Exhibit 10.4
OFFICE LEASE
XXX XXXXX XXXXXX
XXX XXXXXXXXX, XXXXXXXXXX
LANDLORD
NO. I BEACH STREET, LLC a California limited liability company
and
TENANT
CNET, Inc., a Delaware corporation
TABLE OF CONTENTS
ARTICLE I - PREMISES AND TENANT'S PROPERTY.......................................1
1.1. THE PREMISES.....................................................1
1.2. RENTABLE AREA OF THE PREMISES....................................1
1.3. TENANT'S PROPERTY................................................1
1.4. IMPROVEMENTS TO THE PREMISES.....................................1
1.5. PARKING..........................................................1
ARTICLE 2 - TERM.................................................................2
2.1. TERM.............................................................2
2.2. RENT COMMENCEMENT................................................2
2.3. HOLDING OVER.....................................................3
2.4. OPTION TO EXTEND THE TERM OF THE LEASE...........................4
ARTICLE 3 - RENT ................................................................4
3.1. MINIMUM RENT.....................................................4
3.2. INTEREST AND LATE CHARGES........................................4
3.3. MANNER OF PAYMENT................................................5
3.4. DEFINITION OF RENT...............................................5
3.5. REDUCTION OF MINIMUM RENT........................................5
3.6. MINIMUM RENT DURING THE OPTION TERM..............................5
3.7. PERCENTAGE RENT..................................................8
ARTICLE 4 - REAL ESTATE TAXES AND OPERATING EXPENSES.............................9
4.1. TENANT SHALL PAY INCREASES IN REAL ESTATE TAXES
AND OPERATING EXPENSES...........................................9
4.2. DEFINITION OF REAL ESTATE TAXES.................................10
4.3. DEFINITION OF OPERATING EXPENSES................................12
4.4. TENANT'S RIGHT TO AUDIT.........................................13
4.5. TENANT SHALL PAY FOR TAXES LEVIED ON ITS PROPERTY...............13
ARTICLE 5 - UTILITIES USED IN THE PREMISES......................................13
5.1. TENANT SHALL PAY FOR ALL UTILITY COSTS..........................13
5.2. NO LIABILITY FOR INTERRUPTION IN UTILITIES......................13
5.3. INTRA-BUILDING NETWORK CABLE....................................14
ARTICLE 6 - SECURITY DEPOSIT....................................................14
6.1. SECURITY DEPOSIT................................................14
6.2. TERMS OF THE LETTER OF CREDIT...................................14
6.3. RELEASE/REDUCTION OF THE LETTER OF CREDIT.......................15
ARTICLE 7 - USE AND CONDITION OF THE PREMISES...................................15
7.1. USE OF THE PREMISES.............................................15
7.2. OPERATION OF TENANT'S BUSINESS..................................16
7.3. CONDITION OF THE PREMISES.......................................16
7.4. LANDLORD'S OBLIGATION UPON DELIVERY OF THE PREMISES.............17
ARTICLE 8 - MAINTENANCE, REPAIRS, AND ALTERATIONS...............................17
8.1. TENANT'S OBLIGATIONS FOR REPAIRS AND MAINTENANCE................17
8.2. LANDLORD'S OBLIGATIONS FOR REPAIRS AND MAINTENANCE..............18
8.3. LANDLORD'S RIGHT TO MAKE REPAIRS ON BEHALF OF TENANT............18
8.4. ALTERATIONS AND ADDITIONS.......................................18
8.5. TENANT'S CONSTRUCTION AND REPAIR WORK...........................19
8.6. LIENS...........................................................20
8.7. TENANT'S OBLIGATION FOR COMPLIANCE
WITH GOVERNMENT REQUIREMENTS....................................20
8.8. LANDLORD'S OBLIGATION FOR COMPLIANCE
WITH GOVERNMENT REQUIREMENTS....................................21
ARTICLE 9 - LANDLORD'S RIGHT OF ENTRY...........................................21
9.1. RIGHT OF ENTRY..................................................21
9.2. EMERGENCY ENTRANCE INTO THE PREMISES............................21
9.3. DAMAGES SUFFERED BY TENANT AND ABATEMENT OF RENT
AS A CONSEQUENCE OF LANDLORD'S WORK.............................22
ARTICLE 10 - INSURANCE AND INDEMNIFICATION......................................22
10.1. TENANT'S INSURANCE..............................................22
10.2. LANDLORD'S INSURANCE............................................23
10.3. INSURANCE REQUIREMENTS..........................................23
10.4. WAIVER OF CLAIMS AND WAIVER OF SUBROGATION......................24
10.5. CERTIFICATE OF INSURANCE AND POLICY ENDORSEMENTS
AND TENANT'S FAILURE TO PROVIDE EITHER..........................24
10.6. INDEMNIFICATION.................................................24
ARTICLE 11 - DAMAGE OR DESTRUCTION..............................................25
11.1. LANDLORD'S NOTICE TO TENANT.....................................25
11.2. LANDLORD'S OBLIGATION TO REPAIR.................................25
11.3. TERMINATION OF THE LEASE AFTER A CASUALTY LOSS..................25
11.4. TENANT'S RIGHT TO REPAIR........................................26
11.5. LANDLORD'S AND TENANT'S RESPECTIVE RESPONSIBILITIES FOR REPAIR..26
11.6. DAMAGE - END OF TERM............................................26
11.7. TENANT'S WAIVER OF STATUTORY RIGHTS.............................27
11.8. ABATEMENT OF RENT DUE TO A CASUALTY LOSS........................27
ARTICLE 12 - CONDEMNATION.......................................................27
12.1. TAKING OF THE PREMISES..........................................27
12.2. COMPENSATION....................................................27
12.3. VOLUNTARY SALE..................................................27
12.4. WAIVER..........................................................27
ARTICLE 13 - ASSIGNMENT AND SUBLEASE............................................28
13.1. PROHIBITION AGAINST ASSIGNMENTS OR SUBLEASES WITHOUT
LANDLORD'S CONSENT..............................................28
13.2. NOTICE OF THE PROPOSED ASSIGNMENT OR SUBLEASE...................29
13.3. LANDLORD'S CONSENT..............................................29
13.4. TAKE-BACK SPACE.................................................30
13.5. TENANT SHALL REMAIN LIABLE UNDER THE LEASE......................30
13.6. PROFITS FROM AN ASSIGNMENT OR A SUBLEASE........................30
13.7. OBLIGATIONS OF AN ASSIGNEE OR SUBLESSEE.........................31
13.8. PAYMENT OF LANDLORD'S COSTS.....................................31
13.9. NO RELIANCE ON ORAL STATEMENTS..................................31
ARTICLE 14 - DEFAULT............................................................31
14.1. TENANT'S DEFAULT................................................31
14.2. REMEDIES........................................................32
14.3. WAIVER..........................................................32
14.4. LANDLORD'S DEFAULT..............................................33
ARTICLE 15 - HAZARDOUS MATERIALS................................................33
15.1. COMPLIANCE......................................................33
15.2. PROHIBITED ACTS AND DAMAGES RESULTING THEREFROM.................33
15.3. DEFINITION OF HAZARDOUS MATERIALS...............................34
15.4. DISCLOSURE......................................................34
ARTICLE 16 - GENERAL PROVISIONS.................................................34
16.1. MEDIATION AND ARBITRATION.......................................34
16.2. SALE OF LANDLORD'S INTEREST.....................................35
16.3. ESTOPPEL CERTIFICATE............................................35
16.4. FINANCIAL STATEMENT.............................................36
16.5. SUBORDINATION AND ATTORNMENT....................................36
16.6. TENANT SIGNAGE..................................................36
16.7. MERGER..........................................................37
16.8. RECORDING.......................................................37
16.9. ATTORNEYS' FEES.................................................37
16.10. CUMULATIVE REMEDIES.............................................37
16.11. CHOICE OF LAW...................................................37
16.12. SUCCESSORS AND ASSIGNS..........................................37
16.13. SEVERABILITY....................................................37
16.14. AUTHORITY.......................................................37
16.15. TIME OF ESSENCE.................................................37
16.16. CAPTIONS........................................................37
16.17. FORCE MAJEURE...................................................38
16.18. NOTICES.........................................................38
16.19. BROKERS.........................................................38
16.20. JOINT AND SEVERAL LIABILITY.....................................39
16.21. QUIET POSSESSION................................................39
16.22. PRIOR AGREEMENTS AND AMENDMENTS.................................39
EXHIBIT A - LEGAL DESCRIPTION OF THE PREMISES
EXHIBIT B - FLOOR PLANS
EXHIBIT C - WORK LETTER
EXHIBIT D - COMPARABLE SPACE AREA
EXHIBIT E - FORM OF SUBORDINATION AND NON-DISTURBANCE AGREEMENT
BASIC LEASE INFORMATION
Date of the Lease: September 24 1997
SECTIONS
--------
LANDLORD: No. I Beach Street, LLC, a
California limited liability company
3.3, 16.18 Landlord's Address: 000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000-0000
Landlord's Telephone: (000) 000-0000
Landlord's Facsimile Number: (000) 000-0000
Contact for Landlord: Xxxxxx Xxxxx & Associates,
Attn: Xx. Xxxx Xxxxxx
TENANT: CNET, Inc.,
a Delaware corporation
16.18 Tenant's Address: 000 Xxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Tenant's Telephone: (000) 000-0000
Tenant's Facsimile Number: (000) 000-0000
Contact for Tenant: Xxxxx Xxxxxxxx
1.1 PREMISES: 100% of the building (including
exclusive use of the roof) commonly
known as Xxx Xxxxx Xxxxxx,
Xxx Xxxxxxxxx, Xxxxxxxxxx.
1.2 Rentable Area
of the Premises: Approximately 97,015 sq. ft.
1.5 Parking Spaces Up to 165 spaces, of which no more
than 50 spaces will be on a 24-hour
basis
2.1 TERM:
10 Years from the Rent
Commencement Date
2.2 Rent Commencement Date: The earlier of (1) June 1, 1998, or (ii)
the date of substantial completion of
Tenant Improvements to two floors
of the Premises
LANDLORD INITIALS TENANTS INITIALS
----------------- ----------------
SECTIONS
--------
2.1 Scheduled Delivery Date of
Premises to Tenant January 15, 1998
2.5 Option to Extend the Term: Tenant shall have one (1) option to
extend the Term of the Lease for five
(5) years
RENT:
3.1 Minimum Rent (per month): Month 1: Free
Months 2 - 60: $208,582.25,
subject to Section 3.5
Months 61 - 120: $240,920.59,
subject to Section 3.5
3.1 Minimum Rent Payable
on Lease Execution: $208,582.25
3.6 Minimum Rent during
the Option Term: 95% of the Prevailing Market Rate
3.2 Late Charge 3% of the Rent or other amounts
paid after the due date.
4.1 ADDITIONAL LEASE CHARGES: Tenant shall pay 100% of the
Additional Lease Charges over the
Base Year
4.1 Base Year for the
Initial Term: The twelve (12) month period
commencing on the first day of the
month in which the Rent
Commencement Date occurs
3.6, 4.1 Base Year for the
Option Term: The twelve (12) month period
commencing on the first day of the
month in which the Option Term
commences
5.1 UTILITIES: Tenant shall pay for all utilities used
in the Premises
6 SECURITY DEPOSIT: An irrevocable stand-by letter of
credit in the amount of
$3,250,000,00, unless reduced in
accordance with Section 6.3(b)
LANDLORD'S INITIALS TENANT'S INITIALS
----------------- ----------------
OPERATION OF TENANT'S BUSINESS:
7.1 Permitted Use
of the Premises: General office and, subject to the
terms and conditions of Section 7. 1,
the first floor of the Premises may be
used for interactive and/or multi
media purposes, and for retail
purposes.
7.2 Weight Limitation: 75 lbs. per sq. ft.
10.1, 10.2 GENERAL LIABILITY INSURANCE
(PER OCCURRENCE): $5,000,000.00,
subject to Section 10.3(c)
16.1 MEDIATION AND ARBITRATION Landlord and Tenant are bound
to the Mediation and
Arbitration provisions of the
Lease
16.19 REAL ESTATE BROKERS:
Landlord's Broker: Colliers Damner Xxxx
Xxx Xxxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Tenant's Broker: Xxxxxxx & Xxxxxxxxx of
California, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
LANDLORD'S INITIALS TENANT'S INITIALS
----------------- ----------------
OFFICE LEASE
This Lease ("Lease") between NO. I BEACH STREET, LLC, A CALIFORNIA LIMITED
LIABILITY COMPANY ("Landlord") and CNET, INC., A DELAWARE CORPORATION ("Tenant")
is entered into on, and shall be effective as of, September 24 1997.
ARTICLE 1 - PREMISES AND TENANT'S PROPERTY
1.1. THE PREMISES. Landlord leases to Tenant and Tenant leases from
Landlord, subject to the following terms and conditions, the Premises which
represent the entirety of the office building, including the roof, which is
located at Xxx Xxxxx Xxxxxx, Xxxx xxx Xxxxxx xx Xxx Xxxxxxxxx, Xxxxx of
California (the "Premises"). Tenant's right of occupancy of the Premises shall
include the exclusive right of signage on the exterior of the Premises, subject
to the terms and requirements of this Lease. The legal description of the
Premises is more particularly set forth on Exhibit, A which is attached hereto
and made a part hereof.
1.2. RENTABLE AREA OF THE PREMISES. The rentable area of the Premises shall
be deemed to be that area stated in the Basic Lease Information and as shown on
Exhibit B hereof. It is understood that the rentable area set forth in the Basic
Lease Information is approximate only. Tenant may at its discretion measure the
Premises to confirm the rentable area. However, after the execution of this
Lease, no Rent or other adjustment shall be made between the parties in the
event that the rentable area of the Premises is subsequently determined to be
greater or less than the area set forth in the Basic Lease Information.
1.3. TENANT'S PROPERTY. All furniture, furnishings, equipment, trade
fixtures, and articles of movable personal property in the Premises which belong
to Tenant and which can be removed without structural or other material damage
to the Premises (all of which are herein referred to as "Tenant's Property")
shall be the property of Tenant. Upon the expiration or earlier termination of
this Lease, Tenant shall remove from the Premises all of Tenant's Property
except those items that the parties shall agree are to remain and become the
property of Landlord. Tenant shall repair or pay the cost of repairing any
damage to the Premises resulting from the removal of Tenant's Property. Tenant's
obligations under this Section 1.3 shall survive the termination of this Lease.
1.4. IMPROVEMENTS TO THE PREMISES. Concurrently with the execution of this
Lease, Landlord and Tenant are executing the Work Letter which is attached
hereto and marked Exhibit C, providing for Landlord's and Tenant's
responsibilities for improvements to the Premises.
1.5. PARKING.
(a) PARKING AVAILABILITY AND COST. Commencing on January 2, 1998 or as
soon thereafter as the existing tenant in the Premises shall vacate its spaces
in the Northpoint Apartment Garage ("Garage") which is located at 0000 Xxxxxxxx
Xxxxxx, Xxx Xxxxxxxxx and continuing until the termination of this Lease, Tenant
shall have the right to use no fewer than the number of parking spaces set forth
in the Basic Lease Information (as reduced from time to time as herein provided)
for the parking of automobiles or motor bikes ("Tenant's Parking Spaces"). The
owner of the Garage shall designate which parking spaces in the Garage are
available for Tenant's use. Unless Tenant and the owner of the Garage otherwise
agree in a separate agreement between themselves, Tenant may use up to fifty
(50) parking spaces on a 24-hour per day, 7-day per week basis, but Tenant may
only use the remainder of the parking spaces during the hours of 7:30 AM to 5:30
PM, Monday through Friday. Tenant shall pay the then current fair market rent
for any parking spaces which Tenant may use. As of April 1, 1997, the rent for
parking spaces in the Garage on a 24-hour basis was $135.00 per month, and the
rent for parking spaces during business hours, Monday through Friday, was
$105.00 per month.
I
(b) PARKING AGREEMENT. Tenant acknowledges that while there is an
easement allowing the occupant of the Premises to use up to 165 parking spaces
in the Garage, Landlord neither owns nor manages the Garage. In order to use
Tenant's Parking Spaces, Tenant shall be required to enter into a written
agreement ("Parking Agreement") with the owner of the Garage and to comply with
the terms of that agreement. Tenant further acknowledges that it has received
the form of Parking Agreement which is currently in use. Tenant shall designate
the number and type of Tenant's Parking Spaces that Tenant wishes to utilize
pursuant to the notice procedure in the Parking Agreement. During the term of
this Lease, Tenant may increase or decrease the number of Tenant's Parking
Spaces, up to the maximum number provided in the Basic Lease Information,
provided that Tenant gives the owner of the Garage the written notice required
in the Parking Agreement.
ARTICLE 2 - TERM
2.1. TERM.
(a) INITIAL LEASE TERM. Unless otherwise terminated in accordance with
the provisions hereof, this Lease shall be for the period set forth in the Basic
Lease Information as the "Term." Subject to the provisions of subsections (c)
and (d) hereto, Tenant's occupancy of the Premises pursuant to the terms of this
Lease shall commence on the date that Landlord delivers the Premises to Tenant
upon not less than three (3) days' prior written notice to Tenant (the
"Commencement Date"). Landlord shall deliver the Premises to Tenant free and
clear of any rights of possession or occupancy of any existing tenant thereof,
and in broom clean condition (other than as to floors previously identified by
Tenant to be immediately demolished for construction of Tenant Improvements).
Tenant hereby acknowledges that neither Landlord nor any representative of
Landlord has represented to Tenant that after the expiration of the Term of this
Lease, Tenant shall have any right to remain in the Premises or Landlord will be
willing to negotiate with Tenant for a new lease for the Premises.
(b) TENANT'S INSURANCE CERTIFICATE. Tenant shall provide Landlord with
a certificate of insurance in accordance with the provisions of Section 10.5
hereof prior to its occupancy or use of the Premises and prior to the
construction of any Tenant Improvements. Tenant shall have no right of access to
the Premises unless and until this insurance certificate is delivered to
Landlord.
(c) DELAY IN DELIVERY OF POSSESSION. If Landlord is unable to deliver
possession of the Premises to Tenant by the Scheduled Date of Delivery specified
in the Basic Lease Information (other than due to an intentional refusal to
deliver the space), Landlord shall not be liable to Tenant for damages of any
kind; provided, however, if Landlord has not delivered the Premises to Tenant in
the condition required by this Lease by March 31, 1998, Tenant may terminate
this Lease. Subject to the foregoing, any delay in delivery shall not affect
Tenant's obligations hereunder; however, the date of June 1, 1998, as one of the
alternatives for the Rent Commencement Date, shall be extended by one (1) day
for each day that Landlord delays in delivering possession of the Premises to
Tenant beyond the Scheduled Delivery Date.
(d) DELAYS WHICH MAY EXTEND THE DATE OF JUNE 1, 1998. If the
construction of the Tenant Improvements pursuant to Exhibit C hereof is delayed
by Landlord Delays or Force Majeure Delays (both of which terms are defined in
Exhibit Q, Landlord shall not be liable to Tenant for damages of any kind.
Landlord Delays and Force Majeure Delays shall not affect Tenant's obligations
hereunder; however, in addition to subsection (c), the date of June 1, 1998, as
one of the alternatives for the Rent Commencement Date, shall be extended by one
(1) day for each day of Landlord Delays or Force Majeure Delays, as determined
pursuant to Exhibit C.
2.2. RENT COMMENCEMENT.
(a) RENT COMMENCEMENT DATE. Tenant's obligation to pay Minimum Rent
shall commence on the earlier of (i) June 1, 1998, or (ii) the date of
"substantial completion" of the Tenant Improvements described in Exhibit C (the
"Rent Commencement Date"), as such date may be extended as provided in this
Lease. For the purpose of sub-part (ii) of the preceding sentence, the Tenant
Improvements described in Exhibit C hereof shall be deemed to be
2
substantially complete at such time as the Tenant Improvements for not less than
two complete floors of the Premises have been sufficiently completed to enable,
and a temporary certificate of occupancy has been issued permitting, occupancy
of such floors by Tenant for the use thereof for their intended purpose.
(b) TENANT'S OCCUPANCY OF IMPROVED AREAS PRIOR TO THE RENT
COMMENCEMENT DATE. If Tenant occupies a portion of the Premises in which the
Tenant Improvements have been substantially completed prior to the Rent
Commencement Date, Tenant until the Rent Commencement Date shall pay Landlord
Minimum Rent in proportion to such occupancy and one hundred percent (100%) of
all costs and expenses incurred by Landlord as a result of such occupancy (which
the parties agree shall not include Real Estate Taxes). The proportionate amount
of Minimum Rent which Tenant shall owe pursuant to this subsection (b) shall be
calculated by multiplying the Minimum Rent by a fraction, the numerator of which
shall be the rentable area occupied by Tenant and the denominator of which shall
be the total rentable area of the Premises.
(c) TENANT'S OCCUPANCY OF UNIMPROVED AREAS PRIOR TO THE RENT
COMMENCEMENT DATE. If Tenant occupies a portion of the Premises in which the
Tenant Improvements have not been commenced prior to the Rent Commencement Date,
Tenant shall not be required to pay Landlord Minimum Rent as a consequence of
such occupancy. However, Tenant shall pay Landlord one hundred percent (100%) OF
ALL costs and expenses incurred by Landlord as a result of such occupancy (which
the parties agree shall not include Real Estate Taxes).
2.3. HOLDING OVER.
(a) HOLDING OVER WITH LANDLORD'S CONSENT. If Tenant, with Landlord's express
written consent, retains possession of the Premises after the expiration of the
Term of this Lease, such possession shall be deemed to be a month-to-month
tenancy terminable upon thirty (30) days written notice by either party.
Landlord shall not be deemed to have consented to Tenant's continued possession
of the Premises by accepting Rent or any other sum or by orally agreeing to
Tenant's continued possession. During any such month-to-month tenancy, Tenant
shall pay one hundred twenty-five percent (125%) of the Minimum Rent which was
payable by Tenant during the last month of the Term and all other amounts which
Tenant is required to pay under the Lease; provided, however, that Landlord may
change the amount of Rent due under this Lease upon thirty (30) days written
notice to Tenant. A month-to-month tenancy shall be subject to all provisions of
this Lease except those pertaining to the Term.
(b) HOLDING OVER WITHOUT LANDLORD'S CONSENT. If Tenant retains possession of the
Premises after the expiration of the Term of this Lease without Landlord's
written consent, Tenant shall pay to Landlord one hundred twenty-five percent
(125%) of the Minimum Rent payable by Tenant immediately prior to the expiration
of the Term as well as the Additional Lease Charges described herein. Imposition
or collection of these sums, however, shall not be construed as granting Tenant
permission to remain in the Premises after the expiration of the Term of the
Lease.
(c) DAMAGES CAUSED BY TENANT'S HOLDING OVER. Tenant acknowledges that if Tenant
remains in possession of the Premises beyond the Term of this Lease without the
written consent of Landlord, Tenant (i) may interfere with Landlord's attempts
to lease the Premises to another tenant, (ii) may prevent a subsequent tenant
from occupying the Premises, (iii) may provide a prospective tenant with the
grounds for declaring its lease for the Premises to be null and void, or (iv)
may subject Landlord to a lawsuit brought by a subsequent tenant who could not
occupy the Premises at the time specified with its lease with the Landlord. As a
result, if Tenant occupies the Premises beyond the Term of this Lease without
Landlord's written consent, Tenant shall indemnify, defend, protect, and hold
harmless Landlord from and against any loss, cost, damage, or expense, including
attorneys' fees and legal costs, incurred by Landlord in connection with
Tenant's failure to vacate the Premises at the end of the Term. In addition,
Tenant shall pay Landlord any rent or other income which Landlord shall lose as
a result of Tenant's continued occupancy of the Premises beyond the end of the
Term.
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2.4. OPTION TO EXTEND THE TERM OF THE LEASE. Landlord hereby grants to Tenant an
option to extend the Term (the "Option") with respect to all (but not less than
all) of the Premises for one (1) period of five (5) years (the "Option Term") on
all of the terms and conditions of this Lease. The Option Term shall commence
immediately following the expiration of the Initial Term (the "Option Term
Commencement Date") and shall expire on the day before the fifth annual
anniversary of the Option Term Commencement Date. Tenant shall exercise the
Option, if at all, by serving Landlord with a written notice of its exercise of
the Option not less than twelve (12) months nor more than eighteen (18) months
prior to the expiration of the Initial Term. Tenant's notice of exercise of its
Option hereunder shall be irrevocable by Tenant except as provided to the
contrary in Section 3.6(d)); provided, however, Tenant's notice of exercise
shall not be effective if at the time Tenant exercises the Option, Landlord has
declared a default under this Lease. In addition, if at any time after Tenant
validly exercises the Option and prior to the Option Term Commencement Date
Landlord declares a default because of Tenant's failure to pay Minimum Rent or
any Additional Lease Charges, Landlord shall have the right, in addition to all
of Landlord's other rights and remedies under this Lease, to terminate the
Option and to cancel unilaterally Tenant's exercise of its Option to extend the
Term. In that event, this. Lease shall expire at the conclusion of the initial
Term, and Tenant shall have no further rights under this Lease to extend the
Initial Term.
ARTICLE 3 - RENT
3.1. MINIMUM RENT. Tenant shall pay Landlord, as minimum rent for the Premises,
the amount specified in the Basic Lease Information ("Minimum Rent"). Except as
otherwise expressly provided in the Basic Lease Information, Tenant shall pay
Minimum Rent to Landlord in monthly installments, in advance, on the first day
of each month during the Term of this Lease. Upon execution of this Lease,
Tenant shall deliver to Landlord's attorney a check in the amount stated in the
Basic Lease Information as Minimum Rent for the second full month of Rent after
the Rent Commencement Date. Landlord's attorney shall retain said check,
uncashed, until Landlord obtains the consent of Landlord's lender to this Lease
and delivers to Tenant the nondisturbance agreement to which Section 16.5(b)
refers. Upon the delivery of this nondisturbance agreement, Landlord's attorney
shall deliver Tenant's check to Landlord which may then cash same. If Tenant's
obligation to pay Minimum Rent does not commence on the first day of a calendar
month, the Minimum Rent payable by Tenant for the first fractional month shall
be prorated on a thirty (30) day basis. In addition, Tenant shall pay Landlord
the consideration described in the Supplemental Agreement hereto.
