LEASE AGREEMENT
BETWEEN
GBC-UNIVERSITY AVENUE ASSOCIATES, L.P.
AS "LANDLORD"
AND
SCIENTIFIC LEARNING CORPORATION, A DELAWARE CORPORATION
AS "TENANT"
TABLE OF CONTENTS
SECTION PAGE
1. PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. TERM; POSSESSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. SECURITY DEPOSIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5. USE AND COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . . . 8
6. TENANT IMPROVEMENTS & ALTERATIONS . . . . . . . . . . . . . . . . . . . 10
7. MAINTENANCE AND REPAIRS . . . . . . . . . . . . . . . . . . . . . . . . 12
8. TENANT'S TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9. UTILITIES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . 13
10. EXCULPATION AND INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 15
11. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12. DAMAGE OR DESTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . 18
13. CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
14. ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . . . . . . . . . 21
15. DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . 24
16. LATE CHARGE AND INTEREST . . . . . . . . . . . . . . . . . . . . . . . . 26
17. WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
18. ENTRY, INSPECTION AND CLOSURE . . . . . . . . . . . . . . . . . . . . . 27
19. SURRENDER AND HOLDING OVER . . . . . . . . . . . . . . . . . . . . . . . 27
20. ENCUMBRANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
21. ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS . . . . . . . . . . . . . 29
22. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
23. ATTORNEYS' FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
24. QUIET POSSESSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
25. SECURITY MEASURES . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
26. FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
27. RULES AND REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . 31
28. LANDLORD'S LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . 31
29. CONSENTS AND APPROVALS . . . . . . . . . . . . . . . . . . . . . . . . . 32
30. BROKERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
i.
TABLE OF CONTENTS
(CONTINUED)
SECTION PAGE
31. INTENTIONALLY OMITTED . . . . . . . . . . . . . . . . . . . . . . . . . 32
32. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
33. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
34. AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ii.
BASIC LEASE INFORMATION
LEASE DATE: For identification purposes only, the date of this
Lease is July 31, 1997
LANDLORD: GBC-University Associates, L.P.
TENANT: Scientific Learning Corporation, a Delaware corporation
PROJECT: Golden Bear Center Building
BUILDING ADDRESS: 0000 Xxxxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx
RENTABLE AREA OF
BUILDING: 160,587 square feet
PREMISES: Floor: Fourth (4th)
Suite Number: 400
Rentable Area: 34,257
TERM: 60 full calendar months (plus any partial month at the
beginning of the Term)
SCHEDULED
COMMENCEMENT DATE: September 1, 1997
EXPIRATION DATE: The last day of the 60th full calendar month in the
Term
BASE RENT: Month 01-12 $56,524.05 per month
Month 13-24 $73,652.20 per month
Month 25-36 $77,078.25 per month
Month 37-48 $80,503.95 per month
Month 49-60 $83,929.65 per month
BASE YEAR: The calendar year 1997
TENANT'S SHARE: Twenty-one and thirty-three hundredths percent (21.33%)
SECURITY DEPOSIT: Eighty-three thousand three hundred and forty-six
dollars ($83,346.00), and the Letter of Credit
referenced in Section 3 of Exhibit D
LANDLORD'S ADDRESS
FOR PAYMENT OF RENT: GBC-University Associates, L.P.
File #72846
X.X. Xxx 00000
Xxx Xxxxxxxxx, XX 00000-0000
BUSINESS HOURS: 7:30 a.m. to 6:00 p.m.
1.
LANDLORD'S ADDRESS
FOR NOTICES: Xxxxxxx Xxxxxx & Associates
0000 Xxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
with a copy to:
Xxxxxxx Xxxxxx & Associates
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
TENANT'S ADDRESS
FOR NOTICES: At the Premises
ACCESS CARD DEPOSIT: Waived per Section 25
BROKER(S): Colliers Damner Pike
GUARANTOR(S): N/A
PROPERTY MANAGER: Xxxxxxx Xxxxxx & Associates
ADDITIONAL PROVISIONS: (1) Parking (2) Extension Option (3) Letter of Credit
EXHIBITS:
Exhibit A: The Premises
Exhibit B: Construction Rider
Exhibit C: Building Rules
Exhibit D: Additional Provisions
The Basic Lease Information set forth above is part of the Lease. In the
event of any conflict between any provision in the Basic Lease Information and
the Lease, the Lease shall control.
THIS LEASE is made as of the Lease Date set forth in the Basic Lease
Information, by and between the Landlord identified in the Basic Lease
Information ("Landlord"), and the Tenant identified in the Basic Lease
Information ("Tenant"). Landlord and Tenant hereby agree as follows:
1. PREMISES. Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, upon the terms and subject to the conditions of this Lease, the office
space identified in the Basic Lease Information as the Premises (the
"PREMISES"), in the Building located at the address specified in the Basic Lease
Information (the "BUILDING"). The approximate configuration and location of the
Premises is shown on EXHIBIT A. Landlord and Tenant agree that the rentable
area of the Premises for all purposes under this Lease shall be the Rentable
Area specified in the Basic Lease Information. The Building, together with the
parking facilities serving the Building (the "PARKING FACILITY"), and the
parcel(s) of land on which the Building and the Parking
2.
Facility are situated (collectively, the "PROPERTY"), is part of the Project
identified in the Basic Lease Information (the "PROJECT").
2. TERM; POSSESSION. The term of this Lease (the "TERM") shall commence on
the Commencement Date as described below and, unless sooner terminated, shall
expire on the Expiration Date set forth in the Basic Lease Information (the
"EXPIRATION DATE"). The "COMMENCEMENT DATE" shall be the earlier of (a) the
date on which Landlord tenders possession of the Premises to Tenant, with all of
Landlord's construction obligations, if any, "SUBSTANTIALLY COMPLETED" as
provided in the Construction Rider attached as EXHIBIT B (the "CONSTRUCTION
RIDER") or, in the event of any "TENANT DELAY," as defined in the Construction
Rider, the date on which Landlord could have done so had there been no such
Tenant Delay; or (b) the date upon which Tenant, with Landlord's written
permission, actually occupies and conducts business in any portion of the
Premises. The parties anticipate that the Commencement Date will occur on or
about the Scheduled Commencement Date set forth in the Basic Lease Information
(the "SCHEDULED COMMENCEMENT DATE"); PROVIDED, HOWEVER, that Landlord shall not
be liable for any claims, damages or liabilities if the Premises are not ready
for occupancy by the Scheduled Commencement Date. When the Commencement Date
has been established, Landlord and Tenant shall at the request of either party
confirm the Commencement Date and Expiration Date in writing.
3. RENT.
3.1 BASE RENT. Tenant agrees to pay to Landlord the Base Rent set forth
in the Basic Lease Information, without prior notice or demand, on the first day
of each and every, calendar month during the Term, except that Base Rent for the
first full calendar month in which Base Rent is payable shall be paid upon
Tenant's execution of this Lease and Base Rent for any partial month at the
beginning of the Term shall be paid on the Commencement Date. Base Rent for any
partial month at the beginning or end of the Term shall be prorated based on the
actual number of days in the month.
If the Basic Lease Information provides for any change in Base Rent by
reference to years or months (without specifying particular dates), the change
will take effect on the applicable annual or monthly anniversary of the
Commencement Date (which won't necessarily be the first day of a calendar
month).
3.2 ADDITIONAL RENT: INCREASES IN OPERATING COSTS AND TAXES.
(a) DEFINITIONS.
(1) "BASE OPERATING COSTS" means Operating Costs for the
calendar year specified as the Base Year in the Basic Lease Information
(excluding therefrom, however, any Operating Costs of a nature that would not
ordinarily be incurred on an annual, recurring basis).
(2) "BASE TAXES" means Taxes for the calendar year specified as
the Base Year in the Basic Lease Information.
3.
(3) "OPERATING COSTS" means, subject to the exclusions below,
all costs of managing, operating, maintaining and repairing the Property,
including all costs, expenditures, fees and charges for: (A) operation,
maintenance and repair of the Property (including maintenance, repair and
replacement of glass, the roof covering or membrane, and landscaping); (B)
utilities and services (including telecommunications facilities and equipment,
recycling programs and trash removal), and associated supplies and materials;
(c) compensation (including employment taxes and fringe benefits) for persons
who perform duties in connection with the operation, management, maintenance and
repair of the Building, such compensation to be appropriately allocated for
persons who also perform duties unrelated to the Building, up to and including
the grade of Building Manager; (D) property (including coverage for earthquake
and flood if carried by Landlord), liability, rental income and other insurance
relating to the Property, and expenditures for deductible amounts paid under
such insurance; (E) licenses, permits and inspections; (F) complying with the
requirements of any law, statute, ordinance or governmental rule or regulation
or any orders pursuant thereto (collectively "LAWS"); (G) amortization of
capital improvements required to comply with Laws, or which are intended to
reduce Operating Costs or improve the utility, efficiency or capacity of any
Building System, with interest on the unamortized balance at the rate paid by
Landlord on funds borrowed to finance such capital improvements (or, if Landlord
finances such improvements out of Landlord's funds without borrowing, the rate
that Landlord would have paid to borrow such funds, as reasonably determined by
Landlord), over such useful life as Landlord shall reasonably determine; (H) an
office in the Project for the management of the Property, including expenses of
furnishing and equipping such office in a commercially reasonable manner, and
the rental value of any space occupied for such purposes; (I) property
management fees at commercially reasonable rates, generally commensurate with
management fees charged for similar scope and quality of services for other
buildings in the vicinity of the Building, of comparable size, quality and age
as the Building; (J) accounting, legal and other professional services incurred
in connection with the operation of the Property and the calculation of
Operating Costs and Taxes; (K) a reasonable allowance for depreciation on
machinery and equipment used to maintain the Property and on other personal
property owned by Landlord in the Property (including window coverings and
carpeting in common areas); (L) contesting the validity or applicability of any
Laws that may affect the Property; (M) the Building's share of any shared or
common area maintenance fees and expenses (including costs and expenses of
operating, managing, owning and maintaining the Parking Facility and the common
areas of the Project and any fitness center or conference center in the
Project); and (N) any other cost, expenditure, fee or charge, whether or not
hereinbefore described, which in accordance with generally accepted property
management practices would be considered an expense of managing, operating,
maintaining and repairing the Property. Operating Costs for any calendar year,
including the Base Year, during which average occupancy of the Building is less
than one hundred percent (100%) shall be calculated based upon the Operating
Costs that would have been incurred if the Building had an average occupancy of
one hundred percent (100%) during the entire calendar year.
Operating Costs shall not include (i) capital improvements (except as
otherwise provided above); (ii) costs of special services rendered to individual
tenants (including Tenant) for which a special charge is made; (iii) interest
and principal payments on loans or indebtedness secured by the Building; (iv)
costs of improvements for Tenant or other tenants of the
4.
Building; (v) costs of services or other benefits of a type which are not
available to Tenant but which are available to other tenants or occupants, and
costs for which Landlord is reimbursed by other tenants of the Building other
than through payment of tenants' shares of increases in Operating Costs and
Taxes; (vi) leasing commissions, attorneys' fees and other expenses incurred in
connection with leasing space in the Building or enforcing such leases; (vii)
depreciation or amortization, other than as specifically enumerated in the
definition of Operating Costs above; (viii) costs, fines or penalties incurred
due to Landlord's violation of any Law; (ix) costs, fines or penalties incurred
due to Landlord's violation of any terms or conditions of this Lease or any
other lease relating to the Building or Property, or due to Landlord's
negligence or willful misconduct; (x) overhead profit increments paid to
Landlord's subsidiaries or affiliates for management or other services on or to
the Building or for supplies or other materials to the extent that the cost of
the services, supplies or materials exceeds the cost that would have been paid
had the services, supplies or materials been provided by unaffiliated parties on
a competitive basis; (xi) all interest, loan fees, and other carrying costs
related to any mortgage or deed of trust and all rental payable under any ground
or underlying lease, or any lease for any equipment ordinarily considered to be
of a capital nature, to the extent such capital cost would not be includible in
Operating Costs (except janitorial equipment that is not affixed to the
Building); (xii) any compensation paid to clerks, attendants, or other persons
in commercial concessions operated by Landlord; (xiii) advertising and
promotional expenditures; (xiv) costs of repairs and other work occasioned by
fire, windstorm, or other casualty of an insurable nature, to the extent that
insurance proceeds (exclusive of any deductible) are actually received, less the
costs incurred in obtaining such proceeds; and (xv) the cost of correcting any
building code or other violations of law that were violations prior to the
Commencement Date.
(4) "TAXES" means: all real property taxes and general, special
or district assessments or other governmental impositions, of whatever kind,
nature or origin, imposed on or by reason of the ownership or use of the
Property; governmental charges, fees or assessments for transit or traffic
mitigation (including area-wide traffic improvement assessments and
transportation system management fees), housing, police, fire or other
governmental service or purported benefits to the Property; personal property
taxes assessed on the personal property of Landlord used in the operation of the
Property; service payments in lieu of taxes and taxes and assessments of every
kind and nature whatsoever levied or assessed in addition to, in lieu of or in
substitution for existing or additional real or personal property taxes on the
Property or the personal property described above; any increases in the
foregoing caused by changes in assessed valuation, tax rate or other factors or
circumstances; and the reasonable cost of contesting by appropriate proceedings
the amount or validity of any taxes, assessments or charges described above, but
excluding any of the foregoing to the extent assessed based on the value of
above standard office tenant improvements other than Tenant's. To the extent
paid by Tenant or other tenants as "TENANT'S TAXES" (as defined in Section 8 -
TENANT'S TAXES), "Tenant's Taxes" shall be excluded from Taxes.
(5) "TENANT'S SHARE" means the Rentable Area of the Premises
divided by the total Rentable Area of the Building, as set forth in the Basic
Lease Information. If the Rentable Area of the Building is changed or the
Rentable Area of the Premises is changed by Tenant's leasing of additional space
hereunder or for any other reason, Tenant's Share shall be adjusted accordingly.
5.
(b) ADDITIONAL RENT.
(1) Tenant shall pay Landlord as "ADDITIONAL RENT" for each
calendar year or portion thereof, commencing one (1) year after the Commencement
Date, and thereafter throughout the Term, Tenant's Share of the sum of (x) the
amount (if any) by which Operating Costs for such period exceed Base Operating
Costs, and (y) the amount (if any) by which Taxes for such period exceed Base
Taxes.
(2) Prior to the end of the Base Year and each calendar year
thereafter, Landlord shall notify Tenant of Landlord's estimate of Operating
Costs, Taxes and Tenant's Additional Rent for the following calendar year.
Commencing on the first day of January of each calendar year and continuing on
the first day of every month thereafter in such year, Tenant shall pay to
Landlord one-twelfth (1/12th) of the estimated Additional Rent. If Landlord
thereafter reasonably estimates that Operating Costs or Taxes for such year will
vary from Landlord's prior estimate, Landlord may, by notice to Tenant, revise
the estimate for such year (and Additional Rent shall thereafter be payable
based on the revised estimate).
(3) As soon as reasonably practicable after the end of the Base
Year and each calendar year thereafter, Landlord shall furnish Tenant a
statement with respect to such year, showing Operating Costs, Taxes and
Additional Rent for the year, and the total payments made by Tenant with respect
thereto. Unless Tenant raises any objections to Landlord's statement within
ninety (90) days after receipt of the same, such statement shall conclusively be
deemed correct and Tenant shall have no right thereafter to dispute such
statement or any item therein or the computation of Additional Rent based
thereon. If Tenant does object to such statement, then Landlord shall provide
Tenant with reasonable verification of the figures shown on the statement and
the parties shall negotiate in good faith to resolve any disputes. If the
parties are unable to resolve such disputes, Landlord and Tenant shall agree
upon an independent certified public accountant, who shall audit the statement,
and Landlord's calculation of Operating Costs, Taxes and Tenant's share of any
increases in the same. Such accountant's determination shall be binding on
Landlord and Tenant. Tenant shall pay the cost of any such audit, unless the
audit shows that the Landlord's statement overstated the Tenant's share of
increases in Operating Costs and Taxes for the year by more than 7% of the
actual amount of the same, in which case Landlord shall pay the cost of the
audit. Any objection of Tenant to Landlord's statement and resolution of any
dispute shall not postpone the time for payment of any amounts due Tenant or
Landlord based on Landlord's statement, nor shall any failure of Landlord to
deliver Landlord's statement in a timely manner relieve Tenant of Tenant's
obligation to pay any amounts due Landlord based on Landlord's statement.
