EXHIBIT 10.3
0000 00xx XXXXXX, XXXXXXXXXX, XXXXXXXXXX
AMENDED AND RESTATED OFFICE BUILDING NET LEASE
THIS AMENDED AND RESTATED OFFICE BUILDING NET LEASE COMPLETELY
REPLACES AND SUPERCEDES THE OFFICE BUILDING NET LEASE
DATED NOVEMBER 3, 1999, AS AMENDED, BETWEEN LANDLORD AND TENANT.
BASIC LEASE INFORMATION
DATE OF LEASE: October 18, 2000
LANDLORD: BEP-EMERYVILLE, L.P.
LANDLORD'S ADDRESS: c/o Xxxxx Xxxxxxxx, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
TENANT: EVOLVE SOFTWARE, INC.
TENANT'S ADDRESS: 0000 00xx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx, Chief Financial Officer
BUILDING: EmeryTech Building located at:
0000-00xx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxx
LEASED PREMISES: Approximately 51,261 rentable square feet on the
entire East-Hi-Bay and the ground floor of the
West-Hi-Bay of the Building (the "Existing
Premises").
Approximately 21,090 rentable square feet on the
second (2nd) floor and third (3rd) floor
mezzanine of the Building (the "Expansion
Premises").
RENTABLE AREA: Approximately 72,351 rentable square feet.
TERM COMMENCEMENT
DATE (EXISTING PREMISES): July 21, 2000
SCHEDULED TERM COMMENCEMENT
DATE (EXPANSION PREMISES): February 1, 2001
TERM EXPIRATION DATE: July 20, 2007
OPTION TO EXTEND: Number of Extension Periods: One (1)
Years per Extension Period: Five (5)
BASE RENT (NNN): FOR THE EXISTING PREMISES
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$112,774.20.00 (calculated on the basis of $2.20
per month per rentable square foot); beginning on
the first (1st) anniversary of the Term
Commencement Date for the Existing Premises, and
each anniversary thereafter during the Term, Base
Rent (NNN) shall increase at three percent (3%)
per annum.
FOR THE EXPANSION PREMISES
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$71,706.00 (calculated on the basis of $3.40 per
month per rentable square foot); beginning on the
first (1st) anniversary of the Term Commencement
Date for the Expansion Premises, and each
anniversary thereafter during the Term, Base Rent
(NNN) shall increase at three percent (3%) per
annum. Notwithstanding the foregoing, no Base
Rent for the Expansion Premises shall be payable
until after the thirtieth (30th) day after the
Term Commencement Date for the Expansion
Premises; however, Tenant's Proportionate Share
of the Basic Operating Cost for the Expansion
Premises shall be payable from the Term
Commencement Date.
TENANT'S PROPORTIONATE
SHARE: Approximately 47.24%.
PARKING SPACES: 153
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SECURITY DEPOSIT: $2,078,279.25 (for the Existing Premises)
$822,847.78 (for the Expansion Premises)
$2,901,127.03 (total Security Deposit for the
Leased Premises)
GUARANTOR: None
LANDLORD'S BROKER: CB Xxxxxxx Xxxxx
TENANT'S BROKER: Colliers International
[INTENTIONALLY LEFT BLANK, SIGNATURE PAGE FOLLOWS.]
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The foregoing BASIC LEASE INFORMATION is incorporated herein and made a
part of the LEASE to which it is attached. If there is any conflict between the
BASIC LEASE INFORMATION and the LEASE, the BASIC LEASE INFORMATION shall
control.
"LANDLORD":
BEP-EMERYVILLE, L.P.,
a Delaware limited partnership
By: EPI Investors 103 LLC,
a California limited liability company
Its: General Partner
By: Xxxxx Xxxxxxxx, Inc.,
a California corporation
Its: Managing Member
By: /s/ Xxxxx X Xxxxx
------------------------------------
Name: Xxxxx X Xxxxx
----------------------------------
Title: Vice President
---------------------------------
"TENANT":
EVOLVE SOFTWARE, INC.,
a Delaware corporation
By: /s/ Xxxx Xxxxxxxx
---------------------------------
Name: Xxxx Xxxxxxxx
--------------------------------
Title: CFO
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TABLE OF CONTENTS
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Page
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Article 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 1
Article 2. Leased Premises . . . . . . . . . . . . . . . . . . . . . . 4
2.01. Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.02. Acceptance of Leased Premises. . . . . . . . . . . . . . . . 4
2.03. [Intentionally Deleted.] . . . . . . . . . . . . . . . . . . 4
2.04. Reservation of Rights. . . . . . . . . . . . . . . . . . . . 4
2.05. Associated Rights Granted to Tenant. . . . . . . . . . . . . 5
Article 3. Term, Use and Rent . . . . . . . . . . . . . . . . . . . . . 6
3.01. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.02. Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.03. Base Rent. . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.04. Tenant's Proportionate Share of Basic Operating Cost . . . . 7
3.05. Basic Operating Cost . . . . . . . . . . . . . . . . . . . . 10
Article 4. Landlord's Covenants . . . . . . . . . . . . . . . . . . . . 13
4.01. Basic Services . . . . . . . . . . . . . . . . . . . . . . . 13
4.02. Extra Services . . . . . . . . . . . . . . . . . . . . . . . 15
4.03. Window Coverings . . . . . . . . . . . . . . . . . . . . . . 16
4.04. Graphics and Signage . . . . . . . . . . . . . . . . . . . . 16
4.05. Tenant Extra Improvements. . . . . . . . . . . . . . . . . . 16
4.06. Repair Obligation. . . . . . . . . . . . . . . . . . . . . . 17
4.07. Peaceful Enjoyment . . . . . . . . . . . . . . . . . . . . . 17
Article 5. Tenant's Covenants . . . . . . . . . . . . . . . . . . . . . 18
5.01. Payments by Tenant . . . . . . . . . . . . . . . . . . . . . 18
5.02. Tenant Improvements. . . . . . . . . . . . . . . . . . . . . 18
5.03. Taxes on Personal Property and Tenant Extra Improvements . . 18
5.04. Repairs by Tenant. . . . . . . . . . . . . . . . . . . . . . 18
5.05. Waste. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.06. Assignment or Sublease . . . . . . . . . . . . . . . . . . . 19
5.07. Alterations, Additions and Improvements. . . . . . . . . . . 21
5.08. Compliance With Laws and Insurance Standards . . . . . . . . 22
5.09. No Nuisance; No Overloading. . . . . . . . . . . . . . . . . 23
5.10. Furnishing of Financial Statements; Tenant's Representations 23
5.11. Entry by Landlord. . . . . . . . . . . . . . . . . . . . . . 24
5.12. Nondisturbance and Attornment. . . . . . . . . . . . . . . . 24
5.13. Estoppel Certificate . . . . . . . . . . . . . . . . . . . . 25
5.14. Security Deposit . . . . . . . . . . . . . . . . . . . . . . 26
5.15. Surrender. . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.16. Tenant's Remedies. . . . . . . . . . . . . . . . . . . . . . 28
5.17. CC&Rs/Rules and Regulations. . . . . . . . . . . . . . . . . 29
Article 6. Environmental Matters. . . . . . . . . . . . . . . . . . . . 29
6.01. Hazardous Materials Prohibited . . . . . . . . . . . . . . . 29
6.02. Limitations on Assignment and Subletting . . . . . . . . . . 31
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TABLE OF CONTENTS
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(Continued)
Page
6.03. Right of Entry . . . . . . . . . . . . . . . . . . . . . . . 31
6.04. Notice to Landlord . . . . . . . . . . . . . . . . . . . . . 31
Article 7. Insurance, Indemnity, Condemnation, Damage and Default . . . 31
7.01. Landlord's Insurance . . . . . . . . . . . . . . . . . . . . 31
7.02. Tenant's Liability Insurance . . . . . . . . . . . . . . . . 32
7.03. Tenant's Additional Insurance Requirements . . . . . . . . . 33
7.04. Indemnity and Exoneration. . . . . . . . . . . . . . . . . . 34
7.05. Waiver of Subrogation. . . . . . . . . . . . . . . . . . . . 36
7.06. Condemnation . . . . . . . . . . . . . . . . . . . . . . . . 36
7.07. Damage or Destruction. . . . . . . . . . . . . . . . . . . . 36
7.08. Default by Tenant. . . . . . . . . . . . . . . . . . . . . . 38
Article 8. Option to Renew. . . . . . . . . . . . . . . . . . . . . . . 42
8.01. Option to Renew. . . . . . . . . . . . . . . . . . . . . . . 42
Article 9. Miscellaneous Matters. . . . . . . . . . . . . . . . . . . . 44
9.01. Parking. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.02. Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.03. No Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.04. Recording. . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.05. Holding Over . . . . . . . . . . . . . . . . . . . . . . . . 45
9.06. Transfers by Landlord. . . . . . . . . . . . . . . . . . . . 46
9.07. Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . 46
9.08. Termination; Merger. . . . . . . . . . . . . . . . . . . . . 46
9.09. Amendments; Interpretation . . . . . . . . . . . . . . . . . 46
9.10. Severability . . . . . . . . . . . . . . . . . . . . . . . . 46
9.11. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.12. Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . 47
9.13. Guarantor. None. . . . . . . . . . . . . . . . . . . . . . . 47
9.14. Successors and Assigns . . . . . . . . . . . . . . . . . . . 47
9.15. Further Assurances . . . . . . . . . . . . . . . . . . . . . 47
9.16. Incorporation of Prior Agreements. . . . . . . . . . . . . . 47
9.17. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . 48
9.18. Time of the Essence. . . . . . . . . . . . . . . . . . . . . 48
9.19. No Joint Venture . . . . . . . . . . . . . . . . . . . . . . 48
9.20. Authority. . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.21. Declaration of Covenants, Conditions and Restrictions. . . . 48
9.22. Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.23. Building Access. . . . . . . . . . . . . . . . . . . . . . . 48
9.24. Exhibits; Addenda. . . . . . . . . . . . . . . . . . . . . . 48
9.25. Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . 49
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EXHIBITS:
Exhibit A-1 - Site Plan of the Leased Premises
Exhibit A-2 - Floor Plan of the Leased Premises
Exhibit B - Initial Improvement of the Leased Premises (Existing
Premises)
Exhibit B-1 - Preliminary Plans
Exhibit B-2 - Warm Shell Specifications
Exhibit C - Confirmation of Term of Lease
Exhibit D - Confidentiality Agreement
Exhibit E - Building Rules and Regulations
Exhibit F - Estimated Budget
Exhibit G - Initial Improvement of the Leased Premises (Expansion
Premises)
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OFFICE BUILDING NET LEASE
THIS LEASE, made as of the date specified in the BASIC LEASE INFORMATION
sheet, by and between the landlord specified in the BASIC LEASE INFORMATION
sheet ("Landlord") and the tenant specified in the BASIC LEASE INFORMATION sheet
("Tenant").
ARTICLE 1.
DEFINITIONS
1.01. DEFINITIONS. Terms used herein shall have the following
meanings:
1.02. "ADDITIONAL RENT" shall mean all monetary obligations of Tenant
under this Lease other than the obligation for payment of Net Rent.
1.03. "BASE RENT" shall mean the sums due from time to time as rental
for the Leased Premises.
1.04. [INTENTIONALLY DELETED]
1.05. "BASIC OPERATING COST" shall have the meaning given in Section
3.05.
1.06. "BUILDING" shall mean the building and other improvements
associated therewith identified on the Basic Lease Information sheet, commonly
known as EmeryTech and having a Rentable Area of approximately 149,834 square
feet of office space, all as generally identified on Exhibit A-1 hereto which is
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made a part hereof.
1.07. "BUILDING STANDARD IMPROVEMENTS" shall mean the standard
materials ordinarily used by Landlord in the improvement of the Leased Premises.
1.08. "COMMON AREAS" shall mean (a) the areas on individual floors of
the Building devoted to non-exclusive uses such as common corridors, lobbies,
fire vestibules, elevator foyers, stairways, elevators, electric and telephone
closets, restrooms, mechanical closets, janitor closets and other similar
facilities for the benefit of all tenants (and invitees) on the particular floor
and other floors and (b) other areas of the Project available for the use and
benefit of all tenants (and invitees).
1.09. "COMPUTATION YEAR" shall mean a fiscal year consisting of the
calendar year commencing January 1st of each year during the Term, commencing in
the year 2000 and continuing through the Term with a short or stub fiscal year
in (i) in the year 2000 for the period between the Term Commencement Date and
December 31 of such year and (ii) any partial fiscal year in which the Lease
expires or is terminated for the period between January 1 of such year and the
date of lease termination or expiration.
1.10. "LANDLORD'S BROKER" shall mean the individual or corporate broker
identified on the Basic Lease Information sheet as the broker for Landlord.
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1.11. "LANDLORD'S CONTRIBUTION" shall have the meaning given in Exhibit
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B.
1.12. "LANDLORD'S WORK" shall mean the improvements to the Leased
Premises and the Common Areas to be installed at Landlord's expense pursuant to
Exhibit B attached hereto.
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1.13. "LEASED PREMISES" shall mean the floor area more particularly
shown on the floor plan attached hereto as Exhibit A-2, containing the Rentable
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Area (as such term is defined in Section 1.18 below) specified on the Basic
Lease Information sheet.
1.14. "NET RENT" shall mean the total of Base Rent and Tenant's
Proportionate Share of Basic Operating Cost.
1.15. "PERMITTED USE" shall mean general office, and any other related
lawful use; provided, however, that Permitted Use shall not include (a) offices
or agencies of any foreign government or political subdivision thereof; (b)
offices of any agency or bureau of any state, county or city government; (c)
offices of any health care professionals; (d) schools or other training
facilities which are not ancillary to corporate, executive or professional
office use; or (e) retail or restaurant uses.
1.16. "PROJECT" shall mean the Building situated at 0000 00xx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxx, the parking areas affiliated therewith, and the real
property on which the Building and the parking areas are located.
1.17. "RENT" shall mean Net Rent plus Additional Rent.
1.18. "RENTABLE AREA" shall mean the area or areas of space in the
Building determined in accordance with the Standard Method for Measuring Floor
Area in Office Buildings as most recently published by the Building Owners and
Managers Association International (ANSI-Z65.1-1996) and including a
proportionate allocation of the square footage of the Building's elevator and
mechanical equipment areas, telephone and electrical rooms, janitorial service
areas, public lobbies and corridors, which method of measurement shall be
subject to reasonable revision by Landlord from time to time. The Rentable Area
of the Leased Premises has been calculated on the basis of the foregoing
definition and the application of a twelve percent (12%) load factor to the
useable area determined in accordance with such definition, and prior to the
execution of this Lease, Tenant has had an opportunity to verify Landlord's
calculation of Rentable Area and make its own measurements thereof. It is
agreed for all purposes of this Lease to be the amount stated on the Basic Lease
Information sheet.
1.19. "SECURITY DEPOSIT" shall mean the amount specified on the Basic
Lease Information sheet to be paid by Tenant to Landlord and held and applied
pursuant to Section 5.14.
1.20. "SUBSTANTIAL COMPLETION" shall mean (and the Leased Premises
shall be deemed "Substantially Complete") when (i) installation of Landlord's
Work and the Tenant Improvements (and any Tenant Extra Improvements installed by
Landlord's contractor, or, if permitted by Landlord, any Tenant Extra
Improvements installed by Tenant's contractor within the time schedule
established by Landlord's contractor or consultant for performance of such
2
work) has occurred; (ii) the parking facilities are available for use by Tenant
and its employees and Tenant has direct access from the street to the elevator
lobby on the floor (or floors) where the Leased Premises are located; (iii)
basic services (as described in Section 4.01) are available to the Leased
Premises; (iv) Landlord's architect has issued a certificate of Substantial
Completion with respect to the Leased Premises; (v) the Common Areas of the
Project have been completed and are available for use by Tenant and other
tenants of the Building; and (vi) a certificate of occupancy or its equivalent
or a temporary occupancy permit for the Leased Premises has been issued by
appropriate governmental authorities. Substantial Completion shall be deemed to
have occurred notwithstanding a requirement to complete "punchlist" items or
similar corrective work.
1.21. "TENANT EXTRA IMPROVEMENTS" shall mean the improvements to the
Leased Premises approved by Landlord and to be installed at Tenant's expense
pursuant to Exhibit B, if any.
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1.22. "TENANT IMPROVEMENTS" shall mean the tenant improvements and the
Tenant Extra Improvements (if any) installed or to be installed for Tenant by
Landlord or by Tenant, as the case may be, pursuant to Exhibit B and Exhibit G,
--------- ---------
subject to the Landlord's Contribution.
1.23. "TENANT'S BROKER" shall mean the individual or corporate broker
identified on the Basic Lease Information sheet as the broker for Tenant.
1.24. "TENANT'S PHYSICAL POSSESSION DATE" shall mean February 1, 2000
or thirty (30) days prior to the Term Commencement Date, whichever is later,
for the Existing Premises, and the Term Commencement Date for the Expansion
Premises for the Expansion Premises.
1.25. "TENANT'S PROPORTIONATE SHARE" is specified on the Basic Lease
Information sheet and is based on the percentage which the Rentable Area of the
Leased Premises bears to the total Rentable Area of the Project, subject to
adjustment in the event of the remeasurement of the Building or the Project as
permitted under Section 1.18 above.
1.26. "TERM" shall mean the period commencing with the applicable Term
Commencement Date and ending at midnight on the Term Expiration Date.
1.27. "TERM COMMENCEMENT DATE" shall mean the applicable dates set
forth on the Basic Lease Information sheet.
1.28. "TERM EXPIRATION DATE" shall mean the date set forth on the Basic
Lease Information sheet, unless sooner terminated pursuant to the terms of this
Lease or unless extended pursuant to the provisions of Section 8.01.
1.29. OTHER TERMS. Other terms used in this Lease and on the Basic
Lease Information sheet shall have the meanings given to them herein and
thereon.
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ARTICLE 2.
LEASED PREMISES
2.01. LEASE. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the Leased Premises upon all of the terms, covenants and
conditions set forth in this Lease.
2.02. ACCEPTANCE OF LEASED PREMISES. Tenant acknowledges that: (a) it
has been advised by Landlord, Landlord's Broker and Tenant's Broker, if any, to
satisfy itself with respect to the present and future suitability of the Leased
Premises for Tenant's intended use; (b) Tenant has made such inspection and
investigation as it deems necessary with reference to such matters and assumes
all responsibility therefor as the same relate to Tenant's occupancy of the
Leased Premises and the term of this Lease; and (c) neither Landlord nor
Landlord's Broker nor any of Landlord's agents has made any oral or written
representations or warranties with respect to the condition, suitability or
fitness of the Leased Premises other than as may be specifically set forth in
this Lease. Except as specifically otherwise set forth in this Lease, Tenant
accepts the Leased Premises in its AS IS condition existing on the date Tenant
executes this Lease, subject to all matters of record and applicable laws,
ordinances, rules and regulations. Tenant acknowledges that neither Landlord
nor Landlord's Broker nor any of Landlord's agents has agreed to undertake any
alterations or additions or to perform any maintenance or repair of the Leased
Premises except for the routine maintenance and janitorial work specified herein
and except as may be expressly set forth in EXHIBIT B. Notwithstanding the
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foregoing and anything to the contrary in this Lease, (i) with respect to the
Existing Premises only, prior to the Term Commencement Date of the Existing
Premises, Landlord shall complete the Landlord's Work and Substantially Complete
the Tenant Improvements, all in accordance with the provisions of EXHIBIT B, and
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(ii) with respect to the Existing Premises only, Landlord warrants that (A) for
a period of one (1) year from the date of Substantial Completion of each
component of the Tenant Improvements and the Landlord Improvements, each such
component shall remain in good condition and repair and free of defects, and (B)
as of the applicable Term Commencement Date, the roof and all other portions of
the Existing Premises and the roof and all other structural portions of the
Expansion Premises shall be in good condition and working order and free of
defects. In the event that it is determined that the foregoing warranty has
been violated, then it shall be the obligation of Landlord, after receipt of
written notice from Tenant setting forth with specificity the nature of the
violation, to promptly, at Landlord's sole cost, rectify such violation.
Tenant's failure to give written notice to Landlord of patent defects within one
hundred eighty (180) days after the applicable Term Commencement Date shall
cause the conclusive presumption that Landlord has complied with all of
Landlord's obligations hereunder (except that Landlord shall remain obligated to
correct any latent defects). Notwithstanding the foregoing, the cost of the
Tenant Improvements for the Existing Premises shall include the cost incurred
within the Existing Premises, prior to the Term Commencement Date of the
Existing Premises, of causing the Tenant Improvements for the Existing Premises
to be constructed in accordance with the terms of this Lease including
applicable government rules and regulations.
2.03. [INTENTIONALLY DELETED.]
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2.04. RESERVATION OF RIGHTS. Landlord reserves the right from time to
time, so long as the parking facilities and reasonable access and basic services
to the Leased Premises remain available, to install, use, maintain, repair,
relocate and/or replace pipes, conduits, wires and equipment within and around
the Building and to do and perform such other acts and make such other changes
in, to or with respect to the Building or the Project (including without
limitation with respect to the driveways, parking areas, walkways and entrances
to the Project) as Landlord may, in the exercise of sound business judgment, and
good property management practices, determine to be appropriate. In connection
therewith, Landlord shall have the right to close temporarily any of the Common
Areas so long as reasonable access to the parking facilities and the Leased
Premises remains available. The Landlord shall provide Tenant with not less
than twenty-four (24) hours prior notice (except in cases of emergency) and
shall use reasonable efforts to conduct its activities in a manner which is
least disruptive to Tenant's use.
2.05. ASSOCIATED RIGHTS GRANTED TO TENANT.
(a) Tenant shall have the right to install on the roof, in areas
specified by Landlord in Landlord's sole and absolute discretion, and at
Tenant's sole cost, the following equipment (the "Equipment"):
(1) Satellite Dish. One satellite dish with a diameter no
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greater than two (2) feet.
(2) Supplemental HVAC.
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(i) A supplemental HVAC for the specific, limited purpose
of cooling a single server room within the Existing
Premises of not more than 1,000 square feet in size and
which shall be part of the Tenant Improvements; and
(ii) A supplemental HVAC for the specific, limited purpose
of cooling a single server room within the Expansion
Premises of not more than 1,000 square feet in size and
which shall be part of the Tenant Improvements.
(b) In installing the Equipment, Tenant shall adhere to industry
standards for installation and workmanship, all work to be completed to
Landlord's reasonable satisfaction. All engineering and design work shall be
undertaken by Tenant, at its sole expense. Upon termination of the Lease, Tenant
shall, if so requested by Landlord, remove the Equipment and shall repair, to
Landlord's reasonable satisfaction, any damage caused by the installation or
removal of the Equipment. To maintain any roof warranty of the Building, Tenant
shall use such roofing contractors as directed by Landlord.
(c) Tenant shall, at its sole cost, immediately repair and restore to
its prior condition any damage to the Leased Premises, the Building or the
Project caused by the installation, operation or maintenance of the Equipment.
