California-San Francisco-660 Third Street Lease - Gorr Partners LLC and Hot Wired Ventures LLC
OFFICE LEASE FORM
of the Building Owners and Managers Association of San Francisco
PARTIES
THIS LEASE, made this 15th day of November, 1995, between GORR
PARTNERS, LLC, a California limited liability company, Landlord, and HOT WIRED
VENTURES, LLC, a California limited liability company, Tenant.
WITNESSETH:
1. PREMISES. Landlord hereby leases to Tenant and Tenant hereby hires
from Landlord those certain premises (hereinafter called "premises") outlined in
red on Exhibit A attached hereto and by this reference made a part hereof, said
premises being situated on the 3rd & 4th floor(s) of that certain building
(hereinafter called "building") known as 660 Third Street, San Francisco,
California.
Said letting and hiring is upon and subject to the terms, covenants and
conditions herein set forth and Tenant covenants as a material part of the
consideration for this Lease to keep and perform each and all of said terms,
covenants and conditions by it to be kept and performed and that this Lease is
made upon the condition of such performance.
2. PURPOSE. The premises shall be used for general office purposes and
for no other use or purpose without the prior written consent of Landlord.
3. TERM. The term of this Lease shall be for ten (10) years "Lease
Term" unless earlier terminated or extended according to the terms of this
Lease. See Addendum.
4. POSSESSION. If Landlord, for any reason whatsoever, cannot deliver
possession of the said premises to Tenant at the commencement of the term
hereof, this Lease shall not be void or voidable except as set forth herein, nor
shall Landlord be liable to Tenant for any loss or damage resulting therefrom,
but in that event there shall be a proportionate reduction of rent covering the
period between the commencement of said term and the time when Landlord can
deliver possession. See Addendum. Should Landlord tender possession of the
premises to Tenant prior to the date specified for the commencement of the term,
and Tenant accepts such prior tender, such prior occupancy shall be subject to
all terms, covenants, and conditions of this Lease, including the payment of
rent. No delay in delivery of possession shall operate to extend the term
hereof. Within 10 days after written request from Landlord, Tenant shall execute
and return to Landlord an acknowledgment of the commencement date of the term of
this lease. See Addendum.
1.
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5. RENT.
(a) On or before the first business day of each calendar month
during the term hereof Tenant shall pay to Landlord, as minimum monthly rent for
the premises, the sum specified in the Basic Lease Information. The minimum
monthly rent for any partial month shall be prorated at the rate of 1/30 of the
minimum monthly rent per day.
Said rent shall be paid by Tenant to Landlord, in advance, without
deduction or offset, in lawful money of the United States of America at 660
Third Street, San Francisco, CA 94104, or to such other person or at such other
place as Landlord may from time to time designate in writing.
(b) All charges and other amounts of any kind payable by Tenant to
Landlord pursuant to this Lease shall be deemed additional rent. Landlord shall
have the same remedies for default in the payment of additional rent as for
default in the payment of basic rent. Basic rent and additional rent are
collectively sometimes hereinafter referred to as rent.
(c) All rent payable by Tenant to Landlord hereunder, if not
received by Landlord when due, shall bear interest from the due date until paid
at the publicly announced prime rate or reference rate charged on such due date
by the San Francisco Main Office of Bank of America, N.T. & S.A. (or any
successor bank) for short term, unsecured loans to its most creditworthy
borrowers, plus four percent (4%) per annum, but in no event shall such interest
exceed the maximum rate permitted by law. Landlord's acceptance of any interest
payments shall not constitute a waiver of Tenant's default with respect to the
overdue amount or prevent Landlord from exercising any of the rights and
remedies available to Landlord under this Lease or by law.
6. RENTAL ADJUSTMENT.
(a) In addition to the monthly rent provided for in Paragraph 5
hereof, Tenant shall pay to Landlord the sums set forth in the following
subparagraphs. Tenant's percentage share as set forth below has been calculated
by dividing the number of square feet of rentable area in the Premises by the
number of square feet of rentable area in the building. In the event the
rentable area of the building is changed, the Tenant's percentage share shall be
appropriately adjusted. Rentable area shall be based upon the Building Owners
and Managers Association International (BOMAI) standard method of floor
measurement for office buildings. Tenant hereby approves and accepts Landlord's
calculation of Tenant's current percentage share as set forth below.
(b) TAX INCREASES AND ASSESSMENTS. Subject to the terms of the
Addendum, Tenant shall pay to Landlord an amount equal to Tenant's percentage
share as specified in the Basic Lease Information of any increase in real
property taxes and assessments or other fees or charges of whatsoever kind or
character imposed by a governmental agency which may be levied on the land and
building of which the premises are a part and personal property taxes levied on
personal property of Landlord used in the operation of said land and building
above the amount
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of such taxes levied and assessed for the fiscal tax year ending June 30, 1996,
either by way of increase in the rate or in the assessed valuation of said land
and building or by imposition of any such charges by ordinance or statute of any
authority having jurisdiction. For the purposes of the (a) real and personal
property taxes shall include, without limitation, taxes of every kind and nature
levied and assessed in lieu of or in substitution for existing or additional
real or personal property taxes on said land and building as well as any form of
assessment, license, fee, levy, penalty, or tax (other than inheritance or
estate taxes), imposed by any authority having the direct or indirect power to
tax, including any city, county, state, or federal government, or any school,
agricultural, lighting, drainage, or other improvement district, as against any
legal or equitable interest of Landlord in the premises or in the real property
of which the premises are a part, or as against Landlord's right to rent or
other income therefrom, or as against Landlord's business of leasing the
premises. In addition, Tenant shall pay one hundred per cent (100%) of any
increase in taxes or assessments of whatsoever kind and nature (including,
without limitation, all personal property taxes) caused by improvements or
installations made by Tenant to the premises at any time during the term hereof
after the Lease Commencement Date. In the event said taxes or assessments are
charged to or paid or payable by Landlord, Tenant forthwith upon demand
therefore, shall reimburse Landlord for all amounts of such taxes or assessments
chargeable against Tenant pursuant to this subparagraph (b) and paid by
Landlord. See Addendum.
(c) OPERATING EXPENSE INCREASES. Tenant shall pay to Landlord, at
the times hereinafter set forth, an amount equal to Tenant's percentage share as
specified in the Basic Lease Information of any increase in direct expenses paid
or incurred by Landlord on account of the operation or maintenance of the
building above such direct expenses paid or incurred by Landlord during the Base
Year. "Base Year" as used in this subparagraph (b) shall mean the calendar year
1996. "Direct expenses" as used herein shall include all direct costs of
operation and maintenance as determined by standard accounting practices as set
forth in the Building Owners and Managers Association International (BOMAI)
chart of accounts from time to time (excluding, however, any and all taxes of
the nature set forth in subparagraph (b) above) and shall include the following
by way of illustration but not limitation: the cost of contesting by appropriate
proceeding the amount or the validity of any of the aforementioned taxes or
fees; water and sewer charges; insurance premiums; license, permit and
inspection fees; charges of heat, power and steam; janitorial services; labor;
supplies; materials, equipment and tools; management expenses and the cost of
capital improvements made by Landlord to the Building that are intended to
reduce other Operating Expenses or that are required under any governmental law
or regulation that is not applicable to the Building as of the date of
Commencement of this Lease, such cost or allocable portion thereof to be
amortized over such useful life of the improvement together with interest on the
unamortized balance at the rate that was paid by landlord on funds borrowed for
the purpose of constructing or installing such capital improvements, or, if
landlord does not borrow such funds, would have been paid had the Landlord
borrowed funds for such purpose but in no event shall such interest rate exceed
the maximum rate permitted by law. "Direct expenses" as used herein shall not
include depreciation on the building, real estate broker's commissions, tenant
improvements, interest and capital items other than those referred to above. In
the event the Building is not fully occupied during any Expense Year or in the
event the entire Building is not provided with Building standard
3.
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services during any Expense Year, an adjustment shall be made by Landlord in
computing Operating Expenses for such Expense Year so that Operating Expenses
shall be computed as though 95% of the entire Building had been occupied and 95%
of the entire Building had been provided with Building standard services during
such year (or such Operating Expenses shall be computed in accordance with
actual occupancy or actual provision of Building standard services if such
respective amounts shall exceed 95%); provided, however, that in no event shall
the aggregate amount of Operating Expenses collected by Landlord from all
Tenants in the Building exceed the actual Operating Expenses for said year. See
Addendum.
7. SECURITY DEPOSIT. Simultaneously with the execution of this
lease, Tenant shall deposit with Landlord the sum of $85,020.01, of which sum
$36,310.63 shall be payment of the first month's rent and the balance thereof,
namely, $48,709.38, shall be held by Landlord as security for the faithful
performance by Tenant of all the terms, covenants and conditions of this lease.
Provided that at the end of the term Tenant shall have delivered up the Premises
to Landlord, broom clean, and in the same condition as at the commencement date,
reasonable wear excepted, said sum held as security shall be returned to Tenant.
No interest shall be payable thereon and Landlord shall not be required to keep
said sum in a separate account. If Tenant fails to pay any Rent or other charges
due hereunder, or otherwise defaults with respect to any provision of this
Lease, Landlord may at its option apply or retain all or any portion of the
deposit for the payment of any Rent or other charge in default or the payment of
any other sum to which landlord may become obligated by Tenant's default, or to
compensate Landlord for any loss damage which Landlord may suffer thereby. If
Landlord so uses or applies all or any portion of the deposit, then within 10
days after demand therefor Tenant shall deposit cash with Landlord in an amount
sufficient to restore the deposit to the full amount thereof, and Tenant's
failure to do so shall be a material breach of this Lease. Landlord's
application or retention of the deposit shall not constitute a waiver of
Tenant's default to the extent that the deposit does not fully compensate
Landlord for all losses or damages incurred by Landlord in connection with such
default and shall not prejudice any other rights or remedies available to
Landlord under this Lease or by law. Within thirty (30) days after termination
of this Lease, Landlord shall return the unapplied portion of the security
deposit to the Tenant.
No security or guaranty which may now or hereafter be furnished
Landlord for the payment of the rent herein reserved or for performance by
Tenant of the other covenants or conditions of this Lease shall in any way be a
bar or defense to any action in unlawful detainer, or for the recovery of the
premises, or to any action which Landlord may at any time commence for a breach
of any of the covenants or conditions of this Lease.
8. USES PROHIBITED. Tenant shall not do or permit anything to be done
in or about the premises nor bring or keep anything therein which will in any
way increase the rate of or affect any fire or other insurance upon the building
or any of its contents or cause a cancellation of any insurance policy covering
said building or contents. Tenant shall not do or permit anything to be done in
or about the premises which will in any way unreasonably obstruct or interfere
with the rights of other tenants or occupants of the building or injure or annoy
them, or use or allow the premises to be used for any residential, immoral,
unlawful or objectionable purpose, nor shall Tenant cause, maintain or permit
any nuisance in, on or about the premises.
4.
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No loudspeakers or other similar device, system or apparatus which can be heard
or experienced outside the premises shall, without the prior written approval of
Landlord, be used in or at the premises. Tenant shall not commit or suffer to be
committed any waste in or upon the premises. See Addendum.
9. COMPLIANCE WITH LAW. Tenant shall not use or permit anything to be
done in or about the premises which will in any way conflict with any law,
statute, ordinance or governmental rule, regulation or requirement now in force
or which may hereafter be enacted or promulgated. Tenant, at its sole cost and
expense, shall promptly comply with all laws, statutes, ordinances and
governmental rules, regulations or requirements now in force or which may
hereafter be in force and with the requirements of any board of fire
underwriters or other similar body now or hereafter constituted relating to or
affecting the Tenant's use of occupancy of the premises, excluding structural
changes not related to or affected by Tenant's improvements or acts. The
judgment of any court of competent jurisdiction or the admission of Tenant in
any action against Tenant, whether Landlord be a party thereto or not, that
Tenant has violated any law, statute, ordinance or governmental rule, regulation
or requirement shall be conclusive of that fact as between Landlord and Tenant.
