Exhibit 10.17
Lease between
Sobrato Development Company #961 and Brio Technology, Inc.
Section Page #
Parties.................................................................... 1
Premises................................................................... 1
Use........................................................................ 1
Permitted Uses............................................................ 1
Uses Prohibited........................................................... 2
Advertisements and Signs.................................................. 2
Covenants, Conditions and Restrictions.................................... 2
Term and Rental............................................................ 2
Base Monthly Rent......................................................... 2
Late Charges.............................................................. 2
Security Deposit.......................................................... 3
Construction............................................................... 3
Building Shell Construction............................................... 3
Tenant Improvement Plans.................................................. 4
Pricing................................................................... 4
Change Orders............................................................. 5
Letter of Credit to Secure Tenant Improvement Construction................ 5
Tenant Improvement Costs.................................................. 5
Force Majeure............................................................. 6
General Contractor Overhead & Profit...................................... 6
Tenant Delays............................................................. 6
Insurance................................................................. 7
Punch List & Warranty..................................................... 7
Other Work by Tenant...................................................... 7
Acceptance of Possession and Covenants to Surrender........................ 7
Delivery and Acceptance................................................... 7
Condition Upon Surrender.................................................. 8
Failure to Surrender...................................................... 8
Alterations and Additions.................................................. 9
Tenant's Alterations...................................................... 9
Free From Liens........................................................... 9
Compliance With Governmental Regulations.................................. 9
Maintenance of Premises.................................................... 10
Landlord's Obligations.................................................... 10
Tenant's Obligations...................................................... 10
Landlord and Tenant's Obligations Regarding Reimbursable Operating Costs.. 10
Reimbursable Operating Costs.............................................. 10
Page i
Tenant's Allocable Share.................................................. 11
Waiver of Liability....................................................... 11
Replacements.............................................................. 11
Hazard Insurance........................................................... 12
Tenant's Use.............................................................. 12
Landlord's Insurance...................................................... 12
Tenant's Insurance........................................................ 12
Waiver.................................................................... 12
Taxes...................................................................... 12
Utilities.................................................................. 13
Toxic Waste and Environmental Damage....................................... 13
Tenant's Responsibility................................................... 13
Tenant's Indemnity Regarding Hazardous Materials.......................... 14
Actual Release by Tenant.................................................. 14
Environmental Monitoring.................................................. 15
Tenant's Default........................................................... 15
Remedies.................................................................. 15
Right to Re-enter......................................................... 16
Abandonment............................................................... 16
No Termination............................................................ 16
Non-Waiver................................................................ 16
Performance by Landlord................................................... 17
Habitual Default.......................................................... 17
Landlord's Liability...................................................... 17
Limitation on Landlord's Liability........................................ 17
Limitation on Tenant's Recourse........................................... 17
Indemnification of Landlord............................................... 17
Destruction of Premises.................................................... 18
Landlord's Obligation to Restore.......................................... 18
Limitations on Landlord's Restoration Obligation.......................... 18
Condemnation............................................................... 18
Assignment or Sublease..................................................... 18
Consent by Landlord....................................................... 18
Assignment or Subletting Consideration.................................... 19
No Release................................................................ 19
Reorganization of Tenant.................................................. 20
Permitted Transfers....................................................... 20
Effect of Default......................................................... 20
Effects of Conveyance..................................................... 20
Successors and Assigns.................................................... 21
Option to Extend the Lease Term............................................ 21
Grant and Exercise of Option.............................................. 21
Determination of Fair Market Rental....................................... 21
Resolution of a Disagreement over the Fair Market Rental.................. 21
Personal to Tenant........................................................ 22
Right to Rescind.......................................................... 22
Right Of First Offering To Lease........................................... 22
Grant..................................................................... 22
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Exclusions................................................................ 23
General Provisions......................................................... 23
Attorney's Fees........................................................... 23
Authority of Parties...................................................... 23
Brokers................................................................... 23
Choice of Law............................................................. 23
Dispute Resolution........................................................ 23
Entire Agreement.......................................................... 24
Entry by Landlord......................................................... 24
Estoppel Certificates..................................................... 25
Exhibits.................................................................. 25
Interest.................................................................. 25
Modifications Required by Lender.......................................... 25
No Presumption Against Drafter............................................ 25
Notices................................................................... 25
Property Management....................................................... 3
Rent...................................................................... 26
Representations........................................................... 26
Rights and Remedies....................................................... 26
Severability.............................................................. 26
Submission of Lease....................................................... 26
Subordination............................................................. 26
Survival of Indemnities................................................... 26
Time...................................................................... 26
Transportation Demand Management Programs................................. 26
Waiver of Right to Jury Trial............................................. 27
EXHIBIT A - Premises, Building & Project................................... 29
EXHIBIT B - Declaration of Reciprocal Easement, Easements and Covenants.... 30
EXHIBIT C - Office Shell Plans and Specifications.......................... 31
EXHIBIT D - Tenant Improvement Plans and Specifications.................... 32
Page iii
1. PARTIES: THIS LEASE, is entered into on this 20th day of December, 1999,
("Effective Date") between SOBRATO DEVELOPMENT COMPANY #961, a California
Limited Partnership, whose address is 00000 Xxxxx Xx Xxxx Xxxxxxxxx, Xxxxx 000,
Xxxxxxxxx, XX 00000 and BRIO TECHNOLOGY, INC., a California Corporation, whose
address is 0000 X. Xxxxxxxx, Xxxx Xxxx, XX 00000, hereinafter called
respectively Landlord and Tenant.
2. PREMISES: Landlord hereby leases to Tenant, and Tenant hires from
Landlord those certain Premises with the appurtenances, situated in the City of
Santa Xxxxx, County of Santa Xxxxx, State of California, consisting of a 5-story
steel frame building commonly known and designated as 0000 Xxxxx Xxxxxxx Xxxxxxx
consisting of 140,935 rentable square feet ("Building"). Unless otherwise
provided herein, Tenant shall have the non-exclusive right to use the real
property surrounding the Building and the building commonly known as 0000 Xxxxx
Xxxxxxx Xxxxxxx ("4988 Building"), as shown on Exhibit "A" attached hereto
-----------
("Common Area") and in accordance with the Declaration of Reciprocal Easement,
Easements and Covenants and First Amendment ("Reciprocal Easement") attached
hereto as Exhibit "B". The Building, the 4988 Building and the Common Area are
-----------
collectively referred to herein as the "Project". Unless expressly provided
otherwise, the term Premises as used herein shall include the Tenant
Improvements (defined in Section 5.B) constructed by Landlord and Tenant
pursuant to Section 5.B. With regard to the parking stalls within the Common
Area, Tenant shall have the exclusive right to use the parking garage of
approximately 488 parking spaces, except for 38 spaces which shall be available
for exclusive use by the tenant of the 4988 Building. Tenant shall have the
right to install security measures for the garage, such as card key access,
provided (i) the tenant of the 4988 Building is given controlled access to the
parking spaces to be designated for such tenant at all times as determined by
Tenant and Landlord jointly and (ii) there are no restrictions on access to the
garage during normal business hours (unless otherwise agreed by all parties
including the tenant in the 4988 Building). Tenant shall also have the right to
use 27 parking spaces on the on-grade parking lot to be designated for exclusive
use by Tenant as shown in the Reciprocal Easement. Tenant shall have the
obligation to keep the parking garage in good condition and repair, at Tenant's
sole cost, except for the structural portions thereof which shall be maintained
by Landlord at its sole cost. The tenant of the 4988 Building shall have the
obligation to maintain the on-grade parking area at its sole cost. All other
Common Area expenses shall be prorated pursuant to Section 8 of this Lease.
Tenant shall also have the non-exclusive right to use all other portions of the
Common Area as set forth in the Reciprocal Easement attached hereto as Exhibit
B." Tenant shall have the right to install a generator (properly screened from
view) benches, tables, chairs, umbrellas and other outdoor amenities, security
cameras, and other similar removable equipment and furnishings in the Common
Area provided: (i) all such items are installed by Tenant in a manner
reasonably compatible with the design and quality of the Project; and (ii) such
items do not adversely affect or interfere with other tenants in the Project, as
reasonably determined by Landlord. In addition, Tenant shall have the right, at
its sole cost, to install lighting and security devices, including card key
access, in the parking garage. Landlord shall not materially modify the Common
Area without prior written notice to Tenant, and no modifications shall be made
to the Common Area which would materially interfere with Tenant's business or
use of the Premises or decrease the amount of parking available for the Project.
Any modification to the Common Areas shall be done in a manner which minimizes
disruption to Tenant.
3. USE:
A. Permitted Uses: Tenant shall use the Premises only for the following
purposes and shall not change the use of the Premises without the prior written
consent of Landlord: Office, research and development, marketing, light
manufacturing, ancillary storage and other incidental uses. Tenant shall use
only the number of parking spaces allocated to Tenant under this Lease. All
commercial trucks and delivery vehicles shall (i) be parked at the rear of the
Building, (ii) loaded and unloaded in a manner which does not interfere with the
businesses of other occupants of the Project,
PAGE 1
and (iii) permitted to remain within the Project only so long as is reasonably
necessary to complete the loading and unloading. Landlord makes no
representation or warranty that any specific use of the Premises desired by
Tenant is permitted pursuant to any Laws.
B. Uses Prohibited: Tenant shall not commit or suffer to be committed on
the Premises any waste, nuisance, or other act or thing which may disturb the
quiet enjoyment of any other tenant in or around the Premises, nor allow any
sale by auction or any other use of the Premises for an unlawful purpose. Tenant
shall not (i) damage or overload the electrical, mechanical or plumbing systems
of the Premises, (ii) attach, hang or suspend anything from the ceiling or
columns of the building or set any load on the floor in excess of the load
limits for which such items are designed, or (iii) generate dust, fumes or waste
products which create a fire or health hazard or damage the Premises or any
portion of the Project, including without limitation the soils or ground water
in or around the Project. No materials, supplies, equipment, finished products
or semi-finished products, raw materials or articles of any nature, or any waste
materials, refuse, scrap or debris, shall be stored upon or permitted to remain
on any portion of the Premises outside of the Building (excluding items stored
in permitted storage enclosures designed for such purpose) without Landlord's
prior approval, which approval may be withheld in its sole discretion.
C. Advertisements and Signs: Tenant will not place or permit to be placed,
in, upon or about the Premises any signs not approved by the city and other
governing authority having jurisdiction. Subject to the foregoing requirement,
Tenant shall have the right to place two (2) signs mounted on the Building and
one (1) ground mounted monument sign within the Project. The design and
placement of the monument sign shall be subject to the reasonable approval of
Landlord. Any sign placed on the Premises shall be removed by Tenant, at its
sole cost, prior to the Expiration Date or promptly following the earlier
termination of the Lease, and Tenant shall repair, at its sole cost, any damage
or injury to the Premises caused thereby, and if not so removed, then Landlord
may have same so removed at Tenant's expense.
D. Covenants, Conditions and Restrictions: This Lease is subject to the
effect of (i) any easements, mortgages or deeds of trust, ground leases, rights
of way of record and any other matters or documents of record; and (ii) any
zoning laws of the city, county and state where the Building is situated
(collectively referred to herein as "Restrictions") and Tenant and Landlord will
conform to and will not violate the terms of any such Restrictions.
4. TERM AND RENTAL:
A. Base Monthly Rent: The term ("Lease Term") shall be for one hundred
twenty (120) months, commencing on substantial completion of construction as
determined pursuant to Section 5.G (the "Commencement Date") estimated to occur
on June 1, 2000, and ending one hundred twenty (120) months thereafter,
("Expiration Date"). In addition to all other sums payable by Tenant under this
Lease, Tenant shall pay as base monthly rent ("Base Monthly Rent") for the
Premises in an amount determined pursuant to the following schedule:
Months 01 - 12: $323,445.83
Months 13 - 24: $333,149.20
Months 25 - 36: $343,143.68
Months 37 - 48: $353,437.99
Months 49 - 60: $364,041.13
Months 61 - 72: $374,962.36
Months 73 - 84: $386,211.23
Months 85 - 96: $397,797.57
Months 97 - 108: $409,731.49
Months 109 - 120: $422,023.44
Base Monthly Rent shall be due in advance on or before the first day of each
calendar month during the Lease Term. All sums payable by Tenant under this
Lease shall be paid to Landlord in lawful money of the United States of America,
without offset or deduction and without prior notice or demand, at the address
specified in Section 1 of this Lease or at such place or places as may be
designated in writing by Landlord during the Lease Term. Base Monthly Rent for
any period less than a calendar month shall be a pro rata portion of the monthly
installment. Concurrently with Tenant's execution of this Lease, Tenant shall
pay to Landlord the sum of Three Hundred Twenty Three Thousand Four Hundred
Forty Five and 83/100 ($323,445.83) as prepaid rent for the first month of the
Lease.
B. Late Charges: Tenant hereby acknowledges that late payment by Tenant to
Landlord of Base Monthly Rent and other sums due hereunder will cause Landlord
to incur costs not contemplated by this Lease, the exact amount of which is
extremely difficult to ascertain. Such costs include but are not limited to:
administrative, processing, accounting, and late charges which may be imposed on
Landlord by the terms of any contract, revolving credit,
PAGE 2
mortgage, or trust deed covering the Premises. Accordingly, if any installment
of Base Monthly Rent or other sum due from Tenant shall not be received by
Landlord or its designee within five (5) days after the rent is due, Tenant
shall pay to Landlord a late charge equal to five (5%) percent of such overdue
amount, which late charge shall be due and payable on the same date that the
overdue amount was due. The foregoing notwithstanding, Landlord agrees to
provide written notice and a 3-day cure period to Tenant no more than once every
18 months of the Lease Term prior to assessing such late charge. The parties
agree that such late charge represents a fair and reasonable estimate of the
costs Landlord will incur by reason of late payment by Tenant, excluding
interest and attorneys fees and costs. If any rent or other sum due from Tenant
remains delinquent for a period in excess of thirty (30) days then, in addition
to such late charge, Tenant shall pay to Landlord interest on any rent that is
not paid when due at the Agreed Interest Rate specified in Section 19.J
following the date such amount became due until paid. Acceptance by Landlord of
such late charge shall not constitute a waiver of Tenant's default with respect
to such overdue amount nor prevent Landlord from exercising any of the other
rights and remedies granted hereunder. In the event that a late charge is
payable hereunder, whether or not collected, for three (3) consecutive
installments of Base Monthly Rent, then the Base Monthly Rent shall
automatically become due and payable quarterly in advance, rather than monthly,
notwithstanding any provision of this Lease to the contrary.
