Exhibit 10.17
BASIC LEASE INFORMATION
OFFICE LEASE
------------
LEASE DATE: November 4, 1996
LANDLORD: 470 Spear Associates,
a California limited partnership
ADDRESS OF LANDLORD: 00 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
TELEPHONE/FACSIMILE: (000) 000-0000
(000) 000-0000 Fax
TENANT: NetSource Communications, Inc.
a Delaware corporation
ADDRESS OF TENANT: 000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
CONTACT: Xxxx Xxxx, Vice President
TELEPHONE/FACSIMILE: (000) 000-0000 / (415) 546-5252
BUILDING: 000 Xxxxx Xxxxxx
XXXXX: Second Floor
SUITES: 201 and 204, ("Initial Premises"), and Suite 200
and 205 ("Additional Premises") to be added
effective January 1, 1998. (See Paragraph 33.)
RENTABLE AREA: Initial Premises: 7,024 rentable square feet
Additional Premises: 13,520 rentable square feet
PARAGRAPH (3): TERM: Suite 201: Sixty Three (63) months
Suite 204: Sixty (60) months
Suite 200: Forty Eight (48) months
Suite 205: Forty Eight (48) months
(Suites 200 & 205 to terminate contiguous with
Suites 201 and 204)
COMMENCEMENT DATE:
Suite 201: Thirty (30) days after fully executed
Lease by both parties, or upon occupancy
whichever is sooner.
Suite 204: Ninety (90) days after fully executed
Lease by both parties, or upon occupancy
whichever is sooner.
Suite 200: January 1, 1998
Suite 205: January 1, 1998
EXPIRATION DATE: Sixty Three (63) months after
term Commencement Date for Suite 201.
-1-
PARAGRAPH (5): BASE RENT:
Initial Premises: $11,121.33 per month,
Additional Premises: $22,048.87 per month
based upon $ 19.00 per rentable square
foot per year which shall be increased by
three percent (3%) annually on the
anniversary of the Commencement Date of
this Lease. Additional Premises Base Rent
is based upon $19.57 per rentable square
foot per year as it commences January 1,
1998, ($19.00 x 1.03% = $19.57)
PARAGRAPH (6): SECURITY DEPOSIT: $ 22,242.00 to be increased to
$44,291.00 effective January 1, 1998.
PARAGRAPH (7): BASE TAX YEAR:
Initial Premises: 1997
Additional Premises: 1998
BASE EXPENSE YEAR:
Initial Premises: 1997
Additional Premises: 1998
PARAGRAPH (7B): TENANT'S PERCENTAGE SHARE:
13.31%, (Initial Premises)
25.62% (Additional Premises)
based on 52,764 square feet of total rentable
area of project.
EXHIBITS EXHIBIT A and A-1: SITE PLANS
EXHIBIT A-2: FIRST RIGHT SPACE
EXHIBIT B: WORK LETTER AGREEMENT
EXHIBIT C: COMMENCEMENT DATE
EXHIBIT D: RULES AND REGULATIONS
-2-
OFFICE BUILDING LEASE
---------------------
1. PARTIES. This Lease, dated, for reference purposes only, November 4,
1996, is made by and between 470 Spear Associates, a California limited
partnership (herein called "Landlord") and Netsource Communications, Inc., a
Delaware corporation (herein called "Tenant").
2. PREMISES.
(a) Demise of Premises. Landlord does hereby lease to Tenant and Tenant
------------------
hereby leases from Landlord that certain office space ( the "Premises")
indicated on Exhibit "A" attached hereto and incorporated herein by reference,
said Premises being agreed, for the purpose of this Lease, to have an area of
approximately the number of rentable square feet indicated in the Basic Lease
Information and being situated on the floor of that certain building identified
in the Basic Lease Information (the "Building").
(b) Terms and Conditions. Said Lease is subject to the terms, covenants
--------------------
and conditions herein set forth and the Tenant covenants as a material part of
the consideration for this Lease to keep and perform each and all of said terms,
covenants and conditions by it to be kept and performed and that this Lease is
made upon the condition of said performance.
3. TERM.
(a) Initial Term. The term of this Lease shall be for the period
------------
indicated in the Basic Lease Information, commencing on the date (the
"Commencement Date") which is (i) for Suite 201 the earlier of thirty (30) days
from receipt of the fully executed Lease, or the date Tenant takes occupancy of
such portion of the Premises, (ii) for Suite 204 the earlier of ninety (90) days
from receipt of the fully executed Lease, or the date Tenant takes occupancy of
such portion of the Premises, and (iii) for the Additional Premises on January
1, 1998, and ending on the last day of the month in which the end of the Term,
as defined in Basic Lease Information for each such portion of the Premises,
occurs (the "Expiration Date"). As soon as the Commencement Date is determined,
the parties shall execute a memorandum in the form attached hereto as Exhibit
"C" (the "Commencement Date Memorandum") setting forth the Commencement Date and
the Expiration Date. Failure to execute the Commencement Date Memorandum,
however, shall not affect Tenant's or Landlord's obligations hereunder.
(b) Option Term. Provided that Tenant is not in default under the Lease
------------
either at the time of exercise or at the time the Option Term commences, Tenant
shall have the option to extend the initial five (5) year term of this Lease for
one additional period of five (5) years ("Option Term") on the same terms,
covenants and conditions provided in the Lease, except that there shall be no
further options to extend, and upon such renewal the Base Rent due hereunder
shall be equal to the fair market value of the Premises as reasonably determined
by Landlord. Tenant shall exercise said option by giving Landlord written notice
("Option Notice") no less than nine (9) months prior to the expiration of the
initial term of this Lease. Landlord shall notify Tenant of the Base Rent for
the Premises within thirty (30) days of receipt of the Option Notice from
Tenant.
(c) Failure to Exercise Option. If Tenant shall fail to exercise any
--------------------------
option herein provided, each option shall terminate, and shall be null and void
and of no further force and effect. Tenant's exercise of any option shall not
operate to cure any default by Tenant of any of the terms or provisions in the
Lease, nor to extinguish or impair any rights or remedies of Landlord arising by
virtue of such default. If the Lease or Tenant's right to possession of the
Premises shall terminate in any manner whatsoever before Tenant shall exercise
any option herein provided, then immediately upon such termination, the options
herein granted to extend the Term, shall simultaneously terminate and become
null and void. If Tenant does not timely exercise any option granted herein,
Tenant shall promptly, following demand by Landlord, execute, acknowledge and
deliver to Landlord a release of option, quitclaim deed, or other such document
as may be required or requested by Landlord to verify the termination of each
option. Time is of the essence of this provision.
-3-
(d) Appraisal. If the parties are unable to agree on the fair market
---------
value of the Premises within sixty (60) days after Tenant provides the Option
Notice to Landlord, either party may submit the determination of such fair
market value to appraisal, by proceeding as follows:
(i) Either party may demand an appraisal by giving written
notice to the other party, which demand to be effective must state the name,
address and qualifications of an appraiser selected by the party demanding an
appraisal (the "Notifying Party"), which appraiser shall be a member of the
American Institute of Real Estate Appraisers and shall have at least five (5)
years experience appraising office space located in the vicinity of the
Premises. Within ten (10) days following the Notifying Party's appraisal demand,
the other party (the "Non-Notifying Party") shall either approve the appraiser
selected by the Notifying Party or select a second similarly qualified appraiser
by giving written notice of the name, address and qualification of said
appraiser to the Notifying Party. If the Non-Notifying Party fails to select an
appraiser within the ten (10) day period, the appraiser selected by the
Notifying Party shall be deemed selected by both parties and no other appraiser
shall be selected. If two appraisers are selected, they shall select a third
appropriately qualified appraiser. If the two appraisers fail to select a third
qualified appraiser, the third appraiser shall be appointed by the then
presiding judge of the county where the Premises are located upon application by
either party.
(ii) If only one appraiser is selected, that appraiser shall
notify the parties in simple letter form of its determination of the fair market
value for the Premises within fifteen (15) days following his selection, which
appraisal shall be conclusively determinative and binding on the parties as the
appraised fair market value.
(iii) If multiple appraisers are selected, the appraisers
shall meet not later than ten (10) days following the selection of the last
appraiser. At such meeting the appraisers shall attempt to determine the fair
market value for the Premises as of the commencement date of the Option Term by
the agreement of at least two (2) of the appraisers.
(iv) If two (2) or more of the appraisers agree on the fair
market value for the Premises at the initial meeting, such agreement shall be
determinative and binding upon the parties hereto and the agreeing appraisers
shall, in simple letter form executed by the agreeing appraisers, forthwith
notify both Landlord and Tenant of the amount set by such agreement. If multiple
appraisers are selected and two (2) appraisers are unable to agree on the fair
market value for the Premises, all appraisers shall submit to Landlord and
Tenant an independent appraisal of the fair market value for the Premises in
simple letter form within twenty (20) days following appointment of the final
appraiser. The parties shall then determine the fair market value for the
Premises by averaging the appraisals; provided that any high or low appraisal,
differing from the middle appraisal by more than ten percent (10%) of the middle
appraisal, shall be disregarded in calculating the average.