3.2. INTEREST AND LATE CHARGES.
(a) INTEREST AND LATE CHARGES. If Tenant shall fail to pay when due and payable
any Rent or any other amount due under this Lease, such unpaid amounts shall
bear interest at the rate of ten percent (10%) per annum ("Default Interest")
from the date when that amount is due and payable. Tenant acknowledges that the
late payment of Rent or any other amount due under this Lease will cause
Landlord to incur costs and expenses not contemplated under this Lease,
including but not limited to administrative and collection costs and processing
and accounting expenses, the exact amount of which is extremely difficult to
fix. Therefore, subject to subsection (b) hereof, if any payment of Rent is not
received by Landlord within ten (10) days from the date when it is due or if any
other amount due under this Lease is not received by Landlord within thirty (30)
days from the date when it is due, Tenant shall pay Landlord a late charge equal
to three percent (3%) of such amount (the "Late Charge"). Landlord and Tenant
agree that this late charge represents a reasonable estimate of costs and
expenses that will be incurred by Landlord.
(b) NOTICE TO TENANT. The first time in any twelve (12) month period that Tenant
shall fail to pay Rent or any other amount due under this Lease within the time
provided in subsection (a) hereof, Landlord shall serve Tenant with a written
notice of its default before a Late Charge may be assessed against Tenant. In
this instance, a Late Charge shall only be imposed upon Tenant if Tenant does
not pay Rent or the amount due within ten (10) days after Landlord serves its
written notice of default on Tenant. Notwithstanding the foregoing, if Tenant in
any twelve (12) month period is late in the payment of Rent or any other amount
due under
4
this Lease on more than three (3) occasions, Tenant thereafter shall not be
entitled to receive a written notice pursuant to this subsection throughout the
remainder of the term of the Lease.
3.3. MANNER OF PAYMENT. Tenant shall pay Rent and any other amount due under
this Lease to Landlord at Landlord's address set forth in the Basic Lease
Information or at such other address as Landlord may hereafter specify in
writing to Tenant. Tenant shall pay all amounts due as Rent or any other amount
due under this Lease in lawful money of the United States, without prior demand
(except for that portion of the Rent or any other amounts due under this Lease
which are specifically identified in this Lease as amounts payable after notice
from Landlord), and without deduction or offset.
3.4. DEFINITION OF RENT. The term "Rent" when used herein shall refer to both
Minimum Rent and Additional Lease Charges.
3.5. REDUCTION OF MINIMUM RENT. At any time prior to the issuance of the Letter
of Credit, Tenant shall have the right to reduce the Minimum Rent set forth in
the Basic Lease Information in exchange for a reduction of the Tenant
Improvement Allowance specified in Exhibit C hereof. The amount of the reduction
of Minimum Rent shall be calculated as follows:
(i) the Tenant Improvement Reduction shall be calculated by subtracting the
actual amounts expended by Landlord pursuant to Section 2 of Exhibit C from the
Tenant Improvement Allowance of $3,880,600.00 ("Tenant Improvement Reduction"),
(ii) the Tenant Improvement Reduction shall then be multiplied by .012733 (which
is the amount of the monthly payment required to fully amortize $1.00 at an
annual rate of 9% in 119 equal monthly payments) in order to obtain the amount
of the reduction of the monthly Minimum Rent from the 2nd to the 120th month of
the Lease ("Minimum Rent Reduction"), and
(iii) the Minimum Rent Reduction shall be subtracted from the monthly Minimum
Rent in order to obtain the revised monthly Minimum Rent from the 2nd to the
120th month of the Lease.
For example, if the Tenant Improvement Reduction were $380,600.00, the revised
monthly Minimum Rent would be calculated as follows:
Tenant Improvement Allowance $3,880,600.00
Landlord's Actual Expenditures
on Tenant Improvements - 3,500,000.00
Tenant Improvement Reduction $ 380,600.00
Tenant Improvement Reduction $380,600.00
Multiplier x .012733
$ 4,846.18
Months 0 - 00 Xxxxxx 00 - 000
Minimum Rent
$208,582.25 $240,920.59
Minimum Rent Reduction - 4,846.18 - 4,846.18
Revised Minimum Rent $203,736.07 $236,074.41
3.6. MINIMUM RENT DURING THE OPTION TERM.
(a) RENT FOR THE OPTION TERM. The Lease for the Option Term shall be upon the
same terms and conditions as during the original Term, except (i) the Base Year
for calculating Additional Lease Charges for the Option Term shall be the period
specified in the Basic Lease Information, and (ii) the Minimum Rent during the
Option Term shall be equal to ninety-five percent (95%) of the Prevailing Market
Rate (as that term is defined in subsection (c) hereof) for Comparable Space (as
that term is defined in subsection (b) hereof).
5
(b) COMPARABLE SPACE. As used herein, the term "Comparable Space" shall
mean leased general office space determined in accordance with Section
3.6(f)(ii).
(c) PREVAILING MARKET RATE. As used herein, the term "Prevailing Market Rate"
shall mean the amount of monthly minimum rent determined from leases, excluding
subleased space, of Comparable Space (1) which have been executed within the
period between six (6) months and eighteen (18) months before the commencement
of the Option Term or (2) where the prevailing market rent in a lease of
Comparable Space has been determined within the period between six (6) months
and eighteen (18) months before the commencement of the Option Term in order to
determine option rent for such lease in connection with the exercise of an
option to extend the term of such lease. The determination of Prevailing Market
Rate shall take into account and adjust, when it is appropriate to do so, for
the following items of comparability:
(i) the effective rent which shall mean the aggregate of all of the minimum rent
paid by each tenant in Comparable Space over the term of that lease and dividing
that aggregate amount of minimum rent by the number of months in the lease term
for each lease of Comparable Space,
(ii) the location and size of the premises covered by leases of Comparable
Space,
(iii) the value (determined on the basis of dollars per rentable square foot) of
tenant improvements to the premises covered by leases of Comparable Space, for
which the landlord paid at the commencement of the new term for which the
effective rate has been calculated, and
(iv) the duration of the term of leases of Comparable Space.
(d) LANDLORD'S NOTICE AND TENANT'S RESPONSE. No later than ten (10) months prior
to the commencement of the Option Term, Landlord shall serve Tenant with a
written notice setting forth Landlord's determination of the Prevailing Market
Rate for the Option Term ("Landlord's Notice") and with a list of leases of
Comparable Space ("Comparable Space List") upon which Landlord's Notice was
based. The Comparable Space List shall include at least the following
information for each lease: (i) the address of the leased space, (ii) the names
of the landlord and tenant, (iii) the rentable square footage, (iv) the lease
term, (v) the minimum monthly rent throughout the lease term, (vi) any periods
of free rent, and (vii) the value of tenant improvements for which the landlord
paid. Within twenty (20) days after service of Landlord's Notice, Tenant shall
serve Landlord with a written notice ("Tenant's Response") stating that Tenant
either (1) elects to terminate the exercise of its Option (in which event the
Option shall lapse and this Lease shall terminate on the expiration of the
Initial Term), or (2) disagrees with Landlord's determination of the Prevailing
Market Rate and elects to resolve the disagreement as provided in subsection (f)
hereof. If Tenant does not serve Landlord with Tenant's Response as provided in
the previous sentence, Landlord's determination of the Prevailing Market Rate
shall be binding upon Tenant.
(e) INFORMAL RESOLUTION. Landlord and Tenant shall use their best efforts meet
at least two (2) times within a twenty (20) day period, at a mutually agreeable
time and place, to attempt to resolve their disagreement concerning the
Prevailing Market Rate. This consultation period (regardless of its actual
length) shall be deemed to have terminated when Landlord or Tenant shall serve
the other with a written notice stating that that party has decided to resolve
the dispute regarding Prevailing Market Rate pursuant to Section 3.6(f) of the
Lease ("Binding Resolution Notice").
(f) BINDING RESOLUTION OF ANY DISAGREEMENT REGARDING PREVAILING MARKET
RATE. Any disagreement regarding the Prevailing Market Rate shall be resolved as
follows:
(1) If Landlord and Tenant cannot agree on the Prevailing Market Rate, Landlord
and Tenant shall each select one real estate broker ("Party Broker") to
determine the Prevailing Market Rate. Each Party Broker chosen by Landlord and
Tenant shall serve his/her written opinion determination of the Prevailing
Market Rate (determined in accordance
6
with the terms of this Section 3.6) on both Landlord and Tenant within thirty
(30) days after the date when the Binding Resolution Notice was served on
Landlord or Tenant.
(ii) In making their determination of the Prevailing Market Rate, the Party
Brokers shall first attempt to find leases of Comparable Space in excess of
40,000 rentable square feet in the area in yellow on Exhibit D (the "Preferred
Area"). If the Party Brokers are able to find at least five (5) leases of
Comparable Space in excess of 40,000 rentable square feet within the Preferred
Area, the Prevailing Market Rate shall be based solely on leases of Comparable
Space within the Preferred Area. If the Party Brokers are unable to find at
least five (5) leases of Comparable Space in excess of 40,000 rentable square
feet in the Preferred Area, leases of Comparable Space in excess of 20,000
rentable square feet in the entire area on Exhibit D shall also be used to
determine the Prevailing Market Rate.
(iii) At least ten (10) days before the Party Brokers are required to serve
their written opinion of the Prevailing Market Rate on Landlord and Tenant, each
Party Broker shall serve the other, by personal delivery or by facsimile
transmission, with the Comparable Space List which that Party Broker intends to
use in reaching his/her opinion of Prevailing Market Rent. If either Party
Broker fails to serve the other with his/her Comparable Space List as required
by this sub-part (iii), the Neutral Broker shall only use leases on the
Comparable Space List of the Party Broker which did comply with this sub-part
(iii) in reaching his/her determination of Prevailing Market Rent.
(iv) If only one Party Broker serves his/her written determination of the
Prevailing Market Rate on Landlord and Tenant within the time period stated in
sub-part (i) hereof, that opinion shall be deemed to be the Prevailing Market
Rate for the Option Term. If both Party Brokers serve their respective
determinations of Prevailing Market Rate within the time period stated in
sub-part (i) hereof and if the two opinions of Prevailing Market Rate differ by
five percent (5%) or less of the higher of the two, the average of the two
opinions shall be the Prevailing Market Rate. If the two opinions differ by more
than five percent (5%) of the higher of the two, then the two Party Brokers
shall select a third real estate broker (the "Neutral Broker") to determine the
Prevailing Market Rate. If the Party Brokers are unable to agree upon a Neutral
Broker within twenty (20) days, either Landlord or Tenant may request the
American Arbitration Association to appoint the Neutral Broker to determine the
Prevailing Market Rate.
(v) After the selection of the Neutral Broker, each Party Broker shall
serve the Neutral Broker with (1) his/her written determination of the
Prevailing Market Rate for Comparable Space which was served in accordance with
sub-part (i) hereof and (2) if a Party Broker has complied with sub-part (iii)
hereof, his/her Comparable Space List. Each party may also submit to the Neutral
Broker, with a copy simultaneously served on the other party, a written argument
in support of its determination of the Prevailing Market Rate. Neither Party
Broker may change the figure in its determination of the Prevailing Market Rate
after delivering its determination to the other pursuant to sub-part (ii) hereof
or change the leases on its Comparable Space List after delivering same to the
other Party Broker pursuant to sub-part (iii) hereof. Subject to the limitation
set forth in subsection (g) hereof, the Neutral Broker, within thirty ( , 30)
days after his/her selection, shall determine the Prevailing Market Rate by
choosing one of the determinations of the Prevailing Market Rate submitted by
the Party Brokers. If both Party Brokers served their Comparable Space List in
compliance with sub-part (iii) hereof, the Neutral Broker shall base his/her
decision upon the Comparable Space Lists submitted by both Party Brokers and any
research which the Neutral Broker chooses to do on his/her own. If only one
Party Broker served his/her Comparable Space List in compliance with sub-part
(iii) hereof, the Neutral Broker shall base his/her decision only upon the
Comparable Space List submitted by the Party Broker which complied with sub-part
(iii) hereof.
(vi) All real estate brokers chosen to render an opinion of the Prevailing
Market Rate (including the Neutral Broker) shall be real estate brokers licensed
and in good standing with the State of California with not less than ten (10)
years' experience in commercial property leasing in the downtown San Francisco
area; provided, however, the Neutral Broker (but not every broker in the firm
with which the Neutral Broker is employed or associated) shall be a person who
has not represented or acted in any capacity for either party for a period of
ten (10) years before the selection of that person as the Neutral Broker. Each
party
7
shall pay the cost of the Party Broker selected by such party and one-half of
the cost of the Neutral Broker.
(vii) The provisions of subsection (f) hereof shall be the sole procedure for
the determination of Prevailing Market Rate for the Option Term in the event of
a disagreement between Landlord and Tenant; and Section 16.1 shall be
inapplicable thereto.
(g) LIMITATION ON THE DETERMINATION OF PREVAILING MARKET RATE. Notwithstanding
anything to the contrary set forth in this Section 3.6, in no event shall the
monthly Minimum Rent for the Option Term be less than the Minimum Rent payable
for the one month period immediately preceding the commencement of the Option
Term.
(h) CONFIRMATION OF THE DETERMINATION OF PREVAILING MARKET RATE. The
determination of Prevailing Market Rate pursuant to the procedure set forth in
this Section 3.6 shall be final and binding on the parties and may be confirmed
by the Superior Court of the City and County of San Francisco upon the filing of
a petition therefor by Landlord or Tenant. However, if the Neutral Broker does
not determine the Prevailing Market Rate by choosing one of the determinations
of Prevailing Market Rate submitted by the Party Brokers and, instead, uses a
different figure, the Neutral Broker shall be deemed to have exceeded his/her
powers; and the Neutral Broker's determination of Prevailing Market Rate may be
vacated pursuant to Section 1286.2(d) of the Code of Civil Procedure. Landlord
and Tenant hereby waive all of the provisions of Sections 1280 ET SEQ. of the
CALIFORNIA CODE OF CIVIL PROCEDURE and the Commercial Arbitration Rules of the
American Arbitration Association which are contrary to any of the provisions of
this Section 3.6.
(i) MINIMUM RENT PAYABLE IF THE PREVAILING MARKET RATE IS NOT DETERMINED PRIOR
TO THE OPTION TERM. If for any reason there has not been a determination of the
Prevailing Market Rate by the commencement of the Option Term, Tenant's Minimum
Rent payment at the commencement of the Option Term shall be an amount equal to
the Minimum Rent payable immediately preceding the commencement of the Option
Term. In such event, Tenant shall pay Landlord the difference, if any, between
the Prevailing Market Rate and the Minimum Rent which Tenant had paid during the
Option Term within ten (10) business days after the Prevailing Market Rate is
determined, together with interest thereon at the rate of five percent (5%) per
annum, computed from the beginning of the Option Term until the date of payment.
Notwithstanding any dispute regarding the Prevailing Market Rate, Tenant shall
pay all applicable Additional Lease Charges with respect to the Premises, in the
manner and at the times provided in this Lease, effective upon the commencement
of the Option Term.
3.7. PERCENTAGE RENT.
(a) PERCENTAGE REN In addition to the Minimum Rent, if Tenant's Permitted
Non-Office use involves Tenant's Retail Use (which term shall be defined
hereafter) of the Premises, Tenant shall pay Landlord an amount equal to five
percent (5%) of Gross Sales from Tenant's Retail Use in excess of the Breakpoint
("Percentage Rent").
(b) TENANT'S RETAIL USE AND BREAKPOINT. The term "Tenant's Retail Use" shall
mean any use of the Premises by Tenant in the area allowed for Permitted
Non-Office Use from which Tenant receives income which would require Tenant to
pay sales tax to the State of California. The term "Breakpoint" shall mean that
amount of Gross Sales which when multiplied by the Percentage Rent will equal
the Minimum Rent in any calendar year for the portion of the Premises which
Tenant uses for a Permitted Non-Office Use (except that portion of the Premises
to which Section 7. 1 (v) refers).
(c) GROSS SALES. The term "Gross Sales" shall mean: the actual sales prices or
rentals of all goods, wares and merchandise sold, leased, licensed or delivered
and the actual charges for all services performed by Tenant in, at, from, or
arising out of the use of the portion of the Premises devoted to Tenant's Retail
Use, whether for wholesale, retail, cash, credit, or trade-ins or otherwise.
Gross Sales shall include, without limitation, sales and services for which
Tenant is liable to the State of California for sales taxes and (i) where the
orders therefore originate in, at, from, or arising out of the use of the
Premises, whether delivery or performance is made from the Premises or from some
other place, (ii) made or performed by mail, telephone,
8
facsimile or computer-generated orders, and (iii) made or performed by means of
mechanical or other vending devices in the Premises. Any sums which a customer
deposits with and forfeits to Tenant shall be included in Gross Sales. Each
installment or credit sale shall be treated as a sale for the full price in the
month during which such sale is made, regardless of whether or when Tenant
receives payment therefor. No franchise or capital stock tax and no income or
similar tax based on income or profits shall be deducted from Gross Sales.
(d) EXCLUSIONS FOR GROSS SALES. Gross Sales shall not include (i) any amounts
collected and paid by Tenant for sales or excise tax imposed by any duly
constituted governmental authority, (ii) any cash or credit refund made upon any
sale in or from the Premises where the merchandise sold is thereafter returned
by the purchaser and accepted by Tenant, or (iii) sales to Tenant's employees.
(e) GROSS SALES REPORTS AND PAYMENT OF PERCENTAGE RENT. Within twenty (20) days
after the close of each calendar year, Tenant will furnish Landlord with a
written statement, certified as true and accurate by Tenant, setting forth by
calendar month the total amount of the Gross Sales from the Premises during the
preceding calendar year. This statement shall be in the form and shall contain
such information and breakdown as Landlord may reasonably require. Concurrently
with the delivery of this written statement, Tenant shall pay Landlord the
amount, if any, by which Percentage Rent for that year exceeds the Breakpoint.
(f) BOOKS AND RECORDS. Tenant shall maintain in San Francisco, in accordance
with generally accepted accounting principles, consistently applied, complete
and accurate books of account and records of all daily receipts from sales made
or services provided in connection with Tenant's Retail Use, whether for cash or
on credit, showing cumulative totals and all transactions. These books and
records shall include, but not be limited to, true copies of all sales and other
excise tax reports that Tenant may be required to furnish to any governmental
agency. These books and records shall be kept for a period of at least three (3)
years after the date of Tenant's annual statement of Percentage Rent as
described in subsection (e) hereof. The receipt by Landlord of any statement of
Gross Sales or Percentage Rent for any period or the payment of any sum as Rent
shall not bind Landlord as to the correctness of that statement.
(g) RIGHT TO AUDIT. Landlord or Landlord's designee shall have the right to
examine, at any time during normal business hours, all books and records of
Tenant which pertain to Tenant's Retail Use of the Premises. Once in each twelve
(12) month period, Landlord shall be entitled to conduct, or have a certified
public accountant conduct, an audit of the records of all business conducted in
connection with Tenant's Retail Use for the purpose of determining Gross Sales.
This audit shall be conducted during normal business hours at the Premises. If
it shall be determined as a result of such audit that there has been a
deficiency in the payment of Percentage Rent, such deficiency shall become
immediately due and payable with interest from the date when the payment should
have been made at the rate of ten percent (10%) per annum.
ARTICLE 4 - REAL ESTATE TAXES AND OPERATING EXPENSES
4.1. TENANT SHALL PAY INCREASES IN REAL ESTATE TAXES AND OPERATING EXPENSES.
(a) INCREASES IN ADDITIONAL LEASE CHARGES. During the period when Tenant
occupies, or has the right to occupy, the Premises, Tenant shall pay any
increase, over the Base Year set forth in the Basic Lease Information, in Real
Estate Taxes (as hereafter defined) levied or assessed against the Premises
during the Base Year, and in Operating Expenses (as hereafter defined) incurred
or payable by Landlord in the Base Year. The amount of any increase in Real
Estate Taxes and in Operating Expenses as hereinabove provided shall together be
defined herein as "Additional Lease Charges."
(b) ESTIMATE OF INCREASES IN ADDITIONAL LEASE CHARGES. Landlord may, at its
option, estimate the Additional Lease Charges to be paid by Tenant during the
current Lease Year (as hereafter defined) by delivering written notice to Tenant
stating the amount Tenant is required to pay each month as the estimated
increase in Additional Lease Charges. Thereafter, Tenant
9
shall pay, as additional Rent, the estimated increase in Additional Lease
Charges with its monthly payment of Minimum Rent.
(c) RECONCILIATION WITH THE ACTUAL INCREASES IN ADDITIONAL LEASE CHARGES. Within
ninety (90) days following the end of each Lease Year, commencing in the Lease
Year after Tenant first pays estimated Additional Lease Charges, Landlord shall
deliver to Tenant a reconciliation of Tenant's payments of Additional Lease
Charges with the actual increase in Real Estate Taxes and Operating Expenses
over the Base Year. If that reconciliation shows an amount owing by Tenant that
is less than the payments made by Tenant and if Tenant is not in default under
this Lease at the time such reconciliation is delivered, Landlord shall credit
any overpayment to the next payment(s) of Additional Lease Charges. If this
reconciliation shows that Tenant owes more than the estimated payments made by
Tenant, Tenant shall pay the deficiency to Landlord within thirty (30) days
after delivery of such statement of reconciliation.
(d) LEASE YEAR. The term "Lease Year" shall mean a twelve (12) month period
commencing on the annual anniversary of first day of the month in which the Rent
Commencement Date occurs.
(e) SURVIVAL OF OBLIGATIONS. The respective obligations of Landlord and Tenant
under this Section 4.1 shall survive the expiration or earlier termination of
this Lease.
4.2. DEFINITION OF REAL ESTATE TAXES.
(a) TAXES AND ASSESSMENTS INCLUDED WITHIN THE DEFINITION OF REAL ESTATE TAXES.
The term "Real Estate Taxes" as used herein shall include all real property
taxes and assessments on the Premises, as well as all personal property taxes
levied on property used in operation of the Premises whether or not now
customary or within the contemplation of the parties to this Lease. Real Estate
Taxes shall include, but not be limited to: (a) general and special assessments,
license fees, commercial rental tax levy, gross receipts tax (other than
inheritance or estate taxes), fees or assessments for transit, housing, police,
fire, or other governmental services imposed by any authority having the direct
or indirect power to tax against any legal or equitable interest of Landlord in
the Premises, against the Landlord's right to rent or other income therefrom or
against the Landlord's business of leasing the Premises; (b) any tax, fee or
charge with regard to the possession, leasing, transfer of interest, operation,
management, maintenance, alteration, repair, use or occupancy by Tenant of the
Premises; (c) any tax imposed in substitution, partially or totally, for any tax
previously included within the definition of Real Estate Taxes herein; or (d)
any additional property tax or assessment, the nature of which may not have been
previously included within the definition of Real Estate Taxes. The term "Real
Estate Taxes" shall also include the cost to Landlord of contesting the amount,
validity or applicability of any taxes or assessments mentioned in this Section
4.2 (except if such tax is excluded under Section 4.2(c) below). If, as a result
of contesting any Real Estate Taxes or for any other reason, Landlord obtains a
reduction in Real Estate Taxes, Tenant shall be entitled to the same reduction
in the increase in Real Estate Taxes as Landlord receives.
(b) ASSESSMENTS PAID IN INSTALLMENTS.. If any general or special assessment
which is payable in installments is levied and assessed against the Premises,
Tenant shall pay such assessments in installments over the longest period
permitted.
(c) TAXES AND ASSESSMENTS EXCLUDED FROM THE DEFINITION OF REAL ESTATE TAXES. The
term "Real Estate Taxes" shall not include (i) any tax which may be levied on or
against the net income or profit of Landlord, (ii) any inheritance, estate
taxes, transfer taxes, franchise taxes and capital stock taxes, (iii) any
environmental assessments, charges, or liens arising in connection with the
remediation of Hazardous Materials from the Premises, (iv) reserves for the
payment of future Real Estate Taxes. In addition, in no event shall Real Estate
Taxes include any penalty or interest due to Landlord's late payment of taxes.
(d) LIMITATION ON INCREASES IN REAL ESTATE TAXES DUE TO A CHANGE IN OWNERSHIP.
Despite any other provision of this Lease, if there is a change in ownership of
the Premises during the initial Term of this Lease and, as a result, the
Premises is reassessed for Real Estate Tax purposes pursuant to Sections 60 ET
SEQ. of the California Revenue and Tax Code
10
("Reassessment"), Tenant's obligation to pay increases in Real Estate Taxes as a
result of a Reassessment shall be limited as follows:
(i) Tenant shall never pay an increase in Real Estate Taxes attributable to
Reassessment(s) in any Lease Year which exceeds Two Hundred Fifty Thousand
Dollars ($250,000.00). For example, if the Real Estate Taxes assessed in the
Base Year were $65,000.00 and if there were a transfer during the third Lease
Year which caused a Reassessment and, solely as a result of the Reassessment, if
Real Estate Taxes beginning on the first day of the fourth Lease Year increased
by $250,000, the increases in Real Estate Taxes which Tenant would pay as a
result of this limitation (before calculating the limitation in sub-part (ii)
hereof) can be illustrated as follows:
Real Estate
Real Estate Taxes Payable Real Estate Real Estate
Lease Taxes w/o by Tenant w/o Taxes due to Total Real Taxes Paid By
Year Reassessment Reassessment Reassessment Estate Taxes Tenant
1 $65,000.00 0 0 $ 65,000.00 0
2 $66,300.00 $ 1,300.00 0 $ 66,300.00 $
1,300.00
3 $67,626.00 $ 2,626.00 0 $ 67,626.00 $
2,626.00
4 $68,979.00 $ 3,979.00 $250,000.00 $318,979.00 $253,979.00
5 $70,358.00 $ 5,358.00 $255,000.00 $325,358.00 $255,358.00
6 $71,765.00 $ 6,765.00 $260,100.00 $331,865.00 $256,765.00
7 $73,201.00 $ 8,201.00 $265,302.00 $338,503.00 $258,201.00
8 $74,665.00 $ 9,665.00 $270,608.00 $345,273.00 $259,665.00
9 $76,158.00 $11,158.00 $276,020.00 $352,178.00 $261,158.00
10 $77,681.00 $12,681.00 $281,541.00 $359,222.00 $262,681.00
(ii) Tenant's obligation for increases in Real Estate Taxes attributable to a
Reassessment in each Lease Year shall be determined by multiplying the amount
which represents any increase in Real Estate Taxes due to Reassessment(s) by the
following percentages in the following Lease Years:
Lease Year Percentage
1 0%
2 20%
3 30%
4 40%
5 50%
6 60%
7 70%
8 80%
9 90%
10 100%
This limitation, combined with the limitation in sub-part (i) can be
illustrated, by using the assumptions in the example in sub-part (i), as
follows:
Real Estate Real Estate
Taxes Payable Taxes due to Real Estate
Lease by Tenant w/o Reassessment Total Real Taxes Paid by
Year Reassessment Limited by % Estate Taxes Tenant
1 0 0 0 0
2 $ 1,300.00 0 $ 1,300.00 $ 1,300.00
3 $ 2,626.00 0 $ 2,626.00 $ 2,626.00
4 $ 3,979.00 $100,000.00 $103,979.00 $103,979.00
5 $ 5,358.00 $127,500.00 $132,858.00 $132,858.00
6 $ 6,765.00 $156,060.00 $162,825.00 $162,825.00
7 $ 8,201.00 $185,711.00 $193,912.00 $193,912.00
8 $ 9,665.00 $216,486.00 $226,151.00 $226,151.00
9 $11,158.00 $248,418.00 $259,576.00 $259,576.00
10 $12,681.00 $281,541.00 $294,222.00 $262,681.00
11
(iii) Tenant shall not pay any increase in Real Estate Taxes due to
Reassessment(s) which have occurred solely because of a change in ownership
interests within the limited liability company entity which is Landlord or any
transfer from Landlord to an entity in which those (or any of their relatives)
who currently hold more than fifty (50%) of the ownership interests in Landlord
own fifty percent (50%) or more of an interest in the succeeding entity.
