prior to the expiration of the Lease Term;
(b) Anything herein to the contrary notwithstanding, if Tenant is in
default under any of the terms, covenants or conditions of this Lease, either at
the time Tenant exercises the extension option or on the commencement date of
the Extension Period, Landlord shall have, in addition to all of Landlord's
other rights and remedies provided in this Lease, the right to terminate such
option(s) to extend upon notice to Tenant.
(c) In the event the option is exercised in a timely fashion, the Lease
shall be extended for the term of the Extension Period upon all of the terms and
conditions of this Lease, provided that the Base Monthly Rent for the Extension
Period shall be ninety-five percent (95%) of the "Fair Market Rent" for the
Leased Premises, increased annually as set forth below. For purposes hereof,
"Fair Market Rent" shall mean the Base Monthly Rent determined pursuant to the
process described below. In no event, however, shall any adjustment of Base
Monthly Rent pursuant to this paragraph result in a decrease of the Base Monthly
Rent for the Leased Premises below the amount due from Tenant for the preceding
portion of the initial Lease Term for which Base Monthly Rent had been fixed. At
the end of the first 12-month period of the extension Period, Base Monthly Rent
shall be increased to reflect the change in the Consumer Price Index for the San
Francisco Metropolitan Area, All Items (the "CPI"), for the 12-month period
ending 11 months after the Lease Commencement Date, but in no event shall Base
Monthly Rent be increased less than 3% per annum compounded annually nor more
than 5% per annum compounded annually for such 12 month period. Base Monthly
Rent shall be so adjusted at the end of each subsequent 12-month period during
the Extension Period.
15.2 Within thirty (30) days after receipt of Tenant's notice of exercise,
Landlord shall notify Tenant in writing of Landlord's estimate of the Base
Monthly Rent for the Extension Period, based on the provisions of Paragraph 15.1
above. Within thirty (30) days after receipt of such notice from Landlord, and
unless Landlord and Tenant have otherwise agreed on the amount of the Base
Monthly Rent for the Extension Period, Tenant shall have the right either to (i)
accept Landlord's statement of Base Monthly Rent as the Base Monthly Rent for
the Extension Period; or (ii) elect to arbitrate Landlord's estimate of Fair
Market Rent, such arbitration to be conducted pursuant to the provisions hereof.
Failure on the part of Tenant to require arbitration of Fair Market Rent within
such 30-day period shall constitute acceptance of the Base Monthly Rent for the
Extension Period as calculated by Landlord. If Tenant elects arbitration, the
arbitration shall be concluded within 90 days after the date of Tenant's
election, subject to extension for an additional 30-day period if a third
arbitrator is required and does not act in a timely manner. To the extent that
arbitration has not been completed prior to the expiration of any preceding
period for which Base Monthly Rent has been determined, Tenant shall pay Base
Monthly Rent at the rate calculated by Landlord, with the potential for an
adjustment to be made once Fair Market Rent is ultimately determined by
arbitration.
15.3 In the event of arbitration, the judgment or the award rendered in any such
arbitration may be entered in any court having jurisdiction and shall be final
and binding between the parties. The arbitration shall be conducted and
determined in the City and County of San Francisco in accordance with the then
prevailing rules of the American Arbitration Association or its successor for
arbitration of commercial disputes except to the extent that the procedures
mandated by such rules shall be modified as follows:
(a) Tenant shall make demand for arbitration in writing within thirty
(30) days after service of Landlord's determination of Fair Market Rent given
under Paragraph 15.2 above, specifying therein the name and address of the
person to act as the arbitrator on its behalf. The arbitrator shall be qualified
as a real estate appraiser familiar with the Fair Market Rent of similar
industrial, research and development, or office space in the Silicon Valley area
who would qualify as an expert witness over objection to give opinion testimony
addressed to the issue in a court of competent jurisdiction. Failure on the part
of Tenant to make a proper demand in a timely manner for such arbitration shall
constitute a waiver of the right thereto. Within fifteen (15) days after the
service of the demand for arbitration, Landlord shall give notice to Tenant,
specifying the name and address of the person designated by Landlord to act as
arbitrator on its behalf who shall be similarly qualified. If Landlord fails to
notify Tenant of the appointment of its arbitrator, within or by the time above
specified, then the arbitrator appointed by Tenant shall be the arbitrator to
determine the issue.