If Tenant fails to repair and restore damage caused to the Leased Premises, the
Building or the Project within a reasonable time,
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Landlord shall have the right to repair and restore such damage and receive
reimbursement from Tenant of all costs incurred by Landlord.
(d) No installation of the Equipment shall be made by Tenant without
the prior written consent of Landlord, which shall not be unreasonably withheld.
Tenant shall obtain all necessary governmental permits required for any
installation, alteration, addition, or improvement approved by Landlord and
shall comply with all applicable governmental law, regulations, ordinances, and
codes.
ARTICLE 3.
TERM, USE AND RENT
3.01. TERM. Except as otherwise provided in this Lease, the Term shall
commence on the applicable Term Commencement Date, and shall continue in full
force for the Term. Tenant's obligation to pay Rent and its other obligations
under this Lease shall commence upon the applicable Term Commencement Date
(except as expressly otherwise provided herein with respect to obligations
arising earlier). When the Term Commencement Date and the Term Expiration Date
have been ascertained, the parties shall promptly execute a Confirmation of Term
of Lease substantially in the form attached as EXHIBIT C. Tenant shall be given
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physical possession of the Leased Premises on the applicable Tenant's Physical
Possession Date in order for Tenant to install furniture, equipment, cabling and
fixtures, and otherwise to prepare the Leased Premises for occupancy. From the
applicable Tenant's Physical Possession Date through the applicable Term
Commencement Date, Tenant shall be subject to all of the covenants in this
Lease, except that Tenant shall not be obligated to pay Rent. Tenant's
obligation to pay Rent shall commence in accordance with Section 3.03 below.
Provided Landlord has used reasonable efforts to deliver the Expansion Premises
to Tenant on or before February 1, 2001, Landlord shall not be subject to
claims, damages or liabilities by reason thereof, but the Term Commencement Date
for the Expansion Premises shall become the date by which the Expansion Premises
are delivered to Tenant. In the event the Expansion Premises are not delivered
to Tenant for any reason whatsoever on or before, February 1, 2001, Tenant's
Proportionate Share of the Basic Operating Cost for the Expansion Premises shall
not become due and payable until the date Base Rent is due and payable under
Section 3.03 below. In addition, in the event the Expansion Premises are not
delivered to Tenant for any reason whatsoever on or before, April 1, 2001, then
the date Tenant is otherwise obliged to commence payment of Rent shall be
delayed by one additional day for each day that such delay continues beyond
April 1, 2001.
3.02. USE. Tenant shall use the Leased Premises solely for the
Permitted Use and for no other use or purpose, except as permitted by Landlord
pursuant to Landlord's written consent, which consent will not be unreasonably
withheld. It shall not be deemed unreasonable for Landlord to withhold its
consent to a proposed change of use if the proposed use is one set forth in
Section 1.15(a) through (e).
3.03. BASE RENT.
(a) Tenant shall pay the Base Rent to Landlord in accordance with the
Basic Lease Information sheet and in the manner described below. Tenant shall
pay the Base Rent for the first month Base Rent is payable for the Expansion
Premises upon execution of this Lease.
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Commencing after the thirtieth (30th) day after the Term Commencement Date for
the Expansion Premises, Tenant shall pay the Net Rent (consisting of Base Rent
plus, when applicable in accordance with Section 3.04 below, Tenant's
Proportionate Share of Basic Operating Cost) in monthly installments on or
before the first day of each calendar month during the Term and any extensions
or renewals thereof, in advance without demand and without any reduction,
abatement, counterclaim or setoff, in lawful money of the United States at
Landlord's address specified on the Basic Lease Information sheet or at such
other address as may be designated by Landlord in the manner provided for giving
notice under Section 9.11 hereof.
(b) If the Term commences on other than the first day of a month, then
the Base Rent provided for such partial month shall be prorated based upon a
thirty (30)-day month and the prorated installment shall be paid on the first
day of the calendar month next succeeding the Term Commencement Date together
with the other amounts payable on that day. If the Term terminates on other than
the last day of a calendar month, then the Net Rent provided for such partial
month shall be prorated based upon a thirty (30)-day month and the prorated
installment shall be paid on the first day of the calendar month in which the
date of termination occurs.
3.04. TENANT'S PROPORTIONATE SHARE OF BASIC OPERATING COST.
(a) Commencing on the applicable Term Commencement Date and continuing
through the remainder of the Term, Tenant shall pay to Landlord Tenant's
Proportionate Share of the Basic Operating Cost attributable to each Computation
Year.
(b) During the first Computation Year, on or before the first day of
each month during such Computation Year, Tenant shall pay to Landlord
one-twelfth (1/12th) of Landlord's estimate of the amount payable by Tenant
under Section 3.04(a) as set forth in Landlord's written notice to Tenant
delivered on or before the Term Commencement Date. During the last month of each
Computation Year (or as soon thereafter as practicable), Landlord shall give
Tenant notice of Landlord's estimate of the amount payable by Tenant under
Section 3.04(a) for the following Computation Year. On or before the first day
of each month during the following Computation Year, Tenant shall pay to
Landlord one-twelfth (1/12) of such estimated amount, provided that if Landlord
fails to give such notice in the last month of the prior year, then Tenant shall
continue to pay on the basis of the prior year's estimate until the first day of
the calendar month next succeeding the date such notice is given by Landlord;
and from the first day of the calendar month following the date such notice is
given, Tenant's payments shall be adjusted so that the estimated amount for that
Computation Year will be fully paid by the end of that Computation Year. If at
any time or times Landlord determines that the amount payable under Section
3.04(a) for the current Computation Year will vary from its estimate given to
Tenant, Landlord, by not less than thirty (30) days' notice to Tenant, may
revise its estimate for such Computation Year, and subsequent payments by Tenant
for such Computation Year shall be based upon such revised estimate.
(c) Within sixty (60) days following the end of each Computation Year,
Landlord shall deliver to Tenant a statement of amounts payable under Section
3.04(a) for such Computation Year prepared by Landlord's agent. If such
statement shows an amount owing by Tenant that is less than the payments for
such Computation Year previously made by Tenant, Landlord shall credit such
amount to the next payment(s) of Net Rent falling due under this
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Lease. If such statement shows an amount owing by Tenant that is more than the
estimated payments for such Computation Year previously made by Tenant, Tenant
shall pay the deficiency to Landlord within thirty (30) days after delivery of
such statement. If, within one (1) year of Tenant's receipt of Landlord's
statement, Tenant notifies Landlord that Tenant desires to audit or review
Landlord's statement, Landlord shall cooperate with Tenant to permit such audit
or review during normal business hours. Landlord shall make available in the San
Francisco Bay Area at Landlord's, or at Landlord's election at Landlord's
property manager's place of business, such books and records as are reasonably
necessary for Tenant to conduct and complete such audit, which books and records
shall be prepared and maintained in accordance with generally accepted
accounting principles applied on a consistent basis. Tenant shall have the right
to make copies of such books and records at Tenant's sole cost and expense.
Tenant shall bear all other costs and expenses associated with Tenant's audit
(including fees of Tenant's auditor) except as otherwise provided below. If
Tenant conducts a review (rather than an audit as described below) of Landlord's
books and records, Tenant may thereafter cause the same to be audited at any
time within thirty (30) days of completion of such review; provided, however,
that Tenant must notify Landlord of its desire to audit Landlord's statement
within ninety (90) days of Tenant's receipt of Landlord's statement. Within ten
(10) business days of completion of any audit, if Tenant desires to challenge
Landlord's statement, then Tenant shall provide Landlord with a copy of Tenant's
auditor's report. Within thirty (30) days of Landlord's receipt of Tenant's
auditor's report, Landlord shall notify Tenant as to whether Landlord agrees or
disagrees with the conclusions reached in Tenant's auditor's report. Landlord's
failure to respond shall be deemed to constitute a disagreement with the
Tenant's auditor's report. After Landlord's notice, Landlord and Tenant shall
endeavor to resolve any disagreements regarding Tenant's auditor's report. In
the event such audit reveals a discrepancy in Tenant's favor, and Landlord
agrees with the conclusions of Tenant's auditor, then Landlord shall credit the
amount of such discrepancy to the next payment(s) of Net Rent falling due under
this Lease, and if such discrepancy exceeds five percent (5%) of the amount
property payable by Tenant for the Computation Year covered by the audit,
Landlord also shall pay all reasonable costs of the audit. In the event such
audit reveals a discrepancy in Landlord's favor, Tenant shall pay the amount of
the discrepancy to Landlord within ten (10) business days of completion of the
audit. Any such audit may only be conducted by an independent locally or
nationally recognized accounting firm or a locally or nationally recognized real
estate management or consulting firm that is not being compensated by Tenant on
a contingency fee basis. The failure of Tenant to notify Landlord that Tenant
desires an audit within one (1) year of Tenant's receipt of Landlord's statement
under this Section 3.04(c) shall constitute an acceptance by Tenant of
Landlord's statement and a waiver by Tenant of its right to audit for such
Computation Year. If Tenant commences an audit in accordance with this Section
3.04(c), then such audit and the Tenant's auditor's report must be completed
within forty-five (45) days of Tenant's notice to Landlord of Tenant's desire to
audit. Failure of Tenant to complete the audit within such forty-five (45) day
period shall constitute an acceptance by Tenant of Landlord's statement for such
Computation Year. The respective obligations of Landlord and Tenant under this
Section 3.04(c) shall survive the Term Expiration Date, and, if the Term
Expiration Date is a day other than the last day of a Computation Year, the
adjustment in Tenant's Proportionate Share of Basic Operating Cost pursuant to
this Section 3.04(c) for the Computation Year in which the Term Expiration Date
occurs shall be prorated in the proportion that the number of days in such
Computation Year preceding the Term Expiration Date bears to three hundred
sixty-five (365).
8
(d) Landlord shall have the same remedies for a default in the payment
of Tenant's Proportionate Share of Basic Operating Cost as for a default in the
payment of Base Rent. If any review or audit conducted by another tenant of the
Project reveals an overcharge which also is applicable to Tenant, then without
regard to whether Tenant has exercised its review and audit rights hereunder,
Landlord shall promptly notify Tenant of the discrepancy and credit the excess
amount against the next payment(s) of Net Rent. In the event that Landlord
modifies any statement of Basic Operating Costs for a particular Computation
Year after Tenant's review and audit rights for such Computation Year have
lapsed, Tenant's review and audit rights shall be reinstated for the time
periods and upon the terms set forth in Section 3.04(c).
(e) If the parties cannot agree on the results of Tenant's audit
within sixty (60) days following delivery of Tenant's auditor's report to
Landlord, then either party may commence arbitration with respect to the matters
disputed in Tenant's audit by notice to the other party ("Arbitration Notice").
The failure of Tenant to provide an Arbitration Notice within one hundred twenty
(120) days of Tenant's delivery of the Tenant's auditor's report to Landlord
shall constitute a waiver by Tenant of its right to arbitrate hereunder, and
except for such adjustments as have been agreed to by Landlord, Landlord's
statement provided under Section 3.04(c) shall be conclusive and binding to
Tenant. Within thirty (30) days of the Arbitration Notice, Landlord and Tenant
shall jointly select an arbitrator, who shall be unaffiliated in any manner with
either Landlord or Tenant and shall have been active over the five (5) year
period ending on the date of such appointment in the leasing of comparable
commercial properties in the vicinity of the Building. Neither Landlord nor
Tenant shall consult with such arbitrator as to his or her opinion as to the
disputed matters prior to the appointment. The deter-mina-tion of the
arbitra-tor shall be limited solely to issues raised by Tenant's auditor's
report or by Landlord's response to Tenant's auditor's report. Such arbitrator
may hold hearings and require such briefs as the arbitrator, in his or her sole
discretion, determines is necessary. In addition, Landlord or Tenant may submit
to the arbitrator with a copy to the other party within five (5) business days
after the appoint-ment of the arbitrator any data and additional informa-tion
that such party deems relevant to the determination by the arbitrator and the
other party may submit a reply in writing within five (5) business days after
receipt of such data and additional information. The arbitrator shall conduct
such evidentiary hearings as the arbitrator deems necessary or appropriate, and
shall conduct such arbitration in accordance with the commercial rules of the
American Arbitration Association, insofar as the same are not expressly
inconsistent with the provisions of this Section 3.04(e).
(1) The arbitrator shall, within thirty (30) days of his or her
appointment, reach a decision as to the disputed matters in Tenant's
auditor's report, and shall notify Landlord and Tenant of such
determination.
(2) The decision of the arbitrator shall be binding upon
Landlord and Tenant.
(3) If Landlord and Tenant fail to agree upon and appoint such
arbitrator, then the appointment of the arbi-trator shall be made by
the American Arbitration Association.
9
(4) If Landlord and Tenant fail to agree upon other matters
relating to the arbitration, then the rules of the American
Arbitration Association shall govern such arbitration.
(5) The cost of arbitration shall be paid by the substantially
unsuccessful party. As used herein, Landlord shall only be deemed to
be the substantially unsuccessful party if the discrepancy in
Tenant's favor is greater then five percent (5%) of Tenant's
Proportionate Share of Basic Operating Cost paid by Tenant for the
Computation Year being audited.
(6) The arbitration proceeding and all evidence given or
discovered pursuant thereto shall be maintained in confidence by all
parties.
(7) Judgment upon the award rendered by the arbitrator may be
entered by either party into any court having jurisdiction, or
application may be made to such court for a judicial recognition of
the award or an order of enforcement thereof, as the case may be.
3.05. BASIC OPERATING COST.
(a) Basic Operating Cost shall mean all commercially reasonable and
necessary expenses and costs (but not specific costs which are separately billed
to and paid by particular tenants of the Project ) as determined by Landlord in
its reasonable opinion of every kind and nature which Landlord shall pay or
become obligated to pay because of or in connection with the management,
ownership, maintenance, repair, preservation and operation of the Project and
its supporting facilities directly servicing the Project (determined in
accordance with generally accepted accounting principles, consistently applied)
including, but not limited to, the following:
(1) Wages, salaries and related expenses and benefits of all
on-site and off-site employees and personnel engaged in the
operation, maintenance, repair and security of the Project, to the
extent such charges are directly allocable to services rendered by
the employees and personnel for the benefit of the Project.
(2) Costs of Landlord's office (or of a property management
office if Landlord is not the property manager) and office operation
in the Project (provided, however, if such office is used for
business activities other than Project management, only a reasonable
allocation of such cost may be included in Basic Operating Cost), as
well as the costs of operation of a room for delivery and
distribution of mail to tenants of the Building.
(3) All supplies, materials, equipment and equipment rental used
in the operation, maintenance, repair and preservation of the
Project.
(4) Utilities, including water, sewer and power, telephone,
communication and cable television facilities, lighting, heating,
air conditioning and ventilating the entire Project; provided,
however that the Leased Premises
10
shall be (A) separately metered for lights and convenience power,
and (B) separately metered using Landlord's energy management system
for the Project for air conditioning and ventilation.
(5) All maintenance, janitorial and service agreements for the
Project and the equipment therein, including, without limitation,
alarm and/or security service, window cleaning, elevator
maintenance, sidewalks, landscaping, Building exterior and service
areas; provided, however, that Tenant shall have the right to employ
its own janitor to clean the Leased Premises, in which event Tenant
shall not be charged by Landlord for janitorial services to the
Leased Premises but Tenant shall be responsible for its prorata
share of janitorial services to the Common Areas.
(6) A management cost recovery in an amount not to exceed the
lesser of four percent (4%) of all Rent (excluding such management
cost recovery) derived from the Project or the actual costs charged
by the property manager.
(7) Day-to-day ordinary and reasonable legal and accounting
services incurred to the extent attributable to the normal operation
of the Project, excluding those expenses incurred in lease
negotiations, termination of leases, extension of leases or legal
costs incurred in proceedings by or against any specific tenant.
(8) All insurance costs, including, but not limited to, the cost
of all risk property and liability coverage and rental income and
earthquake insurance applicable to the Project and Landlord's
personal property used in connection therewith, as well as
commercially reasonable deductible amounts applicable to such
insurance; provided, however, that Landlord may, but shall not be
obligated to, carry earthquake insurance.
(9) Repairs, replacements and general maintenance (except for
repairs paid by proceeds of insurance or by Tenant or other tenants
of the Project or third parties, and alterations attributable solely
to tenants of the Project other than Tenant).
(10) All real estate or personal property taxes, possessory
interest taxes, business or license taxes or fees, service payments
in lieu of such taxes or fees, annual or periodic license or use
fees, excises, transit charges, housing fund assessments, open space
charges, assessments, bonds, levies, fees or charges, general and
special, ordinary and extraordinary, unforeseen as well as foreseen,
of any kind which are assessed, levied, charged, confirmed or
imposed by any public authority upon the Project (or any portion or
component thereof), its operations, this Lease, or the Rent due
hereunder (or any portion or component thereof), except: (i)
inheritance or estate taxes imposed upon or assessed against the
Project, or any part thereof or interest therein, and (ii)
Landlord's personal or corporate income, gift, franchise or transfer
taxes.
11
(11) Amortization in accordance with generally accepted
accounting principles, consistently applied (together with
reasonable financing charges) of capital improvements made to the
Project subsequent to the applicable Term Commencement Date which
are designed to improve the operating efficiency of the Project
(provided that the amortized amount shall not exceed the anticipated
cost savings), or which may be required by governmental authorities
pursuant to laws not in effect on the applicable Term Commencement
Date, including those improvements required for energy conservation
and for the benefit of individuals with disabilities ("ADA
Improvements") or for energy conservation.
(b) With respect to subsection 3.05(a)(11) above, to the best of
Landlord's knowledge, the Project is in compliance with the Americans with
Disabilities Act and state law applicable to access by disabled persons
(collectively, "ADA"). ADA Improvements, as defined in subsection 3.05(a)(11)
above, includes ADA compliance work in any part of the Project required by
governmental authorities due to changes in law, rules or regulations after the
date of this Lease. ADA Improvements, for the purposes of subsection
3.05(a)(11), shall not include any ADA compliance work in other tenant's spaces
in the Project which is triggered by virtue of tenant improvement work in such
space. Tenant shall not be responsible for the cost of improvements for ADA
compliance work triggered by multi-tenanting of the Building. Tenant shall be
responsible for one hundred percent (100%) of the cost of ADA compliance work
triggered by the Tenant Improvements (or any subsequent alterations or additions
made by Tenant). Tenant shall promptly reimburse Landlord for any costs incurred
by Landlord with respect thereto. If not otherwise paid for by Tenant, Landlord
shall be entitled to deduct from Landlord's Contribution any amount incurred by
Landlord with respect to ADA compliance work triggered by the Tenant
Improvements. Notwithstanding the foregoing, Landlord and not Tenant shall be
responsible for ADA compliance work exterior to the Leased Premises triggered by
the Tenant Improvements which Landlord was obligated to comply with on the
applicable Term Commencement Date.
(c) In the event any of the Basic Operating Costs are not allocable
solely to the Building or are not provided on a uniform basis, Landlord shall
make an appropriate and equitable adjustment, in Landlord's commercially
reasonable judgment, to the relevant cost allocations to the Building and Tenant
shall pay its proportionate share of such Basic Operating Costs allocable solely
to the Building and 100% of such Basic Operating Costs allocable solely to the
Leased Premises.
(d) Notwithstanding any other provision of this Lease to the contrary,
in the event that the Project is not fully occupied during any year of the Term,
an adjustment shall be made in computing Basic Operating Cost for such year so
that Basic Operating Cost shall be computed as though the Project had been 95%
occupied during such year. EXHIBIT F to this Lease sets forth Landlord's good
---------
faith, itemized estimate of the Basic Operating Costs for the Building.
(e) The following items shall be excluded from Basic Operating Costs:
(i) deprecia-tion on the Building and the Project; (ii) debt service; (iii)
rental under any ground or underlying lease; (iv) attorneys' fees and expenses
incurred in connection with lease negotiations with prospective Project tenants
or alleged defaults with other Project tenants; (v) the cost of any
12
improvements or equipment which would be properly classified as capital
expenditures (except for any capital expenditures expressly included in
subsection 3.05(a)(11)); the cost of decorating, improving for tenant occupancy,
painting or redeco-rating portions of the Building or Project to be demised to
tenants; (vii) advertising expenses relating to vacant space; or (viii) real
estate brokers' or other leasing commissions. Notwithstanding anything to the
contrary in this Lease, "Basic Operating Costs" shall not include and Tenant
shall in no event have any obligation to perform or to pay directly, or to
reimburse Landlord for, all or any portion of the following repairs,
maintenance, improvements, replacements, premiums, claims, losses, fees,
charges, costs and expenses (collectively, "Costs"): (a) Costs occasioned by the
act, omission or violation of any law by Landlord, any other occupant of the
Project, or their respective agents, employees or contractors; (b) Costs
occasioned by casualties or by the exercise of the power of eminent domain; (c)
Costs to correct any construction defect in the Project or to comply with any
covenant, condition, restriction, underwriter's requirement or law applicable to
the Project on the Term Commencement Date; (d) Costs of any renovation,
improvement, painting or redecorating of any portion of the Project not made
available for Tenant's use; (e) earthquake insurance to the extent such premiums
are not commercially reasonable and insurance Costs for coverage not customarily
paid by tenants of similar projects in the vicinity of the Leased Premises,
increases in insurance Costs caused by the activities of another occupant of the
Project, insurance deductibles in excess of $10,000 per year, and co-insurance
payments; (f) Costs incurred in connection with the presence of any Hazardous
Material, except to the extent caused by the release or emission of the
Hazardous Material in question by Tenant, its agents, employees, contractors or
invitees; (g) expense reserves; (h) Costs of structural repairs to the Project;
(i) Cost which could reasonably be allocated to other buildings in the Project;
and (j) any tax or assessment expense or any increase therein (i) levied on
Landlord's rental income, unless such tax or assessment expense is imposed in
lieu of real property taxes; (ii) in excess of the amount which would be payable
if such tax or assessment expense were paid in installments over the longest
permitted term; or (iii) attributable to Landlord's inheritance, transfer,
estate or state taxes.
ARTICLE 4.
LANDLORD'S COVENANTS
4.01. BASIC SERVICES. Landlord shall operate the Project to a standard
of quality consistent with that of other similar-class office projects in the
Emeryville office market, and, subject to Tenant's obligation to pay Tenant's
Proportionate Share of Basic Operating Cost, Landlord shall:
(a) Administer improvement of the Leased Premises in accordance with
EXHIBIT B (if any).
----------
(b) Furnish Tenant during Tenant's occupancy of the Leased Premises
the following basic services:
(1) Hot and cold water at those points of supply provided for
general use of other tenants in the Project; central heat and air
conditioning in season, during the Building hours of operation (which
shall be specified in the rules and regulations for the Project
adopted pursuant to Section 5.17, but in any case shall be not less
than 7:00 a.m. to 6:00 p.m. weekdays and 8:00 a.m. to 1:00 p.m.