D. Security Deposit: Concurrently with Tenant's execution of this Lease,
Tenant has deposited with Landlord the sum of Three Hundred Twenty Five Thousand
Dollars ($325,000.00) ("Security "Deposit"). Landlord shall not be deemed a
trustee of the Security Deposit, may use the Security Deposit in business, and
shall not be required to segregate it from its general accounts. Tenant shall
not be entitled to interest on the Security Deposit. If Tenant defaults with
respect to any provisions of the Lease, including but not limited to the
provisions relating to payment of Base Monthly Rent or other charges, Landlord
may, to the extent reasonably necessary to remedy Tenant's default, use any or
all of the Security Deposit towards payment of the following: (i) Base Monthly
Rent or other charges in default; (ii) any other amount which Landlord may spend
or become obligated to spend by reason of Tenant's default including, but not
limited to Tenant's failure to restore or clean the Premises following vacation
thereof. If any portion of the Security Deposit is so used or applied, Tenant
shall, within ten (10) days after written demand from Landlord, deposit cash
with Landlord in an amount sufficient to restore the Security Deposit to its
full original amount, and shall pay to Landlord such other sums as necessary to
reimburse Landlord for any sums paid by Landlord. If Tenant shall monetarily
default after expiration of any applicable cure period more than three (3) times
in any twelve (12) month period, then the Security Deposit shall, within ten
(10) days after demand by Landlord, be increased by Tenant to an amount equal to
three (3) times the Base Monthly Rent. Tenant may not assign or encumber the
Security Deposit without the consent of Landlord. Any attempt to do so shall be
void and shall not be binding on Landlord. The Security Deposit shall be
returned to Tenant within thirty (30) days after the Expiration Date and
surrender of the Premises to Landlord, less any amount deducted in accordance
with this Section, together with Landlord's written notice itemizing the amounts
and purposes for such deduction. In the event of termination of Landlord's
interest in this Lease, Landlord may deliver or credit the Security Deposit to
Landlord's successor in interest in the Premises and thereupon be relieved of
further responsibility with respect to the Security Deposit.
5. CONSTRUCTION:
A. Building Shell Construction: Prior to the Commencement Date, Landlord
shall complete construction of shell of the Building and interior core
improvements ("Office Building Shell") the scope of which improvements are
outlined in the plans and specifications attached as Exhibit "C" ("Office Shell
-----------
Plans and Specifications"). Landlord shall be responsible and pay for all costs
and expenses associated with the Office Building Shell. Tenant shall retain
the right to substitute material finishes in the lobby and core areas of the
Building provided (i) Tenant shall be responsible for any cost increases due to
such substitution, and (ii) any delay in Substantial Completion of the Premises
resulting from such substitution shall be deemed a Tenant Delay pursuant to
Section 5.I of this Lease. The Office Building Shell shall be constructed in a
good and workmanlike fashion and in compliance with all codes, laws, rules and
regulations of applicable governmental authority. Landlord shall assign to
Tenant any warranties related to the Office Building Shell which would reduce
Tenant's maintenance obligations hereunder and shall cooperate with Tenant to
enforce all such warranties. Such
PAGE 3
warranties shall include the warranty on the roof membrane Landlord has received
from the roofing contractor.
B. Tenant Improvement Plans: Tenant, at Tenant's sole cost and expense,
shall retain an interior architect ("Architect") to prepare plans and outline
specifications to be attached as Exhibit "D" ("Tenant Improvement Plans and
-----------
Specifications") with respect to the construction of the balance of the
improvements to the interior of the premises ("Tenant Improvements") necessary
for Tenant's use and occupancy of the Building.
Landlord shall cause Tenant Improvements to be constructed by the Devcon
Construction ("General Contractor"), in accordance with Tenant Improvement Plans
and Specifications. The Tenant Improvement Plans and Specifications shall be
completed for all aspects of the work by (i) February 14, 2000 with all detail
necessary for submittal to the city for issuance of building permits, and (ii)
March 6, 2000 with all detail necessary for construction and shall include any
information required by the relevant agencies regarding Tenant's use of
Hazardous Materials if applicable. The Tenant Improvements shall consist of
all items not included within the scope of the Office Building Shell. All
Tenant Improvements shall be subject to Landlord's approval, which approval
which shall not be unreasonably withheld, conditioned or delayed. The Tenant
Improvement Plans and Specifications shall provide for a minimum build-out in
all areas of the Premises consisting of: (i) fire sprinklers, (ii) floor
coverings, (iii) t-bar suspended ceiling (iv) distribution of the HVAC system,
(v) 2' x 4' drop-in florescent lighting, and (vi) any other work required by the
City of Santa Xxxxx necessary to obtain a Certificate of Occupancy. Tenant
shall not have the right to delay the completion of the foregoing minimum Tenant
Improvement build-out. The Tenant Improvement Plans and Specifications shall be
prepared in sufficient detail to allow the General Contractor to construct the
Tenant Improvements. The Tenant Improvements shall not be removed or altered by
Tenant without the prior written consent of Landlord as provided in Section 7.
Tenant shall have the right to depreciate and claim and collect any investment
tax credits in the Tenant Improvements paid for Tenant. Upon expiration of the
Lease Term or any earlier termination of the Lease, the Tenant Improvements
shall become the property of Landlord and shall remain upon and be surrendered
with the Premises, and title thereto shall automatically vest in Landlord
without any payment therefore.
Landlord shall use its reasonable best efforts to obtain a building permit
from the City of Santa Xxxxx for the Tenant Improvements as soon as possible
after submittal of the Tenant Improvement Plans and Specifications, and
thereafter to cause the General Contractor to Substantially Complete the Tenant
Improvements. The Tenant Improvements shall be deemed substantially complete
when: (i) Tenant Improvements have both been substantially completed in
accordance with the Tenant Improvement Plans and Specifications, as evidenced by
the issuance of a certificate of occupancy or its equivalent by the appropriate
governmental authority, (ii) Tenant's Architect has certified that the Tenant
Improvements have been completed in accordance with the Tenant Improvement Plans
and Specifications, and Landlord's Architect has certified to Tenant that the
Office Building Shell and Project have been completed in accordance with the
Office Building Shell Plans and Specifications; and (iii) the Building systems
including, but not limited to, mechanical, electrical and plumbing, are
operational to the extent necessary to service the Premises, and Tenant has use
of substantially all parking spaces called for under this Lease. Installation
of (i) Tenant's data and phone cabling, (ii) Tenant's furniture, or (iii) the
exterior landscaping shall not be required in order to deem the Tenant
Improvements Substantially Complete. Landlord agrees to provide Tenant a
Certificate of Occupancy from the City of Santa Xxxxx (or its equivalent) within
sixty (60) days following the Commencement Date.
C. Pricing: Within ten (10) days after completion of the Tenant
Improvements Plans and Specifications, Landlord shall cause the General
Contractor to submit to Tenant copies of competitive bids (including a schedule
of values for each bid) from at least three (3) subcontractors (at least one of
which such subcontractors may be specified by Tenant, subject to Landlord's
reasonable approval) for each aspect of the work in excess of Five Thousand and
No/100 Dollars ($5,000.00) related to the Tenant Improvements. The foregoing
notwithstanding, Tenant shall have the right to sole-source to designated
subcontractors (subject to Landlord's reasonable approval) for specialty rooms,
including the IDF/Server rooms. General Contractor shall not do any self-
performed work over $10,000.00 without first providing Tenant with 3 bids for
comparison purposes. Landlord shall cause the General Contractor to utilize the
low bid in each case unless Tenant approves General Contractor's use of another
subcontractor, and the cost of the Tenant Improvements shall be
PAGE 4
based upon construction expenses equal to (i) the bid amounts as approved by
Tenant, and (ii) the general contractor fee specified in Section 5.H below
("Tenant Improvement Budget"). Upon Tenant's written approval of the Tenant
Improvement Budget, which approval shall not be unreasonably withheld or
delayed, Landlord and Tenant shall be deemed to have given their respective
approvals of the final Tenant Improvement Plans and Specifications on which the
cost estimate was made, and Tenant shall cause the General Contractor shall
proceed with the construction of the Tenant Improvements in accordance with the
terms of Section 5.G below. If Tenant does not specifically approve or
disapprove the bids within seven (7) days, Tenant shall be deemed to have
approved the bids.
D. Change Orders: Tenant shall have the right to order changes in the manner
and type of construction of the Tenant Improvements. Upon request and prior to
Tenant's submitting any binding change order, Landlord shall cause the General
Contractor to promptly provide Tenant with written statements of the cost to
implement, cost breakdown, and the time delay and increased construction costs
associated with any proposed change order, which statements shall be binding on
General Contractor. If no time delay or increased construction cost amount is
noted on the written statement, the parties agree that there shall be no
adjustment to the construction cost or the Commencement Date associated with
such change order. If ordered by Tenant, Landlord shall cause the General
Contractor shall implement such change order and the cost of constructing the
Tenant Improvements shall be increased or decreased in accordance with the cost
statement previously delivered by General Contractor to Tenant for any such
change order. The fee charged by General Contractor in addition to any such
change order shall be consistent with Section 5.H. below.
E. Letter of Credit to Secure Tenant Improvement Construction: Within
five (5) days following the Effective Date, Tenant shall deposit with Landlord a
letter of credit ("Letter of Credit") in an amount of Three Million Five Hundred
Thousand Dollars ($3,500,000.00), to secure Tenant's obligation to complete
Tenant Improvements pursuant to this Lease. The Letter of Credit shall
thereafter be promptly reduced upon presentation to Landlord of evidence
reasonably satisfactory to Landlord that a percentage of the Tenant Improvements
equal to the requested reduction has been satisfactorily completed and paid for
including partial lien waivers and architects' certificates. Upon Landlord's
receipt of reasonably satisfactory evidence that the Tenant Improvements have
been completed free of liens and that Tenant has fully paid for the cost of all
of Tenant Improvements, the Letter of Credit shall be cancelled and returned to
Tenant by Landlord. Landlord shall be entitled to draw against the full amount
of the Letter of Credit at any time provided only that Landlord certifies to the
issuer of the Letter of Credit that Tenant has failed to make a payment for
Tenant Improvement costs as provided in 5.D (unless Tenant disputes an amount
due in which event Tenant shall be entitled to withhold the amount so disputed),
that Tenant has failed to timely renew or extend the Letter of Credit as
required by this paragraph, or that Tenant has failed to amend the Letter of
Credit or obtain a new Letter of Credit as required by this paragraph. Tenant
shall keep the Letter of Credit in effect at all times prior to payment in full
for the Tenant Improvements. At least sixty (60) days prior to expiration of
any Letter of Credit, the term thereof shall be renewed or extended for a period
that extends until Tenant has paid in full for the Tenant Improvements.
Tenant's failure to so renew or extend the Letter of Credit shall be a material
default of this Lease by Tenant entitling Landlord to draw down on the entire
amount of the Letter of Credit. Any amounts drawn on the Letter of Credit shall
be used to pay for the cost of the Tenant Improvements. In the event the Letter
of Credit is drawn by Landlord, and the proceeds used to pay for the completion
of the Tenant Improvements, then promptly following Landlord's completion of the
Tenant Improvements Landlord shall refund to Tenant any excess proceeds from the
Letter of Credit.
F. Tenant Improvement Costs: The cost of Tenant Improvements shall
consist of only the following to the extent actually incurred by General
Contractor in connection with the construction of Tenant Improvements:
construction costs, all permit fees, all fees associated with Tenant's
Architect, engineers and consultants, construction taxes or other costs imposed
by governmental authorities related to the Tenant Improvements, and the General
Contractor overhead as described in Section 5.H below. During the course of
construction of Tenant Improvements, Landlord shall cause the General Contractor
to deliver to Tenant not more than once each calendar month a written request
for payment ("Progress Invoice") which shall include and be accompanied by
General Contractor's certified statements setting forth the amount requested,
certifying the percentage of completion of each item for which reimbursement is
requested.
PAGE 5
Tenant shall have a right of reasonable review and approval of the Progress
Invoice. Tenant shall pay directly to the General Contractor the amount due
pursuant to the Progress Invoice, within fifteen (15) days after Tenant's
receipt of the above items. All costs for Tenant Improvements shall be fully
documented to and verified by Tenant.
G. Force Majeure: Any prevention, delay or stoppage due to strikes,
lockouts, inclement weather, labor disputes, inability to obtain labor,
materials, fuel or reasonable substitutes therefor, governmental restrictions,
regulations, controls, civil commotion, fire or other act of God, and another
causes beyond the reasonable control of Landlord (except financial inability)
shall extend the dates contained in this Section 5 by a period equal to the
period of any said prevention, delay or stoppage; provided, however, that in the
event of any such prevention, delay or stoppage, Landlord shall notify Tenant in
writing within five (5) business days of Landlord's discovery of such. If
Landlord fails to do so, Landlord may not claim that any such delay extends the
date for Substantial Completion. If Landlord cannot obtain building permits or
Substantially Complete construction by the dates set forth herein, this Lease
shall not be void or voidable nor shall Landlord be liable for any loss or
damage resulting therefrom.
In the event Landlord has failed to achieve Substantial Completion of the
Premises by August 1, 2000 (as such date is extended by Tenant Delays), Tenant
shall have the right to terminate the involvement of Landlord and the General
Contractor in the construction process by providing Landlord written notice of
such election. Tenant shall thereafter be entitled to complete construction
using a general contractor and/or construction manager of selected by Tenant.
In such event, Tenant shall be entitled to deduct from the Base Monthly Rent
initially payable hereunder any Tenant Improvement costs incurred by Tenant in
excess of the Tenant Improvement Budget approved by Tenant pursuant to Section
5.C as a result of Landlord's failure to achieve Substantial Completion.
H. General Contractor Overhead & Profit: As compensation to General
Contractor for its services related to construction of the Building Shell and
Tenant Improvements, General Contractor shall receive a fee of six percent
(6.0%) of the cost of construction to cover all of the following: construction
supervision and administration, temporary on-site facilities, home office
administration, supervision, project executive, general superintendent, general
overhead, office supplies, accounting services, computer charges, telephone
expenses, fax office/job site, data processing, secretarial services, mail,
express mail, insurance, City licenses, project manager, estimator, project
engineer, scheduling, reconstruction services, superintendent, general labor,
daily clean-up and final clean-up, protection of work, xxxxx cash, safety
enforcement and safety signage, small tools, first aid facilities, general field
coordination, project field office, Tenant vendor coordination, blueprinting,
job trailer, temporary structures, utilities, and coordination and construction
profit. Except as provided therein, Landlord or General Contractor shall not
receive any other fee or payment from Tenant in connection with General
Contractor's services.
