EXHIBIT 10.1
TEMPORARY OCCUPANCY AGREEMENT
THIS TEMPORARY OCCUPANCY AGREEMENT (the "Agreement"), made as of December
3, 1999, by and between CEP-SANSOME INVESTORS LLC, a Delaware limited liability
company ("Landlord"), and PERSONIFY, INC., a California corporation ("Tenant").
RECITALS
A. On or about September 15, 1999, Landlord and Tenant entered into that
certain Office Building Lease (the "Lease") for certain premises located at 000
Xxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx (the "Leased Premises"), with a term
commencement date of April 15, 2000, or if the Tenant Improvements for the 2nd
and 3rd floors are not Substantially Complete by April 15, 2000, ten (10) days
after the date the Tenant Improvements for the 2nd and 3rd floors are
Substantially Complete and the Leased Premises are delivered to Tenant. Except
as provided in Paragraph 1 below, any capitalized term used but not defined
herein shall have the meaning given to it in the Lease.
B. Tenant has requested that Landlord provide Tenant temporary space for
occupancy by Tenant and Landlord wishes to grant such request. The purpose of
this Agreement is to implement Landlord's leasing to Tenant the Temporary
Premises (as hereinafter defined) on the terms and conditions set forth herein.
AGREEMENT
1. Definitions. The following definitions are incorporated herein from
Article 1 of the Lease: 1.02 ("Additional Rent"); 1.07 ("Building"); 1.09
("Common Areas"); 1.12 ("Landlord's Broker"); 1.15 ("Leased Premises"); 1.16
('"Permitted Use"); 1.17 ("Project"); 1.18 ("Rent"); 1.24 ("Tenant's Broker");
1.27 ("Term"); 1.28 ("Term Commencement Date"); 1.29 ("Term Expiration Date");
and 1.30 ("Other Terms"). Notwithstanding the foregoing, any reference in any of
the foregoing definitions to (i) the "Basic Lease Information sheet" shall mean
to the Basic Information sheet attached to this Agreement, (ii) "Exhibit A"
shall mean to Exhibit A to this Agreement; and (iii) the "Leased Premises" shall
mean the "Temporary Premises" as defined in this Agreement.
2. Lease. Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord the Temporary Premises upon all of the terms, covenants and conditions
set forth in this Agreement.
3. Acceptance of Temporary Premises. Tenant acknowledges that: (a) it
has been advised by Landlord and Landlord's broker that Landlord is in the
process of renovating the Building and that Tenant should therefore satisfy
itself with respect to the condition of the Temporary Premises (including,
without limitation, the heating, ventilation, electrical, plumbing
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and other mechanical installations (and the availability of services from such
installations), fire sprinkler systems, security, environmental aspects, and
compliance with applicable laws, ordinances, rules and regulations) and the
present and future suitability of the Temporary Premises for Tenant's intended
use; (b) Tenant has made such inspection and investigation as it deems necessary
with reference to such matters and assumes all responsibility therefor as the
same relate to Tenant's occupancy of the Temporary Premises and the term of this
Lease; and (c) none of Landlord, Landlord's Broker or Landlord's agents
(collectively, "Landlord's Related Parties") has made any oral or written
representations or warranties with respect to the condition, suitability or
fitness of the Temporary Premises other than as may be specifically set forth in
this Agreement. Except as otherwise specifically set forth in this Agreement,
Tenant accepts the Temporary Premises in its AS IS condition existing on the
date Tenant executes this Agreement, subject to all matters of record and
applicable laws, ordinances, rules and regulations. Tenant acknowledges that
none of Landlord's Related Parties has agreed to undertake any improvement,
alterations or additions or to perform any maintenance or repair of the
Temporary Premises except for the routine maintenance and janitorial work
specified herein.
4. Term. Except as otherwise provided in this Lease, the term of Tenant's
occupancy of the Temporary Premises shall commence upon the Term Commencement
Date and shall continue until the Term Expiration Date.
5. Gross Rent. Tenant shall pay the Gross Rent in accordance with the
Basic Information sheet and in the manner described below. Tenant shall pay the
Gross Rent for the first month of the Term upon execution of this Agreement.
Commencing with the first day of the second calendar month of the Term, Tenant
shall pay the Gross Rent in monthly installments on or before the first day of
each calendar month during the Term and any extensions, in advance without
demand and without any reduction, abatement, counterclaim or setoff, in lawful
money of the United States at Landlord's address specified on the Basic
Information sheet or at such other address as may be designated by Landlord in
the manner provided for giving notice under Section 9.11 of the Lease. If the
Term commences on other than the first day of a month, then the Gross Rent
provided for such partial month shall be prorated based upon a thirty (30)-day
month and the prorated installment shall be paid on the first day of the
calendar month next succeeding the Term Commencement Date together with the
other amounts payable on that day. If the Term terminates on other than the last
day of a calendar month, then the Gross Rent provided for such partial month
shall be prorated based upon a thirty (30)-day month and the prorated
installment shall be paid on the first day of the calendar month in which the
date of termination occurs.
6. Services. Tenant acknowledges that Landlord is in the process of
renovating the Building and that Landlord makes no representations or warranties
with respect to the provision of services to the Building. Prior to entering
into this Agreement, Tenant has had the opportunity to review the nature and
level of services being provided to ongoing tenants of the Building and to
satisfy itself that such level of services is adequate for Tenant's needs during
its occupancy of the Temporary Premises pursuant to the terms of this Agreement.
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7. Right To Relocate Temporary Premises.
(a) Landlord shall have the right to relocate the Temporary Premises
to other space (the "Relocated Premises") within the Building at any time during
the Term. The right of relocation may be exercised only if the Relocated
Premises designated by Landlord are similar in area and in appropriateness for
Tenant's purposes as the original Temporary Premises. Tenant shall pay all costs
(including costs of moving Tenant, its property and equipment to the relocated
premises) in connection with or resulting from such relocation, except in the
event that Landlord requires Tenant to move prior to May 1, 2000, in which case
Landlord shall pay for said costs of move. Tenant shall complete its relocation
by the date specified by Landlord, which date shall not be less than fifteen
(15) days after Landlord notified Tenant of the relocation. All of the other
terms, covenants and conditions of this Agreement shall remain unchanged and in
full force and effect, except that the Basic Information sheet shall be revised
as of the date the relocation is effective (i) to identify the location of the
Relocated Premises; (ii) to reflect any change to the Gross Rent (if the
Relocated Premises are smaller, Gross Rent shall be reduced proportionately);
and (iii) to state as the Rentable Area the square footage of the relocated
temporary premises (as computed pursuant to Section 1.20 of the Lease), as
determined by Landlord's architect, which determination shall be final and
binding. In addition, Exhibit A shall be replaced with a revised diagram of the
Relocated Premises.
8. Incorporation of Terms by Reference. The following sections and
articles, except to the extent modified by the terms of this Agreement, are
hereby incorporated by referenced as if set forth herein in full: Section 2.04
("Reservation of Rights"); Section 3.02 ("Use"); Section 4.01 ("Basic
Services"); Section 4.02 ("Extra Services"); Section 4.03 ("Window Coverings");
Section 4.06 ("Repair Obligation"); Section 4.07 ("Peaceful Enjoyment"); Section
5.01 ("Payments by Tenant"); Section 5.03 ("Taxes on Personal Property");
Section 5.04 ("Repairs by Tenant"); Section 5.05 ("Waste"); Section 5.06(a)-(h)
("Assignment or Sublease"); Section 5.07 ("Alterations, Additions and
Improvements"); Section 5.08 ("Compliance with Laws and Insurance Standards");
Section 5.09 ("No Nuisance; No"); Section 5.11 ("Entry by Landlord"); Section
5.12 ("Nondisturbance and Attornment"); Section 5.13 ("Estoppel Certificate");
Section 5.15 ("Surrender"); Section 5.16 ("Tenant's Remedies"); Section 5.17
("Rules and Regulations"); Article 6 ("Environmental Matters"); Article 7
("Insurance, Indemnity, Condemnation, Damage and Default"); Article 9
("Miscellaneous," except that Section 9.22 ("Exhibits; Addenda") is not
included); Exhibit D ("Building Rules and Regulations").
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9. Various Expenses. All moving, telecommunication, data and other
related occupancy expenses (including moving expenses) for occupancy of the
Temporary Premises or the Leased Premises shall be paid for by Tenant.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
day and year first written above.
"LANDLORD":
CEP-SANSOME INVESTORS LLC,
a Delaware limited liability company
By: CEP Investors IX LLC,
a Delaware limited liability company,
as Manager and Member
By: EPI Investors IX LLC,
a California limited liability
company, its Manager
By: Xxxxx Xxxxxxxx, Inc.,
a California corporation,
its Manager
By: /s/ Xxxxx X. Xxxxx
---------------------
Name: Xxxxx X. Xxxxx
-------------------
Title: Vice President
------------------
"TENANT":
PERSONIFY, INC.,
a California corporation
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------------
Typed Name: Xxxxxxx Xxxxxxxx
----------------------------
Title: CFO-COO
---------------------------------
4
EXHIBIT A
FLOOR PLAN
OF THE
LEASED PREMISES
1
EXHIBIT A
* 000 XXXXXXX XXXXXX *
* AMENDED AND RESTATED OFFICE BUILDING LEASE *
This Amended and Restated Office Building Lease completely replaces and
supercedes the Office Building Lease dated September 15, 1999 between Landlord
and Tenant.
BASIC LEASE INFORMATION
Date of Lease: November 12, 1999
Landlord: CEP-SANSOME INVESTORS LLC
Landlord's Address: c/o Xxxxx Xxxxxxxx, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn.: Xx. Xxxxx X. Xxxxx
Tenant: PERSONIFY, INC.
Tenant's Address: 000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xx. Xxxxxxx Vanchesi
Building: 000 Xxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx
Leased Premises: Approximately 45,197 square feet consisting of:
the 2nd floor of the Building (approximately
13,915 rentable square feet), the 3rd floor of the
Building (approximately 15,674 rentable square
feet), and the 4th floor of the Building
(approximately 15,608 rentable square feet)
Rentable Area: Approximately 45,197 rentable square feet
Term Commencement Date: April 15, 2000, or if the Landlord Improvements
for the 2nd and 3rd floors are not Substantially
Complete by April 15, 2000, ten (10) days after
the date the Landlord Improvements for the 2nd and
3rd floors are Substantially Complete and the 2nd
and 3rd floors are delivered to Tenant. The
commencement date for the 4th floor shall be the
later of (i) August 1, 2000, or (ii) the date the
Landlord Improvements for 4th floor are
Substantially Complete.
Term Expiration Date: The last day of the sixtieth (60th) calendar month
after commencement date of the 4th floor.
Option to Expand: None.
Option to Extend:
Number of Extension Periods: None
Years per Extension Period: N/A
Base Rent: For the 3rd and 4th floors:
---------------------------
Months 1 to 24 = $35.50 per rentable square foot
--------------
of Rentable Area per annum.
Months 25 to 36 = $36.00 per rentable square foot
---------------
of Rentable Area per annum.
Months 37 to the Term Expiration Date = $37.00 per
-------------------------------------
rentable square foot of Rentable Area per annum.
Notwithstanding the foregoing, Base Rent for the
4th floor shall not commence until the later of
(i) August 1, 2000, or (ii) the date the Tenant
Improvements for 4th floor are Substantially
Complete.
For the 2nd floor:
------------------
Months 1 to 24 = $35.00 per rentable square foot
--------------
of Rentable Area per annum.
Months 25 to 36 = $35.50 per rentable square foot
---------------
of Rentable Area per annum.
Months 37 to the Term Expiration Date = $36.50 per
-------------------------------------
rentable square foot of Rentable Area per annum.
Base Year: 2000
Tenant's Proportionate
Share (Building): 27.79%
Security Deposit: $1,785,281.50
Guarantor: None
ii
Landlord's Broker: Xxxxx & Xxxxx
Tenant's Broker: Triton Commercial Real Estate
The foregoing BASIC LEASE INFORMATION is incorporated herein and made a
part of the LEASE to which it is attached. If there is any conflict between the
BASIC LEASE INFORMATION and the LEASE, the BASIC LEASE INFORMATION shall
control.
"LANDLORD":
CEP-SANSOME INVESTORS LLC,
a Delaware limited liability company
By: CEP Investors IX LLC,
a Delaware limited liability company,
as Manager and Member
By: EPI Investors IX LLC,
a California limited liability
company, its Manager
By: Xxxxx Xxxxxxxx, Inc.,
a California corporation,
its Manager
By: /s/ Xxxxx X. Xxxxx
-------------------------
Name: Xxxxx X. Xxxxx
-----------------------
Title: Vice President
----------------------
"TENANT":
PERSONIFY, INC.,
a California corporation
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Typed Name: Xxxxxxx Xxxxxxxx
-----------------------------
Title: CFO
----------------------------------
iii
OFFICE BUILDING LEASE
THIS LEASE, made as of the date specified in the BASIC LEASE INFORMATION
sheet, by and between the landlord specified in the BASIC LEASE INFORMATION
sheet ("Landlord") and the tenant specified in the BASIC LEASE INFORMATION sheet
("Tenant").
Article 1.
Definitions
1.01. Definitions: Terms used herein shall have the following meanings:
1.02. "Additional Rent" shall mean all monetary obligations of Tenant
under this Lease other than the obligation for payment of Gross Rent.
1.03. "Base Expenses" [Intentionally deleted]
1.04. "Base Rent" shall mean the sums due from time to time as rental for
the Leased Premises.
1.05. "Base Year" shall mean the calendar year specified on the Basic
Lease Information sheet.
1.06. "Basic Operating Cost" shall have the meaning given in Section 3.05.
1.07. "Building" shall mean the building and other improvements associated
therewith identified on the Basic Lease Information sheet.
1.08. "Building Standard Improvements" shall mean the standard materials
ordinarily used by Landlord in the improvement of the Leased Premises.
1.09. "Common Areas" shall mean (a) the areas on individual floors of the
Building devoted to non-exclusive uses such as common corridors, lobbies, fire
vestibules, elevator foyers, stairways, elevators, electric and telephone
closets, restrooms, mechanical closets, janitor closets and other similar
facilities for the benefit of all tenants (and invitees) on the particular floor
and other floors and (b) other areas of the Project available for the use and
benefit of all tenants (and invitees).
1.10. "Computation Year" shall mean a fiscal year consisting of the
calendar year commencing January 1st of each year during the Term, commencing in
the year 2000 and continuing through the Term with a short or stub fiscal year
in (i) the year 2000 for the period between the Term Commencement Date and
December 31 of such year and (ii) any partial fiscal year in which the Lease
expires or is terminated for the period between January 1 of such year and the
date of lease termination or expiration.
