Lease
THIS LEASE, made as of this 21st day of April, 1988, between Xxxxxx Xxxxxx,
landlord, and Xxxx X. Xxxxx, P. C. and .Xxxx X. Xxxxx, individually; Xxxxxxx
X. Xxxxxxxx, P.C. and Wi111am A Xxxxxxxx , individually; Xxxxxx X. Van Nest,
P.C. and Xxxxxx X. Van Nest, Individually; R. Xxxxxx Xxxxxxx, individually;
Xxxxx X. Xxxxxxx, individually; Xxxxxxx X. Xxxxxx, Individually; Xxxx X. Xxxxx,
individually; also the California General Partnership commonly known as "KEKER &
XXXXXXXX," Tenants.
W I T N E S E T H
1. Premises.
(a) Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, for the term and subject to the agreements, covenants, conditions
and provisions hereinafter set forth, to each and all of which Landlord and
Tenant mutually agree, the space (the "Premises") being that certain
Building located at 000 Xxxxxxx Xxxxxx in the City and County of San
Francisco, State of California. The term "Building" shall mean that
certain 3-story, office building and other improvements. The term "Land"
shall mean, collectively, the parcels of land currently designated as
Assessor's Parcel No. 00-0000-000, City and County of San Francisco,
California, together with all appurtenant rights and easements. The Land
and the Building are hereinafter collectively called the "Real Property."
The Premises shall include the appurtenant right to the use of lobbies,
entrances, stairs and elevator of the Building.
(b) Said leasing is upon and subject to the terms, covenants,
agreements, limitations, exceptions, reservations and conditions herein set
forth, and 'Tenant covenants as a material part of the consideration for
this Lease to keep and perform each and all of the said terms, covenants,
agreements, limitations. exceptions, reservations and conditions by it to
be kept and performed and that this Lease is made on the condition of such
Performance.
2. Definitions. The following terms used herein shall have the meaning
specified below:
Floor(s) on which the Premises are located Xxxxx Xxxxx, Xxxxxx Xxxxx, 0xx
Xxxxx, and 3rd Floor Addition.
Agreed Initial Term: Ten (10) years and zero (0) months, commencing upon
substantial completion of tenant improvements and ending ten years from
commencement of term.
Base Year: The first 12 months of occupancy.
Monthly Rent: The sum of Forty Six Thousand Three Hundred Ninety-Seven
dollars ($46,397) for the first five years (60 Months).
Monthly Rent: The sum of Fifty-Six Thousand Three Hundred Ninety-Five
dollars ($56,395) for the second five years (61-120 Months).
Security Deposit: The sum of Forty One Thousand Seven Hundred Seventy Two
dollars ($41,772). Landlord shall pay annually to Tenant interest accrued on the
Security Deposit, which Deposit shall be placed in one (l) year Certificates of
Deposit with a major Lending Institution.
Tenant's share: 100%
Business of Tenant: General Office (Law Firm).
Real Estate Broker: The Rubicon Group.
Tenant: If there is more than one tenant on the signature page, than each
person or entity signing shall be included, and be jointly and severally liable
Landlord's Consent: Except as provided in Paragraph 33 and Paragraph
13(d), where ever the Lease refers to the Landlord's discretion, consent or
approval on any matter, Landlord agrees that such consent, approval or
discretion shall not be unreasonably withheld or unduly delayed.
3. Term. Delivery of Possession of Premises.
(a) The term of this Lease shall commence and, unless sooner
terminated as hereinafter provided, shall expire on the dates specified in
Paragraph 2 for the commencement and expiration of the Agreed Initial Term.
(b) If Landlord, for any reason whatsoever, cannot deliver possession
of the Premises to Tenant at commencement of the term hereof, then, except
as provided in Paragraph 3(c) this lease shall not be void or voidable, nor
shall Landlord or Landlord's agents, employees or contractors he liable to
Tenant for any loss or damage resulting therefrom, but in that event,
Monthly Rent and additional rent payable pursuant to Paragraph 7 hereof
shall not be payable for the period from the commencement of the term of
this Lease through and including the day preceding the date Landlord can
deliver possession of the Premises to Tenant. Any delay in delivery
extends the lease term but does not amend Tenant's obligations under the
lease.
(c) Notwithstanding any of the foregoing terms of Paragraph 3(b) to
the contrary:
(l) If, except to the extent of any delays caused by Tenant or
Acts of God, Landlord is unable to deliver possession of the Premises
to Tenant within five (5) months after the issuance of the building
permit for landlord's base building construction, Landlord shall pay
to Tenant the amount of $500 per day for each day after the expiration
of such five (5) month period, until the date that Landlord delivers
possession of the Premises to Tenant. This amount represents
liquidated damages for any delay in delivery of possession of the
Premises.
(2) If, for any reason other than delays caused by Tenant,
Landlord is unable to deliver possession of the premises to Tenant
within eleven (11) months after the issuance of the building permit
for Landlord's base building construction, Tenant at Tenant's option,
shall have the right to terminate thin Lease upon thirty (30) days'
written notice given to Landlord at any time after said eleven (11)
month period, provided that suc11 notice of termination shall not be
effective if prior to the conclusion of such thirty (30) day period
Landlord sha11 have delivered possession of the Premises to Tenant.
(d) If the Premises are ready for occupancy prior to the date for
commencement of the term of this Lease as specified in Paragraph 2, Tenant
shall have the right to take early occupancy of the Premises on such date
as Landlord and Tenant agree and, notwithstanding Paragraph 2, the term of
this Lease shall commence on the date of such early occupancy by Tenant,
but shall nevertheless expire on the expiration date specified in Paragraph
2.
(e) Landlord shall give thirty (30) days advance notice of the date
on which Landlord expects the Agreed Initial Term to commence and Landlord
shall promptly notify Tenant thereafter of any change in the expected date
of such commencement. From and after Landlord's notice to Tenant of the
expected Commencement Date, Tenant and Tenant's employees, agents and
contractors shall he permitted to enter upon the Premises to install
Tenant's furniture and equipment therein and to otherwise make the Premises
ready for Tenant's occupancy; provided, however, that such entry by Tenant
shall be subject to all of the terms and conditions of the Lease, including
specifically but not limited to indemnification of Landlord; except,
however, Tenant shall have no obligation to pay Monthly Rent or additional
rent, during this period. Further, If Landlord is unable to deliver
possession of the Premises within five (5) months of the issuance of the
building permit for Landlord's base building construction, Landlord shall
give Tenant a reasonably detailed construction schedule for the completion
of the Premises and the Tenant's move-in date.
4. Building and Tenants Improvements.
Promptly following the execution of this Lease, Landlord shall undertake to
prepare the Building and the Premises for occupancy by Tenant. All construction
to be undertaken by Landlord is to conform to City Building codes, including
Fire and Handicapped Codes.
5. Monthly Rent.
(a) On or before the first day of each calendar month during the term
hereof, Tenant shall pay to Landlord, as monthly rent for the Premises, the
Monthly Rent specified in Paragraph 2. In the event the term of this Lease
commences on a day other than the first day of a calendar month, or
terminates on a day other than the last day of a calendar month, then the
Monthly Rent payable for such partial month shall be approximately prorated
on the basis of a thirty (30) day month. Monthly Rent and the additional
rent specified in Paragraph 7 (in accordance with the procedure specified
therein) shall be paid by Tenant to Landlord, in advance, without deduction
or offset except as expressly provided in Sections in lawful money of the
United States of America at the office of Xxxxxx Xxxxxx, 000 Xxxxxxx Xxx,
Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, or to such other person or at such
other place as Landlord may from time to time designate in writing.
(b) All amounts payable by Tenant to Landlord under this Lease in
addition to the Monthly Rent, including without limitation, Tenant's Share
of increases in Tax Expenses and Operating Expenses as provided in
Paragraph 7, all amounts which Tenant owes to Landlord on account of the
installation by Landlord of any alterations, additions and improvements,
and all personal property and other taxes payable by Tenant as provided in
Paragraph 18 shall constitute additional rent owing by Tenant to Landlord
hereunder. Monthly Rent and additional rent, if not paid by Tenant to
Landlord after an Event of Default, shall bear interest from such due date
to the date of payment by Tenant at the maximum annual interest rate
allowed by law on such due date for business loans (not primarily for
personal, family or household purposes) not exempt from the usury law or,
if there is no such maximum annual interest rate, at the rate of interest
(the "Prime Rate") announced by the .San Francisco Main Office of Bank of
America, NT&SA (or any successor bank thereto) as its "reference rate" (or
if there is no such "reference rate" announced, the rate announced or
charged by such bank in pricing ninety (90) days commercial loans to
substantial commercial borrowers) plus four (4) percentage points. Failure
by tenant to pay monthly and/or additional rent when due, plus interest as
aforesaid, shall constitute an event of default by Tenant hereunder giving
rise to all remedies by landlord under this Lease for nonpayment of rents
subject to the specific Notice and Cure provisions of subparagraph 5(d)
below.
(c) Notwithstanding anything to the contrary above, if Landlord shall
fail to observe or perform any of the covenants, conditions or provisions
to be performed by Landlord under this Lease, with the exception of
Paragraphs 9 and 25 of this Lease, which failure shall continue for a
period of thirty (30) days after written notice thereof given by Tenant,
Tenant may cure the same at the expense of Landlord and offset costs
actually expended by Tenant from the rental payable by Tenant under this
Leases provided, however, that this remedy may not exceed $50,000 in any
one (1) year; and further, provided, however, that in the case of default
by Landlord which with due diligence cannot be cured within such thirty
(30) day period, such thirty (30) day period sha11 be deemed extended and
Tenant's right to cure such default shall not arise if Landlord shall
institute within said thirty (30) day period and diligently continue to
prosecute to completion all steps necessary to cure such default.
(d) Upon Tenant's failure to pay Rent as aforesaid, then on the fifth
day of said month Landlord shall provide written notice to Tenant of the
past due Rent and the five percent (5%) penalty provided in Paragraph 30 of
this Lease, and Tenant shall have five (5) business days to cure. If
Tenant does not cure in said five (5) business days, such failure shall be
an Event of Default as defined in Paragraph 24.
6. Security Deposit. Tenant sha11 pay to Landlord upon the commencement
of the Tenant Improvement construction the Security Deposit specified in
Paragraph 2 as security for the faithful performance by Tenant of all of the
forms, covenants, agreements and the conditions of this Lease to be kept and
performed by Tenant during the term hereof. If Tenant fails to pay Land1ord any
rent, Landlord, at Landlord's option, may apply all or part of the Security
Deposit in satisfaction of Tenant's obligation to the extent of such
application. In no event shall Landlord be required to make any such
application. If Landlord elects to make such application, Landlord shall notify
Tenant in writing of the nature and amount thereof and Tenant shall thereupon be
obligated to deposit with Landlord an amount sufficient to return the Security
Deposit to an amount equal to one hundred percent (100%) of the amount specified
in Paragraph 2. If Tenant fails to do so within five (5) days after Landlord
has given such notice, Landlord at it's option may resort to any or all remedies
available to it for nonpayment of Rent. Promptly following the termination of
the term of this Lease, or, if Tenant has held over beyond such termination,
promptly following the end of any period Tenant has so held over, provided
Tenant has vacated the Premises and fully performed all obligations by Tenant to
he performed hereunder, Landlord shall promptly return to Tenant the Security
Deposit or such portion thereof then held by Landlord after all applications on
account of Tenant's defaults; provided, however, any such return shall not be
construed as an admission by Landlord that Tenant has performed all of its
obligations hereunder. No holder of a Superior Interest (as defined in
Paragraph 21), nor any purchaser at any judicial or private foreclosure sale of
the Real Property or any portion thereof, shall be responsible to Tenant for
such Security Deposit unless such holder or purchaser shall have actually
received the same.