I. Tenant Delays: A "Tenant Delay" shall mean any delay in Substantial
Completion of the Building as a result of any of the following: (i) Tenant's
failure to complete or approve the Tenant Improvement Plans by the dates set
forth in Section 5.B, (ii) Tenant's failure to approve the bids for construction
by the dates set forth in Section 5.C, (iii) changes to the plans requested by
Tenant which delay the progress of the work, (iv) Tenant's request for materials
components, or finishes which are not available in a commercially reasonable
time given the target Commencement Date, (v) Tenant's failure to make a progress
payment for Tenant Improvement costs as provided in Section 5.F, (vi) Tenant's
request for more than one (1) rebidding of the cost of all or a portion of the
work, and (vii) any errors or omissions in the Tenant Improvement Plans provided
by Tenant's architect. In the event Landlord believes Tenant is causing a
Tenant Delay, Landlord shall notify Tenant in writing, state the action or
inaction that it believes is causing the Tenant Delay, and state the date from
which a Tenant Delay is being calculated. Claim of Tenant Delay shall be made
within five (5) days after Landlord's discovery of the occurrence of the event
giving rise to such claim. Tenant shall have the right to expedite work, at its
sole cost, to minimize the effect of any Tenant Delays, to the extent it is
practicable to do so. No Tenant Delay shall advance the Commencement Date to a
date before the estimated Commencement Date of June 1, 2000. Notwithstanding
anything to the contrary set forth in this Lease, and regardless of the actual
date the Premises are Substantially Complete, the Commencement Date shall be
deemed to be the date the Commencement Date would have occurred if no Tenant
Delay had
PAGE 6
occurred as reasonable determined by Landlord. In addition, if a Tenant Delay
results in an increase in the cost of the labor or materials, Tenant shall pay
the cost of such increases.
J. Insurance: Landlord shall cause the General Contractor to procure (as
a cost of the Building Shell) a "Broad Form" liability insurance policy in the
amount of Three Million Dollars ($3,000,000.00). Landlord shall also procure
(as a cost of the Building Shell) builder's risk insurance for the full
replacement cost of the Building Shell and Tenant Improvements while the
Building and Tenant Improvements are under construction, up until the date that
the casualty insurance policy described in Section 9 is in full force and
effect.
K. Punch List & Warranty: After the Building Shell and Tenant Improvements
are Substantially Complete, Landlord shall cause the General Contractor to
immediately correct any construction defect or other "punch list" item which
Tenant brings to General Contractor's attention. All such work shall be
performed so as to reasonably minimize the interruption to Tenant and its
activities on the Premises. General Contractor shall provide a standard
contractor's warranty with respect to the Building Shell and the Tenant
Improvements for one (1) year from the Commencement Date. Such warranty shall
exclude routine maintenance, damage caused by Tenant's negligence or misuse, and
acts of God.
Landlord shall warrant the Office Building Shell and Tenant Improvements against
defects in workmanship or materials, including, but not limited to, HVAC
systems, electrical system and devices, plumbing system and devices (but
excluding Tenant Improvements performed by subcontractors sole-sourced pursuant
to Section 5.C. above), for one (1) year from the Commencement Date. Such
warranty shall exclude (i) routine maintenance, (ii) damage caused by the
negligence or misuse by Tenant, and (iii) acts of God.
L. Other Work by Tenant: All work not described in the Shell Plans and
Specifications or Tenant Improvement Plans and Specifications, such as
furniture, telephone equipment, telephone wiring and office equipment work,
shall be furnished and installed by Tenant at Tenant' cost. Prior to
Substantial Completion, Tenant shall be obligated to (i) provide active phone
lines to any elevators, and (ii) contract with a firm to monitor the fire
system. When the construction of the Tenant Improvements has proceeded to the
point where Tenant's work of installing its fixtures and equipment in the
Premises can be commenced, General Contractor shall notify Tenant and shall
permit Tenant and its authorized representatives and contractors access to the
Premises before the Commencement Date for the purpose of installing Tenant's
trade fixtures and equipment. Any such installation work by Tenant or its
authorized representatives and contractor shall be undertaken upon the following
conditions: (i) the entry into the Premises by Tenant or its representatives or
contractors shall not interfere with or delay General Contractor's work, (ii)
the entry into the Premises by Tenant or its representatives or contractors
shall be under all the terms and conditions of the Lease except for payment of
Base Monthly Rent and other expenses due under the Lease, and (iii) any
contractor used by Tenant in connection with such entry shall not interfere with
the ability of the General Contractor to complete construction using union
labor.
6. ACCEPTANCE OF POSSESSION AND COVENANTS TO SURRENDER:
A. Delivery and Acceptance: On the Commencement Date, Landlord shall
deliver and Tenant shall accept possession of the Premises and enter into
occupancy of the Premises on the Commencement Date. Tenant acknowledges that it
has had an opportunity to conduct, and has conducted, such inspections of the
Premises as it deems necessary to evaluate its condition. Except as otherwise
specifically provided herein, Tenant agrees to accept possession of the Premises
in its then existing condition, subject to all Restrictions and without
representation or warranty by Landlord except as provided in this Lease.
Tenant's taking possession of any part of the Premises shall be deemed to be an
acceptance of any work of improvement done by Landlord in such part as complete
and in accordance with the terms of this Lease except for "Punch List" type
items of which Tenant has given Landlord written notice prior to the time Tenant
takes possession, subject to: (i) any claims with respect to latent defects,
(ii) the warranties from Landlord contained in this Lease, (iii) Landlord's
obligations to correct construction defects, and (iv) any failure of the
Premises to comply with laws in effect as of the date of completion. At the
time Landlord delivers possession of the Premises to Tenant, Landlord and Tenant
shall together execute an acceptance agreement. Landlord shall have no
obligation to deliver possession, nor shall Tenant be entitled to take
occupancy, of the Premises until such acceptance agreement has been executed,
and Tenant's obligation to pay Base Monthly Rent
PAGE 7
and Additional Rent shall not be excused or delayed because of Tenant's failure
to execute such acceptance agreement. Within sixty (60) days after the
Commencement Date, Tenant agrees to be in occupancy of at least fifty percent
(50%) of the rentable square footage of the Premises.
B. Condition Upon Surrender: Tenant further agrees on the Expiration Date
or on the sooner termination of this Lease, to surrender the Premises to
Landlord in good condition and repair, normal wear and tear, casualty damage and
maintenance otherwise the responsibility of Landlord pursuant to this Lease
excepted. In this regard, "normal wear and tear" shall be construed to mean
wear and tear caused to the Premises by the natural aging process which occurs
in spite of prudent application of the best commercially reasonable standards
for maintenance, repair replacement, and janitorial practices, and does not
include items of neglected or deferred maintenance. In any event, Tenant shall
cause the following to be done prior to the Expiration Date or sooner
termination of this Lease: (i) all interior walls shall be cleaned, patched, and
otherwise made paint-ready, (ii) all tiled floors shall be cleaned and waxed,
(iii) all carpets shall be cleaned and shampooed, (iv) all broken, marred,
stained or nonconforming acoustical ceiling tiles shall be replaced, (v) all
cabling placed above the ceiling by Tenant or Tenant's contractors shall be
removed, (vi) all windows shall be washed; (vii) the HVAC system shall be
serviced by a reputable and licensed service firm and left in "good operating
condition and repair" as so certified by such firm, (viii) the plumbing and
electrical systems and lighting shall be placed in good order and repair
(including replacement of any burned out, discolored or broken light bulbs,
ballasts, or lenses. On or before the Expiration Date or sooner termination of
this Lease, Tenant shall remove all its personal property and trade fixtures
from the Premises. All property and fixtures not so removed shall be deemed as
abandoned by Tenant. At the expiration of the Lease Term, Landlord shall not
have the right to require that Tenant remove from the Premises any of the Tenant
Improvements or any Alterations made with Landlord's consent unless Landlord, at
the time of granting such consent, indicates that the subject Alteration must be
removed upon the expiration of the Lease Term. With respect to Permitted
Alterations as defined in Section 7A. below, Tenant shall ascertain from
Landlord within ninety (90) days before the Expiration Date whether Landlord
desires to have any such Permitted Alterations removed. If Landlord shall so
desire, Tenant shall, at Tenant's sole cost and expense, remove such Alterations
and Permitted Alterations as Landlord requires and shall repair any damage to
the Building which results from Tenant's removal of any Alterations, Permitted
Alterations and any improvements and/or Tenant's equipment, fixtures, and
component and shall repair and restore said Premises or such parts thereof
before the Expiration Date. Such repair and restoration shall include causing
the Premises to be brought into compliance with all applicable building codes
and laws in effect at the time of the removal to the extent such compliance is
necessitated by the repair and restoration work.
C. Failure to Surrender: If the Premises are not surrendered at the
Expiration Date or sooner termination of this Lease in the condition required by
this Section 6, Tenant shall be deemed in a holdover tenancy pursuant to this
Section 6.C and Tenant shall indemnify, defend, and hold Landlord harmless
against loss or liability resulting from delay by Tenant in so surrendering the
Premises including, without limitation, any claims made by any succeeding tenant
founded on such delay and costs incurred by Landlord in returning the Premises
to the required condition, plus interest at the Agreed Interest Rate provided,
however, that Landlord shall be required to give Tenant at least thirty (30)
days' advance notice of any potential loss or liability resulting from such
delay. Any holding over after the termination or Expiration Date with
Landlord's express written consent, shall be construed as month-to-month
tenancy, terminable on thirty (30) days written notice from either party, and
Tenant shall pay as Base Monthly Rent to Landlord a rate equal to one hundred
twenty five percent (125%) of the Base Monthly Rent due in the month preceding
the termination or Expiration Date, plus all other amounts payable by Tenant
under this Lease. Any holding over shall otherwise be on the terms and
conditions herein specified, except those provisions relating to the Lease Term
and any options to extend or renew, which provisions shall be of no further
force and effect following the expiration of the applicable exercise period. If
Tenant remains in possession of the Premises after the Expiration Date or sooner
termination of this Lease without Landlord's consent, Tenant's continued
possession shall be on the basis of a tenancy at sufferance and Tenant shall pay
as rent during the holdover period an amount equal to one hundred fifty percent
(150%) of the Base Monthly Rent due in the month preceding the termination or
Expiration Date, plus all other amounts payable by Tenant under this Lease.
This provision shall survive the termination or expiration of the Lease.
PAGE 8
7. ALTERATIONS AND ADDITIONS:
A. Tenant's Alterations': Tenant shall not make, or suffer to be made, any
alteration or addition to the Premises ("Alterations"), or any part thereof,
without obtaining Landlord's prior written consent, which consent shall not be
unreasonably withheld, and delivering to Landlord the proposed architectural and
structural plans for all such Alterations at least fifteen (15) days prior to
the start of construction. If such Alterations affect the structure of the
Building, Tenant additionally agrees to reimburse Landlord its reasonable out-
of-pocket costs incurred in reviewing Tenant's plans. After obtaining
Landlord's consent, which consent shall state whether or not Landlord will
require Tenant to remove such Alteration at the expiration or earlier
termination of this Lease, Tenant shall not proceed to make such Alterations
until Tenant has obtained all required governmental approvals and permits, and
provides Landlord reasonable security, in form reasonably approved by Landlord,
to protect Landlord against mechanics' lien claims. Tenant agrees to provide
Landlord (i) written notice of the anticipated and actual start-date of the
work, (ii) a complete set of half-size (15" X 21") vellum as-built drawings, and
(iii) a certificate of occupancy for the work upon completion of the
Alterations. All Alterations shall be constructed in compliance with all
applicable building codes and laws including, without limitation, the Americans
with Disabilities Act of 1990 as amended from time to time. During the Lease
Term, the Alterations shall be the property of the Tenant and Tenant shall be
entitled to all tax benefits associated therewith. Upon the Expiration Date,
all Alterations, except movable furniture and trade fixtures, shall become a
part of the realty and belong to Landlord but shall nevertheless be subject to
removal by Tenant as provided in Section 6 above. Alterations which are not
deemed as trade fixtures include heating, lighting, electrical systems, air
conditioning, walls, carpeting, or any other installation which has become an
integral part of the Premises. All Alterations shall be maintained, replaced or
repaired by Tenant at its sole cost and expense. Notwithstanding the foregoing,
Tenant shall be entitled without obtaining Landlord's consent, to make
Alterations which do not affect the structure of the Building or which do not
cost more than Fifty Thousand Dollars ($50,000.00) per Alteration ("Permitted
Alterations); provided, however, that Tenant shall still be required to comply
with all other provisions of this paragraph.
B. Free From Liens: Tenant shall keep the Premises free from all liens
arising out of work performed, materials furnished, or obligations incurred by
Tenant or claimed to have been performed for Tenant. In the event Tenant fails
to discharge any such lien within twenty (20) days after receiving notice of the
filing, Landlord shall be entitled to discharge the lien at Tenant's expense and
all resulting costs incurred by Landlord, including reasonable attorney's fees
shall be due from Tenant as additional rent.
C. Compliance With Governmental Regulations: The term Laws or Governmental
Regulations shall include all federal, state, county, city or governmental
agency laws, statutes, ordinances, standards, rules, requirements, or orders now
in force or hereafter enacted, promulgated, or issued. The term also includes
government measures regulating or enforcing public access, traffic mitigation,
occupational, health, or safety standards for employers, employees, landlords,
or tenants. Tenant, at Tenant's sole expense shall make all repairs,
replacements, alterations, or improvements needed to comply with all
Governmental Regulations, except as specifically provided otherwise in this
Lease.
All costs associated with compliance shall be borne by Tenant if the requirement
for compliance is triggered by: (i) Tenant's specific use or change of use of
the Premises; or (ii) Tenant's construction or installation of any Alterations
or trade fixtures. If a capital improvement or replacement to the Premises is
required pursuant to this Section 7.C. for any other reason, then within fifteen
(15) business days after Tenant delivers evidence reasonably satisfactory to
Landlord substantiating Tenant's payment of such capital improvement, Landlord
shall reimburse Tenant for the cost of the improvement or replacement less that
portion of the cost equal to the product of such total cost multiplied by a
fraction, the numerator of which is the number of years remaining in the Lease
Term, the denominator of which is the useful life (in years) of the capital
improvement, as reasonably determined by Landlord in accordance with generally
accepted accounting principles. If the capital improvement is made during the
initial Lease Term, Tenant's share shall initially be based on the initial Lease
Term and if Tenant thereafter exercises its Option pursuant to Section 18 below,
then upon the commencement of the Option Term, an adjustment shall be made so
that during the Option Term Tenant shall pay its share determined by multiplying
the cost of the capital improvement by a fraction, the numerator of
PAGE 9
which is the sum of the Lease Term remaining at the time the capital expenditure
was made and the Option Term and the denominator of which is the useful life of
the capital improvement. The judgment of any court of competent jurisdiction or
the admission of Tenant in any action or proceeding against Tenant (whether
Landlord be a party thereto or not) that Tenant has violated any such law,
regulation or other requirement in its use of the Premises shall be conclusive
of that fact as between Landlord and Tenant.
8. MAINTENANCE OF PREMISES:
A. Landlord's Obligations: Landlord at its sole cost and expense, shall
maintain in good condition, order, and repair, and replace as and when
necessary, all structural portions of the Building, including, without
limitation, the foundation, floor slabs, load bearing walls, below-ground
plumbing and sewage facilities, columns and roof structure of the Building
Shell, and the structural elements of the adjacent parking structure.
