Exhibit 10.14
BUSINESS PARK LEASE
THIS LEASE is made this 10th day of June, 1999, between XXXXXXXX AVENUE
ASSOCIATES, a California partnership, herein referred to as "Landlord," and
INTERNET TRAVEL NETWORK, a California corporation, herein referred to as
"Tenant."
WITNESSETH:
ARTICLE 1 - Premises and Term
Section 1.1. Landlord hereby leases to Tenant and Tenant hereby leases
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from Landlord the demised premises, including the building and other
improvements thereon, consisting of approximately 65,839 square feet of gross
floor area and located at 0000 Xxxxxxxx Xxxxxx, Xxxxx Xxxx, Xxxxxxxxxx (as
described in Exhibit "A" and located substantially as shown on Exhibits "A-1"
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and "B" attached hereto), upon and subject to the terms and provisions of this
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Lease for a demised term of five (5) years, commencing on June 1, 1999, and
ending on May 31, 2004.
Within thirty (30) days after execution of this Lease by both parties,
Tenant shall have the right to re-measure the building on the demised premises
leased herein, and if the square footage thereof is more or less than 65,839
gross square feet of Floor Area (as that term is defined in Section 19.19.
hereof), the base rent and all items of additional rent which are calculated on
the basis of square footage shall each be adjusted on a pro-rata basis
accordingly. Should Tenant exercise its right to re-measure the building leased
herein, then the same shall be done by a licensed architect and is subject to
Landlord's review and approval.
Should Landlord and Tenant agree on a square footage for the building other
than 65,839 gross square feet of Floor Area, then Landlord and Tenant shall
execute a statement or Amendment to this Lease confirming the square footage of
the building and the base rent for each year of the demised term, based on the
re-measured square footage of the building on the demised premises.
Section 1.2. Provided Tenant is not, at the time of giving the notice
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described below or at any time thereafter until commencement of the option term,
in default under any of the terms, conditions and covenants of this Lease beyond
applicable cure periods (which default has not been timely cured), and subject
to the terms and conditions set forth hereinbelow, Tenant shall be granted the
option to extend the demised term of this Lease for one (1) period of five (5)
years.
(a) Tenant shall notify Landlord in writing of Tenant's exercise of
the option to extend the Lease at least two hundred seventy (270) days prior to
the expiration of the initial term; and
(b) The option term will commence on the day after the expiration of
the initial term and shall terminate five (5) years later; and
(c) The base rent for each year of the option term shall equal the
greater of (i) the previous year's base rent, or (ii) the Fair Market Rental
Value (hereinafter defined (of the demised premises. "Fair Market Rental Value"
shall mean the annual base rent (including interim adjustments) that the
Landlord would receive as of the commencement date of the extension term if it
were to lease the demised premises pursuant to the terms of this Lease (except
to the extent that this Lease is inconsistent with the assumptions and
requirements set forth below), for a term equal to the period in question and in
an "as is" condition. In determining the Fair Market Rental Value, comparable
transactions in the area located South of Highway 101 and East of Xxxxx Road and
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contained within the City of Menlo Park shall be considered, including, without
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limitation, landlord and tenant inducements, such as rental concessions, tenant
improvement allowance and rental increases, if and to the extent then a part of
market conditions. The rent on comparable leases shall be adjusted to reflect
the value or cost of such inducements since neither Landlord nor Tenant shall
have any obligation to pay or perform any such inducements (except for rental
increases if applicable). Landlord and Tenant shall agree on the Fair Market
Rental Value in accordance with Section 19.20 below; and
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(d) The option to extend can be exercised only by Internet Travel
Network for its sole use of the demised premises and may not be transferred or
assigned to any subleassee, assignee or other party, nor may this option be
exercised by Internet Travel Network for the use of the premises by any
sublessee, assignee or party other than Internet Travel Network, except that the
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option may be transferred to a Permitted Transferee as set forth in Article 6
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and;
(e) There shall be no further option to extend the demised term.
ARTICLE 2 - Rent
Section 2.1. Tenant covenants and agrees to pay to Landlord without set-
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off, recoupment, deduction or demand of any nature whatsoever, base rent for
each year during the demised term as follows: for the first (1st) year during
the demised term the amount of One Million Eighty Thousand Dollars
($1,080,000.00) per annum, payable in twelve (12) equal monthly installments of
Ninety Thousand Dollars ($90,000,00); for the second (2nd) year during the
demised term the amount of One Million Three Hundred Thirty-Nine Thousand Three
Hundred Fifty-Six Dollars ($1,339,356.00), payable in twelve (12) equal monthly
installments of One Hundred Eleven Thousand Six Hundred Thirteen Dollars
($111,613.00); for the third (3rd) year during the demised term the amount of
One Million Three Hundred Eighty-Six Thousand Two Hundred Forty Dollars
($1,386,240.00), payable in twelve (12) equal monthly installments of One
Hundred Fifteen Thousand Five Hundred Twenty Dollars ($115,520.00); for the
fourth (4th) year during the demised term the amount of One Million Four Hundred
Thirty-Four Thousand Seven Hundred Fifty-Six Dollars ($1,434,756.00), payable in
twelve (12) equal monthly installments of One Hundred Nineteen Thousand Five
Hundred Sixty-Three Dollars ($119,563.00); and for the fifth (5th) year during
the demised term the amount of One Million Four Hundred Eighty-Four Thousand
Nine Hundred Seventy-Six Dollars ($1,484,976.00), payable in twelve (12) equal
monthly installments of One Hundred Twenty-Three Thousand Seven Hundred Forty-
Eight Dollars ($123,748.00). Base rent shall be paid monthly in advance on the
first (1st) day of each calendar month.
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Section 2.2. For the purpose of this Lease, a year shall be twelve (12)
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calendar months, commencing with the first day of the first full calendar month
of the demised term and the succeeding anniversaries thereof. For any period
prior to the commencement of the first year or subsequent to the end of the last
year of the demised term, rent shall be prorated on the basis of the rental rate
then payable.
Section 2.3. All sums payable and all statements deliverable to Landlord
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by Tenant under this Lease shall be paid and delivered at 00 Xxxxxxxxx Xxxx, Xxx
Xxxxx, Xxxxxxxxxx, 00000-0000, or at such other place as Landlord may from time
to time direct by notice to Tenant and all such sums shall be paid in lawful
money of the United States.
Section 2.4. Upon execution of this Lease,
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(a) Tenant shall pay to the Landlord Ninety Thousand Dollars
($90,000.00), which shall be applied by Landlord to the first base rent to
become due and payable under this Lease, and
(b) Tenant shall provide Landlord with an unconditional, clean,
irrevocable, standby letter of credit (the "Letter of Credit"), payable on sight
with the bearer's draft in the amount of Eight Hundred Five Thousand Dollars
($805,000.00) (the "Initial Amount") issued by and drawn on an institution as
may be reasonably acceptable to Landlord (the "Issuing Bank"). The Letter of
Credit shall permit partial drawings and state that it shall be payable against
site drafts presented by Landlord, accompanied by Landlord's certificate that a
default in the payment of base rent or additional rent exists under the Lease
that has not been remedied within any applicable cure period and that said
drawing is in accordance with the terms and conditions of this Lease; no other
document or certification from Landlord shall be required to negotiate the
Letter of Credit. Landlord shall only have the right to draw upon the Letter of
Credit to the extent of the amount of base rent or additional rent that is
delinquent. Landlord may designate any bank as Landlord's advising bank for
collection purposes and any site drafts for the collection of the Letter of
Credit may be presented by the advising bank on Landlord's behalf.
This Letter of Credit shall be for an initial term of one (1) year, and
shall be acceptable to Landlord in both form and substance and shall be deemed
to have renewed without amendment, except to the extent as set forth herein, for
consecutive periods of one year each thereafter during the demised term hereof,
including any option period, unless the Issuing Bank sends notice (the "Non-
Renewal Notice") to Landlord by certified mail, return receipt requested, not
less than sixty (60) days next preceding the then expiration date of the Letter
of Credit that it elects not to renew such Letter of Credit. The Letter of
Credit shall provide that Landlord shall have the right exercisable within
forty-five (45) days of its receipt of the Non-Renewal Notice by site draft on
the Issuing Bank, to receive all or part of the monies of one or more draws in
the amount of the then existing Letter of Credit and Landlord shall hold such
proceeds pursuant to the terms of this Section 2.4. (B) and Section 19.9. unless
and until a replacement Letter of Credit is provided. The amount of the Letter
of Credit shall, provided Tenant is not in material default under the Lease
beyond any applicable notice and cure period, be reduced at the commencement of
each of the following years of the demised term such that the Security Deposit
remaining during the following years shall be the following amounts:
3
Year Remaining Security Deposit
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2 $696,000.00
3 $522,000.00
4 $348,000.00
5 and following $174,000.00
Upon failure of Tenant to pay base rent or additional rent within ten (10)
days after Tenant's receipt of written notice from Landlord that such sum is
due, Landlord shall be entitled to draw against the Letter of Credit in the
amount of the delinquent base rent or additional rent.
Landlord shall not be required to exhaust its remedies against Tenant
before having recourse to the Letter of Credit or to any other form of security
held by Landlord or to any other remedy available to Landlord at law or in
equity.