7. Expense Escalation.
(a) Tenant shall pay to Landlord as additional rent under this Lease
at the times hereinafter set forth Tenant's Share as specified in Paragraph
2 of any increase in the operating Expenses incurred by Landlord in each
calendar year subsequent to the Base Year specified in Paragraph 2 over the
Operating Expenses incurred by Landlord during such Base Year. The term
"Operating Expenses" shall mean the total costs and expenses incurred by
Landlord in connection with the management, operation, maintenance, repair
and ownership of the Real Property, as determined in accordance with
generally accepted accounting principles, consistently applied excluding
"Tax Expenses" as defined below, and including, without limitation, the
following costs (i) the reasonable allocation of salaries, wages, bonuses
and other compensation relating to employees of Landlord or its agents
engaged in the operation, repair, or maintenance of the Real Property; (ii)
premiums and other charges incurred by Landlord with respect to fire and
other casualty, rent and liability insurance, any other insurance as is
deemed necessary or advisable in the reasonable judgment of Landlord, or
any insurance required by the holder of any Superior Interest, and, after
the Base Year, costs of repairing an insured casualty the extent of the
deductible amount under the applicable insurance policy, but excluding
financing charges (other than charges paid to the insurer) with respect to
amounts borrowed by Landlord to pay such premiums or other charges; (iii)
license, permit and inspection fees; (iv) sales, use and excise taxes on
goods and services purchased by Landlord in connection with the operation,
maintenance or repair of the Real Property; (v) supplies, tools, materials
and equipment used in connection with the operation, maintenance and repair
of the Real Property; (vi) the reasonable allocation of accounting, legal,
and other professional fees and expenses; (vii) The cost of maintaining the
sidewalks (amortized over a three (3) year period, at ten percent (10%)
interest) and landscaping; (viii) the cost of any capital improvement made
by Landlord to the Real Property or capital assets acquired by Landlord
after the Base Year required under any governmental law, regulation or
insurance requirement with which the Real Property was not required to
comply during the Base Year, such cost or allocable portion to be amortized
over the useful life thereof, together with interest on the unamortized
balance at a rate per annum equal to the Prime Rate charged at the time
such capital improvements or capital assets are constructed or acquired or
such higher rate as may have been paid by Landlord on funds borrowed for
the purpose of constructing or acquiring such capital improvements or
capital assets, but in either case not more than the maximum rate permitted
by law at the time such capital improvements of capital assets are
constructed or acquired; (ix) the cost of any capital improvements approved
by Tenant (which approval shall not be unreasonably withheld) that are made
by Landlord to the Building or capital assets acquired by Landlord after
the Base Year for the protection of the health and safety of the occupants
of the Real Property or that are designed to reduce other Operating
Expenses, such cost or allocable portion thereof to be amortized over the
useful life thereof, together with interest on the unamortized balance at a
rate per annum equal to the Prime Rate charged at the time such capital
improvements or capital assets are constructed or acquired or such higher
rate as may have been paid by Landlord on funds borrowed for the purpose of
constructing or acquiring such capital improvements or capital assets, but
in either case not more than the maximum rate permitted by law at the time
such capital improvements or capital assets are constructed or acquired.
(b) In order that the Operating Expenses during the Base Year fairly
reflect the cost of maintaining and operating the Building during the Base
Year and are not unduly lower during the Base Year, Operating Expenses for
any calendar year following the Base Year shall be computed in accordance
with the following principle: Any category of Operating Expense included
in any year following the Base Year which was not fully incurred during the
Base Year shall be included in Operating Expenses for such subsequent year
only to the extent of the increase in cost thereof over the cost thereof
which would have been included therefor during the Base Year had such
category of Operating Expense been fully incurred in the Base Year. For
purposes of this Paragraph 7(b) Landlord shall supply Tenant with a list of
Base Year Operating Expenses which are unduly lower, the subsequent change
thereto and a written explanation thereof, within 90 days after the close
of the Base Year, and within 90 days after the close of the next two (2)
subsequent years.
(c) Notwithstanding any of the terms of Section 7(a) of the Lease to
the contrary, "Operating Expenses" shall be the total costs and expenses
reasonably incurred by Landlord as provided in Section 7(a) of the Lease,
but shall not include any of the following:
(i) Repairs or other work to the Building occasioned by fire,
windstorm or other insured casualty or by the exercise of the right of
eminent domain (except that the deductible amount under any policy of
casualty insurance up to a maximum amount of $5,000 per occurrence may
be included within Operating Expenses);
(ii) Attorneys' fees, costs and disbursement and other expenses
incurred in connection with negotiations or disputes with or
prospective subtenants or assignees or associated with the enforcement
of any sublease or the defense of Landlord's title to or interest in
the Building or any part thereof;
(iii) Costs incurred due to a violation by Landlord of any
law, ordinance or governmental rule or regulation or of the terms and
conditions of any lease;
(iv) Debt service on any mortgages or deed of trust or any rent
or other payments due under any ground or underlying lease; and
(v) The cost of the premium for earthquake insurance in any
operating year to the extent that such cost exceeds twenty percent in
excess of (i) the cost of such insurance premium during the Base Year
times (ii) the percentage change in the Consumer Price Index (All
items, San Francisco-Oakland, 1982-84 = 100) between the commencement
of the first operating year following the Base Year and the operating
year in question.
(d) Except as provided in subparagraph (e) below and notwithstanding
any of the other terms of Paragraph 7 of the Lease to the contrary, Tax
Expenses for any calendar year shall not include any increase in taxes
resulting from any reassessment of the Building permitted under Article
XIII A of the California Constitution as a consequence of any change in
ownership of the Building if such change in ownership is between Landlord
and an Affiliated Entity, as such terms are defined in California Revenue
and Taxation Code Sections 60 through 70. Further, any rebate or refund of
property taxes paid by Landlord during any calendar year during the term of
the Lease shall be credited against the amount of Tax Expenses owing in the
subsequent calendar year for purposes of determining the Tenant's
percentage share of property taxes for such calendar year (or, if such
refund or rebate shall pertain to any taxes paid by Landlord during the
last calendar year of the term of the Lease, Landlord shall pay to Tenant
its appropriate share of such refund or rebate based upon Tenant's
percentage share of such property taxes paid by Tenant for such calendar
year).
(e) Notwithstanding any other terms or provisions of this Paragraph 7
to the contrary, during the Agreed Initial Term the pass-through of any
increases in Tax Expense caused by a change of ownership of the Real
Property shall be limited as follows:
(i) With respect to a sale or transfer of the Real Property by
the original Landlord (together with any transferee, assignee or
successor who has taken title to the Real Property without causing a
"reassessment" thereof pursuant to the terms of Cal. Rev. and Tax Code
Sections 60-70) the following provisions shall govern:
(A) There shall be a full pass-through to Tenant of any
increase in Tax Expense resulting from such transfer by said
original Landlord' and
(B) Said original Landlord shall pay to Tenant upon the
closing of such transfer the following amounts:
(l) Fifty percent (50%) of any increase in Tax Expense
that will be payable annually by Tenant for the balance of
the Agreed Initial Term based upon the first $2,500,000 of
any increase in the assessed value of the Real Property (in
the year of transfer) as a consequence of such change of
ownership over the assessed value of the Real Property
immediately prior to such change of ownership; and
(2) One Hundred percent (100%) of any increase in Tax
Expense that will be payable annually by Tenant for the
balance of the Agreed Initial Term based upon any increase
over $2,500,000 in such assessed value of the Real Property
(in the year of such transfer).
Such amounts described in clauses (l) and (2) above shall be
paid in a lump sum, which sum shall be determined by using a )0%
discount factor with respect to the reasonably anticipated
increases in Tax Expense over the balance of the Agreed Initial
Term as a consequence of the reassessment of the hea1 Property
upon such change of ownership. For purposes of clauses (l) and
(2) above, the "increase in Tax Expense that will be payable
annually by Tenant for the balance of the Agreed Initial Term"
shall be reasonably determined at the time of transfer.
(ii) With respect to any subsequent sale or transfer of the nea1
Property during the Agreed Initial Term, there shall be no
pass-through to Tenant of any increase in Tax Expense resulting from a
"reassessment" based upon such subsequent sale or transfer.
(f) Operating Expenses for any calendar year following the Base Year
shall be computed in accordance with good accounting practices common in
the industry.
(g) Tenant shall pay to Landlord as additional rent under this Lease
at the times hereinafter set forth Tenant's Share as specified in Paragraph
2 of any increase in Tax Expenses incurred by Landlord in each calendar
year subsequent to the Base Year over Tax Expenses incurred by Landlord
during such Base Year. The term "Tax Expenses" shall mean all taxes,
assessments, general or special, excises, transit charges, housing fund
assessments or other housing charges or levies, fees or charges, general or
special, ordinary or extraordinary, unforeseen as well as foreseen, of any
kind, which are assessed, levied, charged, confirmed or imposed on the Real
Property, on the Landlord with respect to the Real Property, and the act of
entering into this Lease on the use or occupancy of the Real Property or
any party thereof, including, without limitation, any gross income tax or
excise tax levied with respect to the receipt of such rent, by the United
States of America, the State of California, the City and County of San
Francisco, any political subdivision, public corporation, district or other
political or public entity or public authority, and shall also include any
other tax, fee or other excise, however described, which may be levied or
assessed in lieu of, as a substitute, in whole or in part, for, or as an
addition to, any other Tax Expense. Tax Expenses shall not include income,
franchise, transfer, inheritance or capital stock taxes, unless, due to a
change in the method of taxation, any of such taxes is levied or assessed
against Landlord in lieu of, as a substitute, in whole or in part, for, or
as an addition to, any other charge which would otherwise constitute a Tax
Expense. Tax Expenses shall include reasonable attorneys' fees, costs and
disbursements incurred in connection with proceedings to contest, determine
or reduce Tax Expenses; provided, however, such shall not exceed $500. If
it shall not be lawful for Tenant to reimburse Landlord for any increase in
Tax Expenses as defined herein, the Monthly Rent payable to Landlord prior
to the imposition of such increases in Tax Expenses shall be increased to
net Landlord the same net Monthly Rent after imposition of such increases
in Tax Expenses as would have been received by Landlord prior to the
imposition of such increases in Tax Expenses.
(h) As the Base Year Tax Expenses may not include the supplemental
tax assessment arising as a consequence of the construction of the Premises
and Tenant Improvements to be made prior to the commencement of the Agreed
Initial Term, the Parties agree that Tax Expenses for the Base Year shall
include such supplemental assessment regardless of when paid.
(i) Subject to all of the terms of this Paragraph 7, it is the
intention of Landlord and Tenant that the Monthly Rent paid to Landlord
from the commencement of the term of this Lease to the end thereof shall be
absolutely net of all increases, respectively, in Tax Expenses and
Operating Expenses over, respectively, Tax Expenses and Operating Expenses
for the Base Year, and the foregoing provisions of this Paragraph 7 are
intended to so provide. The provisions for payment of subsequent year
respective increases in Tax Expenses and Operating Expenses by means of a
periodic payment by tenants of their respective Tenant's Shares thereof are
intended to pass on to the tenants and reimburse Landlord for all
increases, respectively, in Tax Expenses and Operating Expenses over,
respectively, Tax Expenses and Operating Expenses for the Base Year.
(j) On or before the first day of each 12 month period following the
Base Year (herein "operating year") during the term of this Lease, or as
soon as practicable thereafter, Landlord shall give to Tenant notice of
Landlord's estimate of the additional rent, if any, payable by Tenant
pursuant to Paragraphs 7(a) and 7(9) for such operating year subsequent to
the Base Year. On or before the first day of each month during such
subsequent operating year, Tenant shall pay to Landlord one twelfth
(l/12th) of such estimated additional rent: provided that if such notice is
not given prior to the first day of any operating year Tenant shall
continue to pay on the basis of the prior year's estimate until the month
after such notice is given. If at any time it appears to Landlord that the
additional rent payable under Paragraphs 7(a) and 7(g) will vary from its
estimate by more than five percent (5%) Landlord may, by written notice to
Tenant, revise its estimate for such year, and subsequent payments by
Tenant for such year shall be based upon such revised estimate. Landlord
shall provide Tenant with a written statement setting forth in reasonable
detail the basis for Landlord's determination of such annual determination.
(k) Within ninety (90) days after the close of the Base Year and each
operating year thereafter during the term of this Lease or as soon after
such ninety (90) day period as practicable, Landlord shall deliver to
Tenant a statement setting forth in reasonable detail the Operating
Expenses and Tax Expenses for said operating year together with reasonable
supporting documentation (including invoices) relating to such expenses.
Additional rent payable under Paragraphs 7 for such operating year, as
shown by such statement, shall be final and binding upon Landlord and
Tenant, unless the Tenant gives written notice of dispute to Landlord
specifying the disputed items within sixty (60) days after receipt of said
statement. In the event of such dispute, Tenant shall pay all amounts not
disputed (plus any amounts owing based upon Paragraph 7(j) above) and
retain an outside property management company to review such statement and
determine whether such statement appears to be an accurate statement of the
Operating Expenses and Tax Expenses for the Real Property for such 12 month
period. If such property management company determines that such statement
appears to be in error by $1000 or more, Landlord may justify the
additional rent statement by informally showing to Tenant the necessary
books and records. If informal resolution fails, the parties shall submit
the matter to arbitration. If such statement shows an amount owing by
Tenant that is less than the estimated payment for such year previously
made by Tenant, Landlord shall at its option either credit the excess to
the next succeeding installments of estimated additional rent or pay the
excess to Tenant within thirty (30) days after delivery of such statement.
If such statement shows an amount owing by Tenant that is more than the
estimated payments for such year previously made by Tenant, Tenant shall
pay the deficiency to Landlord within thirty (30) days after delivery of
such statement.
(l) If this Lease shall terminate on a day other than the last day of
an operating year, the additional rent payable by Tenant pursuant to this
Paragraph 7 applicable to the operating year in which such termination
shall occur shall be prorated on the basis that the number of days from the
commencement of such operating year to and including such termination date
bears to three hundred sixty-five (365).
8. Use.
(a) The Premises shall be used solely for general office purposes and
for no other use or purpose without the prior written consent of Landlord.