B. Tenant's Obligations: Tenant shall clean, maintain, repair and replace
when necessary the Premises and every part thereof through regular inspections
and servicing, including but not limited to: (i) all above-the-foundation
plumbing and sewage facilities, (ii) all heating ventilating and air
conditioning facilities and equipment, (iii) all fixtures, interior walls
floors, carpets and ceilings, (iv) all windows, door entrances, plate glass and
glazing systems including caulking, and skylights, (v) all electrical facilities
and equipment, (vi) all automatic fire extinguisher equipment, (vii) the parking
lot and all underground utility facilities servicing the Premises, (viii) all
elevator equipment, (ix) the roof membrane system (subject to the provisions of
Section 8.G. below), and (x) all waterscape, landscaping and shrubbery. All wall
surfaces and floor tile are to be maintained in an as good a condition as when
Tenant took possession free of holes, gouges, or defacements. With respect to
items (ii), (viii) and (ix) above, Tenant shall provide Landlord a copy of a
service contract between Tenant and a licensed service contractor providing for
periodic maintenance of all such systems or equipment in conformance with the
manufacturer's recommendations. Tenant shall provide Landlord a copy of such
preventive maintenance contracts and paid invoices for the recommended work if
requested by Landlord. The foregoing notwithstanding, Tenant shall have no
responsibility to perform any repair, maintenance or improvement: (i)
occasioned by fire, acts of God or other casualty, whether or not covered by
insurance, or by the exercise of the power of eminent domain, (ii) required as a
consequence of any violation of laws or construction defect in the Premises
existing as of the Commencement Date, or (iii) for which Landlord has a right of
reimbursement from others.
C. Landlord and Tenant's Obligations Regarding Reimbursable Operating Costs':
In addition to the direct payment by Tenant of expenses as provided in Sections
8.B, 9, 10 and 11 of this Lease, Tenant agrees to reimburse Landlord for
Tenant's Allocable Share (as defined in Section 8.E below) of Reimbursable
Operating Costs (as defined in Section 8.D below) resulting from Landlord
payment of expenses related to the Building or Project which are not otherwise
paid by Tenant directly. Tenant agrees to pay its Allocable Share of the
Reimbursable Operating Costs as additional rental within thirty (30) days of
written invoice from Landlord.
D. Reimbursable Operating Costs: For purposes of calculating Tenant's
Allocable Share of Building and Project Costs, the term "Reimbursable Operating
Costs" is defined as all costs and expenses of the nature hereinafter described
which are incurred by Landlord in connection with ownership and operation of the
Building or the Project in which the Premises are located, together with such
additional facilities as may be determined by Landlord to be reasonably
desirable or necessary to the ownership and operation of the Building and/or
Project. All costs and expenses shall be determined in accordance with
generally accepted accounting principles which shall be consistently applied
(with accruals appropriate to Landlord's business), including but not limited to
the following: (i) common area utilities, including water, power, telephone,
heating, lighting, air conditioning, ventilating, and Building utilities to the
extent not separately metered; (ii) common area maintenance and service
agreements for the Building and/or Project and the equipment therein, including
without limitation, common area janitorial services, alarm and security
services, exterior window cleaning, and maintenance of the sidewalks,
landscaping, waterscape, roof membrane, parking areas, driveways, service areas,
mechanical rooms, elevators, and the building exterior; (iii) insurance premiums
and costs, including without limitation, the premiums and cost of fire, casualty
and liability coverage and rental abatement and earthquake (as limited in
Section 9.B below) insurance applicable to the Building or Project; (iv)
PAGE 10
repairs, replacements and general maintenance (excluding repairs and general
maintenance paid by proceeds of insurance or by Tenant or other third parties,
and repairs or alterations attributable solely to tenants of the Building or
Project other than Tenant); and (v) all real estate taxes and assessment
installments or other impositions or charges which may be levied on the Building
or Project, upon the occupancy of the Building or Project and including any
substitute or additional charges which may be imposed during, or applicable to
the Lease Term including real estate tax increases due to a sale, transfer or
other change of ownership of the Building or Project, as such taxes are levied
or appear on the City and County tax bills and assessment rolls. Landlord shall
have no obligation to provide guard services or other security measures for the
benefit of the Project. Tenant assumes all responsibility for the protection of
Tenant and Tenant's Agents from acts of third parties; provided, however, that
nothing contained herein shall prevent Landlord, at its sole option, from
providing security measures for the Project. This is a "Net" Lease, meaning
that Base Monthly Rent is paid to Landlord absolutely net of all costs and
expenses except as otherwise specifically set forth in this Lease. The
provision for payment of Reimbursable Operating Costs by means of periodic
payment of Tenant's Allocable Share of Building and/or Project Costs is intended
to pass on to Tenant and reimburse Landlord for all costs of operating and
managing the Building and/or Project. Notwithstanding anything to the contrary
contained in this Lease, Reimbursable Operating Costs shall not include any of
the items set forth in Exhibit "G" attached hereto.
E. Tenant's Allocable Share: For purposes of prorating Reimbursable
Operating Costs which Tenant shall pay, Tenant's Allocable Share of Reimbursable
Operating Costs shall be computed by multiplying the Reimbursable Operating
Costs by a fraction, the numerator of which is the rentable square footage of
the Premises and the denominator of which is either the total rentable square
footage of the Building if the service or cost is allocable only to the
Building, or the total square footage of the Project if the service or cost is
allocable to the entire Project. Tenant's obligation to share in Reimbursable
Operating Costs shall be adjusted to reflect the Lease Commencement and
Expiration dates and is subject to recalculation in the event of expansion of
the Building or Project.
F. Waiver of Liability: Failure by Landlord to perform any defined
services, or any cessation thereof, when such failure is caused by accident,
breakage, repairs, strikes, lockout or other labor disturbances or labor
disputes of any character or by any other cause, similar or dissimilar, unless
due to the gross negligence or willful misconduct of Landlord, shall not render
Landlord liable to Tenant in any respect, including damages to either person or
property, nor be construed as an eviction of Tenant, nor cause an abatement of
rent, nor relieve Tenant from fulfillment of any covenant or agreement hereof.
Should any equipment or machinery utilized in supplying the services listed
herein break down or for any cause cease to function properly, upon receipt of
written notice from Tenant of any deficiency or failure of any services,
Landlord shall use reasonable diligence to repair the same promptly, but Tenant
shall have no right to terminate this Lease and shall have no claim for rebate
of rent or damages on account of any interruptions in service occasioned thereby
or resulting therefrom. Tenant waives the provisions of California Civil Code
Sections 1941 and 1942 concerning the Landlord's obligation of tenantability and
Tenant's right to make repairs and deduct the cost of such repairs from the
rent. Landlord shall not be liable for a loss of or injury to person or
property, however occurring, through or in connection with or incidental to
furnishing, or its failure to furnish, any of the foregoing.
G. Replacements: If as a part of Tenant's fulfillment of its obligations
under Section 8.B above, Tenant is required to (i) replace the roof membrane on
the Building, or (ii) replace any portion of the Office Building Shell or Common
Area which costs in excess of Fifty Thousand Dollars ($50,000.00) and such
replacement occurs in the last two (2) years of the Lease Term, then Landlord
shall, within ten (10) days following receipt of written invoices and supporting
documentation evidencing the reasonable costs incurred by Tenant in making such
replacement, reimburse Tenant for the entire cost of the replacement less that
portion of the cost equal to the product of such total cost multiplied by a
fraction, the numerator of which is the number of years remaining in the Lease
Term, and the denominator of which is the useful life (in years) of the
replacement. If the replacement occurs during the initial Lease Term, Tenant's
share shall initially be based on the initial Lease Term and if Tenant
thereafter exercises its Option pursuant to Section 18 below, then upon the
commencement of the Option Term, an adjustment shall be made so that during the
Option Term Tenant shall pay its additional share determined by multiplying the
cost of the replacement by a fraction, the
PAGE 11
numerator of which is the sum of the Lease Term remaining at the time of the
replacement and the Option Term and the denominator of which is the useful life
of the replacement.
9. HAZARD INSURANCE:
A. Tenant's Use: Tenant shall not use or permit the Premises, or any part
thereof, to be used for any purpose other than that for which the Premises are
hereby leased; and no use of the Premises shall be made or permitted, nor acts
done, which will cause an increase in premiums or a cancellation of any
insurance policy covering the Premises or any part thereof, nor shall Tenant
sell or permit to be sold, kept, or used in or about the Premises, any article
prohibited by the standard form of fire insurance policies. Tenant shall, at
its sole cost, comply with all requirements of any insurance company or
organization necessary for the maintenance of reasonable fire and public
liability insurance covering the Premises and appurtenances.
B. Landlord's Insurance: Landlord agrees to purchase and keep in force
fire, extended coverage and rental loss (such rental loss covering a 12 month
period) insurance in an amount equal to the replacement cost of the Building
(not including any Tenant Improvements or Alterations paid for by Tenant) as
determined by Landlord's insurance company's appraisers. Landlord agrees to
obtain earthquake insurance subject to the terms hereof if available, but only
to the extent the cost thereof does not exceed five cents ($.05) per square
foot of the Premises per month, compounded each year during the Lease term at
three percent (3%). If the premium due for such insurance exceeds the foregoing
amount, Landlord can elect to continue such insurance and pay the excess portion
of the premium or to terminate earthquake coverage upon ten (10) days' prior
written notice to Tenant, unless Tenant notifies Landlord in writing within such
ten (10) day period that Tenant will pay the entire cost of the insurance
premium due for that year. The parties shall review the earthquake coverage and
premiums due annually during the Lease term in accordance with the foregoing.
Landlord shall be responsible for paying the deductible under the earthquake
insurance carried by Landlord pursuant to the terms hereof and the deductible
payable in the event of an earthquake shall not be subject to reimbursement by
Tenant. Additionally, Landlord may maintain a policy of commercial general
liability insurance insuring Landlord (and such others designated by Landlord)
against liability for personal injury, bodily injury, death and damage to
property occurring or resulting from an occurrence in, on or about the Premises
or Project in an amount as Landlord determines is reasonably necessary for its
protection. Tenant agrees to pay Landlord as additional rent, on demand, the
full cost of said insurance as evidenced by insurance xxxxxxxx to Landlord, and
in the event of damage covered by said insurance, the amount of any deductible
under such policy. Payment shall be due to Landlord within thirty (30) days
after written invoice to Tenant. It is understood and agreed that Tenant's
obligation under this Section will be prorated to reflect the Lease Commencement
and Expiration Dates.
C. Tenant's Insurance: Tenant agrees, at its sole cost, to insure its
personal property, Tenant Improvements (for which it has paid from sources other
than the Work Allowance), and Alterations for their full replacement value
(without depreciation) and to obtain worker's compensation and public liability
and property damage insurance for occurrences within the Premises with a
combined single limit of not less than Five Million Dollars ($5,000,000.00).
Tenant's liability insurance shall be primary insurance containing a cross-
liability endorsement, and shall provide coverage on an "occurrence" rather than
on a "claims made" basis. Tenant shall name Landlord and Landlord's lender as
an additional insured and shall deliver a copy of the policies and renewal
certificates to Landlord. All such policies shall provide for thirty (30) days'
prior written notice to Landlord of any cancellation, termination, or reduction
in coverage.
D. Waiver: Landlord and Tenant hereby waive all rights each may have
against the other on account of any loss or damage sustained by Landlord or
Tenant, as the case may be, or to the Premises or its contents, which may arise
from any risk covered by their respective insurance policies (or which would
have been covered had such insurance policies been maintained in accordance with
this Lease) as set forth above. The Parties shall use their reasonable efforts
to obtain from their respective insurance companies a waiver of any right of
subrogation which said insurance company may have against Landlord or Tenant, as
the case may be.
10. TAXES: Tenant shall be liable for and shall pay as additional rental,
prior to delinquency, the following: (i) all taxes and assessments levied
against Tenant's personal property and trade or business fixtures; (ii) all real
estate taxes and assessment installments or other impositions or charges which
may be
PAGE 12
levied on the Premises or upon the occupancy of the Premises, including any
substitute or additional charges which may be imposed applicable to the Lease
Term; and (iii) real estate tax increases due to an increase in assessed value
resulting from a sale, transfer or other change of ownership of the Premises as
it appears on the City and County tax bills during the Lease Term. Tenant's
obligation under this Section shall be prorated to reflect the Lease
Commencement and Expiration Dates. If, at any time during the Lease Term a tax,
excise on rents, business license tax or any other tax, however described, is
levied or assessed against Landlord as a substitute or addition, in whole or in
part, for taxes assessed or imposed on land or Buildings, Tenant shall pay and
discharge its pro rata share of such tax or excise on rents or other tax before
it becomes delinquent; except that this provision is not intended to cover net
income taxes, inheritance, gift or estate tax imposed upon Landlord. In the
event that a tax is placed, levied, or assessed against Landlord and the taxing
authority takes the position that Tenant cannot pay and discharge its pro rata
share of such tax on behalf of Landlord, then at Landlord's sole election,
Landlord may increase the Base Monthly Rent by the exact amount of such tax and
Tenant shall pay such increase. If by virtue of any application or proceeding
brought by Landlord, there results a reduction in the assessed value of the
Premises during the Lease Term, Tenant agrees to pay Landlord a fee consistent
with the fees charged by a third party appeal firm for such services. Tenant at
its cost shall have the right, at any time, to seek a reduction in the assessed
valuation of the Premises or to contest any real property taxes that are to be
paid by Tenant. Landlord shall not be required to join in any such proceeding or
contest unless the provisions of any law require that the proceeding or contest
be brought by or in the name of the owner of the Premises. In such event,
Landlord shall join in the proceeding or contest or permit it to be brought in
Landlord's name, provided that Landlord is not required to bear any cost in
connection therewith.
11. Utilities: Tenant shall pay directly to the providing utility all water,
gas, electric, telephone, and other utilities supplied to the Premises.
Landlord shall not be liable for loss of or injury to person or property,
however occurring (unless due to the gross negligence or willful misconduct of
Landlord), through or in connection with or incidental to furnishing or the
utility company's failure to furnish utilities to the Premises, and in such
event Tenant shall not be entitled to abatement or reduction of any portion of
Base Monthly Rent or any other amount payable under this Lease. Notwithstanding
the foregoing, if utility services to the Premises are interrupted for a period
of thirty (30) continuous business days through no fault of Tenant, then Tenant
shall be entitled to an abatement of rent to the extent of the interference with
Tenant's use of the Premises occasioned thereby beginning on the expiration of
such thirty (30) day period.
12. TOXIC WASTE AND ENVIRONMENTAL DAMAGE:
A. Tenant's Responsibility: Without the prior written consent of Landlord,
Tenant or Tenant's agents, employees, contractors and invitees ("Tenant's
Agents") shall not bring, use, or permit upon the Premises, or generate, create,
release, emit, or dispose (nor permit any of the same) from the Premises any
chemicals, toxic or hazardous gaseous, liquid or solid materials or waste,
including without limitation, material or substance having characteristics of
ignitability, corrosivity, reactivity, or toxicity or substances or materials
which are listed on any of the Environmental Protection Agency's lists of
hazardous wastes or which are identified in Division 22 Title 26 of the
California Code of Regulations as the same may be amended from time to time or
any wastes, materials or substances which are or may become regulated by or
under the authority of any applicable local, state or federal laws, judgments,
ordinances, orders, rules, regulations, codes or other governmental
restrictions, guidelines or requirements. ("Hazardous Materials") except for
those substances customary in typical office uses for which no consent shall be
required. In order to obtain consent, Tenant shall deliver to Landlord its
written proposal describing the toxic material to be brought onto the Premises,
measures to be taken for storage and disposal thereof, safety measures to be
employed to prevent pollution of the air, ground, surface and ground water.