Further, Tenant shall at all times and in all respects comply with all federal,
state and local laws, ordinances and regulations ("Hazardous Material Laws")
relating to hygiene, environmental protection, or the presence, use generation,
storage, transportation or disposal of any toxic or hazardous substances, as the
same may be amended from time to time, including without limitation, obtaining
any required permits or licenses, and Tenant shall handle, treat, manage and
dispose of any and all toxic or hazardous substances in strict conformity with
all manufacturers' instructions and prudent business practices. See Addendum.
10. ALTERATIONS. After the Commencement Date, Tenant shall not make or
suffer to be made any alterations, additions or improvements to or of the
premises in excess of $1000 in cost or any part thereof without the written
consent of Landlord first had and obtained which shall not be unreasonably
withheld or delayed. Any alterations, additions, or improvements to or of said
premises, including without limitation any partitions, movable or otherwise, and
all carpeting, shall at once become a part of the realty and belong to Landlord.
Movable furniture, equipment and trade fixtures shall remain the property of
Tenant. If Landlord consents to the making of any alterations, additions or
Improvements to the premises by Tenant, the same shall be made by Tenant at
Tenant's sole cost and expense and any contractor or person selected by Tenant
to make the same must first be approved of in writing by Landlord. See Addendum.
Tenant's obligation to remove any alterations, additions, improvements, fixtures
and/or personal property and to repair any damage from such removal shall
survive the termination of this Lease.
Construction of the alterations, additions, or improvements shall be
completed in accordance with drawings and specifications approved in advance in
writing by Landlord, shall be carried out in a good and workmanlike manner, and
shall comply with all applicable requirements of governmental authorities and
such additional conditions as Landlord may reasonably impose.
5.
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11. REPAIR. By entry hereunder upon the commencement of the term
hereof, Tenant accepts the premises as being in good, sanitary order, condition
and repair. Tenant, at Tenant's sole cost and expense, shall keep the premises
and every part thereof in good condition and repair, damage thereto by fire,
earthquake, act of God or the elements not caused by Tenant's negligent or
willful act excepted, Tenant hereby waiving all rights to make repairs at the
expense of the Landlord as provided by law, statute or ordinance now or
hereafter in effect. Upon the expiration or sooner termination of the term
hereof, Tenant shall surrender the premises to Landlord in the same condition as
when received, ordinary wear and tear and damage by fire, earthquake, act of God
or the elements excepted, unless caused by Tenant's negligent or willful act. It
is specifically understood and agreed that Landlord has no obligation and has
made no promises to alter, remodel, improve, repair, decorate or paint the
premises or any part thereof and that no representations respecting the
condition of the premises or the building have been made by Landlord to Tenant
except as specifically set forth in Exhibit B attached hereto. There shall be no
abatement of Rent and no liability to Landlord by reason of any injury or to
interference with Tenant's business arising from the making of any repairs or
performance of any maintenance obligations by the Landlord, except for any
damages caused by Landlord's negligence or intentional acts but in no event any
consequential damages.
12. ABANDONMENT. Tenant shall not vacate or abandon the premises at any
time during the term hereof, and if Tenant shall abandon, vacate or surrender
the premises or be dispossessed by process of law, or otherwise, any personal
property belonging to Tenant and left on the premises shall be deemed to be
abandoned, at the option of Landlord.
13. LIENS. Tenant shall keep the premises and the building and the land
upon which the building is situated free from any liens arising out of any work
performed, materials furnished or obligations incurred by Tenant. Tenant shall
in the event of the filing of any such lien, post any bond required to release
the premises therefrom. Should Tenant fail to remove any such lien within five
(5) business days after notice to do so from Landlord, Landlord may, in addition
to any other remedies, record a bond pursuant to California Civil Code Section
3143 and all amounts incurred by Landlord in so doing shall become immediately
due and payable by Tenant to Landlord as additional rent. Landlord shall have
the right to post and keep posted on the Premises any notices that may be
provided by law or which Landlord may deem to be proper for the protection of
Landlord, the Premises and the building from such liens.
14. ASSIGNMENT AND SUBLETTING.
(a) Tenant shall not mortgage, pledge, hypothecate or encumber this
Lease or any interest therein. Tenant shall not assign this Lease or sublet or
suffer any other person (the agents and servants of Tenant excepted) to occupy
or use the Premises, or any part hereof, or sublet any right or privilege
appurtenant thereto without the prior written consent of Landlord first had and
obtained, which consent shall not be unreasonably withheld or delayed.
Landlord's consent to one assignment, subleasing or occupancy shall not be
deemed to be a consent to any subsequent assignment, subleasing or occupancy.
See Addendum.
6.
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(b) Provided further and notwithstanding anything herein before set
forth: In the event that at any time or from time to time during the term of
this Lease, Tenant desires to sublet all or any part of the Premises, Tenant
shall notify the Landlord in writing (the "Sublet Notice") of the terms of the
proposed subletting, and the area so proposed to be sublet and shall give
Landlord the right to sublet from Tenant such space (the "Sublet Space") on the
same terms as those contained in the Sublet Notice. See Addendum.
If Landlord fails to exercise its option and Tenant desires to complete
the proposed sublease, Tenant shall deliver an executed copy of such sublease to
Landlord in order to obtain its consent as required in paragraph 14(a) above.
See Addendum. If Landlord consents to a sublease, then such sublease shall be
subject to and made upon the following terms:
(i) any such sublease shall be subject to the terms of this
Lease and the term thereof may not extend beyond the expiration of the term of
this Lease;
(ii) no subtenant shall have a right to further sublease its
premises. If Landlord fails to exercise such option, and Tenant fails to
consummate a sublease with a third party within 60 days after the expiration of
Landlord's option period on the same terms and conditions contained in the
Sublet Notice, Tenant shall be required to deliver a new Sublet Notice to
Landlord and comply with the terms and conditions set forth above before any
further subletting shall be permitted.
(c) Regardless of Landlord's consent, no subletting nor assignment
shall release Tenant of Tenant's obligation or alter the primary liability of
Tenant to pay rent and perform other obligations of Tenant under this lease.
(d) In no event shall Tenant assign this Lease or sublet the
premises or any portion thereof to any then existing or prospective tenant (with
whom Landlord has negotiated in the last six months) of said building.
(e) Tenant shall pay Landlord's reasonable costs not to exceed
$1000 incurred in connection with Tenant's request to assign this lease or
sublet the premises, regardless whether or not the Landlord consents to the
proposed transfer.
(f) If Tenant is a corporation or a partnership, the transfer (as a
consequence of a single transaction or any number of separate transactions) of
thirty-five percent (35%) or more of the beneficial ownership interest of the
voting stock of Tenant issued and outstanding as of the date hereof or of the
partnership interests in Tenant, as the case may be, shall constitute an
assignment hereunder for which such consent is required. See Addendum.
15. INDEMNIFICATION OF LANDLORD. Tenant agrees to indemnify and defend
Landlord against and save Landlord harmless from any and all loss, cost,
liability, damage and expense, including without limitation penalties, fines and
reasonable attorneys fees and costs, except as caused by the negligent or
intentional acts of Landlord, its employees or agents, incurred in connection
with or arising from (1) any default by Tenant in the observance of performance
of
7.
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any of the terms, covenants or conditions of this Lease on Tenant's part to be
observed or performed, or (2) the use or occupancy or manner of the use or
occupancy of the Premises by Tenant or any other person or entity claiming
through or under Tenant, including without limitation, the presence, use,
generation, storage, transportation or disposal of any toxic or hazardous
substances, or (3) the condition of the Premises after the Commencement Date and
during the term of the Lease or any occurrence or happening on the Premises from
any cause whatsoever, or (4) any acts, omissions or negligence of Tenant or of
Tenant's agents, contractors, employees, subtenants, licensees, invitees or
visitors or any such person or entity, in, on or about the Premises or the
Building, either prior to the commencement of, during, or after the expiration
of the term, including without limitation any acts, omissions or negligence in
the making or performing of any alterations. Tenant further agrees to indemnify,
defend and save harmless Landlord and Landlord's agents from and against any and
all loss, cost, liability, damage and expense, incurred in connection with or
arising from any claims by any persons by reason of injury to persons or damage
to property occasioned by any use, occupancy condition, occurrence, happening,
act, omission or negligence referred to in the preceding sentence. In the event
any action or proceeding is brought against Landlord for any claim against
which Tenant is obligated to indemnify Landlord hereunder, Tenant upon notice
from Landlord shall defend such action or proceedings at Tenant's sole expense
by counsel approved by Landlord, which approval shall not be unreasonably
withheld or delayed. The provisions of this Section 15 shall survive the
expiration or earlier termination of this lease.
16. INSURANCE. Tenant agrees to keep in force during the term hereof,
at Tenant's expense, public liability and property damage insurance with
combined single limits in the amount of not less than $2,000,000. Said policy
shall name Landlord as an additional insured, and shall insure Landlord's
contingent liability as respects acts, or omissions of Tenant, shall be issued
by an insurance company licensed to do business in the state where the premises
are located; and shall provide that said insurance shall not be cancelled or
amended unless thirty (30) days' prior written notice to Landlord is first
given. Said policy or a certificate thereof shall be delivered to Landlord by
Tenant prior to the commencement of the term and each renewal of such insurance.
Tenant and Landlord hereby waives all rights of subrogation against each other
to which any insurance carrier may at any time become entitled under any policy
of insurance carried by such other party.
17. UTILITIES. Subject to the provisions of the Addendum, Landlord
shall furnish to the premises, during reasonable hours of generally recognized
business days, to be determined by Landlord, and subject to the rules and
regulations of the building, water and electricity suitable for the use of the
premises for general office purposes and heat required in Landlord's judgement
for the comfortable use and occupation of the premises for such purposes,
janitorial service, and elevator service. Landlord shall not be liable for, and
Tenant shall not be entitled to any abatement or reduction of rent by reason of
Landlord's failure to furnish any of the foregoing when such failure or delay is
caused by accident, breakage, repairs, strikes, lockouts or other labor
disturbances or labor disputes of any character, or is caused directly or
indirectly by the limitation, curtailment, rationing or restrictions on use of
water, electricity, gas or any other form of energy serving the premises or the
building, or by any other cause, similar or dissimilar, beyond the reasonable
control of Landlord. Landlord shall not be liable under any
8.
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circumstances for loss of business or injury to property, however occurring,
through or in connection with or incidental to failure to furnish any of the
foregoing. Tenant shall pay and provide for all services and utilities not
furnished by Landlord.
Tenant will not, without the written consent of Landlord, use any
apparatus or device in the premises which will in any way increase the amount of
cooling capacity or water usually furnished or supplied for use of the premises
for general office purposes or connect with or water pipes, any apparatus or
device for the purpose of using water. If Tenant shall require water in excess
of that customarily furnished or supplied to other tenants of the building for
use of their premises for general office purposes, Tenant shall first procure
the consent of Landlord, which Landlord may refuse, to the use thereof and
Landlord may cause water meter to be installed in the premises so as to measure
the amount of excess water consumed by Tenant. The cost of any such meter and of
the installation, maintenance and repair thereof shall be paid by Tenant and
Tenant agrees to pay to Landlord promptly upon demand therefor the cost of all
such excess water consumed, as shown by said meters, at the rates charged for
such services by the local public utility furnishing the same, plus any
additional expense incurred in keeping account of the excess water so consumed.
18. PERSONAL PROPERTY AND OTHER TAXES. Tenant shall pay, before
delinquency, any and all taxes levied or assessed and which become payable
during the term hereof upon Tenant's equipment, furniture, fixtures and other
personal property located in the premises, including carpeting installed by
Tenant even though said carpeting has become a part of the leased premises; and
any and all taxes or increases therein levied or assessed on Landlord or Tenant
by virtue of alterations, additions or improvements to the premises made by
Tenant or Landlord at Tenant's request after the Lease Commencement Date. In the
event said taxes are charged to or paid or payable by Landlord, Tenant,
forthwith upon demand therefore, shall reimburse Landlord for all of such taxes
paid by Landlord.
19. RULES AND REGULATIONS. Tenant shall faithfully observe and comply
with the rules and regulations printed on or annexed to this Lease and all
modifications of and additions thereto applicable to all tenants of the building
from time to time put into effect by Landlord of which Tenant shall have notice.