13
Saturdays, excluding public holidays) and at such temperatures and in
such amounts as are considered reasonably required for the comfortable
use and occupancy of the Leased Premises (which shall not be less than
65 degrees Fahrenheit or greater than 76 degrees Fahrenheit, provided
that the outdoor temperature is not greater than 95 degrees
Fahrenheit) or, in all events, as may be permitted or controlled by
applicable laws, ordinances, rules and regulations.
(2) Structural and exterior maintenance (including exterior
glass and glazing) and routine maintenance, repairs and electric
lighting service for all public areas and service areas of the Project
in the manner and to the extent reasonably deemed by Landlord to be
standard.
(3) Janitorial service to both the Common Areas and the Leased
Premises on a five (5) day per week basis, excluding holidays.
(4) Electric lighting service throughout the Leased Premises and
electrical facilities to provide sufficient power for standard size
personal computers, network servers and equipment comparable thereto,
and other standard office machines of similar low electrical
consumption, but not including electricity required for special
lighting in excess of Building Standard Improvements, and any other
item of electrical equipment which consumes electricity in amounts in
excess of standard office equipment, which standard shall be not less
than 3 xxxxx per rentable square foot for convenience power and 1.5
xxxxx per rentable square foot for lighting, and not more than a total
of 6 xxxxx per rentable square foot for convenience power and lighting
combined. Landlord makes no representation that such power will be
sufficient to run the Equipment described in Section 2.05(a). Electric
power within the Leased Premises, except for the HVAC system, shall be
separately metered at Tenant's expense (or as a cost deducted from the
Landlord's Contribution for Tenant Improvements). Electric power for
the HVAC system within the Leased Premises shall be separately metered
to Tenant through Landlord's energy management system for the Project
and billed directly to Tenant by Landlord (without profit or xxxx-up).
(5) Building Standard lamps, bulbs, starters and ballasts used
in the Leased Premises.
(6) Public and handicap elevator service serving the floors on
which the Leased Premises are situated, including freight elevator
service when prearranged with Landlord, subject to such rules and
regulations as Landlord shall promulgate from time to time.
(c) Landlord shall not be liable for damages to either person or
property, nor shall Landlord be deemed to have evicted Tenant, nor shall
there be any abatement of Rent, nor shall Tenant be relieved from
performance of any covenant on its part to be performed under this Lease
by reason of any (i) deficiency in the provision of basic services; (ii)
breakdown of equipment or machinery utilized in supplying services; or
(iii) curtailment or cessation of services due to causes or circumstances
beyond the
14
reasonable control of Landlord or by the making of the necessary repairs
or improvements, unless such deficiency, breakdown, curtailment or
cessation is due to the active gross negligence or willful misconduct of
Landlord; provided, however, there shall be an abatement of Net Rent in
the event and to the extent that there is a material diminishment in
Tenant's ability to conduct its business at the Leased Premises as a
result of the presence of any Hazardous Materials which does not result
from Tenant's or Tenant's agents', employees', contractors', invitees' or
licensees' release or emission of such Hazardous Material persisting for
more than eleven (11) consecutive days, or as a result of the absence of
(A) electrical lighting services and/or electrical facilities or services
for more than forty-eight (48) hours, or (B) water for more than
seventy-two (72) hours, and in the event said interference persists for
one hundred eighty (180) days, Tenant may, at its option, terminate this
Lease by written notice to Landlord. Landlord shall use reasonable
diligence to make such repairs as may be required to machinery or
equipment within the Project to provide restoration of services and, where
the cessation or interruption of service has occurred due to circumstances
or conditions beyond Project boundaries, to cause the same to be restored,
by diligent application or request to the provider thereof. In no event
shall any mortgagee or the beneficiary under any deed of trust referred to
in Section 5.12 be or become liable for any default of Landlord under this
Section 4.01(c).
4.02. EXTRA SERVICES. Landlord shall provide to Tenant at Tenant's
sole cost and expense (and subject to the limitations hereinafter set forth) the
following extra services:
(a) If Tenant does not elect to provide its own janitorial services
for the Leased Premises, such extra cleaning and janitorial services
required if Tenant Improvements necessitate extra cleaning efforts or are
not consistent in quality and quantity with Building Standard Improvements
(provided, however, that Landlord has notified Tenant in connection with
approvals of Tenant's plans and specifications under EXHIBIT B that
Landlord's approval is conditioned upon the application of this Section
4.02(a));
(b) Additional air conditioning and ventilating capacity required by
reason of any electrical, data processing or other equipment, facilities
or services required to support the same, in excess of the amounts
provided for in Section 4.01(b)(4) above, when prearranged with Landlord;
(c) Heating, ventilation, air conditioning or extra electrical service
provided by Landlord to Tenant (i) during hours other than the Building
hours of operation specified in the rules and regulations for the Project
adopted pursuant to Section 5.17, which shall provide for Building hours
of operation of not less than 7:00 A.M. to 6:00 P.M., Monday through
Friday (excluding holidays) and from 8:00 A.M. to 1:00 P.M. on Saturday,
or (ii) on Saturdays after 1:00 P.M., Sundays, or holidays, all said
heating, ventilation and air conditioning or extra electrical service to
be furnished pursuant to such uniform procedures as may be established
from time to time by Landlord for the Building; provided, however, that
because Tenant will be billed by Landlord for Tenant's actual use of the
air conditioning system within the Leased Premises, the only additional
charge for air conditioning under this Section 4.02(c) (i.e. other than
the additional direct
15
charges for actual use) shall be the five percent (5%) management fee
referenced in the last sentence of this Section 4.02 which is intended to
compensate Landlord for use of the air conditioning system during hours
other than the Building hours of operation and shall be applied against
the additional direct charges for actual use.
(d) Maintaining and replacing non-Building Standard lamps, bulbs,
starters and ballasts (whether or not the light fixtures were installed by
Landlord as part of the Tenant Improvements);
(e) Repair and maintenance service which is the obligation of Tenant
under this Lease, where either Tenant requests that the same be performed
by Landlord or where Tenant has failed to perform its obligation in a
timely manner;
(f) Repair, maintenance or janitorial service to the Leased Premises,
the Common Areas or the Project parking area which is required as a result
of the acts or omissions of Tenant, its agents, employees, contractors,
invitees or licensees; and
(g) Any basic service in amounts determined by Landlord to exceed the
amounts required to be provided under Section 4.01(b), but only if
Landlord elects to provide such additional or excess service.
For the purposes of this Section 4.02, if, in Landlord's reasonable
opinion, Tenant's use of electrical and/or water service at the Leased Premises
is excessive, Landlord may install a separate meter(s) at the Leased Premises to
measure the amount of electricity and/or water consumed by Tenant therein;
provided, however, that Tenant's use of electrical services shall not be
excessive if it does not exceed the total amount provided for in Section
4.01(b)(4). The cost of such installation and of such excess electricity and/or
water (at the rates charged for such services by the local public utility) shall
be paid by Tenant to Landlord upon receipt by Tenant of a xxxx therefor.
The cost chargeable to Tenant for all extra services shall constitute
Additional Rent and shall include a management fee payable to Landlord of five
percent (5%). Additional Rent shall be paid monthly by Tenant to Landlord
concurrently with the payment of Base Rent.
4.03. WINDOW COVERINGS. All window coverings for the Leased Premises
shall be provided by Landlord as Building Standard Improvements. Tenant shall
not place or maintain any window coverings, blinds, curtains or drapes on any
exterior window without Landlord's prior written approval, which Landlord shall
have the right to grant or withhold in its absolute and sole discretion.
4.04. GRAPHICS AND SIGNAGE. Landlord shall provide identification of
Tenant's name and suite numerals (i) on a building directory in the Building
lobby and (ii) at the main entrance door to the Leased Premises. Landlord
reserves the right to exclude any other names from the building directory. All
signs, notices, advertisements and graphics of every kind or character, visible
in or from the Common Areas or the exterior of the Leased Premises shall be
subject to Landlord's prior written approval, which Landlord shall have the
right to withhold in its absolute and sole discretion. Landlord may remove,
without notice to and at the expense of Tenant, any
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sign, notice, advertisement or graphic of any kind inscribed, displayed or
affixed in violation of the foregoing requirement. All approved signs, notices,
advertisements or graphics shall be printed, affixed or inscribed at Tenant's
expense by a person selected by Landlord. Landlord shall be entitled to revise
the Project graphics and signage standards at any time at Tenant's sole cost and
expense; provided, however, after the initial such revision, any further
revision shall be at Landlord's sole cost and expense. Notwithstanding the
foregoing, Tenant shall have exterior signage on the southeast corner of the
East-Hi-Bay of the Building and on the West-Hi-Bay of the Building (facing the
railroad tracks) subject to Landlord's reasonable approval (which may require
that such signage is commensurate with Tenant's proportionate share of space in
the Project) and any government approvals. Such signage may be of a size
comparable to the artist renderings of the Building in the Project brochure
furnished to Tenant. Tenant shall be responsible for the cost of any exterior
signage.
4.05. TENANT EXTRA IMPROVEMENTS. All Tenant Extra Improvements (if any)
shall be installed at Tenant's cost, such installation to be made and paid for
pursuant to the provisions of EXHIBIT B and EXHIBIT G. For purposes hereof,
--------- ---------
"costs" shall include, without limitation, all building permit fees for Tenant
Extra Improvements (not already included in the permit fees paid with respect to
the Landlord's or Tenant Improvements); payments to architects, engineers and
other design consultants for services and disbursements; and such reasonable
inspection fees as Landlord may incur. Landlord shall not seek the benefits of
depreciation deductions or income tax credit allowances for federal or state
income tax reporting purposes with respect to any Tenant Extra Improvements for
which Tenant has fully reimbursed Landlord under this Section 4.05.
4.06. REPAIR OBLIGATION. Subject to Tenant's obligations under Section
3.04 to pay Tenant's Proportionate Share of Basic Operating Cost, Landlord shall
maintain and repair, in a manner consistent with the Comparable Buildings (as
defined in Section 8.01(a)(2)), all elements of the Project that are not the
express obligation of Tenant or other tenants of the Project, including without
limitation: (i) the structural portions of the Building; (ii) the exterior walls
of the Building, including exterior glass and glazing; (iii) the roof (including
both membrane and structure); (iv) all mechanical (including the HVAC system),
electrical, plumbing and life safety systems; (v) the Common Areas; (vi) the
Project parking area; and (vii) landscaped areas (if any). However, Landlord
shall not have any obligation to repair damage caused by Tenant, its agents,
employees, contractors, invitees or licensees. Landlord shall have the right,
but not the obligation, to undertake work of repair which Tenant is required to
perform under this Lease and which Tenant defaults in its obligation to perform.
Tenant shall reimburse Landlord upon demand, as Additional Rent, for all costs
reasonably incurred by Landlord in performing any such repair for the account
of Tenant, together with an amount equal to five percent (5%) of such costs to
reimburse Landlord for its administration and managerial effort. Except as
specifically set forth in this Lease, Landlord shall have no obligation
whatsoever to maintain or repair the Leased Premises. The parties intend that
the terms of this Lease govern their respective maintenance and repair
obligations. Tenant expressly waives the benefit of any statute now or
hereafter in effect to the extent it is inconsistent with the terms of this
Lease with respect to such obligations or which affords Tenant the right to make
repairs at the expense of Landlord or terminate this Lease by reason of the
condition of the Leased Premises or any needed repairs. Landlord shall
perform and construct, and Tenant shall have no responsibility to perform or
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construct, any repair, maintenance or improvements (a) necessitated by the acts
or omissions of Landlord or any other occupant of the Building, or their
respective agents, employees or contractors, (b) for which Landlord has a right
of reimbursement from others, and (c) which could be treated as a "capital
expenditure" under generally accepted accounting principles. Notwithstanding
the foregoing, Tenant shall pay for its share of the repairs described in
subsection (c) to the extent such costs are properly included in Basic Operating
Costs.
4.07. PEACEFUL ENJOYMENT. Landlord covenants with Tenant that upon
Tenant paying the Rent and all other charges required under this Lease and
performing all of Tenant's covenants and agreements herein contained within
applicable notice and cure periods, Tenant shall peacefully have, hold and enjoy
the Leased Premises subject to all of the terms of this Lease and to any deed of
trust, mortgage or other agreement to which this Lease may be subordinate. This
covenant and the other covenants of Landlord contained in this Lease shall be
binding upon Landlord and its successors only with respect to breaches occurring
during its or their respective ownerships of Landlord's interest hereunder.
ARTICLE 5.
TENANT'S COVENANTS
5.01. PAYMENTS BY TENANT. Tenant shall pay Rent at the times and in
the manner provided in this Lease. All obligations of Tenant hereunder to make
payments to Landlord shall constitute Rent and failure to pay the same when due
shall give rise to the rights and remedies provided for in Section 7.08. If
there is more than one Tenant, the obligations imposed under this Lease upon
Tenant shall be joint and several.
5.02. TENANT IMPROVEMENTS. The Tenant Improvements for the Existing
Premises shall be installed and constructed by Landlord pursuant to EXHIBIT B.
---------
The Tenant Improvements for the Expansion Premises shall be installed and
constructed by Tenant pursuant to EXHIBIT G. All Landlord's Work shall become
---------
the property of Landlord upon installation and shall be surrendered to Landlord
without compensation to Tenant upon termination of this Lease by lapse of time
or otherwise. All Tenant Extra Improvements permanently installed pursuant to
Section 4.05 (if any) shall become the property of Landlord upon installation
and shall be surrendered to Landlord without compensation to Tenant upon
termination of this Lease by lapse of time or otherwise.
5.03. TAXES ON PERSONAL PROPERTY AND TENANT EXTRA IMPROVEMENTS. In
addition to, and wholly apart from its obligation to pay Tenant's Proportionate
Share of Basic Operating Costs, Tenant shall be responsible for, and shall pay
prior to delinquency, all taxes or governmental service fees, possessory
interest taxes, fees or charges in lieu of any such taxes, capital levies, and
any other charges imposed upon, levied with respect to, or assessed against
Tenant's personal property, on the value of its Tenant Extra Improvements (if
any) and on its interest pursuant to this Lease. To the extent that any such
taxes are not separately assessed or billed to Tenant, Tenant shall pay the
amount thereof as invoiced to Tenant by Landlord. In no event shall Tenant
have to pay any portion of taxes, capital levies, and any other charges imposed
upon, levied with respect to, or assessed against the personal property or the
improvements of other tenants in the Project.
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5.04. REPAIRS BY TENANT. Subject to Section 4.06, Tenant shall be
obligated to maintain and repair the Leased Premises, to keep the same at all
times in good order, condition and repair, and, upon expiration of the Term, to
surrender the same to Landlord in the same condition as on the applicable Term
Commencement Date for the Existing Premises or the Expansion Premises, as the
case may be, reasonable wear and tear, the Tenant Improvements, taking by
condemnation, and damage that is Landlord's responsibility under Section 7.07.
Tenant's obligations shall include, without limitation, the obligation to
maintain and repair all walls, floors, ceilings and fixtures and to repair all
damage caused by Tenant, its agents, employees, contractors, invitees and others
using the Leased Premises with Tenant's expressed or implied permission. At the
request of Tenant, Landlord shall perform the work of maintenance and repair
constituting Tenant's obligation under this Section 5.04 at Tenant's sole cost
and expense and as an extra service to be rendered pursuant to Section 4.02(e).
Any work of repair and maintenance performed by or for the account of Tenant by
persons other than Landlord shall be performed by contractors approved by
Landlord, which approval shall not be unreasonably withheld, and in accordance
with procedures Landlord shall from time to time establish. Tenant shall give
Landlord prompt notice of any damage to or defective condition in any part of
the Building's mechanical, electrical, plumbing, life safety or other system
servicing, located in or passing through the Leased Premises of which Tenant has
actual notice.
5.05. WASTE. Tenant shall not commit or allow its agents, employees,
contractors, invitees or licensees to commit any waste or damage in any portion
of the Leased Premises or the Project.
5.06. ASSIGNMENT OR SUBLEASE.
(a) Tenant shall not voluntarily or by operation of law assign,
transfer or encumber (collectively "Assign") or sublet all or any part of
Tenant's interest in this Lease or in the Leased Premises without Landlord's
prior written consent given under and subject to the terms of this Section 5.06.
Notwithstanding anything to the contrary contained in this Lease, Landlord and
Tenant agree as follows, Tenant may assign this Lease or sublet the Leased
Premises, or any portion thereof, without Landlord's consent and without being
subjected to Section 5.06(c) or (e) below (but with prior written notice to
Landlord as discussed below): (i) an entity controlling, controlled by or under
common control with Tenant, (ii) a successor entity related to Tenant by merger,
consolidation, reorganization or government action, or (iii) a purchaser of
substantially all of Tenant's assets located in the Leased Premises.
(b) If Tenant desires to Assign this Lease or any interest herein or
sublet the Leased Premises or any part thereof, Tenant shall give Landlord
written notice of such intent. Tenant's notice shall specify the date the
proposed assignment or sublease would be effective and be accompanied by
information pertinent to Landlord's determination as to the financial and
operational responsibility and appropriateness of the proposed assignee or
subtenant, including, without limitation, its name, business and financial
condition, financial details of the proposed transfer, the intended use
(including any modification) of the Leased Premises, and exact copies of all of
the proposed agreement(s) between Tenant and the proposed assignee or subtenant.
Tenant shall promptly provide Landlord with (i) such other or additional
information or documents reasonably requested (within ten (10) days after
receiving Tenant's notice) by
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Landlord, and (ii) an opportunity to meet and interview the proposed assignee or
subtenant, if requested by Landlord.
(c) Landlord shall have a period of ten (10) business days following
such interview and receipt of such additional information (or fifteen (15)
business days from the date of Tenant's original notice if Landlord does not
request additional information or an interview) within which to notify Tenant in
writing that Landlord elects either (i) to terminate this Lease as to the space
so affected as of the effective date specified by Tenant, in which event Tenant
will be relieved of all further obligations hereunder as to such space, or (ii)
to permit Tenant to Assign this Lease or sublet such space, subject, however, to
prior written approval of the proposed assignee or sublessee by Landlord, such
consent not to be unreasonably withheld so long as the use of the Leased
Premises by such proposed assignee or sublessee would be a Permitted Use (unless
otherwise approved by Landlord), the proposed assignee or sublessee is of sound
financial condition as determined by Landlord in its reasonable discretion, the
proposed assignee executes such reasonable assumption documentation as Landlord
shall require, and the proposed assignee or sublessee is not already a tenant in
the Building. Notwithstanding the foregoing, if Landlord elects option (i)
above, Tenant may elect to withdraw Tenant's request to sublet or assign such
portion of the Leased Premises by written notice to Landlord given on or before
the date which is five (5) business days following Landlord's notice to Tenant
of its intent to recapture such space. Upon such notice by Tenant, Landlord's
election to recapture the subject space in that instance shall be null and void
and Tenant shall retain possession of such subject space. If Landlord fails to
notify Tenant in writing of such election within said period, Landlord shall be
deemed to have waived option (i) above, but written approval by Landlord of the
proposed assignee or sublessee shall still be required. Failure by Landlord to
approve a proposed subtenant or assignee shall not cause a termination of this
Lease.
(d) In the event Tenant shall request the consent of Landlord to any
assignment or subletting hereunder, Tenant shall pay Landlord a processing fee
of $250.00 and shall reimburse Landlord for Landlord's reasonable attorneys'
fees incurred in connection therewith not to exceed $1,000. All such fees shall
be deemed Additional Rent under this Lease.
(e) Any rent or other consideration realized by Tenant under any such
sublease or assignment in excess of the Rent payable hereunder, after recovery
of the reasonable cost of Tenant Extra Improvements for which Tenant has paid
and reasonable subletting and assignment costs, including without limitation any
broker's commissions, attorneys' fees and remodeling fees shall be divided and
paid as follows: forty percent (40%) to Tenant and sixty percent (60%) to
Landlord.
(f) In any event in which Landlord has no right to recapture, Tenant
shall diligently seek to obtain not less than fair market rent for the space to
sublet. In any assignment of this Lease in whole or in part, Tenant shall seek
to obtain from the assignee consideration reflecting a value of not less than
fair market rent for the space subject to such assignment.
(g) The consent of Landlord to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Tenant or to
any subsequent or successive assignment or subletting by the assignee or
subtenant. However, Landlord may consent to subsequent assignments and
sublettings of the Lease or sublease or amendments or
20
modifications thereto, without notifying Tenant or any other party liable on the
Lease or sublease and without obtaining their consent. Such action shall not
relieve Tenant or any such other party from liability under this Lease or a
sublease.
(h) No assignment or subletting by Tenant shall relieve Tenant of any
obligation under this Lease. In the event of default by an assignee or subtenant
of Tenant or any successor of Tenant in the performance of any of the terms
hereof, Landlord may proceed directly against Tenant without the necessity of
exhausting remedies against such assignee, subtenant or successor. Any
assignment or subletting which conflicts with the provisions hereof shall be
void and, at Landlord's option, shall constitute a default under this Lease.
(i) Notwithstanding any other provision of this Section 5.06 (other
than Section 5.06(i)), Tenant shall have the right to sublease up to 15,896
square feet of space within the Existing Premises for a sublease term that does
not exceed the first twenty-four (24) months following the Term Commencement
Date of the Existing Premises, and Tenant shall be allowed to keep any excess
rent derived from such sublease and Landlord shall not have the right to
recapture the subleased premises during such initial twenty-four (24) month
period. Tenant shall also have the right to sublease all or any portion of the
Expansion Premises for a sublease term that does not extend beyond the last day
of the eighteenth (18th) month of the Term for the Expansion Premises, and
Tenant shall be allowed to keep any excess rent derived from such sublease and
Landlord shall not have the right to recapture the subleased premises during
such initial eighteen (18) month period.
5.07. ALTERATIONS, ADDITIONS AND IMPROVEMENTS.
(a) Tenant shall not make or allow to be made any alterations or
additions in or to the Leased Premises without first obtaining the written
consent of Landlord; provided, however, Tenant may, without Landlord's consent,
perform interior non-structural alterations or additions not involving material
modifications to the Building and its mechanical, electrical, HVAC and life
safety systems so long as (i) for alterations or additions requiring government
permits, the cost thereof during any calendar year does not exceed Ten Thousand
Dollars ($10,000.00) during any calendar year, or (ii) for alterations or
additions not requiring government permits, the cost thereof during any calendar
year does not exceed Forty Thousand Dollars ($40,000.00). Landlord's consent
will not be unreasonably withheld with respect to proposed alterations and
additions which (i) comply with all applicable laws, ordinances, rules and
regulations; (ii) are compatible with and does not adversely affect the Building
and its mechanical, electrical, HVAC and life safety systems; (iii) will not
affect the structural portions of the Building; (iv) will not interfere with the
use and occupancy of any other portion of the Building by any other tenant, its
employees or invitees; and (v) will not trigger any additional costs to
Landlord. Specifically, but without limiting the generality of the foregoing,
Landlord's right of consent shall encompass plans and specifications for the
proposed alterations or additions, construction means and methods, the identity
of any contractor or subcontractor to be employed on the work of alterations or
additions, and the time for performance of such work. Tenant shall supply to
Landlord any additional documents and information requested by Landlord in
connection with Tenant's request for consent hereunder. Notwithstanding anything
to the contrary contained in the paragraph, in connection with any request for
consent hereunder, Tenant may request that Landlord advise Tenant whether or not
Landlord will require Tenant to
21
remove the alteration at the expiration of the Lease. Unless Landlord advises
Tenant in writing that Landlord will not require Tenant to remove such
alteration at the expiration of the Lease, the parties agree that Tenant shall
be obligated to remove such alteration at the expiration of the Lease. Further,
Landlord acknowledges that Tenant will not be required to remove any Tenant
Improvements to the Leased Premises.