(b) In the event that two arbitrators are chosen pursuant to Paragraph
15.3(a) above, the arbitrators so chosen shall, within fifteen (15) days after
the second arbitrator is appointed determine the Fair Market Rent. If the two
arbitrators shall be unable to agree upon a determination of Fair Market Rent
within such fifteen (15) -day period, they, themselves, shall appoint a third
arbitrator, who shall be a competent and impartial person with qualifications
similar to those required of the first two arbitrators pursuant to Paragraph
15.3(a). In the event they are unable to agree upon such appointment within
seven (7) days after expiration of such 15-day period, the third arbitrator
shall be selected by the parties themselves, if they can agree thereon, within a
further period of fifteen (15) days. If the parties do not so agree, then either
party, on behalf of both, may request appointment of such a qualified person by
the then Chief Judge of the United States District Court having jurisdiction
over the County of Santa Clara, acting in his private and not in his official
capacity, and the other party shall not raise any question as to such Judge's
full power and jurisdiction to entertain the application for and make the
appointment. The three arbitrators shall decide the dispute if it has not
previously been resolved by following the procedure set forth below.
(c) Where an issue cannot be resolved by agreement between the two
arbitrators selected by Landlord and Tenant or settlement between the parties
during the course of arbitration, the issue shall be resolved by the three (3)
arbitrators within fifteen (15) days of the appointment of the third arbitrator
in accordance with the following procedure. The arbitrator selected by each of
the parties shall state in writing his determination of the Fair Market Rent
supported by the reasons therefor with counterpart copies to each party. The
arbitrators shall arrange for a simultaneous exchange of such proposed
resolutions. The role of the third arbitrator shall be to select which of the
24.
<PAGE> 29
two (2) proposed resolutions most closely approximates his determination of Fair
Market Rent. The third arbitrator shall have no right to propose a middle ground
or any modification of either of the two proposed resolutions. The resolution he
chooses as most closely approximating his determination shall constitute the
decision of the arbitrators and be final and binding upon the parties.
(d) In the event of a failure, refusal or inability of any arbitrator to
act, his successor shall be appointed by him, but in the case of the third
arbitrator, his successor shall be appointed in the same manner as provided for
appointment of the third arbitrator. The arbitrators shall decide the issue
within fifteen (15) days after the appointment of the third arbitrator. Any
decision in which the arbitrator appointed by Landlord and the arbitrator
appointed by Tenant concur shall be binding and conclusive upon the parties.
Each party shall pay the fee and expenses of its respective arbitrator and both
shall share the fee and expenses of the third arbitrator, if any, and the
attorneys' fees and expenses of counsel for the respective parties and of
witnesses shall be paid by the respective party engaging such counsel or calling
such witnesses.
(e) The arbitrators shall have the right to consult experts and
competent authorities to obtain factual information or evidence pertaining to a
determination of Fair Market Rent, but any such consultation shall be made in
the presence of both parties with full right on their part to cross-examine. The
arbitrators shall render their decision and award in writing with counterpart
copies to each party. The arbitrators shall have no power to modify the
provisions of this Lease.
ARTICLE 16
TELEPHONE SERVICE
Notwithstanding any other provision of this Lease to the contrary:
(a) So long as the entirety of the Building is leased to Tenant:
(i) Landlord shall have no responsibility for providing to
Tenant any telephone equipment, including wiring, within the Leased Premises or
for providing telephone service or connections from the utility to the Leased
Premises; and
(ii) Landlord makes no warranty as to the quality, continuity or
availability of the telecommunications services in the Building, and Tenant
hereby waives any claim against Landlord for any actual or consequential damages
(including damages for loss of business) in the event Tenant's
telecommunications services in any way are interrupted, damaged or rendered less
effective, except to the extent caused by the grossly negligent or willful act
or omission by Landlord, its agents or employees. Tenant accepts the telephone
equipment (including, without limitation, the INC, as defined below) in its
"AS-IS" condition, and Tenant shall be solely responsible for contracting with a
reliable third party vendor to assume responsibility for the maintenance and
repair thereof (which contract shall contain provisions requiring such vendor to
inspect the INC periodically (the frequency of such inspections to be determined
by such vendor based on its experience and professional judgment), and requiring
such vendor to meet local and federal requirements for telecommunications
material and workmanship). Landlord shall not be liable to Tenant and Tenant
waives all claims against Landlord whatsoever, whether for personal injury,
property damage, loss of use of the Leased Premises, or otherwise, due to the
interruption or failure of telephone services to the Leased Premises. Tenant
hereby holds Landlord harmless and agrees to indemnify, protect and defend
Landlord from and against any liability for any damage, loss or expense due to
any failure or interruption of telephone service to the Leased Premises for any
reason.