Landlord shall not be responsible to Tenant for the nonperformance by any other
tenant or occupant of the building of any of said rules and regulations.
20. HOLDING OVER. If Tenant holds possession of the premises after the
term of this lease, Tenant shall, (at option of Landlord to be exercised by
Landlord's giving written notice to Tenant and not otherwise) become a Tenant
from month to month upon the terms and conditions herein specified, so far as
applicable, at a monthly rental of 140% of the last month's rent payable in
advance, in lawful money, and shall continue to be such Tenant until thirty (30)
days after Tenant shall have given to Landlord or Landlord shall have given to
Tenant a written notice of intent to terminate such monthly tenancy. Unless
Landlord shall exercise the option hereby given him, Tenant shall be a Tenant at
sufferance only, whether or not Landlord shall accept any rent from Tenant while
Tenant is so holding over.
9.
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21. SUBORDINATION. This Lease shall be subject and subordinate at all
times to all ground or underlying leases which may now exist or hereafter be
executed affecting the building and/or the land upon which the building is
situated and to the lien of any mortgages or deeds of trust in any amount or
amounts whatsoever now or hereafter placed on or against said building and/or
land or on or against the Landlord's interest or estate therein or on or against
any ground or underlying lease without the necessity of having further
instruments on the part of Tenant to effectuate such subordination.
Notwithstanding the foregoing, Tenant covenants and agrees to execute and
deliver, upon demand, such further instruments evidencing such subordination of
this Lease to such ground or underlying leases and to the lien of any such
mortgages or deeds of trust as may be required by Landlord. In the event of
termination of any ground or underlying lease, or in the event of foreclosure or
exercise of any power of sale under any mortgage or deed of trust superior to
this Lease or to which this Lease is subject or subordinate, upon Tenant's
attornment to the Lessor under such ground or underlying lease or to the
purchaser at any foreclosure sale or sale pursuant to the exercise of any power
of sale under any mortgage or deed of trust, this Lease shall not terminate and
Tenant shall automatically be and become the Tenant of said Lessor under such
ground or underlying lease or to said purchaser, whichever shall make demand
therefore. See Addendum.
22. ENTRY BY LANDLORD. Landlord reserves and shall upon twenty-four
hours prior notice, except for emergencies, have the right to enter the premises
to inspect the same, to supply janitor service and any other service to be
provided by Landlord to Tenant hereunder, to submit the premises to prospective
purchasers or tenants, to post notices of nonresponsibility, and to alter,
improve or repair the premises and any portion of the building without abatement
of rent and may for that purpose erect scaffolding and other necessary
structures where reasonably required by the character of the work to be
performed, always providing the entrance to the premises shall not be blocked
thereby and further providing that the business of Tenant shall not be
interfered with unreasonably. Tenant hereby waives any claim for damages for any
injury or inconvenience to or interference with Tenant's business, any loss of
occupancy of quiet enjoyment of the premises, and other loss occasioned by such
entry unless caused by Landlord's negligence or intentional wrongful acts
excluding consequential damages. For each of the aforesaid purposes, Landlord
shall at all times have and retain a key with which to unlock all of the doors,
in, upon and about the premises excluding Tenant's vaults and safes, and
Landlord shall have the right to use any and all means which Landlord may deem
proper to open said doors in an emergency in order to obtain entry to the
premises, and any entry to the premises obtained by Landlord by any of said
means, or otherwise, shall not under any circumstances be construed or deemed to
be a forcible or unlawful entry into or a detainer of the premises or an
eviction of Tenant from the premises or any portion thereof.
23. INSOLVENCY OR BANKRUPTCY. Either (a) the appointment of a receiver
to take possession of all or substantially all of the assets of Tenant, (b) an
assignment by Tenant for the benefit of creditors, or (c) any action taken or
suffered by Tenant under any insolvency, bankruptcy or reorganization act shall
constitute a breach of this Lease by Tenant. Upon the happening of any such
event this lease shall terminate five (5) days after written notice of
termination from Landlord to Tenant. In no event shall this Lease be assigned or
assignable by reason of any voluntary or involuntary bankruptcy proceeding nor
shall any rights or privileges
10.
<PAGE> 11
hereunder be an asset of Tenant in any bankruptcy, insolvency or reorganization
proceedings. See Addendum.
24. DEFAULT. See Addendum. In the event of any breach or default of
Lease by Tenant, then Landlord, besides any other rights and remedies of
Landlord at law or equity, shall have the right either to terminate Tenant's
right to possession of the premises and thereby terminate this Lease or have
this Lease continue in full force and effect with Tenant at all times having the
right to possession of the premises. Such property so removed may be stored in a
public warehouse or elsewhere at the cost and for the account of Tenant. Upon
such termination Landlord, in addition to any other rights and remedies
(including rights and remedies under Subparagraphs (1), (2) and (4) of
Subdivision (a) of Section 1951.2 of the California Civil Code of any amendment
thereto), shall be entitled to recover from Tenant the worth at the time of
award of the amount by which the unpaid rent for the balance of the term after
the time of award exceeds the amount of such rental loss that the Tenant proves
could be reasonably avoided. The worth at the time of award of the amount
referred to in subparagraphs (1) and (2) of Subdivision (a) of Section 1951.2 of
the California Civil Code shall be computed by allowing interest at the maximum
rate allowed by law. The worth at the time of the award of the amount referred
to in subparagraph (3) of Subdivision (a) of Section 1951.2 of the California
Civil Code shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of San Francisco at the time of the award plus 1%.
Any proof by Tenant of the amount of rental loss that could be
reasonably avoided shall be made in the following manner: Landlord and Tenant
shall each select a licensed real estate broker in the business of renting
property of the same type and use of the premises and in the same geographic
vicinity and such two real estate brokers shall select a third licensed real
estate broker and the three licensed real estate brokers so selected shall
determine the amount of rental loss that could be reasonably avoided for the
balance of the term of this Lease after the time of award. The decision of the
majority of said licensed real estate brokers shall be final and binding upon
the parties hereto.
Should Landlord, following any breach or default of this Lease by
Tenant, elect to keep this Lease in full force and effect, with Tenant retaining
the right to possession of the premises (notwithstanding the fact the Tenant may
have abandoned the leased premises), then Landlord, besides the rights and
remedies specified in Section 1951.4 of the California Civil Code "(lessor may
continue lease in effect after lessee's breach and abandonment and recover rent
as it becomes due, if lessee has right to sublet or assign, subject only to
reasonable limitations)" and all other rights and remedies Landlord may have at
law or equity, shall have the right to enforce all of Landlord's rights and
remedies under this Lease. Notwithstanding ant such election to have this Lease
remain in full force and effect, Landlord may at any time thereafter elect to
terminate Tenant's right to possession of said premises and thereby terminate
this Lease for any previous breach or default which remains uncured, or for any
subsequent breach or default.
11.
<PAGE> 12
25. DESTRUCTION OR DAMAGE.
(a) In the event the Premises or a portion of the Building is
damaged by fire or other insured casualty, Landlord shall diligently repair the
same to the extent possible with the insurance proceeds received by Landlord,
subject to the provisions of this Section hereinafter set forth, if such repairs
can in Landlord's reasonable opinion be completed within 120 days after issuance
of a building permit therefor under the laws and regulations of federal, state
and local governmental authorities having jurisdiction thereof. In such event
this Lease shall remain in full force and effect except that if such damage is
not the result of the negligence or willful misconduct of Tenant or Tenant's
agents, contractors, employees, subtenants, licensees, invitees or visitors, an
abatement of basic rent shall be allowed Tenant for such part of the Premises as
shall be rendered unusable or inaccessible by Tenant in the conduct of its
business during the time such part is so unusable. Notwithstanding the
foregoing, if such damage shall occur during the final year of the term of this
Lease, Landlord shall not be obligated to repair such damage, but may instead
elect to terminate this Lease upon written notice given to Tenant within 30 days
after the date of such fire or other casualty, in which event this Lease shall
terminate as of the termination date specified in Landlord's notice.
(b) See Addendum.
(c) A total destruction of the Building automatically shall
terminate this lease. Landlord and Tenant acknowledge that this Lease
constitutes the entire agreement of the parties regarding events of damage or
destruction, and Tenant waives the provisions of California Civil Code Sections
1932(2) and 1933(4) and any similar statute nor or hereafter in force.
(d) If the Premises are to be repaired under this Section, Landlord
shall repair at its cost any injury or damage to the building itself, and the
initial improvements made by landlord pursuant to Exhibit B, Tenant shall pay
the cost of repairing or replacing all other improvements in the Premises and
Tenant's trade fixtures, furnishings, equipment and other personal property.
26. EMINENT DOMAIN. If all or any part of the premises shall be taken
or appropriated by any public or quasipublic authority under the power of
eminent domain, and such taking will substantially impair Tenant's use of the
premises for more than 90 days, either party hereto shall have the right, at its
option, to terminate this Lease. If all of the building of which the premises
are a party shall be taken or appropriated by any public or quasi-public
authority under any power of eminent domain, Landlord may terminate this Lease.
In either of such events, Landlord shall be entitled to and Tenant upon demand
of Landlord shall assign to Landlord any rights of Tenant to any and all income,
rent, award, or any interest therein whatsoever excluding any award compensating
Tenant for relocation costs of personal property or equipment of Tenant which
may be paid or made in connection with such public or quasi-public use or
purpose, and Tenant shall have no claim against Landlord or the condemnor for
the value of any unexpired term of this Lease. If a part of the premises shall
be so taken or appropriated and neither party hereto shall elect to terminate
this lease, and rent thereafter to be paid shall be equitably reduced.
12.
<PAGE> 13
27. PLATS AND RIDERS. Clauses, plats and riders, if any, signed by
Landlord and Tenant and endorsed on or affixed to this lease are a part hereof,
and in the event of variation or discrepancy the duplicate original hereof,
including such clauses, plats and riders, if any, held by Landlord shall
control.
28. SALE BY LANDLORD. See Addendum. In the event the original Landlord
hereunder, or any successor owner of the building, shall sell or convey the
Building, including an involuntary transfer and the owner shall expressly assume
Landlord's obligations under the Lease, all liabilities and obligations on the
part of the original Landlord, or such successor owner, under this Lease,
accruing thereafter shall terminate, and thereupon all such liabilities and
obligations shall be binding upon the new owner. Tenant agrees to attorn to such
new owner. If any security be given by Tenant to secure the faithful performance
of all or any of the covenants of this Lease on the part of Tenant, Landlord
shall transfer and/or deliver the security, to the successor in interest of
Landlord, and thereupon Landlord shall be discharged from any further liability
in reference thereto. Except as set forth in this Paragraph 28, this Lease shall
not be affected by any such sale or conveyance.
29. ESTOPPEL CERTIFICATES. At any time and from time to time, upon not
more than ten (10) days prior request by Landlord, Tenant or Landlord shall
execute, acknowledge and deliver to the other party a statement certifying the
date of commencement of this Lease, stating that this Lease is unmodified and in
full force and effect (or if there have been modifications, that this Lease is
in full force and effect as modified and the date and nature of such
modifications) and the dates to which the rent has been paid, and setting forth
such other matters as may reasonably be requested by Landlord or Tenant.
Landlord and Tenant intend that any such statement delivered pursuant to this
paragraph may be relied upon by any mortgagee or the beneficiary of any Deed of
Trust or by any purchaser or prospective purchaser of the building.
30. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements to be
kept and performed by Tenant under any of the terms of this Lease shall be
performed by Tenant and Tenant's sole cost and expense and without any abatement
of rent except as otherwise provided herein. If Tenant shall fail to pay any sum
of money, other than rent, required to be paid by it hereunder or shall fail to
perform any other act on its part to be performed hereunder, and such failure
shall continue for ten (10) business days after notice thereof by Landlord,
Landlord may, but shall not be obligated to, and without waiving any default of
Tenant or releasing Tenant from any obligations of Tenant hereunder, make any
such payment or perform any such other act on Tenant's part to be made or
performed as in this lease provided. All sums so paid by the Landlord and all
necessary incidental costs, together with interest thereon at the rate of ten
percent (10%) per annum from the date of such payment by the Landlord, shall be
paid to landlord forthwith on demand, and Landlord shall have (in addition to
any other right or remedy of Landlord) the same rights and remedies in the event
of nonpayment thereof by Tenant as in the case of default by Tenant in payment
of rent.