Section 2.5. In addition to base rent under Section 2.1., all other
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payments to be made under this Lease by Tenant to Landlord shall be deemed to be
and shall become additional rent hereunder, whether or not the same to be
designated as such, and shall be included in the term "rent" wherever used in
this Lease; and, unless another time shall be expressly provided for the payment
thereof, all rent and additional rent shall be due and payable together with the
next succeeding installment of base rent; and Landlord shall have the same
remedies for failure to pay the same as for a nonpayment of base rent.
Section 2.6. Any amount due from Tenant to Landlord that is not paid
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within five (5) days after written notice that such amount is due shall bear
interest at the lesser of (i) twelve percent (12%) per annum, or (ii) the
highest rate then permitted to be charged on late payments under leases under
California law; provided, however, the payment of any such interest shall not
excuse or cure the default upon which such interest accrued. Tenant acknowledges
and agrees that payment of such interest on late payments is reasonable
compensation to Landlord for the additional costs incurred by Landlord caused by
such late payment, including, but not limited to, collection and administration
expenses and the loss of the use of the money that was late in payment.
ARTICLE 3 - Landlord's Work - Tenant's Work
Section 3.1. Landlord shall not be required to perform any work in the
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demised premises; and, subject to the provisions of Section 11.5., Tenant
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accepts the demised premises in an "as is" condition.
Section 3.2. Tenant shall provide, at Tenant's sole cost, certain interior
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improvements ("Tenant Improvements") in accordance with detailed plans and
specifications therefor which must be approved, in writing, by Landlord or
Landlord's architect before work is commenced (which approval shall not be
unreasonably withheld) and which plans, once approved, shall become Exhibit "C"
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hereto. Tenant shall furnish Landlord with a set of "as built" plans in IBM-
compatible AutoCAD format or such other format which is compatible to Landlord's
computer aided design software after any such work is completed.
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ARTICLE 4 - Streets
Section 4.1. Tenant agrees to require employees, and to direct customers
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and other persons visiting Tenant, to park in the parking area provided in the
Parking and Accommodation Areas and to allow Landlord to post the streets for no
parking. Landlord represents that as of the commencement date of this Lease
there are a total of 170 parking spaces in the Parking and Accommodation Area
available for Tenant's non-exclusive use.
ARTICLE 5 - Utility Services
Section 5.1. Landlord represents that it has at its own cost and expense
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secured the installation of water, gas, sanitary sewers and electrical services
to the demised premises and made all necessary connections thereof to the
building and that the same will be fully operational and in good condition and
repair as of the date Landlord delivers the demised premises to Tenant. Tenant
shall pay all meter or service charges made by public utilities companies and
shall pay for the water, gas and/or electricity used on the demised premises and
sewer use fees and charges whether ad valorum or not and any so called "sewer
connection charges" based on increased wastewater discharge from the demised
premises exclusively. Tenant shall maintain such connections of utilities to the
building.
Section 5.2. Except for Landlord's or its agents' negligence or willful
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misconduct, Landlord shall not be liable to Tenant for the failure of any
utility services.
ARTICLE 6 - Assignment - Change of Ownership
Section 6.1.
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A. Except as otherwise provided herein, Tenant shall not, by operation of
law or otherwise, transfer, assign, sublet, change ownership, mortgage or
hypothecate this Lease or the Tenant's interest in and to the demised premises
without first procuring the written consent of Landlord. Any attempted transfer,
assignment, subletting, license or concession agreement, change of ownership,
mortgage or hypothecation without Landlord's written consent shall be void and
confer no rights upon any third person. Landlord's consent to a proposed
assignment or sublease shall not be unreasonably withheld provided that the
proposed assignee or sublessee shall have: (i) the financial capacity, at the
time of the assignment or sublease, determined in accordance with good
accounting principles, to fulfill all of the obligations of Tenant hereunder;
and (ii) a good reputation in the business community; provided further that
Tenant shall give Landlord not less than fifteen (15) days notice prior to the
effective date of any such assignment or sublease, and Landlord shall have the
option to terminate this Lease with respect to the space to be assigned or
subleased (if the space to be subleased is, or when combined with other
subleases then in effect would cause the total square footage of the demised
premises subleased to be, more than fifty percent (50%) in the aggregate of the
demised premises, except to a Permitted Transferee as hereafter defined) by
notice to Tenant given within fifteen (15) days of Landlord's receipt of
Tenant's notice. Nothing herein contained shall relieve Tenant and any Guarantor
from its covenants and obligations for the demised term. Tenant agrees to
reimburse Landlord for Landlord's reasonable outside attorneys' fees incurred in
conjunction with the processing and documentation of any such requested
transfer, assignment, subletting, change of
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ownership, mortgage or hypothecation of this Lease or Tenant's interest in and
to the demised premises (not to exceed One Thousand Dollars [$1,000.00]). If
Landlord consents to any assignment or sublease pursuant to this Article, Tenant
shall pay Landlord, as additional rent, eighty five percent (85%) of the
Sublease Premium derived from that sublease or assignment. "Sublease Premium"
shall mean all rent, additional rent, and/or other monies, property, and other
consideration of every kind whatsoever received by Tenant from the subtenant or
assignee for, or by reason of, the sublease or assignment (including all amounts
received by Tenant for, attributable to, any Included Property), LESS:
(a) commissions actually paid by Tenant to procure the sublease or
assignment to an independent third party licensed real estate broker and outside
attorneys' fees actually paid by Tenant, commencing with the date on which the
sublease or assignment term commences;
(b) the actual cost of leasehold improvements undertaken by Tenant
(subject to Landlord's prior written consent) solely to prepare the subleased or
assigned space for the subtenant or assignee;
(c) the unamortized cost of Included Property, if any, determined on
a straight-line basis over the period of the term of the sublease or assignment,
as certified to Landlord by Tenant's independent certified public accountant (at
Tenant's expense); and
(d) fixed rent and additional rent (including utilities) allocable to
the space covered by a sublease (as reasonably determined by Landlord, taking
into account the useable area of the premises demised under the sublease).
The term "Included Property" means all property by Tenant transferred in
ownership to the subtenant or assignee as part of the transaction (including,
but not limited to, fixtures and other leasehold improvements installed by
Tenant at its cost and expense and, to the extent Tenant receives consideration
in excess of fair market value, furniture, equipment, and furnishings).
Tenant shall pay the Sublease Premium to Landlord as and when Tenant
receives payment from such subtenant or assignee.
Notwithstanding anything to the contrary herein, Tenant may, without
Landlord's prior written consent, sublet the demised premises or assign the
Lease to ("Permitted Transferee"): (a) a subsidiary, affiliate, division or
corporation controlling, controlled by or under common control with Tenant; (b)
a successor corporation related to Tenant by merger, consolidation,
nonbankruptcy reorganization or governmental action (provided such surviving
corporation succeeds to all or substantially all of Tenant's assets); or (c) a
purchaser of all or substantially all of Tenant's assets provided that, in any
event, any such Permitted Transferee shall agree in writing, in form reasonably
satisfactory to Landlord, to assume, to be bound by, and to perform the terms,
covenants and conditions of this Lease to be done, kept and performed by Tenant,
including (in the case of an assignment) the payment of all amounts due or to
become due under this Lease directly to Landlord, without any modification of
this Lease. Tenant shall provide Landlord with the following no later than ten
(10) days prior to the effective date of the proposed
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transfer: (i) the name and address of the Permitted Transferee, and (ii) a copy
of the proposed sublet or assignment agreement, and (iii) such reasonable
information as may be requested by Landlord to substantiate that the proposed
assignee or sublessee qualifies as a Permitted Transferee under the definition
set forth in this Section 6.1(A). Nothing herein contained shall be construed as
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releasing Tenant from any of its liabilities or other obligations hereunder,
including the payment of rent.
For the purposes of this Lease, the sale of Tenant's capital stock through
any bona fide public exchange or issuances for purposes of raising financing
shall not be deemed on an assignment, subletting or any other transfer of this
Lease or the demised premises.
B. Each transfer, assignment, subletting, mortgage and hypothecation to
which there has been consent shall be by an instrument in writing in form
satisfactory to Landlord, and shall be executed by the transferor, assignor,
sublessor, hypothecator or mortgagor and the transferee, assignee, sublessee,
licensee, concessionaire or mortgagee in each instance, as the case may be; and
each transferee, assignee, sublessee, or mortgagee shall agree in writing for
the benefit of Landlord herein to assume, to be bound by, and to perform the
terms, covenants and conditions of this Lease to be done, kept and performed by
Tenant, including the payment of all amounts due to become due under this Lease
directly or to Landlord. One (1) executed copy of such written instrument shall
be delivered to Landlord. Failure to first obtain in writing Landlord's consent
or failure to comply with the provisions of this Article shall operate to
prevent any such transfer, assignment, subletting, license, concession
agreement, mortgage, or hypothecation from becoming effective.
C. If Tenant hereunder is a corporation which, under the then current
laws of the State of California, is not deemed a public corporation, or is an
unincorporated association or partnership, the transfer, assignment or
hypothecation of any stock or interest in such corporation, association or
partnership in the aggregate in excess of fifty percent (50%) shall be deemed an
assignment within the meaning and provisions of this Section 6.1.
D. Landlord's rights to assign this Lease are and shall remain
unqualified. Upon any sale of the demised premises and provided the purchaser
assumes all obligations under this Lease (including the return of Tenant's
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security deposit). Landlord shall thereupon be entirely released of all
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obligations of Landlord hereunder and shall not be subject to any liability
resulting from any act or omission or event occurring after such date.