(v) The appraisers' determination of fair market value shall
be based on rental of space of similar age, construction, size and location as
the Premises with the improvements installed therein at Landlord's expense and
shall take into account Tenant's obligations to pay additional rent under this
Lease.
(vi) If only one appraiser is selected, then each party shall
pay one-half of the fees and expenses of that appraiser. If three appraisers are
selected, each party shall bear the fees and expenses of the appraiser it
selects and one-half of the fees and expenses of the third appraiser.
4. POSSESSION.
If the Landlord, for any reason whatsoever, cannot deliver possession
of those portions of the said Premises to the Tenant on the respective
Commencement Date(s) noted in the Basic Lease Information, this Lease shall not
be void or voidable, nor shall Landlord be liable to Tenant for any loss or
damage resulting therefrom, nor shall the Expiration Date be
-4-
extended, but in that event, all rent shall be abated during the period between
the Anticipated Commencement Date and the Commencement Date.
5. RENT.
Tenant agrees to pay to Landlord as rental, without prior notice or
demand, for the Premises the Base Rent indicated in the Basic Lease Information,
on or before the first day of the first full calendar month of the term hereof
and a like sum on or before the first day of each and every successive calendar
month thereafter during the term hereof, except that the first month's rent
shall be paid upon the execution hereof. Rent for any period during the term
hereof which is for less than one (1) month shall be a prorated portion of the
monthly installment herein, based upon a thirty (30) day month. Said rental
shall be paid, without deduction or offset in lawful money of the United States
of America, which shall be legal tender at the time of payment, to Landlord, at
the address of Landlord indicated in the Basic Lease Information, or to such
other person or at such other place as Landlord may from time to time designate
in writing.
6. SECURITY DEPOSIT. Tenant has deposited with Landlord the sum of
Twenty Two Thousand Two Hundred Forty Two Dollars ($22,242.00) (the "Security
Deposit"). The Security Deposit shall be held by Landlord as security for the
faithful performance by Tenant of all the terms, covenants, and conditions of
this Lease to be kept and performed by Tenant during the term hereof. An
additional Security Deposit of Twenty Two Thousand Forty Nine Dollars
($22,049.00) shall be due and payable no later than January 1, 1998. If Tenant
defaults with respect to any provision of this Lease, including, but not limited
to the provisions relating to the payment of rent, Landlord may (but shall not
be required to) use, apply or retain all or any part of this Security Deposit
for the payment of any rent or any other sum in default, or for the payment of
any amount which Landlord may spend or become obligated to spend by reason of
Tenant's default, or to compensate Landlord for any other loss or damage which
Landlord may suffer by reason of Tenant's default. If any portion of said
Security Deposit is so used or applied, Tenant shall within five (5) days after
written demand therefor, deposit cash with Landlord in an amount sufficient to
restore the Security Deposit to its original amount and Tenant's failure to do
so shall be a material breach of this Lease. Landlord shall not be required to
keep the Security Deposit separate from its general funds, and Tenant shall not
be entitled to interest on such deposit. If Tenant shall fully and faithfully
perform every provision of this Lease to be performed by it, the Security
Deposit or any balance thereof shall be returned to Tenant (or, at Landlord's
option, to the last assignee of Tenant's interest hereunder) at the expiration
of the Lease term. In the event of termination of Landlord's interest in this
Lease, Landlord shall transfer said deposit to Landlord's successor in interest.
7. RENT ADJUSTMENTS.
(a) Definitions. For the purposes of this Article, the following terms
-----------
are defined as follows:
(i) Base Year. The calendar year of 1997. (Initial Premises)
(ii) Comparison Year. Each calendar year of the term after the Base
Year.
(iii) Direct Expense. All direct costs of operation and maintenance as
determined by standard accounting practices, which shall include the following
costs by way of illustration, but not limitation: real property taxes and
assessments; rent taxes, gross receipt taxes (whether assessed against the
Landlord or assessed against the Tenant and collected by the Landlord, or both);
water and sewer charges; insurance premiums; utilities; janitorial services;
labor; costs incurred in the management of the Building, if any;
air-conditioning and heating; elevator maintenance; supplies; materials;
equipment; and tools; including maintenance, costs, and upkeep of all parking
and common areas. Direct Expenses shall not include depreciation on the Building
of which the Premises are a part, loan payments, or real estate brokers'
commissions. Direct Expenses that vary with occupancy and that are attributable
to any part of the term in which less than ninety-five percent (95%) of the
rentable area of the Building is
-5-
occupied by tenants will be adjusted by Landlord to the amount that Landlord
reasonably believes such Direct Expenses would have been if ninety-five percent
(95%) of the rentable area of the Building had been so occupied.
(b) Additional Rent. Tenant shall pay to Landlord as "additional rent"
---------------
Tenant's Percentage Share of the amount of any increase in Direct Expenses
incurred in any Comparison Year over Direct Expenses incurred in the Base Year.
Landlord shall endeavor to give to Tenant on or before the first day of March of
each year following the Base Year a statement of the additional rent payable by
Tenant hereunder, but failure by Landlord to give such statement by said date
shall not constitute a waiver by Landlord of its right to require payment of
such amount. Upon receipt of the statement, Tenant shall pay in full Tenant's
Percentage Share of the total amount of the increase, if any, due for the past
year. In addition, unless Landlord reasonably estimates that the amount of any
increase in Direct Expenses for the succeeding Comparison Year over the Direct
Expenses for the Base Year will differ, an amount equal to any such increase
shall be divided into twelve (12) equal monthly installments and Tenant shall
pay to Landlord, concurrently with the regular monthly rent payment next due
following the receipt of such statement, an amount equal to one (1) monthly
installment multiplied by the number of months from January in the calendar year
in which said statement is submitted to the month of such payment, both months
inclusive. Subsequent installments shall be payable concurrently with the
regular monthly rent payments for the balance of that calendar year and shall
continue until the next Comparison Year's statement is rendered. If a greater
increase in Direct Expenses occurs in the next or any succeeding Comparison
Year, then upon receipt of a statement from Landlord, Tenant shall pay a lump
sum equal to Tenant's Percentage Share of such total increase in Direct
Expenses, less the total of the monthly installments of estimated increases paid
in the previous calendar year by Tenant; and the estimated monthly installments
to be paid for the next year, following said Comparison Year, shall be adjusted
to reflect such increase. If in any Comparison Year the total of the estimated
payments of Tenant's Percentage Share of the increase in Direct Expenses is less
than the amount owed, then upon receipt of Landlord's statement, any overpayment
made by Tenant on the monthly installment basis provided above shall be credited
towards the next monthly rent falling due and the estimated monthly installments
of Direct Expenses to be paid shall be adjusted to reflect such lower Direct
Expenses for the most recent Comparison Year. If this Lease terminates during a
calendar year, the rental adjustment shall be payable for the portion of the
calendar year included in the Lease term.
8. USE.
(a) Permitted Use. Tenant shall use the Premises for general office
-------------
purposes and shall not use or permit the Premises to be used for any other
purposes without the prior written consent of Landlord, which may be withheld in
Landlord's sole discretion.
(b) Prohibited Uses. Tenant shall not do or permit anything to be done
---------------
in or about the Premises, nor bring or keep anything therein, which will in any
way increase the existing rate of or affect any fire or other insurance upon the
Building or any of its contents, or cause cancellation of any insurance policy
covering said Building or any part thereof or any of its contents. Tenant shall
not do or permit anything to be done in or about the Premises which will in any
way obstruct or interfere with the rights of other tenants or occupants of the
Building or injure or annoy them or use or allow the Premises to be used for any
improper, immoral, unlawful or objectionable purpose, nor shall Tenant cause,
maintain or permit any nuisance in, on or about the Premises. Tenant shall not
commit or suffer to be committed any waste in or upon the Premises.
(c) Hazardous Materials. Tenant shall not bring, store, deposit or use
-------------------
any Hazardous Material (as defined herein) on or about the Premises or the
Building, nor shall Tenant allow or permit its agents, employees, or contractors
to bring, store, deposit or use any Hazardous Material on or about the Premises
or the Building, except incidental quantities of household chemicals commonly
used for office and janitorial purposes. "Hazardous Material" as used herein
shall mean any hazardous, toxic or radioactive substance now or hereafter
regulated by federal, state or local governmental or other authority, including,
but not limited to, any
-6-
"hazardous substance" as defined in Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as it may be
amended or supplemented, and any crude oil, petroleum product, natural gas
product or related materials.