Landlord's approval may be withheld in its reasonable judgment. In the event
Landlord consents to Tenant's use of Hazardous Materials on the Premises or such
consent is not required, Tenant represents and warrants that it shall comply
with all Governmental Regulations applicable to Hazardous Materials including
doing the following: (i) adhere to all reporting and inspection requirements
imposed by Federal, State, County or Municipal laws, ordinances or regulations
and will provide Landlord a copy of any such reports or agency inspections; (ii)
obtain and provide Landlord copies of all necessary permits required for the use
and handling of Hazardous Materials on the Premises; (iii) enforce Hazardous
Materials
PAGE 13
handling and disposal practices consistent with industry standards; (iv)
surrender the Premises free from any Hazardous Materials arising from Tenant's
bringing, using, permitting, generating, creating, releasing, emitting or
disposing of Hazardous Materials; and (v) properly close the facility with
regard to Hazardous Materials including the removal or decontamination of any
process piping, mechanical ducting, storage tanks, containers, or trenches which
have come into contact with Hazardous Materials and obtain a closure certificate
from the local administering agency prior to the Expiration Date.
B. Tenant's Indemnity Regarding Hazardous Materials: Tenant shall, at its
sole cost and expense, comply with all laws pertaining to, and shall with
counsel reasonably acceptable to Landlord, indemnify, defend and hold harmless
Landlord and Landlord's trustees, shareholders, directors, officers, employees,
partners, affiliates, and agents from, any claims, liabilities, costs or
expenses incurred or suffered arising from the bringing, using, permitting,
generating, emitting or disposing of Hazardous Materials by Tenant, Tenant's
Agents or third party invitees through the surface soils of the Premises during
the Lease Term or the violation of any Governmental Regulation or environmental
law, by Tenant or Tenant's Agents. Tenant's indemnification, defense, and hold
harmless obligations include, without limitation, the following: (i) claims,
liability, costs or expenses resulting from or based upon administrative,
judicial (civil or criminal) or other action, legal or equitable, brought by any
private or public person under common law or under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 as amended
("CERCLA"), the Resource Conservation and Recovery Act of 1980 ("RCRA") or any
other Federal, State, County or Municipal law, ordinance or regulation now or
hereafter in effect; (ii) claims, liabilities, costs or expenses pertaining to
the identification, monitoring, cleanup, containment, or removal of Hazardous
Materials from soils, riverbeds or aquifers including the provision of an
alternative public drinking water source; (iii) all costs of defending such
claims; (iv) losses attributable to diminution in the value of the Premises or
the Building; (v) loss or restriction of use of rentable space in the Building;
(vi) Adverse effect on the marketing of any space in the Building; and (vi) all
other liabilities, obligations, penalties, fines, claims, actions (including
remedial or enforcement actions of any kind and administrative or judicial
proceedings, orders or judgments), damages (including consequential and punitive
damages), and costs (including attorney, consultant, and expert fees and
expenses) resulting from the release or violation caused by Tenant or Tenant's
Agents. This Section 12.B shall survive the expiration or termination o this
Lease.
C. Actual Release by Tenant: Tenant and Landlord agrees to notify each
other of any known lawsuits or orders which relate to the remedying of or actual
release of Hazardous Materials on or into the soils or ground water at or under
the Premises. Tenant shall also provide Landlord all notices required by
Section 25359.7(b) of the Health and Safety Code and all other notices required
by law to be given to Landlord in connection with Hazardous Materials. Without
limiting the foregoing, Tenant shall also deliver to Landlord, within twenty
(20) days after receipt thereof, any written notices from any governmental
agency alleging a material violation of, or material failure to comply with, any
federal, state or local laws, regulations, ordinances or orders, the violation
of which or failure to comply with poses a foreseeable and material risk of
contamination of the ground water or injury to humans (other than injury solely
to Tenant or Tenant's Agents).
In the event of any release on or into the Premises or into the soil or ground
water under the Premises, the Building or the Project of any Hazardous Materials
caused by Tenant or Tenant's agents or third party invitees, Tenant agrees to
comply, at its sole cost, with all laws, regulations, ordinances and orders of
any federal, state or local agency relating to the monitoring or remediation of
such Hazardous Materials. In the event of any such release of Hazardous
Materials Tenant shall immediately give verbal and follow-up written notice of
the release to Landlord, and Tenant agrees to meet and confer with Landlord and
its Lender to attempt to eliminate and mitigate any financial exposure to such
Lender and resultant exposure to Landlord under California Code of Civil
Procedure Section 736(b) as a result of such release, and promptly to take
reasonable monitoring, cleanup and remedial steps given, inter alia, the
historical uses to which the Property has and continues to be used, the risks to
public health posed by the release, the then available technology and the costs
of remediation, cleanup and monitoring, consistent with acceptable customary
practices for the type and severity of such contamination and all applicable
laws. Nothing in the preceding sentence shall eliminate, modify or reduce the
PAGE 14
obligation of Tenant under 12.B of this Lease to indemnify, defend and hold
Landlord harmless from any claims liabilities, costs or expenses incurred or
suffered by Landlord. Tenant shall provide Landlord prompt written notice of
Tenant's monitoring, cleanup and remedial steps.
In the absence of an order of any federal, state or local governmental or
quasi-governmental agency relating to the cleanup, remediation or other response
action required by applicable law, any dispute arising between Landlord and
Tenant concerning Tenant's obligation to Landlord under this Section 12.C
concerning the level, method, and manner of cleanup, remediation or response
action required in connection with such a release of Hazardous Materials shall
be resolved by mediation and/or arbitration pursuant to this Lease.
D. Environmental Monitoring: Landlord and its agents shall have the right
to inspect, investigate, sample and monitor the Premises including any air,
soil, water, ground water or other sampling or any other testing, digging,
drilling or analysis to determine whether Tenant is complying with the terms of
this Section 12. If Landlord discovers that Tenant is not in compliance with
the terms of this Section 12, any such costs incurred by Landlord, including
attorneys' and consultants' fees, shall be due and payable by Tenant to Landlord
within five (5) days following Landlord's written demand therefore.
13. TENANT'S DEFAULT: The occurrence of any of the following shall
constitute a material default and breach of this Lease by Tenant: (i) Tenant's
failure to pay the Base Monthly Rent including additional rent or any other
payment due under this Lease by the date such amount is due, where such failure
continues for three (3) business days after written notice from Landlord; (ii)
the abandonment of the Premises by Tenant; (iii) Tenant's failure to observe and
perform any other required provision of this Lease, where such failure continues
for thirty (30) days after written notice from Landlord, provided however that
if the nature of the default is such that it cannot reasonably be cured within
the 30-day period, Tenant shall not be deemed in default if it commences within
such period to cure, and thereafter diligently prosecutes the same to
completion; (iv) Tenant's making of any general assignment for the benefit of
creditors; (v) the filing by or against Tenant of a petition to have Tenant
adjudged a bankrupt or of a petition for reorganization or arrangement under any
law relating to bankruptcy (unless, in the case of a petition filed against
Tenant, the same is dismissed after the filing); (vi) the appointment of a
trustee or receiver to take possession of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease, where possession
is not restored to Tenant within thirty (30) days; or (vii) the attachment,
execution or other judicial seizure of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease, where such
seizure is not discharged within thirty (30) days.
A. Remedies: In the event of any such default by Tenant, then in addition
to other remedies available to Landlord at law or in equity, Landlord shall have
the immediate option to terminate this Lease and all rights of Tenant hereunder
by giving written notice of such intention to terminate. In the event Landlord
elects to so terminate this Lease, Landlord may recover from Tenant all the
following: (i) the worth at time of award of any unpaid rent which had been
earned at the time of such termination; (ii) the worth at time of award of the
amount by which the unpaid rent which would have been earned after termination
until the time of award exceeds the amount of such rental loss for the same
period that Tenant proves could have been reasonably avoided; (iii) the worth at
time of award of the amount by which the unpaid rent for the balance of the
Lease Term after the time of award exceeds the amount of such rental loss that
Tenant proves could be reasonably avoided; (iv) any other amount necessary to
compensate Landlord for all detriment proximately caused by Tenant's failure to
perform its obligations under this Lease, or which in the ordinary course of
things would be likely to result therefrom; including the following: (x)
expenses for repairing, altering or remodeling the Premises for purposes of
reletting, (y) broker's fees, advertising costs or other expenses of reletting
the Premises, and (z) costs of carrying the Premises such as taxes, insurance
premiums, utilities and security precautions; and (v) at Landlord's election,
such other amounts in addition to or in lieu of the foregoing as may be
permitted by applicable California law. The term "rent", as used herein, is
defined as the minimum monthly installments of Base Monthly Rent and all other
sums required to be paid by Tenant pursuant to this Lease, all such other sums
being deemed as additional rent due hereunder. As used in (i) and (ii) above,
"worth at the time of award" shall be computed by allowing interest at a rate
equal to the discount rate of the Federal Reserve Bank of
PAGE 15
San Francisco plus five (5%) percent per annum. As used in (iii) above, "worth
at the time of award" shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus one (1%) percent.
B. Right to Re-enter: In the event of any such default by Tenant, Landlord
shall have the right, after terminating this Lease, to re-enter the Premises and
remove all persons and property. Such property may be removed and stored in a
public warehouse or elsewhere at the cost of and for the account of Tenant, and
disposed of by Landlord in any manner permitted by law.
C. Abandonment: If Landlord does not elect to terminate this Lease as
provided in Section 13.A or 13.B above, then the provisions of 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 a right
to sublet and assign, subject only to reasonable limitations) as amended from
time to time, shall apply and Landlord may from time to time, without
terminating this Lease, either recover all rental as it becomes due or relet the
Premises or any part thereof for such term or terms and at such rental or
rentals and upon such other terms and conditions as Landlord in its sole
discretion may deem advisable, with the right to make alterations and repairs to
the Premises. In the event that Landlord elects to so relet, rentals received
by Landlord from such reletting shall be applied in the following order to: (i)
the payment of any indebtedness other than Base Monthly Rent due hereunder from
Tenant to Landlord; (ii) the payment of any cost of such reletting; (iii) the
payment of the cost of any alterations and repairs to the Premises; and (iv) the
payment of Base Monthly Rent due and unpaid hereunder. The residual rentals, if
any, shall be held by Landlord and applied in payment of future Base Monthly
Rent as the same may become due and payable hereunder. Landlord shall the
obligation to market the space but shall have no obligation to relet the
Premises following a default if Landlord has other comparable available space
within the Building or Project. In the event the portion of rentals received
from such reletting which is applied to the payment of rent hereunder during any
month be less than the rent payable during that month by Tenant hereunder, then
Tenant shall pay such deficiency to Landlord immediately upon demand. Such
deficiency shall be calculated and paid monthly. Tenant shall also pay to
Landlord, as soon as ascertained, any costs and expenses incurred by Landlord in
such reletting or in making such alterations and repairs not covered by the
rentals received from such reletting.
D. No Termination: Landlord's re-entry or taking possession of the
Premises pursuant to 13.B or 13.C shall not be construed as an election to
terminate this Lease unless written notice of such intention is given to Tenant
or unless the termination is decreed by a court of competent jurisdiction.
Notwithstanding any reletting without termination by Landlord because of any
default by Tenant, Landlord may at any time after such reletting elect to
terminate this Lease for any such default.
E. Non-Waiver: The waiver by Landlord or Tenant of any breach of any term,
covenant or condition, herein contained shall not be deemed to be a waiver of
such term, covenant or condition or any subsequent breach of the same or any
other term, covenant or condition herein contained. Landlord may accept
Tenant's payments without waiving any rights under this Lease, including rights
under a previously served notice of default. No payment by Tenant or receipt by
Landlord of a lesser amount than any installment of rent due shall be deemed as
other than payment on account of the amount due. If Landlord accepts payments
after serving a notice of default, Landlord may nevertheless commence and pursue
an action to enforce rights and remedies under the previously served notice of
default without giving Tenant any further notice or demand. Furthermore, the
Landlord's acceptance of rent from the Tenant when the Tenant is holding over
without express written consent does not convert Tenant's Tenancy from a tenancy
at sufferance to a month to month tenancy. No waiver of any provision of this
Lease shall be implied by any failure of Landlord to enforce any remedy for the
violation of that provision, even if that violation continues or is repeated.
Any waiver by Landlord of any provision of this Lease must be in writing. Such
waiver shall affect only the provision specified and only for the time and in
the manner stated in the writing. No delay or omission in the exercise of any
right or remedy by Landlord shall impair such right or remedy or be construed as
a waiver thereof by Landlord. No act or conduct of Landlord, including, without
limitation, the acceptance of keys to the Premises, shall constitute acceptance
of the surrender of the Premises by Tenant before the Expiration Date. Only
written notice from Landlord to Tenant of acceptance shall constitute such
acceptance of surrender of the Premises. Landlord's consent to or approval of
any act by Tenant which
PAGE 16
requires Landlord's consent or approvals shall not be deemed to waive or render
unnecessary Landlord's consent to or approval of any subsequent act by Tenant.
F. Performance by Landlord: If Tenant fails to perform any obligation
required under this Lease or by law or governmental regulation, Landlord in its
sole discretion may, with thirty (30) days' written notice and without waiving
any rights or remedies and without releasing Tenant from its obligations
hereunder, perform such obligation, in which event Tenant shall pay Landlord as
additional rent all sums paid by Landlord in connection with such substitute
performance, including interest at the Agreed Interest Rate (as defined in
Section 19.J) within ten (10) days of Landlord's written notice for such
payment.
G. Habitual Default: The provisions of Section 13 notwithstanding, the
Parties agree that if Tenant shall have defaulted (beyond any applicable cure
period) in the performance of any (but not necessarily the same) term or
condition of this Lease for four or more times during any twelve (12) month
period during the Lease Term, then such conduct shall, at the election of the
Landlord, represent a separate event of default which cannot be cured by Tenant.
Tenant acknowledges that the purpose of this provision is to prevent repetitive
defaults by Tenant, which work a hardship upon Landlord and deprive Landlord of
Tenant's timely performance under this Lease.