E. The consent of Landlord to any transfer, assignment, sublease,
license, or concession agreement, change in ownership, mortgage or hypothecation
of this Lease is not and shall not operate as a consent to any future or further
transfer, assignment, sublease, license or concession agreement, change in
ownership, mortgage or hypothecation, and Landlord specifically reserves the
right to refuse to grant any such consents except as otherwise provided in this
Section 6.1.
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ARTICLE 7 - Tenant's Additional Agreements
Section 7.1. Tenant agrees at all times during the demised term to: (A)
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Keep the demised premises in a neat and clean condition. (B) Promptly remove all
waste, garbage or
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refuse from the demised premises. (C) Promptly comply with all laws and
ordinances and all rules and regulations of duly constituted governmental
authorities affecting the demised premises, and the cleanliness, safety, use and
occupation thereof, but this clause (C) shall not be construed to require Tenant
to comply with any such laws, ordinances, rules or regulations which require
structural changes in the demised premises unless the same are made necessary by
act or work performed by Tenant or the particular nature of Tenant's business.
(D) Prevent the escape from the demised premises of all fumes, odors, and other
substances which are offensive or may constitute a nuisance or interfere with
other tenants.
Section 7.2. Tenant agrees that it will not at any time during the demised
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term without first obtaining the Landlord's written consent: (A) Conduct or
permit any fire, bankruptcy or auction sale in the demised premises. (B) Place
on the exterior walls (including both interior and exterior surfaces of windows
and doors), the roof of any buildings or any other part of the demised premises,
any sign, symbol, advertisement, neon light, other light or other object or
thing visible to public view outside of the demised premises. (C) Change the
exterior color of the building on the demised premises, or any part thereof, or
the color, size, location or composition of any sign, symbol or advertisement
that may have been approved by Landlord. (D) Park, operate, load or unload, any
truck or other delivery vehicle on any place other than the loading area
designated for Tenant's use. (E) Use the plumbing facilities for any purpose
other than that for which they were constructed or dispose of any foreign
substance therein. (F) Install any exterior lighting or plumbing facilities,
shades or awnings, amplifiers or similar devices, or use any advertising medium
which may be heard or experienced outside the demised premises, such as
loudspeakers, phonographs, or radio broadcasts. (G) Deface any portion of the
building or improvements on the demised premises, normal usage excepted. In the
event any portion of the building is defaced or damaged, Tenant agrees to repair
such damage. (H) Permit any rubbish or garbage to accumulate on the demised
premises, or any part thereof, unless confined in metal containers so located as
not to be visible to members of the public. (I) Install, maintain or operate any
sign except as approved in writing by Landlord. (J) Store materials, supplies,
equipment, finished products, raw materials or articles of any nature outside of
the demised premises. (K) Use the demised premises for retail or residential
purposes. Tenant shall have the right to install (at its cost) a monument sign
for the building leased by Tenant hereunder in a location approved by Landlord,
Such monument signage shall be subject to the prior written approval of Landlord
and the City of Menlo Park.
Section 7.3. Tenant agrees that it will not at any time during the demised
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term: (A) Perform any act or carry on any practice which may injure the demised
premises. (B) Burn anything in or about the demised premises. (C) Keep or
display any merchandise or other object on or otherwise obstruct any sidewalks,
walkways or areaways. (D) Use or permit the use of any portion of the demised
premises as living quarters, sleeping apartments, lodging rooms, or for any
unlawful purpose. (E) Use or permit the demised premises to be used for any
purpose which is or shall not then be allowed under the Zoning Ordinance of the
City of Menlo Park, California, in that area.
Section 7.4. Subject to Section 7.1. above, Tenant shall, at its expense,
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comply with all applicable laws, regulations, rules and orders regarding
Tenant's use of the demised premises, regardless of when they become or became
effective, including, without limitation, those relating
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to health, safety, noise, environmental protection, waste disposal, and water
and air quality, and furnish satisfactory evidence of such compliance upon
request of Landlord.
Section 7.5. Should any discharge, leakage, spillage, emission or
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pollution of any type occur upon or from the demised premises due to Tenant's
use and occupancy thereof, Tenant, at its expense, shall be obligated to remedy
the same to the satisfaction of Landlord and any governmental body having
jurisdiction thereover. Tenant agrees to indemnify, hold harmless, and defend
Landlord against all liability, cost, and expense (including without limitation
any fines, penalties, judgments, litigation costs, and attorneys' fees) incurred
by Landlord as a result of Tenant's breach of this section, or as a result of
any such discharge, leakage, spillage, emission, or pollution due to Tenant's
use and occupancy, regardless of whether such liability, cost, or expense arises
during or after the demised term, unless such liability, cost or expense is
proximately caused solely by the active negligence of Landlord.
Tenant shall pay all amounts due Landlord under this section, as additional
rent, within ten (10) days after any such amounts become due
Tenant shall, at least thirty (30) days prior to the termination of the
demised term, or any earlier termination of this Lease, submit a plan to the
Menlo Park Fire Protection District in accordance with applicable provisions of
the Uniform Fire Code, with a copy to Landlord, demonstrating how any hazardous
materials which were stored, dispensed, handled or used in, at or upon the
demised premises will be transported, disposed of or reused at the expiration or
sooner termination of the demised term of this Lease; and Tenant shall, at the
expiration or sooner termination of the demised term comply with all applicable
laws, regulations, rules and orders of any governmental body having jurisdiction
thereover (including without limitation the Menlo Park Fire Protection District)
regarding the disposal of any such hazardous materials.
Tenant's obligations under this Section 7.4. shall survive the expiration
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or earlier termination of this Lease, including without limitation any
termination resulting from any default by Tenant under the Lease.
Landlord represents that to the best of its knowledge there are no known
hazardous materials under, on or in the demised premises as of the execution
date of this Lease.
ARTICLE 8 - Use of Premises
Section 8.1. Tenant shall use the demised premises solely for general
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office, administration, data networking and customer service center purposes and
other related legal uses and for no other purposes without Landlord's written
consent, which consent shall not be unreasonably withheld.
ARTICLE 9 - Indemnity and Public Liability Insurance
Section 9.1. Tenant agrees to indemnify and save harmless Landlord from
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and against all claims arising from any act, omission or negligence of Tenant,
or its contractors, licensees, agents, servants, invitees or employees, or
arising from any accident, injury or damage whatsoever caused to any person, or
to the property of any person occurring during the demised
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[Missing page to come]
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(B) the proceeds of any such insurance policy if Landlord keeps the building and
the demised premises insured against loss or damage by such fire and extended
coverage insurance to the extent of at least eighty percent (80%) of the
insurable value of the building with a replacement cost endorsement (or
otherwise for the full replacement value) to the extent reasonably obtainable
from responsible insurance companies licensed to do business in California.
unless Landlord nevertheless elects to repair and/or rebuild the building and
the demised premises Tenant shall in the event of any such damage or destruction
unless this Lease shall be terminated as hereinafter provided, be responsible
for replacing or repairing all exterior signs, trade fixtures, equipment,
display cases, and other installations originally installed by the Tenant.
Tenant shall have no interest in the proceeds of any insurance carried by
Landlord.
Section 10.2. Tenant's base rent shall be abated proportionately during
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any period in which, by reason of any such damage or destruction, the building
is rendered partially or totally untenantable. Such abatement shall continue for
the period commencing with such destruction or damage and ending with the
substantial completion by the Landlord of such work or repair and/or
reconstruction as Landlord is obligated to do.
Section 10.3. If the building on the demised premises should be damaged or
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destroyed to the extent of 33-1/3% or more of the then monetary value thereof by
an event described in Section 10.1., then Landlord may terminate this Lease by
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written notice to Tenant.
Notwithstanding anything to the contrary in this Lease, if: (i) Landlord
estimates that the demised premises cannot be fully repaired or restored within
a two hundred and seventy (270) day period from the date of such damage and
destruction; or (ii) Landlord commences such repair but fails (subject to
Unavoidable Delay but in no event more than an additional ninety (90) days) to
complete such restoration within such two hundred seventy (270) day period;
then, in either such case, Tenant may, at its option, terminate this Lease
immediately upon notice to Landlord given within ten (10) days of such damage,
or the expiration of such two hundred seventy (270) day period (subject to an
additional 90 days due to an Unavoidable Delay), unless Landlord completes such
restoration before the expiration of any such ten day period, as the case may
be, and the obligation of Tenant, if any, to pay rent to Landlord shall
terminate as of ten (10) days after the date of Tenant's notice.
If neither party elects to terminate this Lease then Landlord shall repair
and/or rebuild the same as provided in Section 10.1. If such damage or
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destruction occurs and this Lease is not so terminated, this Lease shall remain
in full force and effect and the parties waive the provisions of any law to the
contrary. The Landlord's obligation under this Section shall in no event exceed
the scope of the work to reconstruct the building to the condition existing at
the time Landlord delivered possession of the demised premises to Tenant.
Section 10.4. Tenant agrees to comply with all of the regulations and
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rules of the Insurance Service Office or any similar body and will not do,
suffer, or permit an act to be done in or about the demised premises which will
increase any insurance rate with respect thereto.