31. ATTORNEY FEES. If as a result of any breach or default on the part
of Tenant under this Lease, Landlord uses the services of any attorney in order
to secure compliance with this Lease, Tenant shall reimburse Landlord upon
demand as additional rent for any and all
13.
<PAGE> 14
attorneys' fees and expenses incurred by Landlord, whether or not formal legal
proceedings are instituted. Should either party being action against the other
party, by reason or of alleging the failure of the other party to comply with
any or all of its obligations hereunder, whether for declaratory or other
relief, then the party which prevails in such action shall be entitled to its
reasonable attorneys' fees and expenses related to such action, in addition to
all other recovery or relief. A party shall be deemed to have prevailed in any
such action (without limiting the generality of the foregoing) if such action is
dismissed upon the payment by the other party of the sums allegedly due or the
performance of obligations allegedly not complied with, or if such party obtains
substantially the relief sought by it in the action, irrespective of whether
such action is prosecuted to judgment. In addition, if either party to this
Lease becomes a party to or is involved in any way in any action concerning this
Lease or the Premises by reason in whole or in part of any act, neglect, fault
or omission of any duty by the other party, its employees or contractors, the
party subjected to said involvement shall be entitled to reimbursement for any
and all reasonable attorneys' fees and costs.
32. SURRENDER OF PREMISES. The voluntary or other surrender of this
Lease by Tenant or mutual cancellation thereof shall not work a merger and, at
the option of Landlord, shall terminate all or any existing subleases or
subtenancies, or at the option of Landlord, may operate as an assignment to
Landlord of any or all such subleases or subtenancies.
33. WAIVER. The waiver by Landlord or Tenant of performance of any
term, covenant or condition herein contained shall not be deemed to be a waiver
of such term, covenant or condition or any subsequent breach of the same or any
other term, covenant or condition herein contained. The subsequent acceptance of
rent hereunder by landlord shall not be deemed to be a waiver of any preceding
breach by Tenant of any term, covenant or condition of this Lease, other than
the failure of Tenant to pay the particular rent so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
rent.
34. NOTICES. All notices and demands which may or are required to be
given by either party to the other hereunder shall be in writing. All notices
and demands by Landlord to Tenant shall be delivered personally or sent by
United States certified or registered mail, postage prepaid, addressed to Tenant
at the premises, or at such other place as Tenant may from time to time by like
notice designate. All notices and demands by Tenant to Landlord shall be sent by
United States certified or registered mail, postage prepaid, addressed to
Landlord at 660 Third Street, San Francisco, California or at such other place
as Landlord may from time to time by like notice designate.
35. NOTICE OF SURRENDER. At least sixty (60) days before the last day
of the term hereof, Tenant shall give to Landlord a written notice of intention
to surrender the premises on that date, but nothing contained herein or any
failure to give such notice shall be construed as an extension of the term
hereof or as consent of Landlord to any holding over by tenant.
36. DEFINED TERMS AND MARGINAL HEADINGS. The words "Landlord" and
"Tenant," as used herein shall include the feminine and neuter. If there be more
than one Tenant, the obligations hereunder imposed upon Tenant shall be joint
and several. The marginal headings
14.
<PAGE> 15
and titles to the paragraphs of the Lease are not a part of this Lease and shall
have no effect upon the construction or interpretation of any part hereof.
37. TIME AND APPLICABLE LAW. Time is of the essence of this Lease and
each and all of its provisions. This Lease shall in all respects be governed by
the laws of the state in which the premises are located.
38. SUCCESSORS. Subject to the provisions of Paragraph 14 hereof, the
covenants and conditions herein contained shall be binding upon and inure to the
benefits of the heirs, successors, executors, administrators and assigns of the
parties hereto.
39. ENTIRE AGREEMENT. This Lease constitutes the entire agreement
between Landlord and Tenant and no promises or representations, express or
implied, either written or oral, not herein set forth shall be binding upon or
inure to the benefit of Landlord or Tenant. This Lease shall not be modified by
any oral agreement, either express or implied, and all modifications hereof
shall be in writing and signed by both Landlord and Tenant.
40. LATE CHARGE. In the event Tenant shall fail to pay any rents or
sums due hereunder within five (5) days of the due date herein provided, then
and in that event the amount so due and unpaid shall bear a late charge equal to
five percent (5%) of the amount due together with interest accruing from the
date due at the maximum interest rate permitted by law, which late charge and
interest shall be payable forthwith upon demand. (The foregoing shall be in
addition to any other right or remedy of Landlord.)
41. NO DISCRIMINATION. Tenant agrees for Tenant and Tenant's heirs,
executors, successors and assigns and all persons claiming under or through
Tenant, and this Lease is made and accepted upon the following conditions; that
there shall be no discrimination against or segregation of any person or group
of persons on account of race, color, creed, sex, religion, marital status,
ancestry or national origin (whether in the use, occupancy, subleasing,
transferring, tenure or enjoyment of the Premises or otherwise) nor shall Tenant
or any person claiming through or under Tenant establish or permit any such
practice or practices of discrimination or segregation with reference to or
arising out of the use or occupancy of the Premises by Tenant or any person
claiming through or under Tenant.
15.
<PAGE> 16
42. ADDITIONAL PROVISIONS. The exhibits and addenda listed below are
incorporated by reference in this lease.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease the
day and year first above written.
LANDLORD: TENANT:
GORR PARTNERS, a California HOT WIRED VENTURES, LLC, a California
limited liability company limited liability company
By: /s/ [illegible] By: /s/ Andrew Anker
------------------------ ----------------------------------
Its: Member Its:
----------------------- ---------------------------------
Dated: November 17, 1995 Dated: November 15, 1995
--------------------- -------------------------------
SEE YOUR ATTORNEY
This Lease should be given to your attorney for
review and approval before you sign it. BOMA makes
no representation or recommendation concerning the
legal effect, legal sufficiency, or tax
consequences of this Lease. These are questions
for your attorney.
16.
<PAGE> 17
OFFICE LEASE
BASIC LEASE INFORMATION
This Basic Lease Information shall be completed and signed when all
applicable information has been set forth below.
DATE OF LEASE: As of November 15, 1995
BUILDING: 660 Third Street
San Francisco, California
LANDLORD: GORR PARTNERS, LLC
a California limited liability company
TENANT: HOT WIRED VENTURES, LLC
a California limited liability company
RENTABLE AREA
OF PREMISES
(ESTIMATED): 42,510 +/- square feet
RENTABLE AREA
OF BUILDING
(ESTIMATED): 85,020 +/- square feet
TENANT'S PERCENTAGE
SHARE: 50%
LEASE
COMMENCEMENT DATE: March 1, 1996 (estimated)
LEASE
EXPIRATION DATE: Ten (10) years after the Lease Commencement Date
OPTIONS: One (1) five year option, as described in Paragraph 3
of the Addendum.
i.
<PAGE> 18
<TABLE>
<CAPTION>
MINIMUM MONTHLY
RENT: Lease Years Minimum Monthly Rent
----------- --------------------
<S> <C>
1-2 $ 36,310.63
3 $ 42,332.88
4-5 $ 46,583.88
6-10 $ 48,709.38
</TABLE>
SECURITY DEPOSIT: $48,709.38, as provided in Paragraph 7 hereof.
ii.
<PAGE> 19
EXHIBITS
Exhibit A Floor Plan of Premises
Exhibit B Work Letter
Exhibit C Memorandum of Lease Term Dates
Exhibit D Rules and Regulations
Exhibit E Commission Agreement
ADDENDA
Addendum 1 Addendum to Lease
TENANT: HOT WIRED VENTURES, LLC,
a California limited liability company
By:
------------------------------------------------------
Andrew L. Anker, President and Chief Executive Officer
Dated: , 199
-------------------------- ----
Address: 520 Third Street, Fourth Floor
San Francisco, California 94107
Telephone: (415) 222-6333
Facsimile: (415) 222-6369
iii.
<PAGE> 20
LANDLORD: GORR PARTNERS, LLC
a California limited liability company
By:
-----------------------------------
Name:
---------------------------------
Its:
----------------------------------
Dated: , 199
------------------------- ----
Address: 660 Third Street
San Francisco, CA 94104
Telephone: (415)
-----------------
Facsimile: (415)
-----------------
iv.
<PAGE> 21
ADDENDUM TO OFFICE LEASE
This Addendum is attached to and made a part of the Office Lease dated
November 15, 1995 (the "Lease), by and between GORR PARTNERS, LLC, a California
limited liability company ("Landlord") and HOT WIRED VENTURES, LLC, a California
limited liability company ("Tenant"), and the terms and conditions of this
Addendum are incorporated into the Lease.
1. DEFINITIONS. All defined terms used in this Addendum whether
capitalized or in lower case shall have the same meaning as defined in the
Lease.
2. LEASE COMMENCEMENT DATE.
(a) LEASE COMMENCEMENT DATE. The Lease Term shall commence on the
earlier of (i) the date Tenant opens for business in the premises, or (ii) ten
(10) days after substantial completion of the tenant improvements as specified
in Exhibit B attached hereto or (iii) April 30, 1996 provided Landlord has
substantially completed the tenant improvements as specified in Exhibit B (the
"Lease Commencement Date"). The premises shall be deemed substantially completed
and possession delivered when Landlord has substantially completed these
improvements and has delivered written notice of such substantial completion to
Tenant. Tenant agrees to accept the same upon delivery of such notice from
Landlord. No later than ten (10) days after the delivery of possession of the
premises to Tenant, a representative of Landlord and Tenant shall walk through
the premises and compile a "punch list" of items for the premises that must be
completed or repaired by Landlord in order for Landlord to fulfill all of its
construction obligations under the Work Letter. The punch list items shall not
expand Landlord's construction obligations beyond those contained in the Work
Letter. Once the punch list is compiled, Landlord will work diligently to
complete or repair such items within fifteen (15) days unless longer is
necessary to complete said items. Landlord and Tenant agree to cooperate in good
faith so that Landlord can complete its punch list work and Tenant can complete
its fixturization work in the premises with minimum interference to the other.
Tenant agrees that within ten (10) days after the Lease Commencement Date has
been determined, Tenant will execute and deliver to Landlord a written addendum
to this Lease in the form of Exhibit C attached hereto stating the Lease
Commencement Date, the Lease Expiration Date, and accepting possession of the
premises and acknowledging compliance by Landlord with all of the obligations to
construct and deliver possession of the premises. Notwithstanding anything in
this paragraph to the contrary, Tenant shall have a period of ten (10) days upon
substantial completion of the tenant improvements but prior to the Lease
Commencement Date ("Early Entry") during which Tenant shall have access to the
Premises on the terms and conditions set forth in this Lease except for rent for
purposes of installing and assembling Tenant's fixtures, telecommunications and
computers. Tenant shall have no obligation to pay rent during this Early Entry
period.
(b) DELAY IN COMMENCEMENT. Except for delays caused by reasons
beyond Landlord's control including delays caused by Tenant, delays caused by
governmental authorities
1.
<PAGE> 22
or other Force Majeure causes ("Excused Delays"), if the Commencement Date has
not occurred on or before June 30, 1996, Tenant shall have the right to
terminate this Lease upon written notice to Landlord and Landlord and Tenant
shall have no further obligations hereunder. Any delays caused by Tenant's
failure to comply with the requirements of the Work Letter shall not extend the
Lease Commencement Date and Tenant's obligations to pay rent and other charges
hereunder shall commence on April 30, 1996.