(b) Tenant shall not do or suffer or permit anything to be done in or
about the Premises or the Real Property, nor bring or keep anything
therein, which would in any way subject Landlord, Landlord's agents or the
holder of any Superior Interest (as defined in Paragraph 21) to any
liability, increase the premium rate of or affect any fire, casualty,
liability, rent or other insurance relating to the Real Property or any of
the contents of the Building, or cause a cancellation of, or give rise to
any defense by the insurer to any claim under, or conflict with, any
policies for such insurance. If any act or omission of Tenant results in
any such increase in premium rates, Tenant shall pay to Landlord upon
demand the amount of such increase. In the event of subtenants, Tenant
shall not obstruct their use of their demised premises, Tenant shall not
use or suffer or permit the Premises to be used for any immoral, unlawful
or objectionable purpose, nor shall Tenant cause, maintain, suffer or
permit any nuisance in, on or about the Premises. No loudspeakers or other
similar device, system or apparatus which can be heard or experienced
outside the Premises shall, without the prior written approval of Landlord,
be used in or about the Premises; provided, nothing herein shall prohibit
an internal paging or announcement system. Tenant shall not commit or
suffer to be committed any waste in, to or about the Premises.
(c) Tenant shall not use or suffer or permit anything to be done in
or about the Premises which will in any way conflict with any law, statute,
ordinance or governmental rule, regulation or requirement now in force or
which may hereafter be enacted or promulgated. Tenant, at its sole cost
and expense, shall promptly comply with all laws, statutes, ordinances and
governmental rules, regulations or requirements now in force or which may
hereafter be in force and with the requirements of any board of fire
underwriters or other similar body now of hereafter constituted relating to
or affecting the condition, use or occupancy of the Premises, excluding
structural changes not related to or affected by Tenant's improvements,
acts or occupancy of the Premises. The judgment of any court of competent
jurisdiction or the admission of Tenant in an action against Tenant,
whether Landlord be a party thereto or not, that Tenant has violated any
law, statute, ordinance or governmental rule, regulation or requirement
shall be conclusive of the fact as between Landlord and Tenant.
(d) Notwithstanding any of the terms of Paragraph 8(c) of the Lease
to the contrary, Landlord and Tenant acknowledge and agree that Tenant's
obligation thereunder shall not apply to the correction or alteration of
any physical condition or characteristic of any portion of the Premises if
such condition or characteristic existed prior to the commencement of the
Agreed Initial Term.
(e) The provisions of this Paragraph are for the benefit of Landlord
only and are not nor shall they be construed to be for the benefit of any
tenant or occupant of the Building.
9. Alterations and Restoration After First Year.
(a) Other than during the first year of occupancy, Tenant shall not
make or suffer to be made any alterations, additions or improvements to or
of the Premises or any part thereof, excepting as expressly provided in
this Paragraph. In the event Tenant desires any alterations, additions or
improvements to or of the Premises or any part thereof, Tenant must obtain
Landlord's prior written approval of all of same. If Landlord approves
such alterations, additions or improvements desired by Tenant, at
Landlord's sole election and if the cost thereof is in excess of $100,000
in any 12-month period, the same shall be made by Landlord, at Tenant's
sole cost and expense, and Tenant agrees to pay to Landlord, promptly upon
Landlord's demand (which demand may be for the entire cost and expense
thereof in advance of construction (in which case such amount shall be paid
to a third party escrow for payment as construction progresses) or for
installment payments prior to and/or during the course of construction),
the amount of such cost and expense (including. without limitation,
reasonable direct and indirect expenses of Landlord and its agents in
connection with such alterations, additions and improvements, plus the
supervision of such work by Landlord or a general contractor selected by
Landlord on a competitive basis. In the event Landlord does not elect to
make (either directly or through such general contractor selected by
Landlord) such alterations, additions or improvements as shall have been
approved by Landlord or if the same cost less than $100,000 in any 12-month
period, then Tenant may cause such approved alterations, additions, or
improvements to be made at Tenant's sole cost and expense but only by a
contractor approved in writing by Landlord in advance; in such event Tenant
shall pay Landlord on demand prior to or during the course of such
construction a reasonable amount determined by Landlord to compensate
Landlord for its review of Tenant's proposed alterations, additions and
improvements and for all other direct and indirect expenses reasonably
incurred by Landlord or Landlord's agents in connection with such
alterations, additions or improvements. In no event shall Tenant employ
any person, entity or contractor to perform work in the Premises whose
presence (or the presence of any employees or subcontractors of such
person, entity or contractor) may give rise to a labor or other disturbance
in the Building. Default by Tenant in the payment of any sums agreed to be
paid by Tenant for or in connection with alterations, additions or
improvements to the Premises (irrespective of whether such agreement is
pursuant to this Paragraph 9 or separate instrument) shall entitle Landlord
to all the same remedies as for non-payment of rent hereunder. Any
alterations, additions or improvements to or of the Premises, including,
without limitation, any fixed partitions, all carpeting, or any other item
which is normally deemed as affixed to the Premises shall at once become
part of the Building and the property of Landlord. Movable furniture,
equipment, trade fixtures (including any removable secretarial stations and
bookshelves) and personal property shall remain the property of Tenant.
(b) At Landlord's sole election any or all such alterations,
additions or improvements made for or by Tenant and all such movable
furniture, equipment, trade fixtures and personal property shall be removed
from the Premises at the expiration or sooner termination of the term
hereof and the Premises shall be restored to the condition of same prior to
the making or installation of such alterations, additions, improvements or
Tenant's personal property. Said work of removal and restoration shall be
performed at Tenant's sole cost and expense either (i) by Tenant, in which
event Tenant shall pay to a third party escrow (who shall disburse said
funds as the costs of restoration are incurred) on demand by Landlord an
amount sufficient to guarantee that the Premises are restored to the
original condition (except for approved alterations), or (ii) by Landlord,
in which later case Tenant shall pay to Landlord, promptly upon Landlord's
demand, the cost and expense of such work and for supervision of such work
by Landlord or a general contractor selected by Landlord on a competitive
basis.
(c) Notwithstanding any of the terms of this Section 9 of the Lease
to the contrary, any alterations, additions or improvements made for or by
Tenant after the commencement of the Term shall be removed from the
Premises at the expiration or sooner termination of the term of the Lease
only if Landlord so notifies Tenant of such requirement prior to the
installation of any such alterations, additions or improvements. Tenant
shall notify Landlord of all Tenant improvements, installations,
alterations or additions at least twenty (20) days before commencing work
so that Landlord may approve and may advise Tenant that the same shall be
required to be removed at the expiration or sooner termination of the
Lease.
(d) Notwithstanding any other provision of this Section 9 of the
Lease the Tenant may:
(i) Make minor tenant improvements after previously notifying
Landlord pursuant to and subject to the terms and conditions of
Paragraph 9(b); provided, however, the term minor tenant improvements
is limited to expenditures of less than $25,000 in a three (3) month
period; and
(ii) Install without Landlord's consent any movable partition or
like tangible personal property.
10. Repair.
(a) By entry hereunder upon commencement of the term hereof, Tenant
accepts the Premises as being in good, sanitary order, condition and
repair. Tenant, at Tenant's sole cost and expense, shall keep the interior
of the Premises and the Building electrical and plumbing systems in good
working order at all times. Tenant shall be responsible for providing its
own janitorial services for the Premises and all other matters concerning
day-to-day maintenance of the interior of the Building. Tenant hereby
waives all rights to make repairs at the expense of Landlord as provided by
any law, statute or ordinance now or hereinafter in effect. It is
specifically understood and agreed that Landlord has no obligation and has
made no promises to alter, remodel, improve, or repair the building systems
which are the responsibility of the Tenant (i.e. plumbing and electrical),
or to decorate or paint the Premises or any part thereof and that no
representations respecting the condition of the Premises or the Building
have been made by Landlord to Tenant except as specifically herein set
forth. Tenant hereby waives all rights under, and benefits of, subsection
1 of section 1932 and sections 1941 and 1942 of the California Civil Code
and under any similar law, statute or ordinance now or hereafter in effect.
(b) If Landlord makes any additions, alterations or improvements to
any portion of the Real Property at the written request of Tenant, then
Tenant shall pay all cost and expense of same as if it were being done on
the Premises pursuant to Paragraph 9 and Landlord at its option may charge
Tenant for the entire additional cost and expense of repair, maintenance
and operation of the Real Property resulting therefrom incurred by Landlord
from time to time as determined by Landlord, damage to any such additions,
alterations or improvements by fire, earthquake, act of God, or elements
excepted. Tenant shall promptly pay Landlord such cost and expense upon
demand.
(c) Notwithstanding any of the terms of Paragraph 10(a) of the Lease
to the contrary, Tenant's acceptance of the Premises shall be subject to
Landlord's completion of any punchlist items within sixty (60) days after
the commencement of the Agreed Initial Term and to Landlord's obligation to
balance and adjust the HVAC and other building systems in the Premises
after Tenant takes occupancy. Landlord shall remain obligated to repair
any latent defects in the Premises and the Building, except for the
electrical and plumbing systems.
(d) Landlord shall, at Landlord's sole cost and expense, repair and
maintain in good order and condition, the foundations, bearing and exterior
walls, the roof and roof membrane and other structural portions of the
Building. Landlord shall also repair and maintain in good working order
the heating, ventilation and air conditioning system and elevator serving
the Premises (except that Tenant shall be responsible for cleaning the
elevator cab). With respect to the repair and maintenance of the HVAC
system and elevator: (1) any service contracts therefore shall be included
within the definition of Operating Expense (which are the two (2) items
contemplated at the time this Lease is made, as being "unduly" low as set
forth in Paragraph 7(b) and (ii) any capital items of repair or replacement
may be included in Operating Expense on an amortized basis in the manner
provided in Paragraph 7(a) for the amortization of other capital items
described therein.
11. Abandonment. Tenant shall not abandon the Premises or any substantial
part thereof at any time during the term hereof. Tenant understands that if
Tenant should leave the Premises or any part thereof vacant and unsupervised for
a substantial period of time such that the risk of fire, other casualty and
vandalism to the Premises and the Building will be increased, such action by
Tenant shall constitute a breach of this Lease, whether or not Tenant continues
to pay rent and additional rent under this Lease. If Tenant shall abandon,
vacate or surrender the Premises, or any substantial part thereof or be
dispossessed by process of law, or otherwise, any movable furniture, equipment,
trade fixtures, or other personal property belonging to Tenant and left on the
Premises shall be deemed to be abandoned at the option of Landlord (except such
property as may be mortgaged to Landlord), and, whether or not deemed abandoned,
Landlord shall have the right to remove the same from the Premises and charge
Tenant for such removal and any restoration as provided in Paragraph 9.
Landlord may charge Tenant at such rates as Landlord shall from time to time
determine for storing the property so left upon the Premises by Tenant, or, at
Landlord's option, may store the same in a public warehouse at Tenant's expense
provided, however, nothing set forth in this Paragraph or elsewhere in this
Lease shall impose on Landlord any obligation for the care or preservation of
such property so left upon the Premises, and Tenant hereby waives and releases
Landlord from any and all claims in connection with such removal and
specifically waives the provisions of section 1542 of the California Civil Code
with respect to such release. No action or inaction by Landlord pursuant to
this Paragraph 11 shall be construed to have waived Landlord's right to require
Tenant to remove its property, restore any damage to the Building caused by such
removal, and make any restoration required pursuant to Paragraph 9 hereof
12. Liens. Tenant shall not permit any mechanic's materialman's or other
liens arising out of work performed by Tenant or on Tenant's behalf to be filed
against the fee of the Real Property nor against Tenant's leasehold interest or
estate in the Premises. Landlord shall have the right to post and keep posted
on the Premises any notices which it deems necessary for protection from such
liens. If any such liens are so filed, Landlord may, upon thirty (30) days'
written notice to Tenant, without waiving its rights based on such breach by
Tenant and without releasing Tenant from any obligations, pay and satisfy the
same and in such event the sums so paid by Landlord shall be due and payable by
Tenant at once without notice or demand, with interest from such due date at the
Prime Rate plus four (4) percentage points, but in no event more than the
maximum rate permitted by law.
13. Assignment and Subletting.
(a) Neither this Lease not all or any part of the leasehold interest
created hereby shall, directly or indirectly, voluntarily or involuntarily,
by operation of law or otherwise, be assigned, mortgaged, pledged,
encumbered or otherwise transferred by Tenant or Tenant's legal
representatives or successors in interest and neither the Premises nor any
part thereof shall be sublet or be used or occupied for any purpose by
anyone other than Tenant, without the prior written consent of Landlord
first had and obtained in each instance, which consent shall not be
unreasonably withheld or unduly delayed. Tenant agrees that the instrument
by which any assignment or subletting is accomplished shall expressly
provide that no subtenant or assignee shall have the further right to
assign or sublet without Landlord's consent or otherwise permit the space
which is the subject of the subletting or assignment to be used by others
and that each assignee or subtenant will perform and observe all of the
agreements, covenants, conditions and provisions to be performed and
observed by Tenant under this Lease as and when performance and observance
is due and that Landlord shall have the right to enforce said agreements,
covenants, conditions and provisions directly against such assignee or
subtenant. Any mortgage, pledge, hypothecation, encumbrance or transfer or
any such assignment, subletting, occupation or use without the consent of
Landlord as aforesaid shall be void and, at the option of Landlord,
constitute a default entitling Landlord to terminate this Lease and give
rise to all other remedies available to Landlord for breach of this Lease.