1.11. "Gross Rent" shall mean the total of Base Rent and Tenant's
Proportionate Share of Increased Basic Operating Cost.
1.12. "Landlord's Broker" shall mean the individual or corporate broker
identified on the Basic Lease Information sheet as the broker for Landlord.
1.13. "Landlord's Contribution" shall have the meaning given in Exhibit B.
---------
1
1.14. "Landlord's Improvements" shall have the meaning given in Exhibit B.
---------
1.15. "Leased Premises" shall mean the floor area more particularly shown
on the floor plan attached hereto as Exhibit A, containing the Rentable Area (as
---------
such term is defined in Section 1.20 below) specified on the Basic Lease
Information sheet.
1.16. "Permitted Use" shall mean general office, and any other related
lawful use; provided, however, that Permitted Use shall not include (a) offices
or agencies of any foreign government or political subdivision thereof; (b)
offices of any agency or bureau of any state, county or city government; (c)
offices of any health care professionals; (d) schools or other training
facilities which are not ancillary to corporate, executive or professional
office use; or (e) retail or restaurant uses.
1.17. "Project" shall mean the Building and common areas affiliated
therewith, and the real property on which the Building and common areas are
located.
1.18. "Rent" shall mean Gross Rent plus Additional Rent.
1.19. "Rentable Area" shall mean the area or areas of space in the
Building determined in accordance with the Standard Method for Measuring Floor
Area in Office Buildings published by the Building Owners and Managers
Association International (ANSI-Z65.1-1996) and including a proportionate
allocation of the square footage of the Building's elevator and mechanical
equipment areas, telephone and electrical rooms, loading dock, janitorial
service areas, public lobbies and corridors, which measurement shall be subject
to remeasurement by Landlord.
1.20. "Security Deposit" shall mean the amount specified on the Basic
Lease Information sheet to be paid by Tenant to Landlord and held and applied
pursuant to Section 5.14.
1.21. "Substantial Completion" shall mean (and the Leased Premises shall
be deemed "Substantially Complete") when (i) installation of the Tenant
Improvements and the Landlord's Improvements (as defined in Exhibit B) by the
---------
Contractor (as defined in Exhibit B) has occurred; (ii) Tenant has direct access
---------
from the street to the elevator lobby on the floor (or floors) where the Leased
Premises are located; (iii) basic services (as described in Section 4.01) are
available to the Leased Premises; (iv) the Architect (as defined in Exhibit B)
---------
has issued a certificate of Substantial Completion with respect to the Leased
Premises; and (v) a certificate of occupancy or its equivalent for the Leased
Premises has been issued by appropriate governmental authorities. Substantial
Completion shall be deemed to have occurred notwithstanding a requirement to
complete "punchlist" items or similar corrective work.
1.22. [Intentionally deleted.]
1.23. "Tenant Improvements" shall have the meaning given in Exhibit B.
---------
1.24. "Tenant's Broker" shall mean the individual or corporate broker
identified on the Basic Lease Information sheet as the broker for Tenant.
1.25. "Tenant's Physical Possession Date" shall mean ten (10) days prior
to the Term Commencement Date for the 2nd and 3rd floors.
1.26. "Tenant's Proportionate Share" is specified on the Basic Lease
Information sheet and is based on the percentage which the Rentable Area of the
Leased Premises bears to the total Rentable Area of
2
the Project, subject to adjustment in the event of the remeasurement of the
Building or the Project as permitted under Section 1.20 above.
1.27. "Term" shall mean the period commencing with the Term Commencement
Date and ending at midnight on the Term Expiration Date.
1.28. "Term Commencement Date" shall be the date set forth on the Basic
Lease Information sheet.
1.29. "Term Expiration Date" shall be the date set forth on the Basic
Lease Information sheet, unless sooner terminated pursuant to the terms of this
Lease or unless extended pursuant to the provisions of Section 8.01.
1.30. Other Terms. Other terms used in this Lease and on the Basic Lease
Information sheet shall have the meanings given to them herein and thereon.
Article 2.
Leased Premises
2.01. Lease. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the Leased Premises upon all of the terms, covenants and
conditions set forth in this Lease.
2.02. Acceptance of Leased Premises. Tenant acknowledges that: (a) it has
been advised by Landlord, Landlord's Broker and Tenant's Broker, if any, to
satisfy itself with respect to the condition of the Leased Premises (including,
without limitation, the heating, ventilation, electrical, plumbing and other
mechanical installations, fire sprinkler systems, security, environmental
aspects, and compliance with applicable laws, ordinances, rules and regulations)
and the present and future suitability of the Leased Premises for Tenant's
intended use; (b) Tenant has made such inspection and investigation as it deems
necessary with reference to such matters and assumes all responsibility therefor
as the same relate to Tenant's occupancy of the Leased Premises and the term of
this Lease; and (c) neither Landlord nor Landlord's Broker nor any of Landlord's
agents has made any oral or written representations or warranties with respect
to the condition, suitability or fitness of the Leased Premises other than as
may be specifically set forth in this Lease. Except as otherwise specifically
set forth in this Lease, Tenant accepts the Leased Premises in its AS IS
condition existing on the date Tenant executes this Lease, subject to all
matters of record and applicable laws, ordinances, rules and regulations. Tenant
acknowledges that neither Landlord nor Landlord's Broker nor any of Landlord's
agents has agreed to undertake any alterations or additions or to perform any
maintenance or repair of the Leased Premises except for the routine maintenance
and janitorial work specified herein and except as may be expressly set forth in
Exhibit B.
---------
2.03. Right To Relocate Leased Premises. [Intentionally deleted].
2.04. Reservation of Rights. Landlord reserves the right from time to
time, so long as reasonable access and basic services to and Tenant's use of the
Leased Premises remain available, to install, use, maintain, repair, relocate
and/or replace pipes, conduits, wires and equipment within and around the
Building and to do and perform such other acts and make such other changes in,
to or with respect to the Building or the Project (including without limitation
with respect to the driveways, parking areas (if any), walkways and entrances to
the Project) as Landlord may, in the exercise of sound business judgment, deem
to be appropriate. In connection therewith, Landlord shall have the right to
close temporarily any of the Common Areas so long as reasonable access to and
use of the Leased Premises remains available.
3
Article 3.
Term, Use and Rent
3.01. Term. Except as otherwise provided in this Lease, the Term shall
commence upon the Term Commencement Date, and shall continue in full force for
the Term. Tenant shall be given access to the Leased Premises starting on the
Tenant's Physical Possession Date in order for Tenant and other consultants
and/or Tenant's contractors to install, if any, furniture, telephone networks
and computer networks as long as such work does not interfere with the
construction of the Tenant Improvements and the Landlord's Improvements.
Notwithstanding any other provision of this Lease to the contrary, if the
Landlord Improvements for the 2nd and 3rd floors of the Leased Premises are not
Substantially Complete within ninety (90) days of April 15, 2000, excluding from
such tally (x) each day of Tenant Delay (as defined in Exhibit B), and (y) each
---------
day of delay caused by factors entirely beyond the reasonable control of
Landlord, then Tenant, as its sole remedy, may, at its option, by notice in
writing to Landlord within thirty (30) days thereafter, cancel this Lease in
which event Landlord shall return all sums paid or deposited to Landlord, and
neither Landlord nor Tenant shall have any further obligations hereunder. If
written notice of cancellation is not received by Landlord within such thirty
(30)-day period, Tenant's right to cancel this Lease shall terminate and be of
no further force or effect. From the date Tenant has access to the Leased
Premises through the Term Commencement Date, Tenant shall be subject to all of
the covenants in this Lease, except that Tenant's obligation to pay Rent shall
commence in accordance with Section 3.03 below. When the Term Commencement Date
and the Term Expiration Date have been ascertained, the parties shall promptly
execute a Confirmation of Term of Lease substantially in the form attached as
Exhibit C.
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3.02. Use. Tenant shall use the Leased Premises solely for the Permitted
Use and for no other use or purpose, except as permitted by Landlord pursuant to
Landlord's written consent, which consent will not be unreasonably withheld. It
shall not be deemed unreasonable for Landlord to withhold its consent to a
proposed change of use if the proposed use is one set forth in Section 1.16(a)
through (e).
3.03. Base Rent.
(a) Tenant shall pay the Base Rent to Landlord in accordance with
the schedule set forth on the Basic Lease Information sheet and in the manner
described below. Tenant shall pay the Base Rent for the first month of the Term
upon execution of this Lease. Commencing with the first day of the second
calendar month of the Term, Tenant shall pay the Gross Rent (consisting of Base
Rent plus, when applicable in accordance with Section 3.04 below, Tenant's
Proportionate Share of Increased Basic Operating Cost and/or Tenant's
Proportionate Share of Increased Property Taxes) in monthly installments on or
before the first day of each calendar month during the Term and any extensions
or renewals thereof, in advance without demand and without any reduction,
abatement, counterclaim or setoff, in lawful money of the United States at
Landlord's address specified on the Basic Lease Information sheet or at such
other address as may be designated by Landlord in the manner provided for giving
notice under Section 9.11 hereof.
(b) If the Term commences on other than the first day of a month,
then the Base Rent provided for such partial month shall be prorated based upon
a thirty (30)-day month and the prorated installment shall be paid on the first
day of the calendar month next succeeding the Term Commencement Date together
with the other amounts payable on that day. If the Term terminates on other than
the last day of a calendar month, then the Gross Rent provided for such partial
month shall be prorated based upon a thirty (30)-day month and the prorated
installment shall be paid on the first day of the calendar month in which the
date of termination occurs.
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3.04. Tenant's Proportionate Share of Increased Basic Operating Cost.
(a) Commencing in the 2001 Computation Year and continuing through
the remainder of the Term, Tenant shall pay to Landlord (i) Tenant's
Proportionate Share of the total dollar increase, if any, in Basic Operating
Cost attributable to each Computation Year over Basic Operating Costs
attributable to the Base Year ("Tenant's Proportionate Share of Increased Basic
Operating Cost"), and (ii) Tenant's Proportionate Share of the total dollar
increase, if any, in Property Taxes attributable to each Computation Year over
Base Year Property Taxes ("Tenant's Proportionate Share of Increased Property
Taxes").
(b) During the 2001 Computation Year, on or before the first day of
each month during such Computation Year, Tenant shall pay to Landlord one-
twelfth (1/12th) of Landlord's estimate of the amounts payable by Tenant under
Section 3.04(a) for Tenant's Proportionate Share of Increased Basic Operating
Cost and for Tenant's Proportionate Share of Increased Property Taxes, as set
forth in Landlord's written notice to Tenant delivered on or before the Term
Commencement Date. Commencing in the 2000 Computation Year and continuing
thereafter through the remainder of the Term, during the last month of each
Computation Year (or as soon thereafter as practicable), Landlord shall give
Tenant notice of Landlord's estimate of the amounts payable by Tenant under
Section 3.04(a) for Tenant's Proportionate Share of Increased Basic Operating
Cost and for Tenant's Proportionate Share of Increased Property Taxes for the
following Computation Year. On or before the first day of each month during the
following Computation Year, Tenant shall pay to Landlord one-twelfth (1/12th) of
each of such estimated amounts, provided that if Landlord fails to give such
notice in the last month of the prior year, then Tenant shall continue to pay on
the basis of the prior year's estimate until the first day of the calendar month
next succeeding the date such notice is given by Landlord; and from the first
day of the calendar month following the date such notice is given, Tenant's
payments shall be adjusted so that the estimated amount for that Computation
Year will be fully paid by the end of that Computation Year. If at any time or
times Landlord determines that the amount or amounts payable under Section
3.04(a) for Tenant's Proportionate Share of Increased Basic Operating Cost
and/or for Tenant's Proportionate Share of Increased Property Taxes for the
current Computation Year will vary from the respective estimate thereof given to
Tenant, Landlord, by not less than ten (10) business days' notice to Tenant, may
revise such estimate for such Computation Year, and subsequent payments by
Tenant for such Computation Year shall be based upon such revised estimate.
(c) Following the end of each Computation Year (beginning with the
2001 Computation Year), Landlord shall deliver to Tenant a statement of amounts
payable under Section 3.04(a) for such Computation Year prepared by Landlord's
agent. If such statement shows an amount or amounts owing by Tenant with respect
to Basic Operating Cost or Property Taxes that is less than the payments for
such Computation Year previously made by Tenant therefor, respectively, and if
no event of default (as defined below) is outstanding at the time such statement
is delivered, Landlord shall credit such amount to the next payment(s) of Gross
Rent falling due under this Lease. If such statement shows an amount owing by
Tenant with respect to Basic Operating Cost or Property Taxes that is more than
the estimated payments for such Computation Year previously made by Tenant
therefor, respectively, Tenant shall pay the deficiency to Landlord within ten
(10) business days after delivery of such statement. If, within ninety (90) days
of Tenant's receipt of Landlord's statement, Tenant notifies Landlord that
Tenant desires to audit or review Landlord's statement, Landlord shall cooperate
with Tenant to permit such audit or review during normal business hours.
Landlord shall make available in the San Francisco Bay Area at Landlord's, or at
Landlord's election at Landlord's property manager's, place of business, such
books and records as are reasonably necessary for Tenant to conduct and complete
such audit. Tenant shall have the right to make copies of such books and records
at Tenant's sole cost and expense. Tenant shall bear all other costs and
expenses associated with Tenant's audit (including fees of Tenant's auditor).