9. COMPLIANCE WITH LAW. Tenant shall not use the Premises or Building or
permit anything to be done in or about the Premises or Building which will in
any way conflict with any law, statute, ordinance or governmental rule or
regulation now in force or which may hereafter be enacted or promulgated
(collectively, "Laws"). Tenant shall, at its sole cost and expense, promptly
comply with all Laws, and with the requirements of any board of fire insurance
underwriters or other similar bodies now or hereafter constituted, relating to,
or affecting the condition, use or occupancy of the Premises or the Building,
excluding structural changes not related to or affected by Tenant's improvements
or acts. The judgment of any court of competent jurisdiction or the admission of
Tenant in any action against Tenant, whether Landlord be a party thereto or not,
that Tenant has violated any Law shall be conclusive of that fact as between the
Landlord and Tenant.
10. ALTERATIONS AND ADDITIONS. Tenant shall not make or suffer to be
made any alterations, additions or improvements ("Alterations") to or of the
Premises or any part thereof without the prior written consent of Landlord,
which consent shall not be unreasonably withheld, and any Alterations to or of
said Premises, including, but not limited to, wall covering, paneling and
built-in cabinet work, but excepting movable furniture and trade fixtures
installed at the sole cost and expense of Tenant, shall on the expiration of the
term and belong to the Landlord and shall be surrendered with the Premises. In
the event Landlord consents to the making of any Alterations to the Premises by
Tenant, the same shall be made by Tenant at Tenant's sole cost and expense.
Tenant shall be notified at time of consent that Landlord may require removal of
said alteration at Lease expiration. All Alterations to be constructed by Tenant
shall be constructed in accordance with all Laws using new materials of good
quality, by a licensed contractor approved by Landlord. Tenant shall not
commence construction of any Tenant's Alterations until (i) all required
governmental approvals and permits have been obtained, (ii) all requirements
regarding insurance imposed by this Lease have been satisfied, (iii) Tenant has
given Landlord at least five days' prior written notice of its intention to
commence such construction, and (iv) if reasonably requested by Landlord, Tenant
has obtained contingent liability and broad form builders' risk insurance in an
amount reasonably satisfactory to Landlord. Upon the expiration or sooner
termination of the Term hereof, Tenant shall, upon written demand by Landlord,
at Tenant's sole cost and expense, forthwith and with all due diligence remove
any Alterations made by Tenant and designated by Landlord to be removed, and
Tenant shall, forthwith and with all due diligence at its sole cost and expense,
repair any damage to the Premises caused by such removal.
11. REPAIRS.
(a) Tenant's Obligation. By taking possession of the Premises, Tenant
-------------------
shall be deemed to have accepted the Premises as being in good, sanitary order,
condition and repair. Tenant shall, at Tenant's sole cost and expense, keep the
Premises and every part thereof in good condition and repair, and Tenant shall
surrender the Premises to Landlord upon the expiration or sooner termination of
this Lease in such condition. Except as specifically provided in this Lease,
Landlord shall have no obligation whatsoever to alter, remodel, improve, repair,
decorate or paint the Premises or any part thereof and the parties hereto affirm
that Landlord has made no representations to Tenant respecting the condition of
the Premises, the Building or the Building except as specifically herein set
forth.
(b) Landlord's Obligation. Notwithstanding the provisions of Article
---------------------
11(a) hereinabove, Landlord shall repair and maintain the structural portions of
the Building, including the basic plumbing, air conditioning, heating, and
electrical systems, installed or furnished by Landlord, unless such maintenance
and repairs are caused in part or in whole by the act, neglect, fault or
omission of any duty by the Tenant, its agents, servants, employees or invitees,
in which case Tenant shall pay to Landlord the reasonable cost of such
maintenance and repairs. Landlord shall not be liable for any failure to make
any such repairs or to perform any maintenance unless such failure shall persist
for an unreasonable time after
-7-
written notice of the need of such repairs or maintenance is given to Landlord
by Tenant. Excpet as provided in Article 22 hereof, there shall be no abatement
of rent and no liability of Landlord by reason of any injury to or interface
with Tenant's business arising from the making of any repairs, alterations or
improvements in or to any portion of the Building or the Premises or in or to
fixtures, appurtenances and equipment therein. Tenant waives the right to make
repairs at Landlord's expense under any Law now or hereafter in effect, except
in the instance that Landlord receives notice from Tenant of necessary repairs
required by law and Landlord fails to commence said repair within five (5)
business days.
12. LIENS. Tenant shall keep the Building free from any liens arising
out of any work performed, materials furnished or obligations incurred by
Tenant. Landlord may require, at Landlord's sole option, that Tenant shall
provide to Landlord, at Tenant's sole cost and expense, a lien and completion
bond in an amount equal to one and one-half (1-1/2) times any and all estimated
cost of any Alterations made by Tenant in the Premises, to insure Landlord
against any liability for mechanics' and materialmen's liens and to insure
completion of the work.
13. ASSIGNMENT AND SUBLETTING. Tenant shall neither voluntarily nor by
operation of law, assign, transfer, mortgage, pledge, hypothecate or encumber
this Lease or any interest therein, and shall not sublet the said Premises or
any part thereof, or any right or privilege appurtenant thereto, or suffer any
other person (the employees, agents, servants and invitees of Tenant excepted)
to occupy or use the Premises, or any portion thereof, without the prior written
consent of Landlord, which consent shall not be unreasonably withheld. Any such
assignment, or subletting without such consent shall be void, and shall, at the
option of the Landlord, constitute a default under this Lease. An assignment for
purposes of this paragraph shall include any sale or transfer, including by
consolidation, merger or reorganization, of a majority of the voting stock of
Tenant, if Tenant is a corporation, or any sale or other transfer of a majority
of the partnership interest in Tenant, if Tenant is a partnership, in a single
transaction or a series of related transactions. A consent to one assignment,
subletting, occupation or use by any other person shall not be deemed to be a
consent to any subsequent assignment, subletting, occupation or use by another
person. If Tenant shall assign, sublet or otherwise transfer this Lease or the
Premises, or any portion thereof, with Landlord's consent, Tenant shall pay to
Landlord as additional rent, as and when received, all amounts received by
Tenant from such assignment, subletting or transfer, in excess of the amounts
required to be paid by Tenant to Landlord pursuant to this Lease.
14. HOLD HARMLESS. Tenant shall indemnify and hold harmless Landlord
against and from any and all claims arising from Tenant's use of the Premises or
from any activity, work, or other thing done, permitted or suffered by Tenant in
or about the Building, and shall further indemnify and hold harmless Landlord
against and from any and all claims arising from any breach or default in the
performance of any obligation on Tenant's part to be performed under the terms
of this Lease, or arising from any act or negligence of Tenant, or any officer,
agent, employee, guest, or invitee of Tenant, and from and against all costs,
reasonable attorney's fees, expenses and liabilities incurred in or resulting
from any such claim or any action or proceeding brought thereon, and, in any
case, if any action or proceeding is brought against Landlord by reason of any
such claim, Tenant upon notice from Landlord shall defend the same at Tenant's
expense by counsel reasonably satisfactory to Landlord. Tenant as a material
part of the consideration to Landlord hereby assumes all risk of damage to
property or injury to persons, in, upon or about the Premises, from any cause
other than Landlord's negligence, and Tenant hereby waives all claims in respect
thereof against Landlord. Landlord or its agents shall not be liable for any
damage to property entrusted to employees of the Building, nor for loss or
damage to any property by theft or otherwise, nor for any injury to or damage to
persons or property or to the business of Tenant resulting from fire, explosion,
falling plaster, steam, gas, electricity, water or rain which may leak from any
part of the Building or from the pipes, appliances or plumbing works therein or
from the roof, street or subsurface or from any other place resulting from
dampness or any other cause whatsoever, unless caused by or due to the
negligence of Landlord, its agents, servants or employees. Neither Landlord nor
its agents shall be liable for interference with the light or other incorporeal
hereditaments, loss of business by Tenant, or any latent defect in the Premises
or in the Building. Tenant shall give prompt notice to Landlord in case of fire
or
-8-
accidents in the Premises or in the Building or of defects therein or in the
fixtures or equipment.
15. WAIVER OF SUBROGATION. Landlord and Tenant shall each obtain from
their respective insurers under all policies of fire and other casualty
insurance maintained by either of them at any time during the term, insuring or
covering the Premises, or any portion thereof, or operations or property
contained therein, a waiver of all rights of subrogation which the insurer of
one party might otherwise have against the other party, and Landlord and Tenant
shall each indemnify the other against any loss or expense, including reasonable
attorney's fees, resulting from the failure to obtain such waiver.
16. LIABILITY AND PROPERTY INSURANCE.
(a) Required Coverage. Tenant shall, at Tenant's expense, obtain and
-----------------
keep in force during the term of this Lease the following insurance coverage:
(i) comprehensive public liability insurance insuring Landlord and Tenant
against any liability arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto. The minimum
acceptable amount of comprehensive liability insurance is a combined single
limit of $1,000,000 for each occurrence of bodily injury liability and/or
property damage liability; (ii) "all risk" fire and extended coverage property
damage insurance insuring Tenant's personal property in the Premises for the
full actual replacement cost thereof; (iii) workers' compensation coverage and
any other employee benefit insurance sufficient to comply with all Laws;
(iv) business interruption insurance providing coverage against direct or
indirect loss of Tenant's earnings from all causes, including losses
attributable to Tenant's inability to use fully or obtain access to the Premises
or Building; and (v) with respect to construction of Alterations or the like
undertaken by Tenant, contingent liability and broad form builder's risk
insurance in an amount reasonably satisfactory to Landlord.