Section 10.5. Tenant agrees, in addition to any rent provided for herein,
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to pay to the Landlord the cost of the fire and extended coverage insurance
policy carried by Landlord on the demised premises during the entire demised
term or any renewal or extension thereof. This
11
Section expressly requires the Landlord to carry the standard fire and extended
coverage policies described in Section 10.1. above (if available).
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Section 10.6. During the demised term, Tenant shall carry, at its expense,
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insurance against loss and damage by fire with an "All Risk" endorsement for the
full insurable value of Tenant's merchandise, trade fixtures, furnishings,
operating equipment and personal property, including wall coverings, carpeting
and drapes, if installed by Tenant. Landlord and Landlord's mortgagee shall be
named as additional insureds under said policy, which shall be noncancellable
with respect to Landlord and Landlord's mortgagee without twenty (20) days'
prior written notice. A certificate evidencing such coverage shall be delivered
to Landlord prior to commencement of the demised term and thereafter thirty (30)
days prior to the expiration of the term of such policy. Such insurance shall be
written as a primary policy, not contributing with and not in excess of coverage
Landlord may carry. If Tenant shall not comply with its covenants to maintain
said insurance, or if Tenant fails to provide a certificate thereof to Landlord,
Landlord may, but shall not be required to, obtain any such insurance, and if
Landlord does obtain any such insurance, Tenant shall, on demand, reimburse
Landlord for the premium for any such insurance.
Section 10.7. In the event the building on the demised premises shall be
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damaged as a result of any flood, earthquake act of war, nuclear reaction,
nuclear radiation or radioactive contamination, or from any other casualty not
covered by Landlord's fire and extended coverage insurance (or any other
additional insurance actually carried by Landlord) to the extent of One Hundred
Thousand Dollars ($100,000.00) or more, Landlord may within ninety (90) days
following the date of such damage, commence repair, reconstruction or
restoration of the building and prosecute the same diligently to completion in
which event this Lease shall continue in full force and effect so long as said
completion can be completed within two hundred seventy (270) days (subject to
Unavoidable Delay but in no event more than an additional ninety (90) days) or
within thirty (30) days from the date of destruction. Landlord can elect not to
repair, in which event this Lease shall terminate. In either event, Landlord
shall give Tenant written notice of its intention within thirty (30) days of the
damage or destruction.
Section 10.8. Upon any termination of this Lease under the provisions of
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this Article 10, the rent shall be adjusted as of the date of such termination
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and the parties shall be released without further obligation to the other party
upon the surrender of possession of the demised premises to Landlord, except for
items that have been theretofore accrued and are then unpaid, and except for
obligations that are designated as surviving such termination.
Section 10.9. Notwithstanding anything in this Article 10 or elsewhere in
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this Lease to the contrary, Landlord may maintain any insurance on the demised
premises that Landlord deems necessary or reasonably advisable, including, but
not limited to, any rental insurance (not to exceed one (1) year's rent),
owner's protective liability insurance or any insurance required by any
mortgagee of Landlord; and Landlord may include the amount of the premiums for
such insurance in the total of the insurance premiums which Tenant is required
to pay under the terms hereof. Landlord agrees that it will only secure
earthquake or flood insurance if available at commercially reasonable rates.
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Section 10.10. Notwithstanding any other provision of this Lease to the
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contrary, Landlord and Tenant each hereby waive all rights of action against the
other for loss or damage to the demised premises or any property of Landlord and
Tenant in the demised premises, which loss or damage is insured, or is required
pursuant to this Lease to be insured, by valid and collectible insurance
policies to the extent of the proceeds collected or collectible under such
insurance policies, subject to the condition that this waiver shall be effective
only when the waiver is permitted by such insurance policies or when, by the use
of good faith effort or the payment of an additional premium, such waiver could
have been permitted in the applicable insurance policies. The policies of
casualty insurance required to be maintained by Landlord at Tenant under the
terms of this Lease shall contain waiver of subrogation clauses.
ARTICLE 11 - Repair
Section 11.1. Landlord agrees, at Landlord's sole expense, to repair
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structural defects of the building on the demised premises throughout the life
of the Lease. Structural defects and maintenance shall not be deemed to include
cracks or fissures in walls or floors, nor the requirement of painting or
caulking.
Section 11.2. Tenant agrees during the demised term or any extension
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thereof to maintain the interior non-structural portions of the building on the
demised premises, and every part thereof, except as to work to be performed by
Landlord under Sections 11.1. and 11.3. Tenant further agrees to clean, inside
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and out, all of the glass on the exterior of the building. If Tenant should fail
to faithfully perform its maintenance obligations hereunder then Landlord shall,
upon having given written notice to Tenant of the need for said maintenance, and
upon Tenant's failure to so perform, have the right to perform, or cause to be
performed, said maintenance and Tenant shall on demand reimburse Landlord for
Landlord's costs of providing such maintenance. Landlord's reservation of the
right to enter upon the demised premises to perform any repairs or maintenance
or other work in, to, or about the demised premises which in the first instance
is the Tenant's obligation pursuant to this Lease shall not be deemed to impose
any obligation on Landlord to do so, nor shall Landlord be rendered liable to
Tenant or any third party for the failure to do so, and Tenant shall not be
relieved from any obligation to indemnify Landlord as otherwise provided
elsewhere in this Lease.
Section 11.3. Landlord shall provide the following services and Tenant
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shall, in addition to all other payments required to be made under other
provisions of this Lease, on demand reimburse Landlord for Landlord's gross
costs of: (i) maintaining, repairing and replacing the roof; (ii) painting,
maintaining and repairing the exterior of the building; (iii) maintaining,
repairing and replacing the elevator and elevator equipment room (if any); (iv)
maintenance and repair associated with the mechanical and electrical rooms; (v)
maintenance and repair of the trash enclosure utilized in connection with the
building; (vi) maintenance, repair and replacement of the glass on the exterior
of the building and (vii) any other maintenance and repair other than that which
Landlord is required to perform at Landlord's expense per Section 11.1. Tenant
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shall also, on demand, reimburse Landlord for Landlord's gross costs of
maintaining, repairing and replacing the heating and air conditioning equipment
serving the demised premises, whether furnished by Landlord or Tenant.
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If at any time during the demised term Landlord reasonably anticipates that
Landlord will expend in excess of Twenty Thousand Dollars ($20,000.00) for any
one (1) single, non-emergency maintenance, repair or replacement of an item
mentioned in this Section 11.3, or in Article 18, then, provided Tenant is not
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in default under the terms of this Lease beyond applicable cure periods,
Landlord will use its reasonable efforts to advise Tenant in advance of making
such expenditure. At Tenant's request, which request must be delivered to
Landlord within five (5) calendar days after Tenant's receipt of Landlord's
notification, Landlord shall obtain at least two (2) bids from responsible
contractors selected by Landlord for the maintenance, repair or replacement of
said item, and Landlord shall choose the contractor to do such necessary
maintenance, repair or replacement work from such bids, or obtain additional
bids, in Landlord's sole reasonable, business judgement. The provisions
contained herein shall not apply to any work (regardless of the cost) to be
performed by Landlord in an emergency or necessitated by Tenant's negligent act
or omission.
Landlord's said gross costs as used in this Section 11.3. shall include all
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costs and expenses of every kind or nature incurred by Landlord in the
performance of such maintenance, repair or replacements and Landlord's
determination of the amount of said costs and expenses will be final.
Section 11.4. If during the term of this Lease Landlord or Landlord's
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insurance carrier reasonably requires the installation of an Ansul Fire Control
System or its equivalent, or any fire detection device, because of the nature of
the particular activities being carried on by Tenant in the demised premises,
then said system or device shall be installed at the sole cost of the Tenant
within the time specified.
Section 11.5. Landlord agrees that it will deliver the demised premises to
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Tenant with the existing roof, mechanical, HVAC, electrical, plumbing, and
lighting systems of the building on the demised premises in good operating
condition and repair.
Section 11.6. Landlord shall be responsible for all costs relating to
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making the exterior of the building of which the demised premises is a part and
the Parking and Accommodation Areas comply with the provisions of the Americans
with Disabilities Act ("ADA") in effect prior to commencement of this Lease,
provided such costs are not necessitated by any work performed by or for Tenant
hereunder. Tenant shall be responsible, at Tenant's sole cost and expense, for
all work necessary to make the demised premises comply with the ADA which is
required as a condition of issuance of any building permit for the Tenant
Improvements in the demised premises and, in any event, all ADA compliance
required of the demised premises during the demised term hereof after Landlord
delivers possession of the demised premises to Tenant, and/or the costs of ADA
compliance arising with respect to the Parking and Accommodation Areas after the
commencement of the demised term.
ARTICLE 12 - Fixtures & Alterations
Section 12.1. All trade fixtures owned by Tenant and installed in the
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demised premises shall remain the property of Tenant and may be removed from
time to time and shall be removed at the expiration of the demised term. Tenant
shall repair any damage to the demised premises caused by the removal of said
fixtures. If Tenant fails to remove such fixtures on or before the
14
last day of the demised term, all such fixtures shall become the property of
Landlord, unless Landlord elects to require their removal, in which case Tenant
shall promptly remove them and restore the demised premises to its condition
prior to such removal. Landlord may also, at Landlord's sole discretion, store
such fixtures at Tenant's expense.