Within five (5) business days of completion of the audit, if Tenant desires to
challenge Landlord's statement, then Tenant shall provide Landlord with a copy
of Tenant's
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auditor's report. Within thirty (30) days of Landlord's receipt of Tenant's
auditor's report, Landlord shall notify Tenant as to whether Landlord agrees or
disagrees with the conclusions reached in Tenant's auditor's report. Landlord's
failure to respond shall be deemed to constitute a disagreement with the
Tenant's auditor's report. After Landlord's notice, Landlord and Tenant shall
endeavor to resolve any disagreements regarding Tenant's auditor's report. In
the event such audit reveals a discrepancy in Tenant's favor, and Landlord
agrees with the conclusions of Tenant's auditor, then Landlord shall credit the
amount of such discrepancy to the next payment(s) of Gross Rent falling due
under this Lease. In the event such audit reveals a discrepancy in Landlord's
favor, Tenant shall pay the amount of the discrepancy to Landlord within ten
(10) business days of completion of the audit. Any such audit may only be
conducted by an independent nationally recognized accounting firm or a
nationally recognized real estate management or consulting firm that is not
being compensated by Tenant on a contingency fee basis. The failure of Tenant to
notify Landlord that Tenant desires an audit within ninety (90) days of Tenant's
receipt of Landlord's statement under this Section 3.04(c) shall constitute an
acceptance by Tenant of Landlord's statement and a waiver by Tenant of its right
to audit for such Computation Year. If Tenant commences an audit in accordance
with this Section 3.04(c), then such audit and the Tenant's auditor's report
must be completed within thirty (30) days of Landlord's delivery of reasonable
access to its books and records. Failure of Tenant to complete the audit within
such thirty (30) day period shall constitute an acceptance by Tenant of
Landlord's statement for such Computation Year. The respective obligations of
Landlord and Tenant under this Section 3.04(c) shall survive the Term Expiration
Date, and, if the Term Expiration Date is a day other than the last day of a
Computation Year, the adjustments in Tenant's Proportionate Share of Increased
Basic Operating Cost and in Tenant's Proportionate Share of Increased Property
Taxes pursuant to this Section 3.04(c) for the Computation Year in which the
Term Expiration Date occurs shall be prorated in the proportion that the number
of days in such Computation Year preceding the Term Expiration Date bears to
three hundred sixty-five (365).
(d) Landlord shall have the same remedies for a default in the
payment of Tenant's Proportionate Share of Increased Basic Operating Cost or for
a default in the payment of Tenant's Proportionate Share of Increased Property
Taxes as for a default in the payment of Base Rent.
(e) If the parties cannot agree on the results of Tenant's audit
within sixty (60) days following delivery of Tenant's auditor's report to
Landlord, then either party may commence arbitration with respect to the matters
disputed in Tenant's audit by notice to the other party ("Arbitration Notice").
The failure of Tenant to provide an Arbitration Notice within one hundred twenty
(120) days of Tenant's delivery of the Tenant's auditor's report to Landlord
shall constitute a waiver by Tenant of its right to arbitrate hereunder, and
except for such adjustments as have been agreed to by Landlord, Landlord's
statement provided under Section 3.04(c) shall be conclusive and binding to
Tenant. Within thirty (30) days of the Arbitration Notice, Landlord and Tenant
shall jointly select an arbitrator, who shall be unaffiliated in any manner with
either Landlord or Tenant and shall have been active over the five (5) year
period ending on the date of such appointment in the leasing of comparable
commercial properties in the vicinity of the Building. Neither Landlord nor
Tenant shall consult with such arbitrator as to his or her opinion as to the
disputed matters prior to the appointment. The determination of the arbitrator
shall be limited solely to issues raised by Tenant's auditor's report or by
Landlord's response to Tenant's auditor's report. Such arbitrator may hold
hearings and require such briefs as the arbitrator, in his or her sole
discretion, determines is necessary. In addition, Landlord or Tenant may submit
to the arbitrator with a copy to the other party within five (5) business days
after the appointment of the arbitrator any data and additional information that
such party deems relevant to the determination by the arbitrator and the other
party may submit a reply in writing within five (5) business days after receipt
of such data and additional information. The arbitrator shall conduct such
evidentiary hearings as the arbitrator deems necessary or appropriate.
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(1) The arbitrator shall, within thirty (30) days of his or her
appointment, reach a decision as to the disputed matters in Tenant's auditor's
report, and shall notify Landlord and Tenant of such determination.
(2) The decision of the arbitrator shall be binding upon
Landlord and Tenant.
(3) If Landlord and Tenant fall to agree upon and appoint such
arbitrator, then the appointment of the arbitrator shall be made by the American
Arbitration Association.
(4) If Landlord and Tenant fail to agree upon other matters
relating to the arbitration, then the rules of the American Arbitration
Association shall govern such arbitration.
(5) The cost of arbitration shall be paid by the substantially
unsuccessful party.
(6) The arbitration proceeding and all evidence given or
discovered pursuant thereto shall be maintained in confidence by all parties.
(7) Judgment upon the award rendered by the arbitrator may be
entered by either party into any court having jurisdiction, or application may
be made to such court for a judicial recognition of the award or an order of
enforcement thereof, as the case may be.
3.05. Basic Operating Cost.
(a) Basic Operating Cost shall mean all expenses and costs (but not
specific costs which are separately billed to and paid by particular tenants of
the Building) of every kind and nature which Landlord shall pay or become
obligated to pay because of or in connection with the management, ownership,
maintenance, repair, preservation and operation of the Project and its
supporting facilities directly servicing the Project (determined in accordance
with generally accepted accounting principles, consistently applied) including,
but not limited to, the following:
(1) Wages, salaries and related expenses and benefits of all
on-site and off-site employees and personnel engaged in the operation,
maintenance, repair and security of the Project, to the extent such charges are
directly allocable to services rendered by the employees and personnel for the
benefit of the Project.
(2) Costs of Landlord's office (including the property
management office) in the Project and office operation in the Project, as well
as the costs of operation of a room for delivery and distribution of mail to
tenants of the Building.
(3) All supplies, materials, equipment and equipment rental
used in the operation, maintenance, repair and preservation of the Project.
(4) Utilities, including water, sewer and power, telephone,
communication and cable television facilities, lighting, heating, and
ventilating the entire Project.
(5) All maintenance, janitorial and service agreements for the
Project and the equipment therein, including, without limitation, alarm and/or
security service, window cleaning, elevator maintenance, sidewalks, landscaping,
Building exterior and service areas.
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(6) A management cost recovery in an amount not to exceed five
percent (5%) of all Rent (excluding such management cost recovery) derived from
the Building; provided, however, such property management fee shall not exceed
the current "market" rate during a particular Computation Year.
(7) Legal and accounting services for the Project, including
the costs of audits by certified public accountants; provided, however, that
legal expenses shall not include the cost of lease negotiations, termination of
leases, extension of leases or legal costs incurred in proceedings by or against
any specific tenant.
(8) All insurance costs, including, but not limited to, the
cost of all risk property and liability coverage and rental income and
earthquake insurance applicable to the Project and Landlord's personal property
used in connection therewith, as well as commercially reasonable deductible
amounts applicable to such insurance (not to exceed $10,000 allocated to
Tenant); provided, however, that Landlord may, but shall not be obligated to,
carry earthquake insurance.
(9) Repairs, replacements and general maintenance (except for
repairs paid by proceeds of insurance or by Tenant or other tenants of the
Building or third parties, and alterations attributable solely to tenants of the
Project other than Tenant).
(10) Amortization (together with reasonable financing charges)
of capital improvements made to the Project which are designed to improve the
operating efficiency of the Project, or which may be required by governmental
authorities, including those improvements required for energy conservation and
for the benefit of individuals with disabilities ("ADA Improvements").
(b) In the event any of the Basic Operating Costs are not allocable
solely to the Building or are not provided on a uniform basis, Landlord shall
make an appropriate and equitable adjustment, in Landlord's reasonable
discretion, to the relevant cost allocations to the Building and Tenant shall
pay its proportionate share of such Basic Operating Costs allocable solely to
the Building and 100% of such Basic Operating Costs allocable solely to the
Leased Premises.
(c) Notwithstanding any other provision of this Lease to the
contrary, in the event that the Project is not fully occupied during any year of
the Term, an adjustment shall be made in computing Basic Operating Cost for such
year (including the Base Year) so that Basic Operating Cost shall be computed as
though the Building had been 95% occupied during such year.
(d) The following items shall be excluded from Basic Operating
Costs:
(1) The cost of any service sold to any tenant (including
Tenant) or other occupant for which Landlord is entitled to be reimbursed as an
additional charge or rental over and above the basic rent and escalations
payable under the lease with that tenant.
(2) Any depreciation on the Building or Property.
(3) Expenses in connection with services or other benefits of a
type that are not provided to Tenant but which are provided another tenant or
occupant of the Building or Property.
(4) Costs incurred due to Landlord's violation of any terms or
conditions of this Lease or any other lease relating to the Building or
Property.
8
(5) Overhead profit increments paid to Landlord's subsidiaries
or affiliates for management or other services on or to the Building or for
supplies or other materials to the extent that the cost of the services,
supplies, or materials exceeds the cost that would have been paid had the
services, supplies, or materials been provided by unaffiliated parties on a
competitive basis.
(6) All interest, loan fees, and other carrying costs related
to any mortgage or deed of trust or related to any capital item, and all rental
and other payable due under any ground or underlying lease.
(7) Any compensation paid to clerks, attendants, or other
persons in commercial concessions operated by Landlord.
(8) Costs of repairs and other work caused by fire, windstorm,
or other casualty to the extent Landlord receives insurance proceeds.
(9) Any costs, fines, or penalties incurred due to violations
by Landlord of any governmental rule or authority, this Lease or any other lease
in the Property, or due to Landlord's gross negligence or willful misconduct.
(10) Wages, salaries, or other compensation paid to any
executive employees above the grade of building manager.
(11) The cost of correcting any building code or other
violations which were violations prior to the Term Commencement Date.
(12) The cost of containing, removing, or otherwise remediating
any contamination of the Property (including the underlying land and ground
water) by any toxic or hazardous materials (including, without limitation,
asbestos and "PCB's") where such contamination was not caused by Tenant or
Tenant's agents, employees, contractors, invitees or licensees.
(13) Leasing commissions, attorneys' fees, costs, disbursements,
and other expenses incurred in connection with negotiations or disputes with
tenants, or in connection with leasing, renovating, or improving space for
tenants or other occupants or prospective tenants or other occupants of the
Building.
(14) Any capital costs (including improvements or equipment)
except for any capital expenditures expressly included in Section 3.05(a)(11);
the cost of decorating, improving for tenant occupancy, painting or redecorating
portions of the Building to be demised to tenants (including Tenant).
3.06. Property Taxes.
(a) "Property Taxes" shall mean all real estate or personal property
taxes, possessory interest taxes, business or license taxes or fees, service
payments in lieu of such taxes or fees, annual or periodic license or use fees,
excises, transit charges, housing fund assessments, open space charges,
assessments, bonds, levies, fees or charges, general and special, ordinary and
extraordinary, unforeseen as well as foreseen, of any kind which are assessed,
levied, charged, confirmed or imposed by any public authority upon the Project
(or any portion or component thereof), its operations, this Lease, or the Rent
due hereunder (or any portion or component thereof), except: (i) inheritance or
estate taxes imposed upon or assessed against the Project, or any part thereof
or interest therein, and (ii) Landlord's personal or corporate income, gift or
franchise taxes.
9
(b) In the event any of the Property Taxes are not allocable between
the Leased Premises, the Building and other improvements in the Project on a
uniform basis, Landlord shall make an appropriate and equitable adjustment, in
Landlord's reasonable discretion, to the relevant allocations of Property Taxes
to the Leased Premises or the Building and Tenant shall pay its proportionate
share of such Property Taxes allocable to the Building and 100% of such Property
Taxes allocable solely to the Leased Premises.
(c) Notwithstanding any other provision of this Lease to the
contrary, in the event that the Project is not fully occupied during any year of
the Term, an adjustment shall be made in computing Property Taxes for such year
(including the Base Year) so that Property Taxes shall be computed as though the
Building had been 95% occupied during such year.
Article 4.
Landlord's Covenants
4.01. Basic Services. Landlord shall operate the Project to a standard of
quality consistent with that of other similar-class office projects in the
immediate geographical area, and shall:
(a) Administer improvement of the Leased Premises in accordance with
Exhibit B (if any).
---------
(b) Furnish Tenant during Tenant's occupancy of the Leased Premises
the following basic services:
(i) Hot and cold water at those points of supply provided
for general use of other tenants in the Project; steam heating and
ventilating during the Building hours of operation specified in the rules
and regulations for the Project adopted pursuant to Section 5.17 and at
such temperatures, during such seasons, and in such amounts as are standard
for the comfortable use and occupancy of the Leased Premises or, in all
events, as may be permitted or controlled by applicable laws, ordinances,
rules and regulations. Notwithstanding the foregoing, the Building does not
have central air conditioning; however, Landlord shall provide a chilled
water riser which can be accessed by Tenant for specialized cooling or air
conditioning needs (e.g., for a computer room) on each of the floors of the
Leased Premises; provided, however, Tenant, at its sole cost, shall be
responsible for the installation, operation and maintenance of such cooling
or air conditioning systems, if needed, from the point of departure from
such chilled water riser, and, provided further, that the total Rentable
Area receiving the benefit of such specialized cooling or air conditioning
shall not exceed 400 square feet.
(ii) Structural and exterior maintenance (including exterior
glass and glazing) and routine maintenance, repairs and electric lighting
service for all public areas and service areas of the Project in the manner
and to the extent deemed by Landlord to be standard.
(iii) Janitorial service on a five (5) day per week basis,
excluding holidays.
(iv) Electric lighting service throughout the Leased Premises
and electrical facilities to provide sufficient power for typewriters,
standard size personal computers and other standard office machines of
similar low electrical consumption, but not including electricity required
for electronic data processing equipment, special lighting in excess of
Building Standard Improvements, and any other item of electrical equipment
which consumes electricity in amounts in
10
excess of standard office equipment; Landlord shall provide an average of 5
xxxxx per usable square foot of the Leased Premises, peak demand load
(including lighting).
(v) Building Standard lamps, bulbs, starters and ballasts
used in the Leased Premises.
(vi) Public elevator service serving the floors on which the
Leased Premises are situated, including freight elevator service when
prearranged with Landlord, subject to such rules and regulations as
Landlord shall promulgate from time to time.
(c) Landlord shall not be liable for damages to either person or
property, nor shall Landlord be deemed to have evicted Tenant, nor shall there
be any abatement of Rent, nor shall Tenant be relieved from performance of any
covenant on its part to be performed under this Lease by reason of any (i)
deficiency in the provision of basic services; (ii) breakdown of equipment or
machinery utilized in supplying services; or (iii) curtailment or cessation of
services due to causes or circumstances beyond the reasonable control of
Landlord or by the making of the necessary repairs or improvements, unless such
deficiency, breakdown, curtailment or cessation is due to the active gross
negligence or willful misconduct of Landlord. Landlord shall use reasonable
diligence to make such repairs as may be required to machinery or equipment
within the Project to provide restoration of services and, where the cessation
or interruption of service has occurred due to circumstances or conditions
beyond Project boundaries, to cause the same to be restored, by diligent
application or request to the provider thereof. In no event shall any mortgagee
or the beneficiary under any deed of trust referred to in Section 5.12 be or
become liable for any default of Landlord under this Section 4.01(c).