(4) If Tenant's Additional Rent as finally determined for any
calendar year exceeds the total payments made by Tenant on account thereof,
Tenant shall pay Landlord the deficiency within thirty (30) days of Tenant's
receipt of Landlord's statement. If the total payments made by Tenant on
account thereof exceed Tenant's Additional Rent as finally determined for such
year, Tenant's excess payment shall be credited toward the rent next due from
Tenant under this Lease. For any partial calendar year at the beginning or end
of the Term, Additional Rent shall be prorated on the basis of a 365-day year by
computing Tenant's Share of the increases in Operating Costs and Taxes for the
entire year and then prorating such amount for the number of days during such
year included in the Term. Notwithstanding the termination of
6.
this Lease, Landlord shall pay to Tenant or Tenant shall pay to Landlord, as the
case may be, within ten (10) days after Tenant's receipt of Landlord's final
statement for the calendar year in which this Lease terminates, the difference
between Tenant's Additional Rent for that year, as finally determined by
Landlord, and the total amount previously paid by Tenant on account thereof.
If for any reason Base Taxes or Taxes for any year during the Term are
reduced, refunded or otherwise changed, Tenant's Additional Rent shall be
adjusted accordingly. If Taxes are temporarily reduced as a result of space in
the Building being leased to a tenant that is entitled to an exemption from
property taxes or other taxes, then for purposes of determining Additional Rent
for each year in which Taxes are reduced by any such exemption, Taxes for such
year shall be calculated on the basis of the amount the Taxes for the year would
have been in the absence of the exemption. The obligations of Landlord to
refund any overpayment of Additional Rent and of Tenant to pay any Additional
Rent not previously paid shall survive the expiration of the Term.
Notwithstanding anything to the contrary in this Lease, if there is at any time
a decrease in Taxes below the amount of the Taxes for the Base Year, then for
purposes of calculating Additional Rent for the year in which such decrease
occurs and all subsequent periods, Base Taxes shall be reduced to equal the
Taxes for the year in which the decrease occurs.
3.3 PAYMENT OF RENT. All amounts payable or reimbursable by Tenant under
this Lease, including late charges and interest (collectively, "RENT"), shall
constitute rent and shall be payable and recoverable as rent in the manner
provided in this Lease. All sums payable to Landlord on demand under the terms
of this Lease shall be payable within ten (10) days after notice from Landlord
of the amounts due. All rent shall be paid without offset, recoupment or
deduction in lawful money of the United States of America to Landlord at
Landlord's Address for Payment of Rent as set forth in the Basic Lease
Information, or to such other person or at such other place as Landlord may from
time to time designate.
4. SECURITY DEPOSIT. On execution of this Lease, Tenant shall deposit with
Landlord the amount specified in the Basic Lease Information as the Security
Deposit, and Tenant shall deliver to Landlord the "LETTER OF CREDIT" pursuant to
the provisions contained in Section 3 of Exhibit D below (collectively, the
"SECURITY DEPOSIT"), as security for the performance of Tenant's obligations
under this Lease. Landlord may (but shall have no obligation to) use the
security deposit, including any proceeds of the Letter of Credit, or any portion
thereof, to cure any Event of Default under this Lease or to compensate Landlord
for any damage Landlord incurs as a result of Tenant's failure to perform any of
Tenant's obligations hereunder. In such event Tenant shall pay to Landlord on
demand an amount sufficient to replenish the Security Deposit. If Tenant is not
in default at the expiration or termination of this Lease, Landlord shall return
to Tenant the Security Deposit or the balance thereof then held by Landlord and
not applied as provided above within fourteen (14) days after the Lease shall
have expired or terminated and Tenant shall have vacated the Premises in the
condition required hereunder. Landlord may commingle the Security Deposit with
Landlord's general and other funds. Landlord shall not be required to pay
interest on the Security Deposit to Tenant.
7.
5. USE AND COMPLIANCE WITH LAWS.
5.1 USE. The Premises shall be used and occupied for general business
office purposes and for no other use or purpose. Tenant shall comply with all
present and future Laws relating to Tenant's use or occupancy of the Premises
(and make any repairs, alterations or improvements as required to comply with
all such Laws), and shall observe the "BUILDING RULES" (as defined in Section 27
- RULES AND REGULATIONS). Notwithstanding the foregoing or anything else to the
contrary contained in this Lease, except as set forth in Section 3.2 above,
Tenant shall not be responsible for compliance with any laws, codes, ordinances
or other governmental directives where such compliance is not related
specifically to Tenant's use and occupancy of the Premises. For example, if any
governmental authority should require the Building or the Premises to be
structurally strengthened against earthquake, or should require the removal of
"HAZARDOUS MATERIALS" from the Premises that were not arising from or in
connection with the "Handling by Tenant" of "Hazardous Materials" at or about
the Property or Tenant's failure to comply in full with all "ENVIRONMENTAL
REQUIREMENTS" with respect to the Premises (as the foregoing terms are defined
in Section 5.2 below), and such measures are imposed as a general requirement
applicable to all tenants rather than as a condition to Tenant's specific use or
occupancy of the Premises, such work shall be performed by and at the sole cost
of Landlord, subject to the provisions of Section 3.2 of this Lease. Tenant
shall not do, bring, keep or sell anything in or about the Premises that is
prohibited by, or that will cause a cancellation of or an increase in the
existing premium for, any insurance policy covering the Property or any part
thereof. Tenant shall not permit the Premises to be occupied or used in any
manner that will constitute waste or a nuisance, or disturb the quiet enjoyment
of or otherwise annoy other tenants in the Building. Without limiting the
foregoing, the Premises shall not be used for classroom training activities
(except that Tenant may conduct classroom training sessions for up to 36
attendees at a time, not to exceed three (3) Business Days every other week),
practice of medicine or any of the healing arts, providing social services, for
any governmental use (including embassy or consulate use), or for personnel
agency, walk-in or walk-up customer service office (I.E., Tenant may provide
customer service by telephone), studios for radio, television or other media
(except that Tenant may use portions of the Premises for a sound studio for its
own use in adding sound effects to compact discs, CD-ROM's or other products),
travel agency or reservation center operations or uses. Tenant shall not,
without the prior consent of Landlord, (i) bring into the Building or the
Premises anything that may cause substantial noise, odor or vibration, overload
the floors in the Premises or the Building or any of the heating, ventilating
and air-conditioning ("HVAC"), mechanical, elevator, plumbing, electrical, fire
protection, life safety, security or other systems in the Building ("BUILDING
SYSTEMS"), or jeopardize the structural integrity of the Building or any part
thereof; (ii) connect to the utility systems of the Building any apparatus,
machinery. or other equipment other than typical office equipment; or (iii)
connect to any electrical circuit in the Premises any equipment or other load
with aggregate electrical power requirements in excess of 80% of the rated
capacity of the circuit.
5.2 HAZARDOUS MATERIALS.
(a) DEFINITIONS.
8.
(1) "HAZARDOUS MATERIALS" shall mean any substance: (A) that now
or in the future is regulated or governed by, requires investigation or
remediation under, or is defined as a hazardous waste, hazardous substance,
pollutant or contaminant under any governmental statute, code, ordinance,
regulation, rule or order, and any amendment thereto, including the
Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq., and the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq., or (B) that is toxic, explosive, corrosive, flammable,
radioactive, carcinogenic, dangerous or otherwise hazardous, including gasoline,
diesel fuel, petroleum hydrocarbons, polychlorinated biphenyls (PCBs), asbestos,
radon and urea formaldehyde foam insulation.
(2) "ENVIRONMENTAL REQUIREMENTS" shall mean all present and
future Laws, orders, permits, licenses, approvals, authorizations and other
requirements of any kind applicable to Hazardous Materials.
(3) "HANDLED BY TENANT" and "HANDLING BY TENANT" shall mean and
refer to any installation, handling, generation, storage, use, disposal,
discharge, release, abatement, removal, transportation, or any other activity of
any type by Tenant or its agents, employees, contractors, licensees, assignees,
sublessees, transferees or representatives (collectively, "REPRESENTATIVES") or
its guests, customers, invitees, or visitors (collectively, "VISITORS"), at or
about the Premises in connection with or involving Hazardous Materials.
(4) "ENVIRONMENTAL LOSSES" shall mean all costs and expenses of
any kind, damages, including foreseeable and unforeseeable consequential
damages, fines and penalties incurred in connection with any violation of and
compliance with Environmental Requirements and all losses of any kind
attributable to the diminution of value, loss of use or adverse effects on
marketability or use of any portion of the Premises or Property.
(b) TENANT'S ACKNOWLEDGEMENT AND COVENANTS. Tenant acknowledges that
it has received and had an opportunity to review a copy of that certain
Environmental Site Assessment prepared with respect to the Building by AllWest
Environmental, Inc., dated June 13, 1994. No Hazardous Materials shall be
Handled by Tenant at or about the Premises or Property without Landlord's prior
written consent, which consent may be granted, denied, or conditioned upon
compliance with Landlord's requirements, all in Landlord's absolute discretion.
Notwithstanding the foregoing, normal quantities and use of those Hazardous
Materials customarily used in the conduct of general office activities, such as
copier fluids and cleaning supplies ("PERMITTED HAZARDOUS MATERIALS"), may be
used and stored at the Premises without Landlord's prior written consent,
provided that Tenant's activities at or about the Premises and Property and the
Handling by Tenant of all Hazardous Materials shall comply at all times with all
Environmental Requirements. At the expiration or termination of the Lease,
Tenant shall promptly remove from the Premises and Property all Hazardous
Materials Handled by Tenant at the Premises or the Property. Tenant shall keep
Landlord fully and promptly informed of all Handling by Tenant of Hazardous
Materials other than Permitted Hazardous Materials. Tenant shall be responsible
and liable for the compliance with all of the provisions of this Section by all
of Tenant's Representatives and Visitors, and all of Tenant's obligations under
this Section (including its indemnification obligations under paragraph (e)
below) shall survive the expiration or termination of this Lease.
9.
(c) COMPLIANCE. Tenant shall at Tenant's expense promptly take all
actions required by any governmental agency or entity in connection with or as a
result of the Handling by Tenant of Hazardous Materials at or about the Premises
or Property, including inspection and testing, performing all cleanup, removal
and remediation work required with respect to those Hazardous Materials,
complying with all closure requirements and post-closure monitoring, and filing
all required reports or plans. All of the foregoing work and all Handling by
Tenant of all Hazardous Materials shall be performed in a good, safe and
workmanlike manner by consultants qualified and licensed to undertake such work
and in a manner that will not interfere with any other tenant's quiet enjoyment
of the Property or Landlord's use, operation, leasing and sale of the Property.
Tenant shall deliver to Landlord prior to delivery to any governmental agency,
or promptly after receipt from any such agency, copies of all permits,
manifests, closure or remedial action plans, notices, and all other documents
relating to the Handling by Tenant of Hazardous Materials at or about the
Premises or Property. If any lien attaches to the Premises or the Property in
connection with or as a result of the Handling by Tenant of Hazardous Materials,
and Tenant does not cause the same to be released, by payment, bonding or
otherwise, within ten (10) days after the attachment thereof, Landlord shall
have the right but not the obligation to cause the same to be released and any
sums expended by Landlord (plus Landlord's administrative costs) in connection
therewith shall be payable by Tenant on demand.
(d) LANDLORD'S RIGHTS. Landlord shall have the right, but not the
obligation, to enter the Premises at any reasonable time (i) to confirm Tenant's
compliance with the provisions of this Section 5.2, and (ii) to perform Tenant's
obligations under this Section if Tenant has failed to do so after reasonable
notice to Tenant. Landlord shall also have the right to engage qualified
Hazardous Materials consultants to inspect the Premises and review the Handling
by Tenant of Hazardous Materials, including review of all permits, reports,
plans, and other documents regarding same. Tenant shall pay to Landlord on
demand the costs of Landlord's consultants' fees and all costs incurred by
Landlord in performing Tenant's obligations under this Section. Landlord shall
use reasonable efforts to minimize any interference with Tenant's business
caused by Landlord's entry into the Premises, but Landlord shall not be
responsible for any interference caused thereby, except as set forth in Section
10 below.
(e) TENANT'S INDEMNIFICATION. Tenant agrees to indemnify, defend,
protect and hold harmless Landlord and its partners or members and its or their
partners, members, directors, officers, shareholders, employees and agents from
all Environmental Losses and all other claims, actions, losses, damages,
liabilities, costs and expenses of every kind, including reasonable attorneys',
experts' and consultants' fees and costs, incurred at any time and arising from
or in connection with the Handling by Tenant of Hazardous Materials at or about
the Property or Tenant's failure to comply in full with all Environmental
Requirements with respect to the Premises.
6. TENANT IMPROVEMENTS & ALTERATIONS.
6.1 Landlord and Tenant shall perform their respective obligations with
respect to design and construction of any improvements to be constructed and
installed in the Premises (the "TENANT IMPROVEMENTS"), as provided in the
Construction Rider (PROVIDED, HOWEVER, that Tenant shall not be required to
obtain Landlord's prior approval for minor, non-structural
10.
Alterations that do not affect any of the Building Systems, are not visible from
the exterior of the Premises, and cost less than Twenty Thousand Dollars
($20,000), so long as Tenant gives Landlord notice of the proposed Alterations
at least ten (10) days prior to commencement of the Alterations and complies
with all of the following provisions, except that Tenant shall not be required
to obtain Landlord's approval of any plans or specifications therefor). Except
for any Tenant Improvements to be constructed by Tenant as provided in the
Construction Rider, Tenant shall not make any alterations, improvements or
changes to the Premises, including installation of any security system or
telephone or data communication wiring, ("ALTERATIONS"), without Landlord's
prior written consent. Any such Alterations shall be completed by Tenant at
Tenant's sole cost and expense: (i) with due diligence, in a good and
workmanlike manner, using new materials; (ii) in compliance with plans and
specifications approved by Landlord; (iii) in compliance with the construction
rules and regulations promulgated by Landlord from time to time; (iv) in
accordance with all applicable Laws (including all work, whether structural or
non-structural, inside or outside the Premises, required to comply fully with
all applicable Laws and necessitated by Tenant's work); and (v) subject to all
conditions which Landlord may in Landlord's reasonable discretion impose. Such
conditions may include requirements for Tenant to: (i) provide payment or
performance bonds or additional insurance (from Tenant or Tenant's contractors,
subcontractors or design professionals); (ii) use the general contractor
designated by Landlord, so long as the fees to be charged by such general
contractor shall not exceed those that would be charged in an arms'-length
transaction; and (iii) remove all or part of the Alterations prior to or upon
expiration or termination of the Term, as designated by Landlord. If Tenant so
requests, subcontracts shall be competitively bid by subcontractors approved by
Landlord. Notwithstanding anything to the contrary herein, (a) Tenant shall not
be required to remove (1) any of the initial tenant improvements constructed by
or on behalf of Tenant, or (2) any alterations or additions for which Tenant has
obtained Landlord's consent unless at the time Tenant requested such consent
Tenant also requested that Landlord indicate that such removal will be required
and Landlord did not so indicate; and (b) Tenant shall be entitled to remove the
following described items: None [Tenant to provide list for Landlord approval].
If any work outside the Premises, or any work on or adjustment to any of the
Building Systems, is required in connection with or as a result of Tenant's
work, such work shall be performed at Tenant's expense by contractors designated
by Landlord. Landlord's right to review and approve (or withhold approval of)
Tenant's plans, drawings, specifications, contractor(s) and other aspects of
construction work proposed by Tenant is intended solely to protect Landlord, the
Property and Landlord's interests. No approval or consent by Landlord shall be
deemed or construed to be a representation or warranty by Landlord as to the
adequacy, sufficiency, fitness or suitability thereof or compliance thereof with
applicable Laws or other requirements. Except as otherwise provided in
Landlord's consent, or as described above, all Alterations shall upon
installation become pan of the realty and be the property of Landlord.
6.2 Before making any Alterations, Tenant shall submit to Landlord for
Landlord's prior approval reasonably detailed final plans and specifications
prepared by a licensed architect or engineer, a copy of the construction
contract, including the name of the contractor and all subcontractors proposed
by Tenant to make the Alterations and a copy of the contractor's license.
