California-San Jose-305 West Tasman Drive Sublease - marchFIRST Inc., WebEx Inc. and Sobrato Development Co. #871
SUBLEASE
THIS SUBLEASE ("Sublease") is dated for references purposes only as of
April 26, 2000, and is made by and between MARCHFIRST, INC.,
successor-in-interest by merger to USWeb Corporation, a Delaware corporation
("Sublessor"), and WEBEX, INC., a California corporation ("Sublessee").
Sublessor and Sublessee hereby agree as follows:
1. Recitals: This Sublease is made with reference to the fact that
Sobrato Development Company #871, a California limited partnership ("Master
Lessor"), as Landlord, and USWeb Corporation, Sublessor's
predecessor-in-interest, as Tenant, entered that certain Lease, dated as of
December 15, 1999 ("Master Lease"), with respect to that certain single-story,
free-standing building containing approximately 66,684 rentable square feet
("Premises" or "Building") located at 305 West Tasman Drive, San Jose,
California, as more particularly described in the Master Lease. A true and
correct copy of the Master Lease is attached hereto as Exhibit "A" and
incorporated by reference herein.
2. Premises: Sublessor hereby subleases to Sublessee, and Sublessee
hereby subleases from Sublessor, the entire Premises ("Subleased Premises"). The
Subleased Premises are more particularly described in the Master Lease.
3. Term:
A. Term. The term ("Term") of this Sublease shall commence on the
date on which Master Lessor's written consent to this Sublease has been obtained
by Sublessor ("Commencement Date"), and shall expire on February 27, 2008
("Expiration Date"), unless this Sublease is sooner terminated pursuant to its
terms or the Master Lease is sooner terminated pursuant to its terms. Once the
Commencement Date has been established, Sublessor and Sublessee shall execute a
commencement date memorandum setting forth the Commencement Date and Rent
Commencement Date (as defined below).
B. No Option to Extend. The parties acknowledge that Sublessee has
no option to extend the Term of this Sublease.
4. Rent:
A. Monthly Base Rent. Commencing on the date that is ninety (90)
days after the Commencement Date ("Rent Commencement Date") and continuing on
the first day of each calendar month thereafter during the Term, Sublessee shall
pay to Sublessor as Monthly Base Rent for the Subleased Premises equal monthly
installments as follows:
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<TABLE>
<CAPTION>
Months Monthly Base Rent
------ -----------------
<S> <C>
Months 01 - 03 Free Rent
Months 04 - 12 $150,039.00
Months 13 - 24 $156,040.56
Months 25 - 36 $162,042.12
Months 37 - 48 $168,710.52
Months 49 - 60 $175,378.92
Months 61 - 72 $182,714.16
Months 73 - 84 $189,382.56
Months 85 - Expiration Date $197,384.64
</TABLE>
As used herein, "month" shall mean a period beginning on the first (1st) day of
a calendar month and ending on the last day of that month. Monthly Base Rent
shall be paid on or before the first (1st) day of each month. Rent (as defined
in Paragraph 4.B. below) for any period during the Term hereof which is for less
than one month of the Sublease Term shall be a prorata portion of the monthly
installment based on the number of days in that month. Rent shall be payable
without notice or demand and without any deduction, offset, or abatement, in
lawful money of the United States of America. Rent shall be paid directly to
Sublessor at MarchFirst, Inc., 2880 Lakeside Drive, Suite 300, Santa Clara,
California 95054 Attn: Real Estate Department, or such address as may be
designated in writing by Sublessor.
B. Additional Rent. In addition to Monthly Base Rent, Sublessee
shall pay to Sublessor all "additional rent" payable by Sublessor to Master
Lessor pursuant to the Master Lease, including, without limitation, taxes
pursuant to Section 10 of the Master Lease, costs for "Landlord's Insurance"
pursuant to Section 9.B. of the Master Lease, and the property management fee
pursuant to Section 19.N. of the Master Lease. In addition, Sublessee shall be
responsible for payment of its own telephone, telecommunications and data
communications charges, and all utility charges payable directly to the provider
of the utility pursuant to Section 11 of the Master Lease. All monies required
to be paid by Sublessee under this Sublease (except for Monthly Base Rent, as
defined in Paragraph 4.A.) shall be deemed additional rent ("Additional Rent").
Monthly Base Rent and Additional Rent hereinafter collectively shall be referred
to as "Rent."
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C. Payment of Fourth Month's Rent. Upon the execution of this
Sublease by Sublessee, Sublessee shall pay to Sublessor the sum of One Hundred
Fifty Thousand Thirty-Nine and No/100 Dollars ($150,039.00), which shall
constitute Monthly Base Rent for the fourth month of the Term.
5. Security:
A. Security; Cash Portion. Upon Sublessee's execution of this
Sublease, Sublessee shall deliver to Sublessor a security deposit ("Security
Deposit") comprised of (i) the sum of One Hundred Ninety-Seven Thousand Three
Hundred Eighty-Four and 64/100 Dollars ($197,384.64), which sum is equal to one
month's Monthly Base Rent payable during the last year of the Term ("Cash
Portion"), and (ii) a letter of credit upon the terms and conditions and in the
amount set forth in Paragraph 5.B. below, as security for the performance by
Sublessee of the terms and conditions of this Sublease. If Sublessee fails to
pay Rent or other charges due hereunder or otherwise defaults with respect to
any provision of this Sublease, then Sublessor may, but shall not be required
to, draw upon, use, apply or retain all or any portion of the Cash Portion for
the payment of any Rent or other charge in default, for the payment of any other
sum which Sublessor has become obligated to pay by reason of Sublessee's
default, or to compensate Sublessor for any loss or damage which Sublessor has
suffered thereby. If Sublessor so uses or applies all or any portion of the Cash
Portion, then Sublessee, within five (5) days after demand therefor, shall
deposit cash with Sublessor in the amount required to restore the Cash Portion
to the full amount stated above. Within sixty (60) days after the expiration or
earlier termination of this Sublease, if Sublessee is not then in default,
Sublessor shall return to Sublessee (without interest) so much of the Cash
Portion as has not been applied by Sublessor pursuant to this Paragraph, or
which is not otherwise required to cure Sublessee's defaults, if any, hereunder.
B. Letter of Credit. The Letter of Credit ("LC") required pursuant
Paragraph 5.A. above shall be an unconditional, irrevocable, transferable,
stand-by letter of credit in the amount of One Million Six Hundred Thousand and
No/100 Dollars ($1,600,000.00), which LC (i) shall be issued by a money-center
bank (a bank which accepts deposits, maintains accounts, has a local Chicago,
Illinois office which will negotiate a letter of credit, and whose deposits are
insured by the FDIC) such that the LC shall be payable to Sublessor on sight at
the Chicago, Illinois office in partial or full draws, (ii) shall be for a term
commencing on the Commencement Date and expiring sixty (60) days after the
Expiration Date, (iii) shall contain an "evergreen" provision which provides
that the LC automatically is renewed on an annual basis unless the issuer
delivers sixty (60) days' prior written notice of cancellation to Sublessor and
Sublessee, and (iv) otherwise shall be in substantially the form and content
attached hereto as Exhibit B attached hereto and incorporated by reference
herein. Sublessee shall pay all expenses, points and/or fees incurred by
Sublessee in obtaining the LC. The LC shall be held by Sublessor as additional
security for the faithful performance by Sublessee of all of the terms,
covenants and conditions of this Sub-Sublease to be kept and performed by
Sublessee. The LC shall not be mortgaged, assigned or encumbered in any manner
whatsoever by Sublessee without Sublessor's prior written consent. If Sublessee
defaults (following
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any notice and applicable cure periods) with respect to any provision of this
Sublease, including, but not limited to, provisions relating to the payment of
Rent, Sublessor may, but shall not be required to, draw down upon all or any
portion of the LC for payment of any Rent or other sum in default, or for the
payment of any amount that Sublessor may reasonably spend or may become
obligated to spend by reason of Sublessee's default. The use, application or
retention of the LC, or any portion thereof, by Sublessor shall not prevent
Sublessor from exercising any other right or remedy provided by this Sublease or
by law, it being intended that Sublessor shall not first be required to proceed
against either the Cash Portion or the LC, and the Cash Portion or the LC shall
not operate as a limitation on any recovery to which Sublessor otherwise may be
entitled. If any portion of the LC is drawn upon, Sublessee, within five (5)
days after written demand therefor, shall either (i) deposit cash with Sublessor
(which cash shall be applied by Sublessor to the Security Deposit) in an amount
sufficient to cause the sum of the additional cash and the LC to be equivalent
to the amount of the Security Deposit required hereunder; or (ii) reinstate the
LC to the amount required under this Sublease. If any portion of the LC
subsequently is used or applied, Sublessee shall, within five (5) days after
written demand therefor, deposit cash with Sublessor (which cash shall be
applied by Sublessor to the Security Deposit) in an amount sufficient to restore
the Security Deposit to the amount required under this Sublease, and Sublessee's
failure to do so shall be a default under this Sublease. Within sixty (60) days
after the expiration of the Term (subject to any earlier termination of this
Sublease), if Sublessee is not then in default and has not been in default
beyond applicable notice and cure periods during the Term, Sublessor shall
return to Sublessee the LC or so much of the LC as has not been applied by
Sublessor pursuant to this Paragraph, or which is not otherwise required to cure
Sublessee's defaults, if any, hereunder. In no event shall Sublessor be required
to return the Cash Portion to Sublessee prior to the expiration or earlier
termination of the Term.
C. Reduction in LC. So long as Sublessee has not been in default,
beyond applicable notice and cure periods, under this Sublease at any time
during the Term, if Sublessee completes an initial public offering ("IPO")
during the Term, and if as a result of the IPO Sublessee's cash position is not
less than Eighty Million and No/100 Dollars ($80,000,000.00), Sublessee shall
have the right to deliver to Sublessor a letter of credit ("Replacement LC") in
an amount equal to four (4) months' Base Rent payable by Sublessee during the
last year of the Term, or Seven Hundred Eighty-Nine Thousand Five Hundred
Thirty-Eight and 56/100 Dollars ($789,538.56) to replace the LC referenced in
Paragraph 5.B. above. The Replacement LC otherwise shall comply with all of the
requirements of Section 5.B. above. Prior to delivering the Replacement LC to
Sublessor, Sublessee shall provide to Sublessor such information as Sublessor
reasonably shall require to satisfy itself that Sublessee has attained the
financial condition required by this Section 5.C. Sublessor shall not be
obligated to return the original LC to Sublessee until Sublessee has delivered
the Replacement LC to Sublessor. Notwithstanding anything to the contrary
contained in this Sublease, if, at any time after Sublessor has accepted the
Replacement LC, Sublessee is in default, beyond applicable notice and cure
periods, under this Sublease, Sublessor shall have the right to require
Sublessee, within twenty (20) days after receipt of Sublessor's demand therefor,
to replace the Replacement LC with a new letter of credit in the amount of the
original LC, and otherwise in accordance with all of the requirements of
Paragraph 5.B. above.
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6. Construction of Sublessee Improvements:
A. Construction. Commencing on the Commencement Date, Sublessee
shall have the right to enter the Subleased Premises for the purpose of
constructing its tenant improvements, as defined in Section 5.B. of the Master
Lease (hereinafter, the improvements to be constructed by Sublessee shall be
referred to as the "Sublessee Improvements"). Such early entry shall be subject
to all of the covenants, terms and conditions of this Sublease except for the
obligation to pay Rent prior to the Rent Commencement Date. Sublessee shall
comply with all of the terms and conditions of the Master Lease, to the extent
incorporated in this Sublease, with respect to construction of the Sublessee
Improvements, including, without limitation, the obligations set forth in
Articles 5 and 6 of the Master Lease. Master Lessor has completed items 2, 3 and
4 of the "Landlord's Work" described on Exhibit B of the Master Lease. With
respect to item 1, since Master Lessor does not yet know what work will
constitute the Sublessee Improvements, Master Lessor has requested that
Sublessee perform the necessary repairs to the electrical, mechanical and
plumbing systems for the Subleased Premises, and Master Lessor will agree to
reimburse Sublessee promptly upon receipt of Sublessee's detailed invoices for
such work. Sublessor shall use good faith efforts to ensure that the Master
Lessor's consent to this Sublease contains the foregoing agreement.
B. Tenant Improvement Cost. Upon Sublessor's and Master Lessor's
written approval of the budget for the Sublessee Improvements ("Sublessee
Improvement Budget") furnished by the Sublessee's General Contractor (as defined
in Article 5 of the Master Lease), Sublessee shall furnish a copy of the
Sublessee Improvement Budget (as defined in Section 5.C. of the Master Lease) to
Sublessor and Master Lessor. Thereafter, Sublessee shall cause the General
Contractor to proceed with the construction of the Sublessee Improvements in
accordance with the terms of Section 5.B. of the Master Lease. Pursuant to
Section 5.C. of the Master Lease, Master Lessor agreed to provide to Sublessor a
work allowance ("Sublessor's Work Allowance") to be utilized by Sublessor for
the construction of its tenant improvements in the Premises, in the amount of
One Million Six Hundred Eighty-Seven Thousand One Hundred and No/100 Dollars
($1,687,100.00). Sublessor, upon receipt of such sums from Master Lessor
pursuant to the provisions of Paragraph 6.B. below, shall make available to
Sublessee a work allowance ("Sublessee's Work Allowance") in the amount of
Twenty-Five and No/100 Dollars ($25.00) per rentable square foot of the
Subleased Premises, or One Million Six Hundred Sixty-Seven Thousand One Hundred
and No/100 ($1,667,100.00), to be used in connection with Sublessee's
construction of the Sublessee Improvements. The remainder of the Sublessor's
Work Allowance, in the amount of Thirty Cents ($0.30) per rentable square foot,
or Twenty Thousand and No/100 Dollars ($20,000.00), shall be paid by Master
Lessor to Sublessor as reimbursement for Sublessor's costs incurred for
architectural and planning fees in connection with the Premises. Sublessee shall
pay all costs associated with the Sublessee Improvements, less the Sublessee's
Work Allowance. The cost of the Sublessee Improvements shall consist of only the
following to the extent actually incurred by Sublessee in connection with the
construction of the Sublessee Improvements: construction costs, all permit fees,
construction taxes or other costs imposed by governmental authorities related to
the Sublessee Improvements, architectural fees (including the supervision of the
design and construction
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of the Sublessee Improvements), engineering fees, builder's risk insurance, any
sales and use taxes, plan check and license fees, alarm and security systems,
all testing and inspection costs for the Sublessee Improvements, and the General
Contractor overhead and general conditions.
C. Payment of the Sublessee's Work Allowance. During the course of
construction of the Sublessee Improvements, Sublessee shall cause the General
Contractor to deliver to Sublessee not more than once each calendar month a
written request for payment ("Progress Invoice") which shall include and be
accompanied by General Contractor's certified statements setting forth the
amount requested, and certifying the percentage of completion of each item for
which reimbursement is requested. Sublessee shall pay directly to the General
Contractor the amount due pursuant to the Progress Invoice within fifteen (15)
days after Sublessee's receipt of the above items, less ten percent (10%)
retention and amounts which Sublessee has disputed in writing. Within one (1)
business days after Sublessee's payment of the Progress Invoice, Sublessee shall
deliver a copy of the Progress Invoice, together with reasonable evidence of
payment to General Contractor of such invoice, to Sublessor's representative by
facsimile, hand delivery or overnight courier service, addressed to Ms. Lois
Blackmer, MarchFirst, Inc., 2880 Lakeside Drive, Suite 300, Santa Clara,
California 95054, telephone (408) 986-6775, facsimile (408) 987-3241. Sublessor
promptly shall deliver the copy of the Progress Invoice to Master Lessor, and
shall use its reasonable good faith efforts to obtain reimbursement from Master
Lessor within five (5) days after receipt of the Progress Invoice from
Sublessor. Within three (3) business days after receipt of reimbursement from
Master Lessor, Sublessor shall forward the amount of Master Lessor's
reimbursement to Sublessee. Master Lessor's reimbursement to Sublessor, and
Sublessor's reimbursement to Sublessee, shall be an amount equal to the product
of (i) the Progress Invoice, and (ii) a fraction, the numerator of which is the
amount of the Sublessee's Work Allowance and the denominator of which is the
Sublessee Improvement Budget, until such time as Master Lessor has expended the
full amount of the Sublessee's Work Allowance.
D. Sublessee's Indemnification. Sublessee acknowledges that Section
5.B. of the Master Lease requires that the Sublessee Improvements be constructed
not later than February 28, 2001. If Sublessee fails to complete construction by
such date, Sublessee shall indemnify, protect, defend with counsel reasonably
acceptable to Sublessor and hold harmless Sublessor from and against any and all
claims, liabilities, judgments, causes of action, damages, costs and expenses
(including reasonable attorneys' and experts' fees), caused by or arising in
connection with such failure to timely complete the Sublessee Improvements,
including, without limitation, any default under or termination of the Master
Lease resulting from Sublessee's failure, or Master Lessor's failure or refusal,
as a result of Sublessee's failure to timely complete the Sublessee
Improvements, to pay all or any portion of the Sublessee's Work Allowance.
7. Repairs: Sublessor shall deliver the Subleased Premises to Sublessee
in its "as-is" condition. Other than as set forth in the preceding sentence,
Sublessor shall have no obligation whatsoever to make or pay the cost of any
alterations, improvements or repairs to the Subleased Premises, including,
without limitation, any improvement or repair required to comply with any law,
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regulation, building code or ordinance (including, without limitation, the
Americans with Disabilities Act of 1990). Sublessee shall look solely to the
Master Lessor for performance of any construction or repairs required to be
performed by Master Lessor under the terms of the Master Lease.