4.02. Extra Services. Landlord shall provide to Tenant at Tenant's sole
cost and expense (and subject to the limitations hereinafter set forth) the
following extra services:
(a) Such extra cleaning and janitorial services if requested by
Tenant;
(b) [Intentionally deleted].
(c) Heating, ventilation, or extra electrical service, provided by
Landlord to Tenant (i) during hours other than the Building hours of operation
specified in the rules and regulations for the Project adopted pursuant to
Section 5.17, which shall provide for Building hours of operation of 7:00 A.M.
to 6:00 P.M., Monday through Friday (excluding holidays), or (ii) on Saturdays,
Sundays, or holidays, all said heating, ventilation or extra electrical service
to be furnished solely upon the prior written request of Tenant submitted during
business hours to Landlord at least 24 hours in advance of the time such service
is needed, or pursuant to such other procedures as may be established from time
to time by Landlord for the Building or the Project (such after-hour heating,
ventilation and lighting charge shall be billed at Landlord's actual cost basis
prorated with the similar use of other tenants of the Building);
(d) Maintaining and replacing non-Building Standard lamps, bulbs,
starters and ballasts (whether or not the light fixtures were installed by
Landlord as part of the Tenant Improvements);
(e) Repair and maintenance service which is the obligation of Tenant
under this Lease which Tenant fails to timely perform;
(f) Repair, maintenance or janitorial service to the Leased Premises
or the Common Areas which is required as a result of the acts or omissions of
Tenant, its agents, employees, contractors, invitees or licensees; and
11
(g) Any basic service in amounts reasonably determined by Landlord
to exceed the amounts required to be provided under Section 4.01(b), but only if
Landlord elects to provide such additional or excess service.
For the purposes of this Section 4.02, if, in Landlord's reasonable
opinion, Tenant's use of electrical and/or water service at the Leased Premises
is excessive, Landlord may install a separate meter(s) at the Leased Premises to
measure the amount of electricity and/or water consumed by Tenant therein. The
cost of such installation and of such excess electricity and/or water (at the
rates charged for such services by the local public utility) shall be paid by
Tenant to Landlord upon receipt by Tenant of a xxxx therefor.
The cost chargeable to Tenant for all extra services shall constitute
Additional Rent and shall include a management fee payable to Landlord of
fifteen percent (15%). Additional Rent shall be paid monthly by Tenant to
Landlord concurrently with the payment of Base Rent.
4.03. Window Coverings. All window coverings for the Leased Premises shall
be those approved by Landlord. Tenant shall not place or maintain any window
coverings, blinds, curtains or drapes other than those supplied by Landlord on
any exterior window without Landlord's prior written approval, which Landlord
shall have the right to grant or withhold in its absolute and sole discretion.
4.04. Graphics and Signage. Landlord shall provide identification of
Tenant's name and suite numerals (i) on a building directory in the Building
lobby and (ii) at the main entrance door to the Leased Premises. Landlord
reserves the right to exclude any other names from the building directory. All
signs, notices, advertisements and graphics of every kind or character, visible
in or from the Common Areas or the exterior of the Leased Premises shall be
subject to Landlord's prior written approval, which Landlord shall have the
right to withhold in its absolute and sole discretion. Landlord may remove,
without notice to and at the expense of Tenant, any sign, notice, advertisement
or graphic of any kind inscribed, displayed or affixed in violation of the
foregoing requirement. All approved signs, notices, advertisements or graphics
shall be printed, affixed or inscribed at Tenant's expense by a person selected
by Landlord. Landlord shall be entitled to revise the Project graphics and
signage standards at any time.
4.05. [Intentionally deleted]
4.06. Repair Obligation. Landlord's obligation with respect to maintenance
and repair shall be limited to (i) the structural portions of the Building; (ii)
the exterior walls of the Building, including exterior glass and glazing; (iii)
the roof structure and membrane; (iv) mechanical, electrical, plumbing and life
safety systems; (v) the Common Areas; and (vi) the landscaped areas. However,
Landlord shall not have any obligation to repair damage caused by Tenant, its
agents, employees, contractors, invitees or licensees. Landlord shall have the
right, but not the obligation, to undertake work of repair which Tenant is
required to perform under this Lease and which Tenant fails or refuses to
perform in a timely and efficient manner. Tenant shall reimburse Landlord upon
demand, as Additional Rent, for all costs incurred by Landlord in performing any
such repair for the account of Tenant, together with an amount equal to fifteen
percent (15%) of such costs to reimburse Landlord for its administration and
managerial effort. Except as specifically set forth in this Lease, Landlord
shall have no obligation whatsoever to maintain or repair the Leased Premises or
the Project. The parties intend that the terms of this Lease govern their
respective maintenance and repair obligations. Tenant expressly waives the
benefit of any statute now or hereafter in effect to the extent it is
inconsistent with the terms of this Lease with respect to such obligations or
which affords Tenant the right to make repairs at the expense of Landlord or
terminate this Lease by reason of the condition of the Leased Premises or any
needed repairs.
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4.07. Peaceful Enjoyment. Landlord covenants with Tenant that upon Tenant
paying the Rent and all other charges required under this Lease and performing
all of Tenant's covenants and agreements herein contained, Tenant shall
peacefully have, hold and enjoy the Leased Premises subject to all of the terms
of this Lease and to any deed of trust, mortgage, ground lease or other
agreement to which this Lease may be subordinate. This covenant and the other
covenants of Landlord contained in this Lease shall be binding upon Landlord and
its successors only with respect to breaches occurring during its or their
respective ownerships of Landlord's interest hereunder. Notwithstanding the
foregoing, Tenant is aware that beginning on January 1, 2000, the Building will
undergo substantial renovation, including, but not limited to (i) the structural
portions of the Building; (ii) mechanical, electrical, plumbing and life safety
systems; and (iii) the Common Areas (including the main lobby). Tenant has also
been informed that, as part of the Building renovation, a sprinkler system may
be installed by Landlord above the second (2nd) , third (3rd), and fourth (4th)
floor ceiling. With respect to any of the foregoing construction, Landlord shall
use its best efforts to minimize interference with Tenant's business operations
in the Leased Premises.
Article 5.
Tenant's Covenants
5.01. Payments by Tenant. Tenant shall pay Rent at the times and in the
manner provided in this Lease. All obligations of Tenant hereunder to make
payments to Landlord shall constitute Rent and failure to pay the same when due
shall give rise to the rights and remedies provided for in Section 7.08. If
there is more than one Tenant, the obligations imposed under this Lease upon
Tenant shall be joint and several.
5.02. Tenant Improvements. The Tenant Improvements shall be installed and
constructed pursuant to Exhibit B. All Tenant Improvements shall become the
---------
property of Landlord upon installation and shall be surrendered to Landlord
without compensation to Tenant upon termination of this Lease by lapse of time
or otherwise.
5.03. Taxes on Personal Property. In addition to, and wholly apart from
its obligation to pay Tenant's Proportionate Share of Increased Property Taxes,
Tenant shall be responsible for, and shall pay prior to delinquency, all taxes
or governmental service fees, possessory interest taxes, fees or charges in lieu
of any such taxes, capital levies, and any other charges imposed upon, levied
with respect to, or assessed against Tenant's personal property and on its
interest pursuant to this Lease. To the extent that any such taxes are not
separately assessed or billed to Tenant, Tenant shall pay the amount thereof as
invoiced to Tenant by Landlord.
5.04. Repairs by Tenant. Tenant shall be obligated to maintain and repair
the Leased Premises, to keep the same at all times in good order, condition and
repair, and, upon expiration of the Term, to surrender the same to Landlord in
the same condition as on the Term Commencement Date, reasonable wear and tear,
taking by condemnation, casualty, and damage that is Landlord's responsibility
under Section 7.07 not caused by Tenant, its agents, employees, contractors,
invitees and licensees excepted. Tenant's obligations shall include, without
limitation, the obligation to maintain and repair all walls, floors, ceilings
and fixtures and to repair all damage caused by Tenant, its agents, employees,
contractors, invitees and others using the Leased Premises with Tenant's
expressed or implied permission. At the request of Tenant, Landlord shall
perform the work of maintenance and repair constituting Tenant's obligation
under this Section 5.04 at Tenant's sole cost and expense and as an extra
service to be rendered pursuant to Section 4.02(e). Any work of repair and
maintenance performed by or for the account of Tenant by persons other than
Landlord shall be performed by contractors approved by Landlord and in
accordance with procedures Landlord shall from time to time establish. Tenant
shall give Landlord prompt notice of any damage to or defective condition in any
part of the Building's mechanical, electrical, plumbing, life safety or other
system servicing, located in or passing through the Leased Premises.
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5.05. Waste. Tenant shall not commit or allow any waste or damage to be
committed in any portion of the Leased Premises or the Project.
5.06. Assignment or Sublease.
(a) Tenant shall not voluntarily or by operation of law assign,
transfer or encumber (collectively "Assign") or sublet all or any part of
Tenant's interest in this Lease or in the Leased Premises without Landlord's
prior written consent given under and subject to the terms of this Section 5.06.
Notwithstanding anything to the contrary contained in this Lease, Landlord and
Tenant agree as follows, Tenant may assign this Lease or sublet the Leased
Premises, or any portion thereof, without Landlord's consent: (i) to any entity
which controls, is controlled by, or is under common control with Tenant; (ii)
to any entity which results from a merger of, reorganization of, or
consolidation with Tenant; or (iii) to any entity which acquires substantially
all of the stock or assets of Tenant, as a going concern, with respect to the
business that is being conducted in the Leased Premises (hereinafter each a
"Permitted Transfer"). In addition, a sale or transfer of the capital stock of
Tenant shall be deemed a Permitted Transfer if (1) such sale or transfer occurs
in connection with any bona fide financing or capitalization for the benefit of
Tenant, or (2) Tenant is or becomes a publicly traded corporation. Landlord
shall have no right to terminate the Lease in connection with, and shall have no
right to any sums or other economic consideration resulting from any Permitted
Transfer.
(b) If Tenant desires to Assign this Lease or any interest herein or
sublet the Leased Premises or any part thereof, Tenant shall give Landlord
written notice of such intent. Tenant's notice shall specify the date the
proposed assignment or sublease would be effective and be accompanied by
information pertinent to Landlord's determination as to the financial and
operational responsibility and appropriateness of the proposed assignee or
subtenant, including, without limitation, its name, business and financial
condition, financial details of the proposed transfer, the intended use
(including any modification) of the Leased Premises, and exact copies of all of
the proposed agreement(s) between Tenant and the proposed assignee or subtenant.
Tenant shall promptly provide Landlord with (i) such other or additional
information or documents reasonably requested (within ten (10) days after
receiving Tenant's notice) by Landlord, and (ii) an opportunity to meet and
interview the proposed assignee or subtenant, if requested by Landlord.
(c) Landlord shall have a period of twenty (20) days following such
interview and receipt of such additional information (or thirty (30) days from
the date of Tenant's original notice if Landlord does not request additional
information or an interview) within which to notify Tenant in writing that
Landlord elects either (i) to terminate this Lease as to the space so affected
as of the effective date specified by Tenant, in which event Tenant will be
relieved of all further obligations hereunder as to such space, or (ii) to
permit Tenant to Assign this Lease or sublet such space, subject, however, to
prior written approval of the proposed assignee or sublessee by Landlord, such
consent not to be unreasonably withheld so long as the use of the Leased
Premises by such proposed assignee or sublessee would be a Permitted Use, the
proposed assignee or sublessee is of sound financial condition as determined by
Landlord in its reasonable discretion, the proposed assignee or sublessee
executes such reasonable assumption documentation as Landlord shall require, and
the proposed assignee or sublessee is not (x) already a tenant in the Building
or (y) a party with whom Landlord has been discussing the leasing of space in
the Building. If Landlord fails to notify Tenant in writing of such election
within said period, Landlord shall be deemed to have waived option (i) above,
but written approval by Landlord of the proposed assignee or sublessee shall
still be required. Failure by Landlord to approve a proposed subtenant or
assignee shall not cause a termination of this Lease.
(d) In the event Tenant shall request the consent of Landlord to any
assignment or subletting hereunder, Tenant shall pay Landlord a processing fee
of $250.00 and shall reimburse Landlord for
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Landlord's reasonable attorneys' fees incurred in connection therewith. All such
fees shall be deemed Additional Rent under this Lease.
(e) Any rent or other consideration realized by Tenant under any
such sublease or assignment in excess of (i) the Rent payable hereunder, (ii)
any reasonable tenant improvement allowance or other economic concession (e.g.,
space planning allowance, moving expenses, free or reduced rent periods, etc.),
(iii) any advertising costs and brokerage commissions associated with such
assignment or sublease, and (iv) any reasonable legal fees associated with such
assignment or sublease ("Profit"), shall be divided and paid as follows: forty
percent (40%) to Tenant and sixty percent (60%) to Landlord; provided, however,
that if Tenant is in default hereunder beyond any applicable cure period,
Landlord shall be entitled to all such excess rent.
(f) In any subletting undertaken by Tenant, Tenant shall diligently
seek to obtain not less than fair market rent for the space to sublet. In any
assignment of this Lease in whole or in part, Tenant shall seek to obtain from
the assignee consideration reflecting a value of not less than fair market rent
for the space subject to such assignment.
(g) The consent of Landlord to any assignment or subletting shall
not constitute a consent to any subsequent assignment or subletting by Tenant or
to any subsequent or successive assignment or subletting by the assignee or
subtenant. However, Landlord may consent to subsequent assignments and
sublettings of the Lease or sublease or amendments or modifications thereto,
without notifying Tenant or any other party liable on the Lease or sublease and
without obtaining their consent. Such action shall not relieve Tenant or any
such other party from liability under this Lease or a sublease.
(h) No assignment or subletting by Tenant shall relieve Tenant of
any obligation under this Lease. In the event of default by an assignee or
subtenant of Tenant or any successor of Tenant in the performance of any of the
terms hereof, Landlord may proceed directly against Tenant without the necessity
of exhausting remedies against such assignee, subtenant or successor. Any
assignment or subletting which conflicts with the provisions hereof shall be
void and, at Landlord's option, shall constitute a default under this Lease.
(i) Notwithstanding anything to the contrary contained within this
Section 5.06, Landlord acknowledges that, although Tenant anticipates that its
space needs will encompass the total of the Leased Premises at some point in the
near future, a portion of the space which Tenant is currently accepting and
leasing may be initially determined to be in excess of Tenant's current short
term space planning needs. As a result, should Tenant submit a request to
Landlord for Landlord's consent to Tenant's sublease of a portion of the Leased
Premises, which sublease term will expire within the first thirty (30) months of
the Term and such sublease along with all other current subleases and
assignments, in the aggregate, do not exceed 15,674 rentable square feet, such
request shall not be subject to Landlord's right of recapture pursuant to
Section 5.06(c) above.