Tenant shall reimburse Landlord upon demand for any expenses reasonably incurred
by Landlord in connection with any Alterations made by Tenant, including
reasonable fees charged by Landlord's contractors or consultants to review plans
and specifications prepared by Tenant and to update the existing as-built plans
and specifications of the Building to reflect the
11.
Alterations. Tenant shall obtain all applicable permits, authorizations and
governmental approvals and deliver copies of the same to Landlord before
commencement of any Alterations.
6.3 Tenant shall keep the Premises and the Property free and clear of all
liens arising out of any work performed, materials furnished or obligations
incurred by Tenant. If any such lien attaches to the Premises or the Property,
and Tenant does not cause the same to be released by payment, bonding or
otherwise within ten (10) days after the attachment thereof, Landlord shall have
the right but not the obligation to cause the same to be released, and any sums
expended by Landlord (plus Landlord's administrative costs) in connection
therewith shall be payable by Tenant on demand with interest thereon from the
date of expenditure by Landlord at the Interest Rate (as defined in Section 16.2
- INTEREST). Tenant shall give Landlord at least ten (10) days' notice prior to
the commencement of any Alterations and cooperate with Landlord in posting and
maintaining notices of non-responsibility in connection therewith.
6.4 Subject to the provisions of Section 5 - USE AND COMPLIANCE WITH LAWS
and the foregoing provisions of this Section, Tenant may install, maintain and
remove furnishings, equipment, movable partitions, business equipment and other
trade fixtures ("TRADE FIXTURES") in the Premises, provided that the Trade
Fixtures do not become an integral part of the Premises or the Building. Tenant
shall promptly repair any damage to the Premises or the Building caused by any
installation or removal of such Trade Fixtures.
7. MAINTENANCE AND REPAIRS.
7.1 By taking possession of the Premises Tenant agrees that the Premises
are then in a good and tenantable condition. During the Term, Tenant at
Tenant's expense but under the direction of Landlord, shall repair and maintain
the Premises, including the interior walls, floor coverings, ceiling (ceiling
tiles and grid), Tenant Improvements, Alterations, fire extinguishers, outlets
and fixtures, and any appliances (including dishwashers, hot water heaters and
garbage disposers) in the Premises, in a first class condition, and keep the
Premises in a clean, safe and orderly condition.
7.2 Landlord shall maintain or cause to be maintained in reasonably good
order, condition and repair, the structural portions of the roof, foundations,
floors and exterior walls of the Building, the Building Systems, and the public
and common areas of the Property, such as elevators, stairs, corridors and
restrooms; PROVIDED, HOWEVER, that Tenant shall pay the cost of repairs for any
damage occasioned by Tenant's use of the Premises or the Property or any act or
omission of Tenant or Tenant's Representatives or Visitors, to the extent (if
any) not covered by the property insurance that Landlord is required to maintain
hereunder. Landlord shall be under no obligation to inspect the Premises.
Tenant shall promptly report in writing to Landlord any defective condition
known to Tenant which Landlord is required to repair. As a material part of the
consideration for this Lease, Tenant hereby waives any benefits of any
applicable existing or future Law, including the provisions of California Civil
Code Sections 1932(1 ), 1941 and 1942, that allows a tenant to make repairs at
its landlord's expense.
7.3 Landlord hereby reserves the right, at any time and from time to time,
without liability to Tenant, and without constituting an eviction, constructive
or otherwise, or entitling
12.
Tenant to any abatement of rent or to terminate this Lease or otherwise
releasing Tenant from any of Tenant's obligations under this Lease:
(a) To make alterations, additions, repairs, improvements to or in or
to decrease the size of area of, all or any part of the Building, the fixtures
and equipment therein, and the Building Systems;
(b) To change the Building's name or street address;
(c) To install and maintain any and all signs on the exterior and
interior of the
Building;
(d) To reduce, increase, enclose or otherwise change at any time and
from time to time the size, number, location, lay-out and nature of the common
areas (including the Parking Facility) and other tenancies and premises in the
Property and to create additional rentable areas through use or enclosure of
common areas; and
(e) If any governmental authority promulgates or revises any Law or
imposes mandatory or voluntary controls or guidelines on Landlord or the
Property relating to the use or conservation of energy or utilities or the
reduction of automobile or other emissions or reduction or management of traffic
or parking on the Property (collectively "CONTROLS"), to comply with such
Controls, whether mandatory or voluntary, or make any alterations to the
Property related thereto.
In exercising its rights under this Section 7.3, Landlord will use reasonable
efforts to minimize any interruption to or disruption of Tenant's use of the
Premises.
8. TENANT'S TAXES. "TENANT'S TAXES" shall mean (a) all taxes, assessments,
license fees and other governmental charges or impositions levied or assessed
against or with respect to Tenant's personal property or Trade Fixtures in the
Premises, whether any such imposition is levied directly against Tenant or
levied against Landlord or the Property, (b) all rental, excise, sales or
transaction privilege taxes arising out of this Lease (excluding, however, state
and federal personal or corporate income taxes measured by the income of
Landlord from all sources) imposed by any taxing authority upon Landlord or upon
Landlord's receipt of any rent payable by Tenant pursuant to the terms of this
Lease ("RENTAL TAX"), and (c) any increase in Taxes attributable to inclusion of
a value placed on Tenant's personal property, Trade Fixtures or Alterations.
Tenant shall pay any Rental Tax to Landlord in addition to and at the same time
as Base Rent is payable under this Lease, and shall pay all other Tenant's Taxes
before delinquency (and, at Landlord's request, shall furnish Landlord
satisfactory evidence thereof). If Landlord pays Tenant's Taxes or any portion
thereof, Tenant shall reimburse Landlord upon demand for the amount of such
payment, together with interest at the Interest Rate from the date of Landlord's
payment to the date of Tenant's reimbursement.
9. UTILITIES AND SERVICES.
9.1 DESCRIPTION OF SERVICES. Landlord shall furnish to the Premises:
reasonable amounts of heat, ventilation-and air-conditioning during the Business
Hours specified in the
13.
Basic Lease Information ("BUSINESS HOURS") on weekdays except public holidays
("BUSINESS DAYS"); reasonable amounts of electricity and water; and janitorial
services five days a week (except public holidays). Landlord shall also provide
the Building with normal fluorescent tube replacement, window washing, elevator
service (24 hours a day, subject to Landlord's security requirements), and
common area toilet room supplies. Any additional utilities or services that
Landlord may agree to provide (including lamp or tube replacement for other than
Building Standard lighting fixtures) shall be at Tenant's sole expense.
9.2 PAYMENT FOR ADDITIONAL UTILITIES AND SERVICES.
(a) Upon request by Tenant in accordance with the procedures
reasonably established by Landlord from time to time for furnishing HVAC service
at times other than Business Hours on Business Days, Landlord shall furnish such
service to Tenant and Tenant shall pay for such services on an hourly basis at
the then prevailing rate established for the Building by Landlord, which shall
not exceed Landlord's actual costs therefor (including without limitation
electrical costs, depreciation and overtime compensation). Landlord's current
charge for after-hours HVAC is $30 per hour, which includes all of the foregoing
costs.
(b) If the temperature otherwise maintained in any portion of the
Premises by the HVAC systems of the Building is affected as a result of (i) any
lights, machines or equipment used by Tenant in the Premises, or (ii) the
occupancy of the Premises by more than one person per 150 square feet of
rentable area, then Landlord shall have the right to install any machinery or
equipment reasonably necessary to restore the temperature, including
modifications to the standard air-conditioning equipment. The cost of any such
equipment and modifications, including the cost of installation and any
additional cost of operation and maintenance of the same, shall be paid by
Tenant to Landlord upon demand.
(c) If Tenant's usage of electricity, water or any other utility
service exceeds the use of such utility Landlord reasonably determines to be
typical, normal and customary. for the Building, Landlord may determine the
amount of such excess use by any reasonable means (including the installation at
Landlord's request but at Tenant's expense of a separate meter or other
measuring device) and charge Tenant for the cost of such excess usage. In
addition, Landlord may impose a reasonable charge for the use of any additional
or unusual janitorial services required by Tenant because of any unusual Tenant
Improvements or Alterations, the carelessness of Tenant or the nature of
Tenant's business (including hours of operation).
9.3 INTERRUPTION OF SERVICES. In the event of an interruption in, or
failure or inability to provide any of the services or utilities described in
Section 9.1 - "Description of Services" (a "SERVICE FAILURE"), such Service
Failure shall not, regardless of its duration, constitute an eviction of Tenant,
constructive or otherwise, or impose upon Landlord any liability whatsoever,
including, but not limited to, liability for consequential damages or loss of
business by Tenant or, except as provided herein, entitle Tenant to an abatement
of rent or to terminate this Lease.
(a) If any Service Failure not caused by Tenant or its
Representatives and caused by an occurrence on the Property prevents Tenant from
reasonably using a material portion of the Premises and Tenant in fact ceases to
use such portion of the Premises, Tenant shall be entitled to an abatement of
Base Rent and Additional Rent with respect to the portion of
14.
the Premises that Tenant is prevented from using by reason of such Service
Failure in the following circumstances: (i) if Landlord fails to commence
reasonable efforts to remedy the Service Failure within three (3) Business Days
following the occurrence of the Service Failure, and such failure has persisted
and continuously prevented Tenant from using a material portion of the Premises
during that period, the abatement of rent shall commence on the fourth Business
Day following the Service Failure and continue until Tenant is no longer so
prevented from. using such portion of the Premises; and (ii) if the Service
Failure in all events is not remedied within twenty (20) days following the
occurrence of the Service Failure and Tenant in fact does not use such portion
of the Premises for an uninterrupted period of twenty (20) days or more by
reason of such Service Failure, the abatement of rent shall commence no later
than the twenty-first day following the occurrence of the Service Failure and
continue until Tenant is no longer so prevented from using such portion of the
Premises.
(b) If a Service Failure is caused by Tenant or its Representatives,
Landlord shall nonetheless remedy the Service Failure, at the expense of Tenant,
pursuant to Landlord's maintenance and repair obligations under Section 7 -
"Maintenance and Repair" or Section 12.1 -"Landlord's Duty to Repair," as the
case may be, but Tenant shall not be entitled to an abatement of rent or to
terminate this Lease as a result of any such Service Failure.
(c) Notwithstanding Tenant's entitlement to rent abatement under the
preceding provisions, Tenant shall continue to pay Tenant's then current rent
until such time as Landlord and Tenant agree on the amount of the rent
abatement. If Landlord and Tenant are unable to agree on the amount of such
abatement within ten (10) Business Days of the date they commence negotiations
regarding the abatement, then either party may submit the matter to binding
arbitration pursuant to Sections 1280 et seq. of the California Code of Civil
Procedure.
(d) In addition to the foregoing provisions, if there is a Service
Failure not caused by Tenant or its Representatives and caused by an occurrence
on the Property and such Service Failure prevents Tenant from conducting its
business in the Premises in the manner in which Tenant intends to conduct such
business, and (i) Landlord fails to commence reasonable efforts to remedy the
Service Failure within ninety (90) days following the occurrence of the Service
Failure, or (ii) the Service Failure in all events is not remedied within one
(1) year following its occurrence and Tenant in fact does not conduct any
business in the Premises for an uninterrupted period of one (1) year or more,
Tenant shall have the right to terminate this Lease by written notice delivered
to Landlord within ten (10) Business Days following the event described in
clauses (i) or (ii) above giving rise to the right to terminate.
(e) Where the cause of a Service Failure is within the control of a
public utility or other public or quasi-public entity outside Landlord's
control, notification to such utility or entity of the Service Failure and
request to remedy the failure shall constitute "reasonable efforts" by Landlord
to remedy the Service Failure.
(f) Tenant hereby waives the provisions of California Civil Code
Section 1932(1) or any other applicable existing or future law, ordinance or
governmental regulation permitting the termination of this Lease due to such
interruption, failure or inability.
10. EXCULPATION AND INDEMNIFICATION.
15.
10.1 LANDLORD'S INDEMNIFICATION OF TENANT. Landlord shall indemnify,
protect, defend and hold Tenant harmless from and against any claims, actions,
liabilities, damages, costs or expenses, including reasonable attorneys' fees
and costs incurred in defending against the same ("CLAIMS") asserted by any
third party against Tenant for loss, injury or damage, to the extent such loss,
injury or damage is caused by the willful misconduct or negligent acts or
omissions of Landlord or its authorized representatives.
10.2 TENANT'S INDEMNIFICATION OF LANDLORD. Tenant shall indemnify,
protect, defend and hold Landlord and Landlord's authorized representatives
harmless from and against Claims arising from (a) the acts or omissions of
Tenant or Tenant's Representatives or Visitors in or about the Property, or (b)
any construction or other work undertaken by Tenant on the Premises (including
any design defects), or (c) any breach or default under this Lease by Tenant, or
(d) any loss, injury or damage, howsoever and by whomsoever caused, to any
person or property, occurring in or about the Premises during the Term,
excepting only Claims described in this clause (d) to the extent they are caused
by the willful misconduct or negligent acts or omissions of Landlord or its
authorized representatives.
10.3 DAMAGE TO TENANT AND TENANT'S PROPERTY. Landlord shall not be liable
to Tenant for any loss, injury or other damage to Tenant or to Tenant's property
in or about the Premises or the Property from any cause (including defects in
the Property, or in any equipment in the Property; fire, explosion or other
casualty; bursting, rupture, leakage or overflow of any plumbing or other pipes
or lines, sprinklers, tanks, drains, drinking fountains or washstands in, above,
or about the Premises or the Property; or acts of other tenants in the Property)
unless such loss, injury or other damage is caused by the gross negligence,
willful misconduct or breach of this Lease by Landlord or Landlord's authorized
representatives and is covered by any insurance carried or required to be
carried by Landlord hereunder. Tenant hereby waives all claims against Landlord
for any such loss, injury or damage and the cost and expense of defending
against claims relating thereto, including any loss, injury or damage caused by
Landlord's negligence (active or passive) or willful misconduct.
Notwithstanding any other provision of this Lease to the contrary, in no event
shall Landlord be liable to Tenant for any punitive or consequential damages or
damages for loss of business by Tenant.
10.4 SURVIVAL. The obligations of the parties under this Section 10 shall
survive the expiration or termination of this Lease.
11. INSURANCE.
11.1 TENANT' S INSURANCE.
(a) LIABILITY INSURANCE. Tenant shall maintain in full force
throughout the Term, commercial general liability insurance providing coverage
on an occurrence form basis with limits of not less than Two Million Dollars
($2,000,000.00) each occurrence for bodily injury and property damage combined,
Two Million Dollars ($2,000,000.00) annual general aggregate, and Two Million
Dollars ($2,000,000.00) products and completed operations annual aggregate.
Tenant's liability insurance policy or policies shall: (i) include premises and
operations liability coverage, products and completed operations liability
coverage, broad form property damage coverage including completed operations,
blanket contractual liability coverage
16.
including, to the maximum extent possible, coverage for the indemnification
obligations of Tenant under this Lease, and personal and advertising injury
coverage; (ii) provide that the insurance company has the duty to defend all
insureds under the policy; (iii) provide that defense costs are paid in addition
to and do not deplete any of the policy limits; (iv) cover liabilities arising
out of or incurred in connection with Tenant's use or occupancy of the Premises
or the Property; (v) extend coverage to cover liability for the actions of
Tenant's Representatives and Visitors; and (iv) designate separate limits for
the Property. Each policy of liability insurance required by this Section
shall: (i) contain a cross liability endorsement or separation of insureds
clause; (ii) provide that any waiver of subrogation rights or release prior to a
loss does not void coverage; (iii) provide that it is primary, to and not
contributing with, any policy of insurance carried by Landlord covering the same
loss; (iv) provide that any failure to comply with the reporting provisions
shall not affect coverage provided to Landlord, its partners, property managers
and Mortgagees; and (v) name Landlord, its partners, the Property Manager
identified in the Basic Lease Information (the "PROPERTY MANAGER"), and such
other parties in interest as Landlord may from time to time reasonably designate
to Tenant in writing, as additional insureds. Such additional insureds shall be
provided at least the same extent of coverage as is provided to Tenant under
such policies. All endorsements effecting such additional insured status shall
be at least as broad as additional insured endorsement form number CG 20 11 11
85 promulgated by the Insurance Services Office.