(b) Any consent given by Landlord under this Section 5.07 shall be
deemed conditioned upon: (i) Tenant's acquiring all applicable permits required
by governmental authorities; (ii) Tenant's furnishing to Landlord copies of such
permits, together with copies of the approved plans and specifications, prior to
commencement of the work thereon; and (iii) the compliance by Tenant with the
conditions of all applicable permits and approvals in a prompt and expeditious
manner.
(c) Tenant shall provide Landlord with not less than fifteen (15) days
prior written notice of commencement of the work so as to enable Landlord to
post and record appropriate notices of non-responsibility. All alterations and
additions permitted hereunder shall be made and performed by Tenant without cost
or expense to Landlord. Tenant shall pay the contractors and suppliers all
amounts due to them when due and keep the Leased Premises and the Project free
from any and all mechanics', materialmen's and other liens and claims arising
out of any work performed, materials furnished or obligations incurred by or for
Tenant. In the event any alterations or additions to the Leased Premises are
performed by Landlord hereunder, whether by prearrangement or otherwise,
Landlord shall be entitled to charge Tenant a five percent (5%) administration
fee in addition to the actual costs of labor and materials provided. Such costs
and fees shall be deemed Additional Rent under this Lease, and may be charged
and payable prior to commencement of the work.
(d) Any and all alterations, additions or improvements made to the
Leased Premises by Tenant shall become the property of Landlord upon
installation and shall be surrendered to Landlord without compensation to Tenant
upon the termination of this Lease by lapse of time or otherwise unless (i)
Landlord conditioned its approval of such alterations, additions or improvements
on Tenant's agreement to remove them, or (ii) Landlord notifies Tenant prior to
(or promptly after) the Term Expiration Date that the alterations, additions
and/or improvements must be removed, in which case Tenant shall, by the Term
Expiration Date (or promptly thereafter), remove such alterations, additions and
improvements, repair any damage resulting from such removal and restore the
Leased Premises to their condition existing prior to the date of installation of
such alterations, additions and improvements. Notwithstanding anything to the
contrary set forth above, this clause shall not apply to equipment, trade
fixtures or furniture owned by Tenant. Tenant's trade fixtures, furniture,
equipment and other personal property shall at all times be and remain Tenant's
Property ("Tenant's Property"). Except for alterations that cannot be removed
without structural injury to the Leased Premises, at any time Tenant may remove
Tenant's Property from the Leased Premises.
Tenant shall repair at its sole cost and expense all damage caused to
the Leased Premises and the Project by removal of Tenant's movable equipment or
furniture and such other alterations, additions and improvements as Tenant shall
be required or allowed by Landlord to remove from the Leased Premises.
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All alterations, additions and improvements permitted under this
Section 5.07 shall be constructed diligently, in a good and workmanlike manner
with new, good and sufficient materials and in compliance with all applicable
laws, ordinances, rules and regulations (including, without limitation, building
codes and those related to accessibility and use by individuals with
disabilities). Tenant shall, promptly upon completion of the work, furnish
Landlord with "as built" drawings for any alterations, additions or improvements
performed under this Section 5.07.
5.08. COMPLIANCE WITH LAWS AND INSURANCE STANDARDS. Landlord
represents and warrants that, at the Term Commencement Date of the Existing
Premises, all elements of the Building encompassed within a "warm shell" (as
defined in EXHIBIT B) are in compliance with all applicable laws, ordinances and
---------
other legal requirements. Tenant shall not occupy or use, or permit any portion
of the Leased Premises to be occupied or used in a manner that violates any
applicable law, ordinance, rule, regulation, order, permit, covenant, easement
or restriction of record, or the recommendations of Landlord's engineers or
consultants, relating in any manner to the Project, or for any business or
purpose which is disreputable, objectionable or productive of fire hazard.
Tenant shall not do or permit anything to be done which would result in the
cancellation of the all risk property insurance coverage on the Project and/or
its contents. If Tenant does or permits anything to be done which increases the
cost of any insurance covering or affecting the Project, then Tenant shall
reimburse Landlord, upon demand, as Additional Rent, for such additional costs.
Landlord shall deliver to Tenant a written statement setting forth the amount of
any such insurance cost increase and showing in reasonable detail the manner in
which it has been computed. Tenant shall, at Tenant's sole cost and expense,
comply with all laws, ordinances, rules, regulations and orders (state, federal,
municipal or promulgated by other agencies or bodies having or claiming
jurisdiction) related to the use, condition or occupancy of the Leased Premises
now in effect or which may hereafter come into effect including, but not limited
to, (a) accessibility and use by individuals with disabilities, but only insofar
as the same require work within the Leased Premises or work outside the Leased
Premises that Tenant is responsible for pursuant to other provisions of this
Lease, and (b) environmental conditions in, on or about the Leased Premises
caused by Tenant or its agents, employees or contractors. If anything done by
Tenant in its use or occupancy of the Leased Premises shall create, require or
cause imposition of any requirement by any public authority for structural or
other upgrading of or alteration or improvement to the Project, Tenant shall, at
Landlord's option, either perform the upgrade, alteration or improvement at
Tenant's sole cost and expense or reimburse Landlord upon demand, as Additional
Rent, for the cost to Landlord of performing such work. The judgment of any
court of competent jurisdiction or the admission by Tenant in any action against
Tenant, whether Landlord is a party thereto or not, that Tenant has violated any
law, ordinance, rule, regulation, order, permit, covenant, easement or
restriction shall be conclusive of that fact as between Landlord and Tenant.
Notwithstanding the foregoing, Tenant shall not be obligated to make any
structural repairs or alterations to the Leased Premises or any modifications to
the mechanical, electrical, plumbing and life safety systems of the Building to
comply with such laws, ordinances, rules, regulations or orders unless the need
for such compliance arises exclusively by virtue of Tenant's particular use of
the Leased Premises or Tenant's alterations, additions or improvements made
subsequent to the Term Commencement Date.
23
5.09. NO NUISANCE; NO OVERLOADING. Tenant shall use and occupy the Leased
Premises, and control its agents, employees, contractors, invitees and visitors
in such manner so as not to create any nuisance, or unreasonably interfere with,
annoy or disturb (whether by noise, odor, vibration or otherwise) any other
tenant or occupant of the Project or Landlord in its operation of the Project.
Tenant shall not place or permit to be placed any loads upon the floors, walls
or ceilings in excess of the maximum designed load specified by Landlord or
which might damage the Leased Premises, the Building, or any portion thereof.
5.10. FURNISHING OF FINANCIAL STATEMENTS; TENANT'S REPRESENTATIONS. In
order to induce Landlord to enter into this Lease, Tenant agrees that it shall
promptly furnish Landlord, from time to time, within ten (10) business days of
receipt of Landlord's written request therefor, with Tenant's most recent
financial statements in Tenant's customary form reflecting Tenant's financial
condition as of the date of such statements. Tenant represents and warrants that
all financial statements, records and information furnished by Tenant to
Landlord in connection with this Lease are true, correct and complete in all
respects. Prior to Tenant's providing Landlord with any financial information,
Landlord agrees that it will execute a Nondisclosure Agreement in the form of
EXHIBIT D hereto which is made a part hereof. If Tenant or its parent is a
public company, Tenant's obligation under this Section 5.10 shall be satisfied
by delivery to Landlord of Tenant's most recent publicly disclosed financial
information.
5.11. ENTRY BY LANDLORD. Landlord, its employees, agents and consultants,
shall have the right to enter the Leased Premises at any time, in cases of an
emergency, and otherwise at reasonable times upon twenty-four (24) hours' prior
written notice to inspect the same, to clean, to perform such work as may be
permitted or required under this Lease, to make repairs to or alterations of the
Leased Premises or other portions of the Project, to deal with emergencies, to
post such notices as may be permitted or required by law to prevent the
perfection of liens against Landlord's interest in the Project or to show the
Leased Premises to prospective tenants (but only during the last six (6) months
of the Term) , purchasers, encumbrancers or others, or for any other purpose as
Landlord may reasonably deem necessary or desirable; provided, however, that
Tenant may require that an employee of Tenant accompany Landlord during any
non-emergency entry and Landlord shall use its best efforts to minimize
interference with Tenant's business operations in the Leased Premises. Tenant
shall not be entitled to any abatement of Rent or damages by reason of the
exercise of any such right of entry. Any such entry shall comply with the
Tenant's reasonable security measures.
5.12. NONDISTURBANCE AND ATTORNMENT.
(a) This Lease and the rights of Tenant hereunder shall be subject and
subordinate to the lien of any deed of trust, mortgage or other hypothecation or
security instrument (collectively, "Security Device") now or hereafter placed
upon, affecting or encumbering the Project or any part thereof or interest
therein, and to any and all advances made thereunder, interest thereon or costs
incurred and any modifications, renewals, supplements, consolidations,
replacements and extensions thereof. With respect to any Security Device entered
into by Landlord after execution of this Lease, such subordination is
conditioned on Landlord's obtaining assurance in a commercially reasonable form
(a "nondisturbance agreement") from the holder of or beneficiary under such
encumbrance that Tenant's possession of the Leased Premises will not be
disturbed, and Tenant's rights under this Lease will be
24
recognized, so long as Tenant is not in default under this Lease (after
expiration of applicable notice and cure periods) and attorns to the record
owner of the Leased Premises and any subordination of this Lease shall be
conditioned on Tenant's receipt of such an agreement. Without the consent of
Tenant, the holder of any such Security Device or the beneficiary thereunder
shall have the right to elect to be subject and subordinate to this Lease, such
subordination to be effective upon such terms and conditions as such holder or
beneficiary may direct which are not inconsistent with the provisions hereof.
Tenant agrees to attorn to and recognize as the Landlord under this Lease the
holder or beneficiary under a Security Device or any other party that acquires
ownership of the Leased Premises by reason of a foreclosure or sale under any
Security Device (or deed in lieu thereof), provided such holder, beneficiary or
other party has become bound by a nondisturbance agreement as of the date the
Security Device gained priority over this Lease. The new owner following such
foreclosure, sale or deed shall be responsible for the completion of the Tenant
Improvements and shall be responsible for the Security Deposit but shall not be
(i) liable for any act or omission of any prior landlord or with respect to
events occurring prior to acquisition of ownership except relating to a
continuing default; (ii) subject to any offsets or defenses which Tenant might
have against any prior landlord; or (iii) bound by prepayment of more than one
(1) month's Rent unless actually received. Landlord shall, in good faith, use
its best efforts to cause the current holder of a Security Device on the Project
to execute and deliver a nondisturbance agreement to Tenant within thirty (30)
days of execution of this Lease. Landlord shall, however, obtain such
nondisturbance agreement from the holders of all existing Security Devices prior
to the Term Commencement Date.
(b) Tenant shall not unreasonably withhold its consent to changes or
amendments to this Lease requested by the holder of a Security Device so long as
these changes do not alter the basic business terms of this Lease or otherwise
materially diminish any rights or materially increase any obligations of Tenant
hereunder. In connection with any amendment to this Lease required under this
paragraph, Landlord shall reimburse Tenant's reasonable attorneys' fees and
costs, not to exceed $1,000.00 in any single instance. If, within ten (10)
business days after notice from Landlord, Tenant fails or refuses to execute
with Landlord the amendment(s) to this Lease accomplishing the change(s) or
amendment(s) which are requested by such holder, Landlord, at its sole option,
shall have the right to do either or both of the following: (i) to execute any
instrument for or on behalf of Tenant as its attorney-in-fact (in acknowledgment
thereof, Tenant hereby appoints Landlord as its irrevocable attorney-in-fact
solely to execute any instruments required to carry out the intent of this
Section 5.12(b) on behalf of Tenant); and/or (ii) to provide Tenant with a
further notice and if Tenant fails or refuses to execute the amendment(s) within
five (5) business days of such additional notice, Landlord shall have the right
to terminate this Lease.
5.13. ESTOPPEL CERTIFICATE. Within ten (10) days following Landlord's
request, Tenant shall execute, acknowledge and deliver written estoppel
certificates addressed to (i) any mortgagee or prospective mortgagee of
Landlord, or (ii) any purchaser or prospective purchaser of all or any portion
of, or interest in, the Project, on a form specified by Landlord, certifying as
to such facts (if true) and agreeing to such notice provisions and other matters
(provided, however that such notice provisions and other matters shall not alter
the basic business terms of this Lease or otherwise materially diminish any
rights or materially increase any obligations of
25
Tenant hereunder, and if such estoppel certificate includes any matters not
strictly of a factual nature, Tenant shall have a right to reimbursement of
reasonable attorney's fees in connection with the review thereof, in accordance
with Section 5.12 above) as such mortgagee(s) or purchaser(s) may reasonably
require, including, without limitation, the following: (a) that this Lease is
unmodified and in full force and effect (or in full force and effect as
modified, and stating the modifications); (b) the amount of, and date to which
Rent and other charges have been paid in advance; (c) the amount of any Security
Deposit; and (d) acknowledging that Landlord is not in default under this Lease
(or, if Landlord is claimed to be in default, stating the nature of the alleged
default). However, in no event shall any such estoppel certificate require an
amendment of the provisions of this Lease or otherwise affect or abridge
Tenant's rights hereunder. Any such estoppel certificate may be relied upon by
any such mortgagee or purchaser. Failure by Tenant to execute and deliver any
such estoppel certificate within the time requested shall be conclusive upon
Tenant that (1) this Lease is in full force and effect and has not been modified
except as represented by Landlord; (2) not more than one month's Rent has been
paid in advance; and (3) Landlord is not in default under this Lease. Failure by
Tenant to execute and deliver any such estoppel certificate within five days of
Landlord's further notice to Tenant that Tenant has failed to execute and
deliver any such estoppel certificate within the initial ten (10) day notice
period, shall constitute a default under this Lease. If requested by Tenant upon
reasonable written notice, Landlord shall execute and deliver an estoppel
certificate covering the factual matters outlined in clauses (a) through (d)
above (except in case of (d) certifying as to the absence of any default by
Tenant or identifying any such claimed default), which may be relied upon solely
for purposes of Tenant's obtaining financial accommodations.
5.14. SECURITY DEPOSIT.
(a) On December 2, 1999, Tenant delivered to Landlord an Irrevocable
Standby Letter of Credit No. OSF99000883 from Imperial Bank for the amount of
$2,000,000.00. Upon delivery of the Expansion Premises to Tenant, Tenant shall
pay the additional security deposit to Landlord of $901,127.03 ($78,279.25 for
the Existing Premises and $822,847.78 for the Expansion Premises) as additional
security for the full and faithful performance of Tenant's obligations under
this Lease. If at any time during the Term, Tenant shall be in default in the
payment of Rent or in default for any other reason after expiration of
applicable notice and cure periods, Landlord may use, apply or retain all or
part of the Security Deposit for payment of any amount due Landlord or to cure
such default or to reimburse or compensate Landlord for any liability, loss,
cost, expense or damage (including attorneys' fees) which Landlord may suffer or
incur by reason of Tenant's defaults. If Landlord uses or applies all or any
part of the Security Deposit, Tenant shall, on demand, pay to Landlord a sum
sufficient to restore the Security Deposit to the full amount required by this
Lease. Upon expiration of the Term or earlier termination of this Lease and
after Tenant has vacated the Leased Premises, Landlord shall return the Security
Deposit to Tenant, reduced by such amounts as may be required by Landlord to
remedy defaults on the part of Tenant in the payment of Rent, to repair damages
to the Leased Premises caused by Tenant and to clean the Leased Premises. The
portion of the deposit not so required shall be paid over to Tenant (or, at
Landlord's option, to the last assignee of Tenant's interest in this Lease)
within thirty (30) days after expiration of the Term or earlier termination
hereof. Landlord shall hold the Security Deposit for the foregoing purposes;
provided, however, that Landlord shall have no obligation to segregate the
Security Deposit from
26
its general funds or to pay interest in respect thereof. No part of the Security
Deposit shall be considered to be held in trust, or to be prepayment of any
monies to be paid by Tenant under this Lease.
(b) The Security Deposit shall increase proportionally with any
increase in Base Rent resulting from Landlord's funding of additional Tenant
Improvements in accordance with paragraph 5(c) of EXHIBIT B to this Lease, and
---------
such funding being repaid through amortization payments made to Landlord along
with Base Rent in accordance with paragraph 5(c) of EXHIBIT B to this Lease. The
---------
amount of the Security Deposit shall decrease twenty percent (20%) per year
beginning on the second (2nd) anniversary of the Term Commencement Date of the
Existing Premises; provided, however, the amount of the Security Deposit shall
not be less than $218,000.00 at any time during the Term of this Lease.
Accordingly, the Security Deposit shall be reduced as follows:
AMOUNT OF
DATE REDUCTION SECURITY DEPOSIT
---- --------- ----------------
July 21, 2002 $ 580,225.41 $ 2,320,901.62
--------------- ------------- ----------------
July 21, 2003 $ 580,225.41 $ 1,740,676.21
--------------- ------------- ----------------
July 21, 2004 $ 580,225.41 $ 1,160,450.80
--------------- ------------- ----------------
July 21, 2005 $ 580,225.41 $ 580,225.39
--------------- ------------- ----------------
July 21, 2006 $ 362,225.39 $ 218,000.00
--------------- ------------- ----------------
(c) In lieu of a cash deposit, Tenant may deliver the Security Deposit
to Landlord in the form of a clean and irrevocable letter of credit (the "Letter
of Credit") issued by and drawable upon (said issuer being referred to as the
"Issuing Bank") a financial institution which is approved by Landlord in its
sole discretion, provided that Landlord shall not unreasonably withhold its
consent to an Issuing Bank which has outstanding unsecured, uninsured and
unguaranteed indebtedness, or shall have issued a letter of credit or other
credit facility that constitutes the primary security for any outstanding
indebtedness (which is otherwise uninsured and unguaranteed), that is then
rated, without regard to qualification of such rating by symbols such as "+" or
"-" or numerical notation, "Aa" or better by Xxxxx'x Investors Service and "AA"
or better by Standard & Poor's Rating Service, and has combined capital, surplus
and undivided profits of not less than $100,000,000. Such Letter of Credit shall
(a) name Landlord as beneficiary, (b) be in the amount of the Security Deposit,
(c) have a term of not less than one year, (d) permit multiple drawings, (e) be
fully transferable by Landlord, and (f) otherwise be in form and content
reasonably satisfactory to Landlord. If upon any transfer of the Letter of
Credit, any fees or charges shall be so imposed, then such fees or charges shall
be payable solely by Tenant and the Letter of Credit shall so specify. The
Letter of Credit shall provide that it shall be deemed automatically renewed,
without amendment, for consecutive periods of one year each
27
thereafter during the Term unless the Issuing Bank sends a notice (the
"Non-Renewal Notice") to Landlord by certified mail, return receipt requested,
not less than 45 days next preceding the then expiration date of the Letter of
Credit stating that the Issuing Bank has elected not to renew the Letter of
Credit. Landlord shall have the right, upon receipt of the Non-Renewal Notice,
to draw the full amount of the Letter of Credit, by sight draft on the Issuing
Bank, and shall thereafter hold or apply the cash proceeds of the Letter of
Credit pursuant to the terms of this Article. Notwithstanding the foregoing,
Tenant shall thereafter have the right to provide Landlord with a replacement
Letter of Credit in compliance with this Section, in which case Landlord shall
provide Tenant such cash sums drawn on the Letter of Credit. The Issuing Bank
shall agree with all drawers, endorsers and bona fide holders that drafts drawn
under and in compliance with the terms of the Letter of Credit will be duly
honored upon presentation to the Issuing Bank at an office location in San
Francisco. The Letter of Credit shall be subject in all respects to the Uniform
Customs and Practice for Documentary Credits (1993 revision), International
Chamber of Commerce Publication No. 500. Tenant shall have the right at any time
to replace the Letter of Credit with a (i) cash security deposit, (ii) a
replacement Letter of Credit that meets all of the conditions of this Section
5.14, or (iii) a combination of items (i) and (ii).
5.15. SURRENDER. Subject to the provisions of Section 5.07 hereof, on
the Term Expiration Date (or earlier termination of this Lease), Tenant shall
quit and surrender possession of the Leased Premises to Landlord in as good
order and condition as they were in on the applicable Term Commencement Date,
reasonable wear and tear, the Tenant Improvements, casualties, taking by
condemnation and repairs which are Landlord's responsibility excepted.
Reasonable wear and tear shall not include any damage or deterioration that
would have been prevented by good maintenance practice or by Tenant performing
all of its obligations under this Lease. Tenant shall, without cost to
Landlord, remove all furniture, equipment, trade fixtures, debris and articles
of personal property owned by Tenant in the Leased Premises, and shall repair
any damage to the Project resulting from such removal. Any such property not
removed by Tenant by the Term Expiration Date (or earlier termination of this
Lease) shall be considered abandoned, and Landlord may remove any or all of such
items and dispose of same in any lawful manner or store same in a public
warehouse or elsewhere for the account and at the expense and risk of Tenant.
If Tenant shall fail to pay the cost of storing any such property after storage
for thirty (30) days or more, Landlord may sell any or all of such property at
public or private sale, in such manner and at such times and places as Landlord
may deem proper in accordance with applicable law, without notice to or demand
upon Tenant. Landlord shall apply the proceeds of any such sale as follows:
first, to the costs of such sale; second, to the costs of storing any such
property; third, to the payment of any other sums of money which may then or
thereafter be due to Landlord from Tenant under any of the terms of this Lease;
and fourth, the balance, if any, to Tenant.
5.16. TENANT'S REMEDIES. Landlord shall not be deemed in breach of this
Lease unless Landlord fails within a reasonable time to perform an obligation
required to be performed by Landlord. For purposes of this Section 5.16, a
reasonable time shall in no event, be less than thirty (30) days after receipt
by Landlord, and by the holders of any ground lease, deed of trust or mortgage
covering the Leased Premises whose name and address shall have been furnished
Tenant in writing for such purpose, of written notice specifying wherein such
obligation of Landlord has not been performed; provided, however, that if the
nature of Landlord's obligation
28
is such that more than thirty (30) days after such notice are reasonably
required for its performance, then Landlord shall not be in breach of this Lease
if performance is commenced within said thirty (30)-day period and thereafter
diligently pursued to completion. If Landlord fails to cure such default within
the time provided for in this Lease, the holder of any such ground lease, deed
of trust or mortgage shall have an additional thirty (30) days to cure such
default; provided that if such default cannot reasonably be cured within that
thirty (30) day period, then such holder shall have such additional time to cure
the default as is reasonably necessary under the circumstances. Tenant shall
look solely to Landlord's interest in the Project, insurance proceeds,
condemnation awards and the proceeds thereof for recovery of any judgment from
Landlord. Neither Landlord nor any of its trustees, directors, officers, agents,
employees or representatives (or, if Landlord is a partnership, its partners,
whether general or limited) shall ever be personally liable for any such
judgment. Any lien obtained to enforce any such judgment and any levy of
execution thereon shall be subject and subordinate to any lien, deed of trust or
mortgage to which Section 5.12 applies or may apply. Except as otherwise
specifically provided for in this Lease, Tenant shall not have the right to
terminate this Lease or withhold, reduce or offset any amount against any
payments of Rent due and payable under this Lease by reason of a breach of this
Lease by Landlord.