Section 12.2. Tenant shall not make any alterations, additions or
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improvements in or to the demised premises or the building without submitting
plans and specifications therefor for the prior written consent of Landlord,
which consent shall not be unreasonably withheld and, if granted, may be subject
to such conditions as Landlord may reasonably deem appropriate: except that the
consent of Landlord shall not be needed for non-structural interior repairs,
alterations, additions or improvements which cost less than Twenty-Five Thousand
Dollars ($25,000.00) per occurrence and which do not affect the sprinkler system
and/or the mechanical/electrical system or require removal or modification of
improvements installed by Landlord and provided that Tenant shall notify
Landlord of any such changes and shall provide Landlord with as-built plans
thereof in IBM-compatible AutoCAD format or such other format which compatible
to Landlord's computer aided design software. Any such alterations, additions or
improvements consented to by Landlord (or for which Landlord's consent is not
required) shall be made at Tenant's sole cost and expense in accordance with
plans and specifications therefor and Tenant agrees to provide Landlord with an
"as-built" set of plans and specifications in IBM-compatible AutoCAD format or
such other format which is compatible to Landlord's computer aided design
software after any such work is completed. Tenant shall secure any and all
governmental permits, approvals or authorizations required in connection with
any such work, and shall hold Landlord harmless from any and all liability,
costs, damages, expenses (including attorneys' fees) and any and all liens
resulting therefrom. All alterations, decorations, additions and improvements
(and expressly including all light fixtures and floor coverings installed by
Tenant), except furniture, removable paneling, wall fixtures, trade fixtures,
appliances and equipment which do not become a part of the demised premises,
shall be deemed to belong to Tenant, but shall be deemed to have been attached
to the demised premises or the building and to have become the property of
Landlord upon the termination of the demised term. Upon the expiration or sooner
termination of the demised term hereof, Tenant shall, if Landlord has made
written demand at the time of providing its consent, or for such improvements
made by Tenant for which Landlord's consent is not required as Provided
hereinabove, then upon written demand by Landlord, at Tenant's sole cost and
expense, forthwith remove any alterations, decorations, additions or
improvements made by Tenant, designated by Landlord to be removed, and Tenant
shall forthwith at its sole cost and expense repair any damage to the demised
premises or the building caused by such removal.
ARTICLE 13 - Remedies
Section 13.1. Should Tenant default in the performance of any of its
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obligations under this Lease with reference to the payment of rent and such
default continue for five (5) days after the date of written notice that such
payment is due, or should Tenant default in the performance of any other
obligations under this Lease and such default continue for thirty (30) days
after receipt of written notice from Landlord specifying such default or beyond
the time reasonably necessary to cure if such default is of a nature to require
more than thirty (30) days to remedy,
15
then, in addition to all other rights and remedies Landlord may have under this
Lease or under applicable law, Landlord shall have the following rights and
remedies:
(1) The Landlord has the remedy described in California Civil Code Section
1951.4 (Landlord may continue the lease in effect after Tenant's breach and
abandonment and recover rent as it becomes due, if Tenant has the right to
sublet or assign, subject only to reasonable limitations). If Tenant breaches
any covenants of this Lease or if any event of default occurs, whether or not
Tenant abandons the demised premises, this Lease shall continue in effect until
Landlord terminates Tenant's right to possession, and Tenant shall remain liable
to perform all of its obligations under this Lease and Landlord may enforce all
of Landlord's rights and remedies, including the right to recover rent as it
falls due. If Tenant abandons the demised premises or fails to maintain and
protect the same as herein provided, Landlord shall have the right to do all
things necessary or appropriate to maintain, preserve and protect the demised
premises, including the installation of guards, and may do all things
appropriate to a re-letting of the demised premises, and none of said acts shall
be deemed to terminate Tenant's right of possession, unless Landlord elects to
terminate the same by written notice to Tenant. Tenant agrees to reimburse
Landlord on demand for all amounts reasonably expended by Landlord in
maintaining, preserving and protecting the demised premises, together with
interest on the amounts expended from time to time at the maximum legal rate.
Landlord shall also have the right to repair, remodel and renovate the demised
premises at the expense of Tenant and as deemed reasonably necessary by
Landlord.
(2) Landlord shall have the right to terminate Tenant's possession of the
demised premises, and if Tenant's right to possession of the demised premises is
terminated by Landlord by reason of a breach of this Lease by Tenant, or by
reason of the happening of an event of default, or by reason of abandonment of
the demised premises by Tenant, Tenant agrees to pay to Landlord on demand (i)
all unpaid rent earned at the time of termination, together with interest on all
unpaid installments from the times they were due to the date of termination at
the maximum legal rate; (ii) the amounts by which the unpaid rent which would
have been due and payable by Tenant since the date of termination exceeds the
amount of any rental loss that Tenant proves could have been avoided, together
with interest on said amounts from the dates they were due at the maximum legal
rate; (iii) the worth at the time of the award of the amount by which the unpaid
rent for the balance of the term of this Lease exceeds the amount of rental loss
that Tenant proves may reasonably be avoided, together with interest on such
amount at the maximum legal rate from the date of the award until paid; (iv) all
other amounts due Landlord from Tenant under the terms of this Lease, or
necessary to compensate Landlord for all detriment caused by Tenant's failure to
perform its obligations under this Lease. The right to possession of the demised
premises by Tenant should not be deemed terminated until Landlord gives Tenant
written notice of such termination or until Landlord re-lets all or a portion of
the demised premises. In the event that Landlord seeks to recover the amount
due, Landlord shall be entitled to recover the amounts specified in paragraphs
(a) (1), (a) (2) and (a) (4) of Section 1951.2 of the Civil Code of California
as such section reads at the date of this Lease, together with interest on said
amounts at the maximum legal rate from the dates they were due, computed as of
the date of the award, together with the worth at the time of the award of the
amount by which the unpaid rent for the balance of the term exceeds the amount
of such rental loss that Tenant proves could reasonably have been avoided.
Landlord shall be required to mitigate damages by making a good faith effort to
re-let the demised premises.
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(3) No right or remedy herein conferred upon or reserved to Landlord is
intended to be exclusive of any other right or remedy herein or by law, provided
that each shall be cumulative and in addition to every other right or remedy
given herein or now hereafter existing at law or in equity or by statute.
Section 13.2. Landlord shall in no event be in default in the performance
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of any of its obligations hereunder unless and until Landlord shall have failed
to perform such obligations within thirty (30) days or such additional times as
is reasonably required to correct any such default after notice by Tenant to the
Landlord properly specifying wherein the Landlord has failed to perform any such
obligation.
ARTICLE 14 - Bankruptcy
Section 14.1. Tenant shall give written notice to Landlord of its
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intention to commence proceedings under any state or federal insolvency or
bankruptcy law, or any comparable law that is now or hereafter may be in effect,
whereby Tenant seeks to be, or would be, discharged of its debts or the payment
of its debts is sought to be delayed, at least thirty (30) days prior to the
commencement of such proceedings.
Section 14.2. If any of the following events occur:
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(1) The entry of an order for relief under Title 11 of the United States
Code as to Tenant or its executors, administrators or assigns, if any, or the
adjudication of Tenant or its executors, administrators or assigns, if any, as
insolvent or bankrupt pursuant to the provisions of any state insolvency or
bankruptcy act;
(2) The appointment of a receiver, trustee or other custodian of the
property of Tenant by reason of the insolvency or inability of Tenant to pay its
debts;
(3) The assignment of the property of Tenant for the benefit of creditors;
(4) The commencement of any proceedings under any state or federal
insolvency or bankruptcy law, or any comparable law that is now or hereafter may
be in effect, whereby Tenant seeks to be, or would be, discharged of its debts
or the payment of its debts is sought to be delayed;
(5) The failure of Tenant to give written notice to Landlord provided for
in Section 14.1. above;
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then Landlord may, at any time thereafter, in addition to any and all other
rights or remedies of Landlord under this Lease or under applicable law, upon
written notice to Tenant, terminate this Lease in accordance with state and/or
federal laws, and upon such notice this Lease shall cease and terminate with the
same force and effect as though the date set forth in said notice were the date
originally set forth herein and fixed for the expiration of the demised term.
Tenant shall thereupon vacate and surrender the demised premises, but shall
remain liable as herein provided.
17
ARTICLE 15 - Surrender of Premises
Section 15.1. Tenant shall, upon termination of the demised term, or any
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earlier termination of this Lease, surrender to Landlord the demised premises,
including, without limitation, all building equipment and apparatus, and
fixtures (except as provided in Sections 12.1. and 12.2.) then upon the demised
-------------- -----
premises without any damage, injury, or disturbance thereto, or payment
therefor, except damages due to ordinary wear and tear, acts of God, fire and
other perils to the extent the demised premises are not required to be repaired
or restored as herein before provided, and Tenant shall dispose of any hazardous
materials stored, dispensed, handled or used in, at or upon the demised premises
in accordance with the provisions of Section 7.4.