(b) Terms of Coverage. The limits of said insurance shall not limit the
-----------------
liability of the Tenant hereunder. Tenant may carry said insurance under a
blanket policy, providing, however, said insurance by Tenant shall have a
Landlord's protective liability endorsement attached thereto. If Tenant shall
fail to procure and maintain said insurance, Landlord may, but shall not be
required to, procure and maintain same, but at the expense of Tenant. Insurance
required hereunder shall be in companies rated A-7 or better in "Best's
Insurance Guide." Tenant shall deliver to Landlord prior to occupancy of the
Premises copies of policies of liability insurance required herein or
certificates evidencing the existence and amounts of such insurance with loss
payable clauses satisfactory to Landlord. No policy shall be cancelable or
subject to reduction of coverage except after ten (10) days prior written notice
to Landlord. Each policy of insurance required to be carried by Tenant shall
name Landlord and such other parties in interest as Landlord reasonably
designates as additional insureds.
17. SERVICES AND UTILITIES.
(a) Services and Utilities Provided. So long as Tenant is not in default
-------------------------------
hereunder, Landlord agrees to furnish to the Premises during reasonable hours of
generally recognized business days, to be determined by Landlord in its sole
discretion, and subject to the Rules and Regulations of the Building,
electricity for normal lighting and fractional horsepower office machines, heat
and air conditioning required in Landlord's judgment for the comfortable use and
occupation of the Premises, and janitorial service. Landlord shall also maintain
and keep lighted the common stairs, common entries and toilet rooms in the
Building of which the Premises are a part. Landlord shall not be liable for, and
Tenant shall not be entitled to, any reduction of rental by reason of Landlord's
failure to furnish any of the foregoing when such failure is caused by accident,
breakage, repairs, strikes, lockouts or other labor disturbances or labor
disputes of any character, or by any other cause, similar or dissimilar, beyond
the reasonable control of Landlord. Landlord shall not be liable under any
circumstances for a loss of or injury to property, however occurring, through or
in connection with or incidental to failure to furnish any of the foregoing, or
as a result of the failure or interruption of any utility or other service
provided to the Premises for any reason beyond the reasonable control of
Landlord, including any failure of telephone cabling or
-9-
telecommunications facilities. Wherever heat generating machines or equipment
are used in the Premises which affect the temperature otherwise maintained by
the air conditioning system, Landlord reserves the right to install
supplementary air conditioning units in the Premises and the cost thereof,
including the cost of installation, and the cost of operation and maintenance
thereof shall be paid by Tenant to Landlord upon demand by Landlord.
(b) Additional Services. Tenant will not, without written consent of
-------------------
Landlord, use any apparatus or device in the Premises, including, but without
limitation thereto, electronic data processing machines, punch card machines,
and machines using in excess of one hundred twenty (120) volts, which will in
any way increase the amount of electricity usually furnished or supplied for the
use of the Premises as general office space; nor connect with electric current
except through existing electrical outlets in the Premises, any apparatus or
device, for the purpose of using electric current. If Tenant shall require water
or electric current in excess of that usually furnished or supplied for the use
of the Premises as general office space, Tenant shall first procure the written
consent of Landlord, which Landlord may refuse, to the use thereof and Landlord
may cause a water meter or electrical current meter to be installed in the
Premises, so as to measure the amount of water and electric current consumed for
any such use. The cost of any such meters and of installation, maintenance and
repair thereof shall be paid by the Tenant and Tenant agrees to pay to Landlord,
promptly upon demand therefor, for all such water and electric current consumed
as shown by said meters, at the rates charged for such services by the local
public utility furnishing the same, plus any additional expense incurred in
keeping account of the water and electric current so consumed. If a separate
meter is not installed, such excess cost for such water and electric current
will be established by an estimate made by a utility company or electrical
engineer. Tenant shall be billed for consumption of heat and air conditioning
after the stated hours or on non-business days at the rate of Twenty Five
Dollars ($25.00) per hour, which rate may be adjusted annually to reflect any
increase in the actual cost of providing such additional service.
18. PROPERTY TAXES. Tenant shall pay, or cause to be paid, before
delinquency, any and all taxes levied or assessed and which become payable
during the term hereof upon all Tenant's leasehold improvements, equipment,
furniture, fixtures and personal property located in the Premises, except that
which has been paid for by Landlord, and is the standard of the Building. In the
event any or all of the Tenant's leasehold improvements, equipment, furniture,
fixtures and personal property shall be assessed and taxed with the Building,
Tenant shall pay to Landlord its share of such taxes within ten (10) days after
delivery to Tenant by Landlord of a statement in writing setting forth the
amount of such taxes applicable to Tenant's property.
19. RULES AND REGULATIONS. Tenant shall faithfully observe and comply
with the Rules and Regulations attached hereto as Exhibit "D" and such other
Rules and Regulations as Landlord may from time to time promulgate. Landlord
reserves the right from time to time to make all reasonable modifications to
said rules. The additions and modifications to those rules shall be binding upon
Tenant upon delivery of a copy of them to Tenant. Landlord shall not be
responsible to Tenant for the nonperformance of any said rules by any other
tenants or occupants.
20. HOLDING OVER. If Tenant remains in possession of the Premises or any
part thereof after the expiration of the term hereof, with the express written
consent of Landlord, such occupancy shall be a tenancy from month to month at a
rental in an amount equal to one hundred twenty five percent (125%) of the rent
in effect during the last month of the term, plus all other charges payable
hereunder, and upon all the terms hereof applicable to a month-to-month tenancy.
21. ENTRY BY LANDLORD. Landlord reserves and shall at any and all times
have the right to enter the Premises, inspect the same, supply janitorial
service and any other service to be provided by Landlord to Tenant hereunder, to
submit said Premises to prospective purchasers or tenants, to post notices of
non-responsibility, and to alter, improve or repair the Premises and any portion
of the Building of which the Premises are a part that Landlord may deem
necessary or desirable, without abatement of rent and may for that
-10-
purpose erect scaffolding and other necessary structures where reasonably
required by the character of the work to be performed, always providing that the
entrance to the Premises shall not be blocked thereby, and further providing
that the business of the Tenant shall not be interfered with unreasonably.
Tenant hereby waives any claim for damages or for any injury or inconvenience to
or interference with Tenant's business, any loss of occupancy or quiet enjoyment
of the Premises, and any other loss occasioned thereby. For each of the
aforesaid purposes, Landlord shall at all times have and retain a key with which
to unlock all of the doors in, upon and about the Premises, excluding Tenant's
vaults, safes and files, and Landlord shall have the right to use any and all
means which Landlord may deem proper to open said doors in an emergency, in
order to obtain entry to the Premises without liability to Tenant except for any
failure to exercise due care for Tenant's property. Any entry to the Premises
obtained by Landlord by any of said means, or otherwise shall not under any
circumstances be construed or deemed to be a forcible or unlawful entry into, or
a detainer of, the Premises, or an eviction of Tenant from the Premises or any
portion thereof.
22. RECONSTRUCTION.
(a) Insured Damage. In the event the Premises or the Building of which
--------------
the Premises are a part are damaged by fire or other perils fully covered by the
proceeds of fire and extended coverage insurance received by Landlord, Landlord
agrees to forthwith repair the same; and this Lease shall remain in full force
and effect, except that Tenant shall be entitled to a proportionate reduction of
the Base Rent while such repairs are being made, such proportionate reduction to
be based upon the extent to which the making of such repairs shall materially
interfere with the business carried on by the Tenant in the Premises. If the
damage is due to the fault or neglect of Tenant or its employees, there shall be
no abatement of rent.
(b) Uninsured Damage. In the event the Premises or the Building is
----------------
damaged as a result of any cause other than the perils covered by fire and
extended coverage insurance, then Landlord shall forthwith repair the same,
provided the extent of the destruction is less than ten percent (10%) of the
then full replacement cost of the Premises or the Building. In the event the
destruction of the Premises or the Building is to an extent greater than ten
percent (10%) of the full replacement cost, then Landlord shall have the option:
(i) to repair or restore such damage, this Lease continuing in full force and
effect, but the rent to be proportionately reduced as provided in this Article;
or (ii) give notice to Tenant at any time within sixty (60) days after such
damage terminating this Lease as of the date specified in such notice, which
date shall be no less than thirty (30) and no more than sixty (60) days after
the giving of such notice. In the event of giving such notice, this Lease shall
expire and all interest of the Tenant in the Premises shall terminate on the
date so specified in such notice and the Base Rent, reduced by a proportionate
amount, based upon the extent, if any, to which such damage materially
interfered with the business carried on by the Tenant in the Premises, and an
additional rent, shall be paid up to date of such termination.