For purposes of this Paragraph 13, the following events shall be deemed an
assignment of this Lease or a sublease, as appropriate: (i) the issuance
of equity interests (whether stock or partnership interests or otherwise)
in Tenant or any subtenant or assignee, or any entity controlling any of
them, to any person or group of related persons, in a single transaction or
a series of related or unrelated transactions, such that, following such
issuance, such person or group shall have control of Tenant; or (ii) a
transfer of control of Tenant or such subtenant or assignee, or any entity
controlling any of them, in a single transaction or a series of related or
unrelated transactions (including, without limitations, by consolidation,
merger, acquisition or reorganization), except that the transfer of
outstanding capital stock or other listed equity interests by persons or
parties other than "insiders" within the meaning of the Securities Exchange
Act of 1934, as amended, through the "over-the-counter" market or any
recognized national or international securities exchange, shall not be
included in the determination of whether control has been transferred.
"Control" shall mean direct or indirect ownership of not less than 50% of
all of the voting stock of such corporation or not less than 50% of all the
legal and equitable interests in any other business entity. If this Lease
is assigned, whether or not in violation of the terms of this Lease,
Landlord may collect rent from the assignee. If the Premises or any part
thereof is sublet or is used or occupied by anybody other than Tenant,
Landlord may, after an event of Default by Tenant, collect rent from such
subtenant or occupant without having to share "excess rent" as provided in
Paragraph 13(c), but no more than fifty percent (50%) of such "excess rent"
shall be deemed to offset Landlord's damages, except to the extent Tenant's
Monthly Rent and additional rent is being paid by said subtenant. In
either event, Landlord may apply the next amount collected to the rents
herein reserved. The consent by Landlord to an assignment, transfer,
encumbering or subletting pursuant to any provision of this Lease shall not
relieve Tenant or any assignee or subtenant from obtaining the express
written consent of Landlord to any other or further assignment, transfer,
encumbering or subletting. Neither any assignment of this Lease or any
interest created hereby, nor any subletting, occupancy or use of the
Premises or any part thereof by any person other than Tenant, nor any
collection of rent by Landlord from any person other than Tenant, nor any
application of any such rent as provided in this subparagraph (a) shall be
deemed a waiver of any of the provisions of this subparagraph (a) or
relieve, impair, release or discharge Tenant of its obligation fully to
perform the terms of this Lease on Tenant's part to be performed, and
Tenant shall remain fully and primarily liable hereunder.
(b) Tenant shall pay to Landlord the reasonable amount of Landlord's
cost of processing every proposed assignment or subletting (with the
limitation of $500 for the costs of attorneys' and other professional fees
and administrative, accounting and clerical time of Landlord), and the
reasonable amount of all direct and indirect expense incurred by Landlord
arising from any assignee or sublessee (as the case may be) taking
occupancy. Notwithstanding anything herein elsewhere to the contrary,
Landlord shall have no obligation to process any request for such consent
prior to Landlord's receipt of payment by Tenant of the amount of
Landlord's estimate of the processing coats and expenses not to exceed $500
and all other direct and indirect costs and expenses of Landlord and its
agents arising from such assignee or subtenant taking occupancy.
(c) In the event of (i) any permitted subletting at a greater rental
rate the Monthly Rent and additional rent provided for in Paragraph 7
hereof payable by Tenant hereunder (as ratable to the sublease space), or
(ii) any permitted assignment of this Lease or subletting providing for
payment of any consideration (including, without limitation, payment for
such leasehold improvements) by assignee or sublessee to the Tenant, then
one-half (1/2) the amount of all such sublease rental which in excess of
the Monthly Rent and additional rent payable by Tenant hereunder (as
ratable to the sublease space) and one-half (1/2) the amount of all such
consideration shall be deemed additional rent for the Premises and shall be
paid over by Tenant to Landlord as received. Upon Landlord's request
Tenant shall assign to Landlord one-half (1/2) of all such excess amounts
to be paid to Tenant by any such subtenant and shall direct such subtenant
to pay the same directly to Landlord. In the event of more than one
instance of permitted subletting, the amounts (if any) to be paid over by
Tenant to Landlord pursuant to the foregoing with respect to each sublease
shall be separately calculated and shall not be cumulatively calculated as
respects combined subleases.
(d) Tenant shall notify Landlord in writing if Tenant desires to
sublet all or part of the Premises, designating the space proposed to be
sublet and the terms proposed. If during the first Option Period, Tenant
so notifies Landlord that Tenant desires to sublease all or substantially
all of the Premises for the balance of the first Option Period plus all or
any portion of the second Option Period, then Landlord shall have the
right, at its sole discretion, by written notice to Tenant given within
thirty (30) days of such notice from Tenant, to terminate this Lease as of
the date of such subletting proposed by Tenant.
(e) Tenant shall submit to Landlord for Landlord's written approval
any proposed sublease agreement (in which the proposed subtenant shall be
named) together with current financial statement of such proposed
subtenant. Landlord shall not have any liability for any real estate
brokerage commission(s) or with respect to any of the costs and expenses
that Tenant may incur in connection with its proposed subletting, and
Tenant agrees to indemnify, defend and hold harmless Landlord from and
against any and all claims (including, without limitation, claims for
commissions) arising from such proposed subletting or to lease the portion
of the Premises involved to the prospective subtenant as specified by
Tenant in such written notice or to any other person or persons, on the
terms specified by Tenant in such written notice or otherwise arising from
such sublet. Landlord's foregoing rights shall continue throughout the
entire term of this Lease including all option periods. A proposed
assignment of this Lease in whole or in part shall be deemed a proposed
subletting of the Premises in whole or in part (as applicable) for the
purposes of paragraph 13(d).
(f) Except for Paragraph 13(c) and other terms of paragraph 13 to the
contrary, Landlord's consent to a proposed assignment or subletting of the
Premises shall not be unreasonably withheld or delayed.
(g) Notwithstanding any of the terms of Paragraph 13(c) of the Lease
to the contrary, Landlord and Tenant agree that Tenant shall not be
required to pay to Landlord any portion of any sublease rental or
consideration for any assignment of the Lease until such time as Tenant has
recouped from any such sublease rental or consideration for any assignment
all of Tenant's costs (including without limitation brokerage commissions,
attorneys' fees and any tenant improvement costs) incurred by Tenant in
connection with such assignment or subletting' and then, Landlord and
Tenant shall share 501 each, all excess sublease Rents over the Tenant's
Rent and Additional Rent hereunder; unless Tenant is in breach pursuant to
Paragraph 13(a).
(h) Nothing herein shall be deemed as an offset to any Monthly Rent
or Additional Rent payable by Tenant.
(i) Notwithstanding any of the terms of this Paragraph 13 to the
contrary: (i) neither the admission nor withdrawal of partners of Keker &
Xxxxxxxx shall constitute an assignment of this Lease for any purpose
whatsoever and shall not require notice to or approval by Landlord; (ii)
Tenant shall have the right from time to time to enter into incidental
occupancy agreements with clients, other attorneys and business
professionals for the use of offices within the Premises, and any such
agreements shall not constitute an assignment or sublease for any purpose
hereunder so long as no separately demised premises is created by Tenant in
connection therewith and as used herein the term "incidental occupancy
agreements" shall not include any oral or written lease with a guaranteed
term of more than one (1) month, unless such lease is a month-to-month
lease, with a maximum lease term of six (6) months; and (c) Landlord
recognizes that Keker & Xxxxxxxx may merge or otherwise become affiliated
or associated with, or become part of, another law firm, and in connection
therewith may alter its name, and any such merger, affiliation, association
or combination shall not constitute an assignment or sublease for any
purpose hereunder, nor shall it be deemed to release any signatory to this
Lease from liability to Landlord.
14. Indemnification of Landlord.
(a) Landlord and the holders of any Superior Interests (as defined in
Paragraph 21 hereof) shall not be liable to Tenant and Tenant hereby waives
all claims against such parties for any loss, cost, damage, injury,
illness, or death suffered by any person or damage to any property in or
about the Premises or the Real Property by or from any cause whatsoever
and, without limiting the generality of the foregoing, whether caused by
water leakage of any character from the roof, walls, basement or other
portion of the Premises or the Real Property or caused by gas, fire,
electricity or any cause whatsoever, in, on or about the Premises or the
Real Property or any part thereof; provided, however, that nothing herein
shall, subject to the provisions of Paragraph 16, be deemed to excuse
Landlord from or relieve Landlord of any liability for the active
negligence or intentional act or omission of Landlord, its agents,
contractors, or its employees.
(b) Tenant shall hold Landlord and the holders of any Superior
Interests, the respective individual parties therein and the respective
shareholders thereof, as applicable, and all proper agents, contractors,
servants, officers, directors, employees and licenses (hereinafter
collectively called the "Indemnitees") harmless from and against any and
all loss, cost, liability, claim, damage and expense including, without
limitation, penalties, fines and attorneys' fees and expenses, incurred in
connection with or arising from any default by Tenant hereunder or from any
loss, cost, damage, injury, illness, or death suffered by any person or
damage to any property or from any other cause whatsoever: (i) occurring
in or on the Premises or any part thereof arising at any time and from any
cause whatsoever other than to the extent caused by the active negligence
or willful misconduct of any of the Indemnitees or (ii) arising at any time
and occurring in, on or about any part of the Real Property other than the
Premises (including, without limitation, any facilities of the Real
Property, such as elevators, stairways, passageways, hallways, concourses,
plaza areas or adjacent sidewalk) to the extent such injury, illness, death
or damage shall be caused in part or in whole by any act, neglect or
default or omission of any duty with respect to the same by Tenant, its
agents, employees, invitees or licenses. The provision of this Paragraph
14(b) shall survive the termination of this Lease with respect to any
injury, illness, death or damage occurring prior to such termination. In
case any action or proceeding be brought against any of the Indemnitees by
reason of any such claim or liability, Tenant, upon notice from Landlord,
covenants to resist and defend at Tenant's sole expense such action or
proceeding by counsel reasonably satisfactory to Landlord. Tenant, as a
material part of the consideration to Landlord for this Lease, hereby
assumes all risks of damage to property (to whoever belonging) in, upon or
about the Premises from any source, and Tenant hereby waives all claims in
respect thereof against the Indemnitees and agrees to defend and save the
Indemnitees harmless from and against all such claims by others; provided,
however, that nothing herein shall, subject to the provisions of Paragraph
16, be deemed to excuse Landlord from or relieve Landlord of any liability
for the gross negligence or intentional act or omission of Landlord, its
agents, contractors, or its employees.
(c) Landlord agrees to defend, indemnify and hold harmless Tenant
from and against any liability for any injury, lose or damages to any
person or property occurring in or about the Premises and from and against
any and all costs, expenses and liabilities (including without limitation
court costs and reasonable attorneys' fees) incurred in connection with or
arising from (i) any act, omission or active negligence of Landlord or (ii)
any default or failure by Landlord to observe or perform the terms and
conditions of this Lease.
(d) Wither party's obligation to defend, indemnify and hold harmless
the other party, its agents, employees or contractors shall not apply to
any injury, loss or damage to any person or property to the extent caused
by the active negligence or willful acts of the other party or its agents,
employees or contractors and is subject to the provisions of Section 16 of
the Lease.
15. Insurance.
(a) Tenant shall keep in force during the term of this Lease (and, if
Tenant shall take possession of or otherwise occupy or conduct activities
in or about the Premises prior to or after the term hereof, then also
during such pre-term or post-term period), at Tenant's expense: (i)
comprehensive general liability insurance including contractual liability
coverage with a minimum combined single limit of three million dollars
($3,000,000) per occurrence for injuries to or illness or death of persons
and damage to property occurring in or about the Premises: (ii) property
insurance protecting Tenant against loss or damage by fire and such other
risks as are insurable under then-available standard forms of "all risk"
insurance policies (excluding earthquake and flood but including water
damage), covering Tenant's property in or about the Premises or the Real
Property (including Tenant's personal property and any fixtures,
alterations and improvements which, by the terms hereof or by special
agreement with Landlord, have remained or become Tenant's property) for the
full replacement value thereof without deduction for depreciation: and
(iii) workers' compensation insurance in statutory limits. If Tenant shall
at any time undertake or perform any addition to or alteration or
improvement or the Premises, Tenant shall, at Tenant's expense, carry
during such activities "all-risk" builder's risk insurance, completed value
form, in an amount satisfactory to Landlord. The aforesaid liability
insurance shall protect Tenant, as named insured, and Landlord and all the
Indemnitees and any other parties reasonably designated by Landlord, as
additional insureds; shall insure Landlord's and such other parties'
contingent liability as respects acts or omissions of Tenant; shall
specifically include the liability assumed by Tenant under this Lease
(provided, however, that such contractual liability coverage shall not
limit or be deemed to satisfy Tenant's indemnity obligations under this
Lease); and shall contain a cross-liability endorsement allowing an insured
thereunder to recover for injury or damage caused by any of the other
insureds. Landlord reserves the right to increase the foregoing amount of
liability coverage from time to time as Landlord determines is required
adequately to protect Landlord and the other parties designated by Landlord
from the matters insured against, subject to subparagraph (b).