(b) At such time as the entirety of the Leased Premise is no longer
leased to Tenant, Landlord shall in its sole discretion have the right, by
written notice to Tenant, to elect to assume limited responsibility for INC, as
provided below, and upon such assumption of responsibility by Landlord, this
subparagraph (b) shall apply prospectively.
(i) Landlord shall provide Tenant access to such quantity of
pairs in the Building intra-building network cable ("INC") as is determined to
be available by Landlord in its reasonable discretion. Tenant's access to the
INC shall be solely by arrangements made by Tenant, as Tenant may elect,
directly with Pacific Bell or Landlord (or such vendor as Landlord may
designate), and Tenant shall pay all reasonable charges as may be imposed in
connection therewith. Pacific Bell's charges shall be deemed to be reasonable.
Subject to the foregoing, Landlord shall have no responsibility for providing to
Tenant any telephone equipment, including wiring, within the Leased Premises or
for providing telephone service or connections from the utility to the Leased
Premises, except as required by law.
(ii) Tenant shall not alter, modify, add to or disturb any
telephone wiring in the Leased Premises or elsewhere in the Building without the
Landlord's prior written consent, which shall not be unreasonably withheld.
Tenant shall be liable to Landlord for any damage to the telephone wiring in the
Building due to the act, negligent or otherwise, of Tenant or any employee,
contractor or other agent of Tenant. Tenant shall have no access to the
telephone closets within the Building, except in the manner and under procedures
established by Landlord. Tenant shall promptly notify Landlord of any actual or
suspected failure of telephone service to the Leased Premises.
(iii) All costs incurred by Landlord for the installation,
maintenance, repair and replacement of telephone wiring in the Building shall be
a Property Maintenance Cost.
25.
<PAGE> 30
(iv) Landlord makes no warranty as to the quality, continuity or
availability of the telecommunications services in the Building, and Tenant
hereby waives any claim against Landlord for any actual or consequential damages
(including damages for loss of business) in the event Tenant's
telecommunications services in any way are interrupted, damaged or rendered less
effective, except to the extent caused by the grossly negligent or willful act
or omission by Landlord, its agents or employees. Tenant acknowledges that
Landlord meets its duty of care to Tenant with respect to the Building INC by
contracting with a reliable third party vendor to assume responsibility for the
maintenance and repair thereof (which contract shall contain provisions
requiring such vendor to inspect the INC periodically (the frequency of such
inspections to be determined by such vendor based on its experience and
professional judgment), and requiring such vendor to meet local and federal
requirements for telecommunications material and workmanship). Subject to the
foregoing, Landlord shall not be liable to Tenant and Tenant waives all claims
against Landlord whatsoever, whether for personal injury, property damage, loss
of use of the Leased Premises, or otherwise, due to the interruption or failure
of telephone services to the Leased Premises. Tenant hereby holds Landlord
harmless and agrees to indemnify, protect and defend Landlord from and against
any liability for any damage, loss or expense due to any failure or interruption
of telephone service to the Leased Premises for any reason.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the respective dates below set forth with the intent to be legally bound thereby
as of the Effective Date of this Lease first above set forth.
LANDLORD:
CORPORATE TECHNOLOGY CENTRE ASSOCIATES II LLC, a
California limited liability company
By: CORPORATE TECHNOLOGY CENTRE PARTNERS II
LLC, a California limited liability
company, its Managing Member
By: Menlo Equities LLC, a California limited
liability company, its Managing Member
By: Diamant Investments LLC
Dated: 7/2/99 By:
----------------------------------
, Member
------------------------
TENANT:
ACTIVE TOUCH, INC., a California corporation
By: /s/ Subrah S. Iyar
----------------------------------------------
Title: CEO
Dated: 7/1/99 By: /s/ Tom Colby
----------------------------------------------
Title: Vice President Business Operations
26.
<PAGE> 31
EXHIBIT A
SITE PLAN
1.