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ARTICLE 16 - Eminent Domain
Section 16.1. If more than thirty-three percent (33%) of the floor area of
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the building on the demised premises shall be taken under the power of eminent
domain and the portion not so taken will not be reasonably adequate for the
operation of Tenant's business after the Landlord completes such repairs or
alterations as the Landlord is obligated or elects to make, Tenant shall have
the right to elect either to terminate this Lease, or, subject to Landlord's
right to terminate the Lease pursuant to Section 16.4., to continue in
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possession of the remainder of the demised premises and shall notify Landlord in
writing within ten (10) days after such taking of Tenant's election. In the
event less than thirty-three percent (33%) of the floor area of the building on
the demised premises shall be taken or Tenant elects to remain in possession, as
provided in the first sentence hereof, all of the terms herein provided shall
continue in effect, except that the base rent shall be reduced in the same
proportion that the floor area of the building on the demised premises taken
bears to the original floor area of the building on the demised premises, and
Landlord shall at its own cost and expense make all necessary repairs or
alterations to the building so as to constitute the portion of the building not
taken a complete architectural unit and the demised premises a complete unit for
the purposes allowed by this Lease, but such work shall not exceed the scope of
the work to be done by Landlord in originally constructing said building.
Section 16.2. Each party waives the provisions of Code of Civil Procedure
-------------
Section 1265.130 allowing either party to petition the Superior Court to
terminate this Lease in the event of a partial taking.
Section 16.3. All damages or awards for any taking under the power of
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eminent domain whether for the whole or a part of the demised premises shall
belong to and be the property of Landlord whether such damages or awards shall
be awarded as compensation for diminution in value to the leasehold or to the
fee of the demised premises; provided however, that Landlord shall not be
entitled to the award made to Tenant or Landlord for loss of business,
depreciation to, and cost or removal of stock and fixtures and for leasehold
improvements which have been installed by Tenant at its sole cost and expense
less depreciation which is to be computed on the basis of completely
depreciating such leasehold improvements during the initial term of this Lease,
and any award made to Tenant in excess of the then depreciated value of
leasehold improvements shall be payable to the Landlord.
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Section 16.4. If more than thirty-three percent (33%) of the floor areas
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of the building on the demised premises shall be taken under power of eminent
domain, or if more than fifteen percent (15%) of the Parking and Accommodation
Areas shall be so taken, Landlord may, by written notice to Tenant delivered on
or before the date of surrendering possession to the public authority pursuant
to such taking, terminate this Lease as of such date.
Section 16.5. If this Lease is terminated as provided in this Article, the
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rent shall be paid up to the day that possession is so taken by public authority
and Landlord shall make a prorate refund of any rent and all deposits paid by
Tenant in advance and not yet earned.
ARTICLE 17 - Real Property Taxes
Section 17.1. Tenant shall reimburse Landlord for all real property taxes,
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assessments and ongoing sewer fees applicable to the demised premises. Taxes
shall be prorated to lease years for purpose of making this computation. Such
payment shall be made by Tenant within thirty (30) days after receipt of
Landlord's written statement setting forth the amount of such computation
thereof. If the demised term of this Lease shall not expire concurrently with
the expiration date of the fiscal tax year, Tenant's liability for taxes for the
last partial lease year shall be prorated on an annual basis.
Section 17.2. If the demised premises are not separately assessed,
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Tenant's liability shall be an equitable proportion of the real property taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be determined by Landlord from the respective valuations
assigned in the assessor's work sheets or such other information as may be
reasonably available. Landlord's reasonable determination thereof, in good
faith, shall be conclusive.
Section 17.3. Tenant shall pay prior to delinquency all taxes assessed
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against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Tenant contained in the demised premises or elsewhere.
Tenant shall cause said trade fixtures, furnishings, equipment and all other
personal property to be assessed and billed separately from the real property of
Landlord.
If any of Tenant's said personal property shall be assessed with Landlord's
real property, Tenant shall pay Landlord the taxes attributable to Tenant within
ten (10) days after receipt of a written statement setting forth the taxes
applicable to Tenant's property.
Section 17.4. In addition to all other payments provided for herein, the
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Tenant shall on demand reimburse Landlord for any surcharges, fees, and any
similar charges required to be paid by any instrumentality of local, state or
federal government in connection with parking in the parking area, including
policing; supervising with attendants; other costs in connection with providing
charged parking; repairs, replacements and maintenance not properly chargeable
to capital account under good accounting principles; interest and depreciation
of the actual cost of modification or improvements to the areas, facilities and
improvements maintained in this Article either (i) required by any
instrumentality of local, state or federal government, or (ii) installed by
Landlord to facilitate payment of a parking charge by the general public for
parking in the parking area, or both, and other similar costs; and there shall
be excluded (a) cost
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of construction of such improvements which is properly chargeable to capital
account and (b) depreciation of the original cost of construction of all items
not previously mentioned in this sentence. If Landlord shall require the payment
of a parking charge by the general public for parking in the parking area, then
during any period in which such a charge is made the total revenue (after
deducting excise and similar taxes thereon and taxes, fees or surcharges imposed
by any agency or instrumentality of local, state or federal government) actually
received in cash or its equivalent by Landlord for such parking charge shall be
credited against said gross costs.
Section 17.5. Notwithstanding the provisions of Article 17 hereinabove,
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Tenant shall pay any increase in "real property taxes" resulting from any and
ail improvements of any kind whatsoever placed on or in the demised premises for
the benefit of or at the request of Tenant regardless of whether said
improvements were installed or constructed either by Landlord or Tenant.
Section 17.6. In addition to ail other payments provided for herein, the
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Tenant shall on demand reimburse Landlord for any tax (excluding income tax)
and/or business license fee or other levy that may be levied, assessed or
imposed upon the rent or other payments provided for herein or on the square
footage of the demised premises, on the act of entering into this Lease, or on
the occupancy of the Tenant however described, as a direct substitution in whole
or in part for, or in addition to, any real property taxes, whether pursuant to
laws presently existing or enacted in the future.
Section 17.7. Notwithstanding anything to the contrary contained in this
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Lease, real property taxes shall not include, and Tenant shall not be obligated
to pay, any of the following: (a) interest on taxes or penalties resulting from
Landlord's failure to taxes, or (b) transfer, gift or franchise taxes.
ARTICLE 18 - Parking and Accommodation Areas
Section 18.1. Landlord grants to Tenant during the demised term the
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nonexclusive right to use the parking facilities and other areas provided and
designated as "Parking and Accommodation Areas" on Exhibit "B" hereto for the
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accommodation and parking of such automobiles of the Tenant, its officers,
agents, employees and its customers while working or visiting Tenant. Tenant
agrees that its officers, agents and employees will park their automobiles only
in the parking areas provided in the Parking and Accommodation Areas, and Tenant
specifically agrees that such officers, agents and employees will not park on
any public streets in the vicinity of the demised premises. Except as provided
in Section 17.4., Landlord shall not charge parking fees for such right to use
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parking facilities.
Section 18.2. All parking areas and facilities furnished by Landlord
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including, but not limited to, pedestrian sidewalks, landscaped areas and
parking areas shall at all times be subject to the control and management of
Landlord so that Landlord will be in a position to make available efficient and
convenient use thereof, and Landlord shall have the right from time to time to
establish, modify and enforce reasonable rules and regulations with respect to
all facilities and areas mentioned in this Article, and Tenant agrees to abide
by and conform therewith. Landlord shall have the right to construct, maintain
and operate lighting facilities on all of said areas and improvements, to police
the same, from time to time to change the area,
20
location and arrangement of parking areas and facilities, to restrict employee
parking to employee parking areas, to construct surface, subterranean and/or
elevated parking areas and facilities, to establish and from time to time change
the level of parking surfaces, to close (if necessary) all or any portion of
said areas or facilities to such extent as may in the opinion of Landlord's
counsel be legally sufficient to prevent a dedication thereof or the accrual of
any rights of any person or of the public therein, and to do and perform such
other acts in and to said areas and improvements respectively as in the use of
good business judgment the Landlord shall determine to be advisable with a view
to the improvement of the convenience and use thereof by Tenant, other lessees,
and their respective employees and visitors.
Section 18.3. Tenant agrees during the demised term to pay to Landlord an
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annual charge which shall be Landlord's actual gross costs of operating,
maintaining and/or replacing all of the areas and facilities mentioned in this
Article. The annual charge shall be an estimate computed on the basis of periods
of twelve (12) consecutive calendar months, commencing and ending on such dates
as may be designated by Landlord, and shall be paid in monthly installments on
the first day of each calendar month in the amount estimated by Landlord. Within
ninety (90) days after the end of each such annual period, Landlord will
determine (and furnish to Tenant a statement showing in reasonable detail) the
actual annual charge for such period and the amounts so estimated and paid
during such period shall be adjusted within such ninety (90) days (including
adjustments on a prorate basis of any partial such period at either end of the
demised term) and one party shall pay to the other on demand whatever amount is
necessary to effectuate such adjustment.
Landlord's said gross costs shall consist of and include all costs and
expenses of xxxxx kind or nature incurred by Landlord in the operation,
maintenance and/or replacement of all of the areas, facilities and improvements
mentioned in this Article determined in accordance with good accounting practice
by an accountant employed by Landlord. The determination of such accountant
shall be conclusive. Without otherwise limiting the generality of the foregoing,
there shall be included in such gross costs public liability and property damage
insurance, landscape maintenance, maintenance of utilities, water, cleaning of
areas, facilities and improvements, operation of lighting, common area taxes and
assessments determined in the same manner as taxes and assessments on the
demised premises, policing and sweeping of parking areas, supervising with
attendants, repairs, replacements and maintenance, and an amount equal to ten
percent (10%) of the total of all of the above for administration of the Parking
and Accommodation Areas.