5.17. CC&RS/RULES AND REGULATIONS. Tenant shall comply with (i) the rules
and regulations for the Project attached as EXHIBIT E and such reasonable
---------
amendments thereto as Landlord may adopt from time to time with prior notice to
Tenant, and (ii) such reasonable covenants, conditions and restrictions for the
Project ("CC&Rs") as Landlord may adopt from time to time with prior notice to
Tenant. Tenant shall not be required to comply with any new rule or regulation
or CC&Rs unless the same applies non-discriminatorily to all occupants of the
Project, does not unreasonably interfere with Tenant's use of the Leased
Premises and does not materially increase the obligations or decrease the rights
of Tenant under the Lease. In case of any conflict between (i) the rules and
regulations and/or CC&Rs and (ii) the provisions of this Lease, this Lease shall
control.
ARTICLE 6.
ENVIRONMENTAL MATTERS
6.01. HAZARDOUS MATERIALS PROHIBITED.
(a) Except with Landlord's prior written consent, Tenant shall not
cause or permit any Hazardous Materials (as defined in Section 6.01(c) below) to
be brought, kept, used, generated, released or disposed in, on, under or about
the Leased Premises or the Project by Tenant, its agents, employees, contractors
or invitees; provided, however, that Tenant may use, store and dispose of, in
accordance with applicable Laws, limited quantities of standard office and
janitorial supplies, but only to the extent reasonably necessary for Tenant's
operations in the Leased Premises. Tenant hereby indemnifies Landlord from and
against (i) any breach by Tenant of the obligations stated in the preceding
sentence, (ii) any breach of the obligations stated in Section 6.01(b) below, or
(iii) any claims or liability resulting from Tenant's use of Hazardous Materials
in violation of applicable laws or provisions hereof. Tenant hereby agrees to
defend and hold Landlord harmless from and against any and all claims,
liability, losses, damages, costs and/or expenses (including, without
limitation, diminution in value of the Project, or any portion thereof, damages
for the loss or restriction on use of rentable or usable space or of any amenity
of
29
the Project, damages arising from any adverse impact on marketing of space in
the Project, and sums paid in settlement of claims, fines, penalties, attorneys'
fees, consultants' fees and experts' fees) which are caused by any breach of the
obligations stated in Sections 6.01(a) or 6.01(b) or otherwise resulting from
Tenant's use of Hazardous Materials in the Project in violation of applicable
laws or provisions hereof. This indemnification of Landlord by Tenant includes,
without limitation, death of or injury to person, damage to any property or the
environment and costs incurred in connection with any investigation of site
conditions or any cleanup, remedial, removal, or restoration work required by
any federal, state or local governmental agency or political subdivision because
of any Hazardous Material present in, on, under or about the Leased Premises or
the Project (including soil and ground water contamination) which results from
such a breach. Without limiting the foregoing, if the presence of any Hazardous
Material in, on, under or about the Leased Premises or the Project caused or
permitted by Tenant results in any contamination of the Leased Premises or the
Project, Tenant shall promptly take all actions at its sole expense as are
necessary to return the same to the condition existing prior to the introduction
of such Hazardous Material as required under applicable laws; provided that
Landlord's approval of such actions, and the contractors to be used by Tenant in
connection therewith, shall first be obtained. This indemnification of Landlord
by Tenant shall survive the expiration or sooner termination of this Lease.
(b) Tenant covenants and agrees that Tenant shall at all times be
responsible and liable for, and be in compliance with, all federal, state, local
and regional laws, ordinances, rules, codes and regulations, as amended from
time to time ("Governmental Requirements"), relating to health and safety and
environmental matters, arising, directly or indirectly, out of Tenant's use of
Hazardous Materials (as defined in Section 6.01(c) below) in the Project. Health
and safety and environmental matters for which Tenant is responsible under this
paragraph include, without limitation (i) notification and reporting to
governmental agencies, (ii) the provision of warnings of potential exposure to
Hazardous Materials to Landlord and Tenant's agents, employees, licensees,
contractors and others, (iii) the payment of taxes and fees, (iv) the proper
off-site transportation and disposal of Hazardous Materials, and (v) all
requirements, including training, relating to the use of equipment. Immediately
upon discovery of a release of Hazardous Materials associated with Tenant's
activities, Tenant shall give written notice to Landlord, whether or not such
release is subject to reporting under Governmental Requirements. The notice
shall include information on the nature and conditions of the release and
Tenant's planned response. Tenant shall be liable for the cost of any clean-up
of the release of any Hazardous Materials by Tenant on the Project.
(c) As used in this Lease, the term "Hazardous Material" means any
hazardous or toxic substance, material or waste which is or becomes regulated by
any local governmental authority, the State of California or the United States
Government. The term "Hazardous Material" includes, without limitation, any
substance, material or waste which is (i) defined as a "hazardous waste" or
similar term under the laws of the jurisdiction where the Project is located;
(ii) designated as a "hazardous substance" pursuant to Section 311 of the
Federal Water Pollution Control Act (33 U.S.C. Sec. 1317); (iii) defined as a
"hazardous waste" pursuant to Section 1004 of the Federal Resource, Conservation
and Recovery Act, 42 U.S.C. Sec. 6901 et seq. (42 U.S.C. Sec. 6903); (iv)
-- ---
defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.
30
Sec. 9601 et seq. (42 U.S.C. Sec. 9601); (v) hydrocarbons, petroleum, gasoline,
-- ---
crude oil or any products, by-products or fractions thereof; or (vi) asbestos in
any form or condition.
(d) As used in this Article 6, the term "Laws" means any applicable
federal, state or local laws, ordinances, rules or regulations relating to any
Hazardous Material affecting the Project, including, without limitation, the
specific laws, ordinances and regulations referred to in Section 6.01(c) above.
References to specific Laws shall also be references to any amendments thereto
and to any applicable successor Laws.
(e) To the best of Landlord's knowledge, except as disclosed in the
environmental reports (the "Environmental Reports") provided to Tenant (i) there
are no Hazardous Materials, PCB transformers or underground storage tanks on the
Project, and (ii) the Project is in compliance with all Laws relating to any
Hazardous Material. Tenant acknowledges its receipt and review of the
Environmental Reports prior to entering into this Lease. Landlord represents and
warrants that (i) during the period of its ownership of the Project prior to
entering into this Lease, neither it nor its agents, employees, contractors, or
invitees have released or authorized the release of any Hazardous Materials on
the Project, and (ii) after entering into this Lease, Landlord will not release
any Hazardous Materials on the Project. Landlord hereby agrees to indemnify,
protect, defend and hold the Tenant harmless of and from any and all claims,
liability, costs, penalties, fines, damages, injury, judgments, forfeiture,
losses or expenses (including without limitation reasonable attorneys' fees)
arising out of or in any way related to or resulting from any Hazardous
Materials discovered in the Leased Premises or on the Project which were not
brought, kept, used, generated, released or disposed in, on, under or about the
Leased Premises or the Project by Tenant, its agents, employees, contractors or
invitees. This Section 6.01 of the Lease constitutes the entire agreement of
Landlord and Tenant regarding Hazardous Materials.
6.02. LIMITATIONS ON ASSIGNMENT AND SUBLETTING. It shall not be
unreasonable for Landlord to withhold its consent to any proposed assignment or
subletting of the Leased Premises if the proposed assignee's or sublessee's
anticipated use of the Leased Premises involves the generation, storage, use,
treatment, or disposal of Hazardous Material (excluding standard office and
janitorial supplies; in limited quantities as hereinabove provided).
6.03. RIGHT OF ENTRY. Landlord, its employees, agents and consultants,
shall have the right to enter the Leased Premises at any time, in case of an
emergency, and otherwise during reasonable hours and upon reasonable notice to
Tenant, in order to conduct periodic environmental inspections and tests to
determine whether any Hazardous Materials are present. The costs and expenses of
such inspections shall be paid by Landlord unless a default or breach of this
Lease, violation of Laws or contamination caused or permitted by Tenant is found
to exist. In such event, Tenant shall reimburse Landlord upon demand, as
Additional Rent, for the reasonable costs and expenses of such inspections if it
is determined that Tenant has failed to perform its obligations under this Lease
with regard to Hazardous Materials.
6.04. NOTICE TO LANDLORD. Tenant shall promptly notify Landlord in
writing of: (i) any enforcement, clean-up, removal or other governmental or
regulatory action instituted or threatened regarding the Leased Premises or the
Project pursuant to any Laws caused by Tenant's use or storage of Hazardous
Materials; (ii) any claim made or threatened by any person against
31
Tenant or the Leased Premises relating to damage, contribution, cost recovery,
compensation, loss or injury resulting from or claimed to result from Tenant's
use or storage of any Hazardous Material; and (iii) any reports made to or
received from any governmental agency arising out of or in connection with any
Hazardous Material in or removed from the Leased Premises or the Project,
including any complaints, notices, warnings or asserted violations in connection
therewith. Tenant shall also supply to Landlord as promptly as possible, and in
any event within three (3) business days after Tenant first receives or sends
the same, copies of all claims, reports, complaints, notices, warnings, asserted
violations or other communications relating in any way to the Leased Premises or
Tenant's use thereof.
ARTICLE 7.
INSURANCE, INDEMNITY, CONDEMNATION, DAMAGE AND DEFAULT
7.01. LANDLORD'S INSURANCE. Landlord shall secure and maintain
policies of insurance for the Project (including the Leased Premises) covering
loss of or damage to the Project, including the Tenant Improvements (as shown on
the "as-built" plans provided to Landlord after completion of construction of
the Tenant Improvements) and all subsequent alterations, additions and
improvements to the Leased Premises approved by Landlord in writing, with loss
payable to Landlord and to the holders of any deeds of trust, mortgages or
ground leases on the Project. Landlord shall not be obligated to obtain
insurance for Tenant's trade fixtures, equipment, furnishings, machinery or
other property. Such policies shall provide protection against fire and
extended coverage perils and such additional perils as Landlord deems suitable,
in the amount of the estimated replacement cost thereof and with such
deductible(s) as Landlord shall deem reasonably appropriate. Landlord shall
further secure and maintain commercial general liability insurance with respect
to the Project in such amount as Landlord shall determine, such insurance to be
in addition to, and not in lieu of, the liability insurance required to be
maintained by Tenant. In addition, Landlord may secure and maintain rental
income insurance. If the annual cost to Landlord for any such insurance exceeds
the standard rates because of the nature of Tenant's operations, Tenant shall,
upon receipt of appropriate invoices, reimburse Landlord for such increases in
cost, which amounts shall be deemed Additional Rent hereunder. Tenant shall not
be named as an additional insured on any policy of insurance maintained by
Landlord.
7.02. TENANT'S LIABILITY INSURANCE.
(a) Tenant (with respect to both the Leased Premises and the Common
Areas) shall secure and maintain, at its own expense, at all times during the
Term, a policy or policies of commercial general liability insurance with the
premiums thereon fully paid in advance, protecting Tenant and naming Landlord,
the holders of any deeds of trust, mortgages or ground leases on the Project,
and Landlord's representatives (which term, whenever used in this Article 7,
shall be deemed to include Landlord's partners, trustees, ancillary trustees,
officers, directors, shareholders, beneficiaries, agents, employees and
independent contractors) as additional insureds against claims for bodily
injury, personal injury, advertising injury and property damage (including
attorneys' fees) based upon, involving or arising out of Tenant's operations,
assumed liabilities or Tenant's use, occupancy or maintenance of the Leased
Premises and the Common Areas of the Project. Such insurance shall provide for a
minimum amount of Two Million Dollars ($2,000,000.00) for property damage or
injury to or death of one or more than one person in any one accident or
occurrence, with an annual aggregate limit of at least Four Million Dollars
32
($4,000,000.00). The coverage required to be carried shall include fire legal
liability, blanket contractual liability, personal injury liability (libel,
slander, false arrest and wrongful eviction), broad form property damage
liability, products liability and completed operations coverage (as well as
owned, non-owned and hired automobile liability if an exposure exists) and the
policy shall contain an exception to any pollution exclusion which insures
damage or injury arising out of heat, smoke or fumes from a hostile fire. Such
insurance shall be written on an occurrence basis and contain a separation of
insureds provision or cross-liability endorsement acceptable to Landlord. Tenant
shall provide Landlord with a certificate evidencing such insurance coverage.
The certificate shall indicate that the insurance provided specifically
recognizes the liability assumed by Tenant under this Lease (including without
limitation performance by Tenant under Section 7.04) and that Tenant's insurance
is primary to and not contributory with any other insurance maintained by
Landlord, whose insurance shall be considered excess insurance only. Following
the initial Term of the Lease, not more frequently that every two (2) years, if,
in the opinion of any mortgagee of Landlord or of the insurance broker retained
by Landlord, the amount of liability insurance coverage at that time is not
adequate, then Tenant shall increase its liability insurance coverage as
reasonably required by either any mortgagee of Landlord or Landlord's insurance
broker.
(b) Subject to Section 5.08 of this Lease, Tenant shall, at Tenant's
expense, comply with (i) all insurance company requirements pertaining to the
use of the Leased Premises and (ii) all rules, orders, regulations or
requirements of the American Insurance Association (formerly the National Board
of Fire Underwriters) and with any similar body.
7.03. TENANT'S ADDITIONAL INSURANCE REQUIREMENTS.
(a) Tenant shall secure and maintain, at Tenant's expense, at all
times during the Term, a policy of physical damage insurance on all of Tenant's
fixtures, furnishings, equipment, machinery, merchandise and personal property
in the Leased Premises and alterations, additions or improvements made by or for
Tenant upon the Leased Premises, all for the full replacement cost thereof
without deduction for depreciation of the covered items and in amounts that meet
any co-insurance clauses of the policies of insurance. Such insurance shall
insure against those risks customarily covered in an "all risk" policy of
insurance covering physical loss or damage. Tenant may use the proceeds from
such insurance for the replacement of fixtures, furnishings, equipment and
personal property and for restoration of alterations, additions or improvements
to the Leased Premises after the Term Commencement Date. Landlord shall be named
as loss payee to the extent of the value of any such improvements after the Term
Commencement Date. In addition, Tenant shall secure and maintain, at all times
during the Term, loss of income, business interruption and extra expense
insurance in such amounts as will reimburse Tenant for direct or indirect loss
of earnings and incurred costs attributable to all perils commonly insured
against by prudent tenants or attributable to prevention of access to the Leased
Premises or to the Building as a result of such perils; such insurance shall be
maintained with Tenant's property insurance carrier. Further, Tenant shall
secure and maintain at all times during the Term workers' compensation insurance
in such amounts as are required by law, employer's liability insurance in the
amount of One Million Dollars ($1,000,000.00) per occurrence, and all such other
insurance as may be required by applicable law or as may be reasonably required
by Landlord. In the event Tenant makes any
33
alterations, additions or improvements to the Leased Premises, prior to
commencing any work in the Leased Premises, Tenant shall secure "builder's all
risk" insurance which shall be maintained throughout the course of construction,
such policy being an all risk builder's risk completed value form, in an amount
approved by Landlord, but not less than the total contract price for the
construction of such alterations, additions or improvements and covering the
construction of such alterations, additions or improvements, and such other
insurance as Landlord may require, it being understood and agreed that all of
such alterations, additions or improvements shall be insured by Tenant pursuant
to this Section 7.03 immediately upon completion thereof. Tenant shall provide
Landlord with certificates of all such insurance. The property insurance
certificate shall confirm that the waiver of subrogation required to be obtained
pursuant to Section 7.05 is permitted by the insurer. Tenant shall, at least
thirty (30) days prior to the expiration of any policy of insurance required to
be maintained by Tenant under this Lease, furnish Landlord with an "insurance
binder" or other satisfactory evidence of renewal thereof.
(b) All policies required to be carried by Tenant under this Lease
shall be issued by and binding upon a reputable insurance company of good
financial standing licensed to do business in the State of California with a
rating of at least A-VII, or such other rating as may be required by a lender
having a lien on the Project, as set forth in the most current issue of "Best's
Insurance Reports." Tenant shall not do or permit anything to be done that would
invalidate the insurance policies referred to in this Article 7. Evidence of
insurance provided to Landlord shall include an endorsement showing that
Landlord, its representatives and the holders of any deeds of trust, mortgages
or ground leases on the Project are included as additional insureds on general
liability insurance, and as loss payees for property insurance, to the extent
required hereunder, and an endorsement whereby the insurer agrees not to cancel,
non-renew or materially alter the policy without at least thirty (30) days prior
written notice to Landlord, its representatives and any mortgagee of Landlord.
(c) In the event that Tenant fails to provide evidence of insurance
required to be provided by Tenant under this Lease, prior to commencement of the
Term, and thereafter during the Term, within ten (10) days following Landlord's
request therefor, and thirty (30) days prior to the expiration date of any such
coverage, Landlord shall be authorized (but not required), after giving Tenant
two (2) business days advance written notice of Landlord's intention to do so
(which notice may be included in the ten (10) day notice referenced above in
this subparagraph (c)) to procure such coverage in the amounts stated with all
costs thereof (plus a five percent (5%) administrative fee) to be chargeable to
Tenant and payable upon written invoice therefor, which amounts shall be deemed
Additional Rent hereunder.
(d) The minimum limits of insurance required by this Lease, or as
carried by Tenant, shall not limit the liability of Tenant nor relieve Tenant of
any obligation hereunder.
7.04. INDEMNITY AND EXONERATION.
(a) To the extent not prohibited by law, except to the extent due to
the gross negligence or willful misconduct of Landlord, its employees, agents,
contractors or invitees, or Landlord's breach of this Lease, Landlord and
Landlord's representatives shall not be liable for any loss, injury or damage to
person or property of Tenant, Tenant's agents, employees, contractors, invitees
or any other person, whether caused by theft, fire, act of God, acts of the
34
public enemy, riot, strike, insurrection, war, court order, requisition or order
of governmental body or authority or which may arise through repair, alteration
or maintenance of any part of the Project or failure to make any such repair or
from any other cause whatsoever, except as expressly otherwise provided in
Sections 7.06 and 7.07. Landlord shall not be liable for any loss, injury or
damage arising from any act or omission of any other tenant or occupant of the
Project, nor shall Landlord be liable under any circumstances for damage or
inconvenience to Tenant's business or for any loss of income or profit therefrom
(b) Tenant shall indemnify, protect, defend and hold the Project,
Landlord and its representatives, harmless of and from any and all claims,
liability, costs, penalties, fines, damages, injury, judgments, forfeiture,
losses (including without limitation diminution in the value of the Leased
Premises) or expenses (including without limitation attorneys' fees, consultant
fees, testing and investigation fees, expert fees and court costs) arising out
of or in any way related to or resulting directly or indirectly from (i) the use
or occupancy of the Leased Premises, (ii) the activities of Tenant, its agents,
employees, contractors or invitees in or about the Leased Premises or the
Project (where not covered by Landlord's insurance), (iii) any failure to comply
with any applicable law to the extent required hereunder, and (iv) any default
or breach by Tenant in the performance of any obligation of Tenant under this
Lease; provided, however, that the foregoing indemnity shall not be applicable
to claims to the extent due to the gross negligence or willful misconduct of
Landlord, its employees, agents, contractors or invitees, or Landlord's breach
of this Lease.
(c) Tenant shall indemnify, protect, defend and hold the Project,
Landlord and its representatives, harmless of and from any and all claims,
liability, costs, penalties, fines, damages, injury, judgments, forfeiture,
losses (including without limitation diminution in the value of the Leased
Premises) or expenses (including without limitation attorneys' fees, consultant
fees, testing and investigation fees, expert fees and court costs) arising out
of or in any way related to or resulting directly or indirectly from work or
labor performed, materials or supplies furnished to or at the request of Tenant
or in connection with obligations incurred by or performance of any work done
for the account of Tenant in the Leased Premises or the Project, excluding,
however, any work to be performed by or under the direction of Landlord.
(d) The provisions of this Section 7.04 shall survive the expiration
or sooner termination of this Lease. BY SIGNING ITS INITIALS BELOW, TENANT
ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF
THE PROVISIONS SET FORTH IN THIS SECTION 7.04 AND FURTHER ACKNOWLEDGES THAT SUCH
PROVISIONS WERE SPECIFICALLY NEGOTIATED.
________________________
Tenant's Initials
(e) To the extent not prohibited by law, Tenant shall not be liable
for any loss, injury or damage in or about the Project, nor shall Tenant be
liable for any damage or inconvenience to Landlord or Landlord's business or for
any loss of income or profit therefrom to the extent such loss, injury or damage
arises from any gross negligence or willful misconduct of Landlord or its
employees, agents, contractors or invitees, or Landlord's breach of this Lease.
35
(f) To the extent not prohibited by law, Landlord shall indemnify,
protect, defend and hold Tenant and its representatives, harmless of and from
any and all claims, liability, costs, penalties, fines, damages, injury,
judgments, forfeiture, losses or expenses (including without limitation
reasonable attorneys' fees, consultant fees, testing and investigation fees,
expert fees and court costs) by reason of (i) any damage or injury occurring on
the Project to the extent that such damage or injury shall be caused by or arise
from any gross negligence or willful misconduct by Landlord, its employees,
agents, contractors or invitees, or Landlord's breach of this Lease, (ii)
Landlord's failure to comply with any governmental laws, ordinances and
regulations applicable to the Project, or (iii) any default or breach beyond the
expiration of the applicable cure period on the part of Landlord in the
performance of any obligation of Landlord to be performed pursuant to this
Lease; provided however, that the foregoing indemnity shall not be applicable to
claims to the extent arising by reason of any negligence or willful misconduct
of Tenant.
7.05. WAIVER OF SUBROGATION. Anything in this Lease to the contrary
notwithstanding, Landlord and Tenant each waives all rights of recovery, claim,
action or cause of action against the other, its agents (including partners,
both general and limited), trustees, officers, directors, and employees, for any
loss or damage that may occur to the Leased Premises, or any improvements
thereto, or the Project or any personal property of such party therein, by
reason of any cause required to be insured against under this Lease, regardless
of cause or origin, including negligence of the other party hereto, and each
party covenants that, to the fullest extent permitted by law, no insurer shall
hold any right of subrogation against such other party. Tenant shall advise its
insurers of the foregoing and such waiver shall be a part of each policy
maintained by Tenant which applies to the Leased Premises, any part of the
Project or Tenant's use and occupancy of any part thereof.