<PAGE> 32
EXHIBIT B
WORK LETTER
THIS WORK LETTER, dated June 30, 1999, is entered into by and between
CORPORATE TECHNOLOGY CENTRE ASSOCIATES II LLC, a California limited liability
company ("Landlord") and ACTIVE TOUCH, INC., a California corporation
("Tenant"). On or about the date hereof, Landlord and Tenant entered into that
certain Lease (the "Lease") for certain premises (the "Leased Premises")
commonly known as 110 Rose Orchard Way, San Jose, California. This Work Letter
sets forth the agreement of Landlord and Tenant with respect to the improvements
to be constructed in the Leased Premises. All defined terms used herein shall
have the meaning set forth in the Lease, unless otherwise defined in this Work
Letter.
1. CONSTRUCTION OF TENANT IMPROVEMENTS. Landlord shall, through its general
contractor, Applied Construction Technology, Inc. (the "Contractor"), furnish
and install within the Leased Premises, substantially in accordance with the
plans and specifications to be approved by Landlord and Tenant pursuant to
paragraph 2 below, certain items of general construction (the "Tenant
Improvements"). The quantities, character and manner of installation of all of
the Tenant Improvements shall be subject to the limitations imposed by any
applicable governmental regulations relating to conservation of energy and by
applicable building codes and regulations. In addition, unless otherwise agreed
by Landlord in writing, Tenant agrees that the Tenant Improvements shall not
require Landlord to perform work which would (i) require changes to structural
components of the Building or the exterior design of the Building; (ii) require
any material modification to the Building's mechanical or electrical systems;
(iii) be incompatible with the Building plans filed with the City of San Jose;
or (iv) delay the completion of the Leased Premises beyond the Intended
Commencement Date. Landlord shall use commercially reasonable efforts to
promptly obtain all necessary governmental approvals and permits to construct
the Tenant Improvements.
2. SPACE PLANNING.
(a) Landlord and Tenant acknowledge and agree that Tenant has had
prepared for Landlord's approval comprehensive space planning
documents (once approved by Landlord, the "Space Planning
Documents"). Tenant agrees that such space planning documents are
or, after revisions requested by Landlord shall be, sufficient to
enable Landlord's architect and engineers to prepare the Working
Drawings (as defined below).
(b) All planning and interior design services relating to furniture and
equipment, such as selection of colors, finishes, fixtures,
furnishings or floor coverings, will be included in the cost of the
Tenant Improvements, shall be subject to prior written approval of
Landlord (which will not be unreasonably withheld), and shall be
timely delivered so as not to impede the design and construction of
the Tenant Improvements.
(c) Upon execution of the Lease and this Work Letter by Tenant and
receipt by Landlord of the Space Planning Documents, Landlord shall
be authorized to cause its architect and engineers to prepare the
Working Drawings.
3. APPROVAL OF WORKING DRAWINGS.
(a) Landlord and Tenant acknowledge that Landlord shall retain an
architect and engineers to prepare all architectural and engineering
plans and specifications required for the construction of the Tenant
Improvements in conformance with the base building and tenant
improvement standard specifications of the Building (the "Working
Drawings"), and to prepare drawings and specifications for Changes
(as defined below), if any, requested or required pursuant to
paragraph 5 below.
(b) Landlord shall submit the completed Working Drawings to Tenant for
Tenant's approval. Tenant will provide written approval of the
Working Drawings within five days after such submission. If Tenant
disapproves any part of the submission, the disapproval shall
include written instructions adequate for Landlord's architect and
engineers to revise the Working Drawings. Such revisions shall be
subject to Landlord's approval, which shall not be unreasonably
withheld. Tenant will finally approve the revised Working Drawings
within two days after submission thereof to Tenant. If Tenant's
instructions necessitate (i) revisions to the Working Drawings (as
originally submitted) which do not substantially conform with the
Space Planning Documents, or (ii) a substantial change of scope
relative to the Space Planning Documents, the costs incurred by
Landlord as a result of such instructions (including, without
limitation, the cost of revising the Working Drawings) shall be
promptly borne and paid by Tenant upon demand by Landlord.