4.3. DEFINITION OF OPERATING EXPENSES.
(a) DEFINITION OF OPERATING EXPENSES. "Operating Expenses" shall mean the total
cost and expenses paid or incurred by Landlord in connection with the
management, operation, maintenance and repair of the Premises, including,
without limitation, (i) janitorial, maintenance, and other service contracts;
(ii) materials, supplies, equipment, and tools; (iii) the cost of landscape
maintenance and the replacement of plants, trees, and vegetation; (iv) the cost
of maintenance, replacement, and repairs to the Premises; (v) license, permit,
and inspection fees; (vi) all inspections and testing of the Premises (except
voluntary Phase II environmental inspections which are unrelated to Tenant's
occupancy, Phase I environmental inspections which may be required by Landlord's
lender, or repointing of the bricks on the exterior of the Premises); (vii)
wages, salaries, employee benefits and payroll costs of Landlord's employees in
or serving the Premises (excluding such costs of personnel above the rank of
project manager); (viii) the reasonable fees, charges and other costs, of
independent contractors engaged by Landlord to perform work that is otherwise an
Operating Expense; (ix) a management fee equal to four percent (4%) of the
Minimum Rent each Lease Year which shall be paid to Landlord for its services as
a manager; (x) the cost of capital improvements or replacements capitalized for
federal income tax purposes (amortized over the useful life of the improvement,
as determined for federal income tax purposes, together with interest on the
unamortized balance at the rate paid by Landlord on funds borrowed for the
purpose of constructing such capital improvements) made to the Premises in
response to Tenant's requests for additional services or improvements (so long
as Tenant shall have given its prior written approval to such capital
improvement, which approval shall not be unreasonably withheld) or occasioned by
newly enacted Government Requirements as set forth in subsections (b) and (c) of
Section 8.8, (xi) the cost of contesting the validity or applicability of any
Government Requirements described in Section 8.7 or 8.8(b), and (xii) insurance
premiums and the deductible portion on any claim for all insurance obtained by
Landlord for the Premises pursuant to, and calculated in accordance with,
Section 10.2.
(b) EXCLUSIONS FROM OPERATING EXPENSES. Notwithstanding the foregoing, the term
"Operating Expenses" shall not include (1) Real Estate Taxes, (ii) depreciation
on the Premises, (iii) capital improvements (except as provided in clause (x)
above), (iv) real estate brokers' commissions, executive salaries (exclusive of
fees paid for management activities), (v) attorneys' fees and court costs
(except as provided in clause (xiii) above), (vi) voluntary exterior window
replacements, (vii) principal and interest payments on loans and ground lease
payments and other similar finance charges, (viii) repairs or other work
occasioned by the exercise of the power of eminent domain, (ix) costs incurred
due to Landlord's violation of the terms and conditions of this Lease or of any
law, statute, ordinance, (x) expenses for which Landlord is fully compensated or
reimbursed by insurance or by any other party, (xi) cost of repairs or other
work occasioned by a Casualty Loss (as that term is defined in Section 11.1
hereof), (xii) Landlord's general overhead and/or administrative expenses,
(xiii) except as otherwise expressly provided in this Lease, any cost or other
expense incurred with respect to the investigation, removal, remediation,
containment, clean-up, or other response associated with or pertaining to the
actual or alleged presence of Hazardous Materials at, on, beneath, or in the
vicinity of the Premises or to the actual or threatened release of Hazardous
Materials at, on, beneath, or in the vicinity of the Premises, (xiv) any costs
paid to any affiliate of Landlord which is in excess of the amount which would
be paid absent such relationship, and (xv) costs incurred in connection with any
financing or refinancing of the Premises by Landlord.
(c) CONSULTATION REGARDING OPERATING EXPENSES. Each year Landlord agrees to
consult with Tenant regarding the Operating Expenses which it anticipates
incurring over the next twelve (12) months. Tenant may offer any suggestions
which it believes may improve services to the Premises or reduce Operating
Expenses; and Landlord shall give Tenant's suggestions due consideration in
planning for the Operating Expenses for the Premises.
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(d) CHANGE OF A POLICY OR PROCEDURE WHICH INCREASES OR DECREASES OPERATING
EXPENSES. If Operating Expenses at any time increase or decrease as a result of
a change in a policy or procedure in the operation of the Premises (e.g., the
addition of earthquake insurance or other insurance coverages if such insurance
or coverages were not included in Operating Expenses in the Base Year or any
change in the management fee) ["Expense Change"], the Operating Expenses for the
Base Year shall be adjusted for the twelve (12) month period in which the
Expense Change occurs (and for all subsequent years during which that Expense
Change remains in effect). The Operating Expenses for the Base Year shall be
increased or decreased, as appropriate, by the estimated amount that (i) would
have been included in the Operating Expenses for the Base Year if the Expense
Change had been in effect during the Base Year or (ii) would not have been
included in Operating Expenses for the Base Year if the Expense Change were not
in effect during the Base Year. The Operating Expenses for the twelve (12) month
period in which the Expense Change occurs, and thereafter so long as it remains
in effect, shall be based upon the revised Operating Expenses for the Base Year.
(e) LIMITATION ON OPERATING EXPENSES. For any twelve (12) month period in which
increases in Operating Expenses are determined, Landlord shall not collect in
excess of one hundred percent (100%) of the amount by which all Operating
Expenses in the Premises for that period exceed the aggregate of all Operating
Expenses for the Base Year. Landlord shall not recover, through Operating
Expenses, any item of cost more than once.
4.4. TENANT'S RIGHT TO AUDIT. Landlord shall keep in San Francisco complete and
detailed books and records of account relating to Operating Expenses and Real
Estate Taxes for a period of three (3) years after Landlord delivers to Tenant
its annual statement of reconciliation of Additional Lease Charges. During that
same period of three (3) years, Tenant shall have the right to inspect the books
and any other pertinent records of Landlord, on reasonable notice and during
normal business hours, for the purpose of verifying such statement. Tenant may
contest Landlord's computation of Additional Lease Charges for the Premises,
either in whole or in part, by giving Landlord written notice stating its
objections; provided that such notice is received by Landlord, not later than
two (2) months after the expiration of the aforesaid three (3) year period. If
Landlord agrees, or it is determined through arbitration pursuant to Section
16.1 hereof, that there has been an over-charge of Additional Lease Charges to
Tenant, Landlord shall reimburse Tenant for such over-charges within ten (10)
days of such determination, but Tenant shall not have the right to terminate
this Lease as a consequence of such over-charges.
4.5. TENANT SHALL PAY FOR TAXES LEVIED ON ITS PROPERTY. Tenant shall be liable
for, and pay prior to delinquency, all taxes levied against Tenant's Property.
If any taxes on the above-described property are levied against Landlord or
Landlord's property and if Landlord pays the same believing them to be due, or
if the assessed value of Landlord's property is increased by the inclusion of
the value placed on the above-described property and if Landlord pays the taxes
based on such increased assessment believing same to be due, Tenant shall pay
Landlord the taxes so levied against Landlord or the portion of such taxes
resulting from the increase in the assessments due to the above-described
property.
ARTICLE 5 - UTILITIES USED IN THE PREMISES
5.1. TENANT SHALL PAY FOR ALL UTILITY COSTS. Within ten (10) days after
receiving a xxxx therefor from Landlord or directly from the utility, Tenant
shall directly pay to the appropriate utilities for all Utility Costs, including
taxes thereon, incurred in connection with the Premises and/or Tenant's
occupancy thereof during the entire Term of this Lease. The term "Utility Costs"
shall mean the total cost for all water, heat, air-conditioning, gas,
electricity, telephone/telecommuni cations, garbage, and other utilities
provided to or for the Premises (collectively "Utilities").
5.2. NO LIABILITY FOR INTERRUPTION IN UTILITIES. Landlord shall not be liable in
damages or otherwise, and Tenant shall not be entitled to a reduction in Rent or
to terminate this Lease, as a consequence of any failure or interruption of any
utility or service provided to the Premises, unless caused by the gross
negligence or willful misconduct of Landlord.
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5.3. INTRA-BUILDING NETWORK CABLE. Tenant shall be solely responsible, and
Landlord shall not be responsible, for providing any telephone equipment,
including wiring, within the Premises or for providing telephone service or
connections from the utility to the Premises.
ARTICLE 6 - SECURITY DEPOSIT
6.1. SECURITY DEPOSIT.
(a) LETTER OF CREDIT OR PROCEEDS FROM THE LETTER OF CREDIT AS A SECURITY
DEPOSIT. On the later of January 2, 1998 or five (5) days prior to the
commencement of construction of the Tenant Improvements in the Premises pursuant
to Exhibit C hereof, Tenant at its sole cost and expense shall deliver to
Landlord an irrevocable stand-by letter of credit in the amount set forth in the
Basic Lease Information and on the terms described in Section 6.2 ("Letter of
Credit"). The Letter of Credit and any amount of the Letter of Credit that is
drawn on by Landlord but not applied by Landlord to a default of Tenant shall be
held by Landlord as security for Tenant's faithful performance of its
obligations under this Lease. If the security deposit is in the form of cash
because Landlord has drawn on the Letter of Credit, the security deposit may be
commingled with funds of Landlord, and Landlord shall have no obligation or
liability for payment of interest on the security deposit.
(b) USE OF THE SECURITY DEPOSIT. If Tenant fails to pay any amount when due and
payable hereunder or fails to perform any of the terms hereof and Landlord
declares a default under this Lease as a result thereof, Landlord may apply and
use all or any portion of the security deposit for Rent, for payment of any
amount for which Landlord has become obligated as a result of Tenant's default,
or for any loss, expense, or damage sustained by Landlord as a result of
Tenant's default.
(c) RESTORATION OF THE SECURITY DEPOSIT. If Landlord uses any of the security
deposit, Tenant shall, within ten (10) days after written demand therefor,
restore the security deposit, either in the form of cash or the issuance of a
new irrevocable stand-by letter of credit on the terms set forth in Section 6.2,
to the full amount required by the Lease. Tenant's failure to do so shall
constitute a default hereunder; and Landlord shall have the same remedies set
forth in Article 14 for a default in the payment of Rent.
6.2. TERMS OF THE LETTER OF CREDIT. The irrevocable stand-by Letter of Credit
which Tenant shall deliver to Landlord as its security deposit:
(a) shall be in compliance with the terms of this Article 6 and
otherwise shall be in a form reasonably satisfactory to Landlord,
(b) shall be issued by a mutually agreeable financial
institution ("Bank"),
(c) shall name Landlord as beneficiary,
(d) shall be for a term of no less than one (1) year and shall provide that it
is automatically renewable unless the issuer serves Landlord with a written
notice of non-renewal ("Notice of Non-Renewal") at least thirty (30) days before
the then applicable expiration date of the Letter of Credit,
(e) shall provide that in the event that Landlord transfers ownership of the
Premises to another person/entity, Landlord, subject to compliance with the
requirements of the Bank for the transfer of the Letter of Credit, may transfer
the Letter of Credit to the new owner upon Landlord's presentation to the issuer
of a written notice of transfer together with the original Letter of Credit and
that in such event the issuer shall reissue the Letter of Credit in the name of
the transferee stated in the notice of transfer, and
(f) shall provide that Landlord may draw upon the Letter of Credit by presenting
the following to the issuer: (i) a sight draft in an amount which does not
exceed the amount of the Letter of Credit executed by the person executing the
"Certificate" as described in
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sub-part (ii) hereof, and (ii) a certificate (the "Certificate") executed under
penalty of perjury under the laws of the State of California, stating that the
person executing the Certificate is the duly appointed representative of
Landlord and further stating (1) that the Account Party is in default under the
Lease, following written notice and the passage of any applicable cure period,
and that the amount of the sight draft presented concurrently with the
Certificate is due, owing, and unpaid under the Lease, or (2) that the "Notice
of Non-Renewal" has been given and that the Account Party has not provided
Landlord with a satisfactory substitute letter of credit.
6.3. RELEASE/REDUCTION OF THE LETTER OF CREDIT.
(a) RELEASE OF THE LETTER OF CREDIT. So long as Tenant has never been in
material default under this Lease beyond any applicable cure periods, the Letter
of Credit shall be released by Landlord on the later of (i) January 1, 2000 or
(ii) the date when Tenant has established, to Landlord's reasonable
satisfaction, that it has achieved either of the following financial goals:
(i) after-tax net income (as reported on its Form 10-Q filings) in excess of $0
for eight (8) consecutive quarters prior to the date of the release of the
Letter of Credit, or
(ii) after-tax net income, excluding the after-tax effect of extraordinary items
(as reported on its Form 10-K filings) exceeded One Million Dollars
($1,000,000.00) for each of the two (2) consecutive fiscal years ending prior to
the date of the release of the Letter of Credit.
(b) REDUCTION OF THE LETTER OF CREDIT. At any time prior to the Commencement
Date, Tenant shall have the right to reduce the Letter of Credit in exchange for
a reduction of the Tenant Improvement Allowance specified in Exhibit C hereof.
The amount of the reduction of the Letter of Credit shall be equal to two-thirds
(2/3rds) of the amount by which the Tenant Improvement Allowance is reduced. For
example, if the Tenant Improvement Allowance were reduced by Nine Hundred
Thousand Dollars ($900,000.00), the Letter of Credit would be reduced by Six
Hundred Thousand Dollars ($600,000.00).
ARTICLE 7 - USE AND CONDITION OF THE PREMISES
7.1. USE OF THE PREMISES. Tenant shall only use or permit the Premises to be
used for those purposes explicitly set forth in the Basic Lease Information, and
no use of the Premises for any other purpose or in any manner in violation of
the terms of this Lease shall be permitted. In addition, any interactive or
multi-media use or any retail use (collectively "Permitted NonOffice Uses") of
the Premises shall also be limited by all of the following restrictions:
(i) all Permitted Non-Office Uses shall be limited to the first floor of
the Premises;
(ii) Tenant at its sole cost and expense shall be responsible for obtaining
any and all governmental permits and all required approvals necessary for all
Permitted Non-Office Uses (the availability of which is not warranted by
Landlord);
(iii) except as provided in sub-part (v) hereof, only the named Tenant under
this Lease shall be entitled to use the Premises for Permitted Non-Office
Uses;
(iv) except as provided in sub-parts (v) and (vi) hereof, no Permitted
NonOffice Use shall involve any retail use or the sale of any products of
CNET, Inc.;
(v) Tenant may sublease no more than 2,000 rentable square feet of the
first floor of the Premises to one or two sublessees for the use of the area
as a juice bar, coffee shop, pastry shop, or the sale of gourmet sandwiches,
so long as Tenant obtains Landlord's prior written consent to the particular
use (in addition to obtaining Landlord's consent pursuant to Sections 8.4 and
13. 1), which consent shall not be unreasonably withheld; and
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(vi) if CNET, Inc. engages in any activity on the first floor of the
Premises within the definition of Tenant's Retail Use, the total square
footage which shall be devoted to such use shall not exceed two hundred and
fifty (250) square feet.
7.2. OPERATION OF TENANT'S BUSINESS.
(a) LIMITATIONS ON USE OF THE PREMISES. Tenant shall not exceed the floor weight
limitations of the Premises as set forth in the Basic Lease Information without
Landlord's prior written consent. Tenant acknowledges that the limitations
stated in the Basic Lease Information are for the protection of Tenant's
employees as well as the Premises, and serious harm may occur to Tenant's
employees and damage may occur to the Premises if Tenant fails to adhere to the
limitations in the Basic Lease Information.
(b) CAPACITY OF BUILDING SYSTEMS. Tenant acknowledges that the heating, air
conditioning and ventilating ("HVAC") system of the Premises is designed to
operate efficiently assuming an electrical load less than 3.5 xxxxx per square
foot of rentable area of the Premises and that, subject to the foregoing
limitation, the Premises has a total connected electric power capability (at the
main transformer serving the Premises) of 10 xxxxx per rentable square foot.
Tenant shall not connect or use any electrical equipment that exceeds the
capacity of the HVAC system of the Premises without first providing Landlord
with plans and specifications (either under Article 8 hereof or pursuant to
Exhibit C in connection with the construction of the Tenant Improvements)
evidencing, to the reasonable satisfaction of Landlord, the installation and
operation of supplemental HVAC facilities that will provide cooling to
efficiently operate any equipment with an aggregate electrical load in excess of
the design capacity of the existing HVAC system in the Premises. In no event
shall Tenant connect or use any equipment in the Premises that shall exceed the
total electrical load capacity of the Premises.
(c) NO UNLAWFUL OR INJURIOUS USE OF THE PREMISES. Tenant shall not use nor
permit the Premises to be used in any manner which may result in waste or the
creation of a nuisance. Tenant shall not use or permit the use of the Premises
for any purpose or in any manner which may constitute a violation of the laws,
ordinances, regulations or requirements of any governmental entity having
authority over the Premises or any recorded covenants, conditions, or
restrictions.
(d) EFFECT OF TENANT'S USE OF THE PREMISES ON LANDLORD'S INSURANCE. Tenant shall
not use or permit the Premises to be used in any manner which will increase the
existing rate of insurance upon the Premises or cause the cancellation of any
insurance policy covering the Premises or any part thereof. Tenant shall not
sell, or permit to be kept, used or sold, in or about the Premises, any article
which shall now or hereafter be prohibited by Landlord's fire insurance policy.
Tenant shall comply with any and all rules, orders, regulations, or requirements
of the Pacific Fire Rating Bureau or any other organization performing a similar
function of which it has prior written notice. If Tenant breaches any of the
provisions of this subsection and fails to cure such breach within fifteen (15)
days after written notice thereof and, as a consequence, there is an increase in
Landlord's fire insurance premiums, Tenant shall pay the entire cost of any
additional premiums changed.
7.3. CONDITION OF THE PREMISES. Tenant hereby acknowledges that Tenant has had a
reasonable opportunity to inspect the Premises. Except for those improvements to
the Premises which Landlord in this Lease has expressly agreed to make and
except as otherwise provided in Section 7.4, Tenant hereby accepts the Premises
"as is" on the date Tenant takes possession hereunder subject to all laws,
ordinances, and regulations applicable to the Premises and their use and any
restrictions of record. Tenant acknowledges that, except as otherwise provided
in Section 7.4, Tenant shall be solely responsible for its investigation into
the condition of the Premises and whether or not the Premises is in compliance
with any applicable building codes and shall not be entitled to rely upon the
representations, if any, of any person concerning the condition of the Premises
or its compliance with codes. Tenant shall promptly comply with all laws,
ordinances, and regulations applicable to the Premises or their use during the
Term of this Lease or any extensions thereof. However, Tenant shall not be
responsible for any capital or structural improvements to the Premises required
by any governmental entity, except as provided in Section 8.7 hereof.
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7.4. LANDLORD'S OBLIGATION UPON DELIVERY OF THE PREMISES.
(a) COMPLIANCE WITH BUILDING CODES AND THE STRUCTURAL SYSTEM OF THE PREMISES.
Landlord hereby warrants to Tenant (i) that the Premises existing as of the
Commencement Date shall be in compliance with all applicable building codes
applicable to the Premises in its "as-is" condition as of the Commencement Date
and (ii) that the structural elements of the Premises (including the roof, the
roof membrane and other structural elements) existing as of the Commencement
Date shall be in good condition and repair and in compliance with all applicable
building regulations, laws, statutes, ordinances, codes, and covenants and
restrictions of record applicable to the Premises in its "as-is" condition as of
the Commencement Date. If Tenant does not give Landlord written notice of
non-compliance with this warranty within the earlier of (1) ten (10) business
days after the discovery of the breach of this warranty or (2) one-hundred
eighty (180) days after the Rent Commencement Date, this warranty shall expire
and thereafter shall be of no further force or effect.
(b) BUILDING SYSTEMS. Landlord warrants that as of the Commencement Date the
electrical, plumbing, lighting and mechanical systems of the Premises in their
"as-is" condition as of the Commencement Date shall be in working order. If
Tenant does not give Landlord written notice of non-compliance with this
warranty within five (5) days after the Commencement Date, this warranty shall
expire and thereafter shall be of no further force or effect.
(c) TENANT'S REMEDIES. If the Premises do not comply with any of the warranties
set forth in this Section 7.4 as of the Commencement Date, Landlord, after
receipt of written notice from Tenant setting forth with specificity the nature
and extent of such noncompliance and after confirming the accuracy of Tenant's
notice, shall promptly rectify the same at Landlord's sole cost and expense
(which shall not be charged to Tenant). Such repair and correction shall be
Tenant's sole and exclusive remedy against Landlord for breach of these
warranties. Notwithstanding the foregoing, Landlord shall not be required to
remedy any portion of the Premises that does not comply with the above-stated
warranty to the extent that Tenant intends to alter or remove that portion of
the Premises during the construction of its Tenant Improvements pursuant to
Exhibit C.
ARTICLE 8 - MAINTENANCE, REPAIRS, AND ALTERATIONS
8.1. TENANT'S OBLIGATIONS FOR REPAIRS AND MAINTENANCE.
(a) REPAIRS AND MAINTENANCE. At all times during its occupancy of the Premises,
Tenant shall repair and maintain in good condition, at its sole cost and
expense, Tenant's Property, any portion of the Premises which have been damaged
as a consequence of any act or omission of Tenant or any employee or independent
contractor of Tenant, and all telecommunications equipment installed in the
Premises by or for the benefit of Tenant. All repairs to the Premises made by
Tenant shall be at least equal in quality, value, and utility to the
improvements to the Premises before repairs were required.
(b) RETURN OF THE PREMISES. Upon the expiration or earlier termination of this
Lease, Tenant shall return the Premises to Landlord clean and otherwise in the
same condition as existed on the Rent Commencement Date, except for (i) normal
wear and tear, (ii) the Tenant Improvements (other than Tenant's cabling system)
constructed in accordance with Exhibit C hereto, and (iii) Alterations which
Landlord does not require Tenant to remove pursuant to Section 8.4(c) [which
Tenant shall not be required to remove]. Any damage to the Premises, including
any structural damage, resulting from Tenant's use or from the removal of
Tenant's Property shall be repaired by Tenant.
(c) ROOF/EXTERIOR/STRUCTURAL SYSTEM OF THE PREMISES. Notwithstanding any other
provision of this Lease, in the event that Tenant shall construct a deck on the
roof of the Premises, install any equipment on the roof of the Premises, install
any Exterior Tenant Signage (as that term shall be defined hereafter) on any
portion of the Premises, or modify any of the structural members of the Premises
in any manner, Tenant shall thereafter be solely responsible
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for the maintenance and repair of the roof and structural system of the Premises
to the extent the roof or structural system was directly or indirectly affected
by such additions or modifications.
8.2. LANDLORD'S OBLIGATIONS FOR REPAIRS AND MAINTENANCE.
(a) REPAIRS AND MAINTENANCE. Except for Tenant's obligations for repair and
maintenance set forth in Section 8.1, Landlord shall repair and maintain in good
condition the Premises including the foundation, roof and exterior walls and all
mechanical, electrical, and plumbing systems (but not the telecommunications
systems). However, unless Landlord has itself determined that repairs are
required, Landlord's obligation to make repairs shall not arise until receipt of
written notice from Tenant describing the repairs that are required. After
receipt of this notice, Landlord shall have a reasonable period of time to
commence and complete such repairs as are required.
(b) WAIVER. Tenant hereby waives all rights to make repairs at the expense of
Landlord or in lieu of such repairs to vacate the Premises as provided by
California Civil Code Sections 1941 and 1942 or any other law or ordinance now
or hereafter in effect.
8.3. LANDLORD'S RIGHT TO MAKE REPAIRS ON BEHALF OF TENANT. If Tenant refuses or
neglects to make repairs to the Premises which Tenant is required to make, in a
manner reasonably satisfactory to Landlord, Landlord shall have the right upon
giving Tenant ten (10) days prior written notice to enter the Premises and make
the repairs which were Tenant's responsibility hereunder. In such event, within
ten (10) days after receiving an invoice therefor, Tenant shall pay all costs
and expenses incurred by Landlord with interest thereon.
8.4. ALTERATIONS AND ADDITIONS. Except as provided in subsection (d) hereof,
Tenant shall not make any additions, alterations, repairs, or improvements to
the Premises, including the addition of a deck to the roof of the Premises
(collectively "Alterations"), without the prior written consent of Landlord,
which shall not be unreasonably withheld. (Notwithstanding anything in the
foregoing to the contrary, the Tenant Improvements constructed by Tenant in
accordance with Exhibit C shall not be deemed Alterations for purposes of this
Section 8.4; provided, however, the terms of Section 8.4(e) shall apply to any
such improvements constructed by Tenant whether or not the same are installed as
part of the Tenant Improvements.) Regardless of subsection (d) hereof, all
Alterations shall be subject to the following terms and conditions:
(a) DOCUMENTATION OF ALTERATIONS TO BE PERFORMED. Except in case of an emergency
requiring immediate repairs, Tenant shall deliver to Landlord the documents
described in Section 8.5(a) at least thirty (30) days before the date when
Tenant commences work on Alterations of the Premises.