7.06. CONDEMNATION.
(a) If the Leased Premises are taken under the power of eminent domain
or sold under the threat of the exercise of such power (all of which are
referred to herein as "condemnation"), this Lease shall terminate as to the part
so taken as of the date the condemning authority takes title or possession,
whichever first occurs (the "date of taking"). If the Leased Premises or any
portion of the Project is taken by condemnation to such an extent as to render
the Leased Premises untenantable as reasonably determined by Tenant and
Landlord, this Lease shall, at the option of either party to be exercised in
writing within thirty (30) days after receipt of written notice of such taking,
forthwith cease and terminate as of the date of taking. All proceeds from any
condemnation of the Leased Premises shall belong and be paid to Landlord,
subject to the rights of any mortgagee of Landlord's interest in the Project or
the beneficiary of any deed of trust which constitutes an encumbrance thereon;
provided that Tenant shall be entitled to any compensation separately awarded to
Tenant for Tenant's relocation expenses, loss of business goodwill and loss of
Tenant's trade fixtures and the unamortized value of improvements made to the
Leased Premises at Tenant's expense. If this Lease continues in effect after the
date of taking pursuant to the provisions of this Section 7.06(a), Landlord
shall proceed with reasonable diligence to repair, at its expense, the remaining
parts of the Project and the Leased Premises to substantially their former
condition to the extent that the same is feasible (subject to reasonable changes
which Landlord shall deem desirable) and so as to constitute a complete and
tenantable
36
Project and Leased Premises. Net Rent shall xxxxx to the extent appropriate
during the period of restoration, and Net Rent shall thereafter be equitably
adjusted according to the remaining Rentable Area of the Leased Premises and the
Building.
(b) In the event of a temporary taking of all or a portion of the
Leased Premises for the period of ninety (90) days or less, there shall be no
abatement of Rent and Tenant shall remain fully obligated for performance of all
of the covenants and obligations on its part to be performed pursuant to the
terms of this Lease. All proceeds awarded or paid with respect thereto shall
belong to Tenant.
7.07. DAMAGE OR DESTRUCTION. In the event of a fire or other casualty
in the Leased Premises, Tenant shall immediately give notice thereof to
Landlord. The following provisions shall then apply:
(a) If the damage is limited solely to the Leased Premises and the
Leased Premises can, in Landlord's reasonable opinion, be made tenantable
with all damage repaired within twelve (12) months from the date of
damage, then Landlord shall be obligated to rebuild the same to
substantially their former condition to the extent that the same is
feasible (subject to reasonable changes which Landlord shall deem
desirable and such changes as may be required by applicable law) and shall
proceed with reasonable diligence to do so and this Lease shall remain in
full force and effect.
(b) If portions of the Project outside the boundaries of the Leased
Premises are damaged or destroyed (whether or not the Leased Premises are
also damaged or destroyed) and the Leased Premises and the Project can, in
Landlord's opinion, both be made tenantable with all damage repaired
within six (6) months from the date of damage or destruction, and provided
that Landlord determines that it is economically feasible, then Landlord
shall be obligated to rebuild the same to substantially their former
condition to the extent that the same is feasible (subject to reasonable
changes which Landlord shall deem desirable and such changes as may be
required by applicable law) and shall proceed with reasonable diligence to
do so and this Lease shall remain in full force and effect; provided,
however, that Landlord shall not terminate this Lease if it rebuilds the
Project and/or the Leased Premises.
(c) Notwithstanding anything to the contrary contained in Sections
7.07(a) or 7.07(b) above, Landlord shall not have any obligation
whatsoever to repair, reconstruct or restore the Leased Premises and
Tenant shall have the right to terminate this Lease, when any substantial
damage thereto or to the Project occurs during the last nine (9) months of
the Term and Tenant has not effectively exercised any option granted to
Tenant to extend the Term. Under such circumstances, Landlord shall
promptly notify Tenant of its decision not to rebuild, whereupon the Lease
shall terminate as of the date of such notice.
(d) If neither Section 7.07(a) nor 7.07(b) above applies, Landlord
shall so notify Tenant within sixty (60) days after the date of the damage
or destruction and either Tenant or Landlord may terminate this Lease
within thirty (30) days after the date of such notice, such termination
notice to be immediately effective; provided, however, that Landlord shall
have the right to elect to reconstruct the Project and the Leased
Premises,
37
in which event (i) Landlord shall notify Tenant of such election within
said sixty (60) day period and Tenant shall thereupon have no right to
terminate this Lease, and (ii) Landlord shall proceed with reasonable
diligence to rebuild the Project and the Leased Premises to substantially
their former condition to the extent that the same is feasible (subject to
reasonable changes which Landlord shall reasonably deem desirable and such
changes as may be required by applicable law).
(e) During any period when Tenant's use of the Leased Premises is
significantly impaired by damage or destruction, Net Rent shall xxxxx in
proportion to the degree to which Tenant's use of the Leased Premises is
impaired until such time as the Leased Premises are made tenantable as
reasonably determined by Landlord. If the Leased Premises are damaged by
any peril and Landlord does not terminate the Lease, then Tenant shall
have the option to terminate the Lease if the Leased Premises cannot be,
or are not in fact, substantially restored by Landlord to their prior
condition within 180 days after the condemnation or damage, with such 180
day period extended (up to 60 additional days) for periods of delay as
provided under Section 9.12 and periods of delays beyond the reasonable
control of Landlord (including any delays in obtaining permits).
(f) The proceeds from any insurance paid by reason of damage to or
destruction of the Project or any part thereof insured by Landlord shall
belong to and be paid to Landlord, subject to the rights of any mortgagee
of Landlord's interest in the Project or the beneficiary of any deed of
trust which constitutes an encumbrance thereon. Tenant shall be
responsible at its sole cost and expense for the repair, restoration and
replacement of (i) its fixtures, furnishings, equipment, machinery,
merchandise and personal property in the Leased Premises, and (ii) its
alteration, additions and improvements.
(g) Landlord's repair and restoration obligations under this Section
7.07 shall not impair or otherwise affect the rights and obligations of
the parties set forth elsewhere in this Lease. Subject to Section 7.07(e),
Landlord shall not be liable for any inconvenience or annoyance to Tenant,
its employees, agents, contractors or invitees, or injury to Tenant's
business resulting in any way from such damage or the repair thereof.
Landlord and Tenant agree that the terms of this Lease shall govern the
effect of any damage to or destruction of the Leased Premises or the
Project with respect to the termination of this Lease and hereby waive the
provisions of any present or future statute or law to the extent
inconsistent therewith.
7.08. DEFAULT BY TENANT.
(a) Events Of Default. The occurrence of any of the following shall
-------------------
constitute an event of default on the part of Tenant:
(1) Abandonment. Abandonment of the Leased Premises for a
-----------
continuous period of sixty (60) days;
(2) Nonpayment Of Rent. Failure to pay any installment of Rent
-------------------
due and payable hereunder on the date when payment is due, such
failure continuing
38
for a period of three (3) business days after written notice of such
failure; provided, however, that Landlord shall not be required to
provide such notice more than two (2) times in a calendar year with
respect to non-payment of Net Rent or Additional Rent, the third such
non-payment in a calendar year constituting default without
requirement of notice; furthermore, if Tenant shall be served with a
demand for the payment of past due Rent, any payment(s) tendered
thereafter to cure any default by Tenant shall be made only by
cashier's check, wire-transfer or direct deposit of immediately
available funds;
(3) Other Obligations. Failure to perform any obligation,
------------------
agreement or covenant under this Lease other than those matters
specified in Sections 7.08(a)(1) and 7.08(a)(2), such failure
continuing for a period of thirty (30) days after written notice of
such failure (or such longer period as is reasonably necessary to
remedy such default, provided that Tenant commences the remedy within
such thirty (30)-day period and continuously and diligently pursues
such remedy at all times until such default is cured);
(4) General Assignment. Any general arrangement or assignment by
------------------
Tenant for the benefit of creditors;
(5) Bankruptcy. The filing of any voluntary petition in
----------
bankruptcy by Tenant, or the filing of an involuntary petition against
Tenant, which involuntary petition remains undischarged for a period
of sixty (60) days. In the event that under applicable law the trustee
in bankruptcy or Tenant has the right to affirm this Lease and
continue to perform the obligations of Tenant hereunder, such trustee
or Tenant shall, within such time period as may be permitted by the
bankruptcy court having jurisdiction, cure all defaults of Tenant
hereunder outstanding as of the date of the affirmance of this Lease
and provide to Landlord such adequate assurances as may be necessary
to ensure Landlord of the continued performance of Tenant's
obligations under this Lease;
(6) Receivership. The appointment of a trustee or receiver to
------------
take possession of all or substantially all of Tenant's assets or the
Leased Premises, where possession is not restored to Tenant within ten
(10) business days;
(7) Attachment. The attachment, execution or other judicial
----------
seizure of all or substantially all of Tenant's assets or the Leased
Premises, if such attachment or other seizure remains undismissed or
undischarged for a period of ten (10) business days after the levy
thereof;
(8) Insolvency. The admission by Tenant in writing of its
----------
inability to pay its debts as they become due; the filing by Tenant of
a petition seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation; the filing by Tenant of
an answer admitting or failing timely to contest a material allegation
of a petition filed against Tenant in any such proceeding; or, if
within sixty (60) days after the commencement of any proceeding
against Tenant seeking any
39
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law
or regulation, such proceeding shall not have been dismissed;
(9) [Intentionally Deleted.]
(10) Partner. If Tenant is a partnership or consists of more
-------
than one (1) person or entity, if any partner of the partnership or
any person or entity constituting Tenant is involved in any of the
events or acts described in subsections 7.08(a)(4) through (8); or
(11) Misrepresentation. The discovery by Landlord that any
-----------------
representation, warranty or financial statement intentionally given to
Landlord by Tenant or any guarantor of Tenant's obligations under this
Lease was materially false or misleading.
(b) Remedies Upon Default:
(1) Termination. If an event of default occurs, Landlord shall
-----------
have the right, with or without notice or demand, immediately (after
expiration of any applicable grace period specified herein) to
terminate this Lease, and at any time thereafter recover possession of
the Leased Premises or any part thereof and expel and remove therefrom
Tenant and any other person occupying the same, by any lawful means,
and again repossess and enjoy the Leased Premises without prejudice to
any of the remedies that Landlord may have under this Lease, or at law
or in equity by reason of Tenant's default or of such termination.
(2) Continuation After Default. Even though Tenant has breached
--------------------------
this Lease and/or abandoned the Leased Premises, this Lease shall
continue in effect for so long as Landlord does not terminate Tenant's
right to possession under subsection 7.08(b)(1) hereof in writing, and
Landlord may enforce all of its rights and remedies under this Lease,
including (but without limitation) the right to recover Rent as it
becomes due, and Landlord, without terminating this Lease, may
exercise all of the rights and remedies of a landlord under Section
1951.4 of the Civil Code of the State of California or any amended or
successor code section. Acts of maintenance or preservation, efforts
to relet the Leased Premises or the appointment of a receiver upon
application of Landlord to protect Landlord's interest under this
Lease shall not constitute an election to terminate Tenant's right to
possession.
(3) Damages Upon Termination. Should Landlord terminate this
--------------------------
Lease pursuant to the provisions of subsection 7.08(b)(1) hereof,
Landlord shall have all the rights and remedies of a landlord provided
by Section 1951.2 of the Civil Code of the State of California. Upon
such termination, in addition to any other rights and remedies to
which Landlord may be entitled under applicable law, Landlord shall be
entitled to recover from Tenant: (i) the worth at the time of award of
the unpaid Rent and other amounts which had been earned at the time of
40
termination; (ii) the worth at the time of award of the amount by
which the unpaid Rent which would have been earned after termination
until the time of award exceeds the amount of such Rent loss that
Tenant proves could have been reasonably avoided; (iii) 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
Rent loss that Tenant proves could be reasonably avoided; and (iv) any
other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations
under this Lease or which, in the ordinary course of things, would be
likely to result therefrom. The "worth at the time of award" of the
amounts referred to in clauses (i) and (ii) shall be computed with
interest at the lesser of twelve percent (12%) per annum or the
maximum rate then allowed by law. The "worth at the time of award" of
the amount referred to in clause (iii) 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 one percent (1%).
(4) Computation of Rent for Purposes of Default. For purposes of
-------------------------------------------
computing unpaid Rent which would have accrued and become payable
under this Lease pursuant to the provisions of Section 7.08(c), unpaid
Rent shall consist of the sum of:
(i) the total Base Rent for the balance of the Term, plus
(ii) a computation of Tenant's Proportionate Share of Basic
Operating Cost for the balance of the Term, the assumed amount for the
Computation Year of the default and each future Computation Year in
the Term to be equal to Tenant's Proportionate Share of Basic
Operating Cost for the Computation Year immediately prior to the year
in which default occurs, compounded at a per annum rate equal to the
mean average rate of inflation for the preceding five (5) calendar
years as determined by the United States Department of Labor, Bureau
of Labor Statistics Consumer Price Index (All Urban Consumers, all
items (1982-84=100)) for the Metropolitan Area or Region in which the
Project is located. If such Index is discontinued or revised, the
average rate of inflation shall be determined by reference to the
index designated as the successor or substitute index by the
government of the United States.
(5) Late Charge. If any payment required to be made by Tenant
------------
under this Lease is not received by Landlord within five (5) days
after the same is due (or following written notice if required
hereunder), Tenant shall pay to Landlord an amount equal to five
percent (5%) of the delinquency. The parties agree that Landlord would
incur costs not contemplated by this Lease by virtue of such
delinquencies, including without limitation administrative,
collection, processing and accounting expenses, the amount of which
would be extremely difficult to compute, and the amount stated herein
represents a reasonable estimate thereof. Acceptance of such late
charge by Landlord shall in no event constitute a waiver of Tenant's
breach or default with respect to such delinquency, or prevent
Landlord from exercising any of Landlord's other rights and remedies.
41
(6) Interest on Past-Due Obligations. Except as expressly
-----------------------------------
otherwise provided in this Lease, any Rent due Landlord hereunder,
other than late charges, which is not received by Landlord on the date
on which it was due, shall bear interest from the day after it was due
at the lesser of maximum rate then allowed by law, or twelve percent
(12%) per annum, in addition to the late charge provided for in
Section 7.08(e).
(7) Landlord's Right to Perform. Notwithstanding anything to the
---------------------------
contrary set forth elsewhere in this Lease, in the event Tenant fails
to perform any affirmative duty or obligation of Tenant under this
Lease, then within the periods set forth in Section 7.08(a) hereof
(and without notice in case of an emergency) Landlord may (but shall
not be obligated to) perform such duty or obligation on Tenant's
behalf, including, without limitation, the obtaining of insurance
policies or governmental licenses, permits or approvals. Tenant shall
reimburse Landlord upon demand for the costs and expenses of any such
performance (including penalties, interest and attorneys' fees
incurred in connection therewith). Such reasonable costs and expenses
incurred by Landlord shall be deemed Additional Rent hereunder.
(8) Remedies Cumulative. All rights, privileges and elections or
-------------------
remedies of Landlord are cumulative and not alternative with all other
rights and remedies at law or in equity to the fullest extent
permitted by law.
ARTICLE 8.
OPTION TO RENEW
8.01. OPTION TO RENEW.
(a) Landlord hereby grants to Tenant one (1) option (the "Option") to
extend the term of this Lease for an additional period of five (5) years (the
"Option Term"), all on the following terms and conditions:
(1) The Option must be exercised, if at all, by written notice
irrevocably exercising the Option ("Option Notice") delivered by
Tenant to Landlord not later than nine (9) months prior to the Term
Expiration Date. Further, the Option shall not be deemed to be
properly exercised if, as of the date of the Option Notice or at the
Term Expiration Date, (i) Tenant is in default under this Lease after
the delivery of any notice required hereunder and passage of any
applicable cure period, (ii) Tenant has assigned this Lease or its
interest therein (other than an assignment for which Landlord's
consent is not required), or (iii) Tenant, or Tenant's affiliate or
subsidiary, is in possession of less than fifty percent (50%) of the
square footage of the Leased Premises. Provided Tenant has properly
and timely exercised the Option, the term of this Lease shall be
extended for the period of the Option Term, and all terms, covenants
and conditions of this Lease shall remain unmodified and in full force
and effect, except that the Base Rent shall be modified as set forth
in subsection 8.01(a)(2) below.
42
(2) The Base Rent payable for the Option Term shall be the
then-current rental rate per rentable square foot (as further defined
below, "FMRR") being agreed to in new leases by the Landlord and other
landlords of buildings in the Emeryville, California area which are
comparable in quality, location and prestige to the Building
("Comparable Buildings") and tenants leasing space in the Building or
Comparable Buildings. As used herein, "FMRR" shall mean the rental
rate per rentable square foot for which Landlord and other landlords
are entering into new leases (excluding the value of improvements made
at Tenant's expense) within the time period of nine (9) to six (6)
months prior to the Term Expiration Date ("Market Determination
Period"), with new tenants leasing from Landlord and/or other
landlords office space in the Building and/or Comparable Buildings
("Comparative Transactions"). Landlord shall provide its
determina-tion of the FMRR to Tenant within twenty (20) days after
Landlord receives the Option Notice. Tenant shall have fifteen (15)
days ("Tenant's Review Period") after receipt of Landlord's notice of
the FMRR within which to accept such FMRR or to reasonably object
thereto in writing. In the event Tenant objects to the FMRR submitted
by Landlord, Landlord and Tenant shall attempt to agree upon such
FMRR. If Landlord and Tenant fail to reach agreement on such FMRR
within fifteen (15) days following Tenant's Review Period (the
"Outside Agreement Date"), then each party shall place in a separate
sealed envelope its final proposal as to FMRR and such determina-tion
shall be submitted to arbitration in accordance with subparagraph
8.01(b) below.
(b) Landlord and Tenant shall meet with each other within five (5)
business days of the Outside Agreement Date and exchange the sealed envelopes
and then open such envelopes in each other's presence. If Landlord and Tenant do
not mutually agree upon the FMRR within one (1) business day of the exchange and
opening of envelopes, then, within ten (10) business days of the exchange and
opening of envelopes, Landlord and Tenant shall agree upon and jointly appoint
one arbitrator who shall be by profession be a real estate appraiser or broker
who shall have been active over the five (5) year period ending on the date of
such appointment in the leasing of comparable commercial properties in the
vicinity of the Building. Neither Landlord nor Tenant shall consult with such
broker or appraiser as to his or her opinion as to FMRR prior to the
appointment. The deter-mina-tion of the arbitra-tor shall be limited solely to
the issue of whether Landlord's or Tenant's submitted FMRR for the Premises is
the closer to the FMRR for the Leased Premises. Such arbitrator may hold such
hearings and require such briefs as the arbitrator, in his or her sole
discretion, determines is necessary. In addition, Landlord or Tenant may submit
to the arbitrator with a copy to the other party within five (5) business days
after the appoint-ment of the arbitrator any data and additional informa-tion
that such party deems relevant to the determination by the arbitrator ("Data")
and the other party may submit a reply in writing within five (5) business days
after receipt of such Data.
(1) The arbitrator shall, within thirty (30) days of his or her
appointment, reach a decision as to whether the parties shall use
Landlord's or Tenant's submitted FMRR, and shall notify Landlord and
Tenant of such determination.
43
(2) The decision of the arbitrator shall be bind-ing upon
Landlord and Tenant.
(3) If Landlord and Tenant fail to agree upon and appoint such
arbitrator, then the appointment of the arbi-trator shall be made by
the American Arbitration Association.
(4) The cost of arbitration shall be paid by the party whose
submitted FMRR is not selected by the arbitrator.
(5) The arbitration proceeding and all evidence given or
discovered pursuant thereto shall be maintained in confidence by all
parties.
Notwithstanding anything to the contrary contained in this Section, if
the rent during any extended term is determined by arbitration and if Tenant
does not, in its sole discretion, approve the rental amount established by such
appraisal, Tenant may rescind its exercise of the Option by giving Landlord
written notice of such election to rescind within ten (10) days after receipt of
the arbitrator's decision. If Tenant rescinds its exercise of the Option, then
(i) the Lease shall terminate, at Landlord's election, either on the date that
is two hundred seventy (270) days after Tenant's notice of rescission or on the
date the Lease would have otherwise terminated absent Tenant's exercise of the
Option; and (ii) Tenant shall pay all costs and expenses of the arbitration.
ARTICLE 9.
MISCELLANEOUS MATTERS
9.01. PARKING. Landlord agrees to provide Tenant for use by the
employees, agents, customers and invitees of Tenant the number of parking spaces
designated on the Basic Lease Information sheet on an unreserved and unassigned
basis on those portions of the Project designated by Landlord for parking. One
hundred fifty-three (153) of the parking spaces shall be free of charge during
the Term or any extension thereof (the "Free Parking Spaces"). At any time
before the ninetieth (90th) day after the Term Commencement Date for the
Expansion Premises, Tenant may elect to lease an additional sixty-four (64)
parking stalls (Tenant must elect to lease all 64 parking stalls or none of the
parking stalls; Tenant may not elect to lease only a portion of the 64 parking
stalls) at the rate of fifty-five dollars ($55.00) per month per parking stall
with annual increases of three percent (3%) per annum over the prior year. At
any time before July 20, 2001, Tenant may elect to lease, for a period from the
date of such election to the end of the initial Term, up to an additional
forty-six (46) parking stalls at the rate of fifty-five dollars ($55.00) per
month per parking stall with annual increases of the lesser of (i) market
increases, or (ii) three percent (3%) per annum over the prior year. Tenant
shall pay Landlord for all of its monthly parking fees at the time Tenant makes
its regular payment of Base Rent. During the Option Term, the monthly parking
fees (except for the Free Parking Spaces which shall remain free of charge)
shall be the prevailing market parking rental rate at such time, with annual
increases equal to the prevailing annual market increases at such time. The
parking spaces will not be separately identified and Landlord shall have no
obligation to monitor the use of the parking area; provided, however, the
entrance to the Building garage shall be through a card-key system implemented
by Landlord. If a parking density problem occurs during the Term,
44
Landlord shall address the problem, in its reasonable discretion, which solution
may include initiating a parking permit system or a reserved parking system and
any costs associated therewith (including, without limitation, costs of
patrolling the Building garage and/or parking area outside of the Building for
compliance with the parking system) shall constitute a Basic Operating Cost. All
parking shall be subject to any and all rules and regulations adopted by
Landlord in its reasonable discretion from time to time. Only automobiles no
larger than full size passenger automobiles or pick-up trucks or standard
business use vehicles (which do not require parking spaces larger than full size
passenger automobiles) may be parked in the Project parking area. Tenant shall
not permit or allow any vehicles that belong to or are controlled by Tenant or
Tenant's employees, agents, customers or invitees to be loaded, unloaded or
parked in areas other then those designated by Landlord for such activities. A
failure by Tenant or any of its employees, agents, customers or invitees to
comply with the foregoing provisions shall afford Landlord the right, but not
the obligation, without notice, in addition to any other rights and remedies
available under this Lease, to remove and to tow away the vehicles involved and
to charge the cost to Tenant, which cost shall be immediately due and payable
upon demand by Landlord.