8. Indemnity: In addition to the indemnification set forth in Section
14.C. of the Master Lease and in Paragraph 6.B. of this Sublease, and except to
the extent caused by Sublessor's active negligence or willful misconduct,
Sublessee shall indemnify, protect, defend with counsel reasonably acceptable to
Sublessor and hold harmless Sublessor from and against any and all claims,
liabilities, judgments, causes of action, damages, costs and expenses (including
reasonable attorneys' and experts' fees), caused by or arising in connection
with: (i) a breach of Sublessee's obligations under this Sublease; or (ii) a
breach of Sublessee's obligations under the Master Lease to the extent assumed
by Sublessee pursuant to this Sublease; or (iii) any Hazardous Materials (as
defined in Section 12.A. of the Master Lease) used, stored, released, disposed,
generated or transported by Sublessee, its agents, employees, contractors or
invitees in, on or about the Subleased Premises, the Building, or the soil,
surface or groundwater thereunder.
The foregoing indemnifications shall survive the expiration or earlier
termination of this Sublease.
9. Right to Cure Defaults: If Sublessee fails to pay any sum of money to
Sublessor, or fails to perform any other act on its part to be performed
hereunder, then Sublessor may, but shall not be obligated to, upon two (2) days'
prior written notice to Sublessee, make such payment or perform such act. All
such sums paid, and all costs and expenses of performing any such act, shall be
deemed Additional Rent payable by Sublessee to Sublessor upon demand, together
with interest thereon at the maximum rate permitted by law from the date of the
expenditure until repaid.
10. Assignment and Subletting: Except in accordance with the terms of
Article 17 of the Master Lease, Sublessee may not assign this Sublease, sublet
the Subleased Premises, transfer any interest of Sublessee therein, or permit
any use of the Subleased Premises by another party ("Transfer"), and Sublessee
shall obtain the prior written consent of Sublessor, which shall not be
unreasonably withheld or delayed, and Master Lessor to any proposed Transfer. A
consent to one Transfer shall not be deemed to be a consent to any subsequent
Transfer. Any Transfer without such consent shall be void and shall, at the
option of Sublessor, terminate this Sublease. As a condition of granting its
consent to any Transfer, Sublessor shall require that Sublessee charge the
then-fair market rental value for the Subleased Premises, and that Sublessee pay
to Sublessor, as Additional Rent, one hundred percent (100%) of the amounts
referenced in Section 17.B. of the Master Lease. Sublessor's consent to any
assignment or subletting shall be ineffective unless set forth in writing, and
Sublessee shall not be relieved from any of its obligations under this Sublease
unless the consent expressly so provides.
11. Use: Sublessee may use the Subleased Premises only for the uses
permitted by Article 3 of the Master Lease and for no other purpose. Sublessee,
at its sole cost and expense, shall
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comply with the provisions of Article 8 of the Master Lease relative to the
maintenance of the Subleased Premises. Upon demand, Sublessee shall pay to
Sublessor all taxes or charges imposed by applicable governmental authorities
against the Subleased Premises or Sublessor (including, without limitation,
assessments imposed as a consequence of the occurrence, storage, use or disposal
of Hazardous Materials by Sublessee, its agents, employees, contractors or
invitees in or about the Subleased Premises). Sublessee shall not do or permit
anything to be done in or about the Subleased Premises which would (i) injure
the Subleased Premises, or (ii) vibrate, shake, overload, or impair the
efficient operation of the Subleased Premises or the sprinkler systems, heating
ventilating or air conditioning equipment, or utilities systems located therein.
Sublessee shall not store any materials, supplies, finished or unfinished
products, or articles of any nature outside of the Subleased Premises. Sublessee
shall comply with all reasonable rules and regulations promulgated from time to
time by Master Lessor.
12. Effect of Conveyance: As used in this Sublease, the term "Sublessor"
means the holder of the lessee's interest under the Master Lease. In the event
of any transfer of said lessee's interest, the Sublessor shall be and hereby is
entirely relieved of all covenants and obligations of the Sublessor hereunder,
and it shall be deemed and construed, without further agreement between the
parties, that the transferee has assumed and shall carry out all covenants and
obligations thereafter to be performed by Sublessor hereunder. Sublessor shall
transfer and deliver any Security Deposit of Sublessee to the transferee of said
lessee's interest in the Master Lease, and thereupon the Sublessor shall be
discharged from any further liability with respect thereto.
13. Delivery and Acceptance: If Sublessor is unable to deliver
possession of the Subleased Premises to Sublessee on or before the Commencement
Date for any reason whatsoever, then this Sublease shall not be void or
voidable, nor shall Sublessor be liable to Sublessee for any loss or damage;
provided, however, in such event, the Rent Commencement Date shall be delayed
until the date that is ninety (90) days after the actual Commencement Date, as
defined in Paragraph 3.A. above. Notwithstanding the foregoing to the contrary,
if Sublessor has not delivered possession of the Subleased Premises to Sublessee
by the date that is fifteen (15) days after receipt of Master Lessor's consent
to this Sublease, Sublessee shall have the right to terminate this Sublease, in
which case Sublessor shall return to Sublessee all sums (including the LC) paid
to Sublessor in connection with Sublessee's execution hereof. The foregoing
shall be Sublessee's sole remedy in the event Sublessee terminates this Sublease
pursuant to this Paragraph. By taking possession of the Subleased Premises,
Sublessee shall conclusively be deemed to have accepted the Subleased Premises
in their condition as set forth in Paragraph 7 of this Sublease.
14. Improvements: No alteration or improvements, including, without
limitation, Sublessee's Sublessee Improvements, shall be made to the Subleased
Premises except in accordance with this Paragraph and Articles 5 and 7 of the
Master Lease, and with the prior written consent of both Master Lessor and
Sublessor, with Sublessor's consent not to be unreasonably withheld.
Notwithstanding anything to the contrary contained in Section 5.B. of the Master
Lease, Upon the expiration or earlier termination of this Sublease, Sublessee
shall be responsible for removing any
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alterations or improvements, installed in the Subleased Premises by Sublessee,
unless Master Lessor notifies Sublessee in writing that such alterations or
improvements may remain. Notwithstanding anything to the contrary contained in
Section 5.B. of the Master Lease, with respect to the Sublessee Improvements,
Sublessee shall not be obligated to remove the Sublessee Improvements upon the
expiration or earlier termination of this Sublease unless Master Lessor notifies
Sublessee in writing at the time that Sublessee requests Master Lessor's consent
for the Sublessee Improvements that all or any portion of the Sublessee
Improvements must be removed.
15. Waiver of Subrogation; Release: Sublessor and Sublessee hereby
release each other from any injury to persons, damage to property or loss of any
kind which is caused by or results from any risk insured against under any valid
and collectable property insurance policy carried by either party. Each party
shall cause each such insurance policy obtained by it to provide that the
insurer waives all right of recovery against the other party and its agents and
employees in connection with any damage or injury covered by such policy.
Sublessor shall not be liable to Sublessee, nor shall Sublessee be entitled to
terminate this Sublease or to abate Rent, for any reason, including, without
limitation: (i) failure or interruption of any utility system or service; or
(ii) failure of Master Lessor to maintain the Subleased Premises as may be
required under the Master Lease. Notwithstanding the foregoing to the contrary,
to the extent that Base Monthly Rent or additional rent is abated for Sublessor
with respect to the Subleased Premises pursuant to the terms of the Master
Lease, Sublessee's Rent obligations with respect to the Subleased Premises also
shall be abated. Sublessor and Sublessee are corporations, and the obligations
of Sublessor and Sublessee shall not constitute the personal obligations of the
officers, directors, trustees, partners, joint venturers, members, owners,
stockholders or other principals or representatives of such corporations.
16. Default: Sublessee's performance of each of its obligations under
this Sublease constitutes a condition as well as a covenant, and Sublessee's
right to continue in possession of the Subleased Premises is conditioned upon
such performance. In addition, Sublessee shall be in material default of its
obligations under this Sublease if Sublessee is responsible for the occurrence
of any of the events of default set forth in Article 13 of the Master Lease.
17. Remedies: In the event of any default by Sublessee under this
Sublease (including, without limitation, a default pursuant to Article 13 of the
Master Lease), Sublessor shall have all remedies provided by applicable law,
including, without limitation, all rights pursuant to Article 13 of the Master
Lease. Sublessor may resort to its remedies cumulatively or in the alternative.
18. Surrender: On or before the Expiration Date, Sublessee shall remove
all of its trade fixtures and all alterations and improvements which Master
Lessor requires be removed, and shall surrender the Subleased Premises to
Sublessor in the condition required by Article 6 of the Master Lease, free of
Hazardous Materials stored, used or disposed of by Sublessee. If the Subleased
Premises are not so surrendered, then Sublessee shall be liable to Sublessor for
all costs incurred by Sublessor in returning the Subleased Premises to the
required condition, plus interest thereon at the maximum rate permitted by law.
Sublessee shall indemnify, defend, protect and hold harmless
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Sublessor against any and all claims, liabilities, judgments, causes of action,
damages, costs, and expenses (including attorneys' and experts' fees) resulting
from Sublessee's delay in surrendering the Subleased Premises, including,
without limitation, any claim made by any succeeding tenant founded on or
resulting from such failure to surrender.
19. Brokers: Sublessor and Sublessee each represent to the other that
they have dealt with no real estate brokers, finders, agents or salesmen in
connection with this transaction except for Colliers International, representing
Sublessor and Sublessee in dual agency. Each party agrees to hold the other
party harmless from and against all claims for brokerage commissions, finder's
fees, or other compensation made by any agent, broker, salesman or finder as a
consequence of said party's actions or dealings with such agent, broker,
salesman, or finder. Sublessor shall be responsible for the payment of any
brokerage commission due in connection with this Sublease.
20. Notices: Unless five (5) days' prior written notice is given in the
manner set forth in this Paragraph, the addresses of Sublessor and Sublessee for
all purposes connected with this Sublease shall be the addresses set forth below
their respective signatures. All notices, demands, or communications in
connection with this Sublease shall be considered received when (i) personally
delivered, or (ii) if properly addressed and either sent by nationally
recognized overnight courier or deposited in the mail (registered or certified,
return receipt requested, and postage prepaid), on the date shown on the return
receipt for acceptance or rejection. All notices given to the Master Lessor
under the Master Lease shall be considered received only when delivered in
accordance with the Master Lease to all parties hereto at the addresses set
forth below their signatures at the end of this Sublease and to Master Lessor at
the address set forth in the Master Lease.
21. Severability: If any term of this Sublease is held to be invalid or
unenforceable by any court of competent jurisdiction, then the remainder of this
Sublease shall remain in full force and effect to the fullest extent possible
under the law, and shall not be affected or impaired.
22. Amendment: This Sublease may not be amended except by the written
agreement of all parties hereto.
23. Attorneys' Fees: If either party brings any action or legal
proceeding with respect to this Sublease, the prevailing party shall be entitled
to recover reasonable attorneys' fees, experts' fees, and court costs.
Notwithstanding the foregoing and in addition thereto, Sublessor shall be
entitled to immediate receipt from Sublessee, for each breach hereof, of such
reasonable attorneys' fees as may be incurred in connection with each notice or
demand delivered to Sublessee. Sublessee agrees that such sum constitutes
reimbursement to Sublessor of the reasonable cost of the preparation and
delivery of each notice caused by Sublessee's breach.
24. Other Sublease Terms:
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<PAGE> 11
A. Incorporation By Reference. The terms and conditions of this
Sublease shall include various Sections of the Master Lease, which are
incorporated into this Sublease as if fully set forth, except that: (i) each
reference in such incorporated Sections to "Lease" shall be deemed a reference
to "Sublease"; (ii) each reference to the "Premises" shall be deemed a reference
to the "Subleased Premises"; (iii) each reference to "Landlord" and "Tenant"
shall be deemed a reference to "Sublessor" and "Sublessee", respectively; (iv)
each reference to "Tenant Improvements" shall be deemed a reference to the
"Sublessee Improvements" defined in Paragraph 6 of this Sublease, (v) with
respect to work, services, repairs, restoration, provision of insurance or the
performance of any other obligation of Master Lessor under the Master Lease, the
sole obligation of Sublessor shall be to request the same in writing from Master
Lessor as and when requested to do so by Sublessee, and to use Sublessor's
diligent good faith efforts (without requiring Sublessor to spend more than a
nominal sum) to obtain the Master Lessor's performance; (vi) with respect to any
obligation of Sublessee to be performed under this Sublease, wherever the Master
Lease grants to Sublessor a specified number of days to perform its obligations
under the Lease, Sublessee shall have three (3) fewer days to perform the
obligation, including, without limitation, curing any defaults (provided,
however, that if any cure period provides for three (3) days or less to perform,
Sublessee shall have two (2) business days to perform); and (vii) with respect
to any approval required to be obtained from the "Landlord" under the Master
Lease, such consent must be obtained from both the Master Lessor and the
Sublessor and the approval of Sublessor may be withheld, if the Master Lessor's
consent is not obtained.
The following paragraphs of the Master Lease are hereby incorporated
into this Sublease:
Article 2, except that references to "Landlord" in the last sentence
shall mean only Master Lessor;
Article 3;
Section 4.B.,
Article 5, except that (i) Section 5.C. hereby is deleted except to the
extent of the definition of terms set forth therein; (ii) references to Landlord
in Sections 5.A., 5.B., 5.D., 5.E. and 5.F shall mean only Master Lessor, and
(iii) the last sentence of Section 5.C and Section 5.G. hereby are deleted;
Article 6, except that (i) all but the last two sentences of Section
6.A. hereby are deleted, and (ii) references to "Landlord" in the last two
sentences of Section 6.A. shall mean only Master Lessor;
Article 7, except that references to "Landlord" in Section 7.C. shall
mean only Master Lessor;
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<PAGE> 12
Article 8, except that references to "Landlord" in Section 8.A., the
second and third sentences of Section 8.C. and in Section 8.D. shall mean only
Master Lessor;
Article 9, except that references to "Landlord" in the last sentence of
Section 9.A. and in Section 9.B. shall mean only Master Lessor;
Articles 10 and 11;
Article 12, except that references to "Landlord" in the first two
sentences of Section 12.E. shall mean only Master Lessor;
Article 13;
Article 14, except that the words "except to the extent of their
interest in the Premises" in the first sentence of Section 14.B and the last
sentence of Section 14.B. hereby are deleted;
Articles 15 and 16, except that (i) references to "Landlord" in Article
15 shall mean only Master Lessor, and (ii) Sublessee shall not exercise the
termination right set forth in Sections 15.B. and 16 without the prior written
consent of Sublessor, which shall not be unreasonably withheld or delayed;
Article 17, except that references to "Landlord" in Section 17.G. shall
mean only Master Lessor;
Article 19, except that (i) Sections 19.C., I and M (except with
reference to notices to Master Lessor) hereby are deleted, and (ii) references
to "Landlord" in Section 19.T. shall mean only Master Lessor; and
Exhibits A and B, except that references to "Landlord" on Exhibit B
shall mean only Master Lessor.
B. Assumption of Obligations: This Sublease is and all times shall
be subject and subordinate to the Master Lease and the rights of Master Lessor
thereunder. Sublessor hereby agrees to comply with the obligation to pay the
rent due under the Master Lease. Sublessee hereby expressly assumes and agrees:
(i) to comply with all provisions of the Master Lease with respect to the
Subleased Premises during the Term of this Sublease to the extent incorporated
herein; (ii) to perform all the obligations on the part of the "Tenant" to be
performed under the terms of the Master Lease with respect to the Subleased
Premises during the Term of this Sublease to the extent incorporated herein; and
(iii) to hold Sublessor free and harmless of and from all liability, judgments,
costs, damages, claims, demands, and expenses (including reasonable attorneys'
and experts' fees) arising out of Sublessee's failure to comply with or to
perform Sublessee's obligations hereunder or
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<PAGE> 13
the obligations of the "Tenant" under the Master Lease as incorporated herein,
or to act or omit to act in any manner which will constitute a breach of the
Master Lease.
C. Master Lessor's Default. Promptly after receipt of Sublessee's
written request, Sublessor shall serve notice upon Master Lessor if Master
Lessor fails to perform any of its obligations under the Master Lease, and
Sublessor agrees to use its diligent good faith efforts to cooperate with
Sublessee (without requiring Sublessor to spend more than a nominal sum) to
obtain Master Lessor's performance of its obligations under the Master Lease.
The foregoing shall be Sublessor's sole obligation with respect to a default by
Master Lessor under the Master Lease. If, however, after receipt of written
request from Sublessee, Sublessor shall fail or refuse to take action for the
enforcement of Sublessor's rights against Master Lessor with respect to the
Subleased Premises ("Action"), Sublessee shall have the right to take such
Action in its own name, and for that purpose and only to such extent, all of the
rights of Sublessor as Tenant under the Master Lease hereby are conferred upon
and assigned to Sublessee, and Sublessee hereby is subrogated to such rights to
the extent that the same shall apply to the Subleased Premises. If any such
Action against Master Lessor in Sublessee's name shall be barred by reason of
lack of privity, nonassignability or otherwise, Sublessee may take such Action
in Sublessor's name; provided that Sublessee has obtained the prior written
consent of Sublessor, which consent shall not be unreasonably withheld, and,
provided further, that Sublessee shall indemnify, protect, defend by counsel
reasonably satisfactory to Sublessor and hold Sublessor harmless from and
against any and all liability, loss, claims, demands, suits, penalties or damage
(including, without being limited to, reasonable attorneys' fees and expenses)
which Sublessor may incur or suffer by reason of such Action.
25. Condition Precedent: This Sublease and Sublessor's and Sublessee's
obligations hereunder are conditioned upon obtaining the written consent of the
Master Lessor. If Sublessor fails to obtain the Master Lessor's consent within
fifteen (15) days after the latest of the dates of execution of this Sublease by
Sublessor and Sublessee, then either Sublessor or Sublessee may terminate this
Sublease by giving the other written notice, and Sublessor shall return to
Sublessee all sums paid to Sublessor in connection with Sublessee's execution
hereof. The foregoing shall be Sublessee's sole remedy in the event Sublessee
terminates this Sublease pursuant to this Paragraph.