(c) If Tenant fails to approve the Working Drawings or the revised
Working Drawings within the applicable periods set forth in
subparagraph 3(b) above, then (A) Landlord shall not be obligated to
commence construction of the Tenant Improvements, (B) Tenant shall
be responsible for any resulting delay, and the cost of such delay,
in Landlord's completion of the Tenant Improvements and delivery of
the Leased Premises, and (C) any such delay shall be deemed a Tenant
Delay (as defined below).
1.
<PAGE> 33
(d) Upon Tenant's approval of the Working Drawings, Landlord shall be
authorized to cause the Contractor to proceed with the construction
of the Tenant Improvements in accordance with the Working Drawings.
4. COST OF TENANT IMPROVEMENTS. Unless specified otherwise herein, Landlord
shall bear and pay the cost of the Tenant Improvements (which cost shall
include, without limitation, the costs of construction, the cost of permits and
permit expediting, and all architectural and engineering services obtained by
Landlord in connection with the Tenant Improvements, the Contractor's fees,
Landlord's fee for construction administration (up to $2,000 per month) and any
Property Maintenance Costs from the date of this Work Letter until the Lease
Commencement Date) up to a maximum of $483,840.00 (the "Tenant Improvement
Allowance"). The Tenant Improvement Allowance shall be utilized only for
building improvements to the Building, and not for signage, furniture costs, any
third party consulting or contracting fees (other than third party space
planning consultant fees up to $25,000), any telecom/cabling costs, or any other
purpose. Tenant shall bear and pay the cost of the Tenant Improvements
(including but not limited to all of the foregoing fees and costs) in excess of
the Tenant Improvement Allowance, if any. The cost of the Tenant Improvements
shall exclude the cost of furniture, fixtures and inventory and other items of
Tenant's Work (as defined below). Landlord shall provide to Tenant, at Tenant's
request and at Tenant's expense, a complete accounting of all amounts included
as Tenant Improvement costs, and Tenant shall have the right to audit such
account at its sole cost and expense, within 30 days after substantial
completion of the Tenant Improvements. In the event the entire Tenant
Improvement Allowance is not applied to Tenant Improvement Costs or Property
Maintenance Costs as provided herein, up to $282,340.00 of such Tenant
Improvement Allowance not applied shall be amortized by Landlord over seven (7)
years at an interest rate of ten percent (10%) per annum, and the amortizing
amount for each month during such seven (7) year period shall be used to reduce,
on a monthly basis, the Base Monthly Rent paid by Tenant over the Lease Term. In
the event of such reduction in Base Monthly Rent, Landlord and Tenant agree to
execute an amendment to the Lease setting forth the new Base Monthly Rent.
5. CHANGES.
(a) Any request by Tenant for a change in the Tenant Improvements after
approval of the Working Drawings (a "Change") shall be accompanied
by all information necessary to clearly identify and explain the
proposed Change. As soon as practicable after receipt of such an
Estimate Request form, Landlord shall notify Tenant of the estimated
cost of such Change as well as the estimated increase in
construction time caused by the Change, if any. Tenant shall approve
in writing such estimates within two days after receipt of
Landlord's notice. Upon receipt of such written request, Landlord
shall be authorized to cause the Contractor to proceed with the
implementation of the requested Change.
(b) The increased cost and time, as determined by Landlord, of all
Changes, including the cost of architectural and engineering
services required to revise the Working Drawings to reflect such
Changes, the Contractor's overhead and fee, and Landlord's fee for
construction administration services (up to $2,000 per month), shall
be treated as costs of the Tenant Improvements, and shall be as
determined by Landlord in good faith upon completion of the Tenant
Improvements, subject only to Landlord's furnishing to Tenant
appropriate back-up information from the Contractor concerning the
increased costs and increased construction time.