9.02. BROKERS. Landlord has been represented in this transaction by
Landlord's Broker. Tenant has been represented in this transaction by Tenant's
Broker. Upon full execution of this Lease by both parties, Landlord shall pay to
(i) Landlord's Broker a fee for brokerage services rendered by it in this
transaction if provided for in a separate written agreement between Landlord and
Landlord's Broker, and (ii) Tenant's broker pursuant to Landlord's published
commission schedule or, in the event no such schedule exists, pursuant to a
separate agreement by and between Landlord and Tenant's broker. Landlord shall
pay no brokerage fees with respect to the leasing of the Expansion Premises.
Tenant represents and warrants to Landlord that the brokers named in the Basic
Lease Information sheet are the only agents, brokers, finders or other similar
parties with whom Tenant has had any dealings in connection with the negotiation
of this Lease and the consummation of the transaction contemplated hereby.
Tenant hereby agrees to indemnify, defend and hold Landlord free and harmless
from and against liability for compensation or charges which may be claimed by
any other agent, broker, finder or other similar party by reason of any dealings
with or actions of Tenant in connection with the negotiation of this Lease and
the consummation of this transaction, including any costs, expenses and
attorneys' fees incurred with respect thereto. Tenant hereby agrees to also
indemnify, defend and hold Landlord free and harmless from and against liability
for compensation or charges which may be claimed by any agent, broker, finder or
other similar party by reason of any dealings with or actions of Tenant in
connection with the negotiation of the leasing of the Expansion Premises,
including any costs, expenses and attorneys' fees incurred with respect thereto.
9.03. NO WAIVER. No waiver by either party of the default or breach of any
term, covenant or condition of this Lease by the other shall be deemed a waiver
of any other term, covenant or condition hereof, or of any subsequent default or
breach by the other of the same or of any other term, covenant or condition
hereof. Landlord's consent to, or approval of, any act shall not be deemed to
render unnecessary the obtaining of Landlord's consent to, or approval of, any
subsequent or similar act by Tenant, or be construed as the basis of an estoppel
to enforce the provision or provisions of this Lease requiring such consent.
Regardless of Landlord's
45
knowledge of a default or breach at the time of accepting Rent, the acceptance
of Rent by Landlord shall not be a waiver of any preceding default or breach by
Tenant of any provision hereof, other than the failure of Tenant to pay the
particular Rent so accepted. Any payment given Landlord by Tenant may be
accepted by Landlord on account of monies or damages due Landlord,
notwithstanding any qualifying statements or conditions made by Tenant in
connection therewith, which statements and/or conditions shall be of no force or
effect whatsoever unless specifically agreed to in writing by Landlord at or
before the time of deposit of such payment.
9.04. RECORDING. Neither this Lease nor a memorandum thereof shall be
recorded without the prior written consent of Landlord, which consent may be
withheld in Landlord's sole discretion.
9.05. HOLDING OVER. If Tenant holds over after expiration or termination of
this Lease, Tenant shall pay for each month of hold-over tenancy one hundred
fifty percent (150%) times the Base Rent which Tenant was obligated to pay for
the month immediately preceding the end of the Term for each month or any part
thereof of any such hold-over period, together with such other amounts as may
become due hereunder. No holding over by Tenant after the Term shall operate to
extend the Term. In the event of any unauthorized holding over, Tenant shall
indemnify, defend and hold Landlord harmless from and against all claims,
demands, liabilities, losses, costs, expenses (including attorneys' fees),
injury and damages incurred by Landlord as a result of Tenant's delay in
vacating the Leased Premises.
9.06. TRANSFERS BY LANDLORD. The term "Landlord" as used in this Lease
shall mean the owner(s) at the time in question of the fee title to the Leased
Premises or, if this is a sublease, of the Tenant's interest in the master
lease. If Landlord transfers, in whole or in part, its rights and obligations
under this Lease or in the Project, upon its transferee's assumption of
Landlord's obligations hereunder and delivery to such transferee of any unused
Security Deposit then held by Landlord, no further liability or obligations
shall thereafter accrue against the transferring or assigning person as Landlord
hereunder. Subject to the foregoing, the obligations and/or covenants in this
Lease to be performed by the Landlord shall be binding only upon the Landlord as
defined in this Section 9.06.
9.07. ATTORNEYS' FEES. In the event either party places the enforcement of
this Lease, or any part of it, or the collection of any Rent due, or to become
due, hereunder, or recovery of the possession of the Leased Premises, in the
hands of an attorney, or files suit upon the same, the prevailing party shall
recover its reasonable attorneys' fees, costs and expenses, including those
which may be incurred on appeal. Such fees may be awarded in the same suit or
recovered in a separate suit, whether or not suit is filed or any suit that may
be filed is pursued to decision or judgment. The term "prevailing party" shall
include, without limitation, a party who substantially obtains or defeats the
relief sought, as the case may be, whether by compromise, settlement, judgment,
or the abandonment by the other party of its claim or defense. The attorneys'
fee award shall not be computed in accordance with any court fee schedule, but
shall be such as to fully reimburse all attorneys' fees reasonably incurred.
9.08. TERMINATION; MERGER. No act or conduct of Landlord, including,
without limitation, the acceptance of keys to the Leased Premises, shall
constitute an acceptance of the surrender of the Leased Premises by Tenant
before the scheduled Term Expiration Date. Only a
46
written notice from Landlord to Tenant shall constitute acceptance of the
surrender of the Leased Premises and accomplish a termination of this Lease.
Unless specifically stated otherwise in writing by Landlord, the voluntary or
other surrender of this Lease by Tenant, the mutual termination or cancellation
hereof, or a termination hereof by Landlord for default by Tenant, shall
automatically terminate any sublease or lesser estate in the Leased Premises;
provided, however, Landlord shall, in the event of any such surrender,
termination or cancellation, have the option to continue any one or all of any
existing subtenancies. Landlord's failure within thirty (30) days following any
such event to make any written election to the contrary by written notice to the
holder of any such lesser interest, shall constitute Landlord's election to have
such event constitute the termination of such interest.
9.09. AMENDMENTS; INTERPRETATION. This Lease may not be altered, changed or
amended, except by an instrument in writing signed by the parties in interest at
the time of the modification. The captions of this Lease are for convenience
only and shall not be used to define or limit any of its provisions.
9.10. SEVERABILITY. If any term or provision of this Lease, or the
application thereof to any person or circumstances, shall to any extent be
invalid or unenforceable, the remainder of this Lease, or the application of
such provision to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each provision of
this Lease shall be valid and shall be enforceable to the fullest extent
permitted by law.
9.11. NOTICES. All notices, demands, consents and approvals which are
required or permitted by this Lease to be given by either party to the other
shall be in writing and shall be deemed to have been fully given by personal
delivery or by recognized overnight courier service or when deposited in the
United States mail, certified or registered, with postage prepaid, and addressed
to the party to be notified at the address for such party specified on the Basic
Lease Information sheet, or to such other place as the party to be notified may
from time to time designate by at least fifteen (15) days' notice to the
notifying party given in accordance with this Section 9.11, except that upon
Tenant's taking possession of the Leased Premises, the Leased Premises shall
constitute Tenant's address for notice purposes. A copy of all notices given to
Landlord under this Lease shall be concurrently transmitted to such party or
parties at such addresses as Landlord may from time to time hereafter designate
by notice to Tenant.
Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt
card, or if no delivery date is shown, the postmark thereon. Notices delivered
by recognized overnight courier shall be deemed given twenty-four (24) hours
after delivery of the same to the courier. If notice is received on a Saturday,
Sunday or legal holiday, it shall be deemed received on the next business day.
9.12. FORCE MAJEURE. Any prevention, delay or stoppage of work to be
performed by Landlord or Tenant which is due to strikes, labor disputes,
inability to obtain labor, materials, equipment or reasonable substitutes
therefor, acts of God, governmental restrictions or regulations or controls,
judicial orders, enemy or hostile government actions, civil commotion, or other
causes beyond the reasonable control of the party obligated to perform
hereunder, shall excuse performance of the work by that party for a period equal
to the duration of that
47
prevention, delay or stoppage. Nothing in this Section 9.12 shall excuse or
delay Tenant's obligation to pay Rent or other charges due under this Lease.
9.13. GUARANTOR. NONE.
9.14. SUCCESSORS AND ASSIGNS. This Lease shall be binding upon and inure to
the benefit of Landlord, its successors and assigns (subject to the provisions
hereof, including, without limitation, Section 5.15), and shall be binding upon
and inure to the benefit of Tenant, its successors, and to the extent assignment
or subletting, may be approved by Landlord hereunder, Tenant's assigns or
subtenants.
9.15. FURTHER ASSURANCES. Landlord and Tenant each agree to promptly sign
all documents reasonably requested to give effect to the provisions of this
Lease.
9.16. INCORPORATION OF PRIOR AGREEMENTS. This Lease, including the exhibits
and addenda attached to it, contains all agreements of Landlord and Tenant with
respect to any matter referred to herein. No prior agreement or understanding
pertaining to such matters shall be effective.
9.17. APPLICABLE LAW. This Lease shall be governed by, construed and
enforced in accordance with the laws of the State of California.
9.18. TIME OF THE ESSENCE. Time is of the essence of each and every
covenant of this Lease. Each and every covenant, agreement or other provision of
this Lease on Tenant's part to be performed shall be deemed and construed as a
separate and independent covenant of Tenant, not dependent on any other
provision of this Lease or on any other covenant or agreement set forth herein.
9.19. NO JOINT VENTURE. This Lease shall not be deemed or construed to
create or establish any relationship of partnership or joint venture or similar
relationship or arrangement between Landlord and Tenant hereunder.
9.20. AUTHORITY. If Tenant is a corporation, trust or general or limited
partnership, each individual executing this Lease on behalf of Tenant represents
and warrants that he or she is duly authorized to execute and deliver this Lease
on Tenant's behalf and that this Lease is binding upon Tenant in accordance with
its terms. If Tenant is a corporation, trust or partnership, Tenant shall,
within ten (10) business days after request by Landlord, deliver to Landlord
evidence satisfactory to Landlord of such authority.
9.21. DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS. Tenant
acknowledges that it has received and read any CC&Rs for the Project that have
been recorded as of the date hereof, and agrees to comply with and be bound by
all terms, conditions and provisions thereof. Tenant further acknowledges and
agrees that a default by Tenant under the CC&Rs shall constitute a default
hereunder. All obligations of Landlord hereunder shall be limited to the extent
performance of same is prohibited, restricted or limited under the CC&Rs.
48
9.22. OFFER. Preparation of this Lease by Landlord or Landlord's agent and
submission of same to Tenant shall not be deemed an offer to lease to Tenant.
This Lease is not intended to be binding and shall not be effective until fully
executed by both Landlord and Tenant.
9.23. BUILDING ACCESS. Tenant shall have access to the Leased Premises
twenty-four (24) hours per day, seven (7) days per week. The Building shall be
open from 7:00 a.m. to 6:00 p.m. Monday through Friday, and from 8:00 a.m. to
1:00 p.m. Saturday. Landlord shall provide a cardkey system for access to the
Building and the adjacent garage after such hours. Landlord shall provide
security measures in and around the Building that will include, but may not be
limited to, security cameras and roving security patrols.
9.24. EXHIBITS; ADDENDA. The following Exhibits and addenda are attached
to, incorporated in and made a part of this Lease: EXHIBIT A-1 Site Plan of the
-----------
Building; EXHIBIT A-2 Floor Plan of the Leased Premises; EXHIBIT B Initial
------------ ---------
Improvement of the Leased Premises (Existing Premises); EXHIBIT B-1 Preliminary
-----------
Plans; EXHIBIT B-2 Warm Shell Specifications; EXHIBIT C Confirmation of Term of
----------- ---------
Lease; EXHIBIT D Confidentiality Agreement; EXHIBIT E Building Rules and
---------- ----------
Regulations; EXHIBIT F Estimated Budget; and EXHIBIT G Initial Improvement of
---------- ---------
the Leased Premises (Expansion Premises).
9.25. APPROVALS. Unless otherwise specified in this Lease, whenever the
Lease requires an approval, consent, determination, selection or judgment by
either Landlord or Tenant, such approval, consent, determination, selection or
judgment and any conditions imposed thereby shall be reasonable and shall not be
unreasonably withheld or delayed and, in exercising any regret or remedy
hereunder, each party shall at all times act reasonably and in good faith.
9.26. DEPRECIATION. For all tax purposes, Landlord shall have the right to
depreciate the cost of Landlord's Work and the Tenant Improvements (except for
the cost of Tenant Improvements in excess of Landlord's Contribution (which
Landlord's Contribution shall include the amount referenced in Paragraph 5(c) of
EXHIBIT B); and Tenant shall have the right to depreciate all Tenant Extra
Improvements and all alterations to the Leased Premises paid for by Tenant.
[BALANCE OF PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
49
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
day and year first written above.
"LANDLORD":
BEP-EMERYVILLE, L.P.,
a Delaware limited partnership
By: EPI Investors 103 LLC.,
a California limited liability company
Its: General Partner
By: Xxxxx Xxxxxxxx, Inc.,
a California corporation
Its: Managing Member
By: /s/ Xxxxx X Xxxxx
------------------------------------
Name: Xxxxx X Xxxxx
----------------------------------
Title: Vice President
---------------------------------
"TENANT":
EVOLVE SOFTWARE, INC.,
a Delaware corporation
By: /s/ Xxxx Xxxxxxxx
---------------------------------
Name: Xxxx Xxxxxxxx
--------------------------------
Title: CFO
-------------------------------
50
EXHIBIT A-1
[Graphic Omitted]
SITE PLAN
OF THE
BUILDING
1
EXHIBIT A-2
[Graphic Omitted]
FLOOR PLAN
OF THE
LEASED PREMISES
EXHIBIT B
INITIAL IMPROVEMENT OF THE LEASED PREMISES
(EXISTING PREMISES)
1. Tenant Improvements. Landlord shall construct and install the
--------------------
Tenant Improvements in the Leased Premises, substantially in accordance with
plans, working drawings and specifications ("Tenant's Plans") prepared by
Landlord's architect, Kava Massih Architects, Inc., in consultation with Tenant.
Tenant's Plans shall include design build mechanical, electrical and plumbing
plans and specifications. The costs of preparing Tenant's Plans and performing
the Tenant Improvements shall be allocated between, and paid by, Landlord and
Tenant as set forth in this EXHIBIT B. Landlord shall use its best efforts to
---------
minimize the cost of preparing the Tenant's Plans and performing the Tenant
Improvements.
2. Tenant's Plans.
---------------
As soon as reasonably possible Tenant and Landlord shall approve Tenant's
Plans. Landlord shall cause Landlord's architect to cause Tenant's Plan's (i)
to comply with all applicable codes, laws, ordinances, rules and regulations,
(ii) not adversely affect the Building shell or core or any systems, components
or elements of the Building, (iii) be in a form sufficient to secure the
approval of all government authorities with jurisdiction over the Building, and
(iv) be otherwise satisfactory to Landlord in Landlord's reasonable discretion.
Tenant's Plans shall be complete plans, working drawings and specifications for
the layout, improvement and finish of the Leased Premises consistent with the
design and construction of the Building, including mechanical and electrical
drawings and decorating plans, showing as many of the following as possible:
(a) Location and type of all partitions;
(b) Location and type of all doors, with hardware and keying schedule;
(c) Ceiling plans, including light fixtures;
(d) Location of telephone equipment room, with all special electrical
and cooling requirements;
(e) Location and type of all electrical outlets, switches, telephone
outlets, and lights;
(f) Location of all sprinklers;
(g) Location and type of all equipment requiring special electrical
requirements;
1
(h) Location, weight per square foot and description of any heavy
equipment or filing system exceeding fifty (50) pounds per square foot
live and dead load;
(i) Requirements for special air conditioning or ventilation;
(j) Type and color of floor covering;
(k) Location, type and color of wall covering;
(l) Location, type and color of paint or finishes;
(m) Location and type of plumbing;
(n) Location and type of kitchen equipment;
(o) Indicate critical dimensions necessary for construction;
(p) Details showing all millwork with verified dimensions and
dimensions of all equipment to be built in, corridor entrances, bracing or
support of special walls or glass partitions, and any other items or
information requested by Landlord; and
(q) Location of all cabling.
3. Landlord shall cause to be prepared, as quickly as possible, the
Tenant's Plans, as well as an estimate of the total cost of the Tenant
Improvements ("Cost Estimate"), all of which shall conform to or represent
logical evolutions of or developments from the preliminary plans attached hereto
as EXHIBIT B-1 (the "Initial Preliminary Plans"). The parties intend to replace
-----------
the Initial Preliminary Plans with a final space plan within sixty (60) days of
execution of this Lease (the "Final Preliminary Plans"); provided, however, that
the failure of the parties to replace the Initial Preliminary Plans with the
Final Preliminary Plans shall not affect the enforceability of this Lease. The
Tenant's Plans and Cost Estimate shall be delivered to Tenant immediately upon
completion. Within three (3) business days after receipt thereof, at its
election (a) Tenant may approve the Tenant's Plans and Cost Estimate, or (b)
Tenant may deliver to Landlord the specific written changes to such plans that
are necessary, in Tenant's opinion, to conform such plans to the Final
Preliminary Plans or to reduce costs. If Tenant desires changes, Landlord shall
not unreasonably withhold its approval of such changes and the parties shall
confer and negotiate in good faith to reach agreement on modifications to the
Tenant's Plans and the Cost Estimate as a consequence of such change. As soon
as approved by Landlord and Tenant, Landlord shall submit the Tenant's Plans to
all appropriate governmental agencies and thereafter the Landlord shall use its
best efforts to obtain required governmental approvals as soon as practicable.
2
4. Construction.
------------
(a) Landlord, at its sole cost and expense and with no deduction from
Landlord's Contribution (as defined below), shall provide the "warm shell" of
the Leased Premises as further shown on EXHIBIT B-2 (the "Landlord's Work"),
-----------
which shall include the following: (i) windows, side walls and an entry door;
(ii) the restroom core; (iii) HVAC on the roof, but not distributed; (iv)
insulation; (v) line for plumbing, but not distributed; (vi) main sprinkler
lines, but not distributed; and (vii) Common Areas servicing the Leased
Premises.
(b) Landlord shall complete the Landlord's Work and the Tenant
Improvements in the Leased Premises substantially in accordance with Tenant's
Plans and in a good and workmanlike manner and in compliance with all applicable
codes, laws, ordinances, rules and regulations. Landlord shall be entitled to
charge a construction supervision fee equal to the lesser of (i) three and
one-half percent (3.5%) of the total costs of the Tenant Improvements, or (ii)
$1.00 per square foot of the Rentable Area of the Leased Premises. Such
administration fee shall be deducted from Landlord's Contribution. Landlord
shall pay Landlord's Contribution directly to the Contractor in installments as
the Tenant Improvements are constructed, upon Landlord's receipt of a written
request for payment accompanied by written invoices and other written evidence
reasonably satisfactory to Landlord showing the costs incurred, until Landlord's
Contribution is exhausted. Notwithstanding the foregoing, Landlord's payment
with respect to any invoice submitted by the Contractor shall not exceed a fixed
percentage of the amount of such invoice, such fixed percentage to be equal to
the ratio of Landlord's Contribution to the contract price for the Tenant
Improvements. Within ten (10) days of Tenant's receipt from Landlord of a copy
of a written invoice showing Tenant's share of such invoice (i.e. the total
amount of such invoice less Landlord's share as determined by the preceding
sentence), Tenant shall pay to Landlord the balance of such invoice and Landlord
shall pay to the Contractor the full amount of such invoice. Landlord shall have
no liability to Tenant if the Leased Premises are not suitable for Tenant's
occupancy so long as the Leased Premises are constructed in accordance with
Tenant's Plans. Landlord represents and warrants that the entire Landlord
Contribution shall be available to Tenant for its intended use and that no
portion of the Landlord Contribution has been previously committed by Landlord
for items already constructed or currently being constructed except for the
following: (i) sprinkler distribution laterals and heads that have been
installed, and (ii) telecom conduit and cable that has been extended from the
north electrical distribution room to the south electrical distribution room.
(c) Landlord shall enter into a construction contract (the
"Construction Contract") for the Tenant's Improvements with a general contractor
(the "Contractor") selected on a competitive bid basis from the following group
of general contractors: (i) Xxxxxxxxx Construction, (ii) DPR, (iii) Xxxxxx
Construction, and (iv) at Tenant's option, a general contractor proposed by
Tenant subject to Landlord's reasonable approval. The Construction Contract
shall be written on a "guaranteed maximum price" basis (the "Guaranteed Maximum
Price") and will be subject to Tenant's prior written approval, which will not
be unreasonably withheld. The Construction Contract shall require Contractor to
seek competitive bids from subcontractors in each of the major trades, with a
minimum of three bids where possible. Pricing below the guaranteed maximum
amount shall be based upon the actual hard costs of construction (calculated on
an open book basis) with a xxxx-up for the Contractor's general conditions,
3
overhead and profit not to exceed the lesser of the xxxx-up charged for other
tenant improvements at the Project or a commercially reasonable xxxx-up.
(d) Notwithstanding anything to the contrary in the Lease, Landlord
shall solely be responsible for, the cost of the Tenant Improvements shall not
include and the Landlord's Contribution shall not be used for the following: (i)
costs for improvements which are not shown on or described in the final Tenant's
Plans or the general construction contract documents relating to the
Construction Contract unless otherwise approved by Tenant; (ii) costs incurred
to remove Hazardous Materials from the Leased Premises or the surrounding area;
(iii) attorneys' fees incurred in connection with negotiation of construction
contracts including the Construction Contract; (iv) interest and other costs of
financing construction costs not caused by Tenant's failure to make any payments
required under Paragraphs 4 or 5 of this EXHIBIT B; (v) costs incurred as a
---------
consequence of construction defects during the course of construction of the
Tenant Improvements (provided, however, that this clause (v) shall not expand
the scope of any warranty set forth in this Lease); (vi) costs recovered by
Landlord on account of warranties and insurance (and Landlord hereby agrees to
act in a commercially reasonable manner to exercise all rights it has to recover
costs under such warranties and insurance); (vii) restoration costs as a
consequence of casualties where the restoration costs are in excess of the sum
of insurance proceeds plus any applicable deductibles (with such deductibles not
to exceed $10,000.00) under the applicable insurance policies; (viii) penalties
and late charges attributable to Landlord's failure to pay construction costs
unless caused by Tenant's failure to make any payments required under Paragraphs
4 or 5 of this EXHIBIT B; (ix) costs to bring any item which is part of the
---------
"warm shell" set forth on EXHIBIT B-2 into compliance with applicable laws and
-----------
restrictions, including, without limitation, the Americans with Disabilities Act
and environmental laws; (x) wages, labor and overhead for overtime and premium
time unless otherwise agreed by the parties; (xi) offsite management,
supervision fees or other general overhead costs incurred by Landlord other than
the fee set forth in Paragraph 4(b) of this EXHIBIT B; and (xii) costs exceeding
---------
those authorized pursuant to the terms of the Construction Contract.