3. OPTION TO EXTEND LEASE TERM.
(a) OPTION TO EXTEND. Tenant shall have one (1) one-time option
("Option to Extend") to extend the initial Lease Term ("Initial Term") on the
same terms and conditions as set forth in this Lease, except for the minimum
monthly rent ("Minimum Rent") and the Base Year, for a period of five (5) years
("Extended Term"). Tenant may exercise the Option to Extend by delivering
written notice of exercise ("Option Notice") to Landlord at least eight (8)
months but not more than twelve (12) months before the expiration of the Initial
Term. In the event Tenant fails to exercise the Option to Extend in strict
accordance with the foregoing, the Option to Extend shall expire and be of no
further force or effect. If, on the date Tenant gives the Option Notice, a
default under the Lease has occurred and is continuing, then the Option Notice
shall be of no force and effect. If the time period during which Tenant may
exercise the Option to Extend has not expired, Tenant may cure the default and
re-submit the Option Notice (if such resubmission is timely made). Additionally,
(i) if a default has occurred and is continuing on the expiration of the Initial
Term or, (ii) there have occurred more than three (3) material defaults during
the twenty-four (24) months immediately preceding the expiration of the Initial
Term, then, notwithstanding a valid exercise by Tenant of the Option Notice,
Landlord may, in its sole discretion, elect to have this Lease expire at the end
of the Initial Term. The Minimum Rent for the Extended Term shall be determined
pursuant to paragraph (b) below. In no event, however, shall the Minimum Rent
for the Extended Term be less than the Minimum Rent payable in the last Lease
Year of the Initial Term. The Base Year for the Extended Term shall be 2006. For
purposes of this Lease, the term "Lease Year" shall mean each consecutive twelve
month period during the term of this Lease ending on December 31, provided that
the first Lease Year shall commence upon the Lease Commencement Date and shall
end on the next succeeding December 31, and the last Lease Year shall end upon
the Lease Expiration Date.
(b) MINIMUM RENT FOR EXTENDED TERM. Minimum Rent for the Extended
Term shall be the Ninety Five Percent (95%) of the Fair Market Rental of the
premises as determined below.
(i) DEFINITION. "Fair Market Rental" means the fair market
rental per month on similar terms and conditions contained in this
Lease for the specific space that constitutes the premises for the
five (5) year period constituting the Extended Term, as determined
herein. The Fair Market Rental shall take into account only the
following factors: (1) such periodic increases as may be part of the
fair market rental for the Extended Term, (2) the length of the
Extended Term, and (3) the contract rental rate then being charged
by other landlords for
2.
<PAGE> 23
similar space in comparable buildings in the area in which the
premises are located.
(ii) DETERMINING FAIR MARKET RENTAL FOR RENEWAL TERM--INITIAL
20-DAY PERIOD FOR NEGOTIATION. After Tenant delivers the Option
Notice to Landlord, Landlord and Tenant will commence negotiation,
on that date that is six months prior to the expiration of the
Initial Term to determine the Fair Market Rental. If Landlord and
Tenant have not agreed on the Fair Market Rental within twenty (20)
days after such date, then Tenant may elect to have the Fair Market
Rental determined by arbitration.
(iii) ARBITRATION. The arbitration shall be conducted and
determined in the City and County of San Francisco in accordance
with the then prevailing rules of the American Arbitration
Association or its successor for arbitration of commercial disputes
except to the extent that the procedures mandated by said rules
shall be modified as follows:
(A) Tenant shall make demand for arbitration in writing
within ten (10) days of the expiration of the initial
twenty (20) day period provided for the determination by
Tenant and Landlord of the Fair Market Rental [described
in subsection (b)(ii) above], specifying therein the name
and address of the person to act as the arbitrator on its
behalf. The arbitrator shall be qualified as a real estate
appraiser familiar with the Fair Market Rental of
first-class commercial office space in the downtown San
Francisco area who would qualify as an expert witness over
objection to give opinion testimony addressed to the issue
in a court of competent jurisdiction. Failure on the part
of Tenant to make a proper demand in a timely manner for
such arbitration shall constitute a waiver of the right
thereto and acceptance of Landlord's determination of Fair
Market Rental. Within fifteen (15) days after the service
of the demand for arbitration, Landlord shall give notice
to Tenant, specifying the name and address of the person
designated by Landlord to act as arbitrator on its behalf
who shall be similarly qualified. If Landlord fails to
notify Tenant of the appointment of its arbitrator, within
or by the time above specified, then the arbitrator
appointed by Tenant shall be the arbitrator to determine
the issue.
(B) In the event that two arbitrators are chosen
pursuant to paragraph b(iii)(A) above, the arbitrators so
chosen shall, within fifteen (15) days after the second
arbitrator is appointed determine the Fair Market Rental.
If the two arbitrators shall be unable to agree upon a
determination of Fair Market Rental within such 15-day
period, they, themselves, shall appoint a third
arbitrator, who shall be a competent and impartial person
with qualifications similar to those required of the first
two arbitrators pursuant to paragraph b(iii)(A). In the
event they are
3.
<PAGE> 24
unable to agree upon such appointment within seven (7)
days after expiration of said 15-day period, the third
arbitrator shall be selected by the parties themselves, if
they can agree thereon, within a further period of fifteen
(15) days. If the parties do not so agree, then either
party, on behalf of both, may request appointment of such
a qualified person by the then Chief Judge of the United
States District Court having jurisdiction over the City
and County of San Francisco, acting in his private and not
in his official capacity, and the other party shall not
raise any question as to such Judge's full power and
jurisdiction to entertain the application for and make the
appointment. The three arbitrators shall decide the
dispute if it has not previously been resolved by
following the procedure set forth below.
(C) Where an issue cannot be resolved by an agreement
between the two arbitrators selected by Landlord and
Tenant or settlement between the parties during the course
of arbitrations, the issue shall be resolved by the three
arbitrators within fifteen (15) days of the appointment of
the third arbitrator in accordance with the following
procedure. The arbitrator selected by each of the parties
shall state in writing his determination of the Fair
Market Rental supported by the reasons therefor with
counterpart copies to each party. The arbitrators shall
arrange for a simultaneous exchange of such proposed
resolutions. The role of the third arbitrator shall be to
select which of the two proposed resolutions most closely
approximates his determination of Fair Market Rental. The
third arbitrator shall have no right to propose a middle
ground or any modification of either of the two proposed
resolutions. The resolution he chooses as most closely
approximating his determination shall constitute the
decision of the arbitrators and be final and binding upon
the parties.
(D) In the event of a failure, refusal or inability of
any arbitrator to act, his successor shall be appointed by
him, but in the case of the third arbitrator, his
successor shall be appointed in the same manner as
provided for appointment of the third arbitrator. The
arbitrators shall decide the issue within fifteen (15)
days after the appointment of the third arbitrator. The
decision of the arbitrators shall be binding and
conclusive upon the parties. Each party shall pay the fee
and expenses of its respective arbitrator and both shall
share the fee and expenses of the third arbitrator, if
any, and the attorneys' fees and expenses of counsel for
the respective parties and of witnesses shall be paid by
the respective party engaging such counsel or calling such
witnesses.
(E) The arbitrators shall have the right to consult
experts and competent authorities to obtain factual
information or evidence pertaining to a determination of
Fair Market Rental, but any such consultation shall
4.
<PAGE> 25
be made in the presence of both parties with full right on
their part to cross-examine. The arbitrators shall render
their decision and award in writing with counterpart
copies to each party. The arbitrators shall have no power
to modify the provisions of this Lease.
4. TAX INCREASES AND ASSESSMENTS.
(a) CHANGE IN OWNERSHIP DURING INITIAL TERM. Notwithstanding
anything contained in Paragraph 6(b) of the Lease, during the Initial Term
Tenant shall have no obligation to pay any increases in real property taxes
which are attributable to any transaction by Landlord which results in a
reassessment of the building other than transactions requested by Tenant after
the Lease Commencement Date.
(b) PAYMENTS. Tenant shall pay to Landlord monthly as additional
rent during each Lease Year a sum equal to one-twelfth (1/12th) of Tenant's
percentage share of the amount of any increase in real property taxes and
assessments as described in Paragraph 6 (b) of the Lease, payable on or before
the first day of each month during such Lease Year, in advance, in an amount
reasonably estimated by Landlord and billed by Landlord to Tenant, and Landlord
shall have the right initially to determine monthly estimates and to revise such
estimates from time to time. After Landlord has received the bills for the
property taxes and assessments for any year, Landlord shall furnish Tenant with
a statement ("Landlord's Tax Statement") setting forth the amount of the
Tenant's percentage share of the increase in taxes for such year, which may
include any legal fees or expenses incurred by Landlord in seeking the reduction
of such taxes. Such statement shall credit Tenant with its proportionate share
of any refund of taxes received by the Landlord in the Lease Year and not
credited to Tenant and shall be accompanied by a copy of the tax bill, the
refund statement and the bill for legal services, if any, received by Landlord.
If the actual Tenant's Percentage Share of increases in taxes, including any
refund and legal fees, for such year exceeds the estimated amounts paid by
Tenant for such year, Tenant shall pay to Landlord the difference between the
amount paid by Tenant and the actual increase in taxes payable by Tenant within
thirty (30) days after Landlord's Tax Statement has been given to Tenant, and if
the total amount paid by Tenant for such year exceeds the actual increase in
taxes payable by Tenant for such year, such excess shall be credited against
installments of increase in taxes due from Tenant to Landlord until Tenant has
fully recouped such excess payment; or, if such excess payment is made during
the last Lease Year of the Lease Term, such excess shall be refunded to Tenant,
within thirty (30) days after Landlord's delivery of tax statement to Tenant.
5. OPERATING EXPENSE INCREASES.
(a) DEFINITION OF "DIRECT EXPENSES". Notwithstanding anything
contained in Paragraph 6(c) of the Lease, Direct expenses shall also include:
(1) salaries, wages and payroll burden, (2) premiums and other charges incurred
by Landlord with respect to fire, other casualty, rent and liability insurance,
and, after the Base Year, costs of repairing an insured casualty to the extent
of the deductible amount under the applicable insurance policy; (3) telephone,
postage, stationery supplies and other reasonable expenses directly incurred in
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connection with the operation, maintenance or repair of the building; (4)
repairs to and physical maintenance of the building, including building systems
and appurtenances thereto and normal repair and replacement of worn-out
equipment, facilities and installations, but excluding the replacement of major
building systems (except as otherwise provided in Paragraph 6(c) of the Lease;
(5) rubbish removal, window cleaning, security, plumbing, service contracts for
elevator, electrical, telecommunications, cabling, mechanical and other building
equipment and systems or as may otherwise be necessary or proper for the
operation or maintenance of the building; (6) supplies, tools and equipment used
in connection with the operation, maintenance or repair of the building; (7)
accounting, legal and other professional fees and expenses; and (8) painting the
exterior or the common areas of the building and maintaining the sidewalks and
landscaping and public areas of the building.
(b) OPERATING COST EXCLUSIONS. Notwithstanding the provisions of
paragraph (a) above, the following shall not be included within Operating
Expenses:
(1) Leasing commissions, attorneys' fees, costs, disbursements,
and other expenses incurred in connection with negotiations or
disputes with tenants, or in connection with leasing, renovating, or
improving space for tenants or other occupants or prospective
tenants or other occupants of the building.
(2) The cost of any service sold to any tenant (including
Tenant) or other occupant for which Landlord is entitled to be
reimbursed as an additional charge or rental over and above the
basic rent and escalations payable under the lease with that tenant.
(3) any depreciation on the building or property.
(4) Except as otherwise permitted in the Lease, costs of a
capital nature, including but not limited to capital improvements
and alterations, capital repairs, capital equipment, and capital
tools as determined in accordance with generally accepted accounting
principles.
(5) Expenses in connection with services or other benefits of a
type that are not provided to Tenant but which are provided another
tenant or occupant of the building or property.
(6) Costs incurred due to Landlord's violation of any terms or
conditions of this Lease or any other lease relating to the building
or property.
(7) Overhead profit increments paid to Landlord's subsidiaries
or affiliates for management or other services on or to the building
or for supplies or other materials to the extent that the cost of
the services, supplies, or materials exceeds the cost that would
have been paid had the services, supplies, or materials been
provided by unaffiliated parties on a competitive basis.
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(8) All interest, loan fees, and other carrying costs related to
any mortgage or deed of trust or related to any capital item, which
is an excluded operating cost under the Lease, and all rental and
other payable due under any ground or underlying lease, or any lease
for any equipment ordinarily considered to be of a capital nature
(except janitorial equipment which is not affixed to the building).