Section 18.4. The Parking and Accommodation Areas included for the purpose
-------------
of this Article are those shown on Exhibit "B" outside of the building area.
-----------
Section 18.5. Notwithstanding anything to the contrary contained in this
-------------
Lease, gross costs shall not include, and Tenant shall not be required to pay,
any of the following: (a) legal fees, brokerage commissions, advertising costs,
or other related expenses incurred in connection with the leasing of the
Building or defense of Landlord's title to or interest in the building or any
part thereof; (b) repairs, alterations, additions, improvements or replacements
made to rectify or correct any latent defect in the design, materials or
workmanship of the Building; (c) damage and repairs attributable to fire or
other casualty except as otherwise provided herein and except for applicable
deductibles; (d) damage and repairs necessitated by the negligence or willful
21
misconduct of Landlord or Landlord's agents, employees or contractors and not
covered by insurance carried or required to be carried by Tenant hereunder; (e)
executive salaries or salaries of service personnel to the extent that such
service personnel perform services other than in connection with the management,
operation, repair or maintenance of the Building or Parking and Accommodation
Areas (to the extent not covered by the administrative fee described in Section
18.3; above); (f) the cost of any service provided to Tenant for which Landlord
is reimbursed by others; and (g) payment of principal or interest on any
mortgage or other encumbrance or any costs or expenses related thereto.
Tenant's obligation to reimburse Landlord for the cost of a Capital
Expenditure (as used in this Section 18.5., "Capital Expenditure" shall be any
one (1) single improvement, alteration, repair or replacement which costs in
excess of Twenty Five Thousand Dollars ($25,000.00) individually in any one
calendar year) made by Landlord pursuant to Article 11 and/or Article 18 of this
Lease during the demised term and required under good accounting practice to be
amortized, shall be calculated by multiplying the cost of any such Capital
Expenditure by a fraction, the numerator of which is the number of years (both
elapsed and not elapsed) in the demised term, including any option period which
has been (or is subsequently) exercised by Tenant, and the denominator of which
is the number of years in the estimated useful life of the Capital Expenditure
based on good accounting practice (the foregoing limitation shall not apply to
any costs for Capital Expenditures made necessary on account of: (i) negligent
acts or omissions of Tenant or its agents, employees, invitees or contractors;
(ii) the particular nature of Tenant's business or operations; or (iii)
equipment furnished by Tenant and maintained by Landlord). Tenant shall pay any
such amounts, as additional rent, monthly on a straight-line basis amortized
over the remaining demised term of the Lease, including any option period which
has been (or is subsequently) exercised by Tenant, using an interest rate equal
to ten percent (10%) per annum.
Section 18.6. Tenant's internal accountant shall have the right at
-------------
Tenant's own cost and expense to inspect Landlord's records (not more than once
in any calendar year) with respect to all gross costs payable by Tenant under
this Lease for any Fiscal Year of Landlord during the demised term. Tenant shall
give Landlord not less than thirty (30) days' prior written notice of its
intention to conduct any such inspection which such inspection shall be
conducted in Landlord's offices during normal business hours, Landlord will
allow Tenant to use Landlord's copying facilities subject to reimbursement by
Tenant to Landlord of the reasonable cost of copying. Tenant's right to inspect
Landlord's records shall apply only to those records for the Fiscal Year
immediately preceding the Fiscal Year during which the inspection is made.
Landlord will reimburse Tenant for any such gross costs which are found to have
been overstated. Tenant's right to inspect is conditioned upon Tenant, and
Tenant's internal accountant, executing appropriate confidentiality agreements
acceptable to Landlord agreeing to keep the results of any such inspection
confidential.
ARTICLE 19 - Miscellaneous
Section 19.1. Landlord and its designee shall have the right during
-------------
reasonable business hours to enter the demised premises except restricted areas
as established by or on behalf of the Federal Government for security purposes
(and in emergencies at all times), (i) to inspect the
22
same, (ii) for any purpose connected with Landlord's rights or obligations under
this Lease and, (iii) for all other lawful purposes.
Section 19.2. Landlord and its designee shall have the right during
-------------
reasonable business hours to enter the demised premises except restricted areas
as established by or on behalf of the Federal Government for security purposes
(and in emergencies at all times), (i) to inspect the same, (ii) for any purpose
connected with Landlord's rights or obligations under this Lease and, (iii) for
all other lawful purposes.
Section 19.3. This Lease shall be governed exclusively by the provisions
-------------
hereof and by the laws of the State of California as the same from time to time
exist. This Lease expresses the entire understanding and all agreements of the
parties hereto with each other and neither party hereto has made or shall be
bound by any agreement or any representation to the other party which is not
expressly set forth in this Lease.
Section 19.4. If Tenant should hold over after the demised term and any
-------------
extension thereof as herein provided for, then such holding over shall be
construed as a tenancy from month to month at a rent equal to one hundred fifty
percent (150%) that provided for under the monthly rental of the principal term
of this Lease.
Section 19.5. Tenant agrees to maintain all toilet and washroom facilities
------------
within the demised premises in a neat, clean and sanitary condition.
Section 19.6. Landlord covenants and agrees that Tenant, subject to the
-------------
terms and provisions of this Lease, on paying the rent and observing, keeping
and performing all of the terms and provisions of this Lease on its part to be
observed, kept and performed, shall lawfully, peaceably and quietly have, hold,
occupy and enjoy the demised premises during the demised term without hindrance
or ejection by any person lawfully claiming under or against the Landlord.
Section 19.7. Subject to Article 6, the terms and provisions hereof shall
--------------
be construed as running with the land and shall be binding upon and inure to the
benefit of heirs, executors, administrators, successors and assigns of Landlord
and Tenant.
Section 19.8.
-------------
A. Tenant shall promptly pay all sums of money with respect to any labor,
services, materials, supplies or equipment furnished or alleged to have been
furnished to Tenant in, at or about the demised premises, or furnished to
Tenant's agents, employees, contractors or subcontractors, that may be secured
by any mechanic's, materialmen's, supplier's or other liens against the demised
premises or Landlord's interest therein. In the event any such or similar liens
shall be filed, Tenant shall, within three (3) days of receipt thereof, give
notice to Landlord of such lien, and Tenant shall, within ten (10) days after
receiving notice of the filing of the lien, discharge such lien by payment of
the amount due to the lien claimant. However, Tenant may in good faith contest
such lien provided that within such ten (10) day period Tenant provides Landlord
with a surety bond from a company acceptable to Landlord, protecting against
said lien in an amount at least one and one-half (1-1/2) times the amount
claimed or secured as a lien or such greater amount as may be required by
applicable law; and provided further that Tenant, if it
23
should decide to contest such lien, shall agree to indemnify, defend and save
harmless Landlord from and against all costs arising from or in connection with
any proceeding with respect to such lien. Failure of Tenant to discharge the
lien, or, if contested, to provide such bond and indemnification, shall
constitute a default under this Lease and in, addition to any other right or
remedy of Landlord, Landlord may, but shall not be obligated, to discharge or
secure the release of any lien by paying the amount claimed to be due, and the
amount so paid by Landlord, and all costs and expenses incurred by Landlord
therewith, including, but not limited to, court costs and reasonable attorneys'
fees, shall be due and payable by Tenant to Landlord forthwith on demand.
B. At least fifteen (15) days before the commencement by Tenant of any
material construction or remodeling work on the demised premises, Tenant shall
give written notice thereof to Landlord. Landlord shall have the right to post
and maintain on the demised premises such Notices of Non-Responsibility, or
similar notices, provided for under applicable laws.
Section 19.9.
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A. Tenant shall deposit with Landlord the sum specified in Section
2.4.(B) hereof as a "Security Deposit", which Security Deposit shall be reduced
during the demised term pursuant to the provisions of Section 2.4.(B). The
Security Deposit shall be held by Landlord as security for the faithful
performance of all the terms of this Lease to be observed and performed by
Tenant. The Security Deposit shall not be mortgaged, assigned, transferred or
encumbered by Tenant without the written consent of Landlord and any such act on
the part of Tenant shall be without force and effect and shall not be binding
upon Landlord.
B. If any of the rents herein reserved or any other sum payable by Tenant
to Landlord shall be overdue and unpaid, or should Landlord make payments on
behalf of Tenant, or should Tenant shall fail to perform any of the terms of
this Lease, then Landlord may, at its option and without prejudice to any other
remedy which Landlord may have on account thereof, apply the entire Security
Deposit, or so much thereof as may be necessary, to compensate Landlord toward
the payment of rent or additional rent, loss, or damage sustained by Landlord
due to such breach on the part of Tenant, and Tenant shall forthwith upon demand
restore said Security Deposit to the original sum deposited. Should Tenant
comply with all of said terms and pay all of the rent and ail other sums payable
by Tenant to Landlord, the remaining portion of said Security Deposit shall be
returned in full to Tenant at the end of the demised term.
C. In the event of bankruptcy or other similar proceedings listed in
Article 14 hereof, the Security Deposit shall be deemed to be applied first to
the payment of rent and other charges due Landlord for all periods prior to the
filing of such proceedings.
D. In the event Landlord delivers the Security Deposit to the purchaser
of Landlord's interest in the demised premises, Landlord, after written notice
to Tenant of said delivery, shall be discharged from any further liability with
respect to the Security Deposit. This provision shall also apply to any
subsequent transferees.