14. LANDLORD'S LIABILITY:
A. Limitation on Landlord's Liability: In the event of Landlord's failure
to perform any of its covenants or agreements under this Lease, Tenant shall
give Landlord written notice of such failure and shall give Landlord thirty (30)
days to cure or commence to cure such failure prior to any claim for breach or
resultant damages, provided, however, that if the nature of the default is such
that it cannot reasonably be cured within the 30-day period, Landlord shall not
be deemed in default if it commences within such period to cure, and thereafter
diligently prosecutes the same to completion. In addition, upon any such
failure by Landlord, Tenant shall give notice by registered or certified mail to
any person or entity with a security interest in the Premises ("Mortgagee") that
has provided Tenant with notice of its interest in the Premises, and shall
provide Mortgagee a reasonable opportunity to cure such failure. Tenant agrees
that each of the Mortgagees to whom this Lease has been assigned is an expressed
third-party beneficiary hereof. Tenant waives any right under California Civil
Code Section 1950.7 or any other present or future law to the collection of any
payment or deposit from Mortgagee or any purchaser at a foreclosure sale of
Mortgagee's interest unless Mortgagee or such purchaser shall have actually
received and not refunded the applicable payment or deposit. Tenant Further
waives any right to terminate this Lease and to vacate the Premises on
Landlord's default under this Lease. Tenant's sole remedy on Landlord's default
is an action for damages or injunctive or declaratory relief.
B. Limitation on Tenant's Recourse: If Landlord is a corporation, trust,
partnership, joint venture, unincorporated association or other form of business
entity, then (i) the obligations of Landlord shall not constitute personal
obligations of the officers, directors, trustees, partners, joint venturers,
members, owners, stockholders, or other principals or representatives except to
the extent of their interest in the Premises. Tenant shall have recourse only
to the interest of Landlord in the Premises or for the satisfaction of the
obligations of Landlord and shall not have recourse to any other assets of
Landlord for the satisfaction of such obligations.
C. Indemnification of Landlord: As a material part of the consideration
rendered to Landlord, Tenant hereby waives all claims against Landlord for
damages to goods, wares and merchandise, and all other personal property in,
upon or about said Premises and for injuries to persons in or about said
Premises, from any cause arising at any time to the fullest extent permitted by
law, and Tenant shall indemnify, defend with counsel reasonably acceptable to
Landlord and hold Landlord, and their shareholders, directors, officers,
trustees, employees, partners, affiliates and agents from any claims,
liabilities, costs or expenses incurred or suffered arising from the use of
occupancy of the Premises or any part of the Project by Tenant or Tenant's
Agents, the acts or omissions of Tenant or Tenant's Agents, Tenant's breach of
this Lease, or any damage or injury to person or property from any cause, except
to the extent caused by the willful misconduct or active negligence of Landlord
or from the failure of Tenant to keep the Premises in good condition and repair
as herein provided, except to the extent due to the gross negligence or willful
misconduct of Landlord. Further, in the event Landlord is made party to any
litigation due to the acts or omission of Tenant and Tenant's Agents, Tenant
will indemnify, defend (with counsel reasonably acceptable to Landlord) and hold
Landlord harmless from any
PAGE 17
such claim or liability including Landlord's costs and expenses and reasonable
attorney's fees incurred in defending such claims.
15. DESTRUCTION OF PREMISES:
A. Landlord's Obligation to Restore': In the event of a destruction of the
Premises during the Lease Term Landlord shall use due diligence to as promptly
as practicable repair, at Landlord's cost (subject to Tenant reimbursement for
applicable insurance deductibles to the extent Tenant is responsible for such
deductibles), the Premises to substantially the same condition to that which
existed prior to such destruction. Such destruction shall not annul or void
this Lease; however, Tenant shall be entitled to a proportionate reduction of
Base Monthly Rent commencing from the date of destruction, such proportionate
reduction to be based upon the extent to which the repairs interfere with
Tenant's business in the Premises, as reasonably determined by Landlord. In no
event shall Landlord be required to replace or restore Alterations, Tenant
Improvements paid for by Tenant from sources other than the Work Allowance or
Tenant's fixtures or personal property. With respect to a destruction which
Landlord is obligated to repair or may elect to repair under the terms of this
Section, Tenant waives the provisions of Section 1932, and Section 1933,
Subdivision 4, of the Civil Code of the State of California, and any other
similarly enacted statute, and the provisions of this Section 15 shall govern in
the case of such destruction.
B. Limitations on Landlord's Restoration Obligation': Notwithstanding the
provisions of Section 15.A, Landlord shall have no obligation to repair, or
restore the Premises if any of the following occur: (i) if the repairs cannot
be made in one (1) year from the date of receipt of all governmental approvals
necessary under the laws and regulations of State, Federal, County or Municipal
authorities, as reasonably determined by Landlord, (ii) if the holder of the
first deed of trust or mortgage encumbering the Building elects not to permit
the insurance proceeds payable upon damage or destruction to be used for such
repair or restoration, (iii) the damage or destruction is not fully covered by
the insurance maintained by Landlord (excluding deductible amounts) and any
amounts Tenant elects, in its sole discretion, to pay towards the cost of repair
or restoration, (iv) the damage or destruction occurs in the last six (6) months
of the Lease Term (unless Tenant elects to exercise any available option to
extend the Lease Term, (v) Tenant is in default pursuant to the provisions of
Section 13, or (vi) Tenant has vacated the Premises for more than ninety (90)
days. In any such event Landlord may elect either to (i) complete the repair or
restoration, or (ii) terminate this Lease by providing Tenant written notice of
its election within sixty (60) days following the damage or destruction. If (i)
the repairs cannot be made within one (1) year from the date of the damage or
destruction or (ii) the damage or destruction occurs in the last six (6) months
of the Lease Term, Tenant may elect to terminate this Lease by providing
Landlord written notice of its election within sixty (60) days following the
date of the damage or destruction.
16. CONDEMNATION: If any part of the Premises shall be taken for any public
or quasi-public use, under any statute or by right of eminent domain or private
purchase in lieu thereof, and only a part thereof remains which is susceptible
of occupation hereunder, this Lease shall, as to the part so taken, terminate as
of the day before title vests in the condemnor or purchaser ("Vesting Date") and
Base Monthly Rent payable hereunder shall be adjusted so that Tenant is required
to pay for the remainder of the Lease Term only such portion of Base Monthly
Rent as the value of the part remaining after such taking bears to the value of
the entire Premises prior to such taking. If all of the Premises or such part
thereof be taken so that there does not remain a portion susceptible for
occupation hereunder, this Lease shall terminate on the Vesting Date. If part
or all of the Premises be taken, all compensation awarded upon such taking shall
go to Landlord, and Tenant shall have no claim thereto; except Landlord shall
cooperate with Tenant, without cost to Landlord, to recover compensation for
damage to or taking of any Alterations, Tenant Improvements paid for by Tenant
from sources other than the Work Allowance, or for Tenant's moving costs.
Tenant hereby waives the provisions of California Code of Civil Procedures
Section 1265.130 and any other similarly enacted statue, and the provisions of
this Section 16 shall govern in the case of a taking. Notwithstanding anything
to the contrary in this Lease, if as a result of any taking or sale in lieu
thereof under this Section 16, the Premises are no longer reasonably suitable
for Tenant's intended use, Tenant, upon written notice to Landlord, shall be
entitled to terminate this Lease as of the Vesting Date.
17. ASSIGNMENT OR SUBLEASE:
A. Consent by Landlord: Except as specifically provided in this Section
17.E,
PAGE 18
Tenant may not assign, sublet, hypothecate, or allow a third party to use the
Premises without the express written consent of Landlord. In the event Tenant
desires to assign this Lease or any interest herein or sublet the Premises or
any part thereof, Tenant shall deliver to Landlord (i) the proposed agreements
and all ancillary agreements with the proposed assignee/subtenant, (ii) current
financial statements of the transferee covering the preceding three years (if
available), (iii) the nature of the proposed transferee's business to be carried
on in the Premises, (iv) a statement outlining all consideration to be given on
account of the Transfer, and (v) a current financial statement of Tenant.
Landlord may condition its approval of any Transfer on receipt of a
certification from both Tenant and the proposed transferee of all consideration
to be paid to Tenant in connection with such Transfer. At Landlord's request,
Tenant shall also provide additional information reasonably required by Landlord
to determine whether it will consent to the proposed assignment or sublease.
Landlord shall have a ten (10) business day period following receipt of all the
foregoing within which to notify Tenant in writing that Landlord elects to: (i)
terminate this Lease in the event the proposed sublease or assignment is for
more than three (3) full floors within the Premises; (ii) permit Tenant to
assign or sublet such space to the named assignee/subtenant on the terms and
conditions set forth in the notice; or (iii) refuse consent. If Landlord should
fail to notify Tenant in writing of such election within the 10 business-day
period, Landlord shall be deemed to have elected option (iii) above. In the
event Landlord elects option (i) above, Landlord shall reimburse Tenant for any
unamortized Tenant Improvement costs paid by Tenant and this Lease shall expire
with respect to such part of the Premises on the date upon which the proposed
sublease or transfer was to commence, and from such date forward, Base Monthly
Rent and Tenant's Allocable Share of all other costs and charges shall be
adjusted based upon the proportion that the rentable area of the Premises
remaining bears to the total rentable area of the Building. In the event
Landlord elects option (ii) above, Landlord's written consent to the proposed
assignment or sublease shall not be unreasonably withheld, provided and upon the
condition that: (i) the proposed assignee or subtenant is engaged in a business
that is limited to the use expressly permitted under this Lease; (ii) the
proposed assignee or subtenant is a company with sufficient financial worth and
management ability to undertake the financial obligation of this Lease and
Landlord has been furnished with reasonable proof thereof; (iii) the proposed
assignment or sublease is in form reasonably satisfactory to Landlord; (iv)
Tenant reimburses Landlord on demand for any reasonable costs that may be
incurred by Landlord in connection with said assignment or sublease, including
the costs of making investigations as to the acceptability of the proposed
assignee or subtenant, and legal costs not to exceed $2,000.00 incurred in
connection with the granting of any requested consent; and (v) Tenant shall not
have advertised or publicized in any way the availability of the Premises
without prior notice to Landlord. In the event all or any one of the foregoing
conditions are not satisfied, Landlord shall be considered to have acted
reasonably if it withholds its consent. Notwithstanding the foregoing, Landlord
agrees that it will not exercise its right to terminate this Lease for either:
(i) an assignment or sublease during the first thirty six (36) months of the
Lease Term; or (ii) any assignment or sublease affecting less than three (3)
full floors of the Premises.
B. Assignment or Subletting Consideration: Beginning thirty six (36) months
after the Commencement Date, any rent or other economic consideration realized
by Tenant under any sublease and assignment, in excess of the Base Monthly Rent
payable hereunder and reasonable subletting and assignment costs (including but
not limited to legal fees, real estate commissions, advertising fees, and
unamortized Tenant Improvements paid for by Tenant, provided further that such
Tenant Improvements have value to the incoming subtenant), shall be divided and
paid fifty percent (50%) to Landlord and fifty percent (50%) to Tenant.
Tenant's obligation to pay over Landlord's portion of the consideration
constitutes an obligation for additional rent hereunder. The above provisions
relating to Landlord's right to terminate the Lease and relating to the
allocation of excess rent are independently negotiated terms of the Lease which
constitute a material inducement for the Landlord to enter into the Lease, and
are agreed by the Parties to be commercially reasonable. No assignment or
subletting by Tenant shall relieve it of any obligation under this Lease. Any
assignment or subletting which conflicts with the provisions hereof shall be
void.
C. No Release: Any assignment or sublease shall be made only if and shall
not be effective until the assignee or subtenant shall execute, acknowledge, and
deliver to Landlord an agreement, in form and substance satisfactory to
Landlord, whereby the assignee or subtenant shall assume all the obligations of
PAGE 19
this Lease on the part of Tenant to be performed or observed under the sublease
and shall be subject to all the covenants, agreements, terms, provisions and
conditions in this Lease. Notwithstanding any such sublease or assignment and
the acceptance of rent by Landlord from any subtenant or assignee, Tenant and
any guarantor shall remain fully liable for the payment of Base Monthly Rent and
additional rent due, and to become due hereunder, for the performance of all the
covenants, agreements, terms, provisions and conditions contained in this Lease
on the part of Tenant to be performed and for all acts and omissions of any
licensee, subtenant, assignee or any other person claiming under or through any
subtenant or assignee that shall be in violation of any of the terms and
conditions of this Lease, and any such violation shall be deemed a violation by
Tenant. Tenant shall indemnify, defend and hold Landlord harmless from and
against all losses, liabilities, damages, costs and expenses (including
reasonable attorney fees) resulting from any claims that may be made against
Landlord by the proposed assignee or subtenant or by any real estate brokers or
other persons claiming compensation in connection with the proposed assignment
or sublease.
D. Reorganization of Tenant: The provisions of this Section 17.D shall
apply if Tenant is a corporation and: (i) there is a dissolution, merger,
consolidation, or other reorganization of or affecting Tenant, where Tenant is
not the surviving corporation, or (ii) there is a sale or transfer to one person
or entity (or to any group of related persons or entities) of stock possessing
more than 50% of the total combined voting power of all classes of Tenant's
capital stock issued, outstanding and entitled to vote for the election of
directors, and after such sale or transfer of stock Tenant's stock is no longer
publicly traded. In a transaction under clause (i) the surviving corporation
shall promptly execute and deliver to Landlord an agreement in form reasonably
satisfactory to Landlord under which such surviving corporation assumes the
obligations of Tenant hereunder, and in a transaction under clause (ii) the
transferee or buyer shall promptly execute and deliver to Landlord an agreement
in form reasonably satisfactory to Landlord under which such transferee or buyer
assumes the obligations of Tenant under the Lease.
E. Permitted Transfers: Notwithstanding anything contained in this Section
17, so long as Tenant otherwise complies with the provisions of this Article,
Tenant may enter into any of the following transfers (a "Permitted Transfer")
without Landlord's prior consent, and Landlord shall not be entitled to
terminate the Lease or to receive any part of any subrent resulting therefrom
that would otherwise be due pursuant to Sections 17.A and 17.B. Tenant may
sublease all or part of the Premises or assign its interest in this Lease to (i)
any corporation which controls, is controlled by, or is under common control
with the original Tenant to this Lease by means of an ownership interest of more
than 50%; (ii) a corporation which results from a merger, consolidation or other
reorganization in which Tenant is not the surviving corporation, so long as the
surviving corporation has a net worth at the time of such assignment that is
equal to or greater than the net worth of Tenant immediately prior to such
transaction; and (iii) a corporation which purchases or otherwise acquires all
or substantially all of the assets of Tenant so long as such acquiring
corporation has a net worth at the time of such assignment that is equal to or
greater than the net worth of Tenant immediately prior to such transaction.
F. Effect of Default: In the event of Tenant's default beyond any
applicable cure period, Tenant hereby assigns all rents due from any assignment
or subletting to Landlord as security for performance of its obligations under
this Lease, and Landlord may collect such rents as Tenant's Attorney-in-Fact,
except that Tenant may collect such rents unless a default occurs as described
in Section 13 above. A termination if the Lease due to Tenant's default shall
not automatically terminate an assignment or sublease then in existence; rather
at Landlord's election, such assignment or sublease shall survive the Lease
termination, the assignee or subtenant shall attorn to Landlord, and Landlord
shall undertake the obligations of Tenant under the sublease or assignment;
except that Landlord shall not be liable for prepaid rent, security deposits or
other defaults of Tenant to the subtenant or assignee, or for any acts or
omissions of Tenant and Tenant's Agents.