26. Non-Disturbance Agreement; Change of Address. Sublessor shall use
reasonable efforts to obtain from Master Lessor a recognition agreement in the
form referenced in Section 19.T. of the Master Lease. In addition, Sublessor
shall use good faith diligent efforts to require that Master Lessor's written
consent shall permit Sublessee to request a change in the numerical address of
the Building from those numbers permitted by the U.S. Postal Service.
27. Environmental Reports. Prior to execution of this Sublease by
Sublessee, Sublessor shall have provided to Sublessee copies of all
environmental reports for the Building received from Master Lessor.
28. Holding Over. Sublessee acknowledges that it has no right to hold
over in the
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Subleased Premises after the Expiration Date. In addition to the remedies
provided to Master Lessor pursuant to Section 6.C. of the Master Lease,
Sublessee shall indemnify, protect, defend and hold Sublessor harmless from any
and all damages, liabilities, costs and expenses arising in connection with its
failure to timely surrender the Subleased Premises in the condition required by
this Sublease, including, without limitation, any claim made by any succeeding
tenant or sublessee founded on or resulting from such failure to surrender,
together with reasonable attorneys' fees and costs.
IN WITNESS WHEREOF, the parties have executed this Sublease on the day
and year first above written.
[SIGNATURES APPEAR ON NEXT PAGE]
SUBLESSEE: SUBLESSOR:
WEBEX, INC., MARCHFIRST, INC.,
a California corporation a Delaware corporation
By: /s/ Craig Klosterman By: /s/ Vincent T. Scannell
-------------------------- -------------------------
Printed Printed
Name: Craig Klosterman Name: Vincent T. Scannell
----------------------- ----------------------
Its: Its: Vice President
Real Estate & Office Services
----------------------- -----------------------------
Address: 110 Rose Orchard Way Address: 311 So. Wacker Drive, Ste. 3500
San Jose, CA 95134 Chicago, Illinois 60606
Attn: Director of Real Estate
Telephone: (408) 835-7000 Telephone: (800) 426-7767
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<PAGE> 15
EXHIBIT "A"
MASTER LEASE
[to be attached]
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<PAGE> 16
60151613v1
10600 North De Anza Blvd. 408.446.0700
Suite 200 Facsimile: 408.446.0583
Cupertino, CA 95014-2075 www.sobrato.com
[SOBRATO LOGO OMITTED]
SOBRATO
| DEVELOPMENT COMPANIES
Lease between
Sobrato Development Company #871 and USWeb Corporation
<TABLE>
<CAPTION>
SECTION PAGE #
------- ------
<S> <C>
Parties......................................................................................1
Premises.....................................................................................1
Use..........................................................................................1
Permitted Uses............................................................................1
Uses Prohibited...........................................................................1
Advertisements and Signs..................................................................1
Covenants, Conditions and Restrictions....................................................2
Term and Rental..............................................................................2
Base Monthly Rent.........................................................................2
Late Charges..............................................................................2
Security Deposit..........................................................................3
Construction.................................................................................3
Landlord's Work...........................................................................3
Tenant Improvement Construction...........................................................4
Tenant Improvement Costs..................................................................4
Insurance.................................................................................5
Punch List & Warranty.....................................................................5
Other Work by Tenant......................................................................5
Landlord Delay............................................................................5
Acceptance of Possession and Covenants to Surrender..........................................6
Delivery and Acceptance...................................................................6
Condition Upon Surrender..................................................................6
Failure to Surrender......................................................................7
Alterations and Additions....................................................................7
Tenant's Alterations......................................................................7
Free From Liens...........................................................................8
Compliance With Governmental Regulations..................................................8
Maintenance of Premises......................................................................9
Landlord's Obligations....................................................................9
Tenant's Obligations......................................................................9
Waiver of Liability.......................................................................9
Waiver of Liability.......................................................................9
Hazard Insurance............................................................................10
Tenant's Use.............................................................................10
Landlord's Insurance.....................................................................10
Tenant's Insurance.......................................................................11
</TABLE>
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<TABLE>
<CAPTION>
SECTION PAGE #
------- ------
<S> <C>
Waiver...................................................................................11
Taxes.......................................................................................11
Utilities...................................................................................12
Toxic Waste and Environmental Damage........................................................12
Tenant's Responsibility..................................................................12
Tenant's Indemnity Regarding Hazardous Materials.........................................12
Actual Release by Tenant.................................................................13
Environmental Monitoring.................................................................14
Environmental Monitoring.................................................................14
Tenant's Default............................................................................14
Remedies.................................................................................15
Right to Re-enter........................................................................15
Abandonment..............................................................................15
No Termination...........................................................................16
Non-Waiver...............................................................................16
Performance by Landlord..................................................................16
Habitual Default.........................................................................16
Landlord's Liability........................................................................16
Limitation on Landlord's Liability.......................................................16
Limitation on Tenant's Recourse..........................................................17
Indemnification of Landlord..............................................................17
Destruction of Premises.....................................................................18
Landlord's Obligation to Restore.........................................................18
Limitations on Landlord's Restoration Obligation.........................................18
Condemnation................................................................................18
Assignment or Sublease......................................................................19
Consent by Landlord......................................................................19
Assignment or Subletting Consideration...................................................19
No Release...............................................................................20
Reorganization of Tenant.................................................................20
Permitted Transfers......................................................................20
Effect of Default........................................................................21
Effects of Conveyance....................................................................21
Successors and Assigns...................................................................21
Option to Extend the Lease Term.............................................................21
Grant and Exercise of Option.............................................................21
Determination of Fair Market Rental......................................................22
Resolution of a Disagreement over the Fair Market Rental.................................22
Personal to Tenant.......................................................................23
General Provisions..........................................................................23
Attorney's Fees..........................................................................23
Authority of Parties.....................................................................23
Brokers..................................................................................23
Choice of Law ...........................................................................23
Dispute Resolution.......................................................................23
Entire Agreement.........................................................................25
Entry by Landlord........................................................................25
Estoppel Certificates....................................................................25
</TABLE>
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<PAGE> 18
<TABLE>
<CAPTION>
SECTION PAGE #
------- ------
<S> <C>
Exhibits.................................................................................25
Interest.................................................................................25
Modifications Required by Lender.........................................................26
No Presumption Against Drafter...........................................................26
Notices..................................................................................26
Property Management......................................................................26
Rent.....................................................................................26
Representations..........................................................................26
Rights and Remedies......................................................................26
Severability.............................................................................27
Submission of Lease......................................................................27
Subordination............................................................................27
Survival of Indemnities..................................................................27
Time.....................................................................................27
Waiver of Right to Jury Trial............................................................27
EXHIBIT A - Premises & Building.............................................................30
EXHIBIT B - Landlord's Work.................................................................31
EXHIBIT C - Tenant Improvement Plans and Specifications.....................................32
</TABLE>
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1. PARTIES: THIS LEASE, is entered into on this day _____ of November, 1999,
("Effective Date") between SOBRATO DEVELOPMENT COMPANY #871, a California
Limited Partnership, whose address is 10600 North De Anza Boulevard, Suite 200,
Cupertino, CA 95014 and USWEB CORPORATION, a Delaware Corporation, whose address
is 410 Townsend Street, San Francisco, California 94107 hereinafter called
respectively Landlord and Tenant.
2. PREMISES: Landlord hereby leases to Tenant, and Tenant hires from Landlord
those certain premises with the appurtenances, situated in the City of San Jose,
County of Santa Clara, State of California, commonly known and designated as 305
West Tasman Drive, San Jose California consisting of 66,684 rentable square feet
("Building") as outlined in red on Exhibit "A" and all improvements located
therein including but not limited to buildings, parking areas and structures,
landscaping, loading docks, sidewalks, service areas and other facilities
(together, the "Premises"). Unless expressly provided otherwise, the term
Premises as used herein shall include the Tenant Improvements (defined in
Section 5.B) constructed by Tenant pursuant to Section 5.B. Landlord represents
and warrants that the Premises have appurtenant thereto approximately 248 legal
parking spaces for Tenant's exclusive use at no charge to Tenant.
3. USE:
A. PERMITTED USES: Tenant shall use the Premises only for the following
purposes and shall not change the use of the Premises without the prior written
consent of Landlord: Office, research and development, sales, administration,
marketing, and all other related legal uses. Tenant shall use only the number of
parking spaces allocated to Tenant under this Lease. Landlord makes no
representation or warranty that any specific use of the Premises desired by
Tenant is permitted pursuant to any Laws.
B. USES PROHIBITED: Tenant shall not commit or suffer to be committed on
the Premises any waste, nuisance, or other act or thing which may disturb the
quiet enjoyment of any other tenant in or around the Premises, nor allow any
sale by auction or any other use of the Premises for an unlawful purpose. Tenant
shall not (i) damage or overload the electrical, mechanical or plumbing systems
of the Premises, (ii) attach, hang or suspend anything from the ceiling, walls
or columns of the building or set any load on the floor in excess of the load
limits for which such items are designed, or (iii) generate dust, fumes or waste
products which create a fire or health hazard or damage the Premises, including
without limitation the soils or ground water in or around the Premises. No
materials, supplies, equipment, finished products or semi-finished products, raw
materials or articles of any nature, or any waste materials, refuse, scrap or
debris, shall be stored upon or permitted to remain on any portion of the
Premises outside of the Building without Landlord's prior approval, which
approval may be withheld in its sole discretion.
C. ADVERTISEMENTS AND SIGNS: Tenant will not place or permit to be
placed, in, upon or about the Premises any signs not approved by the city and
other governing authority having jurisdiction. Tenant will not place or permit
to be placed upon the Premises any signs, advertisements or notices without the
written consent of Landlord as to type, size, design, lettering, coloring and
location, which consent will not be unreasonably withheld. Any sign placed on
the Premises shall be removed by Tenant, at its sole cost, by no later than the
Expiration Date or promptly following the earlier termination of the Lease, and
Tenant
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shall repair, at its sole cost, any damage or injury to the Premises caused
thereby, and if not so removed, then Landlord may have same so removed at
Tenant's expense. Notwithstanding the foregoing, Landlord agrees that Tenant
shall be entitled to exclusive Building and monument signage on the Premises,
subject to governmental approval and Landlord's reasonable approval as set forth
above. All signage shall be installed at the expense of Tenant.
D. COVENANTS, CONDITIONS AND RESTRICTIONS: This Lease is subject to the
effect of (i) any covenants, conditions, restrictions, easements, mortgages or
deeds of trust, ground leases, rights of way of record and any other matters or
documents of record; and (ii) any zoning laws of the city, county and state
where the Building is situated (collectively referred to herein as
"Restrictions") and Tenant will conform to and will not violate the terms of any
such Restrictions. Landlord represents and warrants that the Premises are not
encumbered by any existing ground lease.
4. TERM AND RENTAL:
A. BASE MONTHLY RENT: The term ("Lease Term") shall be for ninety six
(96) months, commencing on March 1, 2000 (the "Commencement Date") and ending on
February 28, 2008, ("Expiration Date"). Notwithstanding the Parties agreement
that the Lease Term begins on the Commencement Date, this Lease and all of the
obligations of Landlord and Tenant shall be binding and in full force and effect
from and after the Effective Date except that Tenant shall not be obligated to
pay Base Monthly Rent, additional rent, real property taxes or assessments, any
management fee or any other charges under this Lease until the Commencement
Date. In addition to all other sums payable by Tenant under this Lease, Tenant
shall pay as base monthly rent ("Base Monthly Rent") for the Premises an amount
pursuant to the following schedule:
<TABLE>
<S> <C>
Months 01 - 12: $116,697.00
Months 13 - 24: $121,365.00
Months 25 - 36: $126,219.00
Months 37 - 48: $131,268.00
Months 49 - 60: $136,519.00
Months 61 - 72: $141,980.00
Months 73 - 84: $147,659.00
Months 85 - 96: $153,565.00
</TABLE>
Base Monthly Rent shall be due in advance on or before the first day of each
calendar month during the Lease Term. All sums payable by Tenant under this
Lease shall be paid to Landlord in lawful money of the United States of America,
without offset or deduction and without prior notice or demand, at the address
specified in Section 1 of this Lease or at such place or places as may be
designated in writing by Landlord during the Lease Term. Base Monthly Rent for
any period less than a calendar month shall be a pro rata portion of the monthly
installment. Concurrently with Tenant's execution of this Lease, Tenant shall
pay to Landlord the sum of One Hundred Sixteen Thousand Six Hundred Ninety Seven
and No/100 Dollars ($116,697.00) as prepaid rent for the first month of the
Lease.
B. LATE CHARGES: Tenant hereby acknowledges that late payment by Tenant
to Landlord of Base Monthly Rent and other sums due hereunder will cause
Landlord to incur costs not contemplated by this Lease, the exact amount of
which is extremely difficult to ascertain. Such costs include but are not
limited to: administrative, processing, accounting, and late charges which may
be imposed on Landlord by the terms of any contract, revolving credit, mortgage,
or trust deed covering the Premises. Accordingly, if any installment of Base
Monthly Rent or other sum due from Tenant shall not be received by Landlord or
its designee within five (5) days after the rent is due, Tenant shall pay to
Landlord a late charge equal to five (5%) percent of such overdue amount, which
late charge shall be due and payable within five (5) days after written demand
("Demand"). The foregoing notwithstanding, if Landlord issues more than three
(3) Demands during any 24-month period of the Lease, then Landlord shall no
longer be obligated to issue Demands and a late charge shall be thereafter due
and payable on the same date that the overdue amount was due. The parties agree
that such late charge represents a fair and reasonable estimate of the costs
Landlord will incur by reason of
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<PAGE> 21
late payment by Tenant, excluding interest and attorneys fees and costs. If any
rent or other sum due from Tenant remains delinquent for a period in excess of
thirty (30) days then, in addition to such late charge, Tenant shall pay to
Landlord interest on any rent that is not paid when due at the Agreed Interest
Rate specified in Section 19.J following the date such amount became due until
paid. Acceptance by Landlord of such late charge shall not constitute a waiver
of Tenant's default with respect to such overdue amount nor prevent Landlord
from exercising any of the other rights and remedies granted hereunder. In the
event that a late charge is payable hereunder, whether or not collected, for
three (3) consecutive installments of Base Monthly Rent, then the Base Monthly
Rent shall automatically become due and payable quarterly in advance, rather
than monthly, notwithstanding any provision of this Lease to the contrary.
C. SECURITY DEPOSIT: Concurrently with Tenant's execution of this Lease,
Tenant has deposited with Landlord the sum of One Hundred Sixteen Thousand Six
Hundred Ninety Seven and No/100 Dollars ($116,697.00) ("Security Deposit").
Landlord shall not be deemed a trustee of the Security Deposit, may use the
Security Deposit in business, and shall not be required to segregate it from its
general accounts. Tenant shall not be entitled to interest on the Security
Deposit. If Tenant defaults with respect to any provisions of the Lease,
including but not limited to the provisions relating to payment of Base Monthly
Rent or other charges, and such default continues beyond any applicable cure
period, Landlord may, to the extent reasonably necessary to remedy Tenant's
default, use any or all of the Security Deposit towards payment of the
following: (i) Base Monthly Rent or other charges in default; (ii) any other
amount which Landlord may spend or become obligated to spend by reason of
Tenant's default including, but not limited to Tenant's failure to restore or
clean the Premises following vacation thereof. If any portion of the Security
Deposit is so used or applied, Tenant shall, within ten (10) days after written
demand from Landlord, deposit cash with Landlord in an amount sufficient to
restore the Security Deposit to its full original amount, and shall pay to
Landlord such other sums as necessary to reimburse Landlord for any sums paid by
Landlord. If Tenant shall default more than three (3) times in any twelve (12)
month period, irrespective of whether or not such default is cured, then the
Security Deposit shall, within ten (10) days after demand by Landlord, be
increased by Tenant to an amount equal to three (3) times the Base Monthly Rent.
Tenant may not assign or encumber the Security Deposit without the consent of
Landlord. Any attempt to do so shall be void and shall not be binding on
Landlord. The Security Deposit shall be returned to Tenant within thirty (30)
day after the Expiration Date and surrender of the Premises to Landlord, less
any amount deducted in accordance with this Section, together with Landlord's
written notice itemizing the amounts and purposes for such deduction. In the
event of termination of Landlord's interest in this Lease, Landlord shall
deliver or credit the Security Deposit to Landlord's successor in interest in
the Premises and thereupon be relieved of further responsibility with respect to
the Security Deposit.
5. CONSTRUCTION:
A. LANDLORD'S WORK: Landlord shall cause, at Landlord's expense, the
improvements to the Premises outlined on Exhibit "B" ("Landlord's Work") to be
completed prior to the Commencement Date. The Landlord's Work shall be
constructed in a good and workmanlike manner, using new materials and equipment
of good quality, and in compliance with all Laws. With respect to any
modifications to the Premises which are required in order to comply with the ADA
(as defined below), including without limitation improvements to the parking
lot, the lobby, the bathrooms and the drinking fountains (the "ADA Work"), the
parties agree that any required work shall be performed by the General
Contractor (as defined below) during the construction of the Tenant
Improvements. Landlord shall pay all costs associated with such ADA work, in
addition to the Work Allowance (as defined below), and payment shall be
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made by Landlord as payments become due to the General Contractor as provided
below.
Tenant shall be entitled to complete Landlord's Work and offset the cost
thereof, plus interest at the Interest Rate, against Tenant's obligation for
rent next coming due under this Lease if either of the following occur: (i)
Landlord's Work has not been completed by March 1, 2000; or (ii) Landlord
interferes with General Contractor in the construction of the Tenant
Improvements, and such interference continues for three (3) days after written
notice from Tenant. The completion of Landlord's Work by Tenant as provided in
this Section 5.A. shall be the sole and exclusive remedy of Tenant with respect
to either the failure by Landlord to complete Landlord's Work by March 1, 2000,
or the interference by Landlord in construction of Tenant Improvements. In the
event that Tenant shall be required to complete Landlord's Work, Landlord agrees
to promptly assign to Tenant upon demand all plans and specifications relating
to Landlord's Work in order to effectuate the completion thereof, and to
cooperate with Tenant in connection with the completion of such work. Nothing
herein shall diminish Landlord's obligation to act in good faith to promptly
commence and diligently prosecute the Landlord's Work to completion as herein
agreed.