5.07. Alterations, Additions and Improvements.
(a) Tenant shall not make or allow to be made any alterations or
additions in or to the Leased Premises without first obtaining the written
consent of Landlord unless such alteration or addition has a cost of less than
$5,000.00. Landlord's consent will not be unreasonably withheld with respect to
proposed alterations and additions which (i) comply with all applicable laws,
ordinances, rules and regulations; (ii) are compatible with and does not
adversely affect the Building and its mechanical, telecommunication, electrical,
heating, ventilation and life safety systems; (iii) will not affect the
structural portions of the Building; (iv) will not interfere with the use and
occupancy of any other portion of the Building by any other tenant, its
employees
15
or invitees; and (v) will not trigger any additional costs to Landlord.
Specifically, but without limiting the generality of the foregoing, Landlord's
right of consent shall encompass plans and specifications for the proposed
alterations or additions, construction means and methods, the identity of any
contractor or subcontractor to be employed on the work of alterations or
additions, and the time for performance of such work. Tenant shall supply to
Landlord any additional documents and information requested by Landlord in
connection with Tenant's request for consent hereunder.
(b) Any consent given by Landlord under this Section 5.07 shall be
deemed conditioned upon: (i) Tenant's acquiring all applicable permits required
by governmental authorities; (ii) Tenant's furnishing to Landlord copies of such
permits, together with copies of the approved plans and specifications, prior to
commencement of the work thereon; and (iii) the compliance by Tenant with the
conditions of all applicable permits and approvals in a prompt and expeditious
manner.
(c) Tenant shall provide Landlord with not less than fifteen (15)
days prior written notice of commencement of the work so as to enable Landlord
to post and record appropriate notices of non-responsibility. All alterations
and additions permitted hereunder shall be made and performed by Tenant without
cost or expense to Landlord. Tenant shall pay the contractors and suppliers all
amounts due to them when due and keep the Leased Premises and the Project free
from any and all mechanics', materialmen's and other liens and claims arising
out of any work performed, materials furnished or obligations incurred by or for
Tenant. Landlord may require, at its sole option, that Tenant provide to
Landlord, at Tenant's expense, a lien and completion bond in an amount equal to
the total estimated cost of any alterations, additions or improvements to be
made in or to the Leased Premises, to protect Landlord against any liability for
mechanics', materialmen's and other liens and claims, and to ensure timely
completion of the work. In the event any alterations or additions to the Leased
Premises are performed by Landlord hereunder, whether by prearrangement or
otherwise, Landlord shall be entitled to charge Tenant a ten percent (10%)
administration fee in addition to the actual costs of labor and materials
provided. Such costs and fees shall be deemed Additional Rent under this Lease,
and may be charged and payable prior to commencement of the work.
(d) Any and all alterations, additions or improvements made to the
Leased Premises by Tenant shall become the property of Landlord upon
installation and shall be surrendered to Landlord without compensation to Tenant
upon the termination of this Lease by lapse of time or otherwise unless (i)
Landlord conditioned its approval of such alterations, additions or improvements
on Tenant's agreement to remove them, or (ii) if Tenant did not provide a
Removal Determination Request (as defined below), Landlord notifies Tenant prior
to (or promptly after) the Term Expiration Date that the alterations, additions
and/or improvements must be removed, in which case Tenant shall, by the Term
Expiration Date (or promptly thereafter), remove such alterations, additions and
improvements, repair any damage resulting from such removal and restore the
Leased Premises to their condition existing prior to the date of installation of
such alterations, additions and improvements, normal wear, tear and damage by
casualty excepted. Prior to making any alterations, additions or improvements to
the Leased Premises, Tenant may make a written request that Landlord determine
in advance whether or not Tenant must remove such alterations, additions or
improvements on the Term Expiration Date ("Removal Request Determination").
Notwithstanding anything to the contrary set forth above, this clause shall not
apply to movable equipment or furniture owned by Tenant.
(e) All alterations, additions and improvements permitted under this
Section 5.07 shall be constructed diligently, in a good and workmanlike manner
with new, good and sufficient materials and in compliance with all applicable
laws, ordinances, rules and regulations (including, without limitation, building
codes and those related to accessibility and use by individuals with
disabilities). Tenant shall, promptly upon completion of the work, furnish
Landlord with "as built" drawings for any alterations, additions or improvements
performed under this Section 5.07.
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5.08. Compliance With Laws and Insurance Standards. Tenant shall not
occupy or use, or permit any portion of the Leased Premises to be occupied or
used in a manner that violates any applicable law, ordinance, rule, regulation,
order, permit, covenant, easement or restriction of record, or the
recommendations of Landlord's engineers or consultants, relating in any manner
to the Project, or for any business or purpose which is disreputable,
objectionable or productive of fire hazard. Tenant shall not do or permit
anything to be done which would result in the cancellation, or in any way
increase the cost, of the all risk property insurance coverage on the Project
and/or its contents. If Tenant does or permits anything to be done which
increases the cost of any insurance covering or affecting the Project, then
Tenant shall reimburse Landlord, upon demand, as Additional Rent, for such
additional costs. Landlord shall deliver to Tenant a written statement setting
forth the amount of any such insurance cost increase and showing in reasonable
detail the manner in which it has been computed. Tenant shall, at Tenant's sole
cost and expense, comply with all laws, ordinances, rules, regulations and
orders (state, federal, municipal or promulgated by other agencies or bodies
having or claiming jurisdiction) related specifically to the use or occupancy of
the Leased Premises by Tenant, which are now in effect or which may hereafter
come into effect including, but not limited to, (a) accessibility and use by
individuals with disabilities, and (b) environmental conditions in, on or about
the Leased Premises. If anything done by Tenant in its use or occupancy of the
Leased Premises shall create, require or cause imposition of any requirement by
any public authority for structural or other upgrading of or alteration or
improvement to the Project, Tenant shall, at Landlord's option, either perform
the upgrade, alteration or improvement at Tenant's sole cost and expense or
reimburse Landlord upon demand, as Additional Rent, for the cost to Landlord of
performing such work. The judgment of any court of competent jurisdiction or the
admission by Tenant in any action against Tenant, whether Landlord is a party
thereto or not, that Tenant has violated any law, ordinance, rule, regulation,
order, permit, covenant, easement or restriction shall be conclusive of that
fact as between Landlord and Tenant.
5.09. No Nuisance; No Overloading. Tenant shall use and occupy the Leased
Premises, and control its agents, employees, contractors, invitees and visitors
in such manner so as not to create any nuisance, or interfere with, annoy or
disturb (whether by noise, odor, vibration or otherwise) any other tenant or
occupant of the Project or Landlord in its operation of the Project. Tenant
shall not place or permit to be placed any loads upon the floors, walls or
ceilings in excess of the maximum designed load specified by Landlord or which
might damage the Leased Premises, the Building, or any portion thereof.
5.10. Furnishing of Financial Statements; Tenant's Representations. In
order to induce Landlord to enter into this Lease, Tenant agrees that it shall
promptly furnish Landlord, from time to time, within ten (10) business days of
receipt of Landlord's written request therefor, with financial statements in
form and substance reasonably satisfactory to Landlord reflecting Tenant's
current financial condition. Tenant represents and warrants that all financial
statements, records and information furnished by Tenant to Landlord in
connection with this Lease are true, correct and complete in all material
respects. Landlord shall not request financial statements from Tenant more than
four (4) times per calendar year and Landlord or Landlord's lender shall keep
the information contained therein in confidence. Furthermore, Tenant's
obligations with respect to financial statements shall be limited to Tenant's
financial statements existing as of the time of the request.
5.11. Entry by Landlord. Landlord, its employees, agents and consultants,
shall have the right to enter the Leased Premises at any time, in cases of an
emergency, and otherwise at reasonable times (upon twenty-four (24) hours
notice) to inspect the same, to clean, to perform such work as may be permitted
or required under this Lease, to make repairs to or alterations of the Leased
Premises or other portions of the Project or other tenant spaces therein, to
deal with emergencies, to post such notices as may be permitted or required by
law to prevent the perfection of liens against Landlord's interest in the
Project or to show the Leased Premises to prospective tenants, purchasers,
encumbrances or others, or for any other purpose as Landlord may deem necessary
or desirable; provided, however, that Landlord shall use its best efforts to
minimize interference with Tenant's business operations in the Leased Premises.
Tenant shall not be entitled
17
to any abatement of Rent or damages by reason of the exercise of any such right
of entry. In the event of any entry by Landlord onto the Leased Premises,
Landlord shall use its best efforts not to interfere with the conduct of
Tenant's business.
5.12. Nondisturbance and Attornment.
(a) This Lease and the rights of Tenant hereunder shall be subject
and subordinate to the lien of any deed of trust, mortgage or other
hypothecation or security instrument (collectively, "Security Device") now or
hereafter placed upon, affecting or encumbering the Project or any part thereof
or interest therein, and to any and all advances made thereunder, interest
thereon or costs incurred and any modifications, renewals, supplements,
consolidations, replacements and extensions thereof. With respect to any
Security Device entered into by Landlord after execution of this Lease, such
subordination is conditioned on Landlord obtaining assurance in a commercially
reasonable form (a "nondisturbance agreement") from the holder of or beneficiary
under such encumbrance that Tenant's possession of the Leased Premises will not
be disturbed so long as Tenant is not in default under this Lease and attorns to
the record owner of the Leased Premises. Without the consent of Tenant, the
holder of any such Security Device or the beneficiary thereunder shall have the
night to elect to be subject and subordinate to this Lease, such subordination
to be effective upon such terms and conditions as such holder or beneficiary may
direct which are not inconsistent with the provisions hereof. Tenant agrees to
attorn to and recognize as the Landlord under this Lease the holder or
beneficiary under a Security Device or any other party that acquires ownership
of the Leased Premises by reason of a foreclosure or sale under any Security
Device (or deed in lieu thereof). The new owner following such foreclosure, sale
or deed shall not be (i) liable for any act or omission of any prior landlord or
with respect to events occurring prior to acquisition of ownership; (ii) subject
to any offsets or defenses which Tenant might have against any prior landlord;
(iii) bound by prepayment of more than one (1) month's Rent; or (iv) liable to
Tenant for any security deposit not actually received by such new owner.
(b) Tenant shall not unreasonably withhold its consent to changes or
amendments to this Lease requested by the holder of a Security Device so long as
these changes do not alter the basic business terms of this Lease or otherwise
materially diminish any rights or materially increase any obligations of Tenant
hereunder. If, within ten (10) business days after notice from Landlord, Tenant
fails or refuses to execute with Landlord the amendment(s) to this Lease
accomplishing the change(s) or amendment(s) which are requested by such holder,
Landlord, at its sole option, shall have the right to execute any instrument for
or on behalf of Tenant as its attorney-in-fact.
5.13. Estoppel Certificate. Within ten (10) days following either party's
request, the other party shall execute, acknowledge and deliver written estoppel
certificates addressed to the persons or parties identified in such request, on
a form specified by such requesting party, certifying as to such facts (if true)
and agreeing to such notice provisions and other matters as such mortgagee(s) or
purchaser(s) may reasonably require, including, without limitation, the
following: (a) that this Lease is unmodified and in full force and effect (or in
full force and effect as modified, and stating the modifications); (b) the
amount of, and date to which Rent and other charges have been paid in advance;
(c) the amount of any Security Deposit; and (d) acknowledging that neither party
is in default under this Lease (or, if a party is claimed to be in default,
stating the nature of the alleged default). However, in no event shall any such
estoppel certificate require an amendment of the provisions of this Lease or
otherwise affect or abridge a party's rights hereunder. Any such estoppel
certificate may be relied upon by any such person or party designated in such
request. Failure by a party to execute and deliver any such estoppel certificate
within the time requested shall be conclusive upon such party that (1) this
Lease is in full force and effect and has not been modified except as
represented by the requesting party; (2) not more than one month's Rent has been
paid in advance; and (3) neither party is in default under this Lease.
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5.14. Security Deposit.
(a) Concurrently with the execution hereof, Tenant shall pay to
Landlord the agreed upon Security Deposit as security for the full and faithful
performance of Tenant's obligations under this Lease. If at any time during the
Term, Tenant shall be in default in the payment of Rent or in default for any
other reason, Landlord may use, apply or retain all or part of the Security
Deposit for payment of any amount due Landlord or to cure such default or to
reimburse or compensate Landlord for any liability, loss, cost, expense or
damage (including attorneys' fees) which Landlord may suffer or incur by reason
of Tenant's defaults. If Landlord uses or applies all or any part of the
Security Deposit, Tenant shall, on demand, pay to Landlord a sum sufficient to
restore the Security Deposit to the full amount required by this Lease. Upon
expiration of the Term or earlier termination of this Lease and after Tenant has
vacated the Leased Premises, Landlord shall return the Security Deposit to
Tenant, reduced by such amounts as may be required by Landlord to remedy
defaults on the part of Tenant in the payment of Rent, to repair damages to the
Leased Premises caused by Tenant and to clean the Leased Premises. The portion
of the deposit not so required shall be paid over to Tenant (or, at Landlord's
option, to the last assignee of Tenant's interest in this Lease) within thirty
(30) days after expiration of the Term or earlier termination hereof. Landlord
shall hold the Security Deposit for the foregoing purposes; provided, however,
that Landlord shall have no obligation to segregate the Security Deposit from
its general funds or to pay interest in respect thereof. No part of the Security
Deposit shall be considered to be held in trust, or to be prepayment of any
monies to be paid by Tenant under this Lease.