(c) Damage at End of Lease Term. Notwithstanding anything to the
---------------------------
contrary contained in this Article, Landlord shall not have any obligation
whatsoever to repair, reconstruct or restore the Premises when the damage
resulting from any casualty covered under this Article occurs during the last
twelve (12) months of the term of this Lease or any extension thereof.
(d) Property of Tenant. Landlord shall not be required to repair any
------------------
injury or damage by fire or other cause, or to make any repairs or replacements
of any panels, decoration, office fixtures, railings, floor covering,
partitions, or any other property installed in the Premises by Tenant.
(e) Interruption of Use. The Tenant shall not be entitled to any
-------------------
compensation or damages from Landlord for loss of the use of the whole or any
part of the Premises, Tenant's personal property or any inconvenience or
annoyance occasioned by such damage, repair, reconstruction or restoration.
23. DEFAULT. The occurrence of any one or more of the following events
shall constitute a default and breach of this Lease by Tenant:
-11-
(a) The vacating or abandonment of the Premises by Tenant;
(b) The failure by Tenant to make any payment of rent or any
other payment required to be made by Tenant hereunder, as and when due,
where such failure shall continue for a period ten days (10) days after
rent is due thereof by Tenant to Landlord;
(c) The failure by Tenant to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or
performed by the Tenant, other than described in Article 23(b) above,
within the time period therefore specified herein, or if no time period
is specified, where such failure shall continue for a period of thirty
(30) days after written notice thereof by Landlord to Tenant; provided,
however, that if the nature of Tenant's default is such that more than
thirty (30) days are reasonably required for its cure, then Tenant
shall not be deemed to be in default if Tenant commences such cure
within said thirty (30) day period and thereafter diligently prosecutes
such cure to completion; or
(d) The making by Tenant of any general assignment or general
arrangement for the benefit of creditors; or the filing by or against
Tenant of a petition to have Tenant adjudged a bankrupt, or a petition
or reorganization or arrangement under any law relating to bankruptcy
(unless, in the case of a petition filed against Tenant, the same is
dismissed within sixty (60) days); or the appointment of a trustee or a
receiver to take possession of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease, where
possession is not restored to Tenant within thirty (30) days; or the
attachment, execution or other judicial seizure of substantially all of
Tenant's assets located at the Premises or of Tenant's interest in this
Lease, where such seizure is not discharged in thirty (30) days.
24. REMEDIES ON DEFAULT. In the event of any default or breach of this
Lease by Tenant, Landlord may at any time thereafter, with or without notice or
demand and without limiting Landlord in the exercise of a right or remedy which
Landlord may have by reason of such default or breach:
(a) Termination of Lease. Terminate this Lease and all rights of Tenant
--------------------
hereunder by any lawful means, in which case this Lease shall terminate and
Tenant shall immediately surrender possession of the Premises to Landlord. In
such event Landlord shall be entitled to recover from Tenant all damages
incurred by Landlord by reason of Tenant's default including, but not limited
to, (i) the worth at the time of award of any unpaid rent which had been earned
at the time of such termination; plus (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 rental loss that Tenant
proves could have been reasonably avoided; plus (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 rental loss that Tenant proves
could be reasonably avoided; plus (iv) any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant's failure to perform
Tenant's obligations under this Lease or which in the ordinary course of events
would be likely to result therefrom, including, but not limited to, the cost of
recovering possession of the Premises, expenses of reletting, renovation and
alteration of the Premises, reasonable attorney's fees, and any real estate
commissions. The "worth at the time of award" for purposes of subsections
(i) and (ii) above is computed by allowing interest at the maximum legal rate,
and the "worth at the time of award" for purposes of subsection (iii) is
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%). In the event
Tenant shall have abandoned the Premises, Landlord shall have the option of (x)
taking possession of the Premises and recovering from Tenant the amount
specified in this paragraph, or (y) proceeding under the provisions of the
following Article 24(b);
-12-
(b) Continuation of Lease. Maintain Tenant's right to possession, in
---------------------
which case this Lease shall continue in effect whether or not Tenant shall have
abandoned the Premises. In such event Landlord shall be entitled to enforce all
of Landlord's rights and remedies under this Lease, including the right to
recover the rent as it becomes due hereunder; or
(c) Remedies Cumulative. Pursue any other remedy now or hereafter
-------------------
available to Landlord. All rights, options and remedies of Landlord contained in
this Lease shall be construed, and held to be, cumulative and no one of them
shall be exclusive of the other, and Landlord shall have the right to pursue any
one or all of such remedies or any other remedy or relief which may now or
hereafter be provided by law or in equity, whether or not stated in this Lease.
No act or omission by any party shall be construed as an election to terminate
this Lease unless a written notice of such intention is given to Tenant.
25. EMINENT DOMAIN. If more than twenty-five percent (25%) of the
Premises shall be taken or appropriated by any public or quasi-public authority
under the power of eminent domain, either party hereto shall have the right, at
its option, to terminate this Lease, and Landlord shall be entitled to any and
all income, rent, award, or any interest therein whatsoever which may be paid or
made in connection with such public or quasi-public use or purpose, and Tenant
shall have no claim against Landlord for the value of any unexpired term of this
Lease. If either less than or more than twenty-five percent (25%) of the
Premises is taken, and neither party elects to terminate as herein provided, the
rental thereafter to be paid shall be equitably reduced. If any part of the
Building other than the Premises may be so taken or appropriated, Landlord shall
have the right at its option to terminate this Lease and shall be entitled to
the entire award as above provided.
26. OFFSET STATEMENT. Tenant shall at any time and from time to time
upon not less than ten (10) days prior written notice from Landlord execute,
acknowledge and deliver to Landlord a statement in writing (a) certifying that
this Lease is unmodified and in full force and effect (or, if modified, stating
the nature of such modification and certifying that this Lease as so modified,
is in full force and effect), and the date to which the rental and other charges
are paid in advance, if any; (b) acknowledging that there are not, to Tenant's
knowledge, any uncured defaults on the part of the Landlord hereunder, or
specifying such defaults if any are claimed; and (c) setting forth any other
matters which Landlord may reasonably request. Any such statement may be relied
upon by any prospective purchaser or encumbrance of all or any portion of the
real property of which the Premises are a part.
27. PARKING. Tenant shall have the right to use in common with other
tenants or occupants of the Building the parking facilities of the Building, if
any, subject to the monthly rates, Rules and Regulations, and any other charges
of Landlord for such parking facilities which may be established or altered by
Landlord at any time or from time to time during the term hereof. Landlord shall
reserve the next three (3) parking spaces which become available in the parking
structure for Tenant's use at market rents.
28. RELOCATION. Intentionally omitted.
29. AUTHORITY OF PARTIES; LIMITATION OF LIABILITY.
(a) Corporate Authority. If Tenant is a corporation, each individual
-------------------
executing this Lease on behalf of said corporation represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of said
corporation, in accordance with a duly adopted resolution of the board of
directors of said corporation or in accordance with the bylaws of said
corporation, and that this Lease is binding upon said corporation in accordance
with its terms.
(b) Limited Partnership. If the Landlord herein is a limited
-------------------
partnership, it is understood and agreed that any claims by Tenant on Landlord
shall be limited to Landlord's interest in the Building and furthermore, Tenant
expressly waives any and all rights to proceed against the individual partners
or the officers, directors or shareholders of any corporate partner.
-13-
30. BROKERS. Tenant warrants that it has had no dealings with any real
estate broker or agents in connection with the negotiation of this Lease except
Lalanne Xxxxxxxxx.
31. FIRST RIGHT OF OPPORTUNITY. Landlord hereby grants to Tenant a First
Right of Opportunity to lease that certain space shown on Exhibit "A-2" (the
First Right Space") on the terms contained in this paragraph, subordinate to all
currently existing expansion rights on the First Right Space at the time this
lease is executed. If the First Right Space shall become available to lease at
any time after the Commencement Date of this Lease and before the expiration or
sooner termination of the Lease Term, then Landlord shall notify Tenant in
writing of the following basic business terms upon which Landlord is willing to
lease the First Right Space (collectively referred to herein as the "Basic
Business Terms"): (i) the description of the space to be leased; (ii) the term
of the lease; (iii) the tenant improvements Landlord is willing to construct, if
any, or the contribution Landlord is willing to make to pay for any tenant
improvements; (iv) the rent for the initial term or the formula to be used to
determine such rent (including the tenant's share of taxes, assessments,
operating expenses, insurance costs, and the like); (v) any option or options to
extend; and (vi) any other material business term Landlord elects to specify. If
Tenant, within ten (10) calendar days after receipt of Landlord's notice,
indicates in writing its agreement to lease such space on the Basic Business
Terms stated in Landlord's notice, then Landlord shall lease to Tenant and
Tenant shall lease from Landlord such space on the terms stated in Landlord's
notice and the lease of such space shall be consummated by the preparation and
execution of an amendment to this Lease, modified to incorporate the Basic
Business Terms set forth in Landlord's notice. If Tenant does not indicate in
writing its agreement to lease such space on the terms contained in Landlord's
notice within said period of time, then Landlord thereafter shall have the right
to lease such space to any third party on terms to be negotiated by Landlord.