(b) PROPERTY INSURANCE. Tenant shall at all times maintain in effect
with respect to any Alterations and Tenant's Trade Fixtures and personal
property, commercial property insurance providing coverage, on an "all risk" or
"special form" basis, in an amount equal to at least 90% of the full replacement
cost of the covered property. Tenant may carry such insurance under a blanket
policy, provided that such policy provides coverage equivalent to a separate
policy. During the Term, the proceeds from any such policies of insurance shall
be used for the repair or replacement of the Alterations, Trade Fixtures and
personal property so insured. Landlord shall be provided coverage under such
insurance to the extent of its insurable interest and, if requested by Landlord,
both Landlord and Tenant shall sign all documents reasonably necessary or proper
in connection with the settlement of any claim or loss under such insurance.
Landlord will have no obligation to carry insurance on any Alterations or on
Tenant's Trade Fixtures or personal property.
(c) REQUIREMENTS FOR ALL POLICIES. Each policy of insurance required
under this Section 11.1 shall: (i) be in a form, and written by an insurer,
reasonably acceptable to Landlord, (ii) be maintained at Tenant's sole cost and
expense, and (iii) require at least thirty (30) days' written notice to Landlord
prior to any cancellation, nonrenewal or modification of insurance coverage.
Insurance companies issuing such policies shall have rating classifications of
"A" or better and financial size category ratings of "VII" or better according
to the latest edition of the A.M. Best Key Rating Guide. All insurance
companies issuing such policies shall be admitted careers licensed to do
business in the state where the Property is located. Any deductible amount
under such insurance shall not exceed $5,000. Tenant shall provide to Landlord,
upon request, evidence that the insurance required to be caused by Tenant
pursuant to this Section, including any endorsement effecting the additional
insured status, is in full force and effect and that premiums therefor have been
paid.
17.
(d) UPDATING COVERAGE. Tenant shall increase the amounts of
insurance as required by any Mortgagee, and, not more frequently than once every
three (3) years, as recommended by Landlord's insurance broker, if, in the
reasonable opinion of either of them, the amount of insurance then required
under this Lease is not adequate. Any limits set forth in this Lease on the
amount or type of coverage required by Tenant's insurance shall not limit the
liability of Tenant under this Lease.
(e) CERTIFICATES OF INSURANCE. Prior to occupancy of the Premises by
Tenant, and not less than thirty (30) days prior to expiration of any policy
thereafter, Tenant shall furnish to Landlord a certificate of insurance
reflecting that the insurance required by this Section is in force, accompanied
by an endorsement showing the required additional insureds satisfactory to
Landlord in substance and form. Notwithstanding the requirements of this
paragraph, Tenant shall at Landlord's request provide to Landlord a certified
copy of each insurance policy required to be in force at any time pursuant to
the requirements of this Lease or its Exhibits.
11.2 LANDLORD'S INSURANCE. During the Term, to the extent such coverages
are available at a commercially reasonable cost, Landlord shall maintain in
effect insurance on the Building with responsible insurers, on an "all risk" or
"special form" basis, insuring the Building and the Tenant Improvements in an
mount equal to at least 90% of the replacement cost thereof, excluding land,
foundations, footings and underground installations. Landlord may, but shall
not be obligated to, carry insurance against additional perils and/or in greater
amounts.
11.3 MUTUAL WAIVER OF RIGHT OF RECOVERY & WAIVER OF SUBROGATION. Landlord
and Tenant each hereby waive any right of recovery against each other and the
partners, managers, members, shareholders, officers, directors and authorized
representatives of each other for any loss or damage that is covered by any
policy of property insurance maintained by either party. (or required by this
Lease to be maintained) with respect to the Premises or the Property or any
operation therein, regardless of cause, including negligence (active or passive)
of the party benefiting from the waiver. If any such policy of insurance
relating to this Lease or to the Premises or the Property does not permit the
foregoing waiver or if the coverage under any such policy would be invalidated
as a result of such waiver, the party maintaining such policy shall obtain from
the insurer under such policy a waiver of all right of recovery by way of
subrogation against either party in connection with any claim, loss or damage
covered by such policy.
12. DAMAGE OR DESTRUCTION.
12.1 LANDLORD'S DUTY TO REPAIR.
(a) If all or a substantial part of the Premises are rendered
untenantable or inaccessible by damage to all or any part of the Property from
fire or other casualty then, unless either party is entitled to and elects to
terminate this Lease pursuant to Sections 12.2 - LANDLORD'S RIGHT TO TERMINATE
and 12.3 - TENANT'S RIGHT TO TERMINATE, Landlord shall, at its expense, use
reasonable efforts to repair and restore the Premises and/or the Property, as
the case may be, to substantially their former condition to the extent permitted
by then applicable Laws; PROVIDED, HOWEVER, that in no event shall Landlord have
any obligation for repair or restoration beyond the extent of insurance proceeds
received by Landlord for such repair or restoration, or for any of Tenant's
personal property, Trade Fixtures or Alterations.
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(b) If Landlord is required or elects to repair damage to the
Premises and/or the Property, this Lease shall continue in effect, but Tenant's
Base Rent and Additional Rent shall be abated with regard to any portion of the
Premises that Tenant is prevented from using by reason of such damage or its
repair from the date of the casualty until substantial completion of Landlord's
repair of the affected portion of the Premises as required under this Lease. In
no event shall Landlord be liable to Tenant by reason of any injury to or
interference with Tenant's business or property arising from fire or other
casualty or by reason of any repairs to any part of the Property necessitated by
such casualty. Notwithstanding Tenant's entitlement to rent abatement under the
preceding provisions, Tenant shall continue to pay Tenant's then current rent
until such time as Landlord and Tenant agree on the amount of the rent
abatement. Landlord and Tenant agree to negotiate in good faith with respect to
the amount of such abatement; and if Landlord and Tenant are unable to agree on
the amount of such abatement within ten (10) Business Days of the date they
commence negotiations regarding the abatement, then either party may submit the
matter to binding arbitration pursuant to Sections 1280 et seq. of the
California Code of Civil Procedure.
12.2 LANDLORD'S RIGHT TO TERMINATE. Landlord may elect to terminate this
Lease following damage by fire or other casualty under the following
circumstances:
(a) If, in the reasonable judgment of Landlord, the Premises and the
Property cannot be substantially repaired and restored under applicable Laws
within one (1) year from the date of the casualty;
(b) If, in the reasonable judgment of Landlord, adequate proceeds are
not, for any reason (other than Landlord's failure to maintain the insurance
required hereunder), made available to Landlord from Landlord's insurance
policies (and/or from Landlord's funds made available for such purpose, at
Landlord's sole option) to make the required repairs;
(c) If the Building is damaged or destroyed to the extent that, in
the reasonable judgment of Landlord, the cost to repair and restore the Building
would exceed twenty-five percent (25%) of the full replacement cost of the
Building, whether or not the Premises are at all damaged or destroyed; or
(d) If the fire or other casualty, occurs during the last year of the
Term.
If any of the circumstances described in subparagraphs (a), (b), (c) or (d) of
this Section 12.2 occur or arise, Landlord shall give Tenant notice within one
hundred and twenty (120) days after the date of the casualty, specifying whether
Landlord elects to terminate this Lease as provided above and, if not,
Landlord's estimate of the time required to complete Landlord's repair
obligations under this Lease.
12.3 TENANT'S RIGHT TO TERMINATE. Landlord shall give notice to Tenant of
Landlord's election to rebuild or not to rebuild the Premises within one hundred
twenty (120) days after the date of the casualty, and such notice shall specify
Landlord's architect's or engineer's estimate as to the time required to rebuild
or restore the Premises. If all or a substantial part of the Premises are
rendered untenantable or inaccessible by damage to all or any part of the
Property from fire or other casualty, and Landlord does not elect to terminate
as
19.
provided above, then Tenant may elect to terminate this Lease if Landlord's
estimate of the time required to complete Landlord's repair obligations under
this Lease is greater than one (1) year, in which event Tenant may elect to
terminate this Lease by giving Landlord notice of such election to terminate
within thirty (30) days after Landlord's notice to Tenant pursuant to this
Section 12. If Landlord fails to restore the Premises (including reasonable
means of access thereto) by the later of one (I) year after the casualty or
sixty (60) days after the estimated date for completion of Landlord's repair,
Tenant, at any time thereafter until such rebuilding is completed, may terminate
this Lease by delivering written notice to Landlord of such election, in which
event this Lease will terminate as of the date of the giving of such notice.
12.4 WAIVER. Landlord and Tenant each hereby waive the provisions of
California Civil Code Sections 1932(2), 1933(4) and any other applicable
existing or future Law permitting the termination of a lease agreement in the
event of damage or destruction under any circumstances other than as provided in
Sections 12.2 - LANDLORD'S RIGHT TO TERMINATE and 12.3 - TENANT'S RIGHT TO
TERMINATE.
13. CONDEMNATION.
13.1 DEFINITIONS.
(a) "AWARD" shall mean all compensation, sums, or anything of value
awarded, paid or received on a total or partial Condemnation.
(b) "CONDEMNATION" shall mean (i) a permanent taking (or a temporary
taking for a period extending beyond the end of the Term) pursuant to the
exercise of the power of condemnation or eminent domain by any public or
quasi-public authority, private corporation or individual having such power
("CONDEMNOR"), whether by legal proceedings or otherwise, or (ii) a voluntary
sale or transfer by Landlord to any such authority, either under threat of
condemnation or while legal proceedings for condemnation are pending.
(c) "DATE OF CONDEMNATION" shall mean the earlier of the date that
title to the property taken is vested in the Condemnor or the date the Condemnor
has the right to possession of the property being condemned.
13.2 EFFECT ON LEASE.
(a) If the Premises are totally taken by Condemnation, this Lease
shall terminate as of the Date of Condemnation. If a portion but not all of the
Premises is taken by Condemnation, this Lease shall remain in effect; PROVIDED,
HOWEVER, that if the portion of the Premises remaining after the Condemnation
will be unsuitable for Tenant's continued use, then upon notice to Landlord
within thirty (30) days after Landlord notifies Tenant of the Condemnation,
Tenant may terminate this Lease effective as of the Date of Condemnation.
(b) If twenty-five percent (25%) or more of the Project or of the
parcel(s) of land on which the Building is situated or of the Parking Facility
or of the floor area in the Building is taken by Condemnation, or if as a result
of any Condemnation the Building is no longer reasonably suitable for use as an
office building, whether or not any portion of the
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Premises is taken, Landlord may elect to terminate this Lease, effective as of
the Date of Condemnation, by notice to Tenant within thirty (30) days after the
Date of Condemnation.
(c) If all or a portion of the Premises is temporarily taken by a
Condemnor for a period not extending beyond the end of the Term, this Lease
shall remain in full force and effect.
13.3 RESTORATION. If this Lease is not terminated as provided in Section
13.2 - EFFECT ON LEASE, Landlord, at its expense, shall diligently proceed to
repair and restore the Premises to substantially its former condition (to the
extent permitted by then applicable Laws) and/or repair and restore the Building
to an architecturally complete office building; PROVIDED, HOWEVER, that
Landlord's obligations to so repair and restore shall be limited to the amount
of any Award received by Landlord and not required to be paid to any Mortgagee
(as defined in Section 20.2 below). In no event shall Landlord have any
obligation to repair or replace any improvements in the Premises beyond the
amount of any Award received by Landlord for such repair or to repair or replace
any of Tenant's personal property, Trade Fixtures, or Alterations.
13.4 ABATEMENT AND REDUCTION OF RENT. If any portion of the Premises is
taken in a Condemnation or is rendered permanently untenantable by repairs
necessitated by the Condemnation, and this Lease is not terminated, the Base
Rent and Additional Rent payable under this Lease shall be proportionally
reduced as of the Date of Condemnation based upon the percentage of rentable
square feet in the Premises so taken or rendered permanently untenantable. In
addition, if this Lease remains in effect following a Condemnation and Landlord
proceeds to repair and restore the Premises, the Base Rent and Additional Rent
payable under this Lease shall be abated during the period of such repair or
restoration to the extent such repairs prevent Tenant's use of the Premises.
13.5 AWARDS. Any Award made shall be paid to Landlord, and Tenant hereby
assigns to Landlord, and waives all interest in or claim to, any such Award,
including any claim for the value of the unexpired Term; PROVIDED, HOWEVER, that
Tenant shall be entitled to receive, or to prosecute a separate claim for, an
Award for a temporary taking of the Premises or a portion thereof by a Condemnor
where this Lease is not terminated (to the extent such Award relates to the
unexpired Term), or an Award or portion thereof separately designated for
relocation expenses or the interruption of or damage to Tenant's business or as
compensation for Tenant's personal property, Trade Fixtures or Alterations.
13.6 WAIVER. Landlord and Tenant each hereby waive the provisions of
California Code of Civil Procedure Section 1265.130 and any other applicable
existing or future Law allowing either party to petition for a termination of
this Lease upon a partial taking of the Premises and/or the Property.
14. ASSIGNMENT AND SUBLETTING.
14.1 LANDLORD'S CONSENT REQUIRED. Except in connection with a permitted
transfer to an "AFFILIATE" (as defined in Section 14.9 - TRANSFER TO AFFILIATE,
below) Tenant shall not assign this Lease or any interest therein, or sublet or
license or permit the use or occupancy of the Premises or any part thereof by or
for the benefit of anyone other than Tenant, or in any other
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manner transfer all or any part of Tenant's interest under this Lease (each and
all a "TRANSFER"), without the prior written consent of Landlord, which consent
(subject to the other provisions of this Section 14) shall not be unreasonably
withheld. If Tenant is a business entity, any direct or indirect transfer of
fifty percent (50%) or more of the ownership interest of the entity (whether in
a single transaction or in the aggregate through more than one transaction)
shall be deemed a Transfer. Notwithstanding any provision in this Lease to the
contrary, Tenant shall not mortgage, pledge, hypothecate or otherwise encumber
this Lease or all or any part of Tenant's interest under this Lease.
14.2 REASONABLE CONSENT.
(a) Prior to any proposed Transfer, Tenant shall submit in writing to
Landlord (i) the name and legal composition of the proposed assignee, subtenant,
user or other transferee (each a "PROPOSED TRANSFEREE"); (ii) the nature of the
business proposed to be carried on in the Premises; (iii) a copy of the proposed
assignment, sublease or other agreement governing the proposed Transfer; and
(except in the case of a Proposed Transferee that is an Affiliate) (iv) a
current balance sheet, income statements for the last two years and such other
reasonable financial and other information concerning the Proposed Transferee as
Landlord may request. Within fifteen (15) Business Days after Landlord receives
all such information it shall notify Tenant whether it approves or disapproves
such Transfer or if it elects to proceed under Section 14.7 -LANDLORD'S RIGHT TO
SPACE.
(b) Tenant acknowledges and agrees that, among other circumstances
for which Landlord could reasonably withhold consent to a proposed Transfer, it
shall be reasonable for Landlord to withhold consent where (i) the Proposed
Transferee does not intend itself to occupy the entire portion of the Premises
assigned or sublet, (ii) Landlord reasonably disapproves of the Proposed
Transferee's business operating ability or history, reputation or
creditworthiness or the character of the business to be conducted by the
Proposed Transferee at the Premises, (iii) the Proposed Transferee is a
governmental agency or unit, or, if Landlord has space available to accommodate
such Proposed Transferee, an existing tenant in the Project, (iv) the proposed
Transfer would violate any "exclusive" rights of any tenants in the Project, (v)
Landlord or Landlord's agent has shown space in the Building to the Proposed
Transferee or responded to any inquiries from the Proposed Transferee or the
Proposed Transferee's agent concerning availability of space in the Building, at
any time within the preceding nine months, if Landlord has space available to
accommodate such Proposed Transferee, or (vi) Landlord otherwise reasonably
determines that the proposed Transfer would have the effect of decreasing the
value of the Building or increasing the expenses associated with operating,
maintaining and repairing the Property. In no event may Tenant publicly
advertise all or any portion of the Premises for assignment or sublease at a
rental less than that then sought by Landlord for a direct lease (non-sublease)
of comparable space in the Project.
14.3 EXCESS CONSIDERATION. If Landlord consents to the Transfer, Tenant
shall pay to Landlord as Additional Rent, within ten (10) days after receipt by
Tenant, two-thirds (2/3) of all "Sublease Profits" (as defined below).
"Sublease Profits" shall mean any consideration paid by any transferee (the
"TRANSFEREE") for the Transfer, including, in the case of a sublease, the excess
of the rent and other consideration payable by the subtenant over the amount of
Base Rent and Additional Rent payable hereunder applicable to the subleased
space, less any and all direct,
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out-of-pocket expenses and cash concessions, including costs for necessary
Alterations, reasonable brokerage commissions and reasonable attorneys' fees and
costs, paid by Tenant to procure the assignee or subtenant, all of which costs
shall be amortized at an annual interest rate of 10% over the term of the
assignment or sublease.