(b) In lieu of a cash deposit, Tenant may deliver the Security
Deposit to Landlord in the form of a clean and irrevocable letter of credit (the
"Letter of Credit") issued by and drawable upon (said issuer being referred to
as the "Issuing Bank") a financial institution which is approved by Landlord in
its sole discretion, provided that Landlord shall not unreasonably withhold its
consent to an Issuing Bank which has outstanding unsecured, uninsured and
unguaranteed indebtedness, or shall have issued a letter of credit or other
credit facility that constitutes the primary security for any outstanding
indebtedness (which is otherwise uninsured and unguaranteed), that is then
rated, without regard to qualification of such rating by symbols such as "+" or
"-" or numerical notation, "Aa" or better by Xxxxx'x Investors Service and "AA"
or better by Standard & Poor's Rating Service, and has combined capital, surplus
and undivided profits of not less than $100,000,000. Such Letter of Credit shall
(a) name Landlord as beneficiary, (b) be in the amount of the Security Deposit,
(c) have a term of not less than one year, (d) permit multiple drawings, (e) be
fully transferable by Landlord, and (f) otherwise be in form and content
reasonably satisfactory to Landlord. If upon any transfer of the Letter of
Credit, any fees or charges shall be so imposed, then such fees or charges for
the first (1st) transfer only shall be payable solely by Tenant. The Letter of
Credit shall provide that it shall be deemed automatically renewed, without
amendment, for consecutive periods of one year each thereafter during the Term
unless the Issuing Bank sends a notice (the "Non-Renewal Notice") to Landlord by
certified mail, return receipt requested, not less than 45 days next preceding
the then expiration date of the Letter of Credit stating that the Issuing Bank
has elected not to renew the Letter of Credit. Landlord shall have the right,
upon receipt of the Non-Renewal Notice, to draw the full amount of the Letter of
Credit, by sight draft on the Issuing Bank, and shall thereafter hold or apply
the cash proceeds of the Letter of Credit pursuant to the terms of this Article.
The Issuing Bank shall agree with all drawers, endorsers and bona fide holders
that drafts drawn under and in compliance with the terms of the Letter of Credit
will be duly honored upon presentation to the Issuing Bank at an office location
in San Francisco. The Letter of Credit shall be subject in all respects to the
Uniform Customs and Practice for Documentary Credits (1993 revision),
International Chamber of Commerce Publication No. 500. Notwithstanding the
foregoing, Landlord approves Silicon Valley Bank as an Issuing bank.
(c) If at any time during the first twenty-four (24) months of the
Term Tenant shall become a publicly traded company and Tenant has achieved an
audited net worth (as defined by GAAP) of $55,000,000, the Security Deposit
shall be reduced by fifty percent (50%). If the Security Deposit is reduced
19
by fifty percent (50%) as provided for in the previous sentence and during the
first twenty-four (24) months of the Term Tenant's audited net worth (as defined
by GAAP) falls below $35,000,000, the amount of the Security Deposit shall be
increased to the amount prior to the fifty percent (50%) reduction.
(d) Notwithstanding anything in this Section 5.14 to the contrary,
the amount of the Security Deposit shall be reduced by thirty-three percent
(33%) on the last day of the twenty-fourth (24th), thirty-sixth (36th) and
forty-eighth (48th) months of the Term; however, in no event shall the Security
Deposit be less than two (2) months of Base Rent payable for the Leased Premises
during month sixty (60) of the Term.
5.15. Surrender. Subject to the provisions of Section 5.07 hereof, on the
Term Expiration Date (or earlier termination of this Lease), Tenant shall quit
and surrender possession of the Leased Premises to Landlord in as good order and
condition as they were in on the Term Commencement Date, reasonable wear and
tear, taking by condemnation, casualty and repairs which are Landlord's
responsibility excepted. Reasonable wear and tear shall not include any damage
or deterioration that would have been prevented by good maintenance practice or
by Tenant performing all of its obligations under this Lease. Tenant shall,
without cost to Landlord, remove all furniture, equipment, trade fixtures,
debris and articles of personal property owned by Tenant in the Leased Premises,
and shall repair any damage to the Project resulting from such removal. Any such
property not removed by Tenant following Tenant's vacation and the Term
Expiration Date (or earlier termination of this Lease) shall be considered
abandoned, and Landlord may remove any or all of such items and dispose of same
in any lawful manner or store same in a public warehouse or elsewhere for the
account and at the expense and risk of Tenant. If Tenant shall fail to pay the
cost of storing any such property after storage for thirty (30) days or more,
Landlord may sell any or all of such property at public or private sale, in such
manner and at such times and places as Landlord may deem proper, without notice
to or demand upon Tenant. Landlord shall apply the proceeds of any such sale as
follows: first, to the costs of such sale; second, to the costs of storing any
such property; third, to the payment of any other sums of money which may then
or thereafter be due to Landlord from Tenant under any of the terms of this
Lease; and fourth, the balance, if any, to Tenant.
5.16. Tenant's Remedies. Landlord shall not be deemed in breach of this
Lease unless Landlord fails within a reasonable time to perform an obligation
required to be performed by Landlord. For purposes of this Section 5.16, a
reasonable time shall in no event, be less than thirty (30) days after receipt
by Landlord, and by the holders of any ground lease, deed of trust or mortgage
covering the Leased Premises whose name and address shall have been furnished
Tenant in writing for such purpose, of written notice specifying wherein such
obligation of Landlord has not been performed; provided, however, that if the
nature of Landlord's obligation is such that more than thirty (30) days after
such notice are reasonably required for its performance, then Landlord shall not
be in breach of this Lease if performance is commenced within said thirty (30)-
day period and thereafter diligently pursued to completion. If Landlord falls to
cure such default within the time provided for in this Lease, the holder of any
such ground lease, deed of trust or mortgage shall have an additional thirty
(30) days to cure such default; provided that if such default cannot reasonably
be cured within that thirty (30) day period, then such holder shall have such
additional time to cure the default as is reasonably necessary under the
circumstances. Tenant shall look solely to Landlord's interest in the Project
for recovery of any judgment from Landlord. Neither Landlord nor any of its
trustees, directors, officers, agents, employees or representatives (or, if
Landlord is a partnership, its partners, whether general or limited) shall ever
be personally liable for any such judgment. Any lien obtained to enforce any
such judgment and any levy of execution thereon shall be subject and subordinate
to any lien, deed of trust or mortgage to which Section 5.12 applies or may
apply. Tenant shall not have the right to terminate this Lease or withhold,
reduce or offset any amount against any payments of Rent due and payable under
this Lease solely by reason of a breach of this Lease by Landlord.
20
5.17. Rules and Regulations. Tenant shall comply with the rules and
regulations for the Project attached as Exhibit D and such reasonable amendments
---------
thereto as Landlord may adopt from time to time with prior notice to Tenant.
Article 6.
Environmental Matters
6.01. Hazardous Materials Prohibited.
(a) Tenant shall not cause or permit any Hazardous Material (as
defined in Section 6.01(c) below) to be brought, kept, used, generated, released
or disposed in, on, under or about the Leased Premises or the Project by Tenant,
its agents, employees, contractors or invitees; provided, however, that Tenant
may use, store and dispose of, in accordance with applicable Laws, limited
quantities of standard office and janitorial supplies, but only to the extent
reasonably necessary for Tenant's operations in the Leased Premises. Tenant
hereby indemnifies Landlord from and against (i) any breach by Tenant of the
obligations stated in the preceding sentence, (ii) any breach of the obligations
stated in Section 6.01(b) below, or (iii) any claims or liability resulting from
Tenant's use of Hazardous Materials. Tenant hereby agrees to defend and hold
Landlord harmless from and against any and all claims, liability, losses,
damages, costs and/or expenses (including, without limitation, diminution in
value of the Project, or any portion thereof, damages for the loss or
restriction on use of rentable or usable space or of any amenity of the Project,
damages arising from any adverse impact on marketing of space in the Project,
and sums paid in settlement of claims, fines, penalties, attorneys' fees,
consultants' fees and experts' fees) which arise during or after the Term as a
result of any breach of the obligations stated in Sections 6.01(a) or 6.01(b) or
otherwise resulting from Tenant's use of Hazardous Materials. This
indemnification of Landlord by Tenant includes, without limitation, death of or
injury to person, damage to any property or the environment and costs incurred
in connection with any investigation of site conditions or any cleanup,
remedial, removal, or restoration work required by any federal, state or local
governmental agency or political subdivision because of any Hazardous Material
present in, on, under or about the Leased Premises or the Project (including
soil and ground water contamination) which results from such a breach. Without
limiting the foregoing, if the presence of any Hazardous Material in, on, under
or about the Leased Premises or the Project caused or permitted by Tenant
results in any contamination of the Leased Premises or the Project, Tenant shall
promptly take all actions at its sole expense as are necessary to return the
same to the condition existing prior to the introduction of such Hazardous
Material; provided that Landlord's approval of such actions, and the contractors
to be used by Tenant in connection therewith, shall first be obtained. This
indemnification of Landlord by Tenant shall survive the expiration or sooner
termination of this Lease.
(b) Tenant covenants and agrees that Tenant shall at all times be
responsible and liable for, and be in compliance with, all federal, state, local
and regional laws, ordinances, rules, codes and regulations, as amended from
time to time ("Governmental Requirements"), relating to health and safety and
environmental matters, arising, directly or indirectly, out of the use of
Hazardous Materials (as defined in Section 6.01(c) below) in the Project. Health
and safety and environmental matters for which Tenant is responsible under this
paragraph include, without limitation (i) notification and reporting to
governmental agencies, (ii) the provision of warnings of potential exposure to
Hazardous Materials to Landlord and Tenant's agents, employees, licensees,
contractors and others, (iii) the payment of taxes and fees, (iv) the proper of
f-site transportation and disposal of Hazardous Materials, and (v) all
requirements, including training, relating to the use of equipment. Immediately
upon discovery of a release of Hazardous Materials associated with Tenant's
activities, Tenant shall give written notice to Landlord, whether or not such
release is subject to reporting under Governmental Requirements. The notice
shall include information on the nature and conditions
21
of the release and Tenant's planned response. Tenant shall be liable for the
cost of any clean-up of the release of any Hazardous Materials by Tenant on the
Project.
(c) As used in this Lease, the term "Hazardous Material" means any
hazardous or toxic substance, material or waste which is or becomes regulated by
any local governmental authority, the State of California or the United States
Government. The term "Hazardous Material" includes, without limitation, any
substance, material or waste which is (i) defined as a "hazardous waste" or
similar term under the laws of the jurisdiction where the Project is located;
(ii) designated as a "hazardous substance" pursuant to Section 311 of the
Federal Water Pollution Control Act (33 U.S.C. (S) 1317); (iii) defined as a
"hazardous waste" pursuant to Section 1004 of the Federal Resource, Conservation
and Recovery Act, 42 U.S.C. (S) 6901 et seq. (42 U.S.C. (S) 6903); (iv) defined
as a "hazardous substance" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. (S) 9601 et
seq. (42 U.S.C. (S) 9601); (v) hydrocarbons, petroleum, gasoline, crude oil or
any products, by-products or fractions thereof; or (vi) asbestos in any form or
condition.
(d) As used in this Article 6, the term "Laws" means any applicable
federal, state or local laws, ordinances, rules or regulations relating to any
Hazardous Material affecting the Project, including, without limitation, the
specific laws, ordinances and regulations referred to in Section 6.01(c) above.
References to specific Laws shall also be references to any amendments thereto
and to any applicable successor Laws.
(e) To the best of Landlord's knowledge, except as disclosed in the
environmental reports (the "Environmental Reports") provided to Tenant by
Landlord (at Landlord's sole cost and expense) (i) there are no Hazardous
Materials in the Building, and (ii) the Building is in compliance with all Laws
relating to any Hazardous Material. Landlord's knowledge is limited to the
matters contained in the Environmental Reports. Tenant acknowledges its receipt
and review of the Environmental Reports prior to entering into this Lease.
Landlord represents and warrants that (i) during the period of its ownership of
the Project prior to entering into this Lease, it has not released any Hazardous
Materials on the Project, and (ii) after entering into this Lease, Landlord will
not release any Hazardous Materials on the Project. Landlord hereby agrees to
indemnify, protect, defend and hold the Tenant harmless of and from any and all
claims, liability, costs, penalties, fines, damages, injury, judgments,
forfeiture, losses or expenses (including without limitation reasonable
attorneys' fees) arising out of or in any way related to any breach by Landlord
of its representations and warranties in this Section 6.01(e) and Landlord shall
be liable for the cost of any clean-up of the release of any Hazardous Materials
by Landlord on the Project. Landlord, at its sole expense, shall cause to be
removed any asbestos or other Hazardous Materials discovered in the Leased
Premises (except any Hazardous Materials installed by Tenant or part of the
Tenant Improvements) during the term of this Lease required by Government
Requirements to be removed and Landlord shall restore the Leased Premises to its
condition prior to the removal of such Hazardous Materials. Landlord hereby
agrees to indemnify, protect, defend and hold the Tenant harmless of and from
any and all claims, liability, costs, penalties, fines, damages, injury,
judgments, forfeiture, losses or expenses (including without limitation
reasonable attorneys' fees) arising out of or in any way related to or resulting
from any Hazardous Materials discovered in the Leased Premises or on the Project
with were not brought, kept, used, generated, released or disposed in, on, under
or about the Leased Premises or the Project by Tenant, its agents, employees,
contractors or invitees.
6.02. Limitations on Assignment and Subletting. It shall not be
unreasonable for Landlord to withhold its consent to any proposed assignment or
subletting of the Leased Premises if (i) the proposed transferee's anticipated
use of the Leased Premises involves the generation, storage, use, treatment, or
disposal of Hazardous Material (excluding standard office and janitorial
supplies; in limited quantities as hereinabove provided); (ii) the proposed
transferee has been required by any prior landlord, lender or government
authority to take remedial action in connection with Hazardous Material
contaminating a property if the contamination
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resulted from such transferee's actions or use of the property in question; or
(iii) the proposed transferee is subject to an enforcement order issued by any
governmental authority in connection with the generation, storage, use,
treatment or disposal of a Hazardous Material.
6.03. Right of Entry. Landlord, its employees, agents and consultants,
shall have the right to enter the Leased Premises at any time, in case of an
emergency, and otherwise during reasonable hours and upon reasonable notice to
Tenant (upon twenty-four (24) hours notice), in order to conduct periodic
environmental inspections and tests to determine whether any Hazardous Materials
are present. The costs and expenses of such inspections shall be paid by
Landlord unless a default or breach of this Lease, violation of Laws or
contamination caused or permitted by Tenant is found to exist. In such event,
Tenant shall reimburse Landlord upon demand, as Additional Rent, for the costs
and expenses of such inspections. In the event of any entry by Landlord onto the
Leased Premises, Landlord shall use its best efforts not to interfere with the
conduct of Tenant's business.
6.04. Notice to Landlord. Tenant shall immediately notify Landlord in
writing of: (i) any enforcement, clean-up, removal or other governmental or
regulatory action instituted or threatened regarding the Leased Premises or the
Project pursuant to any Laws; (ii) any claim made or threatened by any person
against Tenant or the Leased Premises relating to damage, contribution, cost
recovery, compensation, loss or injury resulting from or claimed to result from
any Hazardous Material; and (iii) any reports made to or received from any
governmental agency arising out of or in connection with any Hazardous Material
in or removed from the Leased Premises or the Project, including any complaints,
notices, warnings or asserted violations in connection therewith. Tenant shall
also supply to Landlord as promptly as possible, and in any event within three
(3) business days after Tenant first receives or sends the same, copies of all
claims, reports, complaints, notices, warnings, asserted violations or other
communications relating in any way to the Leased Premises or Tenant's use
thereof.