(9) Any compensation paid to clerks, attendants, or other
persons in commercial concessions operated by Landlord.
(10) Advertising and promotional expenditures.
(11) Costs of repairs and other work occasioned by fire,
windstorm, or other casualty of an insurable nature to the extent
Landlord receives insurance proceeds to cover such costs.
(12) Any costs, fines, or penalties incurred due to violations
by Landlord of any governmental rule or authority, this Lease or any
other lease in the property, or due to Landlord's negligence or
willful misconduct.
(13) Management costs to the extent they exceed management costs
charged for similar facilities in the area and in any event, to the
extent they exceed six percent (6%) of all other Operating Expenses.
(14) Costs for sculpture, paintings, or other objects of art
(nor insurance thereon or extraordinary security in connection
therewith).
(15) Wages, salaries, or other compensation paid to any
executive employees above the grade of building manager.
(16) The cost of correcting any building code or other
violations which were violations prior to the Commencement Date.
(17) the cost of containing, removing, or otherwise remediating
any contamination of the property (including the underlying land and
ground water) by any toxic or hazardous materials (including,
without limitation, asbestos and "PCB's") where such contamination
was not caused by Tenant or any employee, agent or invitee of
Tenant.
(18) Any other expense that under generally accepted accounting
principles and practice consistently applied would not be considered
a normal maintenance or operating expense.
(c) PAYMENT OF INCREASES IN DIRECT EXPENSES. Tenant shall pay to
Landlord monthly as additional rent during each Lease Year a sum equal to
one-twelfth (1/12th) of
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Tenant's percentage share of increases in Direct expenses for such Lease Year,
payable on or before the first day of each month of such Lease Year, in advance,
in an amount reasonably estimated by Landlord and billed by Landlord to Tenant,
and Landlord shall have the right initially to determine monthly estimates and
to revise such estimates from time to time. Within ninety (90) days after the
end of each Lease Year, Landlord shall furnish Tenant with a statement
("Landlord's Expense Statement"), setting forth in reasonable detail the Direct
expenses for such Lease Year, and Tenant's Percentage Share of increases in
Direct expenses over the Base Year. If the actual increase in Direct expenses
for said Lease Year exceed the estimated increase in Direct expenses paid by
Tenant for such year, Tenant shall pay to Landlord the difference between the
amount paid by Tenant and the actual increase in Direct expenses within thirty
(30) days after Landlord's Expense Statement has been given to Tenant, and if
the total amount paid by Tenant for any such year exceeds the actual increase in
Direct expenses for such year, such excess shall be credited against
installments of the estimated increase in Direct expenses due from Tenant to
Landlord hereunder until Tenant has fully recouped such excess payment; or, if
such excess payment is made during the last Lease Year of the Initial Term, such
excess shall be refunded to Tenant within thirty (30) days after Landlord's
delivery of Operating Expense Statement to Tenant. Tenant shall have no
obligation to pay any amounts hereunder if Landlord's Expense Statement is not
delivered within three (3) years after the end of such Lease Year. A Landlord's
Expense Statement for any Lease Year shall be conclusively deemed to be correct
if not objected to by Tenant, Landlord or Landlord's successor within three
years following the expiration of such Lease Year. Tenant hereby waives the
benefit of any statute of limitations that would extend Tenant's right to
challenge the propriety of any Direct expenses contained in any Landlord's
Expense Statement beyond the three year period agreed to in the preceding
sentence.
(d) TENANT'S AUDIT RIGHTS. Within ninety (90) days after receipt of
Landlord's statement setting forth actual Operating Expenses and Direct Expenses
(the "Statement"), Tenant shall have the right to audit at Landlord's local
offices, at Tenant's expense, Landlord's accounts and records relating to
Operating Expenses and Direct Expenses. Such audit shall be conducted by a
certified public accountant approved by Landlord, which approval shall not be
unreasonably withheld. If such audit reveals that Landlord has overcharged
Tenant, the amount overcharged shall be paid to Tenant within thirty (30) days
after the audit is concluded. If the Statement exceeds the actual Operating
Expenses and Direct Expenses which should have been charged to Tenant by more
than seven percent (7%), the cost of the audit shall be paid by Landlord.
6. USES. Notwithstanding anything contained in Paragraph 8 of the
Lease, if permitted by applicable law and ordinances, and subject to obtaining a
permit (if required by law), Tenant shall be permitted to operate a commercial
kitchen in the premises.
7. COMPLIANCE WITH COVENANTS. Landlord warrants to Tenant that on the
Lease Commencement Date, the premises and all improvements thereon (a) shall be
free from material structural defects and (b) shall comply with all applicable
covenants and restrictions of record, statutes, ordinances, codes, rules,
regulations, orders, and requirements, including, without limitation, Title 24
of the California Administrative Code and the Americans with Disabilities
8.
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Act. In the event of a breach of any of the foregoing warranties, Landlord shall
rectify such breach at its sole cost and expense. Nothing contained herein shall
constitute a warranty by Landlord of the plans and specifications for the
premises as prepared by Tenant's architect pursuant to the Work Letter.
8. COMPLIANCE WITH LAWS.
(a) TENANT'S USE OF HAZARDOUS SUBSTANCES. In addition to the
provisions of Paragraph 9 of the Lease, Tenant shall not use, store, dispose,
release, discharge, transport or generate (collectively "Use of Hazardous
Substances") any Hazardous Substances (as defined below), in, on, to, under,
from or about the premises or the building without Landlord's prior written
consent, which consent may be granted on conditions or withheld in Landlord's
sole and absolute discretion. Tenant warrants and agrees that if Landlord grants
its consent to Tenant's Use of Hazardous Substances, such Use of Hazardous
Substances shall be conducted in strict accordance with all Environmental Laws
(as defined below) and prudent business practices. Any consent or approval by
Landlord of Tenant's Use of Hazardous Substances shall not constitute an
assumption of risk respecting the same nor a warranty or certification by
Landlord that Tenant's proposed Use of Hazardous Substances is safe or
reasonable or in compliance with Environmental Laws. Tenant shall maintain
current all permits required for its operations, including, without limitation,
those for the Use of Hazardous Substances. Tenant shall keep and maintain the
premises in compliance with all, and shall not cause or permit the premises and
the activities conducted thereon by Tenant to be in violation of any,
Environmental Laws. Tenant shall not undertake any remedial action with respect
to any release of Hazardous Substances or to comply with any violation of any
Environmental Law without obtaining the prior written consent of Landlord which
shall not be unreasonably withheld or delayed unless any delay in undertaking
any such remedial action may expose Tenant to any liability. If Tenant's use of
Hazardous Substances results in an increase in the premiums of any insurance
that Landlord is required to maintain under this Lease, then Tenant shall pay
the amount of such increased premiums. Additionally, Landlord may require that
Tenant procure, at Tenant's sole cost and expense, additional insurance that
specifically covers loss or damage to persons or property that may result from
Tenant's use of such Hazardous Substances.
(b) DEFINITIONS. As used in this Lease, the term "Hazardous
Substances" shall mean any substances or materials which at such time are
classified or are considered to be hazardous or toxic under any Environmental
Law, including, without limitation, petroleum products, asbestos and PCBs. As
used in this Lease, the term "Environmental Laws" shall mean any and all present
and future federal, state and local laws (whether under common law, statute,
rule, regulation or otherwise), requirements under permits issued with respect
thereto, and other requirements of governmental authorities relating to the
environment or to any Hazardous Substance (including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as heretofore or hereafter amended from time to time.
(c) LANDLORD'S ENVIRONMENTAL INDEMNITY. Landlord warrants to Tenant
that on the commencement of the term hereof, the premises comply with
Environmental laws. In the event of a breach of the foregoing warranty, Landlord
shall take all reasonable steps to
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remedy such breach. Landlord shall protect, indemnify, defend, and hold Tenant
harmless from and against any and all liability, loss, suits, claims, actions,
costs, and expense (including, without limitation, attorneys' fees) arising from
(a) any breach of the foregoing warranty and (b) any contamination of the
premises by any Hazardous Substances where such contamination was caused by
Landlord. The provisions of this paragraph shall survive the termination of this
Lease.
9. RESTORATION OF PREMISES. Upon the expiration or sooner termination
of the Term, upon demand by Landlord, at Tenant's sole cost and expense, Tenant
shall with all due diligence:
(a) remove any initial Tenant Improvements that were constructed by
Landlord to accommodate Tenant's use of two floors of the building to the extent
that the cost of removing such items does not exceed $50,000;
(b) remove any subsequent alterations, additions or improvements
made by Tenant and designated for removal by Landlord at the time Landlord
approves such alterations; and
(c) repair any damage to the premises caused by any such removal
pursuant to subparagraph (a) or (b) above.
10. ASSIGNMENT AND SUBLETTING.
(a) For purposes of Paragraph 14(a) of the Lease, it shall not be
unreasonable for Landlord to consider the following, among others: (a)
reputation and character of the proposed assignee or sublessee; (b) the
financial worth of the proposed assignee or sublessee; (c) the business
experience of the proposed assignee or sublessee; (d) the number of separate
uses of the premises and (e) other similar matters. In no event shall it be
considered unreasonable for Landlord to withhold its consent to a proposed
assignment or sublease if such proposed assignment or sublease would cause
Landlord to be in default of a lease with another tenant or occupant of the
building. If Landlord approves such assignment or subletting, Tenant shall
proceed with such assignment or subletting and such transfer shall be upon and
subject to the terms of this Lease and Tenant shall pay Landlord a sum equal to
fifty percent (50%) of any rent or other consideration paid to Tenant by any
assignee or sublessee which is in excess of the rent then being paid to Landlord
by Tenant pursuant to the terms of this Lease net of: (a) leasing commissions;
(b) tenant improvements payable by Tenant; and (c) other transaction costs not
to exceed $6,000 in the aggregate including but not limited to attorneys' fees
and the Landlord's approval fee.
(b) If Tenant delivers a Sublet Notice to Landlord, the Sublet
Notice shall be accompanied by a proposed draft of the assignment or sublease
("Draft"). Landlord shall have fifteen (15) business days after delivery of such
Draft to grant its consent or to notify Tenant, in writing, of its intent to
withhold consent. If Landlord does not withhold its consent, Tenant shall
thereafter deliver a copy of the executed sublease or assignment to Landlord and
Landlord
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shall have five (5) business days thereafter to grant its consent or to notify
Tenant in writing, of its intent to withhold consent; provided, however,
Landlord shall have no right to withhold its consent if the executed sublease or
assignment is substantially the same as the proposed Draft previously approved
by Landlord on the same economic terms and conditions as approved by Landlord.
(c) Notwithstanding anything contained in Paragraph 14(f) of the
Lease, Tenant may assign or sublease this Lease to an affiliate or subsidiary
without Landlord's consent.
11. UTILITIES AND SERVICES.
(a) GENERAL. So long as Tenant is not in material default in the
performance of its obligations under this Lease, Landlord shall:
(1) Operate or cause the operation in season of the heating,
ventilating and air-conditioning ("HVAC") system presently serving
the premises, at such temperatures and in such amounts as Landlord
determines are reasonably required for the comfortable occupancy of
the premises or as may be permitted or controlled by applicable
laws, ordinances, rules and regulations. Any HVAC provided by
Landlord to Tenant shall be at Tenant's sole cost and expense,
which shall be an amount equal to Landlord's cost of supplying HVAC
to the HVAC zone of which the premises are a part. Tenant shall
also be responsible for and shall pay Landlord any additional costs
(including, without limitation, the costs of installation of
additional HVAC equipment) incurred because of the failure of the
HVAC system to perform its function due to arrangement of
partitioning in the premises after the initial tenant improvements
or changes or alterations thereto, from any use of heat-generating
machinery or equipment, from occupancy of the premises exceeding
one person per one hundred twenty (120) square feet of rentable
area, or for failure of Tenant to keep all HVAC vents within the
premises free of obstruction.
(2) Provide access to water in the lavatories on each floor and
to the kitchen in the premises and make customary arrangements with
public utilities and/or public agencies to furnish electric current
to the premises as specified in Paragraph (G) of the Work Letter.