B. TENANT IMPROVEMENT CONSTRUCTION: Within the first 12 months of the
Lease Term, Tenant shall cause all improvements to the Premises required by
Tenant and not included in Landlord's Work or the ADA Work ("Tenant
Improvements") to be constructed by a general contractor selected by Tenant
("General Contractor"), in accordance with plans and outline specifications to
be attached as Exhibit "C" ("Tenant Improvement Plans and Specifications"). The
Tenant Improvements Plans and Specifications shall be prepared, at Tenant's
expense by an architect selected by Tenant ("Tenant's Architect"). The Tenant
Improvement Plans and Specifications shall be completed for all aspects of the
work with all detail necessary for submittal to the city for issuance of
building permits and for construction and shall include any information required
by the relevant agencies regarding Tenant's use of Hazardous Materials if
applicable. The Tenant Improvements shall consist of all items not included
within the scope of the Landlord's Work. The Tenant Improvement Plans and
Specifications shall provide for a minimum build-out in all areas of the
Premises consisting of: (i) the Building Core, (ii) fire sprinklers, (iii) floor
coverings, (iv) t-bar suspended ceiling (v) distribution of the HVAC system,
(vi) 2' x 4' drop-in florescent lighting, and (vii) any other work required by
the City of San Jose necessary to obtain a Certificate of Occupancy. Tenant
shall not have the right to delay the completion of the foregoing minimum Tenant
Improvement build-out. The Tenant Improvement Plans and Specifications shall be
prepared in sufficient detail to allow the General Contractor to construct the
Tenant Improvements. The Tenant Improvements shall not be removed or altered by
Tenant except as provided in Section 7. During the Lease Term the Tenant
Improvements shall be the property of the Tenant and Tenant shall be entitled to
all tax benefits associated therewith. Upon expiration of the Lease Term or any
earlier termination of the Lease, the Tenant Improvements shall become the
property of Landlord and shall remain upon and be surrendered with the Premises,
and title thereto shall automatically vest in Landlord without any payment
therefore.
C. TENANT IMPROVEMENT COSTS: Upon Tenant's written approval of the
budget for the Tenant Improvements furnished by the General Contractor ("Tenant
Improvement Budget"), Tenant shall furnish a copy of the Tenant Improvement
Budget to Landlord. Thereafter Tenant shall cause the General Contractor to
proceed with the construction of the Tenant Improvements in accordance with the
terms of Section 5.G below. As an inducement to Tenant to enter into this Lease,
Landlord has agreed to provide Tenant a work allowance to be utilized by Tenant
for the construction of Tenant Improvements ("Work Allowance") in the amount of
One Million Six Hundred Eighty Seven Thousand One Hundred and No/100 Dollars
($1,687,100.00). Tenant shall pay all costs associated with the Tenant
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Improvements less the Work Allowance. The Work Allowance and the cost of ADA
Work shall be paid by Landlord to Tenant as payments become due to General
Contractor as provided below. The cost of Tenant Improvements shall consist of
only the following to the extent actually incurred by Tenant in connection with
the construction of Tenant Improvements: construction costs, all permit fees,
construction taxes or other costs imposed by governmental authorities related to
the Tenant Improvements, architectural fees (including supervision of the design
and construction of the Tenant Improvements), engineering fees, builder's risk
insurance, any sales and use taxes, plan check and license fees, alarm and
security systems, all testing and inspection costs for the Tenant Improvements,
and the General Contractor overhead and general conditions. During the course of
construction of Tenant Improvements, Tenant shall cause the General Contractor
to deliver to Tenant not more than once each calendar month a written request
for payment ("Progress Invoice") which shall include and be accompanied by
General Contractor's certified statements setting forth the amount requested,
certifying the percentage of completion of each item for which reimbursement is
requested. Tenant shall pay directly to the General Contractor the amount due
pursuant to the Progress Invoice, within fifteen (15) days after Tenant's
receipt of the above items, less ten percent (10%) retention and amounts which
Tenant has disputed in writing. Within five (5) days following payment by
Tenant, Landlord shall reimburse Tenant an amount equal to the product of (i)
the Progress Invoice, and (ii) a fraction, the numerator of which is the amount
of the Work Allowance and the denominator of which is the Tenant Improvement
Budget, until such time as Landlord has expended the full amount of the Work
Allowance. In the event Landlord fails to fulfill its obligation to disburse the
Work Allowance in accordance with the terms of this Section 5.C., Tenant shall
have the right to offset any unpaid portions of the Work Allowance, plus
interest at the Interest Rate, against Tenant's obligation for rent next coming
due under this Lease.
D. INSURANCE: Tenant shall cause the General Contractor to procure a
"Broad Form" liability insurance policy in the amount of Three Million Dollars
($3,000,000.00). Landlord shall also procure (as a cost reimbursable by the Work
Allowance) builder's risk insurance for the full replacement cost of the
Building Shell and Tenant Improvements while the Building and Tenant
Improvements are under construction, up until the date that the casualty
insurance policy described in Section 9 is in full force and effect.
E. PUNCH LIST & WARRANTY: After the Tenant Improvements are
Substantially Complete, Tenant shall cause the General Contractor to promptly
correct any construction defect or other "punch list" item relating to the
Tenant Improvements which Tenant brings to General Contractor's attention. The
General Contractor shall provide a standard contractor's warranty with respect
to the Tenant Improvements for one (1) year from the Commencement Date. Such
warranty shall exclude routine maintenance, damage caused by Tenant's negligence
or misuse, and acts of God. Landlord agrees to assign to Tenant any warranties
relating to the Landlord's Work (including the ADA Work) and the Building in
general which may have the effect of reducing Tenant's maintenance costs, and
Landlord agrees to cooperate in the enforcement of such warranties at no cost to
Landlord.
F. OTHER WORK BY TENANT: All work not described in Exhibit "B" or
Exhibit "C", such as furniture, telephone equipment, telephone wiring and office
equipment work, shall be furnished and installed by Tenant at Tenant's cost.
Prior to the Commencement Date, Tenant shall be obligated to (i) provide active
phone lines to any elevators, and (ii) contract with a firm to monitor the fire
system.
G. LANDLORD DELAYS: If Landlord fails to allow Tenant access to the
Premises for the purpose of constructing the Tenant Improvements by the
Effective Date, or to substantially complete the Landlord's Work by the
scheduled Commencement Date (except to the extent caused by any Tenant
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delay), or if Landlord interferes with the General Contractor in the
construction of the Tenant Improvements which causes a delay in the construction
and completion thereof (collectively a "Landlord Delay"), the scheduled
Commencement Date shall by delayed by the total number of days of Landlord Delay
less the number of Tenant delay days. If Tenant does not have access to the
Premises by December 15, 1999, Tenant may elect, by written notice to Landlord
within five (5) days thereafter, to terminate the Lease whereupon the rights and
obligation of Tenant shall immediately terminate, and Landlord shall return to
Tenant all prepaid rent and Security Deposit. The delay in the Commencement Date
and/or the termination of the Lease provided in this Section 5.G. shall be the
sole and exclusive remedy of Tenant with respect to Landlord's failure to allow
Tenant access to the Premises by the Effective Date.
6. ACCEPTANCE OF POSSESSION AND COVENANTS TO SURRENDER:
A. DELIVERY AND ACCEPTANCE: On the Effective Date, Landlord shall
deliver and Tenant shall accept possession of the Premises. Landlord shall
retain a right of entry to complete Landlord's Work and Landlord shall not
interfere with construction of the Tenant Improvements. Tenant acknowledges that
it has had an opportunity to conduct, and has conducted, such inspections of the
Premises as it deems necessary to evaluate its condition. Except as otherwise
specifically provided herein, including Landlord's obligation to perform
Landlord's Work, Tenant agrees to accept possession of the Premises in its then
existing condition, subject to all Restrictions and without representation or
warranty by Landlord. Tenant's taking possession of any part of the Premises
shall be deemed to be an acceptance of the Premises, subject to Landlord's
obligation to perform Landlord's Work, such other representations and warranties
expressly set forth herein, and "punch list" type items of which Tenant has
given Landlord written notice within ten (10) days after substantial completion
of the Landlord's Work. At the time Landlord delivers possession of the Premises
to Tenant, Landlord and Tenant shall together execute an acceptance agreement
whereby Tenant accepts possession of the Premises subject to Landlord's
obligation to perform Landlord's Work, such other representations and warranties
expressly set forth herein, and "punch list" type items of which Tenant has
given Landlord written notice within ten (10) days after substantial completion
of the Landlord's Work. Landlord shall have no obligation to deliver possession,
nor shall Tenant be entitled to take occupancy, of the Premises until such
acceptance agreement has been executed, and Tenant's obligation to pay Base
Monthly Rent and Additional Rent shall not be excused or delayed because of
Tenant's failure to execute such acceptance agreement. Notwithstanding anything
to the contrary contained in this Lease, Tenant's acceptance of the Premises or
submission of a "punch list" pursuant hereto shall not be deemed a waiver of
Tenant's right to have defects in the Landlord's Work or any latent defects in
the Building (other than Tenant Improvements) repaired at no cost to Tenant.
Tenant shall give notice to Landlord whenever any such defect becomes reasonably
apparent, and Landlord shall repair such defect as soon as practicable.
B. CONDITION UPON SURRENDER: Tenant further agrees on the Expiration
Date or on the sooner termination of this Lease, to surrender the Premises to
Landlord in good condition and repair, normal wear and tear, acts of God,
casualties, condemnation, Hazardous Materials (other than those stored, used or
disposed of by Tenant in or about the Premises) and Alterations with respect to
which Landlord has not reserved the right to require removal excepted. In this
regard, "normal wear and tear" shall be construed to mean wear and tear caused
to the Premises by the natural aging process which occurs in spite of prudent
application of commercially reasonable standards for maintenance, repair
replacement, and janitorial practices, and does not include items of neglected
or deferred maintenance. In any event, Tenant shall cause the following to be
done prior to the Expiration Date or sooner termination of this Lease: (i) all
interior walls shall be painted or cleaned so that they appear freshly painted,
(ii) all tiled floors shall be cleaned and waxed, (iii)
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all carpets shall be cleaned and shampooed, (iv) all broken, marred, stained or
nonconforming acoustical ceiling tiles shall be replaced, (v) all cabling placed
above the ceiling by Tenant or Tenant's contractors shall be removed, (vi) all
windows shall be washed; (vii) the HVAC system shall be serviced by a reputable
and licensed service firm and left in "good operating condition and repair" as
so certified by such firm, (viii) the plumbing and electrical systems and
lighting shall be placed in good order and repair (including replacement of any
burned out, discolored or broken light bulbs, ballasts, or lenses. On or before
the Expiration Date or sooner termination of this Lease, Tenant shall remove all
its personal property and trade fixtures from the Premises. All property and
fixtures not so removed shall be deemed as abandoned by Tenant. If Landlord
elects in accordance with Section 7, Tenant shall, at Tenant's sole cost and
expense, remove such Alterations as Landlord has required and shall repair and
restore said Premises or such parts thereof by the Expiration Date to the
condition that existed prior to the installation of the Alteration in question.
Such repair and restoration shall include causing the Premises to be brought
into compliance with all applicable building codes and laws in effect at the
time of the removal to the extent such compliance is necessitated by the repair
and restoration work.
C. FAILURE TO SURRENDER: If the Premises are not surrendered at the
Expiration Date or sooner termination of this Lease in the condition required by
this Section 6, Tenant shall be deemed in a holdover tenancy pursuant to this
Section 6.C and Tenant shall indemnify, defend, and hold Landlord harmless
against loss or liability resulting from delay by Tenant in so surrendering the
Premises including, without limitation, any claims made by any succeeding tenant
founded on such delay and costs incurred by Landlord in returning the Premises
to the required condition, plus interest at the Agreed Interest Rate. Any
holding over after the termination or Expiration Date with Landlord's express
written consent, shall be construed as month-to-month tenancy, terminable on
thirty (30) days written notice from either party, and Tenant shall pay as Base
Monthly Rent to Landlord a rate equal to one hundred twenty five percent (125%)
of the Base Monthly Rent due in the month preceding the termination or
Expiration Date, plus all other amounts payable by Tenant under this Lease. Any
holding over shall otherwise be on the terms and conditions herein specified,
except those provisions relating to the Lease Term and any options to extend or
renew, which provisions shall be of no further force and effect following the
expiration of the applicable exercise period. If Tenant remains in possession of
the Premises after the Expiration Date or sooner termination of this Lease
without Landlord's consent, Tenant's continued possession shall be on the basis
of a tenancy at sufferance and Tenant shall pay as rent during the holdover
period an amount equal to one hundred fifty percent (150%) of the Base Monthly
Rent due in the month preceding the termination or Expiration Date, plus all
other amounts payable by Tenant under this Lease. This provision shall survive
the termination or expiration of the Lease.
7. ALTERATIONS AND ADDITIONS:
A. TENANT'S ALTERATIONS: Tenant shall not make, or suffer to be made,
any alteration or addition to the Premises ("Alterations"), or any part thereof,
without obtaining Landlord's prior written consent and delivering to Landlord
the proposed architectural and structural plans for all such Alterations at
least fifteen (15) days prior to the start of construction. If such Alterations
affect the structure of the Building, Tenant additionally agrees to reimburse
Landlord its reasonable out-of-pocket costs incurred in reviewing Tenant's
plans. After obtaining Landlord's consent, Tenant shall not proceed to make such
Alterations until Tenant has: (i) obtained all required governmental approvals
and permits; and (ii) provided Landlord 7 days' notice prior to beginning
construction so Landlord can post a notice of nonresponsibility. Tenant agrees
to provide Landlord (i) written notice of the anticipated and actual start-date
of the work, (ii) complete set of half-size (15" X 21") vellum
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as-built drawings, and (iii) a certificate of occupancy for the work upon
completion of the Alterations. All Alterations shall be constructed in
compliance with all applicable building codes and laws including, without
limitation, the Americans with Disabilities Act of 1990 as amended from time to
time. Upon the Expiration Date, all Alterations, except movable furniture and
trade fixtures, shall become a part of the realty and belong to Landlord.
Landlord shall, by written notice to Tenant at the time Landlord's consent to
any Alterations is requested, or if no consent is required within ten (10) days
after the written request of Tenant, notify Tenant if the Alterations to be
constructed shall be required to be removed by Tenant upon the Expiration Date
or sooner termination of this Lease. In no event shall the Tenant Improvements
be required to be removed. Alterations which are not deemed as trade fixtures
include heating, lighting, electrical systems, air conditioning, walls,
carpeting, or any other installation which has become an integral part of the
Premises. All Alterations shall be maintained, replaced or repaired by Tenant at
its sole cost and expense. Notwithstanding anything to the contrary herein,
Tenant shall be permitted to make nonstructural alterations to the Premises that
do not require a governmental permit or approval and do not exceed $15,000.00
per work of improvement without Landlord's consent but otherwise subject to all
other terms and conditions set forth in this Section 7.
B. FREE FROM LIENS: Tenant shall keep the Premises free from all liens
arising out of work performed, materials furnished, or obligations incurred by
Tenant or claimed to have been performed for Tenant. In the event Tenant fails
to discharge any such lien within ten (10) days after receiving notice of the
filing, Landlord shall be entitled to discharge the lien at Tenant's expense and
all resulting costs incurred by Landlord, including attorney's fees shall be due
from Tenant as additional rent.
C. COMPLIANCE WITH GOVERNMENTAL REGULATIONS: The term Laws or
Governmental Regulations shall include all federal, state, county, city or
governmental agency laws, statutes, ordinances, standards, rules, requirements,
or orders now in force or hereafter enacted, promulgated, or issued. The term
also includes government measures regulating or enforcing public access, traffic
mitigation, occupational, health, or safety standards for employers, employees,
landlords, or tenants. Following completion of the ADA Work, Tenant, at Tenant's
sole expense shall make all repairs, replacements, alterations, or improvements
needed to comply with all Governmental Regulations. The judgment of any court of
competent jurisdiction or the admission of Tenant in any action or proceeding
against Tenant (whether Landlord be a party thereto or not) that Tenant has
violated any such law, regulation or other requirement in its use of the
Premises shall be conclusive of that fact as between Landlord and Tenant. All
costs associated with compliance with this Section 7.C. shall be borne by Tenant
if the requirement for compliance is triggered by: (i) Tenant's specific use or
change of use of the Premises; (ii) Tenant's application for any permit or
governmental approval; or (iii) Tenant's construction or installation of any
Alterations or trade fixtures. If a capital improvement or replacement to the
Premises is required for any other reason, then within ten (10) business days
after Tenant delivers evidence reasonably satisfactory to Landlord
substantiating Tenant's payment of such capital improvement, Landlord shall
reimburse Tenant for the cost of the improvement or replacement less that
portion of the cost equal to the product of such total cost multiplied by a
fraction, the numerator of which is the number of years remaining in the Lease
Term, the denominator of which is the useful life (in years) of the capital
improvement, as reasonably determined by Landlord in accordance with generally
accepted accounting principles. If the capital improvement is made during the
initial Lease Term, Tenant's share shall initially be based on the initial Lease
Term and if Tenant thereafter exercises its renewal option, then upon the
commencement of the Option term, an adjustment shall be made so that during the
Option Term Tenant shall pay its share determined by multiplying the cost of the
capital improvement by a
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fraction, the numerator of which is the sum of the Lease Term remaining at the
time the capital expenditure was made and the Option Term and the denominator of
which is the useful life of the capital improvement.