(b) If at any time or from time to time, the insurance coverage
specified in Paragraph 15(a) of the Lease is no longer adequate in the
reasonable opinion of Landlord, Tenant shall increase the coverage to the
amount specified by Landlord within forty-five (45) days after notice from
Landlord, provided, that Tenant shall not be required to increase its
coverage more often than once in any 12-month period and any increase in
insurance coverage shall be consistent with prudent business practice.
(c) Each insurance policy required pursuant to this Paragraph 15
shall be issued by an insurance company licensed to do business in the
State of California and approved by Landlord, provide that it is primary
insurance and not excess over or contributory with any other insurance
force for or on behalf of Landlord or any other insureds designated by
Landlord, provide that it may not be materially changed, amended, cancelled
or allowed to lapse unless thirty (30) days' prior written notice to
Landlord and any other insureds designated by Landlord is first given, and
provide that no act or omission of Tenant shall affect or limit the
obligations of the insurer with respect to any other insured. Each such
insurance policy or a certificate thereof shall be delivered to Landlord by
Tenant on or before the effective date of such policy and thereafter Tenant
shall deliver to Landlord renewal policies or certificates at least thirty
(30) days in advance of the expiration dates of expiring policies. In the
event Tenant shall fail to procure such insurance, or to deliver such
policies or certificates, Landlord may, at its option, procure the same for
the account of Tenant, and the coat thereof shall be paid to Landlord by
Tenant upon demand.
(d) Nothing in this Paragraph 15 shall be construed as creating or
implying the existence of (i) any ownership by Tenant of any fixtures,
additions, alterations, or improvements in or to the Premises or (ii) any
right on Tenant's part to make any addition, alteration or improvement in
or to the Premises.
(e) At all times during the term of this Lease, landlord shall
maintain on the Building and the Premises an "All-Risk" casualty policy to
the extent of the full replacement value of the Building and rent lose
insurance coverage for one (1) year of Rent payments hereunder.
16. Waiver of Subrogation Rights. To the extent permitted by their
respective policies of "all risk" or other casualty insurance, Landlord and
Tenant each hereby waive any right of recovery against the other and the
authorized representatives of the other for any loss or damage covered by any
such policy of insurance maintained by either with respect to the Building, the
Premises, or the contents of the Building or the Premises, whether or not such
loss or damage is caused by the fault or negligence of the other party, provided
that such waiver shall be limited to the extent of the net insurance proceeds
payable by the relevant insurance company with respect to such loss or damage.
If any policy of "all risk" or other casualty insurance maintained by Landlord
or Tenant relating to this Lease, the Building, the Real Property, or the
Premises does not permit the foregoing waiver or if the coverage under any such
policy would be invalidated as a result of such waiver, the party maintaining
such policy shall notify the other party of such nonpermission or invalidity
and, either (i) if reasonably possible without payment of additional premium,
obtain from the insurer on such policy a waiver of all rights of subrogation the
insurer might have against either party in connection with any claim of 10SB or
damage covered by such policy, or (ii) have the other party added as an
additional insured under such insurance policy.
17. Utilities. Tenant shall pay, prior to delinquency, all charges for
gas, heat, light, power, telephone, trash removal, janitorial services (which
are to be provided by Tenant) and for all other materials and services supplied
to the Premises. Tenant shall pay to Landlord, as additional rent, Tenant's Pro
Rata Share of charges for water and sewer services to the Building and for any
utility services furnished to, in or about the Building which are not separately
metered, including but not limited to utilities supplied to Common Areas.
Tenant shall indemnify, defend and hold Landlord harmless from any claim, demand
or liability relating to any of the charges and services referred to herein,
including but not limited to any all attorneys' fees and costs connected
therewith. Landlord shall not be liable for the interruption, unavailability or
decrease in the level of service of any utility service to the Premises, unless
caused by Landlord' negligence.
18. Personal Property and Other Taxes. Tenant shall pay, at least ten
(10) days before delinquency, any and all taxes, fees, charges or other
governmental impositions levied or assessed against Landlord or Tenant (a) upon
Tenant's equipment, furniture, fixtures, improvements and other personal
property located in the Premises, including carpeting installed by Tenant, (b)
by virtue of alterations, additions or improvements to the Premises made by
Tenant in each such case whether or not such property has become part of the
Premises and the property of Landlord pursuant to Paragraph 9 of this Lease, and
(c) upon this transaction or any document to which Tenant is a party creating or
transferring an interest or an estate in the Premises. In the event said taxes,
fees, charges or other governmental impositions are charged to or paid or
payable by Landlord, Tenant, forthwith upon demand therefore, shall reimburse
Landlord therefor.
19. Rules and Regulations. Tenant shall faithfully observe and comply
with the Rules and Regulations set forth on Exhibit B attached hereto and any
reasonable amendments or additions thereto. Landlord shall not be responsible
to Tenant for the nonperformance by any subtenant or occupant of the Building of
any of said Rules and Regulations.
20. Holding Over.
(a) Any holding over after the expiration of the term of this Lease
by expiration of time or otherwise with the express written consent of
Landlord shall be construed to be a tenancy from month-to-month at a rent
which shall be determined by Landlord in its reasonable discretion, but in
no event less than the Monthly Rent and additional rent payable under this
Lease during the last full month prior to the date of such expiration and
shall otherwise be on the terms and conditions of thin Lease so far as
possible. Acceptance by Landlord of rent after such holding over with
Landlord's written consent shall not result in any other tenancy or any
renewa1 of the term hereof.
(b) If, without Landlord's consent, Tenant shall retain possession of
the Premises or part thereof after expiration of the term hereof, by lapse
of time or otherwise, than Tenant shall pay Landlord for each month of such
retention rent as determined by Landlord in its reasonable discretion, but
in no event less than one hundred fifty percent (150%) the Monthly Rent and
additional rent payable under this Lease for the last full month prior to
the date of such expiration and shall indemnify Landlord against all
losses, costs, claims, liabilities and expenses (including, without
limitation, attorneys' fees and expenses) sustained by Landlord by reason
of such retention (including, without limitation, claims for damages by any
other person to whom Landlord may have leased all or any part of the
Premises effective upon the expiration of the term of this Lease).
Acceptance by Landlord of rent after such holding over without Landlord's
prior written consent shall not constitute a renewal of the term hereof or
creation of a month-to-month tenancy and Tenant shall be a tenant by
sufferance only; provided, however, such holding over shall otherwise be on
the same terms and conditions of this Lease so far as possible. This
provision is in addition to, and does not affect or waive, Landlord's right
of reentry or any other right or remedy available to Landlord on account of
such holding over.
21. Subordination to Mortgages and Deeds of Trust.
(a) This Lease shall be subject and subordinate at all times to all
ground or underlying leases which may now exist or hereafter be executed
affecting the Real Property or any part thereof and to the lien of any
mortgages or deeds of trust in any amount or amounts whatsoever now or
hereafter placed on or against the Rea1 Property or any part thereof or on
or against Landlord's interest or estate therein or on or against any
ground or underlying lease (any of the foregoing being a "Superior
Interest") without the necessity of having further instruments on the part
of Tenant to effectuate such subordination. Notwithstanding the foregoing,
Tenant covenants and agrees to execute and deliver, upon demand, such
further instruments as may be required by Landlord so long as the same
contains a nondisturbance covenant. If Tenant fails to execute same within
ten (10) days, then tenant hereby irrevocably appoints Landlord the
attorney-in-fact of the Tenant to execute and deliver any such instrument
or instruments for or in the name of Tenant.
(b) Notwithstanding such subordination, in the event that any ground
lease or underlying lease terminates for any reason or any mortgage or deed
of trust is foreclosed or a conveyance in lieu of foreclosure is made for
any reason, Tenant's right to possession of the Premises shall not be
disturbed if Tenant shall not be then in default in the terms of this
Lease, and Tenant shall attorn to the lessor under any ground lease or
underlying 1ease or to any purchaser of the Real Property or shall, at such
lessor's or purchaser's option, enter into a new lease for the balance of
the Term upon the same terms and conditions of this Lease. Tenant
covenants and agrees to execute and deliver, upon demand by Landlord and in
the form reasonably requested by Landlord, any additional documents
evidencing the priority or subordination of this Lease with respect to any
such ground leases or underlying leases or the lien of any such mortgage or
deed of trust.
22. Entry by Landlord.
(a) Landlord reserves and shall at any and all reasonable times have
the right to enter the Premises to inspect the same, to show the Premises
to prospective purchasers or tenants, to post notices of nonresponsibility,
and to alter, improve, or repair the Premises or any portion of the Real
Property with the right to erect in the Premises or elsewhere in the Real
Property scaffolding and other necessary structures where reasonably
required by the character of the work to be performed, in each such case
without any abatement or reduction of rents provided, however, that all
such work shall be done so as to cause as little interference to Tenant as
reasonably possible. Tenant hereby waives any claim for damages for any
injury or inconvenience to or interference with Tenant's business, any loss
of occupancy or quiet enjoyment of the Premises, and any other occasioned
by such entry. For each of the aforesaid purposes, Landlord shall at all
times have and retain a key with which to unlock all of the doors in, upon
or about the Premises, excluding Tenant's vaults and safes, and Landlord
shall have the right to use any and all means which Landlord may deem
proper to open said doors in any emergency in order to obtain entry to the
Premises, and any entry to the Premises obtained by Landlord by any of said
means, or otherwise, shall not under any circumstances be construed or
deemed to be a forcible or unlawful entry into or a detainer of the
Premises or an eviction of Tenant from the Premises or any portion thereof.
(b) Landlord covenants and agrees that Landlord's right to enter the
Premises (except in an emergency) to make alterations, repairs or
additions, whether pursuant to Section 22 of the Lease or as anywhere else
provided in the Lease, shall be exercised with the least possible
interference to Tenant, and to the extent reasonably possible, such work
shall be done after normal business hours where the nature of such work may
materially interfere with or otherwise unreasonably distract Tenant from
the conduct of its business. Nothing contained in this Paragraph 22 shall
be deemed to excuse or relieve Landlord or Tenant from any liability for
the negligence or willful misconduct of such party or party's agents,
servants, employees, contractors or invitees.
(c) Landlord will (except in any emergency) not enter Tenant's
premises without at least 24 hours advance notice.
23. Insolvency or Bankruptcy. Without limitation, the following ehal1
constitute a default under this Lease:
(a) If Tenant shall file a voluntary petition under any applicable
bankruptcy law or shall have an order for relief entered under any
applicable bankruptcy law, or shall file any petition or answer seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief for itself under the present or future
applicable Federal, state or other statue or law relative to bankruptcy,
insolvency or other relief for debtors, or shall seek to consent to or
acquiesce in the appointment of any trustee, receiver, conservator or
liquidator of Tenant or of all or any substantial part of its properties or
its interest in the Premises (the term "acquiesce," as used in this
Paragraph, includes but is not limited to the failure to file a petition or
motion to vacate appeal or discharge any order, judgment or decree within
ten (10) days after retry of such order, judgment or decree); or
(b) If a court of competent jurisdiction shall enter an order,
judgment or decree approving a petition filed against Tenant seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future applicable
Federal, state or other statute or law relating to bankruptcy, insolvency,
or other relief for debtors, and Tenant shall acquiesce in the entry of
such order, Judgment or decree, or such order, Judgment or decree sha11
remain unvacated and unstayed for an aggregate of sixty (60) days (whether
or not consecutive) from the date of entry thereof, or any trustee,
receiver, conservator or liquidator of Tenant or of all or any substantial
part of its properties or its interest in the Premises shall be appointed
without the consent or acquiescence of Tenant and such appointment shall
remain unvacated and unstayed for an aggregate of sixty (60) days (whether
or not consecutive); or
(c) If Tenant shall be unable, or admit in writing its inability to
pay its debts as they matures; or
(d) If Tenant shall give notice to any governmental body of
insolvency or pending insolvency, or suspension or pending suspension or
(e) If Tenant shall make an assignment for the benefit of creditors
or take any other similar action for the protection or benefit of
creditors.
Upon the happening of any such event, this Lease shall terminate. In no event
shall this Lease be assigned or assignable by reason of any voluntary or
involuntary bankruptcy proceedings, nor shall any rights or privileges hereunder
be an asset of Tenant, the trustee, debtor-in-possession, or the debtor's estate
in any bankruptcy, insolvency or reorganization proceedings.