(b) REQUIREMENT OF PAYMENT AND PERFORMANCE BONDS. Landlord may require, at
Landlord's sole option, that Tenant obtain payment and performance bonds, naming
Landlord as obligee, in an amount equal to the total estimated cost of the
Alterations if (i) Tenant is then in default under this Lease, (ii) Tenant has
failed to make any Rent payment when due more than twice during the preceding
twelve (12) months, or (iii) Government Requirements (as hereinafter defined)
impose an obligation to make alterations, improvements, or repairs to the
Premises, as a result of the Alterations proposed by Tenant in an amount in
excess of One Hundred Thousand Dollars ($ 100,000.00).
(c) TITLE TO AND REMOVAL OF ALTERATIONS. All Alterations shall become the
property of Landlord upon installation and, unless Landlord otherwise directs,
shall be surrendered with the Premises when Tenant vacates the Premises. Upon
the expiration or earlier termination of this Lease, Landlord shall have the
right to require Tenant, at Tenant's cost, to remove any Alterations (i) which
Tenant installed without Landlord's consent either in breach of this Lease or
pursuant to subsection (d) hereof, (ii) which were made in accordance with
subsection (e) hereof, or (iii) which Landlord informed Tenant should be removed
when Landlord granted its consent to the Alterations. Notwithstanding the
foregoing, Tenant shall have no obligation to remove any structural Alterations
required to be installed or constructed by Tenant pursuant to Section 8.7. If
Tenant is required to remove Alterations, Tenant shall restore the Premises to
its condition on the Commencement Date of this Lease, except as modified by
18
Alterations which Landlord has approved and not informed Tenant should be
removed at the expiration of the Lease.
(d) ALTERATIONS WHICH DO NOT REQUIRE LANDLORD'S CONSENT. TENANT SHALL have the
right to perform Alterations to THE PREMISES WITHOUT LANDLORD'S CONSENT SO long
as (i) the aggregate cost of the Alterations in any twelve (12) month period is
less than Fifty Thousand Dollars ($50,000.00) and (ii) the Alterations are
non-structural, are not made to the roof or the exterior of the Premises, and do
not affect any of the Utilities serving the Premises.
(e) TELECOMMUNICATIONS EQUIPMENT. At any time during the term of the Lease,
Tenant shall have the right to place upon the roof of the Premises one or more
so-called "satellite dishes" or other similar device (or to replace any such
existing device), such as antenna, for the purpose of receiving and sending
radio, television, computer, telephone, or other communication signals. Any such
installation shall be in accordance with all applicable provisions of Sections
8.4 and 8.5 of the Lease. Tenant shall be responsible for any damage to the
Premises, including but not limited to repairs to the roof of the Premises,
caused by the installation, removal, operation, or maintenance of any such
device. Tenant shall be solely responsible for obtaining any government
approvals which may be required in connection with the installation of any
equipment or structures on the roof. Landlord, by virtue of this subsection (e),
shall not be deemed to have represented to Tenant that any governmental
authorities will approve the installation of any equipment or the erection of
any structure on the roof of the Premises.
8.5. TENANT'S CONSTRUCTION AND REPAIR WORK.
(a) INFORMATION TO BE PROVIDED TO LANDLORD. Tenant shall provide Landlord with
the following: (i) a written description of the work to be performed and
reasonably detailed plans and specifications for the proposed Alterations, which
are reasonably satisfactory to Landlord, prepared at Tenant's sole expense by a
licensed architect, (ii) the name and address of the contractor who will be
performing the Alterations to the Premises, and (iii) a written statement
jointly signed by an architect, licensed to practice in the State of California,
and by Tenant which describes the Alterations, if any, that Government
Requirements will require be performed as a result of Tenant's proposed
Alterations.
(b) PROSECUTION OF THE WORK. Tenant shall perform all Alterations in the
Premises with contractors who are duly licensed in the State of California and
who are approved in advance by Landlord. Tenant shall cause its contractors to
perform their work in a good and workmanlike manner and shall further cause them
to diligently prosecute all work to completion.
(c) CONTRACTOR'S INSURANCE. Before performing any construction or repair work in
the Premises, Tenant shall obtain an insurance certificate and a policy
endorsement, naming Landlord and its agents, employees, and any ground lessors
and mortgagees whose names shall have been furnished to Tenant as additional
insureds, from the general contractor or, if there is no general contractor,
from each specialty contractor whom it employs to perform such work. Each
insurance certificate and policy endorsement shall (i) list all of the named
insureds under the policy, (ii) be issued by an insurer admitted to transact
insurance in the State of California with a financial rating of at least an
A:VII as rated in the most recent edition of Best's Insurance Reports, (iii)
provide at a minimum that the contractor has in full force and effect a
Commercial General Liability policy in amounts not less than $2,000,000.00 per
occurrence for personal injury, bodily injury and property damage with coverage
for premises and operations liability, contractual liability, completed
operations coverage, products liability, and broad form property damage
liability, (iv) contain an endorsement requiring at least thirty (30) days
written notice from the insurance company to all of the named additional
insureds before any cancellation or material change in coverage, scope, or
amount of the insurance policy, and (v) either contain an endorsement (1) which
states that no additional insured will be excluded from coverage in the event
that the additional insured is alleged or found to be negligent in connection
with any claim made under the policy or otherwise or (2) in the form of ISO Form
# CG 20 10 10 93 (or any amendments to this form which are substantially similar
and do not result in a reduction of coverage for the additional insureds). If
Tenant causes any work to be performed in the Premises without first obtaining
such an insurance certificate and policy endorsement, Tenant
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shall indemnify, defend, protect, and hold harmless Landlord from and against
any loss, cost, claim, or damage for which Landlord would have been covered by
such insurance policy.
(d) WORK SHALL CONFORM TO APPLICABLE LAWS AND REGULATIONS. Any construction or
repair work performed by Tenant shall be in accordance with all applicable
government laws, ordinances, codes, and regulations, including but not limited
to all applicable building codes, the Americans with Disabilities Act, and Title
24 of the California Code of Regulations. If any governmental agency or body
requires work to be performed to the Premises as a result of work performed by
Tenant or of Tenant's use of the Premises, Tenant shall be solely responsible
for performing such work. Tenant shall also be solely responsible for obtaining
all required government permits for any work performed by Tenant.
(e) TENANT'S RESPONSIBILITY FOR COSTS. Tenant shall pay all costs and expenses
associated with any Alterations, including any out-of-pocket costs and expenses
reasonably incurred by Landlord in reviewing the proposed Alterations or
inspecting or testing the work performed in the Premises.
8.6. LIENS.
(a) NOTICE TO LANDLORD. At least ten (10) days before the commencement of any
work for which a claim of lien may be recorded, Tenant shall give Landlord
written notice of its intention to commence work to enable Landlord to post
notices of non-responsibility or any other notices which Landlord deems
necessary for the proper protection of Landlord's interest in the Premises.
Landlord shall have the right to enter the Premises and post such notices at any
reasonable time.
(b) REMOVAL OF LIENS. Tenant shall keep the Premises free from any liens arising
out of any work performed by Tenant. If, within thirty (30) days after the
recordation of a mechanic's lien, Tenant fails to obtain a release of the lien
or fails to post a mechanic's lien release bond in the required amount, Landlord
shall have the right, but not the obligation, to cause same to be released by
any means including the payment of the claim giving rise to the lien. Tenant
shall pay to Landlord all costs and expenses incurred by Landlord (including
attorney's fees) in releasing the lien within ten (10) days after Landlord's
demand therefor.
8.7. TENANT'S OBLIGATION FOR COMPLIANCE WITH GOVERNMENT REQUIREMENTS.
(a) TENANT'S OBLIGATION., Except for the obligations of Landlord, as provided in
Sections 7.4 and 8.8 and Landlord's obligations under Exhibit C, Tenant, at
Tenant's sole cost and expense, shall comply with all Government Requirements
(as hereafter defined). It is the intent of the parties that the foregoing
covenant shall impose upon Tenant, and shall relieve Landlord from, the
obligation to make all Alterations to the Premises compelled by Government
Requirements that are (i) non-structural in nature, whether or not of a
substantial and/or permanent nature, (ii) structural or non-structural
Alterations as a consequence of Tenant's use of the Premises described in
Section 8.1(c), and (iii) structural or non-structural Alterations which are
required as a result of (1) Tenant's particular use of the Premises (for other
than general office use), including but not limited to all Permitted Non-Office
Uses, (2) any Alterations to the Premises made by Tenant, or (3) Tenant's breach
of any provision of this Lease. The phrase "non-structural" when used in Article
8 shall mean all such work within the four walls of the Premises, to the doors,
door frames, and entrances to the Premises, that do not require replacement,
alteration or improvement to any of the structural elements of the Premises
(including the roof or roof membrane). It is further the intent of the parties
that the allocation of responsibility for compliance with Government
Requirements as set forth in this Article 8 shall be binding upon the parties
regardless of whether or not this Lease be deemed to be a "net" lease.
(b) DEFINITION OF GOVERNMENT REQUIREMENTS. The term "Government Requirements" as
used in this Lease shall mean all laws, orders, codes, regulations, and
requirements of federal, state, county and municipal authorities which are now
or at any time hereafter may be in effect relating to the condition, use, or
occupancy of the Premises (whether or not any condition or occupancy is related
to Tenant's particular use of the Premises), including but not limited to all
applicable building codes, the Americans with Disabilities Act, and Title 24 of
the California Code of Regulations (collectively "Government Requirements"). By
way of
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example and not limitation, these improvements, alterations, and repairs shall
include those imposed by handicapped accessibility, fire, and life-safety
requirements.
8.8 LANDLORD'S OBLIGATION for COMPLIANCE WITH GOVERNMENT REQUIREMENTS.
(a) LANDLORD'S OBLIGATION. Except as provided to the contrary in Sections 8.1(c)
and 8.7 of this Lease, Landlord, at Landlord's sole cost and expense, shall be
solely responsible for complying with any Government Requirements relating to
the structural portions of the Premises (including the floor slab and the
structural columns), the roof, the exterior walls, and the foundation.
Landlord's obligation hereunder shall include compliance with Government
Requirements as a result of a condition existing in the Premises as of the
Commencement Date which is not in compliance with Government Requirements as of
that date.
(b) LANDLORD'S OBLIGATIONS FOR NEWLY ENACTED GOVERNMENT REQUIREMENTS. If newly
enacted Government Requirements which were not applicable to the Premises as of
the date of this Lease require capital improvements which are not the obligation
of Tenant under Section 8.7, Landlord shall make such Alterations to the
Premises and the cost thereof following completion of the work (other than any
cost required to correct defects in construction or conditions not in
conformance with code requirements existing as of the date of this Lease) shall
be included in Operating Expenses as set forth in subsection (c) hereof.
(c) COST ALLOCATION. Landlord shall amortize the cost of the capital
improvements made pursuant to subsection (b) hereof on a straight line basis
over the useful life (as reasonably determined by Landlord) of such capital
improvements. The term "useful life" shall mean (i) except as provided in
sub-part (ii) hereof, the period of time defined in accordance with generally
accepted accounting principles or (ii) in the case of capital improvements which
would otherwise have a useful life beyond the remaining term of this Lease but
which Landlord reasonably anticipates would not be utilized by another tenant
after the expiration of the term of this Lease, the remaining term of the Lease
after the construction of the capital improvements. Tenant's obligation to pay
its share of such capital improvements shall be limited to the portion of the
cost thereof that is to be amortized as hereinabove provided during the period
of the remainder of the Term of this Lease.
ARTICLE 9 - LANDLORD'S RIGHT OF ENTRY
9.1. RIGHT OF ENTRY. Landlord (and any designated agent, representative,
employee, or contractor) shall have the right to enter the Premises at all
reasonable times (which, as a general matter, shall mean normal business hours)
and, except in cases of emergency, after giving Tenant not less than twenty-four
(24) hours' verbal notice, to make repairs required of Landlord hereunder, to
inspect the Premises, to supply any service to be provided by Landlord
hereunder, to show the Premises to prospective purchasers, mortgagees or, during
the last year of the Term of this Lease, tenants, and to post notices of
non-responsibility. Except in the case of an emergency, Landlord employees
(including, without limitation, Landlord's agents and contractors) who enter the
Premises shall be prepared to provide proper identification and shall enter only
in the presence of and accompanied by a representative of Tenant; and any entry
shall be limited to work areas in which non-sensitive and non-proprietary work
is on-going. Landlord may for that purpose erect and use structures in and
through the Premises where reasonably required by the character of the work to
be performed, provided that when work is performed during Business Hours, the
work shall be performed in a manner that minimizes interference with Tenant's
business. Landlord may also place "For Lease" signs on the outside of the
Premises during the last three (3) months of this Lease.
9.2. EMERGENCY ENTRANCE INTO THE PREMISES. Landlord shall have the right to use
any and all means that Landlord may deem necessary or proper to open the doors
of the Premise or otherwise obtain entry to any portion of the Premises during
an emergency, Landlord shall give Tenant immediate verbal notice of any such
entry and the need therefor. Any emergency entry to the Premises shall not under
any circumstances be deemed to be a forcible or unlawful entry into, or a
detainer of, the Premises or an eviction, actual or constructive, of Tenant from
the Premises.
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9.3. DAMAGES SUFFERED BY TENANT AND ABATEMENT OF RENT AS A CONSEQUENCE OF
LANDLORD'S WORK.
(a) LANDLORD'S RESPONSIBILITY FOR DAMAGES. Except as otherwise provided in
Section 10.3, Landlord shall be liable to Tenant for any personal injury or
damage to Tenant's Property caused by Landlord's negligence or willful
misconduct when making repairs or performing maintenance.
(b) ABATEMENT OF MINIMUM RENT. During the period when Landlord is performing
work in the Premises, Tenant shall be entitled to an abatement of Minimum Rent
if Landlord's work substantially interferes with Tenant's business in the
Premises. Tenant's Minimum Rent shall be abated for the period and in proportion
to Landlord's interference with Tenant's business.
(c) WAIVER. Landlord shall not be liable, and Tenant hereby waives any claim
against Landlord, for lost profits, for loss of occupancy or quiet enjoyment of
the Premises, for constructive eviction, and for any other loss occasioned by
Landlord in connection with its work in the Premises.
ARTICLE 10 - INSURANCE AND INDEMNIFICATION
10.1. TENANT'S INSURANCE. Tenant shall carry and keep in force during the Term
and any extension thereof and at all times while in occupancy of the Premises
the following types of insurance:
(a) GENERAL LIABILITY. Commercial General Liability Insurance policy (including
Personal Injury Liability and Medical Payments coverage), which shall include
broad form contractual liability, with a total limit which is not less than the
amount per occurrence specified in the Basic Lease Information [except as same
may be adjusted in accordance with Section 10.3(c)], bodily injury and property
damage combined, insuring against any and all liability for libel, slander,
false arrest, wrongful eviction, personal injury, property damage and for
injuries to or death of persons occurring in, on, or about the Premises or
arising out of the maintenance, use, or occupancy of the Premises and all areas
adjacent thereto. All liability insurance shall specifically insure the
performance by Tenant of its indemnity obligations under Section 10.6. The
policy shall contain a severability of interest clause. Such insurance shall
name Landlord, its agents, employees, and any ground lessors and mortgagees
whose names shall have been furnished to Tenant as additional insureds. Unless
Landlord shall have given its prior written consent, the foregoing liability and
property damage policy shall cover all insured claims which arose during the
term of the policy, regardless of when Landlord or Tenant is first notified of
that claim.
(b) WORKER'S COMPENSATION AND EMPLOYERS' LIABILITY. Worker's Compensation and
Employers' Liability insurance covering Tenant's employees for California
Worker's Compensation benefits, including employers' liability with limits for
each accident as required by law.
(c) TENANT'S PROPERTY. Fire and perils covered under a Standard Special Causes
of Loss Coverage Form (with no exclusions pertaining to sewer or drain back-ups,
continuous seepage, or any limitation of loss caused by water without prior wind
damage to the Premises), sprinkler leakage and plate glass damage covering, in a
form reasonably satisfactory to Landlord, Tenant's Property, and all furniture,
fittings, installations, partitions and trade fixtures for one hundred percent
(100%) of the full replacement cost thereof (regardless of Tenant's use value in
such property) as shall from time to time be determined by the Tenant. Provided
this Lease is not terminated as of a result of the casualty triggering the loss,
the proceeds from such insurance shall be used exclusively to replace Tenant's
Property in the Premises.
(d) BUSINESS INTERRUPTION. Business interruption and extra expense
insurance in such amounts as will reimburse Tenant for direct or indirect loss
of earnings and
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costs incurred attributable to the perils commonly covered by the Standard
Special Causes of Loss Coverage Form described above. Business interruption
insurance shall be issued by the same insurer which issues, and shall include
the same grounds for coverage as, the Standard Special Causes of Loss Form
described herein.
10.2. LANDLORD'S INSURANCE.
(a) LANDLORD'S INSURANCE POLICIES. Landlord shall obtain (i) replacement
coverage property insurance for the Premises, leasehold improvements and
betterments to the Premises, and Alterations for one hundred percent of the full
replacement cost thereof, with an agreed value endorsement at a value reasonably
acceptable to Tenant, and (ii) liability insurance insuring Landlord, its
agents, contractors and employees in connection with the Premises with a total
limit which is not less than the amount per occurrence specified in the Basic
Lease Information (except as same may be adjusted in accordance with Section
10.3(c)). All liability insurance shall specifically insure the performance by
Landlord of its obligations under this Lease as a covered contract. Landlord's
insurance may include, but not limited to insurance and endorsements covering
any and all casualty risks, earthquake, flood, malicious mischief, Rent loss,
vandalism, sprinkler damage, public liability, civil disorder, hazardous
materials, plate glass, sign, worker's compensation, and such other forms of
insurance and endorsements thereon as Landlord may, from time to time, require
in connection with the Premises. Tenant shall be named as an additional loss
payee on Landlord's replacement coverage insurance policy.
(b) BLANKET INSURANCE PGLICY. Landlord may carry any insurance described in this
Section 10.2 as part of a blanket policy. In such case, a proportionate share of
the cost of such insurance, reflecting exposure to loss, shall be allocated to
the Premises and shall be included in Operating Expenses.
10.3. INSURANCE REQUIREMENTS.
(a) REQUIREMENTS OF ALL INSURANCE. All insurance which Landlord or Tenant
are required to maintain under the terms of this Lease shall:
(i) be issued by insurance companies approved to transact insurance business in
the State of California with a financial rating of at least an A:VI as rated in
the most recent edition of Best's Insurance Reports; and
(ii) contain an endorsement requiring at least thirty (30) days written notice
from the insurance company to Landlord, Tenant, and any ground lessors and
mortgagees whose names shall have been furnished to Tenant before any
cancellation or material change in coverage, scope, or amount of the insurance
policy.
(b) REQUIREMENTS OF TENANT'S LIABILITY INSURANCE. All liability insurance
which Tenant is required to maintain under the terms of this Lease shall:
(i) be written as primary policies, not contributing with and not in
excess of coverage which Landlord or any Indemnitee may carry;
(ii) contain an endorsement listing the names of all Indemnitees as
additional insureds;
(iii) contain an endorsement which states that no Indemnitee will be excluded
from coverage in the event that the Indemnitee is alleged or found to be
negligent in connection with any claim made under the policy or otherwise; and
(iv) not include a cross liability exclusion.
(c) ADJUSTMENTS TO TENANT'S LIABILITY INSURANCE COVERAGE. At the commencement of
the Option Period (if Tenant exercises its option pursuant to Section 2.5) the
amount of liability insurance carried by Landlord and Tenant, as set forth in
the Basic Lease Information, may be reviewed by Landlord's insurance advisor;
and if in his judgment, the amount of such insurance should be increased,
Landlord or Tenant, as the case may be, shall
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immediately increase the amount of its liability insurance in accordance with
the determination of Landlord's insurance advisor and shall thereafter maintain
such coverage.
10.4. WAIVER OF CLAIMS AND WAIVER OF SUBROGATION.
(a) WAIVER OF CLAIMS. To the extent that each party has a right to receive or
has received insurance proceeds therefor, Landlord and Tenant each hereby waive
any claim or right of recovery against the other party for any loss or damage to
their respective property or any loss to their respective businesses or incomes,
any loss or damage to the contents of the Premises, or any operation in the
Premises, or the restoration of the Premises, whether or not such loss or damage
is caused by the fault or negligence of the other party.
(b) WAIVER OF SUBROGATION. Landlord and Tenant shall use their best efforts,
respectively, to cause each insurance policy obtained by either of them to
provide that the insurance company waives all right of recovery by way of
subrogation against Landlord and Tenant in connection with any damage or loss
covered by such policy; provided, however, that the waiver of subrogation in
Landlord's liability insurance policy shall be dependent upon Tenant's liability
insurer providing the insurance coverage to the Indemnitees required by this
Lease. If an insurance policy cannot be obtained with a waiver of subrogation or
is obtainable only by the payment of an additional premium, the party attempting
to obtain the insurance shall notify the other party of this fact in writing
within ten (10) days after being so notified by the insurance company.
Thereafter, the other party shall have a period of fifteen (15) days after
receipt of this notice (i) to find an insurance company which is admitted to
transact insurance business in the State of California and is willing to issue
an insurance policy with a waiver of subrogation at no additional cost or (ii)
to pay the additional premium demanded by the insurance company for the waiver
of subrogation. If an insurance policy cannot be obtained with a waiver of
subrogation or if the party for whose benefit a waiver of subrogation was to be
obtained fails to pay the additional premium charged for the waiver of
subrogation within the aforesaid ten (10) day period, the other party shall be
relieved from its obligation to obtain a waiver of subrogation with respect to
that policy of insurance.
10.5. CERTIFICATE OF INSURANCE AND POLICY ENDORSEMENTS AND TENANT'S FAILURE TO
PROVIDE EITHER. Tenant shall provide Landlord with Policy Endorsements and
Certificate(s) of Insurance evidencing that each of the policies and the
specified provisions required by Sections 10.1, 10.3, and 10.4(b) are in full
force and effect. If Tenant intends to fulfill its obligation to obtain
insurance in accordance with the foregoing sections through a blanket policy
which covers Tenant in the Premises as well as in other business locations,
Tenant shall fulfill its obligation hereunder by providing Landlord with a copy
of the endorsement to the blanket policy. If Tenant fails to provide the
aforesaid Policy Endorsements and Certificate(s) of Insurance prior to the date
when Tenant takes possession of the Premises and thereafter before the
expiration or cancellation of these insurance policies, Landlord shall have the
right, but not the obligation, to procure such insurance in the amounts and
according to the terms stated in Sections 10.1, 10.3 and 10.4(b). All costs and
expenses incurred by Landlord in obtaining such insurance shall be paid by
Tenant within three (3) days after receiving a xxxx therefor from Landlord.
10.6. INDEMNIFICATION.
(a) TENANT'S INDEMNITY OBLIGATION. Tenant shall indemnify, protect, defend, and
hold harmless Landlord (and its partners, agents, and employees) and any ground
lessors and/or mortgagees whose names shall have been furnished to Tenant
("Indemnitees") against and from any and all claims, losses, costs, damage,
injury, death, and expenses including, without limitation, penalties, fines and
reasonable attorneys' fees (including the fees of independent counsel)
("Indemnified Claims") arising from (i) any failure by Tenant to observe or
perform any of the provisions of this Lease, (ii) the use or occupancy of the
Premises by Tenant or any person claiming through or under Tenant, (iii) the
condition of the Premises so long as same is within Tenant's supervision and
control, or (iv) any acts, omissions or negligence of Tenant or any person
claiming through or under Tenant or of the contractors, agents, servants,
employees or licensees of Tenant in, on, or about the Premises. However,
Tenant's indemnity obligation shall not include Indemnified Claims arising from
the gross negligence or willful misconduct of Landlord, its agents, contractors
or employees. If any action or proceeding is brought against Landlord by reason
of any of the foregoing matters, Tenant shall upon notice defend the same at
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Tenant's expense by counsel reasonably satisfactory to Landlord, and Landlord
shall cooperate with Tenant in such defense. Landlord shall not be required to
have first paid any claim in order to be defended or indemnified. Tenant shall
not be required to indemnify Landlord for losses to the extent, if any, that
Landlord has received insurance proceeds therefor or Landlord's insurer has
made payments on behalf of Landlord.
(b) SURVIVAL OF OBLIGATION. Landlord and Tenant's obligations under
this Section 10.6 shall survive termination of the Lease.
ARTICLE 11 - DAMAGE OR DESTRUCTION
11.1. LANDLORD'S NOTICE TO TENANT. If the Premises are damaged by fire,
earthquake, act of God, the elements, or other casualty ("Casualty Loss") and as
a consequence thereof Tenant vacates at least 1/3 of the Premises within thirty
(30) days after the Casualty Loss, Landlord shall send a written notice to
Tenant stating whether it is reasonable to anticipate that the Casualty Loss can
be repaired within two hundred and seventy (270) days after the Casualty Loss.
If the Premises are damaged by a Casualty Loss and Tenant does not vacate at
least 1/3 of the Premises within thirty (30) days after the Casualty Loss,
Landlord shall send a written notice to Tenant stating whether it is reasonable
to anticipate that the Casualty Loss can be repaired within two hundred and
seventy (270) days after repairs are commenced. Both of these notices shall be
referred to herein as "Landlord's Casualty Notice." In addition, within ten (10)
days after receipt by Landlord of written notice from Landlord's insurer stating
whether the Casualty Loss is a covered loss under the policy and of a written
estimate from a licensed architect, engineer, or contractor estimating the cost
of repairs for the Casualty Loss, Landlord shall provide a written notice to
Tenant ("Insured/Self-Insured Notice"), stating (i) whether the Casualty Loss is
an Insured Loss (as hereafter defined) or (ii) whether the Casualty Loss is a
SelfInsured Loss (as hereafter defined).
11.2. LANDLORD'S OBLIGATION TO REPAIR.
(a) INSURED LOSS. If the Casualty Loss, not including Tenant's Property, is
fully covered by Landlord's insurance, without regard to any deductible under
Landlord's insurance policy, ("Insured Loss") and it is reasonable to anticipate
that the Casualty Loss can be repaired within the time period stated in
Landlord's Casualty Notice, Landlord shall promptly repair the Casualty Loss.