8. MAINTENANCE OF PREMISES:
A. LANDLORD'S OBLIGATIONS: Landlord at its sole cost and expense, shall
maintain in good condition, order, and repair, and replace as and when
necessary, the foundation, concrete slab, exterior and load bearing walls,
beams, columns, roof structure of the Building, and any latent defects in the
Building (other than Tenant Improvements).
B. TENANT'S OBLIGATIONS: Tenant shall clean, maintain, repair and
replace when necessary the Premises and every part thereof through regular
inspections and servicing, including but not limited to: (i) all plumbing and
sewage facilities, (ii) all heating ventilating and air conditioning facilities
and equipment, (iii) all fixtures, interior walls floors, carpets and ceilings,
(iv) all windows, door entrances, plate glass and glazing systems including
caulking, and skylights, (v) all electrical facilities and equipment, (vi) all
automatic fire extinguisher equipment, (vii) the parking lot and all underground
utility facilities servicing the Premises, (viii) all elevator equipment, (ix)
the roof membrane system, and (x) all waterscape, landscaping and shrubbery. All
wall surfaces and floor tile are to be maintained in an as good a condition as
exists on the substantial completion of the Tenant Improvements free of holes,
gouges, or defacements. With respect to items (ii), (viii) and (ix) above,
Tenant shall provide Landlord a copy of a service contract between Tenant and a
licensed service contractor providing for periodic maintenance of all such
systems or equipment in conformance with the manufacturer's recommendations.
Tenant shall provide Landlord a copy of such preventive maintenance contracts
and paid invoices for the recommended work if requested by Landlord.
C. WAIVER OF LIABILITY: Failure by Landlord to perform any defined
services, or any cessation thereof, when such failure is caused by accident,
breakage, repairs, strikes, lockout or other labor disturbances or labor
disputes of any character or by any other cause beyond Landlord's reasonable
control, similar or dissimilar, shall not render Landlord liable to Tenant in
any respect, including damages to either person or property, nor be construed as
an eviction of Tenant, nor cause an abatement of rent, nor relieve Tenant from
fulfillment of any covenant or agreement hereof. Should any equipment or
machinery utilized in supplying the services listed herein break down or for any
cause cease to function properly, upon receipt of written notice from Tenant of
any deficiency or failure of any services, Landlord shall use reasonable
diligence to repair the same promptly, but Tenant shall have no right to
terminate this Lease and shall have no claim for rebate of rent or damages on
account of any interruptions in service occasioned thereby or resulting
therefrom. If Landlord fails to use reasonable diligence to make repairs for
which it is responsible under this Section 8.C. and imminent injury to persons
or damage to property may result therefrom, Tenant may make such repairs and
Landlord shall pay the reasonable cost thereof within thirty (30) days after
written demand. Tenant waives the provisions of California Civil Code Sections
1941 and 1942 concerning the Landlord's obligation of tenantability and Tenant's
right to make repairs and deduct the cost of such repairs from the rent.
Landlord shall not be liable for a loss of or injury to person or property,
however occurring, through or in connection with or incidental to furnishing, or
its failure to furnish, any of the foregoing, unless due to Landlord's or
Landlord's Agents active negligence or willful misconduct.
D. CAPITAL IMPROVEMENTS: If as a part of Tenant's fulfillment of its
maintenance obligations under this Section 8, a capital improvement or
replacement to the Premises is paid for by Tenant which costs in excess of
Twenty Five Thousand Dollars ($25,000.00), Landlord shall reimburse Tenant for
the cost of the replacement less the sum of (i) Twenty Five Thousand Dollars
($25,000.00) plus (ii) that
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portion of the remaining cost equal to the product of such total cost multiplied
by a fraction, the numerator of which is the number of years remaining in the
Lease Term, the denominator of which is the useful life (in years) of the
replacement, as reasonably determined by Landlord in accordance with generally
accepted accounting principles. If the capital improvement is made during the
initial Lease Term, Tenant's share shall initially be based on the initial Lease
Term and if Tenant thereafter exercises its renewal option, then upon the
commencement of the Option term, an adjustment shall be made so that during the
Option Term Tenant shall reimburse Landlord an amount determined by multiplying
the cost of the capital improvement by a fraction, the numerator of which is the
sum of the Lease Term remaining at the time the capital expenditure was made and
the Option Term and the denominator of which is the useful life of the capital
improvement,
9. HAZARD INSURANCE:
A. TENANT'S USE: Tenant shall not use or permit the Premises, or any
part thereof, to be used for any purpose other than that for which the Premises
are hereby leased; and no use of the Premises shall be made or permitted, nor
acts done, which will cause an increase in premiums (unless Tenant pays for such
insurance premium increase) or a cancellation of any insurance policy covering
the Premises or any part thereof, nor shall Tenant sell or permit to be sold,
kept, or used in or about the Premises, any article prohibited by the standard
form of fire insurance policies. Tenant shall, at its sole cost, comply with all
reasonable requirements of any insurance company or organization necessary for
the maintenance of reasonable fire and public liability insurance covering the
Premises and appurtenances. Notwithstanding anything to the contrary in this
Lease, Tenant shall not be required to construct or to pay the cost of complying
with underwriters requirements requiring construction of improvements in the
Premises which are properly capitalized under generally accepted accounting
principles, unless such compliance is: (i) also required pursuant to Section
7.C. above; and/or (ii) necessitated solely because of Tenant's particular use
of the Premises. If such improvements are required by Section 7.C., the cost
thereof shall be reimbursed by Landlord pursuant to said Section 7.C.
B. LANDLORD'S INSURANCE: Landlord agrees to purchase and keep in force
fire, extended coverage and rental loss (such rental loss covering a 12 month
period) insurance in an amount equal to the replacement cost of the Building
(excluding only the Tenant Improvements and Alterations paid for by Tenant from
sources other than the Work Allowance) as determined by Landlord's insurance
company's appraisers. If commercially available and carried by other owners of
commercial properties in the area, such fire and property damage insurance may
be endorsed to cover loss caused by such additional perils against which
Landlord may reasonably elect to insure, including earthquake and/or flood, and
shall contain reasonable deductibles which, in the case of earthquake and flood
insurance may be up to fifteen percent (15%) of the replacement value of the
property. Additionally Landlord may maintain a policy of commercial general
liability insurance insuring Landlord (and such others designated by Landlord)
against liability for personal injury, bodily injury, death and damage to
property occurring or resulting from an occurrence in, on or about the Premises
or Project in an amount as Landlord determines is reasonably necessary for its
protection. Tenant agrees to pay Landlord as additional rent, within thirty (30)
days after written demand, the full cost of said insurance as evidenced by
insurance billings to Landlord, and in the event of damage covered by
comprehensive general liability insurance, the amount of any deductible under
such policy, not to exceed Twenty Thousand Dollars ($20,000.00) per occurrence
(excluding earthquake and flood insurance) unless the casualty is caused by the
active negligence or willful misconduct of Landlord or Landlord's agents, in
which case Landlord shall be responsible for any deductible. Payment shall be
due to Landlord within ten (10) days after written invoice to Tenant.
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It is understood and agreed that Tenant's obligation under this Section will be
prorated to reflect the Lease Commencement and Expiration Dates.
C. TENANT'S INSURANCE: Tenant agrees, at its sole cost, to insure its
personal property, Tenant Improvements (for which it has paid from sources other
than the Work Allowance), and Alterations for their full replacement value
(without depreciation) and to obtain worker's compensation and public liability
and property damage insurance for occurrences within the Premises with a
combined single limit of not less than Five Million Dollars ($5,000,000.00).
Tenant's liability insurance shall be primary insurance containing a
cross-liability endorsement, and shall provide coverage on an "occurrence"
rather than on a "claims made" basis. Tenant shall name Landlord and Landlord's
lender as an additional insured and shall deliver a copy of the policies and
renewal certificates to Landlord. All such policies shall provide for thirty
(30) days' prior written notice to Landlord of any cancellation, termination, or
reduction in coverage. Notwithstanding the above, Landlord retains the right to
have Tenant provide other forms of insurance which may be reasonably required to
cover future risks and which are customarily insured against by prudent property
owners in the vicinity of the Premises.
D. WAIVER: Landlord and Tenant hereby waive all rights each may have
against the other on account of any loss or damage sustained by Landlord or
Tenant, as the case may be, or to the Premises or its contents, which may arise
from any risk covered by their respective insurance policies (or which would
have been covered had such insurance policies been maintained in accordance with
this Lease) as set forth above. The Parties shall use their reasonable efforts
to obtain from their respective insurance companies a waiver of any right of
subrogation which said insurance company may have against Landlord or Tenant, as
the case may be.
10. TAXES: Tenant shall be liable for and shall pay as additional rental, prior
to delinquency, the following: (i) all taxes and assessments levied against
Tenant's personal property and trade or business fixtures; (ii) all real estate
taxes and assessment installments or other impositions or charges which may be
levied on the Premises or upon the occupancy of the Premises, including any
substitute or additional charges which may be imposed applicable to the Lease
Term; and (iii) real estate tax increases due to an increase in assessed value
resulting from a sale, transfer or other change of ownership of the Premises as
it appears on the City and County tax bills during the Lease Term. Tenant's
obligation under this Section shall be prorated to reflect the Lease
Commencement and Expiration Dates. If, at any time during the Lease Term a tax,
excise on rents, business license tax or any other tax, however described, is
levied or assessed against Landlord as a substitute or addition, in whole or in
part, for taxes assessed or imposed on land or Buildings, Tenant shall pay and
discharge its pro rata share of such tax or excise on rents or other tax before
it becomes delinquent; except that this provision is not intended to cover net
income taxes, inheritance, gift or estate tax imposed upon Landlord. In the
event that a tax is placed, levied, or assessed against Landlord on the Premises
during the Term hereof and the taxing authority takes the position that Tenant
cannot pay and discharge its pro rata share of such tax on behalf of Landlord,
then at Landlord's sole election, Landlord may increase the Base Monthly Rent by
the exact amount of such tax and Tenant shall pay such increase. If by virtue of
any application or proceeding brought by Landlord, there results a reduction in
the assessed value of the Premises during the Lease Term, Tenant agrees to pay
Landlord a fee consistent with the fees charged by a third party appeal firm for
such services. Property Taxes also shall not include any tax or assessment
expense: (i) levied on Landlord's rental income unless such tax or assessment
expense is imposed in lieu of real property taxes; (ii) in excess of the amount
which would be payable if such tax or assessment expense were paid in
installments over the longest possible term; or (iii) imposed on land and
improvements other than the land upon which the Building is situated. Tenant at
its cost shall have the
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right, at any time, to seek a reduction in the assessed valuation of the
Premises or to contest any real property taxes that are to be paid by Tenant.
Landlord shall not be required to join in any such proceeding or contest unless
the provisions of any law require that the proceeding or contest be brought by
or in the name of the owner of the Premises. In such event, Landlord shall join
in the proceeding or contest or permit it to be brought in Landlord's name,
provided that Landlord is not required to bear any cost in connection therewith.
11. UTILITIES: Tenant shall pay directly to the providing utility all water,
gas, electric, telephone, and other utilities supplied to the Premises. Landlord
shall not be liable for loss of or injury to person or property, however
occurring, through or in connection with or incidental to furnishing or the
utility company's failure to furnish utilities to the Premises, and in such
event Tenant shall not be entitled to abatement or reduction of any portion of
Base Monthly Rent or any other amount payable under this Lease.
12. TOXIC WASTE AND ENVIRONMENTAL DAMAGE:
A. TENANT'S RESPONSIBILITY: Without the prior written consent of
Landlord, Tenant or Tenant's agents, employees, contractors and invitees
("Tenant's Agents") shall not bring, use, or generate, create, release, emit, or
dispose from the Premises any chemicals, toxic or hazardous gaseous, liquid or
solid materials or waste, including without limitation, material or substance
having characteristics of ignitabitity, corrosivity, reactivity, or toxicity or
substances or materials which are listed on any of the Environmental Protection
Agency's lists of hazardous wastes or which are identified in Division 22 Title
26 of the California Code of Regulations as the same may be amended from time to
time or any wastes, materials or substances which are or may become regulated by
or under the authority of any applicable local, state or federal laws,
judgments, ordinances, orders, rules, regulations, codes or other governmental
restrictions, guidelines or requirements ("Hazardous Materials") except for
those substances customary in typical office uses for which no consent by
Landlord shall be required. In order to obtain consent, Tenant shall deliver to
Landlord its written proposal describing the toxic material to be brought onto
the Premises, measures to be taken for storage and disposal thereof, safety
measures to be employed to prevent pollution of the air, ground, surface and
ground water. Landlord's approval may be withheld in its reasonable judgment. In
the event Landlord consents to Tenant's use of Hazardous Materials on the
Premises or such consent is not required, Tenant represents and warrants that it
shall comply with all Governmental Regulations applicable to Hazardous Materials
brought, used, or generated, created, released, emitted or disposed of on or
about the Premises by Tenant or Tenant's Agents, including doing the following:
(i) adhere to all reporting and inspection requirements imposed by Federal,
State, County or Municipal laws, ordinances or regulations and will provide
Landlord a copy of any such reports or agency inspections; (ii) obtain and
provide Landlord copies of all necessary permits required for the use and
handling of Hazardous Materials on the Premises; (iii) enforce Hazardous
Materials handling and disposal practices consistent with industry standards;
(iv) surrender the Premises free from any Hazardous Materials arising from
Tenant's bringing, using, generating, creating, releasing, emitting or
disposing, of Hazardous Materials; and (v) properly close the facility with
regard to Hazardous Materials including the removal or decontamination of any
process piping, mechanical ducting, storage tanks, containers, or trenches which
have come into contact with Hazardous Materials and obtain a closure certificate
from the local administering agency prior to the Expiration Date.
B. TENANT'S INDEMNITY REGARDING HAZARDOUS MATERIALS: Tenant shall, at
its sole cost and expense, comply with all laws pertaining to, and shall with
counsel reasonably acceptable to Landlord, indemnify, defend and hold harmless
Landlord and Landlord's trustees, shareholders, directors, officers, employees,
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partners, affiliates, and agents from, any claims, liabilities, costs or
expenses incurred or suffered arising from the bringing, using, permitting,
generating, emitting or disposing of Hazardous Materials by Tenant or Tenant's
Agents through the surface soils of the Premises during the Lease Term or the
violation of any Governmental Regulation or environmental law, by Tenant or
Tenant's Agents. Tenant's indemnification, defense, and hold harmless
obligations for Tenant's release or violation include, without limitation, the
following: (i) claims, liability, costs or expenses resulting from or based upon
administrative, judicial (civil or criminal) or other action, legal or
equitable, brought by any private or public person under common law or under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 as
amended ("CERCLA"), the Resource Conservation and Recovery Act of 1980 ("RCRA")
or any other Federal, State, County or Municipal law, ordinance or regulation
now or hereafter in effect; (ii) claims, liabilities, costs or expenses
pertaining to the identification, monitoring, cleanup, containment, or removal
of Hazardous Materials from soils, riverbeds or aquifers including the provision
of an alternative public drinking water source; (iii) all costs of defending
such claims; (iv) losses attributable to diminution in the value of the Premises
or the Building; (v) loss or restriction of use of rentable space in the
Building; (vi) Adverse effect on the marketing of any space in the Building; and
(vi) all other liabilities, obligations, penalties, fines, claims, actions
(including remedial or enforcement actions of any kind and administrative or
judicial proceedings, orders or judgments), damages (including consequential and
punitive damages), and costs (including attorney, consultant, and expert fees
and expenses) resulting from the release or violation. This Section 12.B shall
survive the expiration or termination o this Lease.
C. ACTUAL RELEASE BY TENANT: Tenant agrees to notify Landlord of any
lawsuits or orders which relate to the remedying of or actual release of
Hazardous Materials on or into the soils or ground water at or under the
Premises. Tenant shall also provide Landlord all notices required by Section
25359.7(b) of the Health and Safety Code and all other notices required by law
to be given to Landlord in connection with Hazardous Materials. Without limiting
the foregoing, Tenant shall also deliver to Landlord, within twenty (20) days
after receipt thereof, any written notices from any governmental agency alleging
a material violation of, or material failure to comply with, any federal, state
or local laws, regulations, ordinances or orders, the violation of which or
failure to comply with poses a foreseeable and material risk of contamination of
the ground water or injury to humans (other than injury solely to Tenant or
Tenant's Agents. In the event of any release on or into the Premises or into the
soil or ground water under the Premises, the Building or the Project of any
Hazardous Materials used, treated, stored or disposed of by Tenant or Tenant's
Agents, Tenant agrees to comply, at its sole cost, with all laws, regulations,
ordinances and orders of any federal, state or local agency relating to the
monitoring or remediation of such Hazardous Materials. In the event of any such
release of Hazardous Materials Tenant shall immediately give verbal and
follow-up written notice of the release to Landlord, and Tenant agrees to meet
and confer with Landlord and its Lender to attempt to eliminate and mitigate any
financial exposure to such Lender and resultant exposure to Landlord under
California Code of Civil Procedure Section 736(b) as a result of such release,
and promptly to take reasonable monitoring, cleanup and remedial steps given,
inter alia, the historical uses to which the Property has and continues to be
used, the risks to public health posed by the release, the then available
technology and the costs of remediation, cleanup and monitoring, consistent with
acceptable customary practices for the type and severity of such contamination
and all applicable laws. Nothing in the preceding sentence shall eliminate,
modify or reduce the obligation of Tenant under 12.B of this Lease to indemnify,
defend and hold Landlord harmless from any claims liabilities, costs or expenses
incurred or suffered by Landlord as described therein. Tenant shall provide
Landlord prompt written notice of Tenant's
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monitoring, cleanup and remedial steps. In the absence of an order of any
federal, state or local governmental or quasi-governmental agency relating to
the cleanup, remediation or other response action required by applicable law,
any dispute arising between Landlord and Tenant concerning Tenant's obligation
to Landlord under this Section 12.C concerning the level, method, and manner of
cleanup, remediation or response action required in connection with such a
release of Hazardous Materials shall be resolved by mediation and/or arbitration
pursuant to this Lease.