14.4 NO RELEASE OF TENANT. No consent by Landlord to any Transfer shall
relieve Tenant of any obligation to be performed by Tenant under this Lease,
whether occurring before or after such consent, assignment, subletting or other
Transfer. Each Transferee shall be jointly and severally liable with Tenant
(and Tenant shall be jointly and severally liable with each Transferee) for the
payment of rent (or, in the case of a sublease, rent in the amount set forth in
the sublease) and for the performance of all other terms and provisions of this
Lease. The consent by Landlord to any Transfer shall not relieve Tenant or any
such Transferee from the obligation to obtain Landlord's express prior written
consent to any subsequent Transfer by Tenant or any Transferee. The acceptance
of rent by Landlord from any other person (whether or not such person is an
occupant of the Premises) shall not be deemed to be a waiver by Landlord of any
provision of this Lease or to be a consent to any Transfer.
14.5 EXPENSES AND ATTORNEYS' FEES. Tenant shall pay to Landlord on demand
all reasonable costs and expenses (including reasonable attorneys' fees, not to
exceed $1,000.00) incurred by Landlord in connection with reviewing or
consenting to any proposed Transfer (including any request for consent to, or
any waiver of Landlord's rights in connection with, any security interest in any
of Tenant's property at the Premises).
14.6 EFFECTIVENESS OF TRANSFER. Prior to the date on which any permitted
Transfer (whether or not requiring Landlord's consent) becomes effective, Tenant
shall deliver to Landlord a counterpart of the fully executed Transfer document
and Landlord's standard form of Consent to Assignment Or Consent to Sublease
executed by Tenant and the Transferee in which each of Tenant and the Transferee
confirms its obligations pursuant to this Lease. Failure or refusal of a
Transferee to execute any such instrument shall not release or discharge the
Transferee from liability as provided herein. The voluntary, involuntary or
other surrender of this Lease by Tenant, or a mutual cancellation by Landlord
and Tenant, shall not work a merger, and any such surrender or cancellation
shall, at the option of Landlord, either terminate all or any existing subleases
or operate as an assignment to Landlord of any or all of such subleases.
14.7 LANDLORD'S RIGHT TO SPACE.
(a) Notwithstanding any of the above provisions of this Section to
the contrary, except in connection with a Transfer to an Affiliate, if Tenant
notifies Landlord that it desires to enter into a Transfer, Landlord, in lieu of
consenting to such Transfer, may elect (x) in the case of an assignment or a
sublease of the entire Premises, to terminate this Lease, or (y) in the case of
a sublease of less than the entire Premises for the remainder of the Term, to
terminate this Lease as it relates to the space proposed to be subleased by
Tenant. In such event, this Lease will terminate (or the space proposed to be
subleased will be removed from the Premises subject to this Lease and the Base
Rent and Tenant's Share under this Lease shall be proportionately reduced) on
the date the Transfer was proposed to be effective, and Landlord may lease such
space to any party, including the prospective Transferee identified by Tenant.
23.
(b) Notwithstanding the foregoing provisions of Section 14.3 and
14.7(a) to the contrary, Tenant shall have the right to sublease up to 14,000
rentable square feet of the Premises for up to twenty-four (24) months, and
Landlord's right to recapture under Section 14.7(a) shall not apply to such a
sublease; however, Tenant shall pay to Landlord as Additional Rent, within ten
(10) days after receipt by Tenant, one hundred percent (100%) of all Sublease
Profits (as defined in Section 14.3). Any extension or renewal of such a
sublease shall be subject to Sections 14.3 and 14.7(a).
14.8 ASSIGNMENT OF SUBLEASE RENTS. Tenant hereby absolutely and
irrevocably assigns to Landlord any and all rights to receive rent and other
consideration from any sublease and agrees that Landlord, as assignee or as
attorney-in-fact for Tenant for purposes hereof, or a receiver for Tenant
appointed on Landlord's application may (but shall not be obligated to) collect
such rents and other consideration and apply the same toward Tenant's
obligations to Landlord under this Lease; PROVIDED, HOWEVER, that Landlord
grants to Tenant at all times prior to occurrence of any breach or default by
Tenant a revocable license to collect such rents (which license shall
automatically and without notice be and be deemed to have been revoked and
terminated immediately upon any Event of Default).
14.9 TRANSFER TO AFFILIATE. Notwithstanding the foregoing provisions of
this Section 14 to the contrary, Tenant may assign this Lease or sublet the
Premises or any portion thereof, without Landlord's consent, to any corporation
or other entity which controls, is controlled by, or is under common control
with Tenant, or to any corporation or other entity resulting from a merger or
consolidation with Tenant, or to any person or entity which acquires
substantially all the assets of Tenant as a going concern (collectively, an
"AFFILIATE"), provided that the Affiliate assumes in writing all of Tenant's
obligations under this Lease.
14.10 PUBLIC OFFERING OR FINANCING. Notwithstanding any other
provision contained herein to the contrary, (i) Tenant shall be permitted to
offer shares of Tenant's stock at a public offering on any public stock exchange
without Landlord's consent; and any such sale of shares of Tenant's stock at a
public offering on any public stock exchange shall not constitute a "Transfer"
for the purposes of this Section 14; and (ii) Tenant shall be permitted to sell
or transfer share of Tenant's stock in connection with any BONA FIDE financing
or capitalization for the benefit of Tenant; PROVIDED, HOWEVER, in each case
Tenant shall provide to Landlord the notice required under Section 14.2(a)(i)
above.
15. DEFAULT AND REMEDIES.
15.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an "EVENT OF DEFAULT" by Tenant:
(a) Tenant fails to make any payment of rent when due, or any amount
required to replenish the security deposit as provided in Section 4 above, if
payment in full is not received by Landlord within three (3) days after written
notice that it is due.
(b) Tenant abandons the Premises and fails to pay rent when due and
to collect mail and packages and otherwise maintain the Premises in a neat and
orderly condition and as otherwise required under this Lease.
24.
(c) Tenant fails timely to deliver any subordination document,
estoppel certificate or financial statement requested by Landlord within the
applicable time period specified in Sections 20 - ENCUMBRANCES - and 21 -
ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS - below.
(d) Tenant violates the restrictions on Transfer set forth in Section
14 -ASSIGNMENT AND SUBLETTING.
(e) Tenant ceases doing business as a going concern; makes an
assignment for the benefit of creditors; is adjudicated an insolvent, files a
petition (or files an answer admitting the material allegations of a petition)
seeking relief under any state or federal bankruptcy or other statute, law or
regulation affecting creditors' rights; all or substantially all of Tenant's
assets are subject to judicial seizure or attachment and are not released within
30 days, or Tenant consents to or acquiesces in the appointment of a trustee,
receiver or liquidator for Tenant or for all or any substantial part of Tenant's
assets.
(f) Tenant fails, within ninety (90) days after the commencement of
any proceedings against Tenant seeking relief under any state or federal
bankruptcy or other statute, law or regulation affecting creditors' rights, to
have such proceedings dismissed, or Tenant fails, within ninety (90) days after
an appointment, without Tenant's consent or acquiescence, of any trustee,
receiver or liquidator for Tenant or for all or any substantial part of Tenant's
assets, to have such appointment vacated.
(g) Tenant fails to perform or comply with any provision of this
Lease other than those described in (a) through (f) above, and (i) Tenant does
not fully cure such failure within fifteen (15) days after notice to Tenant, or
(ii) if such failure does not jeopardize or impair the quiet enjoyment of any
other occupant of the Building or create any threat of release of any Hazardous
Materials, Tenant does not fully cure such failure within thirty (30) days after
notice to Tenant, or (iii) if such failure does not jeopardize or impair the
quiet enjoyment of any other occupant of the Building or create any threat of
release of any Hazardous Materials, and such failure cannot be cured within such
thirty (30)-day period, Tenant fails within such thirty (30)-day period to
commence, and thereafter diligently proceed with, all actions necessary to cure
such failure as soon as reasonably possible but in all events within ninety (90)
days of such notice; PROVIDED, HOWEVER, that if Landlord in Landlord's
reasonable judgment determines that such failure cannot or will not be cured by
Tenant within such ninety (90) days, then such failure shall constitute an Event
of Default immediately upon such notice to Tenant.
15.2 REMEDIES. Upon the occurrence of an Event of Default, Landlord shall
have the following remedies, which shall not be exclusive but shall be
cumulative and shall be in addition to any other remedies now or hereafter
allowed by law:
(a) Landlord may terminate Tenant's right to possession of the
Premises at any time by written notice to Tenant. Tenant expressly acknowledges
that in the absence of such written notice from Landlord, no other act of
Landlord, including re-entry into the Premises, efforts to relet the Premises,
reletting of the Premises for Tenant's account, storage of Tenant's personal
property and Trade Fixtures, acceptance of keys to the Premises from Tenant or
exercise of any other rights and remedies under this Section, shall constitute
an acceptance of
25.
Tenant's surrender of the Premises or constitute a termination of this Lease or
of Tenant's right to possession of the Premises. Upon such termination in
writing of Tenant's right to possession of the Premises, as herein provided,
this Lease shall terminate and Landlord shall be entitled to recover damages
from Tenant as provided in California Civil Code Section 1951.2 and any other
applicable existing or future Law providing for recovery of damages for such
breach, including the worth at the time of award of the amount by which the rent
which would be payable by Tenant hereunder for the remainder of the Term after
the date of the award of damages, including Additional Rent as reasonably
estimated by Landlord, exceeds the amount of such rental loss as Tenant proves
could have been reasonably avoided, discounted at the discount rate published by
the Federal Reserve Bank of San Francisco for member banks at the time of the
award plus one percent (1%).
(b) Landlord shall have the remedy described in California Civil Code
Section 1951.4 (Landlord may continue this Lease in effect after Tenant's breach
and abandonment and recover rent as it becomes due, if Tenant has the right to
sublet or assign, subject only to reasonable limitations).
(c) Landlord may cure the Event of Default at Tenant's expense. If
Landlord pays any sum or incurs any expense in curing the Event of Default,
Tenant shall reimburse Landlord upon demand for the amount of such payment or
expense with interest at the Interest Rate from the date the sum is paid or the
expense is incurred until Landlord is reimbursed by Tenant.
(d) Landlord may remove all Tenant's property from the Premises, and
such property may be stored by Landlord in a public warehouse or elsewhere at
the sole cost and for the account of Tenant. If Landlord does not elect to
store any or all of Tenant's property left in the Premises, Landlord may
consider such property to be abandoned by Tenant, and Landlord may thereupon
dispose of such property in any manner deemed appropriate by Landlord. Any
proceeds realized by Landlord on the disposal of any such property shall be
applied first to offset all expenses of storage and sale, then credited against
Tenant's outstanding obligations to Landlord under this Lease, and any balance
remaining after satisfaction of all obligations of Tenant under this Lease shall
be delivered to Tenant.
16. LATE CHARGE AND INTEREST.
16.1 LATE CHARGE. If any payment of rent is not received by Landlord when
due, Tenant shall pay to Landlord on demand as a late charge an additional
amount equal to four percent (4%) of the overdue payment; PROVIDED, HOWEVER,
that for the first instance of late payment during any 12-month period, not to
exceed three (3) instances of late payment during the Term, no late charge shall
be imposed. A late charge shall not be imposed more than once on any particular
installment not paid when due, but imposition of a late charge on any payment
not made when due does not eliminate or supersede late charges imposed on other
(prior) payments not made when due or preclude imposition of a late charge on
other installments or payments not made when due.
16.2 INTEREST. In addition to the late charges referred to above, which
are intended to defray Landlord's costs resulting from late payments, any
payment from Tenant to Landlord not
26.
paid when due shall at Landlord's option bear interest from the date due until
paid to Landlord by Tenant at the rate of fifteen percent (15%) per annum or the
maximum lawful rate that Landlord may charge to Tenant under applicable laws,
whichever is less (the "INTEREST RATE"). Acceptance of any late charge and/or
interest shall not constitute a waiver of Tenant's default with respect to the
overdue sum or prevent Landlord from exercising any of its other rights and
remedies under this Lease.
17. WAIVER. No provisions of this Lease shall be deemed waived by Landlord
unless such waiver is in a writing signed by Landlord. The waiver by Landlord
of any breach of any provision of this Lease shall not be deemed a waiver of
such provision or of any subsequent breach of the same or any other provision of
this Lease. No delay or omission in the exercise of any right or remedy of
Landlord upon any default by Tenant shall impair such right or remedy or be
construed as a waiver. Landlord's acceptance of any payments of rent due under
this Lease shall not be deemed a waiver of any default by Tenant under this
Lease (including Tenant's recurrent failure to timely pay rent) other than
Tenant's nonpayment of the accepted sums, and no endorsement or statement on any
check or payment or in any letter or document accompanying any check or payment
shall be deemed an accord and satisfaction. Landlord's consent to or approval
of any act by Tenant requiring Landlord's consent or approval shall not be
deemed to waive or render unnecessary Landlord's consent to or approval of any
subsequent act by Tenant.
18. ENTRY, INSPECTION AND CLOSURE. Upon reasonable oral or written notice to
Tenant (and without notice in emergencies), Landlord and its authorized
representatives may enter the Premises at all reasonable times to: (a) determine
whether the Premises are in good condition, (b) determine whether Tenant is
complying with its obligations under this Lease, (c) perform any maintenance or
repair of the Premises or the Building that Landlord has the right or obligation
to perform, (d) install or repair improvements for other tenants where access to
the Premises is required for such installation or repair, (e) serve, post or
keep posted any notices required or allowed under the provisions of this Lease,
(f) show the Premises to prospective brokers, agents, buyers, transferees,
Mortgagees or tenants, or (g) do any other act or thing necessary for the safety
or preservation of the Premises or the Building. When reasonably necessary and
upon 24 hours' notice (except in cases of emergency) Landlord may temporarily
close entrances, doors, corridors, elevators or other facilities in the Building
without liability to Tenant by reason of such closure. Landlord shall conduct
its activities under this Section in a manner that will minimize inconvenience
to Tenant without incurring additional expense to Landlord. In no event shall
Tenant be entitled to an abatement of rent on account of any entry by Landlord
and Landlord shall not be liable in any manner for any inconvenience, loss of
business or other damage to Tenant or other persons arising out of Landlord's
entry on the Premises in accordance with this Section. No action by Landlord
pursuant to this paragraph shall constitute an eviction of Tenant, constructive
or otherwise, entitle Tenant to an abatement of rent or to terminate this Lease
or otherwise release Tenant from any of Tenant's obligations under this Lease.
19. SURRENDER AND HOLDING OVER.
19.1 SURRENDER. Upon the expiration or termination of this Lease, Tenant
shall surrender the Premises and all Tenant Improvements and Alterations to
Landlord broom-clean and in their original condition, except for reasonable wear
and tear, damage from casualty or
27.
condemnation and any changes resulting from approved Alterations; PROVIDED,
HOWEVER, that prior to the expiration or termination of this Lease Tenant shall,
if requested by Landlord, remove all telephone and other cabling installed in
the Building by Tenant and remove from the Premises all Tenant's personal
property and any Trade Fixtures and all Alterations that Landlord has elected to
require Tenant to remove as provided in Section 6.1 - TENANT IMPROVEMENTS &
ALTERATIONS, and repair any damage caused by such removal. If such removal is
not completed before the expiration or termination of the Term, Landlord shall
have the right (but no obligation) to remove the same, and Tenant shall pay
Landlord on demand for all costs of removal and storage thereof and for the
rental value of the Premises for the period from the end of the Term through the
end of the time reasonably required for such removal. Landlord shall also have
the right to retain or dispose of all or any portion of such property if Tenant
does not pay all such costs and retrieve the property within ten (10) days after
notice from Landlord (in which event title to all such property described in
Landlord's notice shall be transferred to and vest in Landlord). Tenant waives
all Claims against Landlord for any damage or loss to Tenant resulting from
Landlord's removal, storage, retention, or disposition of any such property.
Upon expiration or termination of this Lease or of Tenant's possession,
whichever is earliest, Tenant shall surrender all keys to the Premises or any
other part of the Building and shall deliver to Landlord all keys for or make
known to Landlord the combination of locks on all safes, cabinets and vaults
that may be located in the Premises. Tenant's obligations under this Section
shall survive the expiration or termination of this Lease.