While the repairs are being made, this Lease (subject to Section 11.8 hereof)
shall remain in full force and effect.
(b) SELF-INSURED LOSS. If the Casualty Loss is not an Insured Loss, so long as
(i) the cost to repair the damage to the Premises, not including Tenant's
Property, caused by a Casualty Loss is less than an amount equal to ten percent
(10%) of the lesser of (1) the full replacement cost of the improvements on the
Premises, determined as of the date of the Casualty Loss, or (2) the fair market
value of the Premises, determined as of the date of the Casualty Loss, (ii) it
is reasonable to anticipate that the Casualty Loss can be repaired within the
time period stated in Landlord's Casualty Notice, and (iii) the Casualty Loss
was not caused, directly or indirectly, by any act or omission of Tenant or any
of its employees, agents, contractors, clients, or invitees, Landlord shall
promptly repair the Casualty Loss ("Self-Insured Loss"). While the repairs are
being made, this Lease (subject to Section 11.8 hereof) shall remain in full
force and effect.
11.3. TERMINATION OF THE LEASE AFTER A CASUALTY LOSS.
(a) MUTUAL RIGHT TO TERMINATE THE LEASE. If the Casualty Loss cannot be repaired
within the time period stated in Landlord's Casualty Notice, Landlord or Tenant,
respectively, shall have the right, within thirty (30) days after delivery of
Landlord's Casualty Notice, to give notice to the other terminating this Lease
as of a date specified therein, which date shall not be less than thirty (30)
nor more than sixty (60) days after the date of the notice.
(b) TENANT'S RIGHT TO TERMINATE THE LEASE. If Landlord does not provide Tenant
with Landlord's Casualty Notice within sixty (60) days after the date of the
Casualty Loss, Tenant shall thereafter have the right, which may be exercised at
any time before Tenant
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receives Landlord's Casualty Notice, to give notice to Landlord terminating this
Lease as of a date specified therein, which date shall not be less than thirty
(30) nor more than sixty (60) days after the date of the notice from Tenant.
(c) LANDLORD'S RIGHTS IF A CASUALTY LOSS IS NOT AN INSURED LOSS. Except as
otherwise provided in subsections (a) and (b) hereof, if the Premises is damaged
by a Casualty Loss which is not an Insured Loss or a Self-Insured Loss, Landlord
shall have the right (i) to commence reconstruction of the Premises and
prosecute the same diligently to completion, in which event this Lease shall
continue in full force and effect or (ii) to terminate this Lease. Landlord
shall notify Tenant of its election in writing within thirty (30) days after the
delivery of the Insured/Self-Insured Notice. If Landlord decides to terminate
this Lease, the termination shall be effective immediately upon delivery of
Landlord's notice to Tenant of its election.
(d) TENANT'S OBLIGATION FOR RENT. If either party terminates this Lease pursuant
to Sections 11.3 or 11.6, this Lease and all interest of Tenant in the Premises
shall terminate on the date specified in the notice of termination. Subject to
Section 11.8 hereof, Tenant shall pay the Rent and any other amounts due under
this Lease until the later of (i) the date specified in the notice of
termination or (ii) the date when Tenant vacates the Premises, Landlord shall
refund to Tenant any Rent previously paid for any period after the date when
Tenant vacates the Premises. If neither Landlord nor Tenant deliver to the other
a notice terminating this Lease within the time specified in this Section,
Landlord shall repair the Casualty Loss to the Premises with all reasonable
diligence; and subject to the provisions of Section 11.8 hereof, this Lease
shall remain in full force and effect.
11.4. TENANT'S RIGHT TO REPAIR. Notwithstanding Section 11.3(c), if Landlord
elects to terminate this Lease rather than restore the Premises, Tenant shall
have the right to pay for the restoration of the Premises at Tenant's sole
expense by (i) serving written notice of this election upon Landlord within ten
(10) days after receipt of Landlord's Casualty Notice terminating this Lease
pursuant to Section 11.3(c) and (ii) providing Landlord with proof (which is
reasonably satisfactory to Landlord) of its ability to pay for the restoration.
If Tenant so elects, this Lease shall remain in full force and effect; and
Landlord at Tenant's expense shall commence reconstruction and repair of the
Premises within sixty (60) days after the date of Tenant's notice.
11.5. LANDLORD'S AND TENANT'S RESPECTIVE RESPONSIBILITIES FOR REPAIR.
(a) RESPONSIBILITIES FOR REPAIR. If Landlord elects or is required to repair the
Premises under this Article 11, Landlord shall repair at its cost any damage to
the Premises except Tenant's Property, and Tenant shall repair and/or replace
Tenant's Property.
(b) TENANT'S RIGHT TO OBTAIN INSURANCE PROCEEDS. Landlord shall make available
to Tenant for repairs to Tenant's Property that portion of the proceeds, if any,
of the insurance carried by Landlord which Landlord's insurance carrier
determines to be attributable to the Casualty Loss to Tenant's Property (which
determination shall be binding upon Landlord and Tenant), subject to the
following conditions: (i) that Tenant shall not then be in default under this
Lease, (ii) that Landlord shall first be given satisfactory proof that such work
has been or will be fully performed by Tenant, and (iii) that in the event
Tenant shall fail to commence the work to be performed by Tenant and carry it to
completion with due diligence, Landlord shall have the right, but not the
obligation, to perform the work on behalf of Tenant and any amount expended by
Landlord in doing so shall be repayable by Tenant to Landlord within ten (10)
days after the receipt by Tenant of a xxxx setting forth the amount thereof.
11.6. DAMAGE - END OF TERM.
(a) MUTUAL RIGHT TO TERMINATE AT THE END OF THE TERM. Notwithstanding anything
to the contrary in Section 11.3 hereof, if the Premises are destroyed or damaged
(in an amount in excess of two (2) months of Minimum Rent) during the last
eighteen (18) months of the Term (whether or not the Casualty Loss is an Insured
Loss or a Self-Insured Loss), Landlord or Tenant may elect to terminate this
Lease, with no liability to either party, by serving written notice of such
election to terminate ("Early Termination Notice") on the other party within
thirty (30) days after the date when the destruction or damage occurred.
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(b) TENANT'S EXERCISE OF ITS OPTION TO EXTEND THE TERM. If a Casualty Loss
should occur during the last eighteen (18) months of the initial Term of the
Lease in an amount which would justify the termination of this Lease pursuant to
subsection (a) hereof and if Tenant's option to extend the Term pursuant to
Section 2.4 has not expired, Tenant shall have the right to void Landlord's
Early Termination Notice pursuant to subsection (a) hereof by serving Landlord,
within ten (10) days after Tenant's receipt o the Early Termination Notice, with
a written exercise of its option to extend the Term pursuant to Section 2.4.
11.7. TENANT'S WAIVER OF STATUTORY RIGHTS. Tenant waives any statutory rights of
termination, including but not limited to those under Sections 1932(2), 1933(4)
and 1942 of the California Civil Code, which may arise by reason of the partial
or total destruction of the Premises.
11.8. ABATEMENT OF RENT DUE TO A CASUALTY LOSS. In the event of a Casualty Loss,
Tenant shall be entitled to an abatement of Rent to the extent that the Casualty
Loss materially interferes with Tenant's business in the Premises. If Rent is
abated, it shall be abated based in proportion to (i) the rentable area of the
Premises which cannot be occupied by Tenant for the operation of its business
either because of damage to the Premises caused by the Casualty Loss or repairs
which are undertaken to repair th damage caused by the Casualty Loss and (ii)
the total rentable area of the Premises. Except for the abatement of Rent, if
any, Tenant shall have no claim against Landlord for any damage suffered by
reason of any Casualty Loss.
ARTICLE 12 - CONDEMNATION
12.1. TAKING OF THE PREMISES.
(a) TENANT'S RIGHT TO TERMINATE THE LEASE. If more than ten percent (10%) of the
Premises is taken under the power of eminent domain, Tenant shall have the right
to terminate this Lease as of the date when Tenant is required to vacate the
Premises, by serving written notice of such election within thirty (30) days
after receipt by Tenant of written notice from Landlord that the Premises have
been so taken. Landlord shall promptly notify Tenant in writing of any taking
pursuant to an eminent domain action or deed in lieu thereof. If this Lease is
so terminated, each party shall thereafter be released from any further
liability hereunder after Tenant vacates the Premises, except for those
provisions which this Lease states are to survive the termination of this Lease.
(b) EFFECT IF THE LEASE IS NOT TERMINATED. If Tenant does not terminates this
Lease within the time specified herein, Tenant shall remain in that portion of
the Premises which was not taken; and, in that event, Landlord, at its cost and
expense, shall restore the remaining portion of the Premises as soon as possible
and, to the extent economically reasonable, construct tenant improvements of
like quality and character as those that existed prior to such taking.
Thereafter, the Rent shall be equitably reduced, taking into account the
relative value of the portion of the Premises taken as compared to the portion
remaining; and this Lease shall terminate as to the part taken as of the date
when the condemning authority takes title or possession, whichever occurs first.
12.2. COMPENSATION. In the event of any taking (regardless of whether it results
in termination of this Lease), Landlord shall be entitled to the entire award or
compensation in such proceeding; provided, however, Tenant shall have the right
to apply for compensation or damages for Tenant's Property and Tenant's trade
fixtures affected thereby, moving expenses, and losses sustained by Tenant
arising from its business, but not for any value attributed to the Premises.
12.3. VOLUNTARY SALE. For purposes of this Article 12, a voluntary sale or
conveyance in lieu of condemnation, under threat of condemnation, shall be
deemed a taking under the power of eminent domain.
12.4. WAIVER. Tenant hereby waives any statutory rights of termination which
Tenant may have by reason of any partial taking of the Premises under the power
of eminent domain.
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ARTICLE 13 - ASSIGNMENT AND SUBLEASE
13.1. PROHIBITION AGAINST ASSIGNMENTS OR SUBLEASES WITHOUT LANDLORD'S CONSENT.
(a) LANDLORD'S CONSENT REQUIRED. Except as set forth in subsection (b) hereof,
without Landlord's prior written consent in each instance, Tenant shall not
directly or indirectly, voluntarily or by operation of law, (i) (1) sell,
assign, encumber, pledge or otherwise transfer or hypothecate, any of its
interest in or rights with respect to the Premises or Tenant's leasehold estate
hereunder, (2) sell or transfer more than forty percent (40%) of its outstanding
shares if Tenant is a corporation, (3) add, delete, or transfer more than forty
percent (40%) of its partnership interests or any general partnership interest
if Tenant is a partnership, or (4) add, delete, or transfer more than forty
percent (40%) of its membership interests or the interests of any manager/member
if Tenant is a limited liability company (collectively "Assignment"), or (ii)
permit all or any portion of the Premises to be occupied by anyone other than
Tenant, sublet all or any portion of the Premises, or transfer a portion of its
interest in or rights with respect to Tenant's leasehold estate hereunder
(collectively "Sublease").
(b) PERMITTED TRANSFERS. Notwithstanding subsection (a) hereof, if Tenant is a
corporation whose stock is traded on any commonly recognized national or
regional stock exchange or if Tenant is a corporation, a limited partnership, or
a limited liability company with a net worth at the time of Assignment in excess
of Ten Million Dollars ($10,000,000.00),
(i) the sale and transfer of the stock or other ownership interests in Tenant in
transactions effected on a nationally recognized public stock exchange and
(whether or not a change in control results) the transfer of stock pursuant to
tender offers to shareholders, whether or not solicited, shall not be deemed an
Assignment under Section 13. 1 (a);
(ii) Tenant shall have the right, without the prior consent of Landlord, to
assign this Lease in connection with a merger, consolidation, or sale of
substantially all of its assets so long as the successor is also a corporation
whose stock is traded on any commonly recognized national or regional stock
exchange ("Qualified Successor"); and
(iii) Tenant shall have the right, without the prior consent of Landlord, to
assign this Lease or to Sublease all or any portion of the Premises to (1) any
parent or subsidiary of Tenant or of such parent or (2) provided Sublease(s) of
space either do not exceed an aggregate of 15,000 rentable square feet of the
Premises or do not equal or exceed one full floor in the Premises, any joint
venture or alliance partner with, or consultant to, Tenant (whether or not
affiliated with Tenant) during the course of any collaboration or contract with
such party (individually and collectively, a "Permitted Transferee").
However, even if Landlord's consent is not required hereunder, Tenant and any
assignee or sublessee of Tenant, as applicable, must still comply with Sections
13.2, 13.5, and 13.7.
(c) AN ASSIGNMENT OR SUBLEASE WITHOUT LANDLORD'S CONSENT. Any Assignment or
Sublease that fails to comply with Section 13. 1 (a) or (b) shall be void and,
at the option of Landlord, shall constitute a non-curable default by Tenant
under this Lease. The acceptance of Rent or any other amounts by Landlord from a
proposed assignee or subtenant when Tenant has breached this Section 13.1 shall
not be deemed to be a waiver of Landlord's right to declare Tenant in default
and shall not constitute a consent to an Assignment or Sublease by Landlord.
(d) LIENS ON TENANT'S PROPERTY. Tenant shall have the right to hypothecate
Tenant's Property without Landlord's prior written consent. Landlord shall
execute and deliver customary lien waivers in a form reasonably acceptable to
Tenant's equipment lender.
(e) LIMITATION ON USE IN THE EVENT OF AN ASSIGNMENT/SUBLEASE. If there is an
Assignment of this Lease or if there is a Sublease of any portion of the first
floor of the Premises, the assignee or sublessee shall not have the right to use
the Premises for any Permitted NonOffice use, with the sole exception of the use
described in Section 7. 1 (v).
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13.2. NOTICE OF THE PRO OSED ASSIGNMENT OR SUBLEASE. If Tenant desires at any
time to enter into an Assignment of this Lease or a Sublease of all or any
portion of the Premises, Tenant shall first give notice to Landlord of its
desire to do so, which notice ("Tenant's Notice") shall contain (i) the name and
address of the proposed assignee or sublessee and whether the proposed assignee
or sublessee is a Qualified Successor or a Permitted Transferee, (ii) the nature
of the proposed assignee's or sublessee' business to be carried on in the
Premises, (iii) the general terms and provisions of the proposed Assignment or
Sublease, (iv) a current financial statement of the proposed assignee or
sublessee, (v) when Landlord's consent is required for an Assignment or
Sublease, such other financial and business information as Landlord may
reasonably request concerning the proposed assignee or sublessee, and (vi) when
the Assignment or Sublease is to a Qualified Successor or to a Permitted
Transferee, such other information as Landlord may reasonably request to confirm
that the entity in question is a Qualified Successor or a Permitted Transferee.
If Landlord requests further information pursuant to sub-parts (v) or (vi)
hereof, Landlord shall make its request upon Tenant within five (5) business
days after receipt of Tenant's Notice. Tenant shall deliver Tenant's Notice to
Landlord, together with all of the documents which Landlord has requested
pursuant to sub-parts (v) or (vi) hereof, at least thirty (30) days prior to the
effective date of the Assignment or Sublease.
13.3. LANDLORD'S CONSENT.
(a) LANDLORD'S OPTIONS AFTER RECEIPT OF TENANT'S NOTICE. If Landlord's consent
is required to an Assignment or Sublease, at any time within fifteen (15)
business days after Landlord's receipt of Tenant's Notice (including but not
limited to all of the documents which Landlord may request pursuant to sub-part
(v) of Section 13.2), Landlord may by written notice to Tenant elect to (i)
sublease the portion of the Premises specified in Tenant's Notice (except as
otherwise provided in subsection (b) of Section 13.4) or, if Tenant's Notice
proposes an Assignment, take an assignment of the Lease on the terms set forth
in Tenant's Notice (except as otherwise provided in Section 13.4), (ii) consent
to the Sublease or Assignment, or (ill) disapprove the Sublease or Assignment;
provided, however, Landlord shall not unreasonably withhold its consent to the
Assignment or Sublease. Landlord's failure to elect any of the alternatives
provided in this Section 13.3(a) within the period of fifteen (15) business days
hereinabove provided shall be deemed consent to the proposed Assignment or
Sublease, subject to Section 13.3(e) below.
(b) SOME OF THE CRITERIA FOR LANDLORD'S CONSENT. By way of example, the parties
hereby agree that it shall be reasonable for Landlord to withhold its consent to
a proposed Sublease or Assignment based on any of the following factors,
provided that this list shall not be exclusive:
(i) the use of the Premises by the proposed assignee or sublessee will
not comply with the use of the Premises as described in the Basic Lease
Information;
(ii) the present financial condition of the proposed assignee or
sublessee is insufficient, in Landlord's reasonable judgment, to meet Landlord's
credit standards;
(iii) the proposed assignee's or sublessee's anticipated use of the Premises
involves the generation, storage, use, treatment, or disposal of any Hazardous
Materials; or
(iv) the proposed use of the first floor of the Premises would include
any retail activity.
(c) TIME LIMIT ON AN ASSIGNMENT OR SUBLEASE., If Landlord consents in writing to
the Sublease or Assignment, Tenant may within, but not later than, one hundred
and twenty (120) days after Landlord's consent, enter into an Assignment or
Sublease upon the terms and conditions set forth in Tenant's Notice.
(d) LANDLORD'S CONSENT TO EACH ASSIGNMENT OR SUBLEASE IS REQUIRED. The consent
by Landlord to any Assignment or Sublease shall not relieve Tenant or the
assignee or sublessee from the obligation to obtain Landlord's express written
consent to any other Assignment or Sublease.
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(e) DELIVERY OF TRANSFER DOCUMENT. Prior to the date when any sublessee or
assignee occupies any portion of the Premises, Tenant shall deliver to Landlord
the fully executed Sublease or Assignment, as appropriate. Landlord shall have
five (5) business days after receipt of the fully executed Sublease or
Assignment within which to confirm whether or not the fully executed Sublease or
Assignment is consistent with the terms of the Sublease or Assignment in
Tenant's Notice. If the Sublease or Assignment is consistent with Tenant's
Notice, Landlord shall be deemed (if Landlord's consent was required) to have
consented to the Sublease or Assignment. If the Sublease or Assignment shall
differ in any material respect from the contents of Tenant's Notice, Landlord
shall have the same rights of approval of the Sublease or Assignment that
Landlord had concerning Tenant's Notice. Until Landlord shall have confirmed
that the fully executed Sublease or Assignment is consistent with Tenant's
Notice, the assignee's or sublessee's occupancy of the Premises, if such
occupancy has commenced, shall be on a month-to-month basis.
13.4. TAKE-BACK SPACE.
(a) LANDLORD'S RIGHTS CONCERNING TAKE-BACK SPACE. If Landlord elects to Sublease
or take an Assignment from Tenant as described in Section 13.3(a)(i), (i)
Landlord shall have the right to use the portion of the Premises covered by
Tenant's Notice ("Take-Back Space") for the use permitted under this Lease
(provided that Landlord shall not be permitted to lease the Take-Back Space to
any competitor of Tenant), (ii) the rent payable by Landlord to Tenant shall be
the lesser of that set forth in Tenant's Notice or the Minimum Rent, calculated
on a per rentable square foot basis for the Take-Back Space, payable by Tenant
under this Lease at the time of the Sublease or Assignment, (iii) Landlord may
make such Alterations to the Take-Back Space as it shall elect, (iv) Landlord
shall have the right to further sublease or assign the TakeBack Space to any
party, without the consent of Tenant, (v) the amount payable by Tenant for
increases in Additional Lease Charges as set forth in Article 4 shall be reduced
to reflect the proportion of the building in which the Premises are located that
the Premises shall thereafter occupy in comparison to the Take-Back Space, and
(vi) Landlord shall pay the entire cost incurred in physically separating the
Take-Back Space (if less than the entire Premises) from the balance of the
Premises and in complying with any applicable Government Requirements relating
to such separation.
(b) LIMITATION ON LANDLORD'S RIGHT TO OBTAIN TAKE-BACK SPACE. Landlord shall not
have the right to elect to Sublease the portion of the Premises set forth in
Tenant's Notice, so long as the space which Tenant proposes to Sublease in
Tenant's Notice, when combined with all other space in the Premises which Tenant
has previously subleased does not exceed 33,000 rentable square feet of the
Premises or does not equal or exceed one (1) full floor of the Premises.
13.5. TENANT SHALL REMAIN LIABLE UNDER THE LEASE. No Assignment or Sublease,
other than an assignment to Landlord pursuant to Section 13.4, shall relieve
Tenant of any obligation to be performed by Tenant under this Lease, whether
arising before or after the Assignment or Sublease. In the event of an
Assignment, Tenant shall not be relieved from its liability under the Lease,
regardless of whether Landlord and the assignee subsequently agree to amend or
modify any of the terms of the Lease; provided, however, if the Lease is amended
or modified, Tenant shall not be responsible or liable to the extent Tenant's
obligations under this Lease are increased from that in effect prior to such
amendment or modification. Notwithstanding the foregoing, Tenant shall be
relieved from any and all liability in connection with that portion of the
Premises so long as it is Take-Back Space.
13.6. PROFITS FROM AN ASSIGNMENT OR A SUBLEASE.
(a) PROFITS FROM AN ASSIGNMENT OR A SUBLEASE. Except as otherwise provided in
the next sentence, in the event of an Assignment or a Sublease by Tenant,
Landlord and Tenant shall equally share all of the Profits. If there is an
Assignment to a Qualified Successor or a Sublease to a Permitted Transferee(s)
for space which does not exceed that specified in Section 13. 1 (b)(iii)(2),
Landlord shall not share in any Profits. The term "Profits" shall mean all
amounts received by Tenant upon the execution of the Assignment or Sublease and
each month thereafter as a consequence of the Assignment or Sublease, less (i)
in the case of a Sublease, the Minimum
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Rent paid by Tenant to Landlord, prorated over the portion of the Premises
occupied by the sublessee, (ii) the unamortized value (which shall be calculated
on a straight-line basis over the remaining Term of the Lease without regard to
option periods, if any) of all tenant improvements which Tenant paid for to that
portion of the Premises occupied by the assignee or sublessee, (iii) real estate
brokerage commissions and marketing expenses paid by Tenant in connection with
the Assignment or Sublease, and (iv) the cost paid by Tenant for labor,
materials, and equipment used in the construction of new improvements to the
Premises for the benefit of the assignee or sublessee.
(b) TENANT'S PAYMENTS FOR TENANT IMPROVEMENTS. In order to calculate Profits,
Tenant shall deliver to Landlord within forty-five (45) days after the
completion of any tenant improvements to the Premises (i) copies of all invoices
for labor, materials, and equipment used in the construction of the tenant
improvements (which invoices must show that the work was performed at the
Premises) and (ii) copies of all checks which Tenant used to pay for the tenant
improvements. Only documentation provided to Landlord within the time and in the
form described in this subsection (b) shall be used to calculate the cost of
tenant improvements in accordance with subsection (a) of this Section 13.6.
13.7. OBLIGATIONS OF AN ASSIGNEE OR SUBLESSEE. Each assignee or sublessee shall
assume all obligations of Tenant under this Lease and, other than an assignment
or sublease to Landlord pursuant to Section 13.4, shall be and remain liable
jointly and severally with Tenant for the payment of Rent and for the
performance of all the provisions of this Lease; provided, however, that the
assignee or sublessee shall be liable to Landlord for Rent only in the amount
set forth in the Assignment or Sublease. No assignment shall be binding on
Landlord unless the Assignment agreement shall be satisfactory in substance and
form to Landlord and shall be executed by Landlord.
13.8. PAYMENT OF LANDLORD'S COSTS. In the event that Landlord's approval is
required in connection with a proposed Assignment or a Sublease, Tenant shall
pay Landlord's reasonable attorneys' and consultants' fees and costs incurred in
connection therewith.
13.9. NO RELIANCE ON ORAL STATEMENTS. Tenant acknowledges and agrees to inform
any proposed assignee or sublessee that neither Tenant nor any proposed assignee
or sublessee shall be entitled to rely upon any oral statement or representation
from any person concerning whether or not Landlord will consent to the proposed
Assignment or Sublease. Tenant and any proposed assignee or sublessee may only
reply upon a statement in writing signed by Landlord.
ARTICLE 14 - DEFAULT
14.1. TENANT'S DEFAULT. The occurrence of any one or more of the following
events shall constitute a default and breach of this Lease by Tenant:
(a) abandoning the Premises for more than two (2) days;
(b) the failure to pay any installment of Minimum Rent or Additional Lease
Charges when due and payable under the Lease and within three (3) days after
receiving a written notice from Landlord or its representatives stating or
estimating the amounts due;
(c) permitting Tenant's interest in the Premises or any of Tenant's Property to
be placed in the hands of a receiver for a period in excess of thirty (30) days,
making an assignment for the benefit of creditors, instituting voluntary
proceedings under any bankruptcy act, failing to have dismissed within thirty
(30) days any involuntary proceeding filed against Tenant under any bankruptcy
act, or failing to have dismissed within thirty (30) days any proceedings
seeking to execute or levy against or attach Tenant's interest in the Premises
or any of Tenant's Property;
(d) any breach of Sections 13. 1, and 16.3; or
(e) failing to promptly and fully perform any covenant, condition or
agreement contained in this Lease (other than breaches of the provisions set
forth in subsections
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(a) through (d) of this Section) if this failure continues for twenty (20) days
after written notice thereof from Landlord to Tenant; provided, however, if
Tenant's default cannot reasonably be cured within twenty (20) days, Tenant
shall not be in default hereunder if Tenant commences to cure its default within
twenty (20) days and diligently prosecutes such cure to completion.