D. ENVIRONMENTAL MONITORING: Landlord and its agents shall have the
right to inspect, investigate, sample and monitor the Premises including any
air, soil, water, ground water or other sampling or any other testing, digging,
drilling or analysis to determine whether Tenant is complying with the terms of
this Section 12. If Landlord discovers that Tenant has used, stored, treated or
disposed of any Hazardous Materials on or about the Premises in violation of
applicable Law or this Lease, any such costs incurred by Landlord, including
attorneys' and consultants' fees, shall be due and payable by Tenant to Landlord
within five (5) days following Landlord's written demand therefore.
E. LANDLORD REPRESENTATIONS: Notwithstanding anything to the contrary
contained in this Lease, Landlord hereby represents and warrants to Tenant that,
to the best of Landlord's knowledge: (i) the Premises, the Building and the land
upon which they are located and all operations conducted thereon prior to the
Commencement Date have been and are in compliance with a all laws regarding
Hazardous Materials ("Hazardous Materials Laws"); and (ii) any handling,
transportation, storage, treatment, disposal, release or use of Hazardous
Materials that has occurred on or about the Premises, the Building and the land
prior to the Commencement Date has been in compliance with all Hazardous
Materials Laws. Landlord further represents and warrants that, to the best of
Landlord's knowledge, no litigation has been brought or threatened, nor any
settlements reached with any governmental or private party, concerning the
actual or alleged presence of Hazardous Materials on or about the Premises,
Building or the land, nor has Landlord received any notice of pending
investigations with respect to the presence of Hazardous Materials on or about
the Premises, Building or land. Except to the extent that the Hazardous Material
in question was released, emitted, used, stored, manufactured, transported or
discharged by Tenant or its agents, employees or contractors, Tenant shall not
be responsible for, and hereby is released from, any and all losses, costs
(including reasonable attorneys' fees), expenses, damages, claims, suits,
actions and causes of action with respect to any Hazardous Material present on
or about the Premises, the Building or the surrounding property, or the soil,
groundwater or surface water thereof as of the Lease Commencement Date.
13. TENANT'S DEFAULT: The occurrence of any of the following shall constitute a
material default and breach of this Lease by Tenant: (i) Tenant's failure to pay
the Base Monthly Rent including additional rent or any other payment due under
this Lease within five (5) days after the date such amount is due, (ii) the
abandonment (but not the vacating) of the Premises by Tenant; (iii) Tenant's
failure to observe and perform any other required provision of this Lease, where
such failure continues for thirty (30) days after written notice from Landlord,
provided that if the nature of the default is such that it cannot reasonably be
cured within the 30-day period, Tenant shall not be deemed in default if it
commences within such period to cure, and thereafter diligently prosecutes the
same to completion; (iv) Tenant's making of any general assignment for the
benefit of creditors; (v) the filing by or against Tenant of a petition to have
Tenant adjudged a bankrupt or of a petition for reorganization or arrangement
under any law relating to bankruptcy (unless, in the case of a petition filed
against Tenant, the same is dismissed after the filing); (vi) the appointment of
a trustee or receiver to take possession of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease, where
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possession is not restored to Tenant within sixty (60) days; or (vii) the
attachment, execution or other judicial seizure of substantially all of Tenant's
assets located at the Premises or of Tenant's interest in this Lease, where such
seizure is not discharged within sixty (60) days.
A. REMEDIES: In the event of any such default by Tenant, then in
addition to other remedies available to Landlord at law or in equity, Landlord
shall have the immediate option to terminate this Lease and all rights of Tenant
hereunder by giving written notice of such intention to terminate. In the event
Landlord elects to so terminate this Lease, Landlord may recover from Tenant all
the following: (i) the worth at time of award of any unpaid rent which had been
earned at the time of such termination; (ii) the worth at time of award of the
amount by which the unpaid rent which would have been earned after termination
until the time of award exceeds the amount of such rental toss for the same
period that Tenant proves could have been reasonably avoided; (iii) the worth at
time of award of the amount by which the unpaid rent for the balance of the
Lease Term after the time of award exceeds the amount of such rental loss that
Tenant proves could be reasonably avoided; (iv) any other amount necessary to
compensate Landlord for all detriment proximately caused by Tenant's failure to
perform its obligations under this Lease, or which in the ordinary course of
things would be likely to result therefrom; including the following: (x)
expenses for repairing, altering or remodeling the Premises for purposes of
reletting, (y) broker's fees, advertising costs or other expenses of reletting
the Premises, and (z) costs of carrying the Premises such as taxes, insurance
premiums, utilities and security precautions; and (v) at Landlord's election,
such other amounts in addition to or in lieu of the foregoing as may be
permitted by applicable California law. The term "rent", as used herein, is
defined as the minimum monthly installments of Base Monthly Rent and all other
sums required to be paid by Tenant pursuant to this Lease, all such other sums
being deemed as additional rent due hereunder. As used in (i) and (ii) above,
"worth at the time of award" shall be computed by allowing interest at a rate
equal to the discount rate of the Federal Reserve Bank of San Francisco plus
five (5%) percent per annum. As used in (iii) above, "worth at the time of
award" shall be computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one (1%)
percent.
B. RIGHT TO RE-ENTER: In the event of any such default by Tenant,
Landlord shall have the right, after terminating this Lease, to re-enter the
Premises and remove all persons and property. Such property may be removed and
stored in a public warehouse or elsewhere at the cost of and for the account of
Tenant, and disposed of by Landlord in any manner permitted by law.
C. ABANDONMENT: If Landlord does not elect to terminate this Lease as
provided in Section 13.A or 13.B above, then the provisions of California Civil
Code Section 1951.4, (Landlord may continue the lease in effect after Tenant's
breach and abandonment and recover rent as it becomes due if Tenant has a right
to sublet and assign, subject only to reasonable limitations) as amended from
time to time, shall apply and Landlord may from time to time, without
terminating this Lease, either recover all rental as it becomes due or relet the
Premises or any part thereof for such term or terms and at such rental or
rentals and upon such other terms and conditions as Landlord in its sole
discretion may deem advisable, with the right to make alterations and repairs to
the Premises. In the event that Landlord elects to so relet, rentals received by
Landlord from such reletting shall be applied in the following order to: (i) the
payment of any indebtedness other than Base Monthly Rent due hereunder from
Tenant to Landlord; (ii) the payment of any cost of such reletting; (iii) the
payment of the cost of any alterations and repairs to the Premises; and (iv) the
payment of Base Monthly Rent due and unpaid hereunder. The residual rentals, if
any, shall be held by Landlord and applied in payment of future Base Monthly
Rent as the same may become due and payable hereunder. In the event the portion
of rentals received from such reletting which is applied to the payment of
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rent hereunder during any month be less than the rent payable during that month
by Tenant hereunder, then Tenant shall pay such deficiency to Landlord
immediately upon demand. Such deficiency shall be calculated and paid monthly.
Tenant shall also pay to Landlord, as soon as ascertained, any costs and
expenses incurred by Landlord in such reletting or in making such alterations
and repairs not covered by the rentals received from such reletting.
D. NO TERMINATION: Landlord's re-entry or taking possession of the
Premises pursuant to 13.B or 13.C shall not be construed as an election to
terminate this Lease unless written notice of such intention is given to Tenant
or unless the termination is decreed by a court of competent jurisdiction.
Notwithstanding any reletting without termination by Landlord because of any
default by Tenant, Landlord may at any time after such reletting elect to
terminate this Lease for any such default.
E. NON-WAIVER: Landlord may accept Tenant's payments without waiving any
rights under this Lease, including rights under a previously served notice of
default. No payment by Tenant or receipt by Landlord of a lesser amount than any
installment of rent due shall be deemed as other than payment on account of the
amount due. If Landlord accepts payments after serving a notice of default,
Landlord may nevertheless commence and pursue an action to enforce rights and
remedies under the previously served notice of default without giving Tenant any
further notice or demand. Furthermore, the Landlord's acceptance of rent from
the Tenant when the Tenant is holding over without express written consent does
not convert Tenant's Tenancy from a tenancy at sufferance to a month to month
tenancy. No waiver of any provision of this Lease shall be implied by any
failure of Landlord to enforce any remedy for the violation of that provision,
even if that violation continues or is repeated. Any waiver by Landlord of any
provision of this Lease must be in writing. Such waiver shall affect only the
provision specified and only for the time and in the manner stated in the
writing. No delay or omission in the exercise of any right or remedy by Landlord
shall impair such right or remedy or be construed as a waiver thereof by
Landlord. No act or conduct of Landlord, including, without limitation, the
acceptance of keys to the Premises, shall constitute acceptance of the surrender
of the Premises by Tenant before the Expiration Date. Only written notice from
Landlord to Tenant of acceptance shall constitute such acceptance of surrender
of the Premises. Landlord's consent to or approval of any act by Tenant which
requires Landlord's consent or approvals shall not be deemed to waive or render
unnecessary Landlord's consent to or approval of any subsequent act by Tenant.
F. PERFORMANCE BY LANDLORD: If Tenant fails to perform any obligation
required under this Lease or required by Tenant by law or governmental
regulation, Landlord in its sole discretion may, without notice, without waiving
any rights or remedies and without releasing Tenant from its obligations
hereunder, perform such obligation, in which event Tenant shall pay Landlord as
additional rent all sums paid by Landlord in connection with such substitute
performance, including interest at the Agreed Interest Rate (as defined in
Section 19.J) within ten (10) days of Landlord's written notice for such
payment.
G. HABITUAL DEFAULT: The provisions of Section 13 notwithstanding, the
Parties agree that if Tenant shall have defaulted in the performance of any (but
not necessarily the same) term or condition of this Lease for three or more
times during any twelve (12) month period during the Lease Term, then such
conduct shall, at the election of the Landlord, represent a separate event of
default which cannot be cured by Tenant. Tenant acknowledges that the purpose of
this provision is to prevent repetitive defaults by Tenant, which work a
hardship upon Landlord and deprive Landlord of Tenant's timely performance
Lender this Lease.
14. LANDLORD'S LIABILITY:
A. LIMITATION ON LANDLORD'S LIABILITY: In the event of Landlord's
failure to perform any of its covenants or agreements under
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this Lease, Tenant shall give Landlord written notice of such failure and shall
give Landlord thirty (30) days to cure or commence to cure such failure prior to
any claim for breach or resultant damages, provided, however, that if the nature
of the default is such that it cannot reasonably be cured within the 30-day
period, Landlord shall not be deemed in default if it commences within such
period to cure, and thereafter diligently prosecutes the same to completion. In
addition, upon any such failure by Landlord, Tenant shall give notice by
registered or certified mail to any person or entity with a security interest in
the Premises ("Lender") that has provided Tenant with notice of its interest in
the Premises, and shall provide Lender a reasonable opportunity to cure such
failure, including such time to obtain possession of the Premises by power of
sale or judicial foreclosure, if such should prove necessary to effectuate a
cure, provided that Lender has given Tenant written notice within ten (10) days
after Tenant's delivery of the notice required in the preceding sentence that it
will in fact promptly effect a cure of said default. Tenant agrees that each of
the Lenders to whom this Lease has been assigned is an expressed third-party
beneficiary hereof. Tenant waives any right under California Civil Code Section
1950.7 or any other present or future law to the collection of any payment or
deposit from Lender or any purchaser at a foreclosure sale of Lender's interest
unless Lender or such purchaser shall have actually received and not refunded
the applicable payment or deposit. Tenant Further waives any right to terminate
this Lease and to vacate the Premises on Landlord's default under this Lease.
Tenant's sole remedy on Landlord's default is an action for damages or
injunctive or declaratory relief. The foregoing notwithstanding, Tenant shall be
released from any and all actual losses, costs, expenses, damages, claims,
suits, actions and causes of action with respect to a violation of Law by
Landlord.
B. LIMITATION ON TENANT'S RECOURSE: If Landlord is a corporation, trust,
partnership, joint venture, unincorporated association or other form of business
entity, then (i) the obligations of Landlord shall not constitute personal
obligations of the officers, directors, trustees, partners, joint venturers,
members, owners, stockholders, or other principals or representatives except to
the extent of their interest in the Premises. Tenant shall have recourse only to
the interest of Landlord in the Premises, insurance and condemnation proceeds,
and third party claims relating to the Premises for the satisfaction of the
obligations of Landlord and shall not have recourse to any other assets of
Landlord for the satisfaction of such obligations.
C. INDEMNIFICATION OF LANDLORD: As a material part of the consideration
rendered to Landlord, Tenant hereby waives all claims against Landlord for
damages to goods, wares and merchandise, and all other personal property in,
upon or about said Premises and for injuries to persons in or about said
Premises, from any cause arising at any time to the fullest extent permitted by
law except to the extent caused by the active negligence or willful misconduct
of Landlord or Landlord's agents, and Tenant shall indemnify, defend with
counsel reasonably acceptable to Landlord and hold Landlord, and their
shareholders, directors, officers, trustees, employees, partners, affiliates and
agents from any claims, liabilities, costs or expenses incurred or suffered
arising from the use of occupancy of the Premises or any part of the Project by
Tenant or Tenant's Agents, the acts or omissions of Tenant or Tenant's Agents,
Tenant's breach of this Lease, or any damage or injury to person or property on
or in the Premises during the Term hereof from any cause, except to the extent
caused by the willful misconduct or active negligence of Landlord or from the
failure of Tenant to keep the Premises in good condition and repair as herein
provided, except to the extent due to the gross negligence or willful misconduct
of Landlord. Further, in the event Landlord is made party to any litigation due
to the acts or omission of Tenant and Tenant's Agents, Tenant will indemnify,
defend (with counsel reasonably acceptable to Landlord) and hold Landlord
harmless from any such claim or liability including Landlord's costs and
expenses and reasonable attorney's fees incurred in defending such claims.
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15. DESTRUCTION OF PREMISES:
A. LANDLORD'S OBLIGATION TO RESTORE: In the event of a destruction of
the Premises during the Lease Term Landlord shall repair the same to a similar
condition to that which existed prior to such destruction. Such destruction
shall not annul or void this Lease; however, Tenant shall be entitled to a
proportionate reduction of Base Monthly Rent from the date of destruction until
the repairs are sufficiently complete to allow Tenant to conduct its business
without material interference, such proportionate reduction to be based upon the
extent to which the repairs interfere with Tenant's business in the Premises, as
reasonably determined by Landlord. In no event shall Landlord be required to
replace or restore Alterations, Tenant Improvements paid for by Tenant from
sources other than the Work Allowance or Tenant's fixtures or personal property.
With respect to a destruction which Landlord is obligated to repair or may elect
to repair under the terms of this Section, Tenant waives the provisions of
Section 1932, and Section 1933, Subdivision 4, of the Civil Code of the State of
California, and any other similarly enacted statute, and the provisions of this
Section 15 shall govern in the case of such destruction.
B. LIMITATIONS ON LANDLORD'S RESTORATION OBLIGATION: Notwithstanding the
provisions of Section 15.A, Landlord shall have no obligation to repair, or
restore the Premises if any of the following occur: (i) if the repairs cannot be
made in one hundred eighty (180) days from the date of receipt of all
governmental approvals necessary under the laws and regulations of State,
Federal, County or Municipal authorities, as reasonably determined by Landlord,
(ii) if the holder of the first deed of trust or mortgage encumbering the
Building elects not to permit the insurance proceeds payable upon damage or
destruction to be used for such repair or restoration, (iii) the damage or
destruction is not fully covered by the insurance maintained by Landlord (unless
Tenant, within 45 days after the casualty, agrees in writing to contribute any
shortfall), (iv) the damage or destruction occurs in the last eighteen (18)
months of the Lease Term, (v) Tenant is in default pursuant to the provisions of
Section 13 beyond any applicable cure period, or (vi) Tenant has vacated the
Premises for more than ninety (90) days. In any such event Landlord may elect
either to (i) complete the repair or restoration, or (ii) terminate this Lease
by providing Tenant written notice of its election within sixty (60) days
following the damage or destruction. If the repairs cannot be made within one
hundred eighty (180) days from the date of the damage or destruction, Tenant may
elect to terminate this Lease by providing Landlord written notice of its
election within sixty (60) days following the date of the damage or destruction.
16. CONDEMNATION: If any part of the Premises shall be taken for any public or
quasi-public use, under any statute or by right of eminent domain or private
purchase in lieu thereof, and only a part thereof remains which is susceptible
of occupation hereunder, this Lease shall, as to the part so taken, terminate as
of the day before title vests in the condemnor or purchaser ("Vesting Date") and
Base Monthly Rent payable hereunder shall be adjusted so that Tenant is required
to pay for the remainder of the Lease Term only such portion of Base Monthly
Rent as the value of the part remaining after such taking bears to the value of
the entire Premises prior to such taking. Further, in the event of such partial
taking, Landlord shall have the option to terminate this Lease as of the Vesting
Date. If all of the Premises or such part thereof be taken so that there does
not remain a portion susceptible for occupation hereunder, this Lease shall
terminate on the Vesting Date. If part or all of the Premises be taken, all
compensation awarded upon such taking shall go to Landlord, and Tenant shall
have no claim thereto; except Landlord shall cooperate with Tenant, without cost
to Landlord, to recover compensation for damage to or taking of any Alterations,
Tenant Improvements paid for by Tenant from sources other than the Work
Allowance, or for Tenant's moving costs. Tenant hereby waives the provisions of
California Code of Civil Procedures Section 1265.130 and any other similarly
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enacted statue, and the provisions of this Section 16 shall govern in the case
of a taking.
Notwithstanding anything to the contrary in this Lease, if there is a taking
under the power of eminent domain (or a transfer in lieu thereof), Tenant shall
have the right to terminate the Lease if: (i) there is a taking of more than 25%
of the Building or more than 10% of the parking area; or (ii) there is a
temporary taking of more than 33-1/3% of the Building for one year or more. If
any part of the Premises is taken and this Lease is not terminated, then
Landlord shall, to the extent not prohibited by Law, repair any damage
occasioned thereby to the remainder thereof to a condition reasonably suitable
for Tenant's continued operations.