19.2 HOLDING OVER. If Tenant (directly or through any Transferee or other
successor-in-interest of Tenant) remains in possession of the Premises after the
expiration or termination of this Lease, Tenant's continued possession shall be
on the basis of a tenancy at the sufferance of Landlord. No act or omission by
Landlord, other than its specific written consent, shall constitute permission
for Tenant to continue in possession of the Premises, and if such consent is
given or declared to have been given by a court judgment, Landlord may terminate
Tenant's holdover tenancy at any time upon seven (7) days written notice. In
such event, Tenant shall continue to comply with or perform all the terms and
obligations of Tenant under this Lease, except that the monthly Base Rent during
Tenant's holding over shall be 150% of the Base Rent payable in the last full
month prior to the termination hereof. Acceptance by Landlord of rent after
such termination shall not constitute a renewal or extension of this Lease; and
nothing contained in this provision shall be deemed to waive Landlord's right of
re-entry or any other right hereunder or at law. Tenant shall indemnify, defend
and hold Landlord harmless from and against all Claims arising or resulting
directly or indirectly from Tenant's failure to timely surrender the Premises,
including (i) any rent payable by or any loss, cost, or damages claimed by any
prospective tenant of the Premises, and (ii) Landlord's damages as a result of
such prospective tenant rescinding or refusing to enter into the prospective
lease of the Premises by reason of such failure to timely surrender the
Premises.
20. ENCUMBRANCES.
20.1 SUBORDINATION. This Lease is expressly made subject and subordinate
to any mortgage, deed of trust, ground lease, underlying lease or like
encumbrance affecting any part of the Property or any interest of Landlord
therein which is now existing or hereafter executed or recorded ("ENCUMBRANCE");
PROVIDED, HOWEVER, that such subordination shall only be effective, as to future
Encumbrances, if the holder of the Encumbrance agrees that this Lease shall
survive
28.
the termination of the Encumbrance by lapse of time, foreclosure or otherwise so
long as Tenant is not in default under this Lease. Provided the conditions of
the preceding sentence are satisfied, Tenant shall execute and deliver to
Landlord, within ten (10) days after written request therefor by Landlord and in
a form reasonably requested by Landlord, any additional documents evidencing the
subordination of this Lease with respect to any such Encumbrance and the
nondisturbance agreement of the holder of any such Encumbrance. If the interest
of Landlord in the Property is transferred pursuant to or in lieu of proceedings
for enforcement of any Encumbrance, Tenant shall immediately and automatically
attorn to the new owner, and this Lease shall continue in full force and effect
as a direct lease between the transferee and Tenant on the terms and conditions
set forth in this Lease. Landlord agrees to use reasonable efforts to obtain a
non-disturbance agreement from the holder of the existing Encumbrance under
which the holder of the Encumbrance shall agree that this Lease shall survive
the termination of the Encumbrance by lapse of time, foreclosure, or otherwise
so long as Tenant is not in default under this Lease beyond any applicable cure
period.
20.2 MORTGAGEE PROTECTION. Tenant agrees to give any holder of any
Encumbrance covering any part of the Property ("MORTGAGEE"), by registered mail,
a copy of any notice of default served upon Landlord, provided that prior to
such notice Tenant has been notified in writing (by way of notice of assignment
of rents and leases, or otherwise) of the address of such Mortgagee. If
Landlord shall have failed to cure such default within thirty (30) days from the
effective date of such notice of default, then the Mortgagee shall have an
additional thirty (30) days within which to cure such default or if such default
cannot be cured within that time, then such additional time as may be necessary
to cure such default (including the time necessary to foreclose or otherwise
terminate its Encumbrance, if necessary to effect such cure), and this Lease
shall not be terminated so long as such remedies are being diligently pursued.
21. ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS.
21.1 ESTOPPEL CERTIFICATES.
(a) Within ten (10) days after written request therefor, Tenant shall
execute and deliver to Landlord, in a form provided by or satisfactory to
Landlord, a certificate stating that this Lease is in full force and effect,
describing any amendments or modifications hereto, acknowledging that this Lease
is subordinate or prior, as the case may be, to any Encumbrance and stating any
other information Landlord may reasonably request, including the Term, the
monthly Base Rent, the date to which Rent has been paid, the amount of any
security, deposit or prepaid rent, whether either party hereto is in default
under the terms of the Lease, and whether Landlord has completed its
construction obligations hereunder (if any). Tenant irrevocably constitutes,
appoints and authorizes Landlord as Tenant's special attorney-in-fact for such
purpose to complete, execute and deliver such certificate if Tenant fails timely
to execute and deliver such certificate as provided above. Any person or entity
purchasing, acquiring an interest in or extending financing with respect to the
Property shall be entitled to rely upon any such certificate. If Tenant falls
to deliver such certificate within ten (10) days after Landlord's second written
request therefor, Tenant shall be liable to Landlord for any damages incurred by
Landlord including any profits or other benefits from any financing of the
Property or any interest therein which are lost or made unavailable as a result,
directly or indirectly, of Tenant's failure or refusal to timely execute or
deliver such estoppel certificate.
29.
(b) Within ten (10) days after written request therefor, Landlord
shall execute and deliver to Tenant, in a form provided by or satisfactory to
Tenant, a certificate stating that this Lease is in full force and effect,
describing any amendments or modifications hereto, acknowledging that this Lease
is subordinate or prior, as the case may be, to any Encumbrance and stating any
other information Tenant may reasonably request, including the Term, the monthly
Base Rent, the date to which Rent has been paid, the amount of any security,
deposit or prepaid rent, and whether either party hereto is in default under the
terms of the Lease.
21.2 FINANCIAL STATEMENTS. Within ten (10) days after written request
therefor, but not more than once a year, Tenant shall deliver to Landlord a copy
of the financial statements (including at least a year end balance sheet and a
statement of profit and loss) of Tenant (and of each guarantor of Tenant's
obligations under this Lease), if any, for each of the three most recently
completed years, prepared in accordance with generally accepted accounting
principles (and, if such is Tenant's normal practice, audited by an independent
certified public accountant), all then available subsequent interim statements,
and such other financial information as may reasonably be requested by Landlord
or required by any Mortgagee.
22. NOTICES. Any notice, demand, request, consent or approval that either party
desires or is required to give to the other party under this Lease shall be in
writing and shall be served personally, delivered by messenger or courier
service, or sent by U.S. certified mail, return receipt requested, postage
prepaid, addressed to the other party at the party's address for notices set
forth in the Basic Lease Information. Any notice required pursuant to any Laws
may be incorporated into, given concurrently with or given separately from any
notice required under this Lease. Notices shall be deemed to have been given
and be effective on the earlier of (a) receipt (or refusal of delivery or
receipt); or (b) one (1) day after acceptance by the independent service for
delivery, if sent by independent messenger or courier service, or three (3) days
after mailing if sent by mail in accordance with this Section. Either party may
change its address for notices hereunder, effective fifteen (15) days after
notice to the other party complying with this Section. If Tenant sublets the
Premises, notices from Landlord shall be effective on the subtenant when given
to Tenant pursuant to this Section.
23. ATTORNEYS' FEES. In the event of any dispute between Landlord and Tenant in
any way related to this Lease, the non-prevailing party shall pay to the
prevailing party all reasonable attorneys' fees and costs and expenses of any
type incurred by the prevailing party in connection with any action or
proceeding (including any appeal and the enforcement of any judgment or award),
whether or not the dispute is litigated or prosecuted to final judgment. The
"prevailing party" shall be determined based upon an assessment of which party's
major arguments or positions taken in the action or proceeding could fairly be
said to have prevailed (whether by compromise, settlement, abandonment by the
other party of its claim or defense, final decision, after any appeals, or
otherwise) over the other party's major arguments or positions on major disputed
issues.
24. QUIET POSSESSION. Subject to Tenant's full and timely performance of all of
Tenant's obligations under this Lease and subject to the terms of this Lease,
including Section 20 - ENCUMBRANCES, Tenant shall have the quiet possession of
the Premises throughout the Term as against any persons or entities lawfully
claiming by, through or under Landlord.
30.
25. SECURITY MEASURES. Landlord may, but shall be under no obligation to,
implement security measures for the Property, such as the registration or search
of all persons entering or leaving the Building, requiring identification for
access to the Building, evacuation of the Building for cause, suspected cause,
or for drill purposes, the issuance of magnetic pass cards or keys for Building
or elevator access and other actions that Landlord deems necessary or
appropriate to prevent any threat of property loss or damage, bodily injury or
business interruption; PROVIDED, HOWEVER, that such measures shall be
implemented in a way as not to inconvenience tenants of the Building
unreasonably. Landlord uses an access card system for access to the Building
garage, and has waived the standard requirement of a $25 deposit for each
after-hours Building garage access card issued to Tenant. However, Tenant shall
be responsible for any loss, theft or breakage of any such cards, which must be
returned by Tenant to Landlord upon expiration or earlier termination of the
Lease. Tenant shall pay Landlord the replacement charge (currently $25) for any
card not so returned. Landlord shall at all times have the right to change,
alter or reduce any such security services or measures. Tenant shall cooperate
and comply with, and cause Tenant's Representatives and Visitors to cooperate
and comply with, such security measures. Landlord, its agents and employees
shall have no liability to Tenant or its Representatives or Visitors for the
implementation or exercise of, or the failure to implement or exercise, any such
security measures or for any resulting disturbance of Tenant's use or enjoyment
of the Premises.
26. FORCE MAJEURE. If Tenant or Landlord is delayed, interrupted or prevented
from performing any of its obligations under this Lease, including Landlord's
obligations under the Construction Rider, and such delay, interruption or
prevention is due to fire, act of God, governmental act, strike, labor dispute,
unavailability of materials or any other cause outside the reasonable control of
Tenant or Landlord, excepting Tenant's financial inability, then the time for
performance of the affected obligations of such party shall be extended for a
period equivalent to the period of such delay, interruption or prevention.
27. RULES AND REGULATIONS. Tenant shall be bound by and shall comply with the
rules and regulations attached to and made a part of this Lease as EXHIBIT C to
the extent those rules and regulations are not in conflict with the terms of
this Lease, as well as any reasonable rules and regulations hereafter adopted by
Landlord for all tenants of the Building, upon notice to Tenant thereof
(collectively, the "BUILDING RULES"). Landlord shall not be responsible to
Tenant or to any other person for any violation of, or failure to observe, the
Building Rules by any other tenant or other person.
28. LANDLORD'S LIABILITY. The term "Landlord," as used in this Lease, shall
mean only the owner or owners of the Building at the time in question. In the
event of any conveyance of title to the Building, then from and after the date
of such conveyance, the transferor Landlord shall be relieved of all liability
with respect to Landlord's obligations to be performed under this Lease after
the date of such conveyance. Notwithstanding any other term or provision of
this Lease, the liability of Landlord for its obligations under this Lease is
limited solely to Landlord's interest in the Building as the same may from time
to time be encumbered, and no personal liability, shall at any time be asserted
or enforceable against any other assets of Landlord or against Landlord's
partners or members or its or their respective partners, shareholders, members,
directors, officers or managers on account of any of Landlord's obligations or
actions under this Lease.
31.
29. CONSENTS AND APPROVALS.
29.1 DETERMINATION IN GOOD FAITH. Wherever the consent, approval, judgment
or determination of Landlord is required or permitted under this Lease, Landlord
may exercise its good faith business judgment in granting or withholding such
consent or approval or in making such judgment or determination without
reference to any extrinsic standard of reasonableness, unless the specific
provision contained in this Lease providing for such consent, approval, judgment
or determination specifies that Landlord's consent or approval is not to be
unreasonably withheld, or that such judgment or determination is to be
reasonable, or otherwise specifies the standards under which Landlord may
withhold its consent. If it is determined that Landlord failed to give its
consent where it was required to do so under this Lease, Tenant shall be
entitled to injunctive relief but shall not to be entitled to monetary damages
or to terminate this Lease for such failure.
29.2 NO LIABILITY IMPOSED ON LANDLORD. The review and/or approval by
Landlord of any item or matter to be reviewed or approved by Landlord under the
terms of this Lease or any Exhibits or Addenda hereto shall not impose upon
Landlord any liability for the accuracy or sufficiency of any such item or
matter or the quality or suitability of such item for its intended use. Any
such review or approval is for the sole purpose of protecting Landlord's
interest in the Property, and no third parties, including Tenant or the
Representatives and Visitors of Tenant or any person or entity claiming by,
through or under Tenant, shall have any rights as a consequence thereof.
30. BROKERS. Landlord shall pay the fee or commission of the broker or brokers
identified in the Basic Lease Information (the "BROKER") in accordance with
Landlord's separate written agreement with the Broker, if any. Landlord and
Tenant warrant and represent to each other that in the negotiating or making of
the lease, neither Tenant nor Landlord nor anyone acting on their behalf has
dealt with any real estate broker or finder who might be entitled to a fee or
commission for this Lease other than the Broker. Landlord and Tenant each agree
to indemnify and hold each other harmless from the claim or claims, including
costs, expenses and attorneys fees incurred by the party seeking
indemnification, asserted by any other broker or finder for a fee or commission
based upon any dealings with or statements made by the other party or its
representatives.
31. INTENTIONALLY OMITTED
32. ENTIRE AGREEMENT. This Lease, including the Exhibits and any Addenda
attached hereto, and the documents referred to herein, if any, constitute the
entire agreement between Landlord and Tenant with respect to the leasing of
space by Tenant in the Building, and supersede all prior or contemporaneous
agreements, understandings, proposals and other representations by or between
Landlord and Tenant, whether written or oral, all of which are merged herein.
Neither Landlord nor Landlord's agents have made any representations or
warranties with respect to the Premises, the Building, the Project or this Lease
except as expressly set forth herein, and no rights, easements or licenses shall
be acquired by Tenant by implication or otherwise unless expressly set forth
herein. The submission of this Lease for examination does not constitute an
option for the Premises and this Lease shall become effective as a binding
agreement only upon execution and delivery thereof by Landlord to Tenant.
32.
33. MISCELLANEOUS. This Lease may not be amended or modified except by a
writing signed by Landlord and Tenant. Subject to Section 14 - ASSIGNMENT AND
SUBLETTING and Section 28 - LANDLORD'S LIABILITY, this Lease shall be binding on
and shall inure to the benefit of the parties and their respective successors,
assigns and legal representatives. The determination that any provisions hereof
may be void, invalid, illegal or unenforceable shall not impair any other
provisions hereof and all such other provisions of this Lease shall remain in
full force and effect. The unenforceability, invalidity or illegality of any
provision of this Lease under particular circumstances shall not render
unenforceable, invalid or illegal other provisions of this Lease, or the same
provisions under other circumstances. This Lease shall be construed and
interpreted in accordance with the laws (excluding conflict of laws principles)
of the State in which the Building is located. The provisions of this Lease
shall be construed in accordance with the fair meaning of the language used and
shall not be strictly construed against either party, even if such party drafted
the provision in question. When required by the context of this Lease, the
singular includes the plural. Wherever the term "including" is used in this
Lease, it shall be interpreted as meaning "including, but not limited to" the
matter or matters thereafter enumerated. The captions contained in this Lease
are for purposes of convenience only and are not to be used to interpret or
construe this Lease. If more than one person or entity is identified as Tenant
hereunder, the obligations of each and all of them under this Lease shall be
joint and several. Time is of the essence with respect to this Lease, except as
to the conditions relating to the delivery of possession of the Premises to
Tenant. Neither Landlord nor Tenant shall record this Lease.
34. AUTHORITY. If Tenant is a corporation, partnership, limited liability
company or other form of business entity, each of the persons executing this
Lease on behalf of Tenant warrants and represents that Tenant is a duly
organized and validly existing entity, that Tenant has full right and authority
to enter into this Lease and that the persons signing on behalf of Tenant are
authorized to do so and have the power to bind Tenant to this Lease. Tenant
shall provide Landlord upon request with evidence reasonably satisfactory to
Landlord confirming the foregoing representations.
33.
IN WITNESS WHEREOF, Landlord and Tenant have entered into this Lease as of
the date first above written.