24. Default.
(a) Any failure by Tenant to observe and perform any provision of the
Lease other than Paragraph 5, to be observed or performed by Tenant, where
such failure continues for thirty (30) days after written notice thereof by
Landlord to Tenant shall be deemed an Event of Default: provided, however,
that if such failure is not reasonably susceptible of cure within said
thirty (30) day period (financial inability of Tenant excepted) such
failure shall not constitute an Event of Default as long as Tenant
commences to cure within said thirty (30) day period and thereafter
diligently prosecutes such cure to completion. Any Notice of Default
hereunder shall specify the default and the applicable Lease provisions,
and shall demand that Tenant perform the provisions of the Lease or pay the
Rent that is in arrears, as the case may be. within the applicable period
of time. No such notice shall be deemed a forfeiture or termination of the
Lease provided Tenant cures the default within the applicable period of
time. Failure to specify default in any other Lease provision in said
Notice of Default, shall not be deemed a waiver of any other default
provision.
(b) In the event of the occurrence of an Event of Default (as defined
in this Lease) by Tenant, then Landlord, in addition to any other rights
and remedies of Landlord at law or in equity, shall have the right either
to terminate Tenant's right to possession of the Premises and thereby
terminate this Lease or to have this Lease continue in full force and
effect with Tenant at all times having the right to possession of the
Premises. Should Landlord elect to terminate Tenant's right to possession
of the Premises and terminate this Lease, then Landlord shall have the
immediate right to entry and may remove all persons and property from the
Premises. Such property so removed may be stored in a public warehouse or
elsewhere at the cost and for the account of Tenant. Upon such
termination, Landlord, in addition to any other rights and remedies
available at law or in equity, shall have the right to recover from
Tenant's.
(i) The worth at the time of award of all unpaid rent which had
been earned at the time of termination;
(ii) The worth at the time of award of the amount by which all
unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that Tenant
proves could have been reasonably avoided;
(iii) The worth at the time of award of the amount by which
all unpaid rent for the balance of the term of this Lease after the
time of award exceeds the amount of such rental lose that Tenant
proves could be reasonably avoided; and
(iv) All other amounts necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things
would be likely to result therefrom.
The "worth at the time of award" of the amounts referred to in clauses (i)
and (ii) above shall be computed by allowing latest at the maximum annual
interest rate allowed by law for business loans (not primarily for
personal, family or household purposes) not exempt from the usury law at
the time of termination or, if there is no such maximum annual interest
rate, at the Prime Rate charged on such termination date plus four (4)
percentage points. The "worth at the time of award" of the amount referred
to in clause (iii) above 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%) per annum. For the purpose of determining
unpaid rent under clauses (i), (ii) and (iii) above, such unpaid rent shall
be the Monthly Rent and additional rent payable by Tenant in accordance
with all of the provisions of this Lease, including, without limitation,
provisions pertaining to the increase of such Monthly Rent and additional
rent from time to time during the term of this Lease.
(c) Should Landlord, following any breach or default of this Lease by
Tenant, elect to keep this Lease in full force and effect, for so long as
Landlord does not terminate Tenant's right to possession of the Premises
(notwithstanding the fact Tenant may have abandoned the Premises), then
Landlord, besides all other rights and remedies Landlord may have at law or
in equity, shall have the right to enforce all of Landlord's rights and
remedies under this Lease, including but not limited to the right to
recover the installments of rent as they become due under this Lease.
Notwithstanding any such election to have this Lease remain in full force
and effect, Landlord may at any time thereafter elect to terminate Tenant's
right to possession of said Premises and thereby terminate this Lease for
any previous breach or default which remains uncured, or for any subsequent
breach or default. For the purposes of Landlord's right to continue this
Lease in effect upon Tenant's breach or default, acts of maintenance or
preservation or efforts of Landlord to relet the Premises, or the
appointment of a receiver on the initiative of Landlord to protect its
interest under this Lease does not constitute a termination of Tenant's
right to possession.
(d) In the event Landlord elects, upon default of this Lease by
Tenant, to keep this Lease in full force and effect, Landlord may, from
time to time sublet the Premises or any part thereof for such term and at
such rent and upon such other terms as Landlord in its reasonable
discretion may deem advisable with the right to make alterations and
repairs to the Premises; provided, however, nothing herein shall diminish
Landlord's rights pursuant to subparagraph 24(b). Upon each such
subletting (i) Tenant shall be immediately liable to pay to Landlord, in
addition to indebtedness other than rent due hereunder, the coat of such
subletting and of such alterations and repairs, incurred by Landlord, and
the amount by which the rent hereunder for the period of such subletting
(to the extent such period does not exceed the term hereof) exceeds the
amount agreed to be paid as rent for the Premises for such period of such
subletting; or (ii) at the option of Landlord, rents received from such
subletting shall be applied; first, to payment of indebtedness other than
rent due hereunder from Tenant to Landlord; second, to payment of coats of
such subletting and of such alterations and repairs: third, to payment of
rent due and unpaid hereunder: and the residue, if any, shall be held by
Landlord and applied in payment of future rent as the same becomes due
hereunder. If Tenant has been credited with any rent to be received by
such subletting under option (i), and such rent shall not be promptly paid
to Landlord by such subtenant(s), or if such rent received from such
subletting under option (ii) during any month be less than that to be paid
during that month by Tenant hereunder, Tenant shall pay any such deficiency
to Landlord. Such deficiency shall be calculated and paid monthly. No
taking possession of the Premises by Landlord, shall be construed as an
election on its part to terminate this Lease unless a written notice of
such intention be given to Tenant. Notwithstanding any such subletting
without termination, Landlord may at any time thereafter elect to terminate
this Lease for such previous breach. At Landlord's option and application,
a receiver for Tenant shall be appointed to take possession or the Premises
and to exercise Landlord 'a right to sublet the Premises for Tenant and to
apply any rent collected from the Premises as provided herein.
(e) As used in this Paragraph 24, the one half (1/2) of the "excess
rent" (as defined in Paragraph 13(c)) that is payable to Landlord shall not
be deemed, in any way, to offset Landlord's damages herein. Landlord's
damages, however, will be offset, as provided in this Paragraph 24, to the
extent that Landlord collects (so provided in Paragraph 13(c)) the one-half
(1/2) of "excess rent" that is otherwise payable to Tenant under Paragraph
13(c).
25. Damage by Fire, Etc.
(a) If the Premises or the Building is damaged by fire or other
casualty, Landlord shall diligently repair the same, subject to the
provisions of this Paragraph, provided such repairs can be made within one
hundred eighty (180) days, and this Lease shall remain in full force and
effect. If such fire or other casualty damages the Premises or common
areas or the Real Property necessary for Tenant's use and occupancy of the
Premises, then during the period the Premises or any part thereof are
rendered unusable by such damage and the repair thereof, Tenant shall be
entitled to a proportionate reduction of rent on account of such damage and
repair, such proportionate reduction to be based upon the extent to which
such damage and repair shall prevent the conduct of business by Tenant in
the Premises as set forth more particularly in subparagraph 25 (d);
provided, however, in the event that such damage is the result of the
negligence or willful misconduct of Tenant or Tenant's agents, employees,
contractors, licensees or invitees and is not covered by insurance, then
there shall be no rent abatement. Landlord shall not be obligated to
repair any damage to, or to make any replacement of, Tenant's movable
furniture, equipment, trade fixtures, and other personal property, nor any
additions, alterations or improvements installed in the Premises by or for
Tenant, and Tenant shall, at Tenant's sole cost and expense, repair and
replace such movable furniture, equipment, trade fixtures and other
personal property, and such alterations, additions, and improvements. All
such repair and replacement of alterations, additions and improvements
other than as previously installed pursuant to Paragraph 9 shall be treated
as a work of alteration, addition or improvement by Tenant and all of the
provisions of Paragraph 9 shall apply thereto. Tenant hereby waives
California Civil Code sections 1932(2) and 1933(4), providing for
termination of hiring upon destruction of the thing hired and sections 1941
and 1942, providing for repairs to and of premises.
(b) Landlord's obligation to repair pursuant to subparagraph 25(a)
and 25(c) shall be subject to insurance proceeds being available to
Landlord to effect such repair; provided, however, in the event of an
uninsured casualty costing less than $150,000 to repair, such damage shall
be repaired and this Lease shall remain in effect (except that Rent owing
hereunder shall be abated as provided in Subparagraph 25(d) below) in which
case a Landlord may elect to either (i) repair such damage at Landlord's
sole cost and expense, or (ii) permit Tenant to undertake such repair, in
which latter case Tenant shall repair such damage and shall be entitled to
offset against Monthly Rent the cost of such repair (such offset shall be
limited to fifty percent (50%) of the Monthly Rent for each month until
Tenant has recouped the cost of such repair). With respect to any damage
to be repaired by Landlord, Landlord shall with all due diligence repair or
rebuild the Building and the Premises (including any of Tenant 'a
improvements therein) to the condition at least equal to that existing
immediately prior to said damage. With respect to any insured casualty,
Landlord shall use any insurance proceeds payable to Landlord for the
purpose of such rebuilding, as well as, with respect to the Premises, any
insurance proceeds received by Tenant by reason of its insurance on the
Premises to the extent of the actual amount needed to replace or restore
Tenant's improvements, trade fixtures, and equipment.
(c) If any such damage to Building, or Premises (herein "major
damages") cannot be repaired by Landlord within 180 days after the
occurrence thereof and if as a result of such damage a material portion of
the Premises shall be unusable for the normal operation of Tenant's
business for a period of 180 days or more, Tenant or Landlord shall have
the option to terminate this Lease upon thirty (30) days' written notice to
the other party in which event the Monthly Rent and all additional rent
shall be prorated to the date of the damage, and Tenant shall not be liable
for any Monthly Rent or additional rent after the date of damage.
(d) If the Lease is not terminated after any damage or destruction,
the Monthly Rent and all additional rent shall be equitably prorated and
abated for and during the period commencing with the date of such casualty
and continuing until repairs are completed in the proportion that the area
of the Premises usable by Tenant for normal business operations bears to
the total area then leased by Tenant, taking into consideration the rental
rate per square foot for the space for which the abatement is made and any
adverse effects and disruptions to Tenant's business caused during the
period of such repairs, which Tenant could not reasonably mitigate.
26. Eminent Domain.
(a) If all or any part of the Premises shall be taken or appropriated
by any public or quasi-public authority under the power of eminent domain,
or any agreement in lieu thereof, this Lease shall terminate as to the part
so taken as of the date of taking and, in the case of a partial taking,
either Landlord or Tenant shall have the right to terminate this Lease as
to the balance of the Premises by giving written notice to the other within
ninety (90) days after such dates provided, however, that a condition to
the exercise by Landlord or Tenant of such right to terminate shall be that
the portion of the Premises taken shall be of such extent and nature as to
render the balance of the Premises unusable or uneconomical for Tenant's
purposes. In the event of any taking by exercise of the power of eminent
domain, or agreement in lieu thereof, Landlord shall be entitled to all
compensation, damage, income, rent awards and interest thereon whatsoever
which may be paid or made in connection therewith and Tenant shall have no
claim against Landlord for the value of any unexpired term of this Lease or
of any of the work performed by Landlord in the Premises for or by Tenants
provided, however, that nothing contained herein shall prohibit or prevent
Tenant from seeking at its cost and expense and retaining for its own
account from the authority exercising the power of eminent domain an award
to compensate Tenant for the unamortized cost of any improvements,
additions or alteration to the Premises, which were paid for solely at
Tenant's expense, its relocation expenses and for any loss by Tenant of any
movable furniture, equipment and other personal property resulting from
such exercise. In the event of a partial taking of the Premises which does
not result in a termination of this Lease, the rent thereafter to be paid
under this Lease shall be equitably reduced.
(b) Notwithstanding the foregoing, if all or any portion of the
Premises is taken under power of eminent domain or any agreement in lieu
thereof for a period of time ending prior to the end of the term of this
Lease, this Lease shall remain in full force and effect and Tenant shall
continue to pay all rent and to perform all of the terms, conditions and
covenants of this Lease; provided, however, in such case Tenant shall be
entitled to all compensation, damages, income, rent awards and interest
thereon whatsoever which may be paid or made in connection with any such
temporary taking.
27. Limitation of Landlord's Liability.
(a) Anything contained in this Lease to the contrary notwithstanding,
Tenant shall look solely to Landlord's interest in the Real Property for
the recovery of any judgment against Landlord on account of Landlord's
breach of any of its covenants or obligations under this Lease. Landlord,
the partners of Landlord (if Landlord is a partnership), the officers,
directors or shareholders of Landlord (if Landlord is a corporation), and
the employees and agents of any of them, shall never have any personal
liability for any breach of any covenant or obligation of Landlord under
this Lease and no recourse shall be enforceable against the assets of
Landlord or any such other person other than the interest of Landlord or
such other person in the Real Property for payment of any sums due to
Tenant or enforcement of any other relief based upon any claim made by
Tenant for breach of any of Landlord's covenants or obligations under this
Lease.