G. Conveyance by Landlord: As used in this Lease, the term "Landlord" is
defined only as the owner for the time being of the Premises, so that in the
event of any sale or other conveyance of the Premises or in the event of a
master lease of the Premises, Landlord shall be entirely freed and relieved of
all its covenants and obligations hereunder, and it shall be deemed and
construed, without further agreement between the Parties and the purchaser at
any such sale or the master tenant of the Premises, that the purchaser or master
tenant of the Premises has assumed and agreed
PAGE 20
to carry out any and all covenants and obligations of Landlord hereunder. Such
transferor shall transfer and deliver Tenant's security deposit to the purchaser
at any such sale or the master tenant of the Premises, and thereupon the
transferor shall be discharged from any further liability in reference thereto.
H. Successors and Assigns: Subject to the provisions this Section 17, the
covenants and conditions of this Lease shall apply to and bind the heirs,
successors, executors, administrators and assigns of all Parties hereto; and all
Parties hereto comprising Tenant shall be jointly and severally liable
hereunder.
18. OPTION TO EXTEND THE LEASE TERM:
X. Xxxxx and Exercise of Option: Landlord grants to Tenant, subject to the
terms and conditions set forth in this Section 18.A, one (1) option (the
"Option") to extend the Lease Term for an additional term (the "Option Term").
The Option Term shall be for a period of sixty (60) months and shall be
exercised, if at all, by written notice to Landlord no earlier than twelve (12)
months prior to the date the Lease Term would expire but for such exercise but
no later than nine (9) months prior to the date the Lease Term would expire but
for such exercise, time being of the essence for the giving of such notice. If
Tenant exercises the Option, all of the terms, covenants and conditions of this
Lease shall apply except for the grant of additional Options pursuant to this
Section, provided that Base Monthly Rent for the Premises payable by Tenant
during the Option Term shall be the greater of (i) the average amount of Base
Monthly Rent paid during the initial Lease Term ("Floor Rent"), and (ii) the
Fair Market Rental as hereinafter defined. Notwithstanding anything herein to
the contrary, if Tenant is in monetary or material non-monetary default under
any of the terms, covenants or conditions of this Lease beyond applicable cure
periods either at the time Tenant exercises the Option or at any time thereafter
prior to the commencement date of the Option Term, Landlord shall have, in
addition to all of Landlord's other rights and remedies provided in this Lease,
the right to terminate the Option upon notice to Tenant, in which event the
Lease Term shall not be extended pursuant to this Section 18.A. As used herein,
the term "Fair Market Rental" is defined as the rental and all other monetary
payments, including any escalations and adjustments thereto (including without
limitation Consumer Price Indexing) that Landlord could obtain during the Option
Term from a third party desiring to lease the Premises, based upon the current
use and other potential uses of the Premises, as determined by the rents then
being obtained for new leases of space comparable in age and quality to the
Premises in the same real estate submarket as the Building. Fair Market Rental
shall further take into account that (i) Tenant is in occupancy and making
functional use of the Premises in its then existing condition, and (ii) no
additional work allowance, tenant improvement investment, or leasing commission
shall be required by Landlord.
B. Determination of Fair Market Rental: If Tenant exercises the Option,
Landlord shall send Tenant a notice setting forth the Fair Market Rental for the
Option Term within thirty (30) days following the Exercise Date. If Tenant
disputes Landlord's determination of Fair Market Rental for the Option Term,
Tenant shall, within thirty (30) days after the date of Landlord's notice
setting forth Fair Market Rental for the Option Term, send to Landlord a notice
stating that Tenant either elects to terminate its exercise of the Option, in
which event the Option shall lapse and this Lease shall terminate on the
Expiration Date, or that Tenant disagrees with Landlord's determination of Fair
Market Rental for the Option Term and elects to resolve the disagreement as
provided in Section 18.C below. If Tenant does not send Landlord a notice as
provided in the previous sentence, Landlord's determination of Fair Market
Rental shall be the Base Monthly Rent payable by Tenant during the Option Term.
If Tenant elects to resolve the disagreement as provided in Section 18.C and
such procedures are not concluded prior to the commencement date of the Option
Term, Tenant shall pay to Landlord as Base Monthly Rent the Fair Market Rental
as determined by Landlord in the manner provided above. If the Fair Market
Rental as finally determined pursuant to Section 18.C is greater than Landlord's
determination, Tenant shall pay Landlord the difference between the amount paid
by Tenant and the Fair Market Rental as so determined in Section 18.C within
thirty (30) days after such determination. If the Fair Market Rental as finally
determined in Section 18.C is less than Landlord's determination, the difference
between the amount paid by Tenant and the Fair Market Rental as so determined in
Section 18.C shall be credited against the next installments of Base Monthly
Rent due from Tenant to Landlord hereunder.
C. Resolution of a Disagreement over the Fair Market Rental: Any
disagreement regarding Fair Market Rental shall be resolved as follows:
PAGE 21
1. Within thirty (30) days after Tenant's response to Landlord's notice
setting forth the Fair Market Rental, Landlord and Tenant shall meet at a
mutually agreeable time and place, in an attempt to resolve the disagreement.
2. If within the 30-day period referred to above, Landlord and Tenant
cannot reach agreement as to Fair Market Rental, each party shall select one
appraiser to determine Fair Market Rental. Each such appraiser shall arrive at
a determination of Fair Market Rental and submit their conclusions to Landlord
and Tenant within thirty (30) days after the expiration of the 30-day
consultation period described above.
3. If only one appraisal is submitted within the requisite time period, it
shall be deemed as Fair Market Rental. If both appraisals are submitted within
such time period and the two appraisals so submitted differ by less than ten
percent (10%), the average of the two shall be deemed as Fair Market Rental. If
the two appraisals differ by more than 10%, the appraisers shall immediately
select a third appraiser who shall, within thirty (30) days after his selection,
make and submit to Landlord and Tenant a determination of Fair Market Rental.
This third appraisal will then be averaged with the closer of the two previous
appraisals and the result shall be Fair Market Rental.
4. All appraisers specified pursuant to this Section shall be members of
the American Institute of Real Estate Appraisers with not less than ten (10)
years experience appraising office and industrial properties in the Santa Xxxxx
Valley. Each party shall pay the cost of the appraiser selected by such party
and one-half of the cost of the third appraiser.
D. Personal to Tenant: All Options provided to Tenant in this Lease are
personal and granted to Brio Technology, Inc. (and any transferee under a
Permitted Transfer) and are not exercisable by any third party should Tenant
assign or sublet all or a portion of its rights under this Lease, unless
Landlord consents to permit exercise of any option by any assignee or subtenant,
in Landlord's sole and absolute discretion. In the event Tenant has multiple
options to extend this Lease, a later option to extend the Lease cannot be
exercised unless the prior option has been properly exercised.
E. Right to Rescind: If the determination of Fair Market Rental pursuant to
the foregoing provision results in a Fair Market Rental which is in excess of
the Floor Rent, Tenant shall be entitled to rescind its exercise of the Option
within ten (10) days after the date on which Tenant is notified of the
determination of Fair Market Rental, in which event the Lease Term shall be
extended from the date on which the Lease would have expired if the Option were
never exercised plus an additional period of three (3) months at a rate equal to
110% of the rent payable during the last month of the original Lease Term.
19. RIGHT OF FIRST OFFERING TO LEASE:
X. Xxxxx: Landlord hereby grants Tenant a right of first offering to
lease the 4988 Building. Prior to Landlord offering to lease the 4988 Building
to a third party (other than the third parties with existing rights as of the
Effective Date), Landlord shall give Tenant written notice of such desire and
the terms and other information under which Landlord intends to lease the 4988
Building. Provided at the time of exercise, (i) Tenant is not in default beyond
any applicable cure period, and (ii) Tenant's then current net worth (as
evidenced by its most recent financial statements) is at least equal to its net
worth at the time of execution of this Lease, Tenant shall have the option,
which must be exercised, if at all, by written notice to Landlord within seven
(7) business days after Tenant's receipt of Landlord's notice, to lease the 4988
Building at the rent and terms of lease specified in the notice. In the event
Tenant timely exercises such option to lease the 4988 Building, Landlord shall
lease the 4988 Building to Tenant, and Tenant shall lease the 4988 Building from
Landlord in accordance with the rent and terms specified in Landlord's notice.
Landlord and Tenant shall, in good faith, attempt to reach agreement on the
terms of a mutually acceptable lease agreement consistent with the terms set
forth in Landlord's notice within thirty (30) days of Landlord's notice. In the
event (i) Landlord and Tenant are unable to reach agreement on a mutually
acceptable lease within such thirty (30) day period or (ii) Tenant fails to
exercise Tenant's option within said ten (10) day period, Landlord shall have
one hundred eighty (180) days thereafter to lease the 4988 Building at no less
than ninety percent (90%) of the rental rate and upon the same or substantially
the same other terms of lease as specified in the notice to Tenant. In the
event Landlord fails to lease the 4988 Building within said one hundred eighty
(180) day period or in the event Landlord proposes to lease the 4988 Building at
less than ninety percent (90%) of the rental rate or on other material terms
which are
PAGE 22
more favorable to the prospective tenant than that proposed to Tenant, Landlord
shall be required to resubmit such offer to Tenant in accordance with this Right
of First Offering.
B. Exclusions: Notwithstanding the foregoing, this Right of First
Offering shall automatically terminate, (i) upon the expiration or sooner
termination of the Lease, or (ii) in the event that Landlord transfers its
interest in the Premises or in the 4988 Building, unless such transfer by
Landlord is to a related entity.
20. GENERAL PROVISIONS:
A. Attorney's Fees: In the event a suit or alternative form of dispute
resolution is brought for the possession of the Premises, for the recovery of
any sum due hereunder, to interpret the Lease, or because of the breach of any
other covenant herein; then the losing party shall pay to the prevailing party
reasonable attorney's fees including the expense of expert witnesses,
depositions and court testimony as part of its costs which shall be deemed to
have accrued on the commencement of such action. The prevailing party shall
also be entitled to recover all costs and expenses including reasonable
attorney's fees incurred in enforcing any judgment or award against the other
party. The foregoing provision relating to post-judgment costs is severable
from all other provisions of this Lease.
B. Authority of Parties: Tenant represents and warrants that it is duly
formed and in good standing, and is duly authorized to execute and deliver this
Lease on behalf of said corporation, in accordance with a duly adopted
resolution of the Board of Directors of said corporation or in accordance with
the by-laws of said corporation, and that this Lease is binding upon said
corporation in accordance with its terms. At Landlord's request, Tenant shall
provide Landlord with corporate resolutions or other proof in a form acceptable
to Landlord, authorizing the execution of the Lease.
C. Brokers: Tenant and Landlord represent it has not utilized or contacted
a real estate broker or finder with respect to this Lease other than CB Xxxxxxx
Xxxxx, Inc. and Tenant and Landlord agree to indemnify, defend and hold each
other harmless against any claim, cost, liability or cause of action asserted by
any other broker or finder claiming through the indemnifying party.
D. Choice of Law: This Lease shall be governed by and construed in
accordance with California law. Except as provided in Section 19.E, venue
shall be Santa Xxxxx County.
E. Dispute Resolution: Landlord and Tenant and any other party that may become
a party to this Lease or be deemed a party to this Lease including any
subtenants agree that, except for any claim by Landlord for unlawful detainer or
any claim within the jurisdiction of the small claims court (which small claims
court shall be the sole court of competent jurisdiction), any controversy,
dispute, or claim of whatever nature arising out of, in connection with or in
relation to the interpretation, performance or breach of this Lease, including
any claim based on contract, tort, or statute, shall be resolved at the request
of any party to this agreement through a two-step dispute resolution process
administered by J.A.M.S. or another judicial mediation service mutually
acceptable to the parties located in Santa Xxxxx County, California. The dispute
resolution process shall involve first, mediation, followed, if necessary, by
final and binding arbitration administered by and in accordance with the then
existing rules and practices of J.A.M.S. or other judicial mediation service
selected. In the event of any dispute subject to this provision, either party
may initiate a request for mediation and the parties shall use reasonable
efforts to promptly select a J.A.M.S. mediator and commence the mediation. In
the event the parties are not able to agree on a mediator within thirty (30)
days, J. A. M. S. or another judicial mediation service mutually acceptable to
the parties shall appoint a mediator. The mediation shall be confidential and in
accordance with California Evidence Code (S) 1119 et. seq. The mediation shall
be held in Santa Xxxxx County, California and in accordance with the existing
rules and practice of J. A. M. S. (or other judicial and mediation service
selected). The parties shall use reasonable efforts to conclude the mediation
within sixty (60) days of the date of either party's request for mediation. The
mediation shall be held prior to any arbitration or court action (other than a
claim by Landlord for unlawful detainer or any claim within the jurisdiction of
the small claims court which are not subject to this mediation/arbitration
provision and may be filed directly with a court of competent jurisdiction).
Should the prevailing party in any dispute subject to this Section 19.E attempt
an arbitration or a court action before attempting to mediate, the prevailing
party shall not be entitled to attorney's fees that might otherwise be available
to them in a court action or arbitration and in addition thereto, the party who
is determined by the arbitrator to have resisted mediation, shall be sanctioned
by the
PAGE 23
arbitrator or judge.
IF A MEDIATION IS CONDUCTED BUT IS UNSUCCESSFUL, IT SHALL BE FOLLOWED BY FINAL
AND BINDING ARBITRATION ADMINISTERED BY AND IN ACCORDANCE WITH THE THEN EXISTING
RULES AND PRACTICES OF J.A.M.S. OR THE OTHER JUDICIAL AND MEDIATION SERVICE
SELECTED, AND JUDGMENT UPON ANY AWARD RENDERED BY THE ARBITRATOR(S) MAY BE
ENTERED BY ANY STATE OR FEDERAL COURT HAVING JURISDICTION THEREOF AS PROVIDED BY
CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1280 ET. SEQ, AS SAID STATUTES THEN
APPEAR, INCLUDING ANY AMENDMENTS TO SAID STATUTES OR SUCCESSORS TO SAID STATUTES
OR AMENDED STATUTES, EXCEPT THAT IN NO EVENT SHALL THE PARTIES BE ENTITLED TO
PROPOUND INTERROGATORIES OR REQUEST FOR ADMISSIONS DURING THE ARBITRATION
PROCESS. THE ARBITRATOR SHALL BE A RETIRED JUDGE OR A LICENSED CALIFORNIA
ATTORNEY. THE VENUE FOR ANY SUCH ARBITRATION OR MEDIATION SHALL BE IN SANTA
XXXXX COUNTY, CALIFORNIA.
NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE
ARISING OUT OF THE MATTERS INCLUDED IN THE "MEDIATION AND ARBITRATION OF
DISPUTES" PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW
AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED
IN A COURT OR FURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP
YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE
SPECIFICALLY INCLUDED IN THE "MEDIATION AND ARBITRATION OF DISPUTES" PROVISION.
IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY
BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL
PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.
WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING
OUT OF THE MATTERS INCLUDED IN THE "MEDIATION AND ARBITRATION OF DISPUTES"
PROVISION TO NEUTRAL ARBITRATION.
LANDLORD: ______ TENANT: _______
F. Entire Agreement: This Lease and the exhibits attached hereto contains
all of the agreements and conditions made between the Parties hereto and may not
be modified orally or in any other manner other than by written agreement signed
by all parties hereto or their respective successors in interest. This Lease
supersedes and revokes all previous negotiations, letters of intent, lease
proposals, brochures, agreements, representations, promises, warranties, and
understandings, whether oral or in writing, between the parties or their
respective representatives or any other person purporting to represent Landlord
or Tenant.
G. Entry by Landlord: Upon prior notice to Tenant and subject to Tenant's
reasonable security regulations, Tenant shall permit Landlord and his agents to
enter into and upon the Premises at all reasonable times, and without any rent
abatement or reduction or any liability to Tenant for any loss of occupation or
quiet enjoyment of the Premises thereby occasioned, for the following purposes:
(i) inspecting and maintaining the Premises; (ii) making repairs, alterations or
additions to the Premises; (iii) erecting additional building(s) and
improvements on the land where the Premises are situated or on adjacent land
owned by Landlord; (iv) performing any obligations of Landlord under the Lease
including remediation of Hazardous Materials if determined to be the
responsibility of Landlord, (v) posting and keeping posted thereon notices of
non-responsibility for any construction, alteration or repair thereof, as
required or permitted by any law, and (vi) showing the Premises to Landlord's or
the Master Landlord's existing or potential successors, purchaser, and lenders.
Tenant shall permit Landlord and his agents, at any time within two hundred
seventy (270) days prior to the Expiration Date (or at any time during the Lease
if Tenant is in default hereunder beyond any applicable cure period), to place
upon the Premises "For Lease" signs and exhibit the Premises to real estate
brokers and prospective tenants at reasonable hours. The foregoing
notwithstanding, Landlord and its agents: (i) shall not enter the Premises
without first giving twenty-four (24) hours notice to Tenant of such entry
except in the case of emergency, (ii) shall
PAGE 24
be accompanied by an employee of Tenant at all times while in the Premises,
(iii) shall comply with Tenant's security procedures applicable to the Premises,
and (iv) shall not unreasonably interfere with Tenant's use of the Premises.
H. Estoppel Certificates: At any time during the Lease Term, Tenant shall,
within ten (10) business days following written notice from Landlord, execute
and deliver to Landlord a written statement certifying, if true, the following:
(i) that this Lease is unmodified and in full force and effect (or, if modified,
stating the nature of such modification); (ii) the date to which rent and other
charges are paid in advance, if any; (iii) acknowledging that there are not, to
Tenant's knowledge, any uncured defaults on Landlord's part hereunder (or
specifying such defaults if they are claimed); and (iv) such other information
as Landlord may reasonably request. Any such statement may be conclusively
relied upon by any prospective purchaser or encumbrancer of Landlord's interest
in the Premises. Tenant's failure to deliver such statement within such time
shall be conclusive upon the Tenant that this Lease is in full force and effect
without modification, except as may be represented by Landlord, and that there
are no uncured defaults in Landlord's performance. If Tenant is not a public
company, Tenant agrees to provide, within five (5) days of Landlord's request,
Tenant's most recent three (3) years of audited financial statements for
Landlord's use in financing or sale of the Premises or Landlord's interest
therein.
I. Exhibits: All exhibits referred to are attached to this Lease and
incorporated by reference.
J. Interest: All rent due hereunder, if not paid when due, shall bear
interest at the rate of the Reference Rate published by Bank of America, San
Xxxxxxxxx Xxxxxx, plus two percent (2%) per annum from that date until paid in
full ("Agreed Interest Rate"). This provision shall survive the expiration or
sooner termination of the Lease. Despite any other provision of this Lease, the
total liability for interest payments shall not exceed the limits, if any,
imposed by the usury laws of the State of California. Any interest paid in
excess of those limits shall be refunded to Tenant by application of the amount
of excess interest paid against any sums outstanding in any order that Landlord
requires. If the amount of excess interest paid exceeds the sums outstanding,
the portion exceeding those sums shall be refunded in cash to Tenant by
Landlord. To ascertain whether any interest payable exceeds the limits imposed,
any non-principal payment (including late charges) shall be considered to the
extent permitted by law to be an expense or a fee, premium, or penalty rather
than interest.
K. Modifications Required by Lender: If any lender of Landlord or ground
lessor of the Premises requires a modification of this Lease that will not
increase Tenant's cost or expense or materially or adversely change Tenant's
rights and obligations, this Lease shall be so modified and Tenant shall execute
whatever documents are required and deliver them to Landlord within ten (10)
days after the request.
L. No Presumption Against Drafter: Landlord and Tenant understand, agree
and acknowledge that this Lease has been freely negotiated by both Parties; and
that in any controversy, dispute, or contest over the meaning, interpretation,
validity, or enforceability of this Lease or any of its terms or conditions,
there shall be no inference, presumption, or conclusion drawn whatsoever against
either party by virtue of that party having drafted this Lease or any portion
thereof.
M. Notices: All notices, demands, requests, or consents required to be
given under this Lease shall be sent in writing by U.S. certified mail, return
receipt requested, nationally recognized overnight carrier, or by personal
delivery addressed to the party to be notified at the address for such party
specified in Section 1 of this Lease, or to such other place as the party to be
notified may from time to time designate by at least fifteen (15) days prior
notice to the notifying party. When this Lease requires service of a notice,
that notice shall replace rather than supplement any equivalent or similar
statutory notice, including any notices required by Code of Civil Procedure
Section 1161 or any similar or successor statute. When a statute requires
service of a notice in a particular manner, service of that notice (or a similar
notice required by this Lease) shall replace and satisfy the statutory service-
of-notice procedures, including those required by Code of Civil Procedure
Section 1162 or any similar or successor statute.
N. Asset Management: In addition, Tenant agrees to pay Landlord along with
the expenses to be reimbursed by Tenant a monthly fee for asset management
services rendered by either Landlord or a third party manager engaged by
Landlord (which may be a party affiliated with Landlord), in the amount of one
and 50/100 percent (1.5%) of the Base Monthly
PAGE 25
Rent.
O. Rent: All monetary sums due from Tenant to Landlord under this Lease,
including, without limitation those referred to as "additional rent", shall be
deemed as rent.
P. Representations: Tenant acknowledges that neither Landlord nor any of
its employees or agents have made any agreements, representations, warranties or
promises with respect to the Premises or with respect to present or future
rents, expenses, operations, tenancies or any other matter. Except as herein
expressly set forth herein, Tenant relied on no statement of Landlord or its
employees or agents for that purpose.
Q. Rights and Remedies: Subject to Section 14 above, All rights and
remedies hereunder are cumulative and not alternative to the extent permitted by
law, and are in addition to all other rights and remedies in law and in equity.
R. Severability: If any term or provision of this Lease is held
unenforceable or invalid by a court of competent jurisdiction, the remainder of
the Lease shall not be invalidated thereby but shall be enforceable in
accordance with its terms, omitting the invalid or unenforceable term.
S. Submission of Lease: Submission of this document for examination or
signature by the parties does not constitute an option or offer to lease the
Premises on the terms in this document or a reservation of the Premises in favor
of Tenant. This document is not effective as a lease or otherwise until
executed and delivered by both Landlord and Tenant.
T. Subordination: This Lease is subject and subordinate to ground and
underlying leases, mortgages and deeds of trust (collectively "Encumbrances")
which may now affect the Premises, to any covenants, conditions or restrictions
of record, and to all renewals, modifications, consolidations, replacements and
extensions thereof; provided, however, if the holder or holders of any such
Encumbrance ("Holder") require that this Lease be prior and superior thereto,
within seven (7) days after written request of Landlord to Tenant, Tenant shall
execute, have acknowledged and deliver all documents or instruments, in the form
presented to Tenant, which Landlord or Holder deems necessary or desirable for
such purposes. Landlord shall have the right to cause this Lease to be and
become and remain subject and subordinate to any and all Encumbrances which are
now or may hereafter be executed covering the Premises or any renewals,
modifications, consolidations, replacements or extensions thereof, for the full
amount of all advances made or to be made thereunder and without regard to the
time or character of such advances, together with interest thereon and subject
to all the terms and provisions thereof; provided only, that in the event of
termination of any such lease or upon the foreclosure of any such mortgage or
deed of trust, Holder agrees to recognize Tenant's rights under this Lease as
long as Tenant is not then in default and continues to pay Base Monthly Rent and
additional rent and observes and performs all required provisions of this Lease.
Within ten (10) days after Landlord's written request, Tenant shall execute any
documents required by Landlord or the Holder to make this Lease subordinate to
any lien of the Encumbrance. If Tenant fails to do so, then in addition to such
failure constituting a default by Tenant, it shall be deemed that this Lease is
so subordinated to such Encumbrance. Notwithstanding anything to the contrary in
this Section, Tenant hereby attorns and agrees to attorn to any entity
purchasing or otherwise acquiring the Premises at any sale or other proceeding
or pursuant to the exercise of any other rights, powers or remedies under such
encumbrance.
U. Survival of Indemnities: All indemnification, defense, and hold harmless
obligations of Landlord and Tenant under this Lease shall survive the expiration
or sooner termination of the Lease.
V. Time: Time is of the essence hereunder.
W. Transportation Demand Management Programs: Should a government agency or
municipality require Landlord to institute TDM (Transportation Demand
Management) facilities and/or programs, Tenant agrees that the cost of TDM
imposed facilities and programs required on the Premises, including but not
limited to employee showers, lockers, cafeteria, or lunchroom facilities, shall
be paid by Tenant. Further, any ongoing costs or expenses associated with a TDM
program which are required for the Premises and not provided by Tenant, such as
an on-site TDM coordinator, shall be provided by Landlord with such costs being
included as additional rent and reimbursed to Landlord by Tenant within thirty
(30) days after demand. If TDM facilities and programs are instituted on a
Project wide basis, Tenant shall pay its proportionate share of such costs in
accordance with Section 8 above.
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X. Waiver of Right to Jury Trial: Landlord and Tenant waive their
respective rights to trial by jury of any contract or tort claim, counterclaim,
cross-complaint, or cause of action in any action, proceeding, or hearing
brought by either party against the other on any matter arising out of or in any
way connected with this Lease, the relationship of Landlord and Tenant, or
Tenant's use or occupancy of the Premises, including any claim of injury or
damage or the enforcement of any remedy under any current or future law,
statute, regulation, code, or ordinance.
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease on the day and
year first above written.
Landlord: SOBRATO DEVELOPMENT Tenant: BRIO TECHNOLOGY, INC.
COMPANY #961 a California Corporation
a California Limited Partnership
By: /s/ Xxxx X. Xxxxxxx
-------------------------- * By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Its: General Partner Its: CEO
--------------------------------
* By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Its: CFO
--------------------------------
* NOTE: This lease must be signed by two (2) officers of such corporation: one
being the chairman of the board, the president, or a vice president, and the
other being the secretary, an assistant secretary, the chief financial officer
or an assistant treasurer. If one (1) individual is signing in two (2) of the
foregoing capacities, that individual must sign twice; once as one officer and
again as the other officer and in such event, Tenant must deliver to Landlord a
certified copy of a corporate resolution authorizing the signatory to execute
this Lease.
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EXHIBIT "A" - Premises, Building & Project
PAGE 29
EXHIBIT "B" - Declaration of Reciprocal Easement, Easements and Covenants
PAGE 30
EXHIBIT "C" - Office Shell Plans and Specifications
(sheet references to be attached)
PAGE 31
EXHIBIT "D" - Tenant Improvement Plans and Specifications
(sheet references to be attached)
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Exhibit "E" - Exclusions to Reimbursable Operating Costs
Reimbursable Operating Costs shall not include:
(a) costs incurred in connection with the original construction of the Building
Office Shell and Project and costs of repairing, replacing or otherwise
correcting latent defects and costs incurred (less costs of recovery) for
any item to the extent covered by a manufacturer's, materialman's, vendor's
or Landlord's warranty and paid by such manufacturer, materialman, vendor or
Landlord;
(b) non-cash items such as deductions for depreciation and amortization;
(c) costs, including legal fees and space planners' fees, incurred in connection
with the original construction or development of the Building or the
original or future leasing of the Building, and costs, including permit,
license and inspection costs and allowances and other concessions, incurred
with respect to the installation of tenant improvements made for tenants in
the Building or redecorating vacant leasable space for tenants of other
occupants or prospective tenants or occupants of the Building;
(d) expenses directly resulting from the gross negligence of Landlord, its
agents, servants or employees;
(e) any recalculation of or additional Reimbursable Operating Costs (except
Taxes) actually incurred more than two (2) years prior to the year in which
Landlord proposes that such costs by included;
(f) rental for any space dedicated for conference facilities, storage
facilities or exercise facilities;
(g) costs incurred in connection with the sale, financing, refinancing,
mortgaging, selling or change of ownership of the Project or any portion
thereof, including brokerage commissions, consultants attorneys' and
accountants' fees, closing costs, title insurance premiums, transfer taxes
and interest charges (subject to the provisions of Lease Section 10);
(h) costs for which landlord is reimbursed or entitled to be reimbursed by any
tenant or occupant of the Project or by insurance by its carrier or any
tenant's carrier (or if Landlord fails to carry the insurance required to be
carried by Landlord pursuant to the Lease, costs which would have been
covered by insurance had Landlord obtained the coverage required to be
carried under the Lease) or by anyone else;
(i) any bad debt loss, rent loss, or reserves for bad debts or rent loss;
(j) costs associated with the operation of the business of the partnership or
entity which constitutes Landlord, as the same are distinguished from the
costs of the operation of the Project, costs associated with the operation
of the business of the partnership or entity which constitutes Landlord
including costs of partnership accounting and other legal matters, costs of
defending any lawsuits
PAGE 33
with any mortgagee, costs of incurred in connection with any disputes
between Landlord and its employees, between Landlord and the Project or
Building management, or between Landlord and other tenant or occupants, and
Landlord's general corporate overhead and general and administrative
expenses;
(k) wages and/or benefits attributable to personnel above the level of property
manager or engineer;
(l) amounts paid as ground rental for the Project by Landlord;
(m) any compensation paid to clerks, attendants or other persons in commercial
concessions operated by Landlord;
(n) costs, other than those incurred in ordinary maintenance and repair, for
sculpture, paintings , fountains or other objects of art;
(o) costs incurred to comply with Laws or otherwise relating to the removal or
abatement of hazardous material in the soils and costs incurred to comply
with Laws otherwise relating to the removal or abatement of hazardous
material in the Project, except as otherwise specifically provided in the
Lease;
(p) costs arising from Landlord's charitable or political contributions; and
(q) the amounts of any payments by Landlord or to its affiliates for goods or
services in the Project in excess of a reasonably competitive (but not
necessarily the lowest) rate.
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