TENANT: LANDLORD:
SCIENTIFIC LEARNING CORPORATION, GBC-UNIVERSITY ASSOCIATES, L.P.,
A Delaware corporation A California limited partnership
By: Opportunity Capital Partners,
By: /s/ Xxxxx Xxxxxxx a California limited partnership
---------------------------- Administrative General Partner
Name: Xxxxx Xxxxxxx
---------------------- By: Office Opportunity Corporation,
Title: CFO a California limited partnership
--------------------- Administrative General Partner
By: By: /s/ Xxxx Xxxxxxxx
---------------------------- ---------------------------------
Name: Name: Xxxx Xxxxxxxx
---------------------- ---------------------------
Title: Title:
--------------------- --------------------------
By: /s/ [signature]
---------------------------------
Name: [name]
---------------------------
Title: CFO
--------------------------
34.
EXHIBIT A
ATTACHED TO AND FORMING A PART OF
LEASE AGREEMENT
DATED AS OF JULY 8, 1997
BETWEEN
GBC-UNIVERSITY ASSOCIATES, AS LANDLORD,
AND
SCIENTIFIC LEARNING CORPORATION, AS TENANT ("LEASE")
THE PREMISES
INITIALS:
Landlord [INIT]
Tenant [INIT]
1.
EXHIBIT B
ATTACHED TO AND FORMING A PART OF
LEASE AGREEMENT
DATED AS OF JULY 8, 1997
BETWEEN
GBC-UNIVERSITY ASSOCIATES, AS LANDLORD,
AND
SCIENTIFIC LEARNING CORPORATION, AS TENANT ("LEASE")
CONSTRUCTION RIDER
1. TENANT IMPROVEMENTS. Landlord shall with reasonable diligence through
a contractor designated by Landlord (which contractor may be an affiliate of
Landlord) cause to be installed in the Premises new building standard carpet and
shall cause all interior walls in the Premises to be painted with building
standard paint (the foregoing are hereinafter referred to as the "TENANT
IMPROVEMENTS") in good and workmanlike manner, and in compliance with all
applicable laws, codes and regulations. Upon request by Landlord, Tenant shall
designate in writing an individual authorized to act as Tenant's Representative
with respect to all approvals, directions and authorizations pursuant to this
Construction Rider.
Following execution of this Lease, Landlord shall proceed with reasonable
diligence to cause the Tenant Improvements to be Substantially Completed on or
prior to the Scheduled Commencement Date. The Tenant Improvements shall be
deemed to be "SUBSTANTIALLY COMPLETED" when they have been completed in
accordance with the Final Construction Documents except for finishing details,
minor omissions, decorations and mechanical adjustments of the type normally
found on an architectural "punch list". (The definition of Substantially
Completed shall also define the terms "SUBSTANTIAL COMPLETION" and
"SUBSTANTIALLY COMPLETE.")
Following Substantial Completion of the Tenant Improvements and before
Tenant takes possession of the Premises (or as soon thereafter as may be
reasonably practicable and in any event within 30 days after Substantial
Completion), Landlord and Tenant shall inspect the Premises and jointly prepare
a "punch list" of agreed items of construction remaining to be completed.
Landlord shall complete the items set forth in the punch list as soon as
reasonably possible. Tenant shall cooperate with and accommodate Landlord and
Landlord's contractor in completing the items on the punch list.
1.3. COST OF TENANT IMPROVEMENTS. Landlord shall pay the cost of the
Tenant Improvements described in Section 1 above. If Tenant requests any
additional work the same shall be at Tenant's sole cost ("ADDITIONAL COST"),
including, but not limited to, usual markups for overhead, supervision and
profit. Tenant shall pay Landlord 50% of any Additional Cost based upon the
Final Cost Estimate prior to the commencement of construction of the Tenant
Improvements. The balance of the actual Additional Cost shall be paid to
Landlord upon Substantial Completion of the Tenant Improvements, within ten (10)
days after receipt of Landlord's invoice therefor. Landlord will use reasonable
care in preparing the cost estimates,
1.
but they are estimates only and do not limit Tenant's obligation to pay for the
actual Additional Cost of the Tenant Improvements, whether or not it exceeds the
estimated amounts.
1.4. CHANGES. If Tenant requests any change, addition or alteration
in or to any Final Construction Documents ("CHANGES") Landlord shall cause the
Space Planner to prepare additional Plans implementing such Change. Tenant
shall pay the cost of preparing additional Plans within ten (10) days after
receipt of Landlord's invoice therefor. As soon as practicable after the
completion of such additional Construction Documents, Landlord shall notify
Tenant of the estimated cost of the Changes. Within three (3) working days
after receipt of such cost estimate, Tenant shall notify Landlord in writing
whether Tenant approves the Change. If Tenant approves the Change, Landlord
shall proceed with the Change and Tenant shall be liable for any Additional Cost
resulting from the Change. If Tenant fails to approve the Change within such
three (3) day period, construction of the Tenant Improvements shall proceed as
provided in accordance with the original Construction Documents.
1.5. DELAYS. Tenant shall be responsible for, and shall pay to
Landlord, any and all costs and expenses reasonably incurred by Landlord in
connection with any delay in the commencement or completion of any Tenant
Improvements and any increase in the cost of Tenant Improvements caused by (i)
Tenant's failure to submit information to the Space Planner or approve any Space
Plan, Construction Documents or cost estimates within the time periods required
herein, (ii) any delays in obtaining any items or materials constituting part of
the Tenant Improvements requested by Tenant, (iii) any Changes, or (iv) any
other delay requested or caused by Tenant (collectively, "TENANT DELAYS").
2. DELIVERY OF PREMISES. Upon Substantial Completion of the Tenant
Improvements, Landlord shall deliver possession of the Premises to Tenant. If
Landlord has not Substantially Completed the Tenant Improvements and tendered
possession of the Premises to Tenant on or before the Scheduled Commencement
Date specified in Section 2 - TERM; POSSESSION of the Lease, or if Landlord is
unable for any other reason to deliver possession of the Premises to Tenant on
or before such date, neither Landlord nor its representatives shall be liable to
Tenant for any damage resulting from the delay in completing such construction
obligations and/or delivering possession to Tenant and the Lease shall remain in
full force and effect unless and until it is terminated under the express
provisions of this Paragraph or the Lease. If any delays in Substantially
Completing the Tenant Improvements are attributable to Tenant Delays, then the
Premises shall be deemed to have been Substantially Completed and delivered to
Tenant on the date on which Landlord could have Substantially Completed the
Premises and tendered the Premises to Tenant but for such Tenant Delays.
Notwithstanding the foregoing, if the Commencement Date has not occurred or
been deemed to have occurred within four (4) months after the Scheduled
Commencement Date, either party, by written notice to the other party given
within ten (10) days after the expiration of such four (4) month period, may
terminate this Lease without any liability to the other party. If Tenant fails
to perform any of Tenant's obligations under this Construction Rider within the
time periods specified herein, Landlord may, in lieu of terminating the Lease
under the foregoing provisions, treat such failure of performance as an Event of
Default under the Lease.
2.
3. ACCESS TO PREMISES. Landlord shall allow Tenant and Tenant's
Representatives to enter the Premises prior to the Commencement Date to permit
Tenant to make the Premises ready for its use and occupancy; PROVIDED, HOWEVER,
that prior to such entry of the Premises, Tenant shall provide evidence
reasonably satisfactory to Landlord that Tenant's insurance, as described in
Section 11.1 - TENANT'S INSURANCE of the Lease, shall be in effect as of the
time of such entry. Such permission may be revoked at any time upon twenty-four
(24) hours' notice, and Tenant and its Representatives shall not interfere with
Landlord or Landlord's contractor in completing the Building or the Tenant
Improvements.
Tenant agrees that Landlord shall not be liable in any way for any injury,
loss or damage which may occur to any of Tenant's property placed upon or
installed in the Premises prior to the Commencement Date, the same being at
Tenant's sole risk, and Tenant shall be liable for all injury, loss or damage to
persons or property arising as a result of such entry into the Premises by
Tenant or its Representatives.
4. OWNERSHIP OF TENANT IMPROVEMENTS. All Tenant Improvements, whether
installed by Landlord or Tenant, shall become a part of the Premises, shall be
the property of Landlord and, subject to the provisions of the Lease, shall be
surrendered by Tenant with the Premises, without any compensation to Tenant, at
the expiration or termination of the Lease in accordance with the provisions of
the Lease.
INITIALS:
Landlord [INIT]
Tenant [INIT]
3.
EXHIBIT C
ATTACHED TO AND FORMING A PART OF
LEASE AGREEMENT
DATED AS OF JULY 8, 1997
BETWEEN
GBC-UNIVERSITY ASSOCIATES, AS LANDLORD,
AND
SCIENTIFIC LEARNING CORPORATION, AS TENANT ("LEASE")
BUILDING RULES
The following Building Rules are additional provisions of the foregoing
Lease to which they are attached. The capitalized terms used herein have the
same meanings as these terms are given in the Lease.
1. USE OF COMMON AREAS. Tenant will not obstruct the sidewalks, halls,
passages, exits, entrances, elevators of stairways of the Building ("COMMON
AREAS"), and Tenant will not use the Common Areas for any purpose other than
ingress and egress to and from the Premises. The Common Areas, except for the
sidewalks, are not open to the general public and Landlord reserves the right to
control and prevent access to the Common Areas of any person whose presence, in
Landlord's opinion, would be prejudicial to the safety, reputation and interests
of the Building and its tenants.
2. NO ACCESS TO ROOF. Tenant has no right of access to the roof of the
Building and will not install, repair or replace any antenna, aerial, aerial
wires, fan, air-conditioner or other device on the roof of the Building, without
the prior written consent of Landlord. Any such device installed without such
written consent is subject to removal at Tenant's expense without notice at any
time. In any event Tenant will be liable for any damages or repairs incurred or
required as a result of its installation, use, repair, maintenance or removal of
such devices on the roof and agrees to indemnify and hold harmless Landlord from
any liability, loss, damage, cost or expense, including reasonable attorneys'
fees, arising from any activities of Tenant or of Tenant's Representatives on
the roof of the Building.
3. SIGNAGE. No sign, placard, picture, name, advertisement or notice
visible from the exterior of the Premises will be inscribed, painted, affixed or
otherwise displayed by Tenant on or in any part of the Building without the
prior written consent of Landlord. Landlord reserves the right to adopt and
furnish Tenant with general guidelines relating to signs in or on the Building.
All approved signage will be inscribed, painted or affixed at Tenant's expense
by a person approved by Landlord, which approval will not be unreasonably
withheld.
4. PROHIBITED USES. The Premises will not be used for manufacturing, for
the storage of merchandise held for sale to the general public, for lodging or
for the sale of goods to the general public. Tenant will not permit any
commercial food preparation on the Premises except that Tenant may use
Underwriters' Laboratory approved equipment for brewing coffee, tea, hot
chocolate and similar beverages and for heating food in a microwave oven,
toaster or
1.
toaster oven, so long as such use is in accordance with all applicable federal,
state and city laws, codes, ordinances, rules and regulations.
5. JANITORIAL SERVICES. Tenant will not employ any person for the
purpose of cleaning the Premises or permit any person to enter the Building for
such purpose other than Landlord's janitorial service, except with Landlord's
prior written consent. Tenant will not necessitate, and will be liable for the
cost of, any undue amount of janitorial labor by reason of Tenant's carelessness
in or indifference to the preservation of good order and cleanliness in the
Premises. Janitorial service will not be furnished to areas in the Premises on
nights when such areas are occupied after 9:30 p.m., unless such service is
extended by written agreement to a later hour in specifically designated areas
of the Premises.
6. KEYS AND LOCKS. Landlord will furnish Tenant, free of charge, two
keys to each door or lock in the Premises. Landlord may make a reasonable
charge for any additional or replacement keys. Tenant will not duplicate any
keys, alter any locks or install any new or additional lock or bolt on any door
of its Premises or on any other part of the Building without the prior written
consent of Landlord and, in any event, Tenant will provide Landlord with a key
for any such lock. On the termination of the Lease, Tenant will deliver to
Landlord all keys to any locks or doors in the Building which have been obtained
by Tenant.
7. FREIGHT. Upon not less than twenty-four hours prior notice to
Landlord, which notice may be oral, an elevator will be made available for
Tenant's use for transportation of freight, subject to such scheduling as
Landlord in its discretion deems appropriate. Tenant shall not transport
freight in loads exceeding the weight limitations of such elevator. Landlord
reserves the right to prescribe the weight, size and position of all equipment,
materials, furniture or other property brought into the Building, and no
property will be received in the Building or carried up or down the freight
elevator or stairs except during such hours and along such routes and by such
persons as may be designated by Landlord. Landlord reserves the right to
require that heavy objects will stand on wood strips of such length and
thickness as is necessary to properly distribute the weight. Landlord will not
be responsible for loss of or damage to any such property from any cause, and
Tenant will be liable for all damage or injuries caused by moving or maintaining
such property.
8. NUISANCES AND DANGEROUS SUBSTANCES. Tenant will not conduct itself or
permit Tenant's Representatives or Visitors to conduct themselves, in the
Premises or anywhere on or in the Property in a manner which is offensive or
unduly annoying to any other Tenant or Landlord's property managers. Tenant
will not install or operate any phonograph, radio receiver, musical instrument,
or television or other similar device in any part of the Common Areas and shall
not operate any such device installed in the Premises in such manner as to
disturb or annoy other tenants of the Building. Tenant will not use or keep in
the Premises or the Property any kerosene, gasoline or other combustible fluid
or material other than limited quantities thereof reasonably necessary for the
maintenance of office equipment, or, without Landlord's prior written approval,
use any method of heating or air conditioning other than that supplied by
Landlord. Tenant will not use or keep 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 Landlord or other occupants of the Building by
reason of noise, odors or vibrations, or interfere
2.
in any way with other tenants or those having business therein. Tenant will not
bring or keep any animals in or about the Premises or the Property.
9. BUILDING NAME AND ADDRESS. Without Landlord's prior written consent,
Tenant will not use the name of the Building in connection with or in promoting
or advertising Tenant's business except as Tenant's address.
10. BUILDING DIRECTORY. A directory for the Building will be provided for
the display of the name and location of tenants. Landlord reserves the right to
approve any additional names Tenant desires to place in the directory and, if so
approved, Landlord may assess a reasonable charge for adding such additional
names.
11. WINDOW COVERINGS. No curtains, draperies, blinds, shutters, shades,
awnings, screens or other coverings, window ventilators, hangings, decorations
or similar equipment shall be attached to, hung or placed in, or used in or with
any window of the Building without the prior written consent of Landlord, arid
Landlord shall have the right to control all lighting within the Premises that
may be visible from the exterior of the Building.
12. FLOOR COVERINGS. Tenant will not lay or otherwise affix linoleum,
tile, carpet or any other floor covering to the floor of the Premises in any
manner except as approved in writing by Landlord. Tenant will be liable for the
cost of repair of any damage resulting from the violation of this rule or the
removal of any floor covering by Tenant or its contractors, employees or
invitees.
13. WIRING AND CABLING INSTALLATIONS. Landlord will direct Tenant's
electricians and other vendors as to where and how data, telephone, and
electrical wires and cables are to be installed. No boring or cutting for wires
or cables will be allowed without the prior written consent of Landlord. The
location of burglar alarms, smoke detectors, telephones, call boxes and other
office equipment affixed to the Premises shall be subject to the written
approval of Landlord.
14. OFFICE CLOSING PROCEDURES. Tenant will see that the doors of the
Premises are closed and locked and that all water faucets, water apparatus and
utilities are shut off before Tenant or its employees leave the Premises, so as
to prevent waste or damage. Tenant will be liable for all damage or injuries
sustained by other tenants or occupants of the Building or Landlord resulting
from Tenant's carelessness in this regard or violation of this rule. Tenant
will keep the doors to the Building corridors closed at all times except for
ingress and egress.
15. PLUMBING FACILITIES. The toilet rooms, toilets, 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
disposed of therein. Tenant will be liable for any breakage, stoppage or damage
resulting from the violation of this rule by Tenant, its employees or invitees.
16. USE OF HAND TRUCKS. Tenant will not use or permit to be used in the
Premises or in the Common Areas any hand tracks, carts or dollies except those
equipped with rubber tires and side guards or such other equipment as Landlord
may approve.
3.
17. REFUSE. Tenant shall store all Tenant's trash and garbage within the
Premises or in other facilities designated By Landlord for such purpose. Tenant
shall not place in any trash box or receptacle any material which cannot be
disposed of in the ordinary and customary manner of removing and disposing of
trash and garbage in the city in which the Building is located without being in
violation of any law or ordinance governing such disposal. All trash and
garbage removal shall be made in accordance with directions issued from time to
time by Landlord, only through such Common Areas provided for such purposes and
at such times as Landlord may designate. Tenant shall comply with the
requirements of any recycling program adopted by Landlord for the Building.