(b) As used herein, Landlord's interest in the nea1 Property shall
include any insurance proceeds or condemnation awards received by Landlord
and not applied to the restoration of the Real Property or to the payment
of any indebtedness thereon. Further, the provisions of this Paragraph 27
shall only be effective so long as Landlord maintains a minimum of
$1,000,000 unencumbered equity in the Real Property, and only during the
period that Landlord owns the Real Property.
28. Sale by Landlord.
(a) In the event of a sale, conveyance or other transfer by Landlord
of the Real Property, the same shall operate to release Landlord from any
future liability of any covenants or conditions, express or implied, herein
contained in favor of Tenant, and in such event Tenant agrees to look
solely to the successor in interest of Landlord in this Lease for
performance of all of Landlord's covenants or obligations hereunder
accruing from and after the date of such transfer. If any security be
given by Tenant to secure the faithful performance of all or any of the
covenants of this Lease on the part of Tenant, Landlord shall transfer
and/or deliver the security, as such, to the successor in interest of
Landlord, and thereupon Landlord shall be discharged from any further
liability in reference thereto; provided, however, nothing in this
Paragraph 28 shall require Landlord to transfer more security than is
actually held by Landlord at the date of transfer and; provided, however,
that any dispute between Landlord and Tenant over any previous application
of the security shall not be waived as a consequence of the transfer.
(b) As a condition to the release of Landlord's liability under the
Lease upon sale of the Building, any buyer of the Building shall assume in
writing Landlord's obligations under the Lease and shall acknowledge
Tenant's security deposit.
29. Estoppel Certificate. Tenant, at any time upon not less than ten (10)
days' prior written notice from Landlord, shall execute, acknowledge and deliver
to Landlord a statement in writing (1) certifying that the Lease is unmodified
and in full force and effect (or, if modified, stating the nature of such
modification and certifying that the Lease, as so modified, is in full force and
effect) and the date to which the rent and other charges are paid in advance, if
any, and (2) acknowledging that there are not, to Tenant's knowledge, any
uncured defaults on the part of Landlord hereunder, or specifying such defaults
if any are claimed. Any such statement may be conclusively relied upon by any
prospective purchaser or encumbrancer of the Premises. Tenant's failure to
deliver such statement within such time shall be conclusive upon Tenant (1) that
the Lease in full force and effect, without modification, except as may be
represented by Landlord, (2) that there are no uncured defaults in Landlord's
performance, and (3) that not more than one (1) month's rent has been paid in
advance.
30. Right of Landlord to Perform; Late Charge.
(a) All covenants and agreements to be kept or performed by Tenant
under any of the terms of this Lease shall be performed by Tenant at
Tenant's sole cost and expense and without any abatement of rent. If
Tenant shall fail to pay any sum of money required to be paid by it
hereunder (other than Monthly Rent and additional rent payable pursuant to
Paragraphs 5 and 7) or shall fail to perform any other act on its part to
be performed hereunder, Landlord may, but shall not be obliged to, and
without waiving any default of Tenant or releasing Tenant from any
obligations to Landlord hereunder, make any such payment or perform any
such other act on Tenant's part to be made or performed as in this Lease
provided. All sums so paid by Landlord and all necessary incidental costs,
together with interest thereon from the date of such payment by Landlord
until paid at an annual rate of interest equal to the lesser of (a) four
percent (4%) over the prevailing "base rate" announced from time to time by
the Bank of America NT&SA for purposes of pricing loans to major corporate
borrowers or (b) the highest rate allowed by law for commercial
obligations, which interest shall be payable forthwith upon demand, and
Landlord shall have (in addition to any other right or remedy of Landlord)
the same rights and remedies in the event of nonpayment thereof by Tenant
as in the case of default by Tenant in the payment of rent.
(b) Tenant acknowledges that late payment by Tenant to Landlord of
any installment of Monthly Rent or additional rent will cause Landlord to
incur costs not contemplated by this Lease, the exact amount of such costs
being extremely difficult and impracticable to fix. Such costs include,
without limitation, processing and accounting charges, and late charges
that may be imposed on Landlord by the terms of any encumbrance and note
secured by any encumbrance encumbering the Real Property. Therefore, if
any installment of Monthly Rent or additional rent due from Tenant is not
paid within five (5) days after the date such installment is due, the
Tenant shall pay to Landlord an additional sum of five percent (5%) of the
overdue installment as a late charge. The parties agree that this late
charge represents a fair and reasonable estimate of the costs that Landlord
will incur by reason of late payment by Tenant. Acceptance of any late
charge shall not constitute a waiver of Tenant's default with respect to
the overdue amount, nor prevent Landlord from exercising any of the other
rights and remedies available to Landlord.
31. Arbitration and Attorneys' Fees.
(a) Any dispute, controversy or claim arising under this Lease shall
be submitted to arbitration in the City of San Francisco, California.
Except as otherwise provided with respect to the selection of arbitrators,
said arbitration shall be conducted in accordance with the Rules of
Commercial Arbitration of the American Arbitration Association or its
successor, and the provisions of California Code of Civil Procedure Section
1283.05 or any successor or amended statute or law containing similar
provisions. Each party to this Agreement shall appoint one arbitrator and
notify the other party of such appointment; provided, however, that no
officer, agent, attorney, employee or other person who has a financial
interest in said dispute may be appointed and that each person so appointed
shall have had five year's experience in commercial leasing matters in San
Francisco. Promptly after their appointment, the two arbitrators appointed
by the parties shall meet and select as the third and presiding arbitrator
a member of State Bar of California who in the last ten years tried ten
cases to judgment and arbitrated to award or served as an arbitrator of at
least three disputes. The arbitrators shall have no power to modify any of
the provisions of this Lease and their jurisdiction is limited accordingly.
The arbitrators shall prepare and serve written findings of fact and
conclusions which adequately set forth the basis of their decision and
which cites the statutes and precedents relied upon in reaching such
decision. Except as may be otherwise decided by the arbitration tribunal,
the expenses of arbitration shall be borne equally by the parties and each
party shall be responsible for the fees and expenses of its own experts,
evidence and attorneys. Judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof,
including, but not limited to, the rights and remedies for in Title 3,
chapter 4 of the California Code of Civil Procedure. All arbitration
concerning this Lease, the Real Property or any matter related thereto
shall be binding and final.
(b) In the event of any action or proceeding at Law or in equity
between Landlord and Tenant (including an action or proceeding between
Landlord and the trustee or debtor in possession while Tenant is a debtor
in a proceeding under the Bankruptcy Code (Title 11 of the United States
Code) or any successor statute to such Code) to enforce any provision of
this Lease or to protect or establish any right or remedy of either
Landlord or Tenant hereunder, the unsuccessful party to such action or
proceeding shall pay to the prevailing party all costs and expenses,
including, without limitation, reasonable attorneys' fees and expenses,
incurred in such action or proceeding and in any appeal in connection
therewith by such prevailing party, whether or not such action, proceeding
or appeal is prosecuted to judgment or other final determination. The term
"prevailing party" shall include, without limitation, a party who obtains
legal counsel or brings an action against the other by reason of the
other's breach or default and obtains substantially the relief sought,
whether by compromise, settlement or judgment. If such prevailing party
shall recover in any such action, proceeding or appeal, such costs,
expenses and/or attorneys' fees shall be included in and as a part of such
judgment.
32. Surrender of Premises.
(a) Upon the expiration or sooner termination of the term hereof,
Tenant shall surrender the Premises to Landlord in the same condition as
when received, ordinary wear and tear and damage by fire, earthquake, act
of God or the elements excepted and, at Tenant's sole cost, shall remove
all movable furniture, equipment, trade fixtures and personal property
(except partitions, in accordance with Paragraph 9 of this Lease) and
repair any damage in the Premises or elsewhere in the Building caused by
such removal. Any property which is not so removed by Tenant within
fifteen (15) calendar days following notice thereof to Tenant shall be
deemed abandoned by Tenant, and title to such property shall, at Landlord's
election, pass to Landlord, provided that any such abandonment and transfer
of title shall not be deemed to be a waiver of Landlord's rights and
remedies against Tenant for removal of such items by Tenant. Whether or
not title shall so pass to Landlord, Landlord may cause such property to be
removed and stored and/or disposed of, and may make appropriate repairs to
the Premises and Building, and Tenant shall pay the cost of such action on
demand. Tenant shall indemnify Landlord against any loss or liability
resulting from delay by Tenant in so surrendering the Premises, removing
property and making repairs, including without limitation any claims made
by any succeeding tenant- founded on such delay, unless such delay is
caused by fire, earthquake, act of God or other conditions beyond Tenant's
reasonable control (financial inability excepted).
(b) The voluntary or other surrender of this Lease by Tenant or a
mutual cancellation thereof shall not work a merger, and at the option of
Landlord, (i) shall terminate all or any existing subleases or
subtenancies, or (ii) shall operate as an assignment to Landlord of all or
any such subleases or subtenancies.
33. Withdrawal of Partners.
(a) In the event of the withdrawal or removal of one or more than one
of the general partners of Tenant's general partnership (said partner being
referred to herein as a "Withdrawing Partner" and said general partnership
being referred to as the "Partnership"), Landlord agrees that; upon advance
notice to Landlord of said withdrawing Partner to withdrawal or removal
from the Partnership, said withdrawing Partner or Partners shall not be
released from any obligations and/or liabilities under the Lease unless
consented to by Landlord in its sole judgment which consent may be withheld
for any reason. In the event of a partner's withdrawal is consented to
then the remaining partners must:
(i) Assume the proportional share of liability of the
withdrawing partner; and
(ii) Must submit adequate documentation to Landlord that the
remaining partners are of sufficient financial strength to give
Landlord security for the Lease given the expenses incurred by
Landlord in making improvements.
(b) The partners of Keker & Xxxxxxxx (or successor) shall provide
additional financial statements to the present Lender or any proposed
Lender, when reasonably requested.
34. Waiver. The waiver by Landlord or Tenant of performance of any term,
covenant or condition herein contained shell not be deemed to be a waiver of
such term, covenant or condition or any subsequent breach of the same or by any
other term, covenant or condition herein contained. The subsequent acceptance
of rent hereunder by Landlord shall not be deemed to be a waiver of any
preceding breach by Tenant of any term, covenant or condition of this Lease,
other than the failure of Tenant to pay the particular rent so accepted,
regardless of Landlord's knowledge of such preceding breach at the time of
acceptance of such rent.
35. Notices. All notices and demands which may or are required to be
given by either party to the other hereunder shall be in writing. All notices
and demands by Landlord to Tenant shall be delivered personally or sent by
United States certified or registered mall, postage prepaid, addressed to Tenant
at the Premises, or to such other place as Tenant may from time to time by like
notice designate. All notice and demands by Tenant to Landlord shall be sent by
United States certified or registered mail, postage prepaid, addressed to
Landlord in care of Xxxxxx Xxxxxx, 000 Xxxxxxx Xxx, Xx. Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000, or to such other place as Landlord may from time to time by
like notice designate.
36. Notice of Surrender. At least ninety (90) days before the last day of
the term hereof, Tenant shall give to Landlord a written notice of intention to
surrender the Premises on that date, but neither this Paragraph nor any failure
by Landlord to protest the lack of such notice by Tenant shall be construed as
an extension of the term hereof or as consent of Landlord to any holding over by
Tenant, provided, however, that failure to give such notice in a timely manner,
shall not be deemed an Event of Default.
37. Defined Terms and Marginal Headings. The words "Landlord" and
"Tenant" as used herein shall include the plural as well as the singular. Words
used in masculine gender include the feminine and neuter. If there be more than
one Tenant the obligations hereunder imposed upon Tenant shall be joint and
several. The headings and titles to the Paragraphs of this Lease are not a part
of this Lease and shall have no effect upon the construction or interpretation
of any part hereof. Whatsoever the term "including" or "includes" has been used
in this Lease it shall be construed as if followed by the phrase "without
limitation." As used herein the term "shall" is mandatory and "may" is
permissive.
38. Time and Applicable Law. Time is of the essence of this Lease and
each and all of its provisions. This Lease shall in all respects be governed by
and construed in accordance with the laws of the State of California.
39. Successors. Subject to the provisions of Paragraphs 13 and 28 hereof,
the covenants and conditions herein contained shall be binding upon and inure to
the benefit of the heirs, successors, executors, administrators and assigns of
the parties hereto.
40. Entire Agreement. This Lease (including any Exhibits, Riders or
attachments hereto) together with the Work Agreement of even date herewith
(which Work Agreement shall no longer be operative following Tenant's letter
that said Work Agreement has been completed), constitutes the entire agreement
between Landlord and Tenant and no promises or representations, express or
implied, either written or oral, not herein set forth shall be binding upon or
inure to the benefit of Landlord or Tenant. This Lease shall not be modified by
any oral agreement, either express or implied, and all modifications hereof
shall be in writing and signed by both Landlord and Tenant.
41. Equal Employment Opportunity. There are incorporated in this Lease
the provisions of Executive Order 11246 (as amended ) of the President of the
United States on equal employment opportunities and the rules and regulations
issued pursuant thereto with which Landlord represents that it will comply
unless exempted.