Article 7.
Insurance, Indemnity, Condemnation, Damage and Default
7.01. Landlord's Insurance. Landlord shall secure and maintain policies of
insurance for the Project (including the Leased Premises) covering loss of or
damage to the Project, including the Tenant Improvements, but excluding all
subsequent alterations, additions and improvements to the Leased Premises, with
loss payable to Landlord and to the holders of any deeds of trust, mortgages or
ground leases on the Project. Landlord shall not be obligated to obtain
insurance for Tenant's trade fixtures, equipment, furnishings, machinery or
other property. Such policies shall provide protection against fire and extended
coverage perils and such additional perils as Landlord deems suitable, and with
such deductible(s) as Landlord shall deem reasonably appropriate. Landlord shall
further secure and maintain commercial general liability insurance with respect
to the Project in such amount as Landlord shall determine, such insurance to be
in addition to, and not in lieu of, the liability insurance required to be
maintained by Tenant. In addition, Landlord may secure and maintain rental
income insurance. Landlord may elect to self-insure for the coverages required
under this Section 7.01. If the annual cost to Landlord for any such insurance
exceeds the standard rates because of the nature of Tenant's operations, Tenant
shall, upon receipt of appropriate invoices, reimburse Landlord for such
increases in cost, which amounts shall be deemed Additional Rent hereunder.
Tenant shall not be named as an additional insured on any policy of insurance
maintained by Landlord.
7.02. Tenant's Liability Insurance.
(a) Tenant (with respect to both the Leased Premises and the
Project) shall secure and maintain, at its own expense, at all times during the
Term, a policy or policies of commercial general liability
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insurance with the premiums thereto paid in advance, protecting Tenant and
naming Landlord, the holders of any deeds of trust, mortgages or ground leases
on the Project, and Landlord's representatives (which term, whenever used in
this Article 7, shall be deemed to include Landlord's partners, trustees,
ancillary trustees, officers, directors, shareholders, beneficiaries, agents,
employees and independent contractors) as additional insureds against claims for
bodily injury, personal injury, advertising injury and property damage
(including attorneys' fees) based upon, involving or arising out of Tenant's
operations, assumed liabilities or Tenant's use, occupancy or maintenance of the
Leased Premises and the Common Areas of the Project. Such insurance shall
provide for a minimum amount of Two Million Dollars ($2,000,000.00) for property
damage or injury to or death of one or more than one person in any one accident
or occurrence, with an annual aggregate limit of at least Two Million Dollars
($2,000,000.00). The coverage required to be carried shall include fire legal
liability, blanket contractual liability, personal injury liability (libel,
slander, false arrest and wrongful eviction), broad form property damage
liability, products liability and completed operations coverage (as well as
owned, non-owned and hired automobile liability if an exposure exists) and the
policy shall contain an exception to any pollution exclusion which insures
damage or injury arising out of heat, smoke or fumes from a hostile fire. Such
insurance shall be written on an occurrence basis and contain a separation of
insureds provision or cross-liability endorsement acceptable to Landlord. Tenant
shall provide Landlord with a certificate evidencing such insurance coverage.
The certificate shall indicate that the insurance provided specifically
recognizes the liability assumed by Tenant under this Lease (including without
limitation performance by Tenant under Section 7.04) and that Tenant's insurance
is primary to and not contributory with any other insurance maintained by
Landlord, whose insurance shall be considered excess insurance only. Not more
frequently than every two (2) years, if, in the opinion of any mortgagee of
Landlord or of the insurance broker retained by Landlord, the amount of
liability insurance coverage at that time is not adequate, then Tenant shall
increase its liability insurance coverage as required by either any mortgagee of
Landlord or Landlord's insurance broker.
(b) Tenant shall, at Tenant's expense, comply with (i) all insurance
company requirements pertaining to the use of the Leased Premises and (ii) all
rules, orders, regulations or requirements of the American Insurance Association
(formerly the National Board of Fire Underwriters) and with any similar body.
7.03. Tenant's Additional Insurance Requirements.
(a) Tenant shall secure and maintain, at Tenant's expense, at all
times during the Term, a policy of physical damage insurance on all of Tenant's
fixtures, furnishings, equipment, machinery, merchandise and personal property
in the Leased Premises and on any alterations, additions or improvements made by
or for Tenant upon the Leased Premises, all for the full replacement cost
thereof without deduction for depreciation of the covered items and in amounts
that meet any co-insurance clauses of the policies of insurance. Such insurance
shall insure against those risks customarily covered in an "all risk" policy of
insurance covering physical loss or damage. Tenant shall use the proceeds from
such insurance for the replacement of fixtures, furnishings, equipment and
personal property and for the restoration of any alterations, additions or
improvements to the Leased Premises. In addition, Tenant shall secure and
maintain, at all times during the Term, loss of income, business interruption
and extra expense insurance in such amounts as will reimburse Tenant for direct
or indirect loss of earnings and incurred costs attributable to all perils
commonly insured against by prudent tenants or attributable to prevention of
access to the Leased Premises or to the Building as a result of such perils;
such insurance shall be maintained with Tenant's property insurance carrier.
Further, Tenant shall secure and maintain at all times during the Term workers'
compensation insurance in such amounts as are required by law, employer's
liability insurance in the amount of One Million Dollars ($1,000,000.00) per
occurrence, and all such other insurance as may be required by applicable law or
as may be reasonably required by Landlord. In the event Tenant makes any
alterations, additions or improvements to the Leased Premises, prior to
commencing any work in the Leased Premises, Tenant shall secure "builder's all
risk" insurance which shall be maintained throughout the course of construction,
such policy being an all risk builder's risk completed value form, in an amount
approved by Landlord, but not less than the total contract
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price for the construction of such alterations, additions or improvements and
covering the construction of such alterations, additions or improvements, and
such other insurance as Landlord may require, it being understood and agreed
that all of such alterations, additions or improvements shall be insured by
Tenant pursuant to this Section 7.03 immediately upon completion thereof. Tenant
shall provide Landlord with certificates of all such insurance. The property
insurance certificate shall confirm that the waiver of subrogation required to
be obtained pursuant to Section 7.05 is permitted by the insurer. Tenant shall,
at least thirty (30) days prior to the expiration of any policy of insurance
required to be maintained by Tenant under this Lease, furnish Landlord with an
"insurance binder" or other satisfactory evidence of renewal thereof.
(b) All policies required to be carried by Tenant under this Lease
shall be issued by and binding upon a reputable insurance company of good
financial standing licensed to do business in the State of California with a
rating of at least A-VII, or such other rating as may be required by a lender
having a lien on the Project, as set forth in the most current issue of "Best's
Insurance Reports." Tenant shall not do or permit anything to be done that would
invalidate the insurance policies referred to in this Article 7. Evidence of
insurance provided to Landlord shall include an endorsement showing that
Landlord, its representatives and the holders of any deeds of trust, mortgages
or ground leases on the Project are included as additional insureds on general
liability insurance, and as loss payees for property insurance, to the extent
required hereunder, and an endorsement whereby the insurer agrees not to cancel,
non-renew or materially alter the policy without at least thirty (30) days prior
written notice to Landlord, its representatives and any mortgagee of Landlord.
(c) In the event that Tenant fails to provide evidence of insurance
required to be provided by Tenant under this Lease, prior to commencement of the
Term, and thereafter during the Term, within ten (10) days following Landlord's
request therefor, and thirty (30) days prior to the expiration date of any such
coverage, Landlord shall be authorized (but not required) to procure such
coverage in the amounts stated with all costs thereof (plus a fifteen percent
(15%) administrative fee) to be chargeable to Tenant and payable upon written
invoice therefor, which amounts shall be deemed Additional Rent hereunder.
(d) The minimum limits of insurance required by this Lease, or as
carried by Tenant, shall not limit the liability of Tenant nor relieve Tenant of
any obligation hereunder.
7.04. Indemnity and Exoneration.
(a) To the extent not prohibited by law, or unless due to the gross
negligence or willful misconduct of Landlord, Landlord and Landlord's
representatives shall not be liable for any loss, injury or damage to person or
property of Tenant, Tenant's agents, employees, contractors, invitees or any
other person, whether caused by theft, fire, act of God, acts of the public
enemy, riot, strike, insurrection, war, court order, requisition or order of
governmental body or authority or which may arise through repair, alteration or
maintenance of any part of the Project or failure to make any such repair or
from any other cause whatsoever, except as expressly otherwise provided in
Sections 7.06 and 7.07. Landlord shall not be liable for any loss, injury or
damage arising from any act or omission of any other tenant or occupant of the
Project, nor shall Landlord be liable under any circumstances for damage or
inconvenience to Tenant's business or for any loss of income or profit
therefrom.
(b) Tenant shall indemnify, protect, defend and hold the Project,
Landlord and its representatives, harmless of and from any and all claims,
liability, costs, penalties, fines, damages, injury, judgments, forfeiture,
losses (including without limitation diminution in the value of the Leased
Premises) or expenses (including without limitation attorneys' fees, consultant
fees, testing and investigation fees, expert fees and court costs) arising out
of or in any way related to or resulting directly or indirectly from (i) the use
or occupancy of the Leased Premises, (ii) the activities of Tenant, its agents,
employees, contractors or invitees in or about the Leased Premises or the
Project (where not covered by Landlord's insurance), (iii) any failure
25
to comply with any applicable law, and (iv) any default or breach by Tenant in
the performance of any obligation of Tenant under this Lease; provided, however,
that the foregoing indemnity shall not be applicable to claims arising by reason
of the gross negligence or willful misconduct of Landlord.
(c) Tenant shall indemnify, protect, defend and hold the Project,
Landlord and its representatives, harmless of and from any and all claims,
liability, costs, penalties, fines, damages, injury, judgments, forfeiture,
losses (including without limitation diminution in the value of the Leased
Premises) or expenses (including without limitation attorneys' fees, consultant
fees, testing and investigation fees, expert fees and court costs) arising out
of or in any way related to or resulting directly or indirectly from work or
labor performed, materials or supplies furnished at the request of Tenant or in
connection with obligations incurred by or performance of any work done for the
account of Tenant in the Leased Premises or the Project unless such work is
performed by or at the direction of Landlord.
(d) The provisions of this Section 7.04 shall survive the expiration
or sooner termination of this Lease. BY SIGNING ITS INITIALS BELOW, TENANT
ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF
THE PROVISIONS SET FORTH IN THIS SECTION 7.04 AND FURTHER ACKNOWLEDGES THAT SUCH
PROVISIONS WERE SPECIFICALLY NEGOTIATED.
RAV
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Tenant's Initials
(e) To the extent not prohibited by law or not inconsistent with
Sections 7.04(a) and (b), Tenant shall not be liable for any loss, injury or
damage in or about the Project, nor shall Tenant be liable for any damage or
inconvenience to Landlord or Landlord's business or for any loss of income or
profit therefrom to the extent such loss, injury or damage arises from any gross
negligence or willful misconduct of Landlord.
(f) To the extent not prohibited by law or not inconsistent with
Sections 7.04(a) and (b), Landlord shall indemnify, protect, defend and hold
Tenant and its representatives, harmless of and from any and all claims,
liability, costs, penalties, fines, damages, injury, judgments, forfeiture,
losses or expenses (including without limitation reasonable attorneys' fees,
consultant fees, testing and investigation fees, expert fees and court costs) by
reason of (i) any damage or injury occurring on the Project to the extent that
such damage or injury shall be caused by or arise from any gross negligence or
willful misconduct by Landlord, (ii) Landlord's failure to comply with any
governmental laws, ordinances and regulations applicable to the Project, or
(iii) any default or breach beyond the expiration of the applicable cure period
on the part of Landlord in the performance of any obligation of Landlord to be
performed pursuant to this Lease; provided however, that the foregoing indemnity
shall not be applicable to claims to the extent arising by reason of any
negligence or willful misconduct of Tenant.
7.05. Waiver of Subrogation. Anything in this Lease to the contrary
notwithstanding, Landlord and Tenant each waives all rights of recovery, claim,
action or cause of action against the other, its agents (including partners,
both general and limited), trustees, officers, directors, and employees, for any
loss or damage that may occur to the Leased Premises, or any improvements
thereto, or the Project or any personal property of such party therein, by
reason of any cause required to be insured against under this Lease to the
extent of the coverage required, regardless of cause or origin, including
negligence of the other party hereto, provided that such party's insurance is
not invalidated thereby; and each party covenants that, to the fullest extent
permitted by law, no insurer shall hold any right of subrogation against such
other party. Tenant shall advise its insurers of the foregoing and such waiver
shall be a part of each policy maintained by Tenant which applies to the Leased
Premises, any part of the Project or Tenant's use and occupancy of any part
thereof.
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7.06. Condemnation.
(a) If the Leased Premises are taken under the power of eminent
domain or sold under the threat of the exercise of such power (all of which are
referred to herein as "condemnation"), this Lease shall terminate as to the part
so taken as of the date the condemning authority takes title or possession,
whichever first occurs (the "date of taking"). If the Leased Premises or any
portion of the Project is taken by condemnation to such an extent as to render
the Leased Premises untenantable as reasonably determined by Landlord, this
Lease shall, at the option of either party to be exercised in writing within
thirty (30) days after receipt of written notice of such taking, forthwith cease
and terminate as of the date of taking. All proceeds from any condemnation of
the Leased Premises shall belong and be paid to Landlord, subject to the rights
of any mortgagee of Landlord's interest in the Project or the beneficiary of any
deed of trust which constitutes an encumbrance thereon; provided that Tenant
shall be entitled to any compensation separately awarded to Tenant for Tenant's
relocation expenses or, loss of Tenant's trade fixtures. If this Lease continues
in effect after the date of taking pursuant to the provisions of this Section
7.06(a), Landlord shall proceed with reasonable diligence to repair, at its
expense, the remaining parts of the Project and the Leased Premises to
substantially their former condition to the extent that the same is feasible
(subject to reasonable changes which Landlord shall deem desirable) and so as to
constitute a complete and tenantable Project and Leased Premises. Gross Rent
shall xxxxx to the extent appropriate during the period of restoration, and
Gross Rent shall thereafter be equitably adjusted according to the remaining
Rentable Area of the Leased Premises and the Building.