The cost of all electricity serving the Premises shall be paid for
by Tenant directly to the utility company. Landlord shall, at its
sole cost and expense, install a separate electrical meter in the
premises.
(3) Operate, maintain, clean, light, heat, ventilate and
air-condition the common areas of the building and provide such
security as may be reasonably necessary during business hours only.
Landlord shall not be liable to Tenant for losses due to theft or
burglary, or for damages or injury done by unauthorized
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persons in the building. Landlord shall provide elevator service in
the building on a 24 hours per day, seven days per week basis.
(4) Provide janitorial service to the building at a standard
provided to other comparable office buildings in San Francisco on
each weekday, exclusive of Saturday, Sunday and holidays, subject
to access being granted to the person or persons employed or
retained by Landlord to perform such work at such time as
prescribed by Landlord.
(5) Notify Tenant in writing at least forty-eight (48) hours
before any intentional shut-down of electrical power or HVAC
serving the premises, except in the case of an emergency.
Notwithstanding the terms of this Lease to the contrary, if any
building service is interrupted for a period of five (5) consecutive business
days due to the gross negligence or willful acts of Landlord, its agents,
servants, employees, contractors or subcontractors, or ten (10) consecutive
business days for any other reason and such failure adversely effects Tenant's
use of the premises for Tenant's normal business operations, then there shall be
an abatement of Base Rent from and after said fifth (5th) or tenth (10th) day,
until such services are restored. However, if such failure lasts for one hundred
twenty (120) consecutive days, Tenant shall have the option, upon written notice
to Landlord, to terminate this Lease. Landlord agrees to use its best efforts to
restore such services as soon as possible. If Landlord has not diligently
commenced efforts to restore such services within three (3) days of such
interruption, Tenant may make any necessary repairs and may deduct the actual
cost of such repairs from the next installment or installments of rent due
hereunder.
(b) SUPPLEMENTARY SERVICES. Tenant shall pay Landlord, at the
charges established by Landlord from time to time, for all supplementary
services requested by Tenant, which charges shall be payable by Tenant upon
demand by Landlord. Such supplementary services shall include, without
limitation, maintenance, repair, janitorial, cleaning and other services
provided during hours other than ordinary business hours and/or in amounts not
considered by Landlord as standard.
(c) INTERRUPTION OF ACCESS, USE OR SERVICES. Landlord shall not be
liable for any failure to provide access to or use of the premises, or to
furnish any services or utilities when such failure is caused by nature
occurrences, riots, civil disturbances, insurrection, war, court order, public
enemy, accidents, breakage, repairs, strikes, lockouts, other labor disputes,
the making of repairs, alterations or improvements to the premises or the
building, the inability to obtain an adequate supply of fuel, gas, steam, water,
electricity, labor or other supplies or by any other condition beyond Landlords'
reasonable control, and Tenant shall not be entitled to any damages resulting
from such failure,nor shall such failure relieve Tenant of the obligation to pay
all sums due hereunder or constitute or be construed as a constructive or other
eviction of Tenant. If any governmental entity promulgates or revises any
statute, ordinance or building, fire or other code, or imposes mandatory or
voluntary controls or guidelines on Landlord or the building or any part
thereof, relating to the use or conservation of energy, water, gas, steam,
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light or electricity or the provision of any other utility or service provided
with respect to this Lease, or if Landlord is required or elects to make
alterations to the building in order to comply with such mandatory or voluntary
controls or guidelines, or make such alterations to the building, neither such
compliance nor the making of such alterations shall in any event entitle Tenant
to any damages, relieve Tenant of the obligation to pay any of the sums due
hereunder, or constitute or be construed as a constructive or other eviction of
Tenant.
12. SUBORDINATION AGREEMENT. Landlord specifically agrees that (i)
Tenant may conclusively rely upon any written notice Tenant receives from the
beneficiary of any mortgage or deed of trust ("Lender"), encumbering the
building and/or the land upon which the building is situated, notwithstanding
any claim by Landlord contesting the validity of any term or condition of such
notice, including, but not limited to, any default claimed by Lender and (ii)
that Landlord shall not make any claim of any kind against Tenant or Tenant's
leasehold interest with respect to amounts paid to Lender by Tenant or any acts
performed by Tenant pursuant to such written notice. As a condition to Tenant's
execution of this Lease, Landlord hereby covenants and agrees to deliver to
Tenant, prior to the Lease Commencement Date, a Subordination, Non-Disturbance
and Attornment Agreement executed by Wells Fargo Bank, National Association, in
a form reasonably acceptable to Tenant (the "Wells Fargo Non-Disturbance"). In
the event that Landlord does not deliver the Wells Fargo Non-Disturbance to
Tenant prior to the Lease Commencement Date, this Lease shall terminate and be
of no further force and effect, Landlord shall immediately return to Tenant the
Security Deposit and any and all other funds theretofore delivered by Tenant to
Landlord, and neither Tenant nor Landlord shall have any further liability under
this Lease. Notwithstanding anything in this Lease to the contrary, as a
condition to Tenant's subordination to any future mortgages, deeds of trust, or
ground or underlying leases affecting the premises,, Tenant shall receive a
non-disturbance agreement in a form reasonably acceptable to Landlord and
Tenant.
13. TENANT'S DEFAULT. Tenant shall be deemed to be in default under
this Lease upon the occurrence of any of the following events ("Event of
Default"): (a) Tenant shall fail to pay any Rent within five (5) days after the
same becomes due and payable; (b) Tenant shall fail to pay any other sum when
and as the same becomes due and payable and such failure shall continue for more
than five (5) business days after written notice that such payment was not
received when due; (c) Tenant shall fail to observe, keep or perform any of the
other terms, covenants, agreements or conditions contained in this Lease or in
the rules and regulations described in Paragraph 6 above and on the part of
Tenant to be observed or performed and such default continues for a period of
thirty (30) days after written notice by Landlord and Tenant shall not within
said period commence with due diligence the curing of such default or, having so
commenced, shall thereafter fail or neglect with due diligence to complete the
curing of such default or shall not, in all events, complete the curing of such
default within ninety (90) days after the original default notice to Tenant; (d)
Tenant shall file a petition for bankruptcy or become insolvent or make a
transfer in fraud of creditors, or make an assignment for the benefit of
creditors, or commence or there is commenced against Tenant any proceedings of
any kind under any provision of the United States Bankruptcy Code or under any
other insolvency, bankruptcy or reorganization act and, in the event any such
proceedings are involuntary, Tenant is not discharged from the same within
ninety (90) days thereafter; (e) a receiver is appointed
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for a substantial part of the assets of Tenant and is not dismissed or
discharged within ninety (90) days; (f) Tenant shall abandon the premises; or
(g) this Lease or any estate of Tenant hereunder shall be levied upon by any
attachment or execution which is not discharged or bonded against within thirty
(30) days.
14. BANKRUPTCY OF TENANT. To the extent permitted under then-applicable
law, if a petition is filed by or against Tenant for relief under Title 11 of
the United States Code, as amended (the "Bankruptcy Code"), and Tenant
(including for purposes of this paragraph Tenant's successor in bankruptcy,
whether a trustee or Tenant as debtor in possession) assumes and proposes to
assign, or proposes to assume and assign, this Lease pursuant to the provisions
of the Bankruptcy Code to any person or entity who has made a bona fide offer to
accept any assignment of this Lease on the terms acceptable to Tenant, then
notice of the proposed assignment setting forth (a) the name and address of the
proposed assignee, (b) all of the terms and conditions of the offer and proposed
assignment, and (c) the adequate assurance to be furnished by the proposed
assignee of its future performance under the Lease, shall be given to Landlord
by Tenant no later than twenty (20) days after the Tenant has made or received
such offer, but in no event later than ten (10) days prior to the date on which
Tenant applies to a court of competent jurisdiction for authority and approval
to enter into the proposed assignment. Landlord shall have the prior right and
option, to be exercised by notice to Tenant given at any time prior the date on
which the court order authorizing such assignment becomes final and
non-appealable, to receive an assignment of this Lease upon the same terms and
conditions, and for the same consideration, if any, as the proposed assignee,
less any brokerage commissions which may otherwise be payable out of the
consideration to be paid by the proposed assignee for the assignment of this
Lease. If this Lease is assigned pursuant to the provisions of the Bankruptcy
Code, Landlord: (i) may require from the assignee a deposit or other security
for the performance of its obligations under the Lease in an amount
substantially the same as would have been required by Landlord upon the initial
leasing to a tenant similar to the assignee; and (ii) shall receive, as
additional rent, the sums and economic consideration described in Paragraph 7 of
this Addendum. Any person or entity to which this Lease is assigned pursuant to
the provisions of the Bankruptcy Code shall be deemed, without further act or
documentation, to have assumed all of the Tenant's obligations arising under
this Lease on and after the date of such assignment. No provision of this Lease
shall be deemed a waiver of Landlord's rights or remedies under the Bankruptcy
Code to oppose any assumption and/or assignment of this Lease, to require a
timely performance of Tenant's obligations under this Lease, or to regain
possession of the premises if this Lease has neither been assumed nor rejected
within sixty (60) days after the date of the order for relief or within such
additional time as a court of competent jurisdiction may have fixed.
Notwithstanding anything in this Lease to the contrary, all amounts payable by
Tenant to or on behalf of Landlord under this Lease, whether or not expressly
denominated as rent, shall constitute rent for the purposes of Section 502(b)(6)
of the Bankruptcy Code.
15. DAMAGE AND DESTRUCTION. This paragraph shall be in replacement of
Paragraph 25(b) of the Lease: "Landlord shall notify Tenant within thirty (30)
days of the date of a casualty, and such notice shall specify Landlord's
architect's or engineer's reasonable estimate as to the time required to rebuild
or restore the Premises. If such repairs cannot in Landlord's reasonable opinion
be completed within one hundred twenty (120) days after issuance of a
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<PAGE> 35
building permit therefor or if such damage is uninsured, either Landlord or
Tenant may elect to terminate this Lease by giving written notice thereof within
sixty (60) days after the date of such fire or casualty. If either Landlord or
Tenant elects to terminate this Lease, the Lease shall terminate as of the
termination date specified in either party's notice. If neither party elects to
terminate the Lease, Landlord shall commence restoration of the premises.
If Landlord fails to restore the premises within a period which is
thirty (30) days longer than the period Landlord estimates as the rebuilding
period, Tenant may within ten (10) days thereafter terminate this Lease by
delivering written notice to Landlord of such termination, in which event this
Lease shall terminate as of the date of the giving of such notice.
If the damage or destruction to the Premises is of such a nature that
Tenant reasonably determines that such damage or destruction will materially
interfere with the conduct of Tenant's business, and Landlord is obligated to
restore the Premises under this section, and Landlord fails to restore the
Premises (including reasonable means of access thereto) within said one hundred
twenty (120) days, Tenant, at any time thereafter until such restoration is
completed, may terminate this Lease by delivering written notice to Landlord of
such termination, in which event this Lease shall terminate as of the date of
the giving of such notice.
16. LIMITATION OF RECOVERY AGAINST LANDLORD. Tenant acknowledges and
agrees that the liability of Landlord (which for purposes of this Paragraph
shall include all partners, both general and limited, of any partnership and the
officers, directors and shareholders of any corporation) under this Lease shall
be limited to its interest in the building, and any judgments rendered against
Landlord shall be satisfied solely out of the proceeds of sale of its interest
in the building. No officer or partner of Landlord shall be named as a party in
any suit or action (except as may be necessary to secure jurisdiction over
Landlord) and no personal judgment shall lie against Landlord. Tenant agrees
that the foregoing covenants and limitations shall be applicable to any
obligation or liability of Landlord, whether expressly contained in this Lease
or imposed by statute or at common law. The foregoing provisions are not
intended to relieve Landlord from the performance of any of Landlord's
obligations under this Lease, but only to limit the personal liability of
Landlord in case of recovery of a judgment against Landlord.
17. AUTHORITY. Each of the persons executing this Lease on behalf of
the Tenant does hereby covenant and warrant that Tenant is duly organized and
validly existing, that Tenant has and is qualified to do business in California,
that Tenant has full right and authority to enter into this Lease and to carry
out the transactions contemplated herein, and that each person signing on behalf
of Tenant is authorized to do so.