14.2. REMEDIES.
(a) LANDLORD'S REMEDIES. In the event of Tenant's default hereunder, in addition
to any other rights or remedies which Landlord may have, Landlord shall have the
right, at Landlord's option, to do any of the following:
(i) obtain the rights and remedies provided by California Civil Code Section
1951.2, including, but not limited to, the right to terminate Tenant's right to
possession of the Premises and to recover the worth at the time of award of the
amount by which the unpaid Rent for the balance of the Term after the time of
award exceeds the amount of rental loss for the same period that the Tenant
proves could be reasonably avoided, as computed pursuant to subsection (b) of
Section 1951.2 of the Civil Code;
(ii) obtain the rights and remedies described in California Civil Code Section
1951.4 (Landlord may continue the Lease in effect after Tenant's breach and
abandonment and recover Rent as it becomes due, if Tenant has the right to
sublet or assign, subject only to reasonable limitations);
(iii) obtain from Tenant, as damages, all of the costs and expenses, including
unamortized construction costs, architect and engineering fees, incurred by
Landlord (a) in constructing the Tenant Improvements in connection with this
Lease or (b) in making repairs or constructing any new improvements to the
Premises for the benefit of any replacement tenant to whom Landlord may lease
the Premises after Tenant's default. (Notwithstanding the foregoing, if at the
time of trial in any action brought by Landlor against Tenant to obtain such
damages, Landlord has leased the Premises to another tenant, the aforesaid
damages shall be reduced to the extent that the improvements constructed by
Landlord are used by a subsequent tenant.);
(iv) obtain from Tenant, as damages, any real estate brokerage fees and costs
incurred by Landlord in leasing the Premises to a replacement tenant after
Tenant's default; and/or
(v) obtain full Rent from Tenant for that period(s), if any, during
which this Lease permitted Tenant to occupy the Premises without the payment of
full Rent.
(b) NO TERMINATION OF THIS LEASE. Acts of maintenance and preservation, efforts
to sublease the Premises or the appointment of a receiver to protect Landlord's
interest under this Lease shall not be deemed to be a termination of this Lease
or of Tenant's obligation to pay Rent thereafter accruing, unless Landlord
notifies Tenant in writing of Landlord's election to terminate this Lease.
(c) WORTH AT THE TIME OF AWARD. For purposes of Section 1951.2(a)(1) and (2) of
the California Civil Code, "worth at the time of award" shall be computed by
allowing interest at the rate of ten percent (10%) per annum. The worth at the
time of award for purposes of Section 1951.2(a)(3) of the Civil Code shall be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%). For the
purposes of Section 1951 of the Civil Code "rent" shall be calculated for each
month by adding (i) the monthly Minimum Rent, plus (ii) one twelfth (1/12th) of
the increases in Additional Lease Charges payable by Tenant hereunder during the
twelve (12) consecutive month period prior to the month in which Tenant's
default occurred.
14.3. WAIVER., THE waiver by Landlord of the breach of any term, covenant, or
condition of this Lease shall not be deemed a waiver of any subsequent breach of
the same or any other term, covenant, or condition. Landlord's acceptance of
Rent or any other amounts subsequent to any breach hereof shall not be deemed a
waiver of any preceding breach other than the failure to pay the particular
amounts accepted, regardless of Landlord's knowledge of any
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breach at the time it accepts that amount. Landlord shall not be deemed to have
waived any term, covenant, or condition unless Landlord gives Tenant written
notice of such waiver.
14.4. LANDLORD'S DEFAULT.
(a) LANDLORD'S OPPORTUNITY TO CURE ANY DEFAULT. If Landlord fails to
perform any covenant, condition or agreement contained in the Lease within
thirty (30) days after receipt of written notice from Tenant specifying such
default or if (when a default cannot reasonably be cured within thirty (30)
days) Landlord fails to commence to cure the default within thirty (30) days,
Landlord shall be liable to Tenant for any damages sustained by Tenant as a
result of Landlord's breach. Tenant shall not have the right to terminate this
Lease or to withhold, reduce, or offset any amount against Rent except as
otherwise specifically provided herein.
(b) TENANT'S RIGHT TO CURE LANDLORD DEFAULTS. In the event Landlord
fails to cure said default within thirty (30) days after receipt of said written
notice, or if having commenced said cure it does not diligently pursue it to
completion, Tenant may elect to cure said breach at Tenant's expense, so long as
Tenant only uses contractors from a list of approved contractors which Landlord
shall provide to Tenant from time to time. Within ten (10) days after it has
completed its cure, Tenan shall deliver to Landlord such documentation of the
costs incurred by Tenant in curing said default as Landlord may reasonably
request. Tenant shall have the right to offset from Rent the amount which Tenant
is able to establish, to Landlord's reasonable satisfaction, that it incurred to
cure said default pursuant to the provisions of this Section 14.4.
Notwithstanding the foregoing, in the event of a Casualty Loss, the provisions
of Article 11, rather than this Section 14.4, shall govern.
(c) LIMITATION OF LIABILITY. If Tenant obtains a money judgment
against Landlord resulting from any default or other claim arising under this
Lease, this judgment shall only be satisfied from the Property and the rents,
issues, profits, and other income received therefrom, and no other real,
personal or mixed property of Landlord (or of any persons, or entities which
comprise Landlord) shall be subject to levy to satisfy any such judgment.
ARTICLE 15 - HAZARDOUS MATERIALS
15.1. COMPLIANCE.
(a) LANDLORD'S COMPLIANCE. Landlord hereby represents that, to the
best of Landlord's knowledge, as of the date of the execution of this Lease, the
Premises comply with all applicable laws, rules, orders, ordinances, directions,
regulations and requirements of federal, state, county and municipal authorities
pertaining to air and water quality, Hazardous Materials, waste disposal, air
emissions and other environmental matters ("Hazardous Materials Laws") with
respect to the Premises. Landlord shall be solely liable for violations of any
Hazardous Materials Laws regarding the Premises (i) attributable to Hazardous
Materials used in the course of the original construction of the Premises or any
refurbishing thereof prior to the date of this Lease, (ii) as a result of
Hazardous Materials in the soil or groundwater on or before the date of this
Lease, or (iii) as a result of Landlord's use of Hazardous Materials in
violation of applicable law.
(b) TENANT'S COMPLIANCE. Tenant shall comply with all Hazardous
Materials Laws with respect to the Premises at all times when Tenant is in
possession of the Premises.
15.2. PROHIBITED ACTS AND DAMAGES RESULTING THEREFROM.
(a) HAZARDOUS MATERIALS PROHIBITED. Tenant shall not cause or permit
any Hazardous Materials to be brought upon, kept, or used in or about the
Premises without the prior written consent of the Landlord, which shall not be
unreasonably withheld as long as Tenant demonstrates to Landlord's reasonable
satisfaction that such Hazardous Materials are necessary to Tenant's business
and will be used, kept, and stored in a manner that complies with all laws
regulating any Hazardous Materials.
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(b) TENANT'S OBLIGATIONS IN THE EVENT OF A BREACH. If Tenant breaches its
obligations stated herein or if the Premises are contaminated by Hazardous
Materials as a consequence of Tenant's acts or omissions, Tenant shall be in
default under this Lease. In addition to all other sums Tenant is required to
pay as a consequence of its default, Tenant shall pay the diminution in value of
the Premises, damages for the loss of or restrictions on rentable or usable
space or any amenity of the Premises, damages arising from any adverse impact on
marketing of space in the Premises, costs incurred in connection with any
investigation of site conditions or any cleanup, remedial, removal or
restoration work required by any federal, state or local governmental agency or
political subdivision as a consequence of its default hereunder, Without
limiting the foregoing, if the presence of any Hazardous Materials on the
Premises caused or permitted by Tenant results in contamination, Tenant shall
promptly take all actions as are necessary to return the Premises to the
condition existing prior to the introduction of Hazardous Materials. Tenant
shall obtain Landlord's written approval of its remediation efforts before
beginning remediation of the Premises. The foregoing obligation shall survive
the expiration or earlier termination of this lease.
15.3. DEFINITION OF HAZARDOUS MATERIALS. The term "Hazardous Materials" shall
mean any hazardous or toxic substance, material, or waste, including, but not
limited to, those substances, materials and wastes listed in the United States
Department of Transportation Hazardous Materials Table (49 CFR 172.101) or by
the Environmental Protection Agency as hazardous substances (40 CFR 302) and
amendments thereto, or such substances, materials and wastes that are or become
regulated under any applicable federal, state or local law or regulation.
15.4. DISCLOSURE. On the Commencement Date and on January I of each year
thereafter, Tenant shall disclose in writing to Landlord the names and amounts
of all Hazardous Materials which were stored, used or disposed of on the
Premises or which Tenant intends to store, use or dispose of on the Premises.
ARTICLE 16 - GENERAL PROVISIONS
16.1. MEDIATION AND ARBITRATION.
(a) MEDIATION. LANDLORD AND TENANT HAVE AGREED TO HAVE ANY DISPUTE BETWEEN THEM,
WHERE THE AMOUNT IN DISPUTE IS LESS THAN $100,000, ARISING OUT OF TENANT'S
OCCUPANCY OF THE PREMISES OR CONCERNING THIS LEASE -- OTHER THAN AN UNLAWFUL
DETAINER ACTION OR A CLAIM FOR CONSTRUCTIVE EVICTION -DECIDED BY THIRD PARTY
MEDIATION BEFORE, AND AS A CONDITION PRECEDENT TO, THE INITIATION OF ANY
ADJUDICATIVE ACTION OR PROCEEDING, INCLUDING ARBITRATION. IN THE EVENT THAT THE
PARTIES HERETO DO NOT RESOLVE ANY DISPUTE AFTER ONE DAY OF MEDIATION, THE
DISPUTE SHALL BE DECIDED BY ARBITRATION PURSUANT TO SECTION 16.1(d) HEREOF. IT
IS FURTHER AGREED THAT BY SIGNING IN THE SPACE BELOW, THE PARTIES HERETO HAVE
AGREED TO GIVE UP THEIR RIGHT TO HAVE THE DISPUTES SUBJECT TO THIS SECTION
LITIGATED IN A COURT AS WELL AS EACH PARTY'S RIGHTS TO DISCOVERY AND APPEAL
EXCEPT TO THE EXTENT THAT SUCH RIGHTS ARE SPECIFICALLY ENUMERATED IN THIS
SECTION 16. 1. IF EITHER PARTY REFUSES TO MEDIATE OR ARBITRATE THE DISPUTES
SUBJECT TO THIS SECTION, THE OTHER PARTY MAY COMPEL THE MEDIATION OR ARBITRATION
OF THAT DISPUTE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE.
IT IS UNDERSTOOD THAT THIS AGREEMENT TO MEDIATE AND ARBITRATE DISPUTES IS
VOLUNTARY AND THAT IT IS ONLY BINDING UPON THOSE PARTIES WHOSE SIGNATURES APPEAR
BELOW.
(b) COMMENCEMENT OF MEDIATION. The mediation shall commence when one party to a
dispute (the "Offering Party") makes a written offer of compromise ("Offer") to
the other party(s). If the Offer is not accepted by the other party(s) (the
"Refusing Party") within five (5) days after receipt of the Offer by the
Refusing Party, any party may refer the dispute to mediation before any mutually
agreeable organization regularly offering services as a mediator. tor
If the parties are unable to agree upon a mediation within five (5) days after
the Offer is received
34
by the Refusing Party, the dispute shall be mediated by the Judicial Arbitration
& Mediation Service, 0 Xxxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, XXXXXXXXXX ("JAMS").
The parties shall have three (3) business days after the matter is submitted to
mediation to agree upon the mediator from the available panel. If the parties
are unable to agree within that three (3) day period, any party may request that
mediation organization appoint the mediator. The mediator chosen by the parties
or appointed by JAMS shall be a attorney at law licensed to practice in the
State of California with at least two (2) years experience as a mediator and at
least ten (10) years experience in the practice of real estate law.
(c) COSTS OF MEDIATION AND ARBITRATION. Each party shall advance in equal shares
the fees charged by the mediator and the costs of the mediation until it is
determined whether the dispute is resolved without further proceedings. If the
mediation succeeds in resolving the dispute, each party to the mediation will
equally share the fees of the mediator and the costs of the mediation, and each
shall bear its own attorneys' fees and costs in connection with the mediation.
On the other hand, if the mediation does not resolve the dispute, the prevailing
party at the arbitration or in any subsequent court proceeding for the purposes
of applying Section 16.8 shall be (i) the Offering Party if the Refusing
Party(s) does not obtain a more favorable judgment or award than was set forth
in the Offer or (ii) the Refusing Party(s) if the Refusing Party(s) does obtain
a more favorable judgment or award than was set forth in the Offer.
(d) ARBITRATION. After the parties have complied with subsection (b) of this
Section 16.1, any claim, controversy or dispute between or among the parties to
this mediation and arbitration agreement shall be submitted to arbitration.
(e) ARBITRATION PROCEDURES. Any matter subject to arbitration shall be submitted
to JAMS OR, IF JAMS NO longer exists, to any similar organization mutually
acceptable to the parties. The arbitration shall be conducted pursuant to the
procedures set forth in Sections 1280 ET SEQ. of the California Code of Civil
Procedure. The arbitration shall be decided by one neutral arbitrator. The
arbitrator shall follow the provisions of Sections 1282.2(a)(2) and 1283.05 of
the California Code of Civil Procedure, shal set a date for an arbitration
hearing no longer than one (1) month after the selection of the arbitrator, and
shall make an award no later than five (5) days after the conclusion of the
arbitration hearing. Any of the time deadlines set forth in this Lease or in
Sections 1280 ET SEQ. of the Code of Civil Procedure or set by the arbitrator
may be changed or modified at any time by the written stipulation of all of the
parties to the arbitration. The decision of the arbitrator shall be final and
binding upo the parties; and any court of competent jurisdiction may thereafter
enter judgment in accordance with the arbitrator's decision.
(f) SELECTION OF THE ARBITRATOR. The parties shall have three (3) business days
after the matter is submitted to arbitration to agree upon the neutral
arbitrator from the available panel. If the parties are unable to agree within
that three (3) day period, any party may request the appropriate official at
JAMS to appoint the arbitrator from its panel and that appointment shall be
binding upon the parties to the arbitration. The arbitrator chosen by the
parties or appointed by JAMS shall be a retired Federal District Court,
California Superior Court, or federal or state appellate court judge with at
least ten (10) years experience on the bench.
16.2. SALE OF LANDLORD'S INTEREST. In the event of any sale or transfer of the
Premises or the Property and assignment of this Lease by Landlord, Landlord
shall be relieved of any and all liability and obligations contained in or
derived from this Lease or relating to the Premises occurring after the
consummation of such sale or transfer. If any security deposit or prepaid rent
has been paid by Tenant, Landlord shall transfer the security deposit or prepaid
rent to Landlord's successor and upon such transfer, Landlord shall be relieved
of any and all further liability with respect thereto.
16.3. ESTOPPEL CERTIFICATE. Each party ("Certifying Party") shall, at any time
and from time to time, but not more frequently than twice in any twelve (12)
month period, upon not less than ten (10) business days' prior notice by the
other party ("Requesting Party") execute, acknowledge and deliver to the
Requesting Party a statement in writing, certifying (a) that this Lease is
unmodified and in full force and effect (or, if modified, stating the
modifications); (b) the amount of monthly Minimum Rent and the increases in
Additional Lease Charges payable
35
monthly by Tenant and the date to which these components of Rent have been paid
in advance; (c) the amount of any security deposited with Landlord; (d) the
Commencement Date and the last date of the Term and the number and duration of
option periods, if any; (e) whether or not there are then existing any defenses
against the enforcement of any of the obligations of Tenant under this Lease
(and, if so, specifying same); (f) whether or not Landlord is in default
hereunder (and, if so, specifying same); and (g) such other matters as may be
reasonably requested by the Requesting Party. Any prospective purchaser, ground
lessor, lender, or other interested party shall be entitled to rely on the truth
of all of the matters contained in such statement; however, the Certifying Party
may provide in any such certificate that it shall have no liability for any
misstatement contained therein. Failure to comply with this Section shall be a
material breach of this Lease by the Certifying Party and in addition to all of
the other rights and remedies hereunder, the Requesting Party shall have the
right to collect from the Certifying Party all damages caused by the loss of a
loan, sale, or other transaction which may result from said party's failure to
comply with this Section 16.3.
16.4. FINANCIAL STATEMENT. Upon Landlord's written request, Tenant shall deliver
to Landlord within ten (10) days its most recent publicly available financial
statement certified by Tenant to be accurate. Landlord agrees that such
information, if requested by Tenant, shall be held in confidence and disclosed
only for purposes related to the sale, exchange, ground leasing, or financing of
the Property.
16.5. SUBORDINATION AND ATTORNMENT.
(a) SUBORDINATION/NON-DISTURBANCE AGREEMENT. Upon Landlord's written request,
Tenant shall execute a subordination and non-disturbance agreement which is
substantially in the form of Exhibit E hereto ("Subordination/Non-Disturbance
Agreement"), wherein Tenant shall subordinate its rights to the lien of any
future mortgage, future deed of trust, or the interest of any future lease in
which Landlord is tenant and to all advances made or hereafter to be made upon
the security therefor. In the event of any foreclosure sale, transfer in lieu of
foreclosure, or termination of a lease in which Landlord is tenant, Tenant shall
attorn to the purchaser, transferee or lessor of Landlord, at their option, and
recognize such party as landlord under this Lease. Within ten (10) days after
Landlord's request therefor, Tenant shall execute and deliver to Landlord the
Subordination/Non-Disturbance Agreement to effectuate the purposes of this
Section 16.5. Tenant acknowledges that if Tenant does not promptly comply with
this Section 16.5, Tenant may cause Landlord to lose a potential loan or ground
lease or to suffer the imposition of penalties or an increased rate of interest
in connection with such future loan,
(b) NON-DISTURBANCE AGREEMENT FROM THE EXISTING LENDER. Landlord agrees to use
all reasonable efforts (without the requirement to expend out-of-pocket funds,
other than reasonable fees of Landlord's and Landlord's mortgagee's legal
counsel) to obtain with reasonable promptness from the existing lender on the
Premises a non-disturbance agreement which is reasonably satisfactory to Tenant.
16.6. TENANT SIGNAGE.
Subject to the terms and conditions of this Section 16.6, Tenant shall have the
exclusive right of tenant identification ("External Tenant Signage") on the
exterior of the Premises (including the roof). tenant's right of External Tenant
Signage shall be subject to the following conditions:
(i) The color, materials, lighting and other design features shall be developed
by Tenant and its architect and approved by landlord and Tenant. Landlord shall
have the right to withhold its consent to the External Tenant Signage in
Landlord's sole discretion. However, if Landlord does not consent to the
External Tenant Signage, Landlord shall state, in writing and in reasonable
detail, the basis for its disapproval and propose changes to the External Tenant
Signage that would be acceptable to Landlord. Tenant shall be solely responsible
for any Alterations required as a result of the Exterior Signage and shall be
solely responsible for compliance with all local, state and federal laws
(including obtaining any and all permits) associated with the Exterior Tenant
Signage.
36
(ii) The right to External Signage granted hereunder is personal to the named
Tenant under this Lease and any Qualified Successor. Such right shall be revoked
and shall become null and void, without any abatement of or reduction in rent to
Tenant, for any period in which the named Tenant under this Lease and/or any
Qualified Successor does not occupy at least fifty percent of the rentable area
of the Premises.
(iii) Tenant, at its sole cost and expense, shall repair and maintain the
External Tenant Signage and any portion of the Premises to which the External
Tenant Signage is attached. Tenant shall promptly repair any vandalism,
breakage, or damage to the External Tenant Signage.
(iv) The cost of design, fabrication and installation of the External Tenant
Signage shall be chargeable against the Allowance under the work Letter attached
as Exhibit C, and shall otherwise be at the sole cost and expense of Tenant.
16.7. MERGER. ' The voluntary or other surrender of this Lease by Tenant or
termination hereof shall not cause a merger but shall, at Landlord's option,
terminate any existing subtenancies or operate as an assignment to Landlord of
any subtenancies.
16.8. RECORDING. This Lease shall not be recorded by either Landlord or Tenant;
provided, however, upon obtaining the prior written consent of the other party,
either party may record a memorandum of this Lease.
16.9. ATTORNEYS' FEES. In the event there is a mediation, arbitration, lawsuit,
action, or proceeding between or among Landlord and Tenant (except for a dispute
regarding Prevailing Market Rate which is resolved pursuant to the provisions of
Section 3.6 without the necessity of litigation) which arises from or concerns
this Lease or the Premises, whether that mediation, arbitration, lawsuit,
action, or proceeding involves causes of action in contract or in tort, at law
or in equity, the prevailing party shall be entitled to recover all costs and
expenses, including its attorneys' fees, in such lawsuit, action or proceeding.
Subject to the requirements of Section 16.1(c) [for those actions which are
subject to the mediation and arbitration process], the prevailing party shall be
determined by the court or an arbitrator based upon an assessment of which
party's major arguments made or positions taken in the proceeding could fairly
be said to have prevailed over the other party's major arguments or positions.
16.10. CUMULATIVE REMEDIES. No remedy or election exercised hereunder shall be
deemed exclusive but shall be cumulative with all other remedies at law or in
equity.
16.11. CHOICE OF LAW. This Lease shall be governed by and construed in
accordance with the laws of the State of California.
16.12. SUCCESSORS AND ASSIGNS. Subject to the provisions regarding assignment
contained herein, this Lease shall bind and inure to the benefit of the heirs,
personal representatives, successors and assigns of the parties hereto.
16.13. SEVERABILITY. A final determination by a court of competent jurisdiction
that any provision of this Lease is invalid, void, or unenforceable shall not
affect the validity of any other provision of this Lease, and all other
provisions and this Lease shall remain in full force and effect.
16.14. AUTHORITY., Each individual executing this Lease on behalf of Landlord or
Tenant, as the case may be, hereby warrants and represents that he/she is duly
authorized to execute and deliver this Lease on behalf of said party and that
this Lease is binding on the party on behalf of which the individual executed
this Lease.
16.15. TIME OF ESSENCE. Time is of the essence in the performance of each and
every term, covenant and condition of this Lease.
16.16. CAPTIONS., The article, section, and subsection captions contained herein
are for reference purposes only and are not a part of this Lease.
37
16.17. FORCE MAJEURE. Except for the payment of Rent (which shall not be excused
unless specifically permitted hereunder), strikes, labor disputes, an inability
to obtain labor, materials, equipment or reasonable substitutes therefor, acts
of God, governmental restrictions or regulations, judicial orders, government
action, civil commotion, Casualty Loss, or other causes beyond the reasonable
control of the party obligated to perform hereunder shall excuse performance by
such party for a period equal to the time during which that party was prevented,
delayed, or stopped from its obligations hereunder.
16.18. NOTICES.
(a) SERVICE OF NOTICES. All bills, statements, notices, demands, requests or
other communications given or required to be given under this Lease shall only
be effective if in writing and (i) sent by express, registered or certified
mail, (ii) sent by private carrier, i.e., Federal Express, (iii) sent by
facsimile transmission, or (iv) delivered personally:
(1) to Tenant (A) at Tenant's address or facsimile number, set forth in the
Basic Lease Information, (B) at Tenant's address or facsimile in the Premises,
if sent subsequent to Tenant's taking possession of the Premises, or (C) at any
place where Tenant may be found or at the Premises if sent subsequent to
Tenant's vacating, deserting, abandoning, or surrendering the Premises;
(2) to Landlord at Landlord's address or facsimile number set forth in
the Basic Lease Information; or
(3) to such other address or facsimile number as either Landlord or Tenant may
designate as its new address or facsimile number by written notice given to the
other in accordance with the provisions of this Section 16.18.
Any xxxx, statement, notice, demand, request or other communication shall be
deemed to have been given two (2) days after the date when it shall have been
mailed as provided in this Section 16.18 if sent by registered or certified
mail, upon the date of delivery to the above-referenced address if personally
delivered or sent by express mail or by private carrier, or upon the date of
receipt if sent by facsimile transmission.
(b) COMPLIANCE WITH STATUTORY REQUIREMENTS. Notwithstanding the foregoing, to
the extent that a three or thirty day notice to Tenant complies with the
requirements of the California Civil Code or Code of Civil Procedure, service of
such notice shall be deemed to comply with the requirements of this Lease.
16.19. BROKERS.
(a) TENANT'S BROKER. Tenant warrants that it has had no dealings with any real
estate broker or agent in connection with the negotiation of this Lease other
than the broker(s) designated in the Basic Lease Information, and Tenant knows
of no other real estate broker or agent who is entitled to a commission in
connection with this Lease.
(b) REPRESENTATION BY BROKERS. Tenant acknowledges that the real estate broker
designated in the Basic Lease Information as Landlord's broker only represented
Landlord and did not represent Tenant in connection with the leasing of the
Premises and the negotiation and drafting of this Lease. If a broker is
identified in the Basic Lease Information as the Tenant's broker, that is the
only person who represented Tenant in connection with the Premises and this
Lease.
(c) COMMISSION. Landlord shall pay the commission due in connection with the
Lease pursuant to the terms of the separate agreement between Landlord and
Landlord's Broker. Landlord and Tenant shall each indemnify, defend and hold the
other harmless from and against any and all claims and damages and for any and
all costs and expenses (including reasonable attorneys' fees and costs)
resulting from claims that may be asserted against the other party by any
broker, agent or finder not disclosed herein.
38
16.20. JOINT AND SEVERAL LIABILITY. If there is more than one person or entity
identified as Tenant in this Lease, each person or entity shall be jointly and
severally liable for all of Tenant's obligations under this Lease.
16.21. QUIET POSSESSION. Upon Tenant's paying rent, additional rent and other
sums provided hereunder and observing and performing all of the covenants,
conditions and provisions on Tenant's part to be observed and performed
hereunder, Tenant shall have quiet possession of the Premises for the entire
term hereof, subject to all of the provisions of this Lease.
16.22. PRIOR AGREEMENTS AND AMENDMENTS. This Lease represents the entire
agreement between the parties pertaining to the Premises and this Lease and
supersedes all previous negotiations, representations, agreements and
communications between the parties whether written or oral, including but not
limited to any letters of intent executed by the parties to this Lease or their
real estate brokers. Tenant acknowledges that in executing this Lease Tenant has
not relied on any verbal or written understanding, promise, or representation
which does not appear on this document. This Lease shall only be amended or
modified by a written instrument executed by both Landlord and Tenant.
LANDLORD TENANT
NO. I BEACH STREET, LLC, CNET, Inc.
a California limited liability company a Delaware corporation
XXXXXX XXXXX, DZAI~f~VERMYER,
Vi t c
its Managing Member Vice-President. Finance an
Dated: September -, 1997 Administration
Dated: September -, 1997
39
EXHIBIT "A"
All that certain real property situated in the City and County of San
Francisco, State of California, described as follows:
COMMENCING at the point of intersection of the southerly line of Beach
Street and the westerly line of Grant Avenue; running thence westerly and along
said line of Beach Street 275 feet; thence at a right angle southerly 137 feet
and 6 inches; thence at a right angle easterly 275 feet to the westerly line of
Grant Avenue; thence at a right angle northerly along said line of Grant Avenue
137 feet and 6 inches to the point of commencement.