6. TENANT'S WORK. Landlord and Tenant acknowledge and agree that certain work
required for Tenant's occupancy of the Leased Premises, including but not
limited to the procurement and installation of furniture, fixtures, equipment,
artwork and interior signage are beyond the scope of the Tenant Improvements and
shall be performed by Tenant or its contractors at Tenant's sole cost and
expense. All such work ("Tenant's Work") shall be subject to Landlord's prior
written approval. Tenant shall adopt a construction schedule for Tenant's Work
in conformance with the Contractor's schedule, and shall perform Tenant's Work
in such a way as not to hinder or delay the operations of Landlord or the
Contractor in the Building. Any costs incurred by Landlord as a result of any
interference with Landlord's operations by Tenant or its contractors shall be
promptly paid by Tenant to Landlord upon demand. Landlord shall make all
reasonable efforts to notify Tenant of any such interference of which Landlord
has actual knowledge, but failure to provide such notice shall in no way limit
Landlord's right to demand payment for such costs. Tenant's contractors shall be
subject to Landlord's prior written approval, and to the administrative
supervision of the Contractor. Tenant's Work shall comply with all of the
following requirements:
(a) Tenant's Work shall not proceed until Landlord has approved in
writing: (i) Tenant's contractors, (ii) proof of the amount and
coverage of public liability and property damage insurance carried
by Tenant's contractors in the form of an endorsed insurance
certificate naming Landlord, the Contractor, and the agents of
Landlord and the Contractor as additional insureds, in an amount not
less than two million dollars, and (iii) complete and detailed plans
and specifications for Tenant's Work.
(b) Tenant's Work shall be performed in conformity with a valid permit
when required, a copy of which shall be furnished to Landlord before
such work is commenced. In any event, all Tenant's Work shall comply
with all applicable laws, codes and ordinances of any governmental
entity having jurisdiction over the Building. Landlord shall have no
responsibility for Tenant's failure to comply with such applicable
laws. Any and all delay in obtaining a certificate of occupancy due
to Tenant's vendors is the responsibility of Tenant and shall be a
Tenant Delay.
2.
<PAGE> 34
(c) In connection with Tenant's Work (e.g., delivering or installing
furniture or equipment to the second floor of the Leased Premises),
Tenant or its contractors shall arrange for any necessary hoisting
or elevator service with Landlord and shall pay such reasonable
costs for such services as may be charged by Landlord.
(d) Tenant shall promptly pay Landlord upon demand for any extra expense
incurred by Landlord by reason of faulty work done by Tenant or its
contractors, by reason of damage to existing work caused by Tenant
or its contractors, or by reason of inadequate cleanup by Tenant or
its contractors.
7. COMPLETION; TENANT DELAY.
(a) Upon the earlier to occur of (i) Landlord's delivery to Tenant of a
certificate of occupancy issued by the City of San Jose for the
Leased Premises, (ii) Tenant's occupancy of all or part of the
Leased Premises for purposes of conducting business therein, (iii)
the date that Landlord's architect furnishes a certificate of
substantial completion confirming that the Tenant Improvements have
been substantially completed, subject to minor details of
construction, decoration or mechanical adjustment which do not
unreasonably affect Tenant's ability to do business in the Leased
Premises, or (iv) the date upon which Tenant opens for business in
the Leased Premises, the Tenant Improvements shall be deemed
complete and possession of the Leased Premises shall be deemed
delivered to Tenant for all purposes under the Lease.
(b) If Landlord shall be delayed in substantially completing the Tenant
Improvements as a result of:
(i) Tenant's failure to furnish the information, instructions and
plans required in paragraph 3 or approve the Working Drawings, within the
applicable time periods specified in paragraph 3; or
(ii) Any changes in the scope of the Tenant Improvements from
that set forth in the Space Planning Documents, or any Changes to the Working
Drawings requested by Tenant after approval thereof pursuant to paragraph 5
(including without limitation Tenant Changes which are requested but not
subsequently approved by Tenant pursuant to paragraph 5); or
(iii) Any interruption or interference in Landlord's construction
of the Tenant Improvements caused by Tenant, its contractors or its vendors; or
(iv) Tenant's failure to timely pay any amounts which Tenant is
obligated to pay under this Work Letter; or
(v) Any other act, neglect, failure or omission of Tenant, its
agents, employees or contractors (items (i) through (v) above being collectively
referred to as "Tenant Delays");
then the date upon which the payment of rental under the Lease, shall commence
shall be advanced by the cumulative duration of such Tenant Delays.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Work Letter
as of the respective dates set forth below.
LANDLORD:
CORPORATE TECHNOLOGY CENTRE ASSOCIATES II LLC, a
California limited liability company
By: CORPORATE TECHNOLOGY CENTRE PARTNERS II
LLC, a California limited liability
company, its Managing Member
By: Menlo Equities LLC, a California limited
liability company, its Managing Member
By: Diamant Investments LLC
Dated: 7/2/99 By:
----------------------------------
, Member
----------------------
TENANT:
ACTIVE TOUCH, INC., a California corporation
By: /s/ Subrah S. Iyar
-------------------------------------------------
Title: CEO
3.