5. Landlord's and Tenant's Contributions.
----------------------------------------
(a) Landlord shall pay for Landlord's Work.
(b) As Landlord's contribution for the costs of Tenant Improvements,
Landlord shall give Tenant an allowance in the maximum amount of $25.00 per
square foot of Rentable Area, which equals $1,281,525.00 based upon 51,261
rentable square feet ("Landlord's Contribution"). Landlord's Contribution may be
used only for direct hard and soft costs, including construction costs,
architect fees, and consultant fees; provided, however, that, in the event that
a portion of Landlord's Contribution remains after payment in full for the
Tenant Improvements, such portion shall be a credit against Base Rent. Any costs
of preparing Tenant's Plans and constructing the Tenant Improvements in excess
of Landlord's Contribution shall be paid by Tenant and shall constitute Tenant's
Extra Improvements.
(c) In the event that the actual cost of the Tenant Improvements
exceeds $1,281,525.00, Landlord shall make available up to an additional
$256,305.00 for the Tenant Improvements. Tenant may pay such actual costs in
cash or may elect to have any portion of
4
such amount amortized over the initial lease Term and paid monthly with Base
Rent along with interest calculate d at the lesser of the maximum rate allowed
by law or 11.5%.
6. Changes. Except for minor and immaterial changes, if Tenant
-------
requests any change in Tenant's Plans after final approval thereof by Landlord
and Tenant, Tenant shall request such change in a written notice to Landlord.
Each such request shall be accompanied by proper plans and specifications
prepared by Tenant, at Tenant's expense, necessary to show and explain such
change from the previously approved Tenant's Plans. All changes in Tenant's
Plans (except for minor and immaterial changes) shall be subject to the prior
written approval of Landlord which shall be given within five (5) business days
(which shall not be unreasonably withheld).
7. Other Work by Tenant. All work not within the scope of the normal
----------------------
construction trades employed on the Building, such as the furnishing and
installing of furniture, telephone equipment, office equipment and wiring, shall
be furnished and installed by Tenant at Tenant's expense.
8. Requirements for Work Performed by Tenant. All work performed at
--------------------------------------------
the Building or in the Project by Tenant or Tenant's contractor or
subcontractors shall be subject to the following additional requirements:
a. Such work shall not proceed until Landlord has approved in writing:
(i) Tenant's contractor, (ii) the amount and coverage of public liability
and property damage insurance, with Landlord named as an additional
insured, carried by Tenant's contractor, (iii) complete and detailed plans
and specifications for such work, and (iv) a schedule for the work.
b. All work shall be done in conformity with a valid permit when
required, a copy of which shall be furnished to Landlord before such work
is commenced. In any case, all such work shall be performed in accordance
with all applicable laws. Notwithstanding any failure by Landlord to
object to any such work, Landlord shall have no responsibility for
Tenant's failure to comply with applicable laws.
c. Tenant or Tenant's contractor shall arrange for necessary utility,
hoisting and elevator service, on a nonexclusive basis, with Landlord.
Landlord shall have the right to require any necessary movement of
materials by the elevator to be done after regular working hours.
d. Tenant shall be responsible for cleaning the Leased Premises, the
Building and the Project and removing all debris in connection with the
Tenant Improvements and its other work. All completed work shall be
subject to inspection and acceptance by Landlord. Tenant shall reimburse
Landlord for the cost of third party supervision of construction of the
Tenant Improvements (which may be deducted by Landlord from Landlord's
Contribution) upon demand and for all extra expense incurred by Landlord
by reason of faulty work done by Tenant or Tenant's contractor or by
reason of inadequate cleanup by Tenant or Tenant's contractor. Landlord
will provide Tenant with copies of
5
third party consultant invoices within five (5) business days of Tenant's
request for such invoices.
e. Tenant shall be responsible for the cost of separately metering
electrical utilities to the Leased Premises (or such cost may be paid and
deducted from Landlord's Contribution.
9. Tenant Delay. If the completion of the Tenant Improvements is
-------------
delayed (i) at the request of Tenant, (ii) by Tenant's failure to comply with
the foregoing provisions (including failure to pay any sums payable by Tenant
within the time periods specified herein), (iii) by changes in the Tenant's
Plans ordered by Tenant after such Tenant's Plans were already approved by
Landlord and Tenant or by extra work ordered by Tenant, (iv) because Tenant
chooses to have additional work performed by Landlord, or (v) because of any
other act or omission of Tenant not within Tenant's specific rights under this
Lease (collectively, "Tenant Delay"), then Tenant shall be responsible for all
costs and any expenses occasioned by such Tenant Delay including, without
limitation, any costs and expenses attributable to increases in labor or
materials (but only where such increased costs exceed Landlord's Contribution
under paragraph 5(b)); and, if such delay actually delays the Term Commencement
Date, then Tenant shall pay Lessor the Base Rent for the entire period of such
delay.
10. Binding Arbitration. Any dispute ("Dispute") between the parties
--------------------
with respect to the Tenant's Plans and/or the Construction Contract shall be
resolved in accordance with the following procedures. Either party may
commence arbitration with respect to a Dispute by giving notice to the other
party ("Arbitration Notice"). Within ten (10) days of the Arbitration Notice,
Landlord and Tenant shall jointly select an arbitrator, or if they are unable to
reach agreement on the arbitrator, in accordance with the then current
arbitration rules and procedures (the "Rules") of JAMS-Endispute ("JAMS") from a
list of qualified people maintained by JAMS. Neither Landlord nor Tenant shall
consult with such arbitrator as to his or her opinion as to the Dispute prior to
the appointment. The determination of the arbitrator shall be limited solely to
the Dispute. The arbitration shall take place in San Francisco, California and
all expedited procedures prescribed by the Rules shall apply. Such arbitrator
may hold hearings and require such briefs as the arbitrator, in his or her sole
discretion, determines is necessary. In addition, Landlord or Tenant may submit
to the arbitrator, with a copy to the other party, within five (5) business days
after the appointment of the arbitrator any data and additional information that
such party deems relevant to the determination by the arbitrator and the other
party may submit a reply in writing within five (5) business days after receipt
of such data and additional information. The arbitrator shall conduct such
evidentiary hearings as the arbitrator deems necessary or appropriate.
(a) The arbitrator shall, within twenty-one (21) days of his or her
appointment, reach a decision as to the Dispute, and shall notify Landlord and
Tenant of such determination.
(b) The decision of the arbitrator shall be binding upon Landlord and
Tenant.
(c) If Landlord and Tenant fail to agree upon other matters relating
to the arbitration, then the Rules shall govern such arbitration.
6
(d) The cost of the arbitration shall be paid by the substantially
unsuccessful party.
(e) The arbitration proceeding and all evidence given or discovered
pursuant thereto shall be maintained in confidence by all parties.
(f) Judgment upon the award rendered by the arbitrator may be entered
by either party in any court having jurisdiction, or application may be made to
such court for a judicial recognition of the award or an order of enforcement
thereof, as the case may be.
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EXHIBIT C
CONFIRMATION OF TERM OF LEASE
This Confirmation of Term of Lease is made by and between BEP-EMERYVILLE,
L.P., a Delaware limited partnership, as Landlord, and, a, as Tenant, who agree
as follows:
1. Landlord and Tenant entered into a Lease dated ____________________,
19_____ (the "Lease"), in which Landlord leased to Tenant and Tenant leased from
Landlord the Leased Premises described in the Basic Lease Information sheet of
the Lease (the "Leased Premises").
2. Pursuant to Section 3.01 of the Lease, Landlord and Tenant agree to
confirm the commencement date and expiration date of the Term of the Lease as
follows:
a. _________________________, 20_____, is the Term Commencement Date;
b. _________________________, 20_____, is the Term Expiration Date;
c. _________________________, 20_____, is the commencement date of
Rent under the Lease.
3. Tenant hereby confirms that the Lease is in full force and effect
and:
a. It has accepted possession of the Leased Premises as provided in
the Lease;
b. The improvements and space required to be furnished by Landlord
under the Lease have been furnished;
c. Landlord has fulfilled all its duties of an inducement nature;
d. The Lease has not been modified, altered or amended, except as
follows:__________________________________________________________
______________________; and
e. There are no setoffs or credits against Rent and no security
deposit has been paid except as expressly provided by the Lease.
1
4. The provisions of this Confirmation of Term of Lease shall inure to
the benefit of, or bind, as the case may require, the parties and their
respective successors, subject to the restrictions on assignment and subleasing
contained in the Lease.
DATED: _________________________, 20_____
"LANDLORD": "TENANT":
BEP-EMERYVILLE, L.P., EVOLVE SOFTWARE, INC.,
a Delaware limited partnership a Delaware corporation
By: EPI Investors 103 LLC,
a California limited liability company
Its: General Partner By:____________________________
Name:__________________________
By: Xxxxx Xxxxxxxx, Inc., Title:_________________________
a California corporation
Its: Managing Member
By:____________________________
Name:__________________________
Title:_________________________
By:____________________________
Name:__________________________
Title:_________________________
2
EXHIBIT D
CONFIDENTIALITY AGREEMENT
EXHIBIT E
BUILDING RULES AND REGULATIONS
1. The sidewalks, doorways, halls, stairways, vestibules and other
similar areas shall not be obstructed by Tenant or used by it for any purpose
other than ingress to and egress from the Leased Premises, and for going from
one part of the Building to another part. Corridor doors, when not in use,
shall be kept closed. Before leaving the Building, Tenant shall make
commercially reasonable efforts to ensure that all doors to the Leased Premises
are securely locked and all water faucets and electricity are shut off.
2. Plumbing fixtures shall be used only for their designated purpose,
and no foreign substances of any kind shall be deposited therein. Damage to any
such fixtures resulting from misuse by Tenant or any employee or invitee of
Tenant shall be repaired at the expense of Tenant.
3. Nails, screws and other attachments to the Building require prior
written consent from Landlord, except for the routine hanging of pictures and
diplomas or certifications. Tenant shall not mar or deface the Leased Premises
in any way. Tenant shall not place anything on or near the glass of any window,
door or wall which may appear unsightly from outside the Leased Premises.
4. All contractors and technicians rendering any installation service
to Tenant shall be subject to Landlord's approval and supervision prior to
performing services. This applies to all work performed in the Building,
including, but not limited to, installation of telephones, telegraph equipment,
wiring of any kind, and electrical devices, as well as all installations
affecting floors, walls, woodwork, windows, ceilings and any other physical
portion of the Building.
5. Movement in or out of the Building of furniture, office equipment,
safes or other bulky material which requires the use of elevators, stairways, or
the Building entrance and lobby shall be restricted to hours established by
Landlord. All such movement shall be under Landlord's supervision, and the use
of an elevator for such movements shall be restricted to the Building's freight
elevator. Arrangements shall be made at least 24 hours in advance with Landlord
regarding the time, method, and routing of such movements. Tenant shall pay for
the services of the employees of the elevator service company employed when
safes and other heavy articles are moved into or from the Building, and Tenant
shall assume all risks of damage and pay the cost of repairing or providing
compensation for damage to the Building, to articles moved and injury to persons
or property resulting from such moves. Landlord shall not be liable for any
acts or damages resulting from any such activity.
6. Landlord shall have the right to limit the weight and size of, and
to designate the location of, all safes and other heavy property brought into
the Building.
7. Tenant shall cooperate with Landlord in maintaining the Leased
Premises. Tenant shall not employ any person for the purpose of cleaning the
Leased Premises other than the
1
Building's cleaning and maintenance personnel. Window, carpet and wall cleaning
shall be done only by Landlord's agents at such times and during such hours as
Landlord shall elect but in no event less than once per year. Janitorial
services will not be furnished on nights when rooms are locked and occupied
after 7:00 P.M.
8. Deliveries of water, soft drinks, newspapers or other such items to
the Leased Premises shall be restricted to hours established by Landlord and
made by use of the freight elevator if Landlord so directs.
9. Nothing shall be swept or thrown into the corridors, halls, elevator
shafts or stairways. No birds, fish or animals of any kind shall be brought
into or kept in, on or about the Leased Premises, with the exception of guide
dogs where necessary.
10. No cooking shall be done in the Leased Premises except in
connection with a convenience lunch room for the sole use of employees and
guests (on a non-commercial basis) in a manner which complies with all of the
provisions of the Lease and which does not produce fumes or odors.
11. Food, soft drink or other vending machines shall not be placed
within the Leased Premises without Landlord's prior written consent.
12. Tenant shall not install or operate on the Leased Premises any
electric heater, stove or similar equipment without Landlord's prior written
consent. Tenant shall not use or keep on the Leased Premises any kerosene,
gasoline, or inflammable or combustible fluid or material other than limited
quantities reasonably necessary for the operation and maintenance of office
equipment utilized at the Leased Premises. No explosives shall be brought onto
the Project at any time.
13. Tenant shall not waste electricity, water or air conditioning and
agrees to reasonably cooperate with Landlord to assure the effective operation
of the Building's heating and air conditioning and to comply with any
governmental energy-saving rules, laws or regulations of which Tenant has actual
notice. Tenant shall not tamper with or attempt to adjust temperature control
thermostats in the Leased Premises; Landlord shall make reasonable adjustments
in thermostats upon request from Tenant.
14. The Building air conditioning system is designed for operation only
with all outside Building windows closed; accordingly, Tenant shall not open or
allow any outside window to be opened at any time.
15. Tenant, its employees, agents and invitees shall each comply with
all requirements necessary for the security of the Leased Premises, including,
if implemented by Landlord, the use of service passes issued by Landlord for
after-hours movement of office equipment/packages, and the signing of a security
register in the Building lobby after hours. Landlord reserves the right to
refuse entry to the Building after normal business hours to Tenant, its
employees, agents or invitees, or any other person without satisfactory
identification showing his or her right of access to the Building at such time.
Landlord shall not be liable for any damages resulting from
2
any error in regard to any such identification or from such admission to or
exclusion from the Building. Landlord shall not be liable to Tenant for losses
due to theft or burglary, or for damage by unauthorized persons in, on or about
the Project, and Tenant assumes full responsibility for protecting the Leased
Premises from theft, robbery and pilferage, which includes keeping doors locked
and other means of entry closed.
16. Landlord will furnish Tenant with one hundred (100) initial keys
for entrance doors into the Leased Premises, and may charge Tenant for
additional keys thereafter. All such keys shall remain the property of
Landlord. No additional locks are allowed on any door of the Leased Premises
without Landlord's prior written consent and Tenant shall not make any duplicate
keys. Upon termination of this Lease, Tenant shall surrender to Landlord all
keys to the Leased Premises, and give to Landlord the combination of all locks
for safes and vault doors, if any, in the Leased Premises.
17. Tenant shall not bring into (or permit to be brought into) the
Building any bicycle or other type of vehicle.
18. Landlord retains the right at any time, without liability to
Tenant, to change the name and street address of the Building, except as
otherwise expressly provided in the Lease with respect to signage; provided,
however, that after an initial such change, Landlord shall reimburse Tenant its
actual reasonable costs thereof.
19. Canvassing, peddling, soliciting, and distribution of handbills in
or at the Project are prohibited and Tenant will cooperate to prevent these
activities.
20. The Building hours of operation are 7:00 A.M. to 6:00 P.M., Monday
through Friday, excluding holidays. Landlord reserves the right to close and
keep locked all entrance and exit doors of the Building on Saturdays, Sundays
and legal holidays, and between the hours of 6:00 P.M. of any day and 7:00 A.M.
of the following day, and during such other hours as Landlord may deem advisable
for the protection of the Building and the tenants thereof. Card key access to
the Building will be provided to Tenant during such closed hours.
21. The requirements of Tenant will be attended to only upon
application to the Project manager. Employees will not perform any work or do
anything outside of their regular duties unless under specific instruction from
the Project manager.
22. Tenant shall cooperate fully with the life safety program of the
Building as established and administered by Landlord. This shall include
participation by Tenant and its employees in exit drills, fire inspections, life
safety orientations and other programs relating to fire and life safety that may
be established by Landlord.
23. No smoking shall be permitted in the Building.
24. Subject to the provisions of this Lease, Landlord reserves the
right to rescind any of these rules and regulations and to make future
reasonable rules and regulations required for the safety, protection and
maintenance of the Project, the operation and preservation of the good
3
order thereof, and the protection and comfort of the tenants and their employees
and visitors. Such rules and regulations, when made and written notice thereof
given to Tenant, shall be binding as if originally included herein. Landlord
shall not be responsible to Tenant for the non-observance or violation of these
rules and regulations by any other tenant of the Building. Landlord reserves the
right to exclude or expel from the Project any person who, in Landlord's
judgment, is under the influence of liquor or drugs, or who shall in any manner
do any act in violation of any of these rules and regulations.
4
EXHIBIT F
ESTIMATED BUDGET
1
EXHIBIT G
INITIAL IMPROVEMENT OF THE LEASED PREMISES
(EXPANSION PREMISES)
1. Tenant Improvements. Tenant shall select a contractor (the "Contractor")
--------------------
to construct and install the Tenant Improvements (as defined below). The
Contractor must be approved by Landlord, which approval shall not be
unreasonably withheld. Landlord hereby approves of all of the following
contractors: Xxxxxxxxx Construction, South Bay Construction, Carli Construction,
DPR, Xxxxxxx Xxxxxx Builders, Xxxxxxx & Xxxxxxx and Webcor. The Contractor shall
construct and install the tenant improvements (the "Tenant Improvements") in the
Leased Premises, substantially in accordance with plans, working drawings and
specifications ("Tenant's Plans") prepared by Tenant's architect (the
"Architect") and the Tenant's Plans shall be approved by Landlord, which
approval shall not be unreasonably withheld. As part of the Tenant Improvements,
Tenant shall be allowed to construct a staircase (the "Staircase") connecting
the Existing Premises with the Expansion Premises, subject to Landlord approval,
which approval shall not be unreasonably withheld.
2. Tenant's Plans. Tenant and Landlord shall mutually approve Tenant's
---------------
Plans in writing, each party's approval shall not be unreasonably withheld.
Tenant's Plan's shall comply with all applicable codes, laws, ordinances, rules
and regulations, shall not adversely affect the Building shell or core or any
systems, components or elements of the Building, shall be in a form sufficient
to secure the approval of all government authorities with jurisdiction over the
Building, and shall be otherwise satisfactory to Landlord in Landlord's
reasonable discretion. Tenant's Plans shall be complete plans, working drawings
and specifications for the layout, improvement and finish of the Leased Premises
consistent with the design and construction of the Building, including
mechanical and electrical drawings and decorating plans, showing as many of the
following as possible:
(a) Location and type of all partitions;
(b) Location and type of all doors, with hardware and keying schedule;
(c) Ceiling plans, including light fixtures;
(d) Location of telephone equipment room, with all special electrical
and cooling requirements;
(e) Location and type of all electrical outlets, switches, telephone
outlets, and lights;
(f) Location of all sprinklers;
(g) Location and type of all equipment requiring special electrical
requirements;
1
(h) Location, weight per square foot and description of any heavy
equipment or filing system exceeding fifty (50) pounds per square foot
live and dead load;
(i) Requirements for air conditioning or special ventilation;
(j) Type and color of floor covering;
(k) Location, type and color of wall covering;
(l) Location, type and color of paint or finishes;
(m) Location and type of plumbing;
(n) Location and type of kitchen equipment;
(o) Indicate critical dimensions necessary for construction;
(p) Details showing all millwork with verified dimensions and
dimensions of all equipment to be built in, corridor entrances, bracing or
support of special walls or glass partitions, and any other items or
information requested by Landlord; and
(q) Location of all cabling.
3. Landlord's Review. Landlord's review and approval of Tenant's Plans
-----------------
shall not constitute, and Landlord shall not be deemed to have made, any
representation or warranty as to the compliance of the Tenant Improvements with
any laws or as to the suitability of the Leased Premises or the Tenant
Improvements for Tenant's needs.
4. Construction. The Tenant Improvements in the Leased Premises
------------
shall be completed substantially in accordance with Tenant's Plans by the
Contractor in a good and workmanlike manner. Subject to Section 5 of this
EXHIBIT G, Tenant shall promptly pay when due the entire cost of all of the
----------
Tenant Improvements (including the cost of all utilities, permits, fees, taxes,
and property and liability insurance in connection therewith) required by
Tenant's Plans. Except as otherwise expressly provided herein, Landlord shall
have no liability to Tenant if the Leased Premises is not suitable for Tenant's
occupancy or if Tenant has not obtained all the necessary permits for Tenant to
occupy the Leased Premises by the rent commencement date.
5. Landlord's and Tenant's Contributions. Landlord shall not pay for
---------------------------------------
costs of Tenant Plans and for any of the costs of constructing the Tenant
Improvements. Any and all costs of preparing Tenant's Plans and constructing
the Tenant Improvements shall be paid by Tenant.
6. Changes. Except for minor and immaterial changes, if Tenant
-------
requests any change in Tenant's Plans, Tenant shall request such change in a
written notice to Landlord.
2
7. Other Work by Tenant. All work not within the scope of the normal
----------------------
construction trades employed on the Building, such as the furnishing and
installing of furniture, telephone equipment, office equipment and wiring, shall
be furnished and installed by Tenant at Tenant's expense.
8. Requirements for Work Performed by Tenant. All other work performed
-----------------------------------------
at the Building or in the Project by Tenant or Tenant's contractor or
subcontractors shall be subject to the following additional requirements:
(a) Such work shall not proceed until Landlord has approved in
writing: (i) Tenant's contractor, (ii) the amount and coverage of public
liability and property damage insurance, with Landlord named as an
additional insured, carried by Tenant's contractor, (iii) complete and
detailed plans and specifications for such work, and (iv) a schedule for
the work.
(b) All work shall be done in conformity with a valid permit when
required, a copy of which shall be furnished to Landlord before such work
is commenced. In any case, all such work shall be performed in accordance
with all applicable laws. Notwithstanding any failure by Landlord to
object to any such work, Landlord shall have no responsibility for
Tenant's failure to comply with applicable laws.
(c) Tenant or Tenant's contractor shall arrange for necessary utility,
hoisting and elevator service, on a nonexclusive basis, with Landlord.
Landlord shall have the right to require any necessary movement of
materials by the elevator to be done after regular working hours.
(d) Tenant shall be responsible for cleaning the Leased Premises, the
Building and the Project and removing all debris in connection with the
its work. All completed work shall be subject to inspection and acceptance
by Landlord. Tenant shall reimburse Landlord for the cost all extra
expense incurred by Landlord by reason of faulty work done by Tenant or
Tenant's contractor or by reason of inadequate cleanup by Tenant or
Tenant's contractor. Landlord will provide Tenant with copies of third
party consultant invoices within five (5) business days of Tenant's
request for such invoices.
(e) Landlord shall not unreasonably withhold, delay or condition to
any consent, approval or acceptance that is required hereunder.
3