BEING part of 00 XXXX XXXXX XX. 00.
EXHIBIT B
[MAP]
Diagrams of floor plans of First, Second and Third Floors
EXHIBIT C
WORK LETTER
THIS WORK LETTER ("WORK Letter") supplements the Lease (the "Lease") dated
September 24, 1997, executed concurrently herewith, by and between NO. I BEACH
STREET, LLC as Landlord, and CNET, INC., as Tenant, covering certain premises
described in the Lease (the "Premises").
1. PLANS/SPECIFICATIONS, BUDGET, AND DEMOLITION
1.1 Prior to commencing work on the leasehold improvements to the
Premises as hereinafter provided ("Tenant Improvements"), Tenant shall submit to
Landlord complete and detailed plans and specifications for the Tenant
Improvements ("Tenant's Plans") and a schedule of values for such work (the
"Budget"). Tenant's Plans shall be prepared by the architectural firm of Xxxxxx
Xxxxx Xxxxxx Xxxxx Architects, Inc. ("Architect") and by the engineering firm of
Xxxxxxxx & Associates ("Engineer"), both licensed to practice in the State of
California. If Tenant hereafter shall desire to change the Architect or
Engineer, that change shall be satisfactory to Landlord, in Landlord's
reasonable discretion. The Budget shall be prepared by Tenant and shall evidence
a cost of design, purchase, and construction of Tenant Improvements that
constitute permanent improvements to the Premises, as described in Section 3.2
of this Work Letter, in an amount which is not less than Three Million Five
Hundred Thousand Dollars ($3,500,000.00).
1.2 The Architect shall coordinate with Landlord's designated
representative to assure that Tenant's Plans are consistent with the existing
design and construction of the Premises. Tenant acknowledges that Landlord has
provided Tenant with a set of base building drawings for the Premises ("Building
Drawings"). However, Landlord does not warrant, and Tenant should not rely upon,
the accuracy of the Building Drawings since the existing tenant in the Premises
may have made a variety of changes to the Premises over time that are not
reflected in the Building Drawings. Tenant, therefore, should undertake its own
investigation of the Premises to confirm existing conditions, rather than
relying on the Building Drawings.
1.3 Tenant shall deliver to Landlord the schematic drawings
("Schematic Drawings") upon which Tenant's Plans shall be based not later than
October 1, 1997. Landlord shall have ten (10) working days after receipt thereof
to review and approve/disapprove the Schematic Drawings. Once Landlord has
approved the Schematic Drawings, Tenant shall cause the Architect to prepare
Tenant's Plans which must be consistent with the approved Schematic Drawings.
Tenant shall deliver Tenant's Plans to Landlord for its approval, in one or more
stages, during the period between November 1, 1997 and January 1, 1998. Landlord
shall not unreasonably withhold its approval of Tenant's Plans so long as
Tenant's Plans are consistent with the Schematic Drawings. In scheduling the
preparation of the Schematic Drawings and Tenant's Plans, Tenant shall allow
sufficient time for review and approval by Landlord and by the appropriate
government agencies in order to prevent delays in the construction of the Tenant
Improvements
1.4 If Landlord disapproves of the Schematic Drawings or Tenant's
Plans or any portion of either, Landlord shall promptly notify Tenant thereof in
writing and of the revisions which Landlord requires in order for Tenant to
obtain Landlord's approval. As promptly as reasonably possible, but in no event
longer than fifteen (15) days thereafter, Tenant shall submit to Landlord a
revised set of Schematic Drawings or Tenant's Plans incorporating the changes
required by Landlord. Said revisions shall also be subject to Landlord's
approval. Landlord shall have five (5) working days after receipt of the revised
Schematic Drawings or Tenant's Plans to notify Tenant in writing of Landlord's
approval or disapproval of same. If Landlord again disapproves of or requests
revisions to the Schematic Drawings or Tenant's Plans, Tenant shall submit to
Landlord, within ten (10) business days after receiving Landlord's written
disapproval or request for revisions, a further revised set of Schematic
Drawings or
Tenant's Plans incorporating the changes required by Landlord. This process
shall continue until Landlord has approved the Schematic Drawings and Tenant's
Plans.
1.5 The final Tenant Plans, approved by Landlord, shall be
referred to as the "Final Plans." The Final Plans shall be signed by Landlord
and Tenant. After approval of the Final Plans, Tenant shall not make any changes
thereto without Landlord's prior written approval in accordance with the
provisions of this Work Letter Agreement.
1.6 Prior to commencing work on the Tenant Improvements in the
Premises as hereinafter provided, Tenant shall demolish and remove any existing
improvement in the Premises as are necessary to prepare the Premises for the
Tenant Improvements.
1.7 Tenant shall be solely responsibility for obtaining all
necessary governmental approvals and permits (including but not limited to the
approval of the San Francisco City Planning Department) required to commence and
complete the Tenant Improvements; and immediately upon receipt thereof, Tenant
shall deliver copies of all such approvals and permits to Landlord.
1.8 Except as expressly set forth in Section 5 hereof, it shall
be Tenant's sole responsibility to satisfy all applicable building code
requirements and governmental rules and regulations concerning the design and
construction of the Tenant Improvements. Landlord's approval of the Final Plans
is not intended, and should not be understood by Tenant, as an affirmation that
the Final Plans comply with applicable building codes or other governmental
rules and regulations or that the Final Plans are in conformance with standards
of good workmanship as practiced by architects/engineers in the San Francisco
Bay Area. Landlord's review of the Final Plans is solely for Landlord's benefit,
and Tenant shall not rely upon that review for any purpose whatsoever in
connection with the work on or the design of the Tenant Improvements.
1.9 Tenant acknowledges that Landlord intends to obtain the
rehabilitation credit described in Section 47 of the Internal Revenue Code in
connection with the construction of the Tenant Improvements and that pursuant to
Section 47 of the Internal Revenue Code, the qualified rehabilitation
expenditures must not be less than the amount of the Budget in Section 1. 1 of
this Work Letter Agreement and must have been made within a twenty-four (24)
month period. Tenant, therefore, shall use its best efforts in order to complete
all work on the Tenant Improvements within a period of twenty-four (24) months.
1.10 Tenant shall select a general contractor to perform the work
on the Tenant Improvements ("Contractor"), duly licensed in the State of
California and familiar with all applicable building code requirements.
Contractor shall be subject to Landlord's prior written approval which shall not
be unreasonably withheld.
2. SCHEDULING AND TENANT'S PRIOR ACCESS TO THE PREMISES
2.1 At least five (5) days prior to the start of construction on
the Tenant Improvements, Tenant shall deliver to Landlord the "as-planned"
schedule of the work to be performed ("TI Schedule"). The TI Schedule shall be
prepared by the Contractor, and it shall show the schedule for the submission of
all SHOP DRAWINGS/SUBMITTALS AND FOR THE PERFORMANCE of each portion of the work
on the Tenant Improvements. Tenant and the Architect shall either consult with
the Contractor or the Architect shall perform the necessary investigation to
determine the availability of the equipment and materials to be incorporated
into the Tenant Improvements and which portions of the Tenant Improvements will
require long lead time for ordering and/or manufacturing. The TI Schedule shall
include sufficient time for ordering all equipment and materials in order to
permit work on the Tenant Improvements for at least two (2) full floors to be
completed by June 1, 1998. The TI Schedule shall set forth when Landlord's Work
(as described hereafter) is to be performed in order that such work shall be
coordinated with Contractor's work on the Tenant Improvements. The TI Schedule
shall be in the form of a Critical Path Method schedule. Except for demolition
work, Tenant shall not commence work on the Tenant Improvements until Tenant has
delivered the TI Schedule to Landlord.
2
2.2 Unless Landlord has informed Tenant that Landlord will not be
able to deliver possession of the Premises to Tenant by the Scheduled Delivery
Date set forth in the Basic Lease Information, the TI Schedule shall either show
(i) that the Tenant Improvements for not less than two complete floors of the
Premises shall be sufficiently complete to enable occupancy of such floors by
Tenant for the use thereof for their intended purpose ("Occupancy Completion")
by June 1, 1998 or (ii) the TI Schedule shall be accompanied by a written
statement, signed by Tenant and the Contractor, explaining each reason why
Occupancy Completion cannot be achieved by June 1, 1998. The date of substantial
completion of all of the Tenant Improvements shall be referred to herein and in
the Construction Contract as "Completion Date."
2.3 Landlord acknowledges that Tenant needs reasonable access to
the Premises before the Commencement Date in order to obtain measurements of the
Premises, confirm existing conditions in the Premises, and for space planning
preparation purposes (collectively "Pre-Delivery Functions"). Upon request by
Tenant, Landlord shall make arrangements with the existing tenant in the
Premises to permit Tenant to perform its PreDelivery Functions. Landlord shall
endeavor to grant Tenant access to the portion of the Premises needed by Tenant
to perform Pre-Delivery Functions within the time period reasonably requested by
Tenant. Tenant, however, acknowledges that it must accommodate the Pre-Deliver
Functions which it wishes to perform to the business operations of the existing
tenant in the Premises and, accordingly, that it may have to alter the
Pre-Delivery Functions which it wishes to perform or the time when it wishes to
perform Pre-Delivery Functions. Therefore, Tenant shall schedule its
Pre-Delivery Functions sufficiently in advance in order to allow for the
possibility that Pre-Delivery Functions may need to be delayed to accommodate
the existing tenant in the Premises. Tenant shall complete all of its
Pre-Delivery Functions prior to December 1, 1997 or any delay associated with
the performance of Pre-Delivery Functions shall not be a Landlord Delay.
2.4 Tenant shall be solely responsible for all costs and expenses
incurred in connection with the Pre-Delivery Functions.
2.5 Tenant hereby agrees to indemnify, defend, and hold harmless
Landlord and the existing tenant from and against any loss, cost, expense,
liability, damage, or injury in connection with any of the Pre-Delivery
Functions.
3. PUMENT FOR WORK ON THE TENANT IMPROVEMENTS AND THE CONSTRUCTION
CONTRACT
3.1 It is acknowledged that Landlord has heretofore contributed
the amount of Nine Thousand Seven Hundred One and 501100 Dollars ($9,701.50),
for purposes of establishing Tenant's configuration within the Premises. Such
payment is in addition to the Tenant Improvement Allowance as described in
section 3.2 hereof.
3.2 Tenant shall receive from Landlord a Tenant Improvement
Allowance equal to Three Million Eight Hundred Eighty Thousand Six Hundred
Dollars and 00/100 ($3,880,600.00), plus the amount, if any, determined in
accordance with Section 3.7 hereof. The Tenant Improvement Allowance shall be
used for the design and construction of the Tenant Improvements, which
constitute permanent improvements to the Premises, including without limitation,
architectural, engineering, telecommunication installation and cabling, the roof
top deck, the cost of Pre-Delivery Functions, partitions of any kind, fire doors
and fire walls and a rapid response sprinkler system. To the extent that the
Tenant Improvement Allowance has not been fully used in the design and
construction of Tenant Improvements, Tenant may use the Allowance for furniture
that will be utilized in the Premises and other occupancy related costs,
provided that Tenant shall first deliver to Landlord a detailed description of
how this portion of the Tenant Improvement Allowance shall be used. No portion
of the Tenant Improvement Allowance shall be used for the removal or remediation
of Hazardous Materials in the Premises.
3.3 In order to construct the Tenant Improvements, Tenant shall
enter into a fixed price or a guaranteed maximum price construction contract,
which shall be approved in advance by Landlord (the "Construction Contract").
The Construction Contract for the Tenant Improvements shall at least include all
of the provisions which are attached hereto and identified as "Construction
Contract Terms;" provided, however, that the Construction Contract Terms may
3
be revised with Landlord's approval, which approval shall not be unreasonably
withheld, in a manner which does not expose Landlord to additional liability.
3.4 Tenant each month shall submit to Landlord (a) the
Contractor's Progress Payment Application and, at the end of the project, the
Final Payment Application and all supporting documentation required by the
Construction Contract and (b) the Architect's Certificate for Progress Payments
or Final Payment, as applicable. If the payment applications, when aggregated
with all prior payments by Landlord for Tenant Improvements, do not exceed the
Tenant Improvement Allowance, Landlord shall pay the amount set forth in the
Architect's Certificate for Progress Payment, less retainages, or the
Architect's Certificate for Final Payment. Tenant shall be solely responsible
for the payment of any amounts in excess of the Tenant Improvement Allowance, in
the event work on the Tenant Improvements is not completed within the Tenant
Improvement Allowance.
3.5 In the event Tenant does not use any or all of the Tenant
Improvement Allowance, the payment of the Minimum Rent shall be reduced in
accordance with Section 3.5 of the Lease.
3.6 Landlord shall be a party to the Construction Contract for
the limited purpose of making payments to the Contractor in accordance with this
Work Letter Agreement. Landlord's liability for the cost of the construction of
the Tenant Improvements shall in no event exceed the Tenant Improvement
Allowance, except (i) for payment for Landlord's Work (if Contractor is to
perform Landlord's Work), (ii) for the removal or remediation of Hazardous
Materials in the Premises (if there are any Hazardous Materials), and (iii) to
the extent that Landlord has failed to deliver joint checks to Tenant to enable
Tenant to make progress or final payments to the Contractor within the time
period established by the Construction Contract. In addition, Landlord shall not
be obligated to make payments to the Contractor except in accordance with the
provisions of the Construction Contract. All payments which Landlord shall make
to the Contractor shall be in the form of a joint check which shall be payable
to both Tenant and the Contractor.
3.7 If on or before the date when Tenant delivers Schematic
Drawings to Landlord, Tenant notifies Landlord that it has chosen to repair or
replace the windows on the third floor of the Premises, the Tenant Improvement
Allowance shall be increased by an amount equal to the lesser of (i) the
construction costs incurred by Tenant in the performance of such work or (ii)
the sum of $109,656.00.
4. CHANGES, ADDITIONS, AND ALTERATIONS
4.1 From time to time Tenant may make changes in the Final Plans
prior to final completion and request that Landlord approve such changes.
However, Tenant shall not make any material changes to the Final Plans (which
shall mean a change that is in excess of $ 10,000.00, is visible from the
exterior of the Premises, or affects the structure, roof, or exterior walls of
the Premises), without securing the prior written approval of Landlord, which
approval shall not be unreasonably withheld. In seeking Landlord's approval for
changes to the Final Plans, Tenant shall deliver to Landlord such documentation
as the Construction Contract shall require for changes in the Contract Price or
an extension of the Completion Date.
4.2 No such changes in the Final Plans shall delay the Rent
Commencement Date set forth in the Lease. Landlord shall approve or disapprove
any such changes that do not impact or affect any central building system in the
Premises within ten (10) working days after the receipt of a request from
Tenant. Upon approval by Landlord, such change shall be included within the
phrase "Final Plans".
5. CONSTRUCTION AND DELAYS
5.1 The performance of the work on the Tenant Improvements shall
be subject to the following terms and conditions:
(a) except to the extent of a conflict between Article 8 of
the Lease and this Work Letter Agreement (in which case this agreement shall
govern) compliance by
4
Tenant and the Contractor and its subcontractors, material suppliers, and
equipment renters of whatever tier ("Tenant's Contractors") with the applicable
provisions of Article 8 of the Lease,
(b) all of the work on the Tenant Improvements, which are
performed by Tenant's Contractors, shall be scheduled through Tenant,
(c) all work on the Tenant Improvements shall be performed
in accordance with the reasonable rules and regulations which Landlord may issue
from time to time,
(d) Tenant shall reimburse Landlord for any and all expenses
incurred by Landlord by reason of work performed by Tenant's Contractors which
is defective or not in accordance with the Final Plans, by reason of delays in
Landlord's Work caused by delays in the work on the Tenant Improvements
performed by Tenant, or as a result of inadequate clean-up, and
(e) Landlord shall have no responsibility whatsoever for the
supervision or coordination of Tenant's Contractors, the Architect, or the
Engineer, the quality of their work or any other matter with respect to Tenant's
Contractors, the Architect, or the Engineer; however, Landlord and Tenant shall
coordinate the work on Tenant Improvements with Landlord's Work as described
herein and as set forth in the TI Schedule.
5.2 Landlord shall not receive a fee, profit, overhead, or
general conditions in connection with the construction of the Tenant
Improvements.
5.3 Tenant shall not be responsible for delays to work on the
Tenant Improvements that is caused by a Landlord Delay (which is defined in
Section 5.4 hereof) or a Force Majeure Delay (which is defined in Section 5.5
hereof).
(a) As a pre-condition to the determination that any delay
in work on the Tenant Improvements is a Landlord Delay or a Force Majeure Delay,
Tenant must delivery the following documents to Landlord at the following times:
(i) the TI Schedule at the time and in the form
described in Sections 2.1 and 2.2 of this Work Letter Agreement;
(ii) the monthly revised TI Schedules, the monthly TI
Schedule Narrative, and the superintendent daily reports, as required by the
Construction Contract for the preceding calendar month, by fifteenth (15th) day
of each month,;
(iii) the Contractor's claims for an extension of the
Completion Date, as required by the Construction Contract, within ten (10) days
after Architect receives same from the Contractor; and
(iv) the Architect's and/or Engineer's written
evaluation of, and recommendation concerning, the Contractor's requests for
extensions of the Completion Date, which the Tenant shall require its
Architect/Engineer to deliver to Landlord within fifteen (15) days after the
Contractor submits its request for an extension of the Completion Date.
(b) The delays on the project which are attributable to a
Landlord Delay and a Force Majeure Delay shall be limited to those delays which
affect work on the critical path and which are not concurrently caused by
Tenant, Tenant's Contractors, the Architect, or the Engineer.
5.4 Except as otherwise provided in Section 5.6 hereof, the term
"Landlord Delay" when used in this Work Letter Agreement or in the Lease shall
mean a delay to work on the Tenant Improvements which was caused by any of the
following: (i) Landlord's failure to approve or disapprove the Schematic
Drawings and/or Tenant's Plans or any change order under the Construction
Contract within the time-frames set forth in this Work Letter Agreement, (ii)
delay in delivering possession of the Premises to Tenant beyond the Scheduled
Delivery Date in the Basic Lease Information, (iii) delay in obtaining the
necessary governmental permits or
5
approvals for Landlord's Work, (iv) performance of Landlord's Work at a time
which is not in accordance with the TI Schedule (unless ordered by the
Contractor or Architect or caused by act or omission of Tenant, the Architect,
the Engineer, or Tenant's Contractors), (v) refusal to permit Tenant's
Contractors to enter the Premises, use of the Premises, or any facilities in the
Premises after the date when Landlord delivers possession of the Premises to
Tenant, (vi) any misinformation about any physical condition of THE PREMISES
WHICH LANDLORD SHALL GIVE TO TENANT, the falsity of which Architect, Engineer,
or Tenant's Contractors would not have been able to discover with the use of
reasonable diligence, (vii) any unknown conditions in the Premises which
Architect, Engineer, or Tenant's Contractors would not have been able to
discover with the use of reasonable diligence, (viii) failure of the Premises,
or any portion thereof, to comply with applicable building codes or law, the
application of which was not triggered by work on the Tenant Improvements, and
(ix) the presence of Hazardous Materials in the Premises. Landlord shall be
responsible for Landlord Delays regardless of whether such delays were caused by
Landlord or by Landlord's agents or contractors; provided that the Architect,
Engineer, and any consultant employed by them or by Tenant shall not be deemed
to be Landlord's agents or contractors.
5.5 Except as otherwise provided in Section 5.6 hereof, the term
"Force Majeure Delay" when used in this Work Letter Agreement or in the Lease
shall mean a delay to work on the Tenant Improvements which was caused by any of
the following: strikes, lockouts, or other labor or industrial disturbance,
civil disturbance, judicial orders, act of a public enemy, war, riot, blockage,
embargo, inability to secure customary materials, supplies, or labor though
ordinary sources by reason of the order of any government body or, a Casualty
Loss (as defined in Section 11. 1 of the Lease).
5.6 Notwithstanding the foregoing, the terms "Landlord Delay" or
"Force Majeure Delay" when used in this Work Letter Agreement or the Lease shall
not include any delays to work on the Tenant Improvements which were directly or
indirectly caused by any of the following:
(a) any acts or omissions of Tenant which are not in
accordance with the requirements of this Work Letter Agreement, including
without limitation (i) failure to deliver or to revise the Schematic Drawings
and/or Tenant's Plans as required, (ii) failure to provide the TI Schedule to
Landlord as required, or (iii) requesting that materials, equipment, or supplies
be included in the Tenant Improvements when such materials, equipment, or
supplies cannot be delivered to the project site in time to achieve Occupancy
Completion by June 1, 1998;
(b) any acts or omissions of the Architect and/or Engineer,
including without limitation (i) design errors, conflicts, or omissions in the
Final Plans, (ii) failure to review and return shop drawings and/or submittals
in a timely manner, (iii) failure to review Contractor's requests for change
orders or extras in a timely manner, (iv) failure to review and approve
Contractor's progress payment applications in a timely manner, (v) failure to
promptly respond to the Contractor's requests for information or requests for
interpretation of the Final Plans, (vi) specification of materials, equipment,
or supplies which are either not readily available or which require long lead
times to order and/or manufacture, without ensuring that the materials,
equipment, or supplies can be ordered and/or manufactured without delaying the
construction of the Tenant Improvements, and (vii) issuing change orders or
clarifications of the Final Plans, either of which change the Contractor's scope
or sequence of work;
(c) any acts or omissions of Tenant's Contractors, including
without limitation (i) performing defective construction work, (ii) performing
work which is not in accordance with the Final Plans, (iii) proposing
substitutions for any materials, equipment, or supplies specified in the Final
Plans, (iv) failing to coordinate its own work with other contractors or failing
to coordinate and properly sequence the work of contractors of any lower tier,
(v) failing to make progress payments, when due, to contractors of any lower
tier, (vi) failing to investigate the Premises prior to the start of
construction in order to determine the field conditions which might be expected
to affect work on the Tenant Improvements, (vii) failing to review the Final
Plans with sufficient care prior to the start of construction in order to
discover any conflicts or omissions in the Final Plans, (viii) failing to
provide contractors of any lower tier with regular up-dates of the TI Schedule,
(ix) failing to order materials, equipment, or supplies which are either not
readily available or which require long lead times to order and/or
6
manufacture, in sufficient time to ensure the construction of the Tenant
Improvements will not be delayed, and (x) any breach of the Construction
Contract;
(d) any conflicts between or among the Architect, Engineer,
and Tenant's Contractors regarding the scope or sequence of work on the Tenant
Improvements; and
(e) any changes to the Final Plans, unless specifically
requested by Landlord.
6. LANDLORD'S WORK
6.1 Prior to the Commencement Date, Landlord shall be responsible
for and shall pay for costs incurred in performing the following work
("Landlord's Work"): (i) making changes to the restrooms and paths of travel
(including, if required, but not limited to elevator cabs) as required by local
or state law implementing the American Disabilities Act (ADA), and (ii) pressure
grouting the floor slab of the Premises. In addition, if on or before the date
when Tenant delivers Schematic Drawings to Landlord, Tenant does not choose to
repair or replace the windows on the third floor of the Premises, Landlord shall
perform such work. Landlord shall use its best efforts to obtain in a timely
fashion all permits necessary for Landlord's Work.
6.2 Contractor shall be responsible for coordinating and
sequencing Landlord's Work in order to ensure that there is no interference with
the work of the other contractors on the project.
6.3 If any Hazardous Materials are discovered in the Premises,
Landlord shall also be responsible for remediating, disposing, and complying
with all laws relating to any Hazardous Materials discovered to be present in
the Premises (unless introduced by Tenant or Tenant's Contractors) during the
construction of the Tenant Improvements.
7. INTENT OF THE PARTIES
7.1 It is the intent of the parties in entering into this Work
Letter Agreement that Tenant shall take the responsibility for the design and
construction of the Tenant Improvement work but that the Tenant Improvements
shall be the property of Landlord and shall be added to Landlord's capital
account for the Premises. It is further the intent of the parties that
Landlord's financial responsibility for the design and construction of the
Tenant Improvements shall be limited to the lesser of the Final Budget or the
Tenant Improvement Allowance.
7.2 It is further the intent of the parties in entering into this
Lease that to the fullest extent permitted under the Internal Revenue Code,
Landlord will be entitled to receive the applicable rehabilitation tax credit
for the Tenant Improvement work pursuant to this Work Letter Agreement. If any
provisions of this Work Letter Agreement are determined to be contrary to the
intent expressed in this Section 7.2, such provisions shall be deemed to have
been void ab initio so as to preserve Landlord's right to the rehabilitation tax
credit.
7.3 In the event of a dispute between Landlord and Tenant
regarding the terms of this Work Letter Agreement or any issue regarding the
construction of the Tenant Improvements, such disputes shall be resolved in
accordance with the provisions of Section 16.1 of the Lease.
LANDLORD TENANT
NO. I BEACH STREET, LLC CNET, INC.
XXXXXX XXXXX, XXXXX XXXXXXXX,
Its Managing Member Vice-President, Finance and Administration
Dated: September _, 1997 Dated:September -, 1997
7
CONSTRUCTION CONTRACT TERMS
SECTION_______ SCHEDULING OF THE WORK.
(a) At least thirty (30) days prior to the start of construction on
the Work, Contractor shall deliver to Landlord and Tenant the "as-planned"
schedule of the work to be performed ("TI Schedule"). The TI Schedule shall show
the schedule for the submission of all shop drawings/submittals and for the
performance of each portion of the Work. The TI Schedule shall take into
consideration the availability of the equipment and materials to be incorporated
into the Work and which portions of the Work will require long lead-time for
ordering and/or manufacturing. The TI Schedule shall include sufficient time for
ordering all equipment and materials in order that the Tenant Improvements for
not less than two complete floors of the Premises shall be sufficiently complete
to enable occupancy of such floors by Tenant for the use thereof for their
intended purpose ("Occupancy Completion") by June 1, 1998. The TI Schedule shall
set forth when the work to be performed by Landlord is to be scheduled in order
that such work shall be coordinated with the remainder of the Work. The TI
Schedule shall be in the form of a Critical Path Method schedule. Contractor
shall not commence work on the project until Contractor has delivered the TI
Schedule to Landlord and Tenant.