<PAGE> 35
Dated: 7/1/99 By: /s/ Tom Colby
-------------------------------------------------
Title: Vice President Business Operations
4.
<PAGE> 36
EXHIBIT C
FORM OF TENANT ESTOPPEL CERTIFICATE
__________________, 19____
--------------------------
--------------------------
--------------------------
--------------------------
Re 110 Rose Orchard Way
San Jose, California
Ladies and Gentlemen:
Reference is made to that certain Lease, dated as of _______________, 19___,
between CORPORATE TECHNOLOGY CENTRE ASSOCIATES II LLC, a California limited
liability company ("Landlord"), and the undersigned (herein referred to as the
"Lease"). A copy of the Lease [and all amendment thereto] is[are] attached
hereto as EXHIBIT A. At the request of Landlord in connection with [____________
State reasons for request for estoppel certificate], the undersigned hereby
certifies to Landlord and to [_________ State names of other parties requiring
certification] and each of your respective successors and assigns as follows:
1. The undersigned is the tenant under the Lease.
2. The Lease is in full force and effect and has not been amended,
modified, supplemented or superseded except as indicated in Exhibit A.
3. There is no defense, offset, claim or counterclaim by or in favor of
the undersigned against Landlord under the Lease or against the obligations of
the undersigned under the Lease. The undersigned has no renewal, extension or
expansion option, no right of first offer or right of first refusal and no other
similar right to renew or extend the term of the Lease or expand the property
demised thereunder except as may be expressly set forth in the Lease.
4. The undersigned is not aware of any default now existing of the
undersigned or of Landlord under the Lease, nor of any event which with notice
or the passage of time or both would constitute a default of the undersigned or
of Landlord under the Lease.
5. The undersigned has not received notice of a prior transfer,
assignment, hypothecation or pledge by Landlord of any of Landlord's interest in
the Lease.
6. The monthly rent due under the Lease is $____________ and has been
paid through __________________, and all additional rent due and payable under
the Lease has been paid through _________________.
7. The term of the Lease commenced on __________________, and expires on
___________________, unless sooner terminated pursuant to the provisions of the
Lease. Landlord has performed all work required by the Lease for the
undersigned's initial occupancy of the demised property.
8. The undersigned has deposited the sum of $____________ with Landlord
as security for the performance of its obligations as tenant under the Lease,
and no portion of such deposit has been applied by Landlord to any obligation
under the Lease.
9. There is no free rent period pending, nor is Tenant entitled to any
Landlord's contribution.
The above certifications are made to Landlord and Lender knowing that Landlord
and Lender will rely thereon in accepting an assignment of the Lease.
Very truly yours,
ACTIVE TOUCH, INC., a California corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
1.
<PAGE> 37
EXHIBIT D
FORM OF LEASE COMMENCEMENT DATE CERTIFICATE
This Lease Commencement Date Certificate is entered into by Landlord and Tenant
pursuant to the Work Letter attached as Exhibit B to the Lease.
1. (a) Landlord: Corporate Technology Centre Associates II LLC, a
California limited liability company
(b) Tenant: Active Touch, Inc., a California corporation
(c) Lease: Lease dated June __, 1999 between Landlord and Tenant.
(d) Leased Premises: 110 Rose Orchard Way, San Jose, California
2. CONFIRMATION OF LEASE COMMENCEMENT.
Landlord and Tenant confirm that the Lease Commencement Date is
____________ and the Expiration Date is ______________ and that Article 1 of the
Lease is amended accordingly.
Landlord and Tenant have executed this Lease Commencement Date
Certificate as of the dates set forth below.
LANDLORD:
CORPORATE TECHNOLOGY CENTRE ASSOCIATES II LLC, a
California limited liability company
By: CORPORATE TECHNOLOGY CENTRE PARTNERS II
LLC, a California limited liability
company, its Managing Member
By: Menlo Equities LLC, a California limited
liability company, its Managing Member
Dated: By:
--------------- ----------------------------------------
, Member
-----------------------------
TENANT:
ACTIVE TOUCH, INC., a California corporation
By:
------------------------------------------------
Title:
---------------------------------------------
Dated: By:
--------------- ------------------------------------------------
Title:
---------------------------------------------
1.