18. SOLICITING. Canvassing, peddling, soliciting and distribution of
handbills or any other written materials in the Building are prohibited, and
Tenant will cooperate to prevent the same.
19. PARKING. Tenant will use, and cause Tenant's Representatives and
Visitors to use, any parking spaces to which Tenant is entitled under the Lease
in a manner consistent with Landlord's directional signs and markings in the
Parking Facility. Specifically, but without limitation, Tenant will not park,
or permit Tenant's Representatives or Visitors to park, in a manner that impedes
access to and from the Building or the Parking Facility or that violates space
reservations for handicapped drivers registered as such with the California
Department of Motor Vehicles. Landlord may use such reasonable means as may be
necessary to enforce the directional signs and markings in the Parking Facility,
including but not limited to towing services, and Landlord will not be liable
for any damage to vehicles towed as a result of non-compliance with such parking
regulations.
20. FIRE, SECURITY AND SAFETY REGULATIONS. Tenant will comply with all
safety, security, fire protection and evacuation measures and procedures
established by Landlord or any governmental agency.
21. RESPONSIBILITY FOR THEFT. Tenant assumes any and all responsibility
for protecting the Premises from theft, robbery and pilferage, which includes
keeping doors locked and other means of entry to the Premises closed.
22. SALES AND AUCTIONS. Tenant will not conduct or permit to be conducted
any sale by auction in, upon or from the Premises or elsewhere in the Property,
whether said auction be voluntary, involuntary, pursuant to any assignment for
the payment of creditors or pursuant to any bankruptcy or other insolvency
proceeding.
23. WAIVER OF RULES. Landlord may waive any one or more of these Building
Rules for the benefit of any particular tenant or tenants, but no such waiver by
Landlord will be construed as a waiver of such Building Rules in favor of any
other tenant or tenants nor prevent Landlord from thereafter enforcing these
Building Rules against any or all of the tenants of the Building.
24. EFFECT ON LEASE. These Building Rules are in addition to, and shall
not be construed to in any way modify or amend, in whole or in part, the terms,
covenants, agreements and conditions of the Lease. Continued violation of these
Building Rules following receipt of
4.
written notice constitutes a failure to fully perform the provisions of the
Lease, as referred to in Section 15.1 - "EVENTS OF DEFAULT".
25. NON-DISCRIMINATORY ENFORCEMENT. Subject to the provisions of the
Lease (and the provisions of other leases with respect to other tenants),
Landlord shall use reasonable efforts to enforce these Building Rules in a
non-discriminatory manner, but in no event shall Landlord have any liability for
any failure or refusal to do so (and Tenant's sole and exclusive remedy for any
such failure or refusal shall be injunctive relief preventing Landlord from
enforcing any of the Building Rules against Tenant in a manner that
discriminates against Tenant).
26. ADDITIONAL AND AMENDED RULES. Landlord reserves the right to rescind
or amend these Building Rules and/or adopt any other and reasonable rules and
regulations as in its judgment may from time to time be needed for the safety,
care and cleanliness of the Building and for the preservation of good order
therein.
INITIALS:
Landlord [INIT]
Tenant [INIT]
5.
EXHIBIT D
ATTACHED TO AND FORMING A PART OF
LEASE AGREEMENT
DATED AS OF JULY 8, 1997
BETWEEN
GBC-UNIVERSITY ASSOCIATES, AS LANDLORD,
AND
SCIENTIFIC LEARNING CORPORATION, AS TENANT ("LEASE")
ADDITIONAL PROVISIONS RIDER
1. PARKING.
(a) TENANT'S PARKING RIGHTS. Landlord shall provide Tenant, on an
unassigned and non-exclusive basis, for use by Tenant and Tenant's
Representatives and Visitors, at the users' sole risk, up to sixty-eight (68)
parking spaces in the Parking Facility which spaces shall be available at the
then prevailing monthly charge which is currently $80.00 per month per parking
space. If Tenant leases additional office space pursuant to this Lease,
Landlord shall provide Tenant, also on an unassigned, non-exclusive and
unlabelled basis, one (1) additional parking space in the Parking Facility for
each two hundred fifty (250) rentable square feet of additional office space
leased to Tenant. The parking spaces to be made available to Tenant hereunder
may contain a reasonable mix of spaces for compact cars and up to ten percent
(10%) of the unassigned spaces may also be designated by Landlord as Building
visitors' parking.
(b) AVAILABILITY OF PARKING SPACES. Landlord shall take reasonable
actions to ensure the availability of the parking spaces leased by Tenant, but
Landlord does not guarantee the availability of those spaces at all times
against the actions of other tenants of the Building and users of the Parking
Facility. Access to the Parking Facility may, at Landlord's option, be
regulated by card, pass, bumper sticker, decal or other appropriate
identification issued by Landlord. Landlord retains the right to revoke the
parking privileges of any user of the Parking Facility who violates the rules
and regulations governing use of the Parking Facility (and Tenant shall be
responsible for causing any employee of Tenant or other person using parking
spaces allocated to Tenant to comply with all parking rules and regulations).
(c) ASSIGNMENT AND SUBLETTING. Notwithstanding any other provision
of the Lease to the contrary, Tenant shall not assign its rights to the parking
spaces or any interest therein, or sublease or otherwise allow the use of all or
any part of the parking spaces to or by any other person, except in connection
with a permitted assignment or sublease, or except with Landlord's prior written
consent, which may be granted or withheld by Landlord in its sole discretion.
In the event of any separate assignment or sublease of parking space rights that
is approved by Landlord, Landlord shall be entitled to receive, as additional
Rent hereunder, one hundred percent (100%) of any profit received by Tenant in
connection with such assignment or sublease.
1.
(d) CONDEMNATION, DAMAGE OR DESTRUCTION. In the event the Parking
Facility is the subject of a Condemnation, or is damaged or destroyed, and this
Lease is not terminated, and if in such event the available number of parking
spaces in the Parking Facility is permanently reduced, then Tenant's rights to
use parking spaces hereunder may, at the election of Landlord, thereafter be
reduced in proportion to the reduction of the total number of parking spaces in
the Parking Facility. In such event, Landlord reserves the right to reduce the
number of parking spaces to which Tenant is entitled or to relocate some or all
of the parking spaces to which Tenant is entitled to other areas in the Parking
Facility.
2. EXTENSION OPTION.
Provided that Scientific Learning Corporation has not assigned this
Lease or sublet any or all of the Premises (it being intended that all rights
pursuant to this provision are and shall be personal to the original Tenant
under this Lease and shall not be transferable or exercisable for the benefit of
any Transferee, except for Transfers to Affiliates permitted under Section
14.9), and provided Tenant is not in default beyond any applicable cure period
under this Lease at the time of exercise or at any time thereafter until the
beginning of any such extension of the Term, Tenant shall have the option (the
"EXTENSION OPTION") to extend the Term for one (1) additional consecutive period
of five (5) years (each an "EXTENSION PERIOD"), by giving written notice to
Landlord of the exercise of any such Extension Option at least nine (9) months,
but not more than twelve (12) months, prior to the expiration of the initial
Term. The exercise of any Extension Option by Tenant shall be irrevocable and
shall cover the entire Premises leased by Tenant pursuant to this Lease. Upon
such exercise, the term of the Lease shall automatically be extended for the
applicable Extension Period without the execution of any further instrument by
the parties; provided that Landlord and Tenant shall, if requested by either
party, execute and acknowledge an instrument confirming the exercise of the
Extension Option. Any Extension Option shall terminate if not exercised
precisely in the manner provided herein. Any extension of the Term shall be
upon all the terms and conditions set forth in this Lease and all Exhibits
thereto, except that: (i) Tenant shall have no further option to extend the Term
of the Lease, other than as specifically set forth herein; (ii) Landlord shall
not be obligated to contribute funds toward the cost of any remodeling,
renovation, alteration or improvement work in the Premises; and (iii) Base Rent
for any such Extension Period shall be ninety-five percent (95%) of the then
Fair Market Base Rental (as defined below) for the Premises for the space and
term involved, which shall be determined as set forth below.
(a) "FAIR MARKET BASE RENTAL" shall mean the "fair market" Base Rent
at the time or times in question for the applicable space, based on the
prevailing rentals then being charged to new tenants in the Building and new
tenants in other office buildings in the general vicinity of the Building of
comparable size, location, quality and age as the Building for leases with terms
equal to the Extension Period, taking into account the creditworthiness and
financial strength of the tenant, the financial guaranties provided by the
tenant (if any), the value of market landlord concessions (including the value
of construction, renovation, moving and other allowances or rent credits), the
desirability, location in the building, size and quality of the space. tenant
finish allowance and/or tenant improvements, included services, operating
expenses and tax and expense stops or other escalation clauses, and brokerage
commissions, for the space in the Building for which Fair Market Base Rental is
being determined and for comparable space in the buildings which are being used
for comparison. Fair Market Base Rental shall also reflect
2.
the then prevailing rental structure for comparable office buildings in the
general vicinity of the Property, so that if, for example, at the time Fair
Market Base Rental is being determined the prevailing rental structure for
comparable space and for comparable lease terms includes periodic rental
adjustments or escalations, Fair Market Base Rental shall reflect such rental
structure.
(b) Landlord and Tenant shall endeavor to agree upon the Fair Market
Base Rental. If they are unable to so agree within thirty (30) days after
receipt by Landlord of Tenant's notice of exercise of the Extension Option, then
within ten (10) days after the expiration of that period each party, at its cost
and by giving written notice to the other party, shall appoint a licensed real
estate broker with at least five (5) years of experience in leasing office
buildings, and who is active in the leasing of office space in the general
vicinity of the Property. If a party does not appoint a broker within ten (10)
days after the other party has given written notice of the name of its broker,
the single broker appointed shall be the sole broker and shall determine the
Fair Market Base Rental. If the two brokers are appointed by the parties as
stated in this paragraph, they shall meet promptly and attempt to determine the
Fair Market Base Rental. If they are unable to agree within thirty (30) days
after the second broker has been appointed, they shall attempt to elect a third
broker meeting the qualifications stated in this paragraph within ten (10) days
after the last day the two brokers are given to determine the Fair Market Base
Rental. If they are unable to agree on the third broker, either of the parties
to this Lease, by giving ten (10) days' prior written notice to the other party,
can apply to the then president of the county real estate board of the county in
which the premises are located, or to the presiding judge of the superior court
of that county, for the selection of a third broker who meets the qualifications
stated in this paragraph. Each of the parties shall bear the fees and costs of
its own broker, and one-half of the cost of appointing the third broker and of
paying the third broker's fees and costs. The third broker, however selected,
shall be a person who has not previously acted as an exclusive agent for either
party.
Within thirty (30) days after the selection of the third broker, a majority
of the brokers shall determine the Fair Market Base Rental. If a majority of
the brokers are unable to determine the Fair Market Base Rental within the
stipulated period of time, the three appraisals shall be added together and
their total divided by three; the resulting quotient shall be the Fair Market
Base Rental; PROVIDED, HOWEVER, that if the low appraisal is more than ten
percent (10%) lower than the middle appraisal, the low appraisal shall be
disregarded, and if the high appraisal is more than ten percent (10%) higher
than the middle appraisal, the high appraisal shall be disregarded. If one
appraisal is disregarded, the remaining two appraisals shall be added together
and their total divided by two; and the resulting quotient shall be the Fair
Market Base Rental. After the Fair Market Base Rental has been determined, the
brokers shall immediately notify the parties.
(c) In the event the Fair Market Base Rental for any Extension Period
has not been determined at such time as Tenant is obligated to pay Base Rent for
such Extension Period, Tenant shall pay as Base Rent pending such determination,
the Base Rent in effect for such space immediately prior to the Extension
Period; PROVIDED, that upon the determination of the applicable Fair Market Base
Rental, any shortage of Base Rent paid shall be paid to Landlord by Tenant.
3.
(d) In no event shall the Base Rent during any Extension Period be
less than $2.17, which is the average effective Base Rent in effect over the
original Term, PLUS the average monthly Tenant's Share of Operating Costs and
Taxes payable by Tenant pursuant to Section 3.2(b)(1) for the twelve (12) month
period prior to such Extension Period.
(e) The term of this Lease, whether consisting of the Initial Term
alone or the Initial Term as extended by any Extension Period (if any Extension
Option is exercised), is referred to in this Lease as the "Term."
3. LETTER OF CREDIT.
(a) Tenant shall deliver to Landlord a clean, unconditional
irrevocable, transferable letter of credit (the "Letter of Credit") in form, and
issued by a financial institution ("ISSUER") satisfactory to Landlord. The
Letter of Credit shall be provided to Landlord prior to the Commencement Date
and Tenant taking occupancy of the Premises under the Lease, and shall be in the
amount of $350,000.00, name Landlord as the beneficiary thereunder, and provide
that draws thereunder will be honored upon receipt by Issuer of a written
statement signed by Landlord stating that Landlord is entitled to draw down on
the Letter of Credit. Landlord shall be entitled to draw the entire amount
under the Letter of Credit if either (i) Tenant commits an Event of Default
under this Lease, (ii) Tenant does not deliver to Landlord a replacement letter
of credit from Issuer or another financial institution satisfactory to Landlord
in the amount and form of the initial Letter of Credit no later than one month
before the expiration date of the then existing Letter of Credit, or (iii) upon
a proposed sale or lease of the Building Tenant does not deliver to any the new
landlord a replacement Letter of Credit pursuant to the provisions of (d) below.
Any amount drawn under the Letter of Credit shall be held by Landlord as a
security deposit, subject to the terms of Section 4. If Tenant fails to deliver
the Letter of Credit to Landlord when required, such failure shall constitute an
Event of Default under the Lease.
(b) Reduction or Elimination of Letter of Credit.
(i) Provided that there has been no Event of Default under the
Lease, annually on each anniversary of the Commencement Date, Landlord will
reduce the Letter of Credit requirement by $70,000.
(ii) Provided that there has been no Event of Default under the
Lease, and provided Tenant has pre-tax net income of at least $4,500,000.00
during the preceding portion of the calendar year either on the anniversary of
the Commencement Date or on December 31 of any year, then upon request by
Tenant, Landlord will reduce the Letter of Credit requirement to an amount equal
to $83,000.00; and provided that there has been no Event of Default under the
Lease, and provided Tenant has pre-tax net income of at least $5,500,000.00
during the preceding portion of the calendar year either on the anniversary of
the Commencement Date or on December 31 of any year, then upon request by
Tenant, Landlord will reduce the Letter of Credit requirement to zero. Any
request by Tenant for a reduction or elimination of the Letter of Credit
requirement shall be accompanied by a financial statement audited by an
independent certified public accountant or certified by the Chief Financial
Officer of Tenant, PROVIDED, HOWEVER, that if Landlord reduces or eliminates the
Letter of Credit requirement based upon a certified but unaudited financial
statement, Tenant shall provide
4.
Landlord with an audited financial statement promptly following the end of
Tenant's fiscal year (but in all events by ninety (90) days after the end of
Tenant's fiscal year), and if such audited financial statement does not support
the reduction or elimination of the Letter of Credit requirement, the
requirement shall be reinstated.
(iii) If an initial public offering of Tenant's stock is made on
any public stock exchange resulting in a market capitalization of at least
$100,000,000.00, and if there has been no Event of Default under the Lease
during the preceding eighteen (18) months, then Landlord shall waive the
requirement of the Letter of Credit.
(c) Tenant shall not assign or encumber or attempt to assign or
encumber the Letter of Credit and neither Landlord nor its successors or assigns
shall be bound by any such assignment or encumbrance or attempted assignment or
encumbrance.
(d) If Landlord shall be holding the Letter of Credit as security,
then, in the event of a proposed sale or lease of the Building by Landlord,
Tenant will, upon ten (10) Business Days' notice, at its sole cost and expense,
cause the issuing bank to consent to the assignment or to issue a substitute
letter of credit on identical terms except for the stated beneficiary, from the
same issuing bank or another bank acceptable to Landlord in Landlord's sole
discretion, naming the new landlord as the beneficiary thereof upon delivery by
Landlord of the then outstanding Letter of Credit.
INITIALS:
Landlord [INIT]
Tenant [INIT]
5.