42. Light and Air. Tenant covenants and agrees that no diminution of
light, air or view by any structure which may hereafter be erected (whether or
not by Landlord) shall entitle Tenant to any reduction of rent hereunder, result
in any liability or Landlord to Tenant, or in any other way affect this Lease.
43. Severability. If any provision of this Lease or the application
thereof to any person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Lease and the application of such provisions to
other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
44. Financing Condition. If at any time or times Landlord declares to
obtain financing for the Real Property, if any lender which intends to take, or
is holding, a mortgage or deed of trust encumbering the Rea1 Property should
require, as a condition to such financing, either execution by Tenant of an
agreement requiring Tenant to send such lender written notice of any default by
Landlord under this Lease, giving such lender the right to cure such default
until such lender has completed foreclosure, and preventing Tenant from
terminating this Lease unless such default remains uncured after foreclosure has
been completed, or any modification of the agreements, covenants, conditions or
provisions of this Lease, or both of them, then Tenant agrees to execute and
deliver such agreement and to modify this lease as required by such lender,
provided, however, that no such modification shall affect the length of the term
hereof or increase the Rent payable by Tenant under Paragraphs 5 and 7, or
increase any other financial obligation existing under this Lease, or Tenants
rights herein and shall be in all other respects be reasonable related to the
lender's security interest in this Lease. Tenant acknowledges and agrees that
its failure to execute any such agreement or modification required by such
lender may cause Landlord serious financial damage by causing the failure of a
financing transaction and Landlord shall have rights to damages caused by the
lose of said financing.
45. Authority. If Tenant is a corporation, partnership, trust,
association or other entity, Tenant and each person executing this Lease on
behalf of Tenant does hereby covenant and warrant that (a) Tenant is duly
incorporated or otherwise established or formed and validly existing under the
laws of its state of incorporation, establishment or formation, (b) Tenant has
and is duly qualified to do business in California, (c) Tenant has full
corporate, partnership, trust, association or other appropriate power and
authority to enter into this Lease and to perform all Tenant's obligations
hereunder, and (d) each person (and all of the persons of more than one signs)
signing this Lease on behalf of Tenant is duly and validly authorized to do so.
46. No Offer. Submission of this instrument for examination and signature
by Tenant does not constitute a reservation of or option for lease, and is not
effective as a lease or otherwise until execution and delivery by both Landlord
and Tenant.
47. Real Estate Brokers. Each party to this Lease represents and warrants
that it has negotiated this Lease with the Real Estate Broker identified in
Paragraph 2 and has not authorized or employed, or acted by implication to
authorize or to employ, any other real estate broker or salesman to act for
either Tenant or Landlord in connection with this Lease. Each party shall hold
the other harmless from and indemnify and defend Landlord against any and all
claims by any real estate broker or salesman other than the Real Estate Broker
identified in Paragraph 2 for a commission or finder's fee as a result of
Tenant's entering into this Lease.
48. Counterparts; Exhibits, Riders and Other Attachments.
(a) This Lease may be executed in two or more counterparts, but all
of such counterparts taken together shall constitute one and the same
instrument.
(b) All Exhibits, Riders and other attachments hereto are hereby
incorporated herein and made a part hereof.
49. OPTION TO EXTEND TERM:
(a) First Option Period.
If an Event of Default by Tenant shall not then exist, Tenant shall
have the right to extend the Initial Term of this Lease for a period of
five (5) years ("First Option Period"). The First Option Period shall
commence on the day following the date on which this Lease otherwise
terminates according to the provisions of Paragraph 2, and shall terminate
at midnight on the last day of the sixtieth (60th) month thereafter.
Tenant shall exercise the right to the First Option Period by delivering
written notice to Landlord not later than six (6) months prior to the
expiration of the Agreed Initial Term of this Lease.
(b) Terms, Conditions, Covenants and Rent for First Option Period.
The First Option Period shall be on all of the terms, conditions and
covenants applicable to the Agreed Initial Term of the Lease with the
following specific exception. The monthly rent for the First Option Period
shall be determined in the manner set forth in Subparagraph 49.e, hereof.
(c) Second Option Period.
If an Event of Default by Tenant shall not then exist, and Tenant has
exercised the right to the First Option Period, Tenant shall have the right
to extend the Term of the Lease for a Second Five (5) Year Option Period;
provided, however, that the right to exercise the Second Option shall be
personal to Tenant to the extent that if, during the Agreed Initial Term,
Tenant shall have assigned this Lease or subleased the entire Premises or
substantially all the Premises, for the balance of the Agreed Initial Term
and the First Option Period such that the original Tenant hereunder (as
such Tenant may have changed through any one or more mergers, affiliations,
associations or combinations as described in Paragraph 13(j) above) is no
longer in possession of all or substantially all of the Premises, then the
Second Option shall be null and void and Tenant shall have no right to
extend the term of this Lease for the Second Option Period. The Second
(2nd) Five Year Option Period shall commence on the day following the date
on which the First Option Period terminates and shall terminate on the last
day of the Sixtieth (60th) month thereafter. The failure by Tenant to
exercise any Option Period herein shall terminate Tenant's right to any
successive Option Periods. Tenant shall exercise the right to the Second
Five Year Option Period by delivering written notice to Landlord not later
than six (6) months prior to the expiration of the First Option Period.
(d) Terms, Conditions, Covenants and Rent for Second Five Year Option
Period.
The Second Five Year Option Period shall be on all of the terms,
conditions and covenants applicable to the Initial Term and the First
Option Period with the following exceptions:
(l) The monthly rent for the Second Five Year Option Period
shall be determined as set forth in Subparagraph 49.e, hereof.
(2) Tenant shall have no right to extend any Term or Option
Period of this Lease beyond the termination of the Second (2nd) Five
Year option Period.
(e) Rent During Option Periods. The basic rent for each Option
Period shall be the "Fair Market Rental" for such Option Period determined
as follows:
(1) As used herein, the term "Fair Market Rental" for any Option
Period means the Monthly Rent that Landlord could obtain as of the
commencement of the Option Period from a third party desiring to lease
the Premises for the Option Period taking into account the services
provided under the terms of the Lease, the rental then being obtained
for new leases of space comparable to the Premises in the locality of
the Building, tenant improvement allowances provided or to be
provided, rental abatements, other forms of rental concessions and all
other factors that would be relevant to a third party desiring to
lease the Premises for said Option Period on said terms in determining
the rental such party would be willing to pay therefore. Said Fair
Market shall also take into account an equitable sharing of the cost
savings in leasing commissions realized as a consequence of Tenant's
election to exercise the renewa1 Option.
(2) At least 120 days prior to the commencement of any Option
Period Landlord shall send to Tenant a notice setting forth its
determination of the Fair Market Rental. In the event Tenant disputes
Landlord's determination of the Fair Market Rental, Tenant shall,
within thirty (30) days after the date of Landlord's notice send to
Landlord a notice stating that Tenant desires to submit the dispute as
to the Fair Market Rental to arbitration as provided in subparagraph
(3) below. If Tenant does not so send Landlord such notice,
Landlord's determination of the Fair Market Rental shall be the
Monthly Rents for such Option Period. In the event Tenant elects to
arbitrate, and such arbitration shall not have been concluded Prior to
the commencement of the Option Period, Tenant shall pay Monthly Rent
to Landlord at the rate set forth in Landlord's notice to Tenant of
the Fair Market rental. If the amount of Fair Market Rental, as
finally determined by arbitration, is greater than Landlord's
determination, Tenant shall pay to Landlord the difference between the
amount paid by Tenant and the Fair Market rental, as so determined by
arbitration, for the period between the commencement of the Option
Period and the date of such determination within thirty (30) days of
the determination, and if the Fair Market rental, as finally
determined by arbitration. is less than Landlord's determination, the
difference between the amount paid by Tenant and the Fair Market
Rental, as so determined by arbitration, for said period shall be
credited against the next installments of basic rent due from Tenant
to Landlord.
(3) In the event Tenant elects to submit the determination of
the Fair Market Rental for any Option Period to arbitration as above
provided, the judgment or the award rendered in any such arbitration
may be entered in any court having jurisdiction and shall be final and
binding upon the parties. The arbitration shall be conducted and
determined in the City and County of San Francisco in accordance with
the then prevailing rules of the American Arbitration Association or
its successor for arbitration of commercial disputes, except to the
extent that the procedures mandated by said rules are expressly
modified herein.
(A) Tenant's notice requiring arbitration as provided in
subparagraph (2) above shall specify the name and address of the
person to act as the arbitrator on Tenant's behalf. The
arbitrator shall be an attorney, M.A.I. or licensed real estate
broker with at least ten (10) years' experience in the field of
commercial property leases, who's familiar with the prevailing
market rentals of first-class commercial office space in the
downtown San Francisco area and would qualify as an expert
witness over objection to give opinion testimony addressed to the
lease in a court of competent jurisdiction. Within twenty (20)
business days after receipt of the notice requiring arbitration,
Landlord shall give notice to Tenant specifying the name and
address of the Person designated by Landlord as arbitrator on its
behalf, who shall be similarly qualified. If Landlord fails to
notify Tenant of the appointment of its arbitrator, within the
time above specified, then Tenant on behalf of Landlord may
request appointment of a similarly qualified person by the then
Chief Judge of the United States District Court having
jurisdiction over the City and County of San Francisco, and the
other party shall not raise any question as to such Judge's full
power and jurisdiction to entertain the application for and make
the appointment.
(B) In the event that the two arbitrators are chosen
pursuant to subparagraph (A) above, the arbitrators so chosen
shall meet within ten (10) business days after the second
arbitrator is appointed, and if within ten (10) business days
after such first meeting the arbitrators shall be unable to agree
upon a determination of the Fair Market Rental, they shall
appoint a third arbitrator, who shall be a competent and
impartial person with qualifications similar to those above
required or the first two arbitrators. In the event the two
arbitrators are unable to agree upon such appointment of a third
arbitrator within five (5) business days after the expiration of
such ten-day period, the third arbitrator shall be selected by
the parties, if they can agree thereon, within a further period
of ten (10) business days. If the parties do not so agree, then
either on behalf of both, may request appointment of such a
qualified person by the then Chief Judge of the United States
District Court having jurisdiction over the City and County of
San Francisco, and the other party shall not raise any question
as to such Judge's full power and jurisdiction to entertain the
application for and make the appointment. The three arbitrators
shall decide the dispute if it has not previously been resolved
by following the procedure set forth in subparagraph (C) below
and shall attempt to so decide the issue within ten (10) business
days of the appointment of the third arbitrator.
(C) If the determination of the Fair Market Rental cannot
be resolved by agreement between the two arbitrators selected by
Landlord and Tenant or settlement between the parties during the
course of arbitration, the issue shall be resolved by the three
arbitrators in accordance with the following procedure. The
arbitrator selected by each of the parties shall state in writing
his determination of the Fair Market Rental, supported by the
reasons therefore with counterpart copies to each party. The
arbitrators shall arrange for simultaneous exchange or such
proposed determinations. The role of the third arbitrator shall
be to select which of the two proposed determinations most
closely approximates his determination of the Fair Market Rental.
The third arbitrator shall have the right to propose a middle
ground or any modification of either of the two proposed
determinations. The determination he chooses shall constitute
the decision of the arbitrators and shall be binding and
conclusive upon the parties.
(D) In the event of a failure, refusal or inability of any
arbitrator to act, his successor (similarly qualified) shall be
appointed by him, but in the case of the third arbitrator, his
successor shall be appointed in the same manner as above provided
for appointment of the third arbitrator. Any decision in which
the arbitrator appointed by Landlord and the arbitrator appointed
by Tenant concur shall be binding and conclusive upon the
parties. Each party shall pay the fees and expenses of its
respective arbitrator and both shall share the fees and expenses
of the third arbitrator, if any, and the attorneys' fees and
expenses of counsel of the respective parties and of witnesses
shall be paid by the respective party engaging such counsel or
calling such witnesses.
(E) The arbitrators shall have the right to consult experts
and competent authorities with factual information or evidence
pertaining to a determination of the Fair Market Rental, but any
such consultation shall be made in the presence of both parties
with full right on their part to cross-examine. The arbitrators
shall render their decision and award in writing with counterpart
copies to each party. The arbitrators shall have no power to
modify the provisions of the Lease.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the
day and year first above written.
By Landlord: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx
By Tenants: /s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx, P.C.
by Xxxx X. Xxxxx its principal
/s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx, individually
/s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx, P.C.,
by Xxxxxxx X. Xxxxxxxx its principal
/s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx, individually
/s/ Xxxxxx X. Van Nest
Xxxxxx X. Van Nest, P.C.,
by Xxxxxx X. Van Next its principal
/s/ Xxxxxx X. Van Nest
Xxxxxx X. Van Nest, individually
/s/ R. Xxxxxx Xxxxxxx
R. Xxxxxx Xxxxxxx, individually
/s/ Xxxxxxxxxxx X. Xxxx
Xxxxxxxxxxx X. Xxxx, individually
/s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx, individually
/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx, individually
/s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx, individually
/s/
Keker & Xxxxxxxx, a California Partnership
Tenants.