18. BASIC LEASE INFORMATION. At such time as all the Lease terms called
for in the Basic Lease Information attached hereto have been finally determined
in accordance with the provisions of this Lease, the Basic Lease Information
shall be completed and signed by the parties and shall thereafter be a final and
binding agreement of the parties as to the terms and conditions set forth
therein.
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19. NO CONSTRUCTION AGAINST PREPARER. This Lease has been prepared by
Landlord and its professional advisors and reviewed by Tenant and its
professional advisors. Landlord, Tenant, and their separate advisors believe
that this Lease is the product of all of their efforts, that it expresses their
agreement, and that it should not be interpreted in favor of either Landlord or
Tenant or against either Landlord or Tenant merely because of their efforts in
preparing it.
20. FORCE MAJEURE. In addition to specific provisions of this Lease,
the time within which a party is to perform an obligation under this Lease shall
be extended on a day for day basis to the extent such performance is delayed as
a result of labor or supply difficulties, inclement weather, acts of God,
government regulation, additions, modifications or withdrawals of, or delays in
obtaining, governmental consents or approvals, building moratoria or
restrictions, requirements to prepare further environmental impact documents or
to conduct further environmental impact studies, or any similar cause beyond the
reasonable control or without the fault of the party invoking such extension.
Nothing contained in the foregoing sentence, however, shall excuse Tenant from
its obligation to timely pay Rent or any other monetary amounts owing under this
Lease. Any party invoking an extension under this Paragraph shall immediately
notify the other party in writing of the occurrence and nature of the force
majeure event and the anticipated delay resulting therefrom.
21. SIGNAGE. Tenant may, at Tenant's sole cost and expense, install on
the exterior facade of the building as well as on the lobby directory and at the
entrance to the premises on both the third and fourth floors, and on a flag pole
on the roof such signs subject to Landlord's approval which shall not be
unreasonably withheld or delayed, and otherwise in accordance with the
ordinances of the City of San Francisco.
22. PARKING. During the Lease Term and Extended Term Tenant shall have
the right to lease up to fourteen (14) parking spaces in the building's north
parking lot ("North Spaces") at an initial monthly rental rate of $85 per space
("Parking Rate") on the terms and conditions established by Landlord from time
to time for the use of such parking spaces ("Parking Terms"). In addition, as
long as Landlord has the right to use the building's south parking lot, Landlord
will make available to Tenant up to thirteen (13) additional parking spaces in
the south parking lot on a month-to-month basis, at the Parking Rate and on the
Parking Terms. Landlord may, at is option, move Tenant's right to the North
Spaces to spaces located in the south parking lot provided Landlord can guaranty
Tenant access to such spaces during the entire term of this Lease and any
Extended Term. After the first Lease Year, the Parking Rate for all spaces
leased by Tenant shall be subject to increase as a result of an increase in the
Consumers Price Index ("CPI"), effective on the first day of such Lease Year
computed as follows: the then monthly Parking Rate shall be multiplied by a
fraction, the numerator of which shall be equal to the index (defined below)
available immediately prior to the expiration of the prior Lease Year and the
denominator of which shall be equal to the Index available immediately prior to
the commencement of the Prior Lease Year. The basis for computing each CPI
increase shall be the CPI for All Urban Consumers, San Francisco-Oakland-San
Jose area, All Items (1982-84=100), as published by the United States Department
of Labor, Bureau of Labor Statistics ("Index"). If publication of the Index by
any governmental or private agency is discontinued or if it so modified that it
does not accurately reflect the changes in consumer
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prices from one Lease Year to another then the Landlord and Tenant shall use
such other index as is then generally recognized and accepted for similar
determination of changes in consumer prices. If the Index is revised, it shall
be converted in accordance with the conversion factor published by the Bureau of
Labor Statistics or any other governmental agency then publishing same.
23. BROKERAGE COMMISSION. The parties hereto acknowledge that Stubbs,
Collenette and Associates, Inc. ("Stubbs") is the exclusive broker for the
building and that Colliers Damner Pike is the exclusive broker for Tenant.
Landlord shall pay the broker's commission to Stubbs in connection with this
Lease pursuant to a separate written agreement with Stubbs. Landlord shall pay
the broker's commission to Colliers pursuant to a separate written agreement
between Colliers and Landlord attached hereto as Exhibit E. If a broker or
finder (other than the parties identified in this Paragraph) claims that it
represented Landlord or Tenant in connection with this Lease and that it is
entitled to a commission or finder's fee, then the party whom such broker or
finder claims to represent (whether Landlord or Tenant) shall indemnify, protect
and defend the other from all loss, claim, expense and liability arising out of
such claim, including reasonable attorneys' fees.
24. SECURITY. At the time of the execution of this Lease, there is no
provision for continuous manned security during either standard or non-standard
operating hours at the building.
25. EXPANSION SPACE - RIGHT OF FIRST REFUSAL. Subject to the terms and
conditions of this Paragraph, Tenant shall have the right of first refusal
throughout the Initial Term to lease all or a portion of the second floor of the
building (the "Expansion Space"), which right may be exercised only by strict
compliance with the terms of this Paragraph. Landlord shall not enter into a
binding lease with any third party tenant for all or any portion of the
Expansion Space without first offering such Expansion Space to Tenant as
follows:
(a) Landlord shall provide Tenant with its right of first refusal
hereunder by notifying Tenant in writing that it has received a bona fide offer
from a third party tenant to lease the Expansion Space, or any portion thereof,
and offering to lease such premises to Tenant (the "Offer") on all the same
terms and conditions as this Lease, except as follows: (i) the term of any lease
for the Expansion Space shall be co-terminus with this Lease, including any
renewal options; and (ii) Landlord shall have no obligation to perform or pay
for any Base Building Work (as defined in the Work Letter attached hereto)
except for demolition, HVAC, code required upgrades, and electrical work
required to enable Tenant to occupy the Expansion Space ("Expansion Base
Building Work"), and Landlord's obligation to perform or pay for such Expansion
Base Building Work and for any Tenant Improvements (as defined in the Work
Letter) shall be reduced proportionately as follows:
(1) the total cost to Landlord for Tenant Improvements relating
to the Expansion Space shall not exceed the product of (x) $17.75
per rentable square foot of the Expansion Space, multiplied by (y)
a fraction (the "Remaining Term Fraction"), the numerator of which
is the number of full calendar months
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remaining in the Initial Term following Tenant's scheduled
occupancy date in the Expansion Space, and the denominator of which
is 120 months; and
(2) the total cost to Landlord for the Expansion Base Building
Work relating to the Expansion Space shall not exceed the product
of (x) the cost of all such work required for the Expansion Space
multiplied by (y) the Remaining Term Fraction; provided, however,
that no such limitation or proration of Landlord's cost shall apply
if either of the following conditions is satisfied: (A) the
Remaining Term Fraction (expressed as a percentage) is more than
sixty percent (60%); or (B) concurrently with accepting the Offer
in accordance with subparagraph (c) below Tenant also validly and
irrevocably exercises the Option to Extend pursuant to Paragraph 3
of this Addendum (which concurrent exercise of the Option to Extend
shall be permitted notwithstanding the 12-month time limitation
contained in the second sentence of said Paragraph 3).
(b) In addition, any new lease for the Expansion Space, or any
portion thereof, executed pursuant to this right of first refusal (an "Expansion
Lease") shall contain provisions that provide for the following:
(i) Any default under this Lease shall constitute a default
under the Expansion Lease, and it is agreed that any default under
any Expansion Lease shall constitute a default under this Lease.
(ii) Neither the Option to Extend provided under Section 3
above nor any renewal or extension option contained in any
Expansion Lease may be exercised by Tenant singly, but both must be
exercised, if at all, concurrently with each other. Any attempted
or purported exercise in violation of this provision shall be void
and of no force or effect for any purpose.
(c) The Expansion Lease shall take the form of an amendment to this
Lease in form mutually acceptable to Landlord and Tenant and in compliance with
this Paragraph to be executed within five (5) business days after Tenant's
acceptance of the Offer.
(d) If Tenant fails to deliver its written acceptance of the Offer
in the manner required above within such five (5) business day period, or if an
Expansion Lease for the Expansion Space consistent with the Offer is not signed
by Tenant within the time required by subparagraph (c) above, then Landlord
shall have the right to lease all or any portion of the Expansion Space covered
by the Offer to any other person on any terms or conditions whatsoever,
regardless whether such terms and conditions are more or less favorable than
those offered to Tenant.
(e) Tenant shall have no right to exercise any right of first
refusal hereunder if, at the time Landlord desires to enter into a lease with
another tenant for all or any portion the Expansion Space, an Event of Default
has occurred and is continuing.
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26. RIGHT OF FIRST REFUSAL TO PURCHASE BUILDING. Before consummating a
voluntary sale of the building at any time during the Initial Term or the
Extended Term of this Lease, and so long as no breach or default by Tenant has
occurred and is continuing under this Lease, Landlord will notify Tenant of the
purchase price and other terms (collectively "Sale Terms") upon which it would
be willing to sell the building to Tenant, which Sale Terms shall include an
allocation of closing costs in accordance with then prevailing custom in the
City and County of San Francisco. Tenant shall notify Landlord in writing within
five (5) business days after Landlord's notice whether Tenant is interested in
purchasing the building on the Sale Terms ("Tenant's Interest Notice"). If,
within twenty-five (25) business days after Tenant's Interest Notice, Tenant
unconditionally agrees in writing to purchase the building on the Sale Terms,
Tenant shall execute a formal agreement prepared by Landlord for the purchase
and sale of the building consistent with the Sale Terms within five (5) days
thereafter; provided, however, if the notice of Sale Terms was delivered by
Landlord in the form of a proposed contract of sale, then Tenant shall indicate
its acceptance of the Sale Terms by signing such proposed contract and the sale
shall close within fifteen (15) business days thereafter. If Tenant does not
deliver the Tenant's Interest Notice within the five (5) business day period, or
its written agreement to purchase the building on the Sale Terms offered in
Landlord's notice within such twenty-five day period, or if Landlord and Tenant
do not enter into a fully executed agreement for the purchase and sale of the
building within such five-day period (if applicable), Landlord shall thereafter
have the right to offer and sell the building to any third party on the Sale
Terms or any other terms and conditions, so long as the gross purchase price for
the building is at least ninety-five (95%) of the purchase price contained in
the Sale Terms and the terms of any seller financing, if any, are not
substantially less favorable to the purchaser than any such terms contained in
the Sale Terms offered to Tenant; provided, however, Landlord may elect to
transfer or sell the building to a nonprofit or charitable organization for a
lesser amount which amount is ninety-five percent (95%) of the purchase price
contained in the Sales Terms adjusted to reflect the economic value of the
transaction to Landlord including the tax consequences of such transaction. The
right of first refusal shall lapse upon such sale to a third party.
Notwithstanding the foregoing, Tenant's right of first refusal to purchase the
building under this Paragraph shall not apply to any involuntary sale or
disposition of the building, such as by foreclosure, deed-in-lieu of
foreclosure, condemnation or sale under threat of condemnation or any change in
the percentage ownership among the parties constituting Landlord or any change
in the legal entity constituting Landlord.
27. LANDLORD'S WARRANTY. Landlord hereby warrants it is the fee owner
of the premises, that it has authority to enter into this Lease, and that it
shall take all actions necessary, at its expense, to defend Tenant's quiet
enjoyment of the premises.
28. LANDLORD'S INDEMNITY. Landlord hereby indemnifies Tenant and its
agents, employees and successors and assignees against the following unless
caused by the negligence or intentional actions of Tenant, its employees,
shareholders, partners, agents, contractors or invitees: (i) any damages and
claims arising from Landlord's or Landlord's agents' breach of this Lease; (ii)
the negligence or willful misconduct of Landlord or its agents in the building
or the premises; and (iii) any causes of action solely related to the building
arising prior to the
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Commencement Date. The foregoing indemnity shall exclude consequential damages
unless any damages are caused by the gross negligence or intentional misconduct
of Landlord.
20.