The provisions of this paragraph shall terminate upon (i) the expiration or
earlier termination of the Lease, or (ii) any assignment by Tenant of its
interest in this Lease or subletting by Tenant of substantially all of the
Leased Premises for substantially all of the remainder of the Lease Term, or
(iii) upon a failure by Tenant to indicate in a timely manner in writing its
agreement to lease the First Right Space on the Basic Business Terms stated in
Landlord's notice, or (iv) upon a sale or other transfer of fee title to the
Building to any party in which neither Landlord nor the partners of Landlord
hold an interest.
32. TENANT IMPROVEMENTS. Landlord shall construct Tenant Improvements in
the Premises based upon a mutually agreed upon floor plan in accordance with the
attached Exhibit "A" to the Lease and further defined in the Tenant Improvement
Workletter, Exhibit "B". All costs and expenses of the Tenant Improvements shall
be at the sole cost of the Tenant. The Tenant shall not be charged any
construction supervisory or other administrative fees associated with the
construction of the Tenant Improvements installed by the Landlord. All telephone
and computer cabling shall be installed by and paid for by the Tenant, at its
sole cost and expense. In addition, all costs associated with the moving and
relocation of the Tenant shall be at Tenant's sole cost and expense.
33. ADDITIONAL PREMISES. The Tenant currently occupies Suite 200,
consisting of 10,520 square feet, under the terms of a Sublease with Xxx Xxxxxx,
Inc. This Sublease terminates effective December 31, 1997. The Tenant also
occupies Suite 205 consisting of 3,000 square feet which is on a separate Lease
Agreement with the Landlord and terminates effective December 31, 1997.
Effective January 1, 1998, the Initial Premises ( 7,024 square feet) shall be
expanded by the addition of the Additional Premises (10,520 square feet plus
3,000 square feet) for a total of 20,544 square feet, the "Revised Premises". If
either the Tenant or the Landlord shall negotiate an early termination agreement
with Xxx Xxxxxx, Inc., then Landlord and Tenant shall enter into an Amendment to
Lease to reflect the earlier addition of the Additional Premises to this Lease.
34. GENERAL PROVISIONS.
(a) Plats and Riders. Clauses, plats and riders, if any, signed by the
----------------
Landlord and the Tenant and endorsed on or affixed to this Lease are a part
hereof.
-14-
(b) Waiver. The waiver by Landlord of any term, covenant or condition
------
herein contained shall not be deemed to be a waiver of such term, covenant or
condition on any subsequent breach of the same or any other term, covenant or
condition herein contained. The subsequent acceptance of rent hereunder by
Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of
any term, covenant or condition of this Lease, other than the failure of the
Tenant to pay the particular rental so accepted, regardless of Landlord's
knowledge of such preceding breach at the time of the acceptance of such rent.
(c) Notices. All notices and demands which may or are to be required or
-------
permitted to be given by either party to the other hereunder shall be in
writing. All notices and demands shall be: (i) personally delivered, and
considered effective upon receipt, (ii) sent by United States Mail, first class,
certified, postage prepaid, addressed as set forth in the Basic Lease
Information, or in the case of Tenant, to the Premises, and shall be considered
effective three (3) days after mailing; or (iii) sent by facsimile to the number
contained in the Basic Lease Information, and shall be considered effective upon
confirmation of receipt. Either party may specify a different address for notice
purposes by written notice to the other.
(d) Joint Obligation. If there be more than one Tenant the obligations
-----------------
hereunder imposed upon Tenants shall be joint and several.
(e) Marginal Headings. The marginal headings and titles to the
------------------
Articles of this Lease are not a part of this Lease and shall have no effect
upon the construction or interpretation of any part hereof.
(f) Time. Time is of the essence of this Lease and each and all of its
----
provisions in which performance is a factor.
(g) Successors and Assigns. The covenants and conditions herein
----------------------
contained, subject to the provisions as to assignment, apply to and bind the
heirs, successors, executors, administrators and assigns of the parties hereto.
(h) Recordation. Neither Landlord nor Tenant shall record this Lease or
-----------
a short form memorandum hereof without the prior written consent of the other
party.
(i) Quiet Possession. Upon Tenant paying the rent reserved hereunder and
----------------
observing and performing all of the covenants, conditions and provisions on
Tenant's part to be observed and performed hereunder, Tenant shall have quiet
possession of the Premises for the entire term hereof, subject to all the
provisions of this Lease.
(j) Late Charges. Tenant hereby acknowledges that late payment by Tenant
------------
to Landlord of rent or other sums due hereunder will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Landlord by terms of any mortgage or trust deed covering the Premises.
Accordingly, if any installment of rent or of a sum due from Tenant shall not be
received by Landlord or Landlord's designee within ten (10) days after such
amount is due, then Tenant shall pay to Landlord a late charge equal to ten
percent (10%) of such overdue amount. The parties hereby agree that such late
charges represent a fair and reasonable estimate of the cost that Landlord will
incur by reason of the late payment by Tenant. Acceptance of such late charges
by the Landlord shall in no event constitute a waiver of Tenant's default with
respect to such overdue amount, nor prevent Landlord from exercising any of the
other rights and remedies granted hereunder.
(k) Inability to Perform. Except as provided for in Articles 22 and 25
--------------------
herein, this Lease and the obligations of the Tenant hereunder shall not be
affected or impaired because the Landlord is unable to fulfill any of its
obligations hereunder or is delayed in doing so, if such inability or delay is
caused by reason of strike, labor troubles, acts of God, or any other cause
beyond the reasonable control of the Landlord.
-15-
(l) Attorneys' Fees. In the event of any action or proceeding brought by
----------------
either party against the other under this Lease the prevailing party shall be
entitled to recover all costs and expenses including the fees of its attorneys
in such action or proceeding in such amount as the court may adjudge reasonable
as attorneys' fees.
(m) Sale of Premises by Landlord. In the event of any sale of the
----------------------------
Building, Landlord shall be and is hereby entirely freed and relieved of all
liability under any and all of its covenants and obligations contained in or
derived from this Lease arising out of any act, occurrence or omission occurring
after the consummation of such sale; and the purchaser, at such sale or any
subsequent sale of the Premises shall be deemed, without any further agreement
between the parties or their successors in interest or between the parties and
any such purchaser, to have assumed and agreed to carry out any and all of the
covenants and obligations of the Landlord under this Lease.
(n) Subordination, Attornment. Upon request of the Landlord, Tenant will
-------------------------
in writing subordinate its rights hereunder to the lien of any mortgage, deed of
trust, ground lease or similar instrument now or hereafter affecting all or any
portion of the Building, and upon any buildings hereafter placed upon the
Building, and to all advances made or hereafter to be made upon the security
thereof. In the event any proceedings are brought for foreclosure, or in the
event of the exercise of the power of sale under any mortgage or deed of trust
made by the Landlord covering the Premises, and, at the election of the
purchaser, the Tenant shall attorn to the purchaser upon any such foreclosure or
sale and recognize such purchaser as the Landlord under this Lease.
(o) Mortgagee Modification. Tenant hereby agrees to modify the Lease as
----------------------
may reasonably be required from time to time by the holder of a security
interest in the Building or any portion thereof, so long as such modification
does not materially increase the obligations of Tenant hereunder.
(p) Default by Landlord. In the event of any default on the part of
-------------------
Landlord, Tenant shall use reasonable efforts to give notice by registered mail
to any holder of a security interest in the Building whose name has been
provided to Tenant and shall offer such party a reasonable opportunity to cure
the default, including time to obtain possession of the Premises by power of
sale or judicial foreclosure or other appropriate legal proceedings, if such
should prove necessary to effect a cure.
(q) Name. Tenant shall not use the name of the Building or of Building
----
for any purpose other than as an address of the business to be conducted by the
Tenant in the Premises.
(r) Separability. Any provision of this Lease which shall prove to be
------------
invalid, void or illegal shall in no way affect, impair or invalidate any other
provision hereof of such other provision shall remain in full force and effect.
(s) Cumulative Remedies. No remedy or election hereunder shall be
--------------------
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
(t) Choice of Law. This Lease shall be governed by the laws of the
-------------
State in which the Premises are located.
(u) Signs and Auctions. Tenant shall not conduct any auction upon the Premises
-------------------
or Building without Landlord's prior written consent. Landlord hereby grants
Tenant permission to install the name "NETSOURCE" on the front of the building,
subject to Landlord approval prior to installation, which said approval shall be
timely and shall not be unreasonably withheld, and subject to the City of San
Francisco permit specifications. Tenant shall at its sole cost and expense be
responsible for the permitting, installation, maintenance, and all other sign
related issues. Upon termination of this lease, Tenant shall be responsible at
its sole cost and expense for the removal of said signage and any repair to the
building as a result of said signage.