17. ASSIGNMENT OR SUBLEASE:
A. CONSENT BY LANDLORD: Except as specifically provided in this Section
17.E, Tenant may not assign, sublet, hypothecate, or allow a third party to use
the Premises without the express written consent of Landlord, which consent
shall not be unreasonably withheld. In the event Tenant desires to assign this
Lease or any interest herein or sublet the Premises or any part thereof, Tenant
shall deliver to Landlord (i) executed counterparts of any agreement and of all
ancillary agreements with the proposed assignee/subtenant, (ii) current
financial statements of the transferee covering the preceding three years if
available, (iii) the nature of the proposed transferee's business to be carried
on in the Premises, and (iv) a statement outlining all consideration to be given
on account of the Transfer. Landlord may condition its approval of any Transfer
on receipt of a certification from both Tenant and the proposed transferee
describing all consideration to be paid to Tenant in connection with such
Transfer. At Landlord's request, Tenant shall also provide additional
information reasonably required by Landlord to determine whether it will consent
to the proposed assignment or sublease. Landlord shall have a fifteen (15) day
period following receipt of all the foregoing within which to notify Tenant in
writing that Landlord elects to: (i) permit Tenant to assign or sublet such
space to the named assignee/subtenant on the terms and conditions set forth in
the notice; or (ii) refuse consent. If Landlord should fail to notify Tenant in
writing of such election within the 15-day period, Landlord shall be deemed to
have elected option (i) above. Landlord's written consent to the proposed
assignment or sublease shall not be unreasonably withheld, provided and upon the
condition that: (i) the proposed assignee or subtenant is engaged in a business
that is limited to a use permitted under this Lease and does involve the use of
Hazardous Materials; (ii) the proposed assignee or subtenant is a company with
sufficient financial worth to undertake the financial obligation of this Lease
and Landlord has been furnished with reasonable proof thereof; (iii) the
proposed assignee or sublessee executes Landlord's consent in form reasonably
satisfactory to Landlord as described in Section 17.C. below; and (iv) Tenant
reimburses Landlord on demand for any costs that may be incurred by Landlord in
connection with said assignment or sublease, including the costs of making
investigations as to the acceptability of the proposed assignee or subtenant and
legal costs incurred in connection with the granting of any requested consent,
not to exceed a total $1,000.00. In the event all or any one of the foregoing
conditions are not satisfied, Landlord shall be considered to have acted
reasonably if it withholds its consent.
B. ASSIGNMENT OR SUBLETTING CONSIDERATION: Any rent or other economic
consideration realized by Tenant under any sublease and assignment, in excess of
the Base Monthly Rent, real estate taxes and assessments, and amortized capital
expenses payable under Sections 7.C. and 8.B. payable hereunder and reasonable
subletting and assignment costs including brokers' commissions, shall be divided
and paid fifty percent (50%) to Landlord and fifty percent (50%) to Tenant.
Tenant's obligation to pay over Landlord's portion of the consideration
constitutes an obligation for additional rent hereunder. The above provisions
relating to the allocation of excess rent are independently negotiated terms of
the Lease which constitute a
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material inducement for the Landlord to enter into the Lease, and are agreed by
the Parties to be commercially reasonable. No assignment or subletting by Tenant
shall relieve it of any obligation under this Lease. Any assignment or
subletting which conflicts with the provisions hereof shall be void.
C. NO RELEASE: Any assignment or sublease shall be made only if and
shall not be effective until the assignee or subtenant shall execute,
acknowledge, and deliver to Landlord an agreement, in form and substance
satisfactory to Landlord, whereby the assignee or subtenant shall assume all the
obligations of this Lease on the part of Tenant to be performed or observed and
shall be subject to all the covenants, agreements, terms, provisions and
conditions in this Lease. Notwithstanding any such sublease or assignment and
the acceptance of rent by Landlord from any subtenant or assignee, Tenant and
any guarantor shall remain fully liable for the payment of Base Monthly Rent and
additional rent due, and to become due hereunder, for the performance of all the
covenants, agreements, terms, provisions and conditions contained in this Lease
on the part of Tenant to be performed and for all acts and omissions of any
licensee, subtenant, assignee or any other person claiming under or through any
subtenant or assignee that shall be in violation of any of the terms and
conditions of this Lease, and any such violation shall be deemed a violation by
Tenant. Tenant shall indemnify, defend and hold Landlord harmless from and
against all losses, liabilities, damages, costs and expenses (including
reasonable attorney fees) resulting from any claims that may be made against
Landlord by the proposed assignee or subtenant or by any real estate brokers or
other persons claiming compensation in connection with the proposed assignment
or sublease.
D. REORGANIZATION OF TENANT: The provisions of this Section 17.D shall
apply if Tenant is a corporation and: (i) there is a dissolution, merger,
consolidation, or other reorganization of or affecting Tenant, where Tenant is
not the surviving corporation, or (ii) there is a sale or transfer to one person
or entity (or to any group of related persons or entities) of stock possessing
more than 50% of the total combined voting power of all classes of Tenant's
capital stock issued, outstanding and entitled to vote for the election of
directors, and after such sale or transfer of stock Tenant's stock is no longer
publicly traded. In a transaction under clause (i) the surviving corporation
shall promptly execute and deliver to Landlord an agreement in form reasonably
satisfactory to Landlord under which such surviving corporation assumes the
obligations of Tenant hereunder, and in a transaction under clause (ii) the
transferee or buyer shall promptly execute and deliver to Landlord an agreement
in form reasonably satisfactory to Landlord under which such transferee or buyer
assumes the obligations of Tenant under the Lease.
E. PERMITTED TRANSFERS: Notwithstanding anything contained in this
Section 17, so long as Tenant otherwise complies with the provisions of this
Article, Tenant may enter into any of the following transfers (a "Permitted
Transfer") without Landlord's prior consent, and Landlord shall not be entitled
to receive any part of any subrent resulting therefrom that would otherwise be
due pursuant to Sections 17.A and 17.B. Tenant may sublease all or part of the
Premises or assign its interest in this Lease to (i) a subsidiary, affiliate,
franchisee, division or corporation which controls, is controlled by, or is
under common control with the original Tenant to this Lease by means of an
ownership interest of more than 50%; (ii) a corporation which results from a
merger, consolidation or other reorganization in which Tenant is not the
surviving corporation, so long as the surviving corporation has a net worth
after giving effect to such assignment that is equal to or greater than the net
worth of Tenant immediately prior to such transaction; and (iii) a corporation
which purchases or otherwise acquires all or substantially all of the assets of
Tenant so long as such acquiring corporation has a net worth after giving effect
to such assignment that is equal to or greater than the net worth of Tenant
immediately prior to such transaction.
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F. EFFECT OF DEFAULT: In the event of Tenant's default beyond any
applicable cure period, Tenant hereby assigns all rents due from any assignment
or subletting to Landlord as security for performance of its obligations under
this Lease, and Landlord may collect such rents as Tenant's Attorney-in-Fact,
except that Tenant may collect such rents unless a default occurs as described
in Section 13 above. A termination of the Lease due to Tenant's default shall
not automatically terminate an assignment or sublease then in existence; rather
at Landlord's election, such assignment or sublease shall survive the Lease
termination, the assignee or subtenant shall attorn to Landlord, and Landlord
shall undertake the obligations of Tenant under the sublease or assignment;
except that Landlord shall not be liable for prepaid rent, security deposits
(unless such rent or security deposit is actually delivered to Landlord) or
other defaults of Tenant to the subtenant or assignee, or for any acts or
omissions of Tenant and Tenant's Agents.
G. CONVEYANCE BY LANDLORD: As used in this Lease, the term "Landlord" is
defined only as the owner for the time being of the Premises, so that in the
event of any sale or other conveyance of the Premises or in the event of a
master lease of the Premises, Landlord shall be entirely freed and relieved of
all its covenants and obligations hereunder, and it shall be deemed and
construed, without further agreement between the Parties and the purchaser at
any such sale or the master tenant of the Premises, that the purchaser or master
tenant of the Premises has assumed and agreed to carry out any and all covenants
and obligations of Landlord hereunder. Such transferor shall transfer and
deliver Tenant's security deposit to the purchaser at any such sale or the
master tenant of the Premises, and thereupon the transferor shall be discharged
from any further liability in reference thereto.
F. SUCCESSORS AND ASSIGNS: Subject to the provisions this Section 17,
the covenants and conditions of this Lease shall apply to and bind the heirs,
successors, executors, administrators and assigns of all Parties hereto; and all
Parties hereto comprising Tenant shall be jointly and severally liable
hereunder.
18. OPTION TO EXTEND THE LEASE TERM:
A. GRANT AND EXERCISE OF OPTION: Landlord grants to Tenant, subject to
the terms and conditions set forth in this Section 18.A, two (2) options (the
"Options") to extend the Lease Term for an additional term (the "Option Term").
Each Option Term shall be for a period of sixty (60) months and shall be
exercised, if at all, by written notice to Landlord no earlier than eighteen
(18) months prior to the date the Lease Term would expire but for such exercise
but no later than twelve (12) months prior to the date the Lease Term would
expire but for such exercise, time being of the essence for the giving of such
notice. If Tenant exercises the Option, all of the terms, covenants and
conditions of this Lease except for the grant of additional Options pursuant to
this Section shall constitute the Lease terms during the Option Term, provided
that Base Monthly Rent for the Premises payable by Tenant during the Option Term
shall be the greater of (i) the Base Monthly Rent applicable to the period
immediately prior to the commencement of the Option Term, and (ii) ninety five
percent (95%) of the Fair Market Rental as hereinafter defined. Notwithstanding
anything herein to the contrary, if Tenant is in monetary or material
non-monetary default under any of the terms, covenants or conditions of this
Lease either at the time Tenant exercises the Option or at any time thereafter
prior to the commencement date of the Option Term beyond any applicable cure
period, Landlord shall have, in addition to all of Landlord's other rights and
remedies provided in this Lease, the right to terminate the Option upon notice
to Tenant, in which event the Lease Term shall not be extended pursuant to this
Section 18.A. As used herein, the term "Fair Market Rental" is defined as the
rental and all other monetary payments, including any escalations and
adjustments thereto (including without limitation Consumer Price Indexing) that
Landlord could obtain during the Option Term from a third party
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desiring to lease the Premises, based upon the current use and other potential
uses of the Premises, as determined by the rents then being obtained for new
leases of space comparable in age and quality to the Premises in the same real
estate submarket as the Building. Fair Market Rental shall further take into
account that Tenant is in occupancy and making functional use of the Premises in
its then existing condition and no additional work allowance, tenant
improvements or other rental concessions shall be required of Landlord. The
appraisers shall be instructed that the foregoing five percent (5%) discount is
intended to reduce comparable rents which include (i) brokerage commissions,
(ii) tenant improvement allowances, and (iii) vacancy costs, to account for the
fact that Landlord will not suffer such costs in the event Tenant exercises its
Option.
B. DETERMINATION OF FAIR MARKET RENTAL: If Tenant exercises the Option,
Landlord shall send Tenant a notice setting forth the Fair Market Rental for the
Option Term within thirty (30) days following the Exercise Date. If Tenant
disputes Landlord's determination of Fair Market Rental for the Option Term,
Tenant shall, within thirty (30) days after the date of Landlord's notice
setting forth Fair Market Rental for the Option Term, send to Landlord a notice
stating that Tenant either elects to terminate its exercise of the Option, in
which event the Option shall lapse and this Lease shall terminate on the
Expiration Date, or that Tenant disagrees with Landlord's determination of Fair
Market Rental for the Option Term and elects to resolve the disagreement as
provided in Section 18.C below. If Tenant does not send Landlord a notice as
provided in the previous sentence, Landlord's determination of Fair Market
Rental shall be the Base Monthly Rent payable by Tenant during the Option Term.
If Tenant elects to resolve the disagreement as provided in Section 18.C and
such procedures are not concluded prior to the commencement date of the Option
Term, Tenant shall pay to Landlord as Base Monthly Rent the Fair Market Rental
as determined by Landlord in the manner provided above. If the Fair Market
Rental as finally determined pursuant to Section 18.C is greater than Landlord's
determination, Tenant shall pay Landlord the difference between the amount paid
by Tenant and the Fair Market Rental as so determined in Section 18.C within
thirty (30) days after such determination. If the Fair Market Rental as finally
determined in Section 18.C is less than Landlord's determination, the difference
between the amount paid by Tenant and the Fair Market Rental as so determined in
Section 18.C shall be credited against the next installments of Base Monthly
Rent due from Tenant to Landlord hereunder.
C. RESOLUTION OF A DISAGREEMENT OVER THE FAIR MARKET RENTAL: Any
disagreement regarding Fair Market Rental shall be resolved as follows:
1. Within thirty (30) days after Tenant's response to Landlord's notice
setting forth the Fair Market Rental, Landlord and Tenant shall meet at a
mutually agreeable time and place, in an attempt to resolve the disagreement.
2. If within the 30-day period referred to above, Landlord and Tenant
cannot reach agreement as to Fair Market Rental, each party shall select one
appraiser to determine Fair Market Rental. Each such appraiser shall arrive at a
determination of Fair Market Rental and submit their conclusions to Landlord and
Tenant within thirty (30) days after the expiration of the 30-day consultation
period described above.
3. If only one appraisal is submitted within the requisite time period,
it shall be deemed as Fair Market Rental. If both appraisals are submitted
within such time period and the two appraisals so submitted differ by less than
ten percent (10%), the average of the two shall be deemed as Fair Market Rental.
If the two appraisals differ by more than 10%, the appraisers shall immediately
select a third appraiser who shall, within thirty (30) days after his selection,
make and submit to Landlord and Tenant a determination of Fair Market Rental.
This third appraisal will then be averaged with the closer of the two previous
appraisals and the result shall be Fair Market Rental.
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4. All appraisers specified pursuant to this Section shall be members of
the American Institute of Real Estate Appraisers with not less than ten (10)
years experience appraising office and industrial properties in the Santa Clara
Valley. Each party shall pay the cost of the appraiser selected by such party
and one-half of the cost of the third appraiser.
D. PERSONAL TO TENANT: All Options provided to Tenant in this Lease are
personal and granted to USWeb Corporation (or a permitted transferee as
described in Section 17.E.) and are not exercisable by any third party should
Tenant assign or sublet all or a portion of its rights under this Lease, unless
Landlord consents to permit exercise of any option by any assignee or subtenant,
in Landlord's sole and absolute discretion. In the event Tenant has multiple
options to extend this Lease, a later option to extend the Lease cannot be
exercised unless the prior option has been properly exercised.
19. GENERAL PROVISIONS:
A. ATTORNEY'S FEES: In the event a suit or alternative form of dispute
resolution is brought for the possession of the Premises, for the recovery of
any sum due hereunder, to interpret the Lease, or because of the breach of any
other covenant herein; then the losing party shall pay to the prevailing party
reasonable attorney's fees including the expense of expert witnesses,
depositions and court testimony as part of its costs which shall be deemed to
have accrued on the commencement of such action. The prevailing party shall also
be entitled to recover all costs and expenses including reasonable attorney's
fees incurred in enforcing any judgment or award against the other party. The
foregoing provision relating to post-judgement costs is severable from all other
provisions of this Lease.
B. AUTHORITY OF PARTIES: Tenant represents and warrants that it is duly
formed and in good standing, and is duly authorized to execute and deliver this
Lease on behalf of said corporation, in accordance with a duty adopted
resolution of the Board of Directors of said corporation or in accordance with
the by-laws of said corporation, and that this Lease is binding upon said
corporation in accordance with its terms. At Landlord's request, Tenant shall
provide Landlord with corporate resolutions or other proof in a form reasonably
acceptable to Landlord, authorizing the execution of the Lease.
C. BROKERS: Tenant and Landlord each represent to the other that it has
not utilized or contacted a real estate broker or finder with respect to this
Lease other than Colliers International, which represents Tenant, and Tenant and
Landlord each agree to indemnify, defend and hold each other harmless against
any claim, cost, liability or cause of action asserted by any other broker or
finder claiming through the indemnifying party.
D. CHOICE OF LAW: This Lease shall be governed by and construed in
accordance with California law. Except as provided in Section 19.E, venue shall
be Santa Clara County.
E. DISPUTE RESOLUTION: Landlord and Tenant and any other party that may
become a party to this Lease or be deemed a party to this Lease including any
subtenants agree that, except for any claim by Landlord for unlawful detainer or
any claim within the jurisdiction of the small claims court (which small claims
court shall be the sole court of competent jurisdiction for such claim), any
controversy, dispute, or claim of whatever nature arising out of, in connection
with or in relation to the interpretation, performance or breach of this Lease,
including any claim based on contract, tort, or statute, shall be resolved at
the request of any party to this agreement through a two-step dispute resolution
process administered by J.A.M.S. or another judicial mediation service mutually
acceptable to the parties located in Santa Clara County, California. The dispute
resolution process shall involve first, mediation, followed, if necessary, by
final and binding arbitration administered by and in accordance with the then
existing rules and practices of J.A.M.S. or other judicial mediation service
selected. In the event of
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any dispute subject to this provision, either party may initiate a request for
mediation and the parties shall use reasonable efforts to promptly select a
J.A.M.S. mediator and commence the mediation. In the event the parties are not
able to agree on a mediator within thirty (30) days, J.A.M.S. or another
judicial mediation service mutually acceptable to the parties shall appoint a
mediator. The mediation shall be confidential and in accordance with California
Evidence Code Section 1119 et. seq. The mediation shall be held in Santa Clara
County, California and in accordance with the existing rules and practice of
J.A.M.S. (or other judicial and mediation service selected). The parties shall
use reasonable efforts to conclude the mediation within sixty (60) days of the
date of either party's request for mediation. The mediation shall be held prior
to any arbitration or court action (other than a claim by Landlord for unlawful
detainer or any claim within the jurisdiction of the small claims court which
are not subject to this mediation/arbitration provision and may be filed
directly with a court of competent jurisdiction). Should the prevailing party in
any dispute subject to this Section 19.E attempt an arbitration or a court
action before attempting to mediate, the prevailing party shall not be entitled
to attorney's fees that might otherwise be available to them in a court action
or arbitration and in addition thereto, the party who is determined by the
arbitrator to have resisted mediation, shall be sanctioned by the arbitrator or
judge.