(b) Unless Contractor has been informed that it will not be able to
commence its Work by the Scheduled Delivery Date, the TI Schedule shall either
show (i) that Occupancy Completion shall be achieved prior to June 1, 1998 or
(ii) the TI Schedule shall be accompanied by a written statement, signed by
Contractor, explaining each reason why Occupancy Completion cannot be achieved
by June 1, 1998.
(c) Within fifteen (15) days after the expiration of each calendar
month during Contractor's performance of the Work, Contractor shall deliver to
Landlord and Tenant an updated TI Schedule which shall show both the "as-built"
schedule of the Work through the end of the preceding calendar month, any
changes to the critical path of the Work, and revisions, if any, to the
"as-planned" schedule for the remainder of the Work. Simultaneously with its
delivery of the up-dated TI Schedule, Contractor shall send Landlord and Tenant
a narrative ("TI Schedule Narrative") in which Contractor shall explain the
reason for each delay in the TI Schedule and each revision that was necessary to
the critical path.
(d) In order to allow Landlord, Tenant, and Contractor to be informed
about the progress of the Work, Contractor each day shall have prepared
Contractor's superintendent daily reports which shall describe the
subcontractors which were working on the project, the number of men who were
working, a brief description of the work performed, any defects or deficiencies
in the work performed, and the causes of any delay to the Work. Within fifteen
(15) days after the expiration of each calendar month during Contractor's
performance of the Work, Contractor shall deliver to Landlord and Tenant copies
of its superintendent daily reports for the preceding calendar month.
(e) Contractor shall not be entitled to request an extension of the
Contract Time for any reason unless Contractor has provided the documents
described in this section to the entities and within the time periods specified.
SECTION _______ CHANGES IN THE WORK.
(a) In the event that a change in the Work is to be ordered, Architect
shall issue to Contractor a written proposal request, with Tenant's approval,
that describes the change in the Work. Contractor shall not change or deviate
from the Contract Documents without Tenant's prior written approval.
(b) Within five (5) business days following the receipt of a proposal
request, Contractor shall submit a change proposal to Architect, with a copy to
Landlord, that sets forth any requested adjustment in the Contract Price or the
Completion Date and includes, in such detail as is required by Architect, an
itemization of all costs of material and labor with extensions listing
quantities and total costs and a substantiation of any claim for an extension of
the Completion Date. If no written change proposal is submitted by Contractor
within such period, it
8
shall be conclusively presumed that the change described in the proposal request
does not call for any Work that will result in an increase in the Contract Price
or an extension of the Completion Date, and such change shall be performed by
the Contractor without any such increase or extension.
(c) Within ten (10) business days after receipt of Contractor's change
proposal, Architect shall send a written evaluation and recommendation
concerning that proposal request to Landlord and Tenant. If Tenant accepts the
change proposal submitted by Contractor, Contractor shall prepare a change order
incorporating that proposal which will be signed by Tenant.
(d) If the change in Work results, in Architect's opinion, in a
decrease in Contractor's scope of Work, Architect shall estimate the decrease in
the Contract Price. Thereafter, Contractor shall proceed with its Work in
accordance with the adjusted Contract Price contained in the change order unless
Contractor submits written protest to Architect within ten (10) days from the
receipt of such proposal request. In that event, Contractor shall proceed with
the Work but shall retain the right to dispute Architect's determination.
SECTION - APPLICATIONS FOR PROGRESS PAYMENTS.
(a) Contractor shall prepare and submit to Architect an Application
for Progress Payment on the current AIA form by the twentiAi (20th) day of each
month. Contractor's Application shall be based upon all the Work performed by
Contractor to date as a percentage of Contractor's total scope of Work and as a
percentage of each category in the Schedule of Values. This Application for
Progress Payment shall be in the form required by Architect and shall be
supported by such documentation required by Architect, which must at least
include a statement of the quantities included in the Project by Contractor
which forms the basis for Contractor's contention that it has completed a
certain percentage of the Work, copies of payment applications from Contractor's
subcontractors, copies of certified payroll reports from Contractor and each of
the subcontractors of any tier for the period for which a progress payment is
requested, a Conditional Waiver and Release Upon Progress Payment, in the form
specified by Section 3262(d)(1) of the California Civil Code, executed by
Contractor and each of Contractor's subcontractors, equipment suppliers, and
materialmen.
(b) Whenever Landlord or Architect requests Contractor to do so (but
not more frequently than once per month), Contractor, in addition to providing
the documentation set forth in subsection (a) hereof, shall submit to Landlord
and to Architect: (1) a written declaration signed under penalty of perjury by
Contractor which shall state (i) the fixed price under the Construction Contract
and the total of all approved change orders and all claims for extras by
Contractor to which Tenant has agreed, (ii) the total amount which Contractor or
any of its subcontractors, materialmen, or equipment suppliers have claimed for
extras that are disputed, (iii) the total amount paid to Contractor to date, and
(iv) that Contractor has paid its subcontractors, materialmen, and equipment
suppliers for all progress payment applications and bills submitted to date; and
(2) Unconditional Waivers and Releases Upon Progress Payment, in the form
specified by Section 3262(d)(2) of the California Civil Code, executed by
Contractor and each of its subcontractors, equipment suppliers, and materialmen,
which shows the total amount paid to each.
SECTION - PROGRESS PAYMENTS.
(a) The Architect will, within five (5) business days after receipt of
Contractor's Application for Progress Payment (which shall be prepared by
Contractor), either issue a Certificate for Progress Payment to Landlord and
Tenant, with a copy to Contractor, for such amount as the Architect determines
is properly due, or notify Contractor in writing of his reasons for withholding
the Certificate. If Architect issues a Certificate for Payment, that Certificate
shall specify the aggregate value of Contractor's Work on the Project to date
from which sum there shall be deducted a reserve of ten percent (10%), all
previous payments made under prior Progress Payment Applications, the aggregate
amount of all payments made by Landlord or Tenant to others on behalf of
Contractor, and all other amounts which Landlord or Tenant is entitled to retain
in accordance with the provisions of the Contract Documents.
9
(b) As soon as reasonably possible after Architect has issued his
Certificate for Progress Payment, but in any event no later than seven (7)
business days after Contractor submits its Application for Progress Payment,
Contractor shall be paid the sum indicated in the Certificate for Progress
Payment.
SECTION ______ FINAL PAYMENT.
(a) Upon receipt of a written notice from Contractor that the Work is
ready for final inspection and acceptance and upon receipt of an Application for
Final Payment (supported by such documentation as Architect may require,
including copies of the final certified payroll reports from Contractor and each
of the subcontractors of any tier and a Conditional Waiver and Release Upon
Final Payment in the form specified in Section 3262(d)(3) of the California
Civil Code executed by Contractor and each of Contractor's subcontractors,
equipment suppliers, and materialmen), the Architect will promptly make an
inspection of the Work; and, if he finds the Work is in accordance with the
Contract Documents and that the Contract is fully performed, he will promptly
issue a Certificate for Final Payment to Landlord and Tenant.
(b) The retainages allowed by this Contract shall be retained until:
(1) Landlord and Tenant have received a Certificate for Final Payment from
Architect; and (2) thirty-five (35) days have elapsed following recordation of a
Notice of Completion in the official records of the City and County of San
Francisco, State of California. Thereafter, the retained percentage and all
other amounts due to Contractor shall be paid, provided (i) that Contractor
executes and delivers to Architect, simultaneously with the final payment, an
Unconditional Waiver and Release Upon Final Payment, in the form specified by
Section 3262(d)(4) of the California Civil Code, executed by Contractor and each
of Contractor's subcontractors, equipment suppliers, and materialmen, (ii) that
Contractor submits to Landlord and Tenant an affidavit signed under penalty of
perjury by the Contractor which states that all those providing labor,
materials, equipment, tools, facilities, services, and insurance used and
contracted to be used in or in connection with the construction of the Project
by and through Contractor have been fully paid, and (iii) that Contractor
delivers to Landlord all warranties required by this Construction Contract.
SECTION ______ LANDLORD/TENANT'S OBLIGATION TO MAKE PAYMENTS TO CONTRACTOR.
(a) In the Work Letter Agreement between Landlord and Tenant, Landlord
agreed to provide Tenant with a Tenant Improvement Allowance in the amount of
Three Million Eight Hundred Eighty Thousand Six Hundred Dollars and 00/100
($3,880,600.00) which was to be used for the design and construction of the
Tenant Improvements. Except as provided in subsection (b) hereof, Landlord shall
be obligated to make payments to Contractor in accordance with the terms of this
Construction Contract only to the extent of the amount of the aforesaid Tenant
Improvement Allowance, less any portion of the Tenant Improvement Allowance
which Landlord has paid for the costs of design or other costs and expenses
associated with the construction of the Tenant Improvements. Landlord shall make
all payments of the Tenant Improvement Allowance to Contractor in the form of
joint checks, on which Tenant and Contractor shall be named as joint payees.
Except as provided in subsection (b) hereof, Tenant shall be solely responsible
for all payments to the Contractor in excess of the Tenant Improvement
Allowance.
(b) Landlord's liability to the Contractor for the construction of the
Tenant Improvements shall in no event exceed the Tenant Improvement Allowance,
except (i) for the work, if any, described in the Contract Documents as
"Landlord's Work," and (ii) for any work performed by Contractor, after prior
written notice to Landlord, in removing and remediating Hazardous Materials.
(c) In order to inform Contractor which party will be responsible for
paying each Progress Payment and the Final Payment, Landlord shall deliver to
Contractor, together with each Progress Payment which it makes, an itemization
showing all payments made by Landlord to date for the design and construction of
the Tenant Improvements and the total amount remaining of the Tenant Improvement
Allowance.
10
(d) Except for its obligation to make payments to the Contractor as
described in this section, Landlord shall have no obligation or responsibility
for any aspect of the construction of the Tenant Improvements.
SECTION ______ WITHHOLDING PAYMENTS TO CONTRACTOR. Landlord and/or Tenant
shall have the right to withhold all or a portion of any progress or the final
payment due Contractor (i) if Contractor does not supply the documentation in
support of its progress payment or final payment application required by this
Construction Contract, (ii) if Contractor, by any act or omission, is
responsible for any damage to its own or any other work in the construction of
the Project or to any real or personal property of Landlord, Tenant, or others,
(iii) if Contractor's Work on the Project is defective or deficient in any
manner and Contractor has not remedied such defect or deficiency as instructed
by Architect, (iv) if Contractor shall fail to remove and have released any
mechanic's lien or stop notice on the real property on which Contractor
performed its Work which is asserted by one of Contractor's subcontractors,
equipment suppliers, and materialmen, or (v) if Contractor owes an indemnity
obligation pursuant to this Construction Contract, unless the Contractor's
insurance carrier has agreed to provide insurance coverage therefor without a
reservation of rights.
SECTION ______ CONTRACTOR SHALL PQY FOR LABOR AND MATERIALS. Contractor
shall pay for all materials and labor used in or in connection with its
performance of the Work through the period covered by previous payments received
from Landlord or Tenant and shall furnish satisfactory evidence, whenever
requested by Landlord or Tenant, to verify any and all such payments. All sums
received by Contractor under this Contract shall be received in trust for the
express purpose of paying in full for all labor and materials for the
performance of this Contract. No title to any payment, or part thereof, shall
vest in Contractor or be used for any other purpose until Contractor has first
paid in full for all labor and materials supplied to Contractor and incorporated
in this project.
SECTION ______ CLAIMS FOR EXTRAS.
(a) If Contractor wishes to make a claim for an increase in the
Contract Price or an extension of the Completion Date, he shall give Architect
written notice thereof within five (5) business days after the occurrence of the
event giving rise to such claim. No claim by Contractor shall be valid unless
approved in writing by Architect and Tenant. Contractor shall substantiate both
its right to an increase or extension and the amount of the increase or
extension by providing such information and documentation as Architect may
reasonably request.
(b) Within five (5) business days after receipt of Contractor's claim,
Architect shall send a written evaluation and recommendation concerning that
claim to Landlord and Tenant. Architect and Tenant must approve any written
claim from Contractor prior to Contractor performing the work which forms the
basis of its claim, except Contractor shall proceed in an emergency endangering
life or property. If Contractor fails to obtain Architect's and Tenant's written
approval for its claim prior to the time it performs the work which forms the
basis of the claim (unless the above exception applies), Contractor shall waive
any claims it might have had involving such work.
SECTION ______ INDEMNIFICATION BY CONTRACTOR. Contractor shall defend,
protect, indemnify, and hold harmless C/NET, Inc. and No. I Beach Street, LLC
and their respective, directors, officers, shareholders, members, managers,
agents and employees (collectively referred to as "Indemnitees") from and
against all liability, liens, injuries, claims, damages, fines, penalties,
costs, and expenses, including attorneys' fees and litigation or arbitration
costs, arising out of or resulting from the performance of the Work and/or
breach of the Contract Documents, provided that any such liability, lien,
injury, claim, damage, cost, or expense is caused, in whole or in part, by any
act or omission of Contractor, its subcontractors of any lower tier, anyone
directly or indirectly employed by any of them, or anyone for whose acts any of
them may be liable. Contractor's indemnity obligation shall be binding upon
Contractor regardless of whether any of the Indemnitees is negligent, actively,
passively, or not at all. However, Contractor shall not be required to indemnify
any Indemnitee whose sole negligence or willful misconduct is responsible for
the liability, lien, injury, claim, damage, cost, or expense. Contractor shall,
upon demand by any of its Indemnitees, defend any action or proceeding brought
against any of its
11
Indemnitees with respect to the matters set forth in this Construction Contract;
but any of the Indemnitees shall have the right to conduct its own defense if it
chooses to do so.
SECTION ______ INSURANCE REQUIRED TO BE CARRIED BY CONTRACTOR. Contractor
shall at all times carry with companies acceptable to Tenant all necessary
Worker's Compensation and other insurance required by law and a Commercial
General Liability Insurance policy in amounts not less than $5,000,000.00 per
occurrence for bodily injury and property damage. Such policy or policies shall
include coverage for premises and operations liability, contractual liability
(including, but not limited to, Contractor's indemnity obligation to the
Indemnitees), completed operations coverage, products liability, broad form
property damage liability, liability which Contractor may incur as a result of
the operations, acts, or omissions of its subcontractors, suppliers, or
materialmen, and their agents or employees, automobile liability, including
owned, non-owned, and hired vehicles. Such policy or policies shall be endorsed
to include all Indemnitees as additional insureds and to stipulate that such
insurance shall be primary insurance and that any insurance carried by any
Indemnitees shall be excess and not contributory insurance.
SECTION ______ INSURANCE REQUIREMENTS. All insurance coverage procured by
the Contractor shall (i) list all of the named insureds under the policy, (ii)
be issued by an insurer admitted to transact insurance in the State of
California with a financial rating of at least an A:Vl1I as rated in the most
recent edition of Best's Insurance Reports, (iii) contain an endorsement
requiring at least thirty (30) days written notice from the insurance company to
all of the named additional insureds before any cancellation or material change
in coverage, scope, or amount of the insurance policy, and (Iv) contain an
endorsement stating that no additional insured will be excluded from coverage in
the event that the additional insured is alleged or found to be negligent in
connection with any claim made under the policy or otherwise.
SECTION ______ DELIVERY OF CERTIFICATES OF INSURANCE AND POLICY
ENDORSEMENTS TO LANDLORD AND TENANT. If Contractor fails to deliver to Landlord
and Tenant insurance certificates and policy endorsements which reflect the
requirements specified in this Construction Contract within forty-eight (48)
hours after demand, and in any event prior to commencement of Contractor's Work
on the Project, Landlord may, but shall not be obligated to, obtain such
insurance for Contractor and pay the premiums thereon, and Contractor shall
repay Landlord, on demand, any sum or sums paid therefor, or Landlord may deduct
such premiums from any money due or to become due to Contractor under this
Agreement. In the alternative, Landlord may declare Contractor in default under
this Construction Contract.
12
EXHIBIT D
[MAP]
Diagram of Comparable Space Area
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the date: set forth below by
and between , hereinafter called "Tenant"; ,
hereinafter called "Landlord"; and Midland Loan Services, L. P., Master Servicer
for LaSalle National Bank, Trustee for SASCO SERIES 1996 CFL (collectively
referred to herein as "Lender"), as follows:
W I T N E S S E T H:
WHEREAS, Under is now the holder of a Mortgage or Deed of Trust, which
secures or will secure a Note in the original principal amount of $ in
favor of Lender as executed by Landlord and which encumbers the real property,
together with the buildings and improvements thereon, described in Exhibit "A"
attached hereto and made a part hereof; and,
WHEREAS, Tenant is the holder of a lease (the "Lease") dated
from Landlord and, as further amended by instrument(s) dated (such
lease, together with the amendments set forth herein are collectively referred
to as "the Lease") covering certain premises more particularly described in the
Lease (hereafter the "Leased Premises"); and,
WHEREAS, Tenant., Landlord and Lender desire to confirm their understanding
with respect to the Lease and the Mortgage or Deed of Trust;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, Tenant, Landlord and Lender hereby agree and covenant as
follows:
1. The Lease and the rights of Tenant thereunder are now and at all times
hereafter shall be subject and subordinate to the above Deed of Trust or
Mortgage and to all renewals, modifications or extensions thereof, but such
renewals modifications and extensions shall nevertheless be subject and entitled
to the benefits of the terms of this Agreement.
2. So long as Tenant is not in default (beyond any period given Tenant to
cure such default) in the payment of rent or in. the performance of any of the
terms, covenants or conditions of the Lease on Tenant's part to be performed,
Tenant's possession of the Leased 'Premises and Tenant's rights and privileges
under the Lease, or any renewals, modifications. or extensions thereof which may
be affected in accordance with any option granted in the Lease, shall not be
diminished or interfered with by Under, and Tenant's occupancy of the Leased
Premises shall not be disturbed by Lender during the term of the Lease or any
such renewals, modifications, or extensions thereof.
3. So long as Tenant is not in default (beyond any period given Tenant to
cure such default) in the payment of rent or in the performance of any of the
terms, covenants or conditions of the Lease on Tenant's part to be performed,
Lender will not join Tenant, or any leasehold mortgagee of Tenant ("Tenant's
Mortgagee"), as a party defendant for the purpose of
SNDA - SASCO SERIES 1996 CFI
Page 2
terminating or otherwise affecting Tenant's or Tenant's Mortgagee's interest.
and estate under the Lease in any action or proceeding brought by Lender for the
purpose of enforcing any of its rights in the event of any default under the
Note and Mortgage or Deed of Trust; provided, however, Lender may join Tenant or
Tenant's Mortgagee as a party in any such action or proceeding IF such joinder
is necessary under any statute or law for the purpose of effecting the remedies
available to the Lender under the Note and Mortgage or Deed of Trust, BUT ONLY
for such purpose and NOT for the purpose of terminating the Lease.
4. If the interests of Landlord shall be transferred to and owned by Lender
by reason of foreclosure or other proceedings brought by it, or by any other
manner, and Lender succeeds to the interests of the Landlord under the Lease,
Tenant shall be bound to Lender under all of the terms, covenants and conditions
of the Lease for the balance of the term thereof remaining and any extensions or
renewals thereof which may be effected in accordance with. any option granted in
the Lease, with the same force and effect as if Lender were the Landlord under
the Lease, and Tenant does hereby attorn to Lender as its Landlord, such
attornment to be effective and self-operative without the execution of any
further instruments on the part of any of the parties hereto immediately upon
Under succeeding to the interest of the Landlord under the Lease. The respective
rights and obligations of Tenant and Lender upon such attornment, to the extent
of the then remaining balance of the term of the Lease and any such extensions
and renewals, shall be and are the same as now set forth therein; it being the
intention of the parties hereto for this purpose to incorporate the Lease in
this Agreement by reference with the same force and effect as if set forth at
length herein.
5. If Lender shall succeed to Landlord's interest in the Lease, then during
the period of Lender's ownership of such interest, but not thereafter, Lender
shall be bound to Tenant and Tenant's Mortgagee under all the terms, covenants
and conditions of the Lease, and during the period of Lender's ownership of
Landlord's interest in the Lease, Tenant and Tenant's Mortgagee shall have the
same remedies against Lender for the breach of an agreement contained in the
Lease that Tenant and Tenant's Mortgagee would have had against the Landlord if
Under had not succeeded to Landlord's interest therein; provided, however, that
notwithstanding any provisions in the Lease to the contrary, Lender shall not
be:
(a) liable for any act or omission of any prior landlord arising under
the Lease (including the Landlord) or subject to any offsets, defenses or
counterclaims which Tenant may have against any prior landlord arising under the
Lease (including the Landlord), or,
(b) bound by any rents or additional rent which Tenant might have PAID
FOR more than the current month to any prior landlord (including the Landlord);
or
(c) bound by any amendment or modification of the I-ease made without
its consent; or,
(d) LIABLE FOR any security deposited under the Lease unless such
security has been physically delivered to Lender.
SNDA - SASCO SFRIFS 1996 CFL
Page 3
Provided, however, that the Under shall not be relieved from responsibility
for failure to perform any obligation under the Lease which, although such
failure may have begun prior to Lender succeeding to Landlord's interest,
thereafter continues. In such event, Lender's responsibility shall be determined
as if the failure had first arisen upon the day Landlord's title to the Subject
Property succeeds to Lender.
6. Tenant shall promptly notify Lender of any default , act OR OMISSION OF
Landlord which would give Tenant the right, immediately or after the lapse of a
period of time, to cancel or terminate the Lease or to claim a partial or total
eviction ("a Landlord Default"). In the event of a Landlord Default, the Tenant
shall not exercise any rights available to it: i) until it has given written
notice of such Landlord Default to Lender; and ii) unless Lender has failed
within thirty (30) days after Lender receives such notice, to cure or remedy the
Landlord Default or, if the same can. not be reasonably remedied with such
period, until a reasonable period for remedying such Landlord Default has
elapsed, but in any event, not less than the period of time the Landlord would
be entitled to cure such default pursuant to the terms of the Lease. Lender
shall have no obligation under this paragraph to remedy any Landlord Default.
7. The terms "holder of a mortgage" and "Lender" or any similar term herein
or in the LEASE shall be deemed to include Lender and any of its successors or
assigns, including anyone who shall have succeeded to Landlord's interests by,
through or under foreclosure of the Mortgage or Deed of Trust, or by deed in
lieu of such foreclosure or otherwise.
8. The Landlord has assigned or will assign to Lender all of Landlord's
right, title and interest in the Lease by an Assignment of Rents and Leases
("Rent Assignment"). If in the future there is a default by the Landlord in the
performance and observance of the terms of the Note or Mortgage or Deed of
Trust, the Lender may at its option under the Rent Assignment require that all
rents and all other payments due under the Lease be paid directly to Lender.
Upon notification to that effect by the Lender to the Landlord and the Tenant,
the Landlord HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS the Tenant and the Tenant
agrees to pay any payments due under the terms of the Lease to the Lender. Such
payments shall constitute payments under the terms of the Lease and Landlord
shall have no claim against Tenant by reason of such payments made to Lender.
Such payments shall be made by Tenant to Lender regardless of any right of
setoff, counterclaim or other defense which Tenant may have against Landlord.
Neither the Rent Assignment or its implementation shall diminish any OBLIGATION
OF THE LANDLORD under the Lease or IMPOSE ANY such obligations on the Lender.
9. Any notice, or request or other communication required by this Agreement
to be given shall be in writing and shall be: (a) personally delivered; or, (c)
transmitted by postage prepaid registered or certified mail, return receipt
requested. All such notices, requests or other communications shall be addressed
to Tenant, Landlord or Under at the addresses set forth below or such other
address as the parties shall in like manner designate. All such notices and
requests shall be deemed to have been given on the first to occur of- (i) the
actual date received, or (ii) the date of delivery if personally delivered; or
(iii) five (5) days following posting it transmitted by mail.
SNDA -SMSCO SERIES 1996 CFL
Page 4
If to Tenant:
If to Landlord:
If to Lender: Midland Loan Services, L.P.
000 Xxxx 00xx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: ________________,
Asset Manager
10. This Agreement may NOT be modified except by a written agreement signed
by the parties hereto or their respective successors in interest. This Agreement
Shall inure to the benefit of and be binding upon the parties hereto, their
successors and assigns.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals by
and through their duly authorized officers on the ________ day of ____________,
19____.
"Lender" LaSalle National Bank as Trustee for
SASCO SERIES 1996 CFL, by and through its
Master Servicer, Midland Loan Services, L. P.
By
-------------------------------------------
X. X. Xxxxxx
Its Servicing Officer
"TENANT"
(print)
---------------------------------------------
By
-------------------------------------------
Its
------------------------------------------
"LANDLORD"
(print)
---------------------------------------------
By
-------------------------------------------
Its
------------------------------------------
SNDA - SASCO SERIES 0000 XX,
Xxx 0
XXXXX XX XXXXXXXX
)
COUNTY OF XXXXXXX
On this day of 199__, before me, a Notary Public in and for
the State of Missouri, personally appeared C. 3. Xxxxxx, personally known to me
(or proved to me ON the basis of satisfactory evidence) to be the person who
executed this instrument, ON OATH stated the he was authorized to execute the
instrument, and acknowledged that he is the Servicing Officer of Midland Loan
Services, L.P., to be the free and voluntary act and deed of said company for
the uses and purposes mentioned in the instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day and
year first above written,
(seal)
-----------------------------------------------
(Print Name)
NOTARY PUBLIC in and for the State of Missouri.
My appointment expires
-------------------
STATE OF
COUNTY OF
On this day of before me, a Notary Public in
and for the State of personally appeared personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
person who executed this instrument, tin oath stated the he/she was authorized
to execute the instrument, and acknowledged that lie/she is the
of to be the free and voluntary act and deed of
said for the uses and purposes mentioned in the
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day and
year first above written.
(seal)
-----------------------------------------------
(Print Name)
NOTARY PUBLIC in and for the State of
My appointment expires
-------------------
SNDA - SASCO SERIES 1996 CFL Page 6
STATE OF
ss.
COUNTY OF
On this day of 199_, before me, a Notary Public in
and for the State of personally appeared
personally known to me (or proved to me on the basis of satisfactory evidence)
to he the person who executed this instrument, on oath stated the he/she was
authorized to execute the instrument, and acknowledged that he/she is the
- of
to be the free and voluntary act and deed or said for the uses aid purposes
mentioned in the instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and official seat the day and
year first above written.
(seal)
-----------------------------------------------
(Print Name)
NOTARY PUBLIC in and for the State of
My appointment expires
-------------------