-16-
(v) Submission of Lease. If this Lease has been filled in, it has been
-------------------
prepared for submission to your attorney for his approval. No representation or
recommendation is made by the real estate broker or its agents or employees as
to the legal sufficiency, legal effect, or tax consequences of this Lease or the
transactions relating thereto. This Lease shall not be effective or binding on
any party until fully executed by both parties hereto.
(w) Entire Agreement. This Lease contains the entire agreement of the
----------------
parties hereto with respect to any matter covered or mentioned in this Lease,
and no prior agreements, understanding or representation pertaining to any such
matters shall be effective for any purpose. No provision of this Lease may be
amended or added to except by an agreement in writing signed by the parties
hereto or their respective successors in interest.
-17-
IN WITNESS WHEREOF, the parties hereto have executed this Lease intending to be
bound as of the last date set forth below.
LANDLORD TENANT
470 Spear Associates, NetSource Communications, Inc.
a California limited partnership a Delaware corporation
By: Lalanne Xxxxxxx & Xxxxx Company,
a California limited partnership
its General Partner
By: Lalanne Xxxxxxx & Xxxxx Company, Inc.
a California corporation
Its General Partner
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ NetSource Communications, Inc.
--------------------------- ----------------------------------
Xxxxxx X. Xxxxxxx
Its President
-18-
EXHIBIT A
DESCRIPTION OF PREMISES
INITIAL PREMISES
SUITES # 201 & 204
7,024 Rentable Square Feet
-19-
EXHIBIT B
---------
WORK LETTER AGREEMENT
---------------------
The purpose of this Work Letter Agreement ("Agreement") is to delineate the
responsibilities of Landlord and Tenant with respect to the design and
construction of the tenant improvements (the "Tenant Improvements") in the
Premises. At this time, there are no Tenant Improvements anticipated for this
Lease. However, this Work Letter Agreement shall govern all agreed upon future
Tenant Improvements. This Agreement is made a part of the Lease by reference and
shall be subject to all of the terms and conditions of the Lease.
1. Description of Work.
-------------------
1.1 Tenant Improvements. Landlord shall construct in the Premises the
-------------------
Tenant Improvements, if any, described in the plans ("Working Drawings"), a copy
of which is attached hereto as Exhibit "B-1". In no event shall the Tenant
Improvements include the procurement, construction and/or installation of any
trade fixtures, equipment, furniture, furnishings, telephone equipment (except
for the relocation of the telephone and ethernet wiring) or other personal
property (collectively, "Personal Property") to be used in the Premises by
Tenant.
1.2 Tenant's Work. Tenant may require work ("Tenant's Work") that is
-------------
different from or in addition to the Tenant Improvements, subject to the
reasonable approval of Landlord and otherwise in accordance with Paragraph 10 of
the Lease. Any and all work other than the Tenant Improvements shall be deemed
and construed as Tenant's Work, and Tenant shall pay all costs of performing
Tenant's Work at its sole cost and expense. Except as otherwise expressly agreed
in writing by Landlord, any changes to the Tenant Improvements requested by
Tenant shall be deemed Tenant's Work.
2. Plans and Specifications.
------------------------
2.1 Approval of Working Drawings. Working Drawings have been approved by
----------------------------
both Landlord and Tenant as attached hereto in Exhibit B-1.
2.2 Liability for Plan. Approval of the Working Drawings by Landlord shall
------------------
not be considered a representation or warranty by or on behalf of Landlord as to
the adequacy, efficiency, suitability, fitness or desirability of any space
layout or improvements or otherwise constitute an assumption by Landlord of any
responsibility for the accuracy or sufficiency thereof.
-20-
3. Construction.
------------
3.1 Commencement & Prosecution of Work. Upon execution of the Lease by both
----------------------------------
parties, Landlord's contractor ("Contractor") shall be instructed to commence
and diligently proceed with the construction of the Tenant Improvements
substantially in accordance with the approved Working Drawings.
3.2 Cost of Tenant Improvements. Tenant shall pay the cost of the Tenant
---------------------------
Improvements described in the Working Drawings. The costs of the Tenant Work
shall be paid by Tenant promptly upon demand by Landlord for progress payments
as they become due to Contractor under its contract with Landlord for Tenant
Work. Landlord, at its option, may require Tenant to pay for any necessary
up-front expenses of the Tenant Work, which amount shall be paid by Tenant
within no more than fifteen (15) days after request therefrom and in any event
before Landlord shall be required to commence construction of the Tenant Work.
3.3 Completion. As used in this Agreement and in the Lease, the substantial
----------
completion of the Tenant Improvements and/or the Premises shall mean the
substantial completion of the Tenant Improvements in accordance with the
approved Working Drawings, as determined by the Contractor. Tenant acknowledges
that "punchlist items" may remain to be completed or corrected subsequent to the
completion of the Tenant Improvements and/or the Premises.
4. Changes, Additions or Alterations.
---------------------------------
4.1 Changes Requested by Tenant. Any changes in the Tenant Improvements
---------------------------
after approval of the Working Drawings shall be at Tenant's sole cost and
expense and shall be subject to Landlord's approval. Tenant shall pay all costs
incurred by Landlord in reviewing any requested change, whether such change is
approved by Landlord or not. If Landlord approves any such request, Landlord
shall notify Tenant of the estimated costs and delay, if any, chargeable to
Tenant by reason of such change. Within three (3) days of receipt of such
estimated cost, Tenant shall notify Landlord in writing whether Tenant approves
such change. If Tenant approves such change, Tenant shall promptly pay Landlord
the estimated costs of such change, and the Contractor shall proceed with the
change as soon as reasonably practical thereafter. If Tenant does not promptly
approve such change and/or pay such estimated cost, Landlord shall be entitled
to proceed in accordance with the previously approved Working Drawings.
4.2 Changes by Landlord. Landlord shall have the right to make such
-------------------
changes to the approved Working Drawings (or in the Tenant Improvements pursuant
thereto), as Landlord may deem reasonably necessary for coordinating and
completing the Tenant Improvements or as required by governmental authorities.
Tenant agrees and understands that any substitutions, changes or deviations from
the approved Working Drawings that may be reasonably necessary during
construction of the Premises shall not affect, change or invalidate the Lease,
or give rise to any claim by Tenant for any offset, credit, loss, damage or
delay, or otherwise. Landlord shall notify Tenant of any such changes.
-21-
5. Delay; Force Majeure.
--------------------
5.1 Tenant Delay. Tenant shall be responsible for and pay any and all costs
------------
and expenses incurred by Landlord in connection with any delay ("Tenant Delay")
in the commencement or completion of the Tenant Improvements caused by (a)
Tenant's failure to approve or disapprove any cost estimates or prices for
Tenant Work within the time periods required herein, (b) Tenant's request for
materials, finishes, installations or improvements other than building standard,
(c) any changes, additions or alterations requested by or on behalf of Tenant
after Landlord's approval of the Working Drawings, (d) Tenant's failure to pay
any amount when due hereunder, (e) failure or refusal by Tenant to observe and
perform fully and promptly any other provision of this Agreement or the Lease on
Tenant's part to be observed or performed, or (f) any other delay of any kind or
nature caused by any act or omission of Tenant, or any contractor, agent,
servant or employee of Tenant. If there is any Tenant Delay, the Premises shall
be deemed completed, and the Commencement Date shall be deemed to occur, on the
date the Premises would have been completed but for such Tenant Delay, as
determined by the Contractor.
5.2 Force Majeure. Landlord's obligation to perform the Tenant Improvements
-------------
shall not require Landlord to incur overtime costs and expenses and shall be
subject to delays due to acts of God, governmental restrictions, strikes, labor
disturbances, shortages of material or supplies, Tenant Delay, and to any cause
or event beyond Landlord's reasonable control, whether similar or dissimilar to
the foregoing and whether or not foreseeable by the parties. Except as otherwise
expressly provided in the Lease, failure of Landlord to deliver possession of
the Premises with in the time and in the condition provided for in the Lease
will not give rise to any claim for damages by Tenant against Landlord or
Landlord's contractors, architects, engineers, consultants, employees, attorneys
or agents.
6. Default & Remedies.
------------------
6.1 Failure to Perform. Failure or refusal by Tenant to perform any
------------------
obligation on Tenant's part to be performed in accordance with the provisions of
this Agreement shall constitute an event of default by Tenant under this
Agreement and under Paragraph 23 of the Lease.
6.2 Remedies. Landlord shall have and be entitled to exercise all rights
--------
and remedies available to Landlord for default in payment of rent under the
Lease if Tenant fails to make any payment required of Tenant in accordance with
the provisions of this Agreement. Landlord shall not be obligated to commence or
to continue with any of the Tenant Improvements until Landlord receives all
payments then due. Landlord shall be entitled to collect from Tenant upon demand
all attorneys' fees incurred by Landlord in connection with enforcement of this
Agreement. If at any time there is any breach or default by Tenant under this
Agreement, Landlord shall have the right, in addition to all other rights and
remedies available to Landlord under the Lease or at law or in equity, to
terminate the Lease by and upon written notice to Tenant, without any liability
to Tenant from liability to Landlord for breach of the Lease or this Agreement.