IF A MEDIATION IS CONDUCTED BUT IS UNSUCCESSFUL, IT SHALL BE FOLLOWED BY FINAL
AND BINDING ARBITRATION ADMINISTERED BY AND IN ACCORDANCE WITH THE THEN EXISTING
RULES AND PRACTICES OF J.A.M.S. OR THE OTHER JUDICIAL AND MEDIATION SERVICE
SELECTED, AND JUDGMENT UPON ANY AWARD RENDERED BY THE ARBITRATOR(S) MAY BE
ENTERED BY ANY STATE OR FEDERAL COURT HAVING JURISDICTION THEREOF AS PROVIDED BY
CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1280 ET. SEQ, AS SAID STATUTES THEN
APPEAR, INCLUDING ANY AMENDMENTS TO SAID STATUTES OR SUCCESSORS TO SAID STATUTES
OR AMENDED STATUTES, EXCEPT THAT THE ARBITRATOR SHALL PERMIT REASONABLE
DISCOVERY SUCH AS DOCUMENT PRODUCTION BUT IN NO EVENT SHALL THE PARTIES BE
ENTITLED TO PROPOUND INTERROGATORIES OR REQUEST FOR ADMISSIONS DURING THE
ARBITRATION PROCESS. THE ARBITRATOR SHALL BE A RETIRED JUDGE OR A LICENSED
CALIFORNIA ATTORNEY. THE VENUE FOR ANY SUCH ARBITRATION OR MEDIATION SHALL BE IN
SANTA CLARA COUNTY, CALIFORNIA.
NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE
ARISING OUT OF THE MATTERS INCLUDED IN THE "MEDIATION AND ARBITRATION OF
DISPUTES" PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW
AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED
IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP
YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE
SPECIFICALLY INCLUDED IN THE "MEDIATION AND ARBITRATION OF DISPUTES" PROVISION.
IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY
BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL
PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.
WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING
OUT OF THE MATTERS INCLUDED IN THE "MEDIATION AND ARBITRATION OF DISPUTES"
PROVISION TO NEUTRAL ARBITRATION.
LANDLORD: JMG TENANT: JS
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F. ENTIRE AGREEMENT: This Lease and the exhibits attached hereto
contains all of the agreements and conditions made between the Parties hereto
and may not be modified orally or in any other manner other than by written
agreement signed by all parties hereto or their respective successors in
interest. This Lease supersedes and revokes all previous negotiations, letters
of intent, lease proposals, brochures, agreements, representations, promises,
warranties, and understandings, whether oral or in writing, between the parties
or their respective representatives or any other person purporting to represent
Landlord or Tenant.
G. ENTRY BY LANDLORD: Upon prior notice to Tenant and subject to
Tenant's reasonable security regulations, Tenant shall permit Landlord and his
agents to enter into and upon the Premises at all reasonable times upon 24
hours' prior notice (except in case of emergency), and without any rent
abatement or reduction or any liability to Tenant for any loss of occupation or
quiet enjoyment of the Premises thereby occasioned, for the following purposes:
(i) inspecting and maintaining the Premises; (ii) making repairs, alterations or
additions to the Premises; (iii) erecting additional building(s) and
improvements on the land where the Premises are situated or on adjacent land
owned by Landlord; (iv) performing any obligations of Landlord under the Lease
including remediation of Hazardous Materials if determined to be the
responsibility of Landlord, (v) posting and keeping posted thereon notices of
non-responsibility for any construction, alteration or repair thereof, as
required or permitted by any law, and (vi) showing the Premises to Landlord's or
the Master Landlord's existing or potential successors, purchaser, and lenders.
Tenant shall permit Landlord and his agents, at any time within two hundred ten
(210) days prior to the Expiration Date (or at any time during the Lease if
Tenant is in default hereunder beyond any applicable cure period), to place upon
the Premises "For Lease" signs and exhibit the Premises to real estate brokers
and prospective tenants at reasonable hours. Landlord shall use reasonable
efforts not to interfere with Tenant's business operations in the Premises
during such entry. Tenant shall have the right to require that a representative
of Tenant accompany Landlord and its visitors in areas of the Premises which
Tenant deems to be secure (including Tenant's server room and rooms with vaults
or safes).
H. ESTOPPEL CERTIFICATES: At any time during the Lease Term, Tenant
shall, within ten (10) business days following written notice from Landlord,
execute and deliver to Landlord a written statement certifying, if true, the
following: (i) that this Lease is unmodified and in full force and effect (or,
if modified, stating the nature of such modification); (ii) the date to which
rent and other charges are paid in advance, if any; (iii) acknowledging that
there are not, to Tenant's knowledge, any uncured defaults on Landlord's part
hereunder (or specifying such defaults if they are claimed); and (iv) such other
information as Landlord may reasonably request. Any such statement may be
conclusively relied upon by any prospective purchaser or encumbrancer of
Landlord's interest in the Premises. Tenant's failure to deliver such statement
within such time shall be conclusive upon the Tenant that this Lease is in full
force and effect without modification, except as may be represented by Landlord,
and that there are no uncured defaults in Landlord's performance. Tenant agrees
to provide, within five (5) days of Landlord's request, Tenant's most recent
three (3) years of audited financial statements for Landlord's use in financing
or sale of the Premises or Landlord's interest therein, if the then Tenant is
not a publicly traded company.
I. EXHIBITS: All exhibits referred to are attached to this Lease and
incorporated by reference.
J. INTEREST: All rent due hereunder, if not paid when due, shall bear
interest at the rate of the Reference Rate published by Bank of America, San
Francisco Branch, plus two percent (2%) per annum from that date until paid in
full ("Agreed Interest Rate"). This provision shall survive the expiration or
sooner termination of the Lease. Despite any other provision of this Lease, the
total liability for interest payments shall not
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exceed the limits, if any, imposed by the usury laws of the State of California.
Any interest paid in excess of those limits shall be refunded to Tenant by
application of the amount of excess interest paid against any sums outstanding
in any order that Landlord requires. If the amount of excess interest paid
exceeds the sums outstanding, the portion exceeding those sums shall be refunded
in cash to Tenant by Landlord. To ascertain whether any interest payable exceeds
the limits imposed, any nonprincipal payment (including late charges) shall be
considered to the extent permitted by law to be an expense or a fee, premium, or
penalty rather than interest.
K. MODIFICATIONS REQUIRED BY LENDER: If any lender of Landlord or ground
lessor of the Premises requires a modification of this Lease that will not
increase Tenant's cost or expense or materially or adversely change Tenant's
rights and obligations, this Lease shall be so modified and Tenant shall execute
whatever documents are required and deliver them to Landlord within ten (10)
days after the request.
L. NO PRESUMPTION AGAINST DRAFTER: Landlord and Tenant understand, agree
and acknowledge that this Lease has been freely negotiated by both Parties; and
that in any controversy, dispute, or contest over the meaning, interpretation,
validity, or enforceability of this Lease or any of its terms or conditions,
there shall be no inference, presumption, or conclusion drawn whatsoever against
either party by virtue of that party having drafted this Lease or any portion
thereof.
M. NOTICES: All notices, demands, requests, or consents required to be
given under this Lease shall be sent in writing by local or overnight courier
service or by U.S. certified mail, return receipt requested, or by personal
delivery addressed to the party to be notified at the address for such party
specified in Section 1 of this Lease, or to such other place as the party to be
notified may from time to time designate by at least fifteen (15) days prior
notice to the notifying party. Notices by courier service shall be deemed
effective on the date of delivery to the specified address. Noticed by the
United States Postal System shall be deemed effective on the date of delivery or
attempted delivery. When this Lease requires service of a notice, that notice
shall replace rather than supplement any equivalent or similar statutory notice,
including any notices required by Code of Civil Procedure Section 1161 or any
similar or successor statute. When a statute requires service of a notice in a
particular manner, service of that notice (or a similar notice required by this
Lease) shall replace and satisfy the statutory service-of-notice procedures,
including those required by Code of Civil Procedure Section 1162 or any similar
or successor statute. If any notice is due on Saturday, Sunday or a legal
holiday, such notice shall be deemed due on the next business day.
N. PROPERTY MANAGEMENT: In addition, Tenant agrees to pay Landlord along
with the expenses to be reimbursed by Tenant a monthly fee for management
services rendered by either Landlord or a third party manager engaged by
Landlord (which may be a party affiliated with Landlord), in the amount of three
percent (3%) of the Base Monthly Rent.
O. RENT: All monetary sums due from Tenant to Landlord under this Lease,
including, without limitation those referred to as "additional rent", shall be
deemed as rent.
P. REPRESENTATIONS: Tenant acknowledges that neither Landlord nor any of
its employees or agents have made any agreements, representations, warranties or
promises with respect to the Premises or with respect to present or future
rents, expenses, operations, tenancies or any other matter except as expressly
set forth herein. Except as expressly set forth herein, Tenant relied on no
statement of Landlord or its employees or agents for that purpose.
Q. RIGHTS AND REMEDIES: Subject to Section 14 above, All rights and
remedies hereunder are cumulative and not alternative to the extent permitted by
law, and are in addition to all other rights and remedies in law and in equity.
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R. SEVERABILITY: If any term or provision of this Lease is held
unenforceable or invalid by a court of competent jurisdiction, the remainder of
the Lease shall not be invalidated thereby but shall be enforceable in
accordance with its terms, omitting the invalid or unenforceable term.
S. SUBMISSION OF LEASE: Submission of this document for examination or
signature by the parties does not constitute an option or offer to lease the
Premises on the terms in this document or a reservation of the Premises in favor
of Tenant. This document is not effective as a lease or otherwise until executed
and delivered by both Landlord and Tenant.
T. SUBORDINATION: This Lease is subject and subordinate to ground and
underlying leases, mortgages and deeds of trust (collectively "Encumbrances")
which may now affect the Premises, to any covenants, conditions or restrictions
of record, and to all renewals, modifications, consolidations, replacements and
extensions thereof; provided, however, if the holder or holders of any such
Encumbrance ("Holder") require that this Lease be prior and superior thereto,
within ten (10) business days after written request of Landlord to Tenant,
Tenant shall execute, have acknowledged and deliver all documents or
instruments, in the form presented to Tenant, which Landlord or Holder deems
necessary or desirable for such purposes. Landlord shall have the right to cause
this Lease to be and become and remain subject and subordinate to any and all
Encumbrances which are now or may hereafter be executed covering the Premises or
any renewals, modifications, consolidations, replacements or extensions thereof,
for the full amount of all advances made or to be made thereunder and without
regard to the time or character of such advances, together with interest thereon
and subject to all the terms and provisions thereof; provided only, that in the
event of termination of any such lease or upon the foreclosure of any such
mortgage or deed of trust, Holder agrees to recognize Tenant's rights under this
Lease as long as Tenant is not then in default beyond any applicable cure period
and continues to pay Base Monthly Rent and additional rent and observes and
performs all required provisions of this Lease. Within ten (10) days after
Landlord's written request, Tenant shall execute any documents required by
Landlord or the Holder to make this Lease subordinate to any lien of the
Encumbrance. If Tenant fails to do so, then in addition to such failure
constituting a default by Tenant, it shall be deemed that this Lease is so
subordinated to such Encumbrance. Notwithstanding anything to the contrary in
this Section, Tenant hereby attorns and agrees to attorn to any entity
purchasing or otherwise acquiring the Premises at any sale or other proceeding
or pursuant to the exercise of any other rights, powers or remedies under such
encumbrance.
Landlord shall cause the existing lender to furnish to Tenant, within forty-five
(45) days of the date of both parties' execution of this Lease, with a written
agreement providing for (i) recognition by the lender of all of the terms and
conditions of this Lease; and (ii) continuation of this Lease upon foreclosure
of existing lender's security interest in the Premises. In the event that
Landlord is unable to provide such agreement, Tenant's sole remedy shall be
termination of the Lease, which election shall be made within fourteen (14) days
following the expiration of such forty-five (45) day period.
U. SURVIVAL OF INDEMNITIES: All indemnification, defense, and hold
harmless obligations of Landlord and Tenant under this Lease shall survive the
expiration or sooner termination of the Lease.
V. TIME: Time is of the essence hereunder.
W. WAIVER OF RIGHT TO JURY TRIAL: Landlord and Tenant waive their
respective rights to trial by jury of any contract or tort claim, counterclaim,
cross-complaint, or cause of action in any action, proceeding, or hearing
brought by either party against the other on any matter arising out of or in any
way connected with this Lease, the relationship of Landlord and Tenant, or
Tenant's use or occupancy of the Premises, including any claim of injury or
damage or
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the enforcement of any remedy under any current or future law, statute,
regulation, code, or ordinance.
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease on the day and
year first above written.
Landlord: SOBRATO DEVELOPMENT CO. Tenant: USWEB CORPORATION
#871 a California Limited a Delaware Corporation
Partnership
By: /s/ [Illegible] By: /s/ Carolyn U. Aren
------------------------------- -------------------------------
Its: General Partner Its: EVP
------------------------------- -------------------------------
By: /s/ Frank Slattery
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Its: Asst. Secretary
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NOTE: This lease must be signed by two (2) officers of such corporation: one
being the chairman of the board, the president, or a vice president, and the
other being the secretary, an assistant secretary, the chief financial officer
or an assistant treasurer. If one (1) individual is signing in two (2) of the
foregoing capacities, that individual must sign twice; once as one officer and
again as the other officer and in such event, Tenant must deliver to Landlord a
certified copy of a corporate resolution authorizing the signatory to execute
this Lease.
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EXHIBIT "A" - Premises & Building
[GRAPHIC OMITTED]
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EXHIBIT "B" - Landlord's Work
Landlord's Work shall consist of the following scope:
1. All electrical, mechanical, plumbing systems (excluding those
systems which Tenant elects not to utilize) and the roof membrane
shall be in good condition and repair.
2. The depressed floor slab shall be filled with sand and topped
with concrete to provide that the entire building slab is at the
same elevation.
3. Punch windows shall be added along the north and east side of the
building and the existing mechanical pad removed pursuant to the
elevation plan prepared by Arctec dated October 25, 1999, a copy
of which is attached hereto.
4. Any modifications required by the Americans with Disabilities Act
to make the improvements existing as of the Effective Date
conform with the ADA shall be completed as per the Lease.
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EXHIBIT "C" - Tenant Improvement Plans and Specifications
(sheet references to be attached)
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FORM OF LETTER OF CREDIT
[Lending Institution Name]
[Address of Lending Institution] Date: __________, 2000
IRREVOCABLE STANDBY LETTER OF CREDIT NO. ____________
Account Party [Account Party's Name]
[Account Party Address]
In favor of: Beneficiary
[Beneficiary Name], its successors and assigns
[Beneficiary Address]
AMOUNT EXPIRY DATE:
USD _____________ [Expiry Date]
[Dollar Amount] U.S. Dollars Only
Gentlemen:
We hereby establish our irrevocable letter of credit in favor of [Beneficiary
Name] in the amount of USD [Numeric Dollar Amount] ([Alphabetic Dollar Amount]
U.S. Dollars Only), effective immediately. Funds under this Letter of Credit are
available to you by your draft at sight drawn on the [Lending Institution Name,
Lending Institution Address], bearing the clause "Drawn under [Lending
Institution Name] Letter of Credit No. _______ dated ________, 199__," and
accompanied by the following document:
Beneficiary's signed statement stating that: "The undersigned
Beneficiary is entitled to draw upon this Letter of Credit pursuant to
the terms of that Sublease dated [Lease Date] for premises at [Premises
Address] between [tenant's name] and [Sublessor's name], as such Lease
may have been modified or amended to date. The undersigned Beneficiary
hereby makes demand for the payment of [dollar amount requested] of the
Letter of Credit."
Such statement shall be conclusive as to such matters and we will accept such
statement as binding and correct without having to investigate or having to be
responsible for the accuracy, truthfulness or validity thereof or any part
thereof and notwithstanding the claim of any person to the contrary.
This Letter of Credit is transferable by Beneficiary. This Letter of Credit sets
forth in full the terms of our undertaking and such undertaking shall not in any
way be modified, amended, or amplified by reference to any document(s),
instrument(s), contract(s), or agreement(s) referred to herein or in which this
Letter of Credit relates, and any such reference shall not be deemed to
incorporate herein by
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<PAGE> 52
reference any document(s), instrument(s), contract(s), or agreement(s). Partial
draws under this Letter of Credit shall be permitted.
It is a condition of this Letter of Credit that it shall be deemed automatically
extended without amendment for one year from the present or any future
expiration date of this Letter of Credit unless at least sixty (60) days prior
to the then current expiration date we notify the Beneficiary by registered
letter that we elect not to consider this Letter of Credit renewed for such
additional period. If such notice is given, then during such notice period
(i.e., the at least sixty (60) day period commencing on the date of such notice
and ending with the then applicable expiration date of this Letter of Credit),
this Letter of Credit shall remain in full force and effect and Beneficiary may
draw up to the full amount of the sum when accompanied by a statement described
above in the first paragraph of this Letter of Credit.
We hereby agree with you that drafts drawn and presented in compliance with the
terms of this Letter of Credit will be honored by us immediately if presented at
any of our offices on or before [Expiry Date], as such date may be extended
pursuant to the terms hereof.
Unless otherwise stated in this Letter of Credit, this Letter of Credit is
subject to The Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500, which is
incorporated by reference herein.
Very truly yours,
_______________________________________
Authorized Signature
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