Section 19.10. All notices, statements, demands, requests, consents,
---------------
approvals, authorizations, offers, agreements, appointments or designations
hereunder by either party to the other shall be in writing and shall be
sufficiently given and served upon the other party or, if sent
24
by overnight carrier or United States certified mail, return receipt requested,
postage prepaid, and addressed as follows:
If sent to Tenant, the same shall be addressed to the Tenant at 0000
Xxxxxxxx Xxxxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000, or at such other place as Tenant
may from time to time designate by notice to Landlord.
If sent to Landlord, the same shall be addressed to Landlord at 00
Xxxxxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxx 00000-0000, or at such other place as
Landlord may from time to time designate by notice to Tenant.
Any such notice when sent by overnight carrier or certified mail as above
provided shall be deemed duly served on the third business day following the
date of such mailing.
Section 19.11. As used in this Lease and when required by the context,
---------------
each number (singular or plural) shall include all numbers, and each gender
shall include all genders; and unless the context otherwise requires, the word
"person" shall include corporation, firm or association.
Section 19.12. In case of litigation with respect to the mutual rights,
---------------
obligations, or duties of the parties hereunder, the prevailing party shall be
entitled to reimbursement from the other party of all costs and reasonable
attorneys' fees actually incurred.
Section 19.13. Each term and each provision of this instrument
--------------
performable by Tenant shall be construed to be both a covenant and a condition.
Section 19.14. Except as otherwise expressly stated, each payment
--------------
provided herein to be made by Tenant to Landlord shall be in addition to and not
in substitution for the other payments to be made by Tenant to Landlord.
Section 19.15. Time is and shall be of the essence of this Lease
---------------
and all of the terms, provisions, covenants and conditions hereof.
Section 19.16. The Tenant warrants that it has not had any dealings with
--------------
any realtor, broker, or agent in connection with the negotiation of this Lease
excepting only Xxxxxxx Xxxxxx and Cornish & Xxxxx Commercial, whom Landlord
agrees to pay whatever commission may be due. Each party agrees to hold the
other harmless from any cost, expense or liability for any compensation,
commissions or charges claimed by any realtor, broker, or agent with respect to
this Lease and/or the negotiation thereof with whom the other party has or
purportedly has dealt.
Section 19.17. Tenant agrees that its interest in this Lease shall be
---------------
subordinate to any mortgage, deed of trust and/or other security indenture
hereafter placed upon the demised premises and to any and all advances made or
to be made thereunder and to the interest thereon made and all renewals,
replacements, and extensions thereof, but nothing herein contained shall be
deemed to alter or limit Tenant's rights as set forth in Section 19.6. Tenant
shall, at the request of Landlord or any mortgagee, trustee or holder of any
such security instrument, execute in writing an agreement subordinating its
rights under this Lease to the lien of such mortgage, deed of trust and/or other
security indenture subject to a standard non-disturbance clause. If any
25
mortgagee, trustee or holder of such security instrument elects to have the
Tenant's interest in this Lease superior to any such instrument by notice to
Tenant, then this Lease should be deemed superior to the lien of any such
mortgage, deed of trust or security indenture whether this Lease was executed
before or after said mortgage, deed of trust and/or security indenture.
Section 19.18. Landlord reserves the right during the last six months of
--------------
the demised term of this Lease or the last six months of any extension hereof to
enter the property during normal working hours for the purpose of showing the
demised premises (except restricted areas established by, or on behalf of, the
Federal Government for security purposes) to prospective tenants or purchasers
and to place signs (for the last year) on the demised premises advertising the
property for lease or sale.
Section 19.19. The following terms as used in this Lease shall have the
--------------
following meaning:
(a) "Unavoidable Delay" means any prevention, delay or stoppage due
to strike(s), lockout(s), labor dispute(s), act(s) of God, inability to obtain
labor or materials or reasonable substitutes therefor, governmental
restrictions, governmental regulations, governmental controls, enemy or hostile
governmental action, civil commotion, fire or other casualty, and other
conditions or causes beyond the reasonable control of the party obligated to
perform.
(b) "Floor Area" shall mean the total constructed area of the
building on the demised premises. This area is computed by measuring to the
outside finished surface of permanent outer building wails, without any
deductions. All enclosed floors of the building are calculated.
Section 19.20. For the purposes of determining the base rent during the
--------------
option period (if any) contained in Section 1.2. of this Lease, the Fair Market
Rental Value shall be determined as follows: in Tenant's notice to Landlord
exercising the option to extend, Tenant shall advise Landlord of its estimate of
the Fair Market Rental Value for the demised premises (including interim
adjustments). Landlord, within thirty (30) days thereafter, shall advise Tenant
in writing of its estimate of the Fair Market Rental Value (including interim
adjustments). During the next twenty (20) calendar days the parties shall meet
and confer for the purpose of agreeing upon the Fair Market Rental Value. If the
parties are then unable to agree, then the Fair Market Rental Value shall be
determined by an appraisal as herein set forth and the Fair Market Rental Value
as so determined shall be binding upon Landlord and Tenant. Within one hundred
twenty (120) days after the Tenant's notice of exercise of the option Landlord
and Tenant shall each appoint an appraiser and notify the other party in writing
of its choice. Thereupon, the two appraisers shall elect a third appraiser
within thirty (30) days of their appointment, unless during such period the two
appraisers shall have agreed upon a Fair Market Rental Value, in which case
their determination shall be final and binding. If the two appraisers shall be
unable to agree upon a third appraiser, then the Landlord and Tenant shall
immediately request the Presiding Judge of the San Mateo County Superior Court
to make such selection. The decision of the third appraiser shall be final and
binding provided that the determination of Fair Market Rental Value of the third
appraiser shall be equal to, or in-between, the determinations of the other two
appraisers. Each party shall bear the cost of the appraiser selected by it and
the cost of the third appraiser
26
shall be shared equally. To be appointed as an appraiser the person so appointed
shall hold the professional designation as may then be the preeminent
professional designation, hold any licenses which may then be required by law,
and have at least three (3) years current experience in appraisal of commercial
properties in the San Francisco Bay Area including San Mateo County. In nonevent
shall the base rent for each year of the option term be less than the amount of
base rent payable by Tenant on an annualized basis during the final year of the
initial term.
27
IN WITNESS WHEREOF, the parties have executed this instrument.
TENANT: LANDLORD:
INTERNET TRAVEL NETWORK, XXXXXXXX AVENUE ASSOCIATES,
a California corporation a California partnership
By: _____________________________ By: ___________________________
President Managing Partner
By: _____________________________
Secretary
(Single Tenant -
Land Building)
28
EXHIBIT "A"
XXXXXXXX PARK
0000 XXXXXXXX XXX.
XXXXX XXXX, XXXXXXXXXX
DESCRIPTION OF DEMISED PREMISES
FOR
"INTERNET TRAVEL NETWORK"
All that certain real property situated in the City of Menlo Park, County
of San Mateo, California.
Parcel 2 as shown on that certain map entitled "Parcel Map of a Subdivision
of Lots 5 and 6 and portion of Xxx 0, Xxxxxxxx Xxxxxxxxxx Xxxx, Xxxxx Park, San
Mateo County, California", recorded in Volume 12 of Parcel Maps at Page 20, San
Mateo Records, and a portion of Parcel C as shown on that certain map entitled
"Record of Survey Resubdivision of Portions of Xxx 0 xxx 0, Xxxxx Xx. 000,
Xxxxxxxx Xxxxxxxxxx Xxxx, Xxxxx Park, San Mateo County, California", recorded in
Volume 6 of L.L.S. Maps at Page 62, San Mateo Records, more particularly
described as follows:
BEGINNING at a point on the Northwesterly line of Xxxxxxxx Avenue, said
point being the most Southerly corner of said Parcel 2; thence from said point
of beginning North 68(degree) 03' West 370.00 feet; thence North 21(degree) 57'
East 319.86 feet; thence South 68(degree) 03' East 370.00 feet and South
21(degree) 57' West 319.86 feet to the point of beginning.
Reserving therefrom unto the Landlord, its successors and assigns a non-
exclusive 23.00 foot easement for vehicular, ingress and egress over that
certain real property described as follows:
Beginning at a point on the Northwesterly line of Xxxxxxxx Avenue, from
which point the most Southerly corner of said Parcel 2 bears South 21(degree)
57' West 319.86 feet; thence from said point of beginning along said
Northwesterly line of Xxxxxxxx Avenue South 21(degree) 57' West 23.00 feet;
thence North 68(degree) 03' West 370.00 feet; thence North 21(degree) 57' East
23.00 feet and South 68(degree) 03' East 370.00 feet to the point of beginning.
Furthermore demising a non-exclusive 2.00 foot easement for vehicular,
ingress and egress over that certain real property described as follows:
Beginning at a point on the Northwesterly line of Xxxxxxxx Avenue, from
which point the most Southerly corner of said Parcel 2 bears South 21(degree)
57' West 319.86 feet; thence from said point of beginning along said
Northwesterly line of Xxxxxxxx Avenue North 21(degree) 57' East 2.00 feet;
thence North 68(degree) 03' West 370.00 feet; thence South 21(degree) 57' West
2.00 feet and South 68(degree) 03' East 370.00 feet to the point of beginning.
E-1