7. Performance of Tenant's Work. Tenant may, with Landlord's written consent,
----------------------------
enter the Premises prior to the Commencement Date solely for the purpose of
performing Tenant's Work and installing Tenant's Personal Property as long as
such entry will not interfere with the orderly construction and completion of
the Tenant Improvements in the Premises. Tenant shall notify Landlord of its
desired time(s) of entry and shall submit for Landlord's approval the scope of
the work to be performed and the name(s) of the contractor(s) who will perform
the same. Tenant hereby indemnifies and agrees to protect, defend and hold
harmless, any mortgagee, ground lessor or beneficiary of a mortgage, ground
lease or deed of trust related to the Premises or the Building harmless from and
against any and all suits, claims, actions, losses, costs or expenses (including
claims for worker's compensation) of any nature whatsoever, together with
reasonable attorneys' fees for counsel of Landlord's choice, arising out of or
in connection with the performance of Tenant's Work or the installation of
Tenant's Personal Property (including, but not limited to, claims for breach of
warranty, personal
-22-
injury or property damage) except with respect to injury or damage caused by
Landlord's willful or negligent acts or omissions.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
LANDLORD TENANT
470 Spear Associates NetSource Communications, Inc.,
a California limited partnership a Delaware corporation
By: Lalanne Xxxxxxx & Xxxxx Company,
a California limited partnership
Its General Partner
By: Lalanne Xxxxxxx & Xxxxx Company, Inc.,
a California corporation
Its General Partner
By: X. Xxxxxxxxx & Associates, Inc.
a California corporation
its General Partner
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ NetSource Communications, Inc.
--------------------------- ----------------------------------
Xxxxxx X. Xxxxxxx
Its President
-23-
EXHIBIT C
---------
COMMENCEMENT DATE MEMORANDUM
----------------------------
THIS COMMENCEMENT DATE MEMORANDUM dated, for reference purposes only, as of
the ______ day of _________________________, 19__, is made by and between 470
Spear Associates, a California limited partnership ("Landlord") and NetSource
Communications, Inc., a Delaware corporation ("Tenant").
RECITALS
--------
A. Landlord is the Landlord and Tenant is the Tenant under that certain Office
Lease between them dated, for reference purposes only, as of ________, 1996 (the
"Lease"). Unless otherwise defined, capitalized terms used herein shall have the
same respective meanings as given them in the Lease.
B. Pursuant to Paragraph 3 of the Lease, the parties desire to confirm certain
matters pertaining to the Lease.
AGREEMENT
---------
NOW, THEREFORE, the parties agree as follows:
1. Tenant acknowledges and agrees that the Tenant Improvements have been
substantially completed in accordance with the Work Letter and that the Tenant
Improvements and the Premises are in good and satisfactory order, condition and
repair.
2. The Commencement Date of the Lease is __________________.
3. The Expiration Date of the Lease is _____________________.
4. This Memorandum may be executed in counterparts, each of which shall be
deemed an original, and both of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed this Memorandum as of the date
first above written.
LANDLORD TENANT
470 Spear Associates NetSource Communications, Inc.,
a California limited partnership a Delaware corporation
By: Lalanne Xxxxxxx & Xxxxx Company,
a California limited partnership
Its General Partner
By: Lalanne Xxxxxxx & Xxxxx Company, Inc.,
a California corporation
Its General Partner
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ NetSource Communications, Inc.
-------------------------- ----------------------------------
Xxxxxx X. Xxxxxxx
Its President
-24-
EXHIBIT D
---------
RULES AND REGULATIONS
---------------------
1. No sign, placard, picture, advertisement, name or notice shall be inscribed,
displayed or printed or affixed on or to any part of the outside or inside of
the Building without the written consent of Landlord first had and obtained and
Landlord shall have the right to remove any such sign, placard, picture,
advertisement, name or notice without notice to and at the expense of Tenant.
2. All approved signs or lettering on doors shall be printed, painted, affixed
or inscribed at the expense of Tenant by a person approved by Landlord.
3. Tenant shall not place anything or allow anything to be placed near the glass
of any window, door, partition or wall which may appear unsightly from outside
the Premises; provided, however, that Landlord may furnish and install a
Building standard window covering at all exterior windows. Tenant shall not
without prior written consent of Landlord cause or otherwise sunscreen any
window.
4. The sidewalks, halls, passages, exits, entrances, elevators and stairways
shall not be obstructed by any of the tenants or used by them for any purpose
other than for ingress and egress from their respective Premises.
5. Tenant shall not alter any lock or install any new or additional locks or any
bolts on any doors or windows of the Premises.
6. The toilet rooms, urinals, wash bowls and other apparatus shall not be used
for any purpose other than that for which they were constructed and no foreign
substance of any kind whatsoever shall be thrown therein. The expense of any
breakage, stoppage or damage resulting from the violation of this rule shall be
borne by the Tenant who, or whose employees or invitees, shall have caused it.
7. Tenant shall not overload the floor of the Premises or in any way deface the
Premises or any part thereof. No furniture, freight or equipment of any kind
shall be brought into the Building without the prior notice to Landlord and all
moving of the same into or out of the Building shall be done at such time and in
such manner as Landlord shall designate. Landlord shall have the right to
prescribe the weight, size and position of all safes and other heavy equipment
brought into the Building and also the times and manner of moving the same in
and out of the Building. Safes or other heavy objects shall, if considered
necessary by Landlord, stand on supports of such thickness as is necessary to
properly distribute the weight. Landlord will not be responsible for loss of or
damage to any such safe or property from any cause and all damage done to the
Building by moving or maintaining any such safe or other property shall repaired
at the expense of Tenant.
8. Tenant shall not use, keep or permit to be used or kept any foul or noxious
gas or substance in the Premises, or permit or suffer the Premises to be
occupied or used in a manner offensive or objectionable to the Landlord or other
occupants of the Building by reason of noise, odors and/or vibrations, or
interfere in any way with other tenants or those having business therein, nor
shall any animals or birds be brought in or kept in or about the Premises or the
Building.
9. No cooking shall be done or permitted by any Tenant on the Premises, nor
shall the Premises be used for the storage of merchandise, for washing clothes,
for lodging, or for any improper, objectionable or immoral purposes.
10. Tenant shall not use or keep in the Premises or the Building any kerosene,
gasoline or inflammable or combustible fluid or material, or use any method of
heating or air conditioning other than that supplied by Landlord.
11. Landlord will direct electricians as to where and how telephone and
telegraph wires are to be introduced. No boring or cutting for wires will be
allowed without the consent of the Landlord. The location of telephones, call
boxes and other office equipment affixed to the Premises shall be subject to the
approval of Landlord.
12. On Saturdays, Sundays and legal holidays, and on other days between the
hours of 6:00 p.m. and 8:00 a.m. the following day, access to the Building, or
to the halls, corridors, elevators or stairways in the Building, or to the
Premises may be refused unless the person seeking access is known to the person
or employee of the Building in charge and has a pass or is properly identified.
The Landlord shall in no case be liable for damages for any error with regard to
the admission to or exclusion from the Building of any person. In case of
invasion, mob, riot, public excitement, or other commotion, the Landlord
reserves the right to prevent access to the Building during the continuance of
the same by closing of the doors or otherwise, for the safety of the tenants and
protection of property in the Building and the Building.
13. Landlord reserves the right to exclude or expel from the Building any person
who, in the judgment of Landlord, is intoxicated or under the influence of
liquor or drugs, or who shall in any manner do any act in violation of any of
the Rules and Regulations of the Building.
-25-
14. No vending machine or machines of any description shall be installed,
maintained or operated upon the Premises without the written consent of the
Landlord.
15. Landlord shall have the right, exercisable without notice and without
liability to Tenant, to change the name and street address of the Building of
which the Premises are a part.
16. Tenant shall not disturb, solicit, or canvass any occupant of the Building
and shall cooperate to prevent same.
17. Without the written consent of Landlord, Tenant shall not use the name of
the Building in connection with or in promoting or advertising the business of
Tenant except as Tenant's address.
18. Landlord shall have the right to control and operate the public portions of
the Building, and the public facilities, and heating and air conditioning, as
well as facilities furnished for the common use of the tenants, in such manner
as it deems best for the benefit of the tenants generally.
19. All entrance doors in the Premises shall be left locked when the Premises
are not in use, and all doors opening to public corridors shall be kept closed
except for normal ingress and egress from the Premises.
-00-
XXXXXXX X-0
DESCRIPTION OF PREMISES
ADDITIONAL PREMISES
SUITES # 200 & 205
13,520 Rentable Square Feet
-27-