(b) In the event of a temporary taking of all or a portion of the
Leased Premises, there shall be no abatement of Rent and Tenant shall remain
fully obligated for performance of all of the covenants and obligations on its
part to be performed pursuant to the terms of this Lease. All proceeds awarded
or paid with respect thereto shall belong to Tenant.
7.07. Damage or Destruction. In the event of a fire or other casualty in
the Leased Premises, Tenant shall immediately give notice thereof to Landlord.
The following provisions shall then apply:
(a) If the damage is limited solely to the Leased Premises and the
Leased Premises can, in Landlord's reasonable opinion, be made tenantable with
all damage repaired within six (6) months from the date of damage, then Landlord
shall be obligated to rebuild the same to substantially their former condition
to the extent that the same is feasible (subject to reasonable changes which
Landlord shall deem desirable and such changes as may be required by applicable
law) and shall proceed with reasonable diligence to do so and this Lease shall
remain in full force and effect.
(b) If portions of the Project outside the boundaries of the Leased
Premises are damaged or destroyed (whether or not the Leased Premises are also
damaged or destroyed) and the Leased Premises and the Project can, in Landlord's
reasonable opinion, both be made tenantable with all damage repaired within six
(6) months from the date of damage or destruction, and provided that Landlord
determines that it is economically feasible, then Landlord shall be obligated to
rebuild the same to substantially their former condition to the extent that the
same is feasible (subject to reasonable changes which Landlord shall deem
desirable and such changes as may be required by applicable law) and shall
proceed with reasonable diligence to do so and this Lease shall remain in full
force and effect.
(c) Notwithstanding anything to the contrary contained in Sections
7.07(a) or 7.07(b) above, Landlord shall not have any obligation whatsoever to
repair, reconstruct or restore the Leased Premises when any damage thereto or to
the Project occurs during the last eighteen (18) months of the Term and Tenant
has not effectively exercised any option granted to Tenant to extend the Term.
Under such circumstances, Landlord shall promptly notify Tenant of its decision
not to rebuild, whereupon the Lease shall terminate as of the date of such
notice.
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(d) If neither Section 7.07(a) nor 7.07(b) above applies, Landlord
shall so notify Tenant within sixty (60) days after the date of the damage or
destruction and either Tenant or Landlord may terminate this Lease within thirty
(30) days after the date of such notice, such termination notice to be
immediately effective; provided, however, that Landlord shall have the right to
elect to reconstruct the Project and the Leased Premises, in which event (i)
Landlord shall notify Tenant of such election within said sixty (60) day period
and Tenant shall thereupon have no right to terminate this Lease, and (ii)
Landlord shall proceed with reasonable diligence to rebuild the Project and the
Leased Premises to substantially their former condition to the extent that the
same is feasible (subject to reasonable changes which Landlord shall deem
desirable and such changes as may be required by applicable law).
(e) During any period when Tenant's use of the Leased Premises is
significantly impaired by damage or destruction, Gross Rent shall xxxxx in
proportion to the degree to which Tenant's use of the Leased Premises is
impaired until such time as the Leased Premises are made tenantable as
reasonably determined by Landlord; provided that no such rental abatement shall
be permitted if the casualty is the result of the negligence or willful
misconduct of Tenant or Tenant's employees, agents, contractors or invitees.
(f) The proceeds from any insurance paid by reason of damage to or
destruction of the Project or any part thereof insured by Landlord shall belong
to and be paid to Landlord, subject to the rights of any mortgagee of Landlord's
interest in the Project or the beneficiary of any deed of trust which
constitutes an encumbrance thereon. Tenant shall be responsible at its sole cost
and expense for the repair, restoration and replacement of (i) its fixtures,
furnishings, equipment, machinery, merchandise and personal property in the
Leased Premises, and (ii) its alteration, additions and improvements; provided,
however, that Landlord shall have the option of requiring Tenant to assign to
Landlord (or any party designated by Landlord) some or all of the proceeds
payable to Tenant under this Article 7, whereupon Landlord shall be responsible
for the repair or restoration of such insured property.
(g) Landlord's repair and restoration obligations under this Section
7.07 shall not impair or otherwise affect the rights and obligations of the
parties set forth elsewhere in this Lease. Subject to Section 7.07(e), Landlord
shall not be liable for any inconvenience or annoyance to Tenant, its employees,
agents, contractors or invitees, or injury to Tenant's business resulting in any
way from such damage or the repair thereof. Landlord and Tenant agree that the
terms of this Lease shall govern the effect of any damage to or destruction of
the Leased Premises or the Project with respect to the termination of this Lease
and hereby waive the provisions of any present or future statute or law to the
extent inconsistent therewith.
7.08. Default by Tenant.
(a) Events of Default. The occurrence of any of the following shall
constitute an event of default on the part of Tenant:
(1) Abandonment. Vacating the Leased Premises without the
intention to reoccupy same, or abandonment of the Leased Premises for a
continuous period of fourteen (14) days;
(2) Nonpayment of Rent. Failure to pay any installment of Rent
due and payable hereunder on the date when payment is due, such failure
continuing for a period of three (3) business days after written notice of such
failure; provided, however, that Landlord shall not be required to provide such
notice more than two (2) times during the Term with respect to non-payment of
Gross Rent or Additional Rent, the third such non-payment constituting default
without requirement of notice; furthermore, if Tenant shall be served with a
demand for the payment of past due Rent, any payment(s) tendered thereafter to
cure any default by Tenant shall be made only by cashier's check, wire-transfer
or direct deposit of immediately available funds;
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(3) Other Obligations. Failure to perform any obligation,
agreement or covenant under this Lease other than those matters specified in
subsections 7.08(a)(1) and 7.08(a)(2), such failure continuing for a period of
fifteen (15) business days after written notice of such failure (or such longer
period as is reasonably necessary to remedy such default, provided that Tenant
commences the remedy within such fifteen (15)-day period and continuously and
diligently pursues such remedy at all times until such default is cured);
(4) General Assignment. Any general arrangement or assignment
by Tenant for the benefit of creditors;
(5) Bankruptcy. The filing of any voluntary petition in
bankruptcy by Tenant, or the filing of an involuntary petition against Tenant,
which involuntary petition remains undischarged for a period of sixty (60) days.
In the event that under applicable law the trustee in bankruptcy or Tenant has
the right to affirm this Lease and continue to perform the obligations of Tenant
hereunder, such trustee or Tenant shall, within such time period as may be
permitted by the bankruptcy court having jurisdiction, cure all defaults of
Tenant hereunder outstanding as of the date of the affirmance of this Lease and
provide to Landlord such adequate assurances as may be necessary to ensure
Landlord of the continued performance of Tenant's obligations under this Lease;
(6) Receivership. The appointment of a trustee or receiver to
take possession of all or substantially all of Tenant's assets or the Leased
Premises, where possession is not restored to Tenant within ten (10) business
days;
(7) Attachment. The attachment, execution or other judicial
seizure of all or substantially all of Tenant's assets or the Leased Premises,
if such attachment or other seizure remains undismissed or undischarged for a
period of ten (10) business days after the levy thereof;
(8) Insolvency. The admission by Tenant in writing of its
inability to pay its debts as they become due; the filing by Tenant of a
petition seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future statute,
law or regulation; the filing by Tenant of an answer admitting or failing timely
to contest a material allegation of a petition filed against Tenant in any such
proceeding; or, if within sixty (60) days after the commencement of any
proceeding against Tenant seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statute, law or regulation, such proceeding shall not have been
dismissed;
(9) Misrepresentation. The discovery by Landlord that any
representation, warranty or financial statement given to Landlord by Tenant or
any guarantor of Tenant's obligations under this Lease was materially false or
misleading.
(10) Security Deposit. Failure by Tenant to perform its
obligations with respect to the Security Deposit as set forth in Section 5.14.
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(b) Remedies Upon Default:
(1) Termination. If an event of default occurs, Landlord shall
have the right, until such default is cured, with or without notice or demand,
immediately (after expiration of any applicable grace period specified herein)
to terminate this Lease, and at any time thereafter recover possession of the
Leased Premises or any part thereof and expel and remove therefrom Tenant and
any other person occupying the same,
29
by any lawful means, and again repossess and enjoy the Leased Premises without
prejudice to any of the remedies that Landlord may have under this Lease, or at
law or in equity by reason of Tenant's default or of such termination.
(2) Continuation After Default. Even though Tenant has breached
this Lease and/or abandoned the Leased Premises, this Lease shall continue in
effect for so long as Landlord does not terminate Tenant's night to possession
under subsection 7.08(b)(1) hereof in writing, and Landlord may enforce all of
its rights and remedies under this Lease, including (but without limitation) the
right to recover Rent as it becomes due, and Landlord, without terminating this
Lease, may exercise all of the rights and remedies of a landlord under Section
1951.4 of the Civil Code of the State of California or any amended or successor
code section. Acts of maintenance or preservation, efforts to relet the Leased
Premises or the appointment of a receiver upon application of Landlord to
protect Landlord's interest under this Lease shall not constitute an election to
terminate Tenant's right to possession. If Landlord elects to relet the Leased
Premises for the account of Tenant, the rent received by Landlord from such
reletting shall be applied as follows: first, to the payment of any indebtedness
other than Rent due hereunder from Tenant to Landlord; second, to the payment of
any costs of such reletting; third, to the payment of the cost of any
alterations or repairs to the Leased Premises; fourth, to the payment of Rent
due and unpaid hereunder; and the balance, if any, shall be held by Landlord and
applied in payment of future Rent as it becomes due. If that portion of rent
received from the reletting which is applied against the Rent due hereunder is
less than the amount of the Rent due, Tenant shall pay the deficiency to
Landlord promptly upon demand by Landlord. Such deficiency shall be calculated
and paid monthly. Tenant shall also pay to Landlord, as soon as determined, any
costs and expenses incurred by Landlord in connection with such reletting or in
making alterations and repairs to the Leased Premises, which are not covered by
the rent received from the reletting.
(c) Damages Upon Termination. Should Landlord terminate this Lease
pursuant to the provisions of subsection 7.08(b)(1) hereof, Landlord shall have
all the rights and remedies of a landlord provided by Section 1951.2 of the
Civil Code of the State of California. Upon such termination, in addition to any
other rights and remedies to which Landlord may be entitled under applicable
law, Landlord shall be entitled to recover from Tenant: (i) the worth at the
time of award of the unpaid Rent and other amounts which had been earned at the
time of termination; (ii) the worth at the 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 Rent loss that Tenant proves could have been
reasonably avoided; (iii) the worth at the time of award of the amount by which
the unpaid Rent for the balance of the Term after the time of award exceeds the
amount of such Rent loss that Tenant proves could be reasonably avoided; and
(iv) any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations under this
Lease or which, in the ordinary course of things, would be likely to result
therefrom. The "worth at the time of award" of the amounts referred to in
clauses (i) and (ii) shall be computed with interest at the lesser of eighteen
percent (18%) per annum or the maximum rate then allowed by law. The "worth at
the time of award" of the amount referred to in clause (iii) shall be computed
by discounting such amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of the award plus one percent (1%).\
(d) Computation of Rent for Purposes of Default. For purposes of
computing unpaid Rent which would have accrued and become payable under this
Lease pursuant to the provisions of Section 7.08(c), unpaid Rent shall consist
of the sum of:
(1) the total Base Rent for the balance of the Term, plus
(2) a computation of Tenant's Proportionate Share of Increased
Basic Operating Cost and of Tenant's Proportionate Share of Increased Property
Taxes for the balance of the Term, the assumed amounts for the Computation Year
of the default and each future Computation Year in the Term to
30
be equal to Tenant's Proportionate Share of Increased Basic Operating Cost and
tenant's Proportionate Share of Property Taxes, respectively, for the
Computation Year immediately prior to the year in which default occurs,
compounded at a per annum rate equal to the mean average rate of inflation for
the preceding five (5) calendar years as determined by the United States
Department of Labor, Bureau of Labor Statistics Consumer Price Index (All Urban
Consumers, all items (1982-84=100)) for the Metropolitan Area or Region in which
the Project is located. If such Index is discontinued or revised, the average
rate of inflation shall be determined by reference to the index designated as
the successor or substitute index by the government of the United States.
(e) Late Charge. If any payment required to be made by Tenant under
this Lease is not received by Landlord on or before the date the same is due,
Tenant shall pay to Landlord an amount equal to six percent (6%) of the
delinquency. The parties agree that Landlord would incur costs not contemplated
by this Lease by virtue of such delinquencies, including without limitation
administrative, collection, processing and accounting expenses, the amount of
which would be extremely difficult to compute, and the amount stated herein
represents a reasonable estimate thereof. Acceptance of such late charge by
Landlord shall in no event constitute a waiver of Tenant's breach or default
with respect to such delinquency, or prevent Landlord from exercising any of
Landlord's other rights and remedies.
(f) Interest on Past-Due Obligations. Except as expressly otherwise
provided in this Lease, any Rent due Landlord hereunder, other than late
charges, which is not received by Landlord on the date on which it was due,
shall bear interest from the day after it was due at the maximum rate then
allowed by law, in addition to the late charge provided for in Section 7.08(e).
(g) Landlord's Right to Perform. Notwithstanding anything to the
contrary set forth elsewhere in this Lease, in the event Tenant falls to perform
any affirmative duty or obligation of Tenant under this Lease, and such failure
continues beyond any applicable notice and cure period, then within five (5)
business days after written notice to Tenant (and without notice in case of an
emergency) Landlord may (but shall not be obligated to) perform such duty or
obligation on Tenant's behalf, including, without limitation, the obtaining of
insurance policies or governmental licenses, permits or approvals. Tenant shall
reimburse Landlord upon demand for the costs and expenses of any such
performance (including penalties, interest and attorneys' fees incurred in
connection therewith). Such costs and expenses incurred by Landlord shall be
deemed Additional Rent hereunder.
(h) Remedies Cumulative. All rights, privileges and elections or
remedies of Landlord are cumulative and not alternative with all other rights
and remedies at law or in equity to the fullest extent permitted by law.
(i) Waiver. Tenant waives any right of redemption or relief from
forfeiture under California Code of Civil Procedure Sections 1174 and 1179, or
under any other present or future law in the event Tenant is evicted and
Landlord takes possession of the Leased Premises by reason of a default.
Article 8.
Option to Renew; Option to Expand
8.01. Option to Renew. None.
8.02. Option to Expand. None.
31
Article 9.
Miscellaneous Matters
9.01. Parking. None.
9.02. Brokers. Landlord has been represented in this transaction by
Landlord's Broker. Tenant has been represented in this transaction by Tenant's
Broker. Upon full execution of this Lease by both parties, Landlord shall pay to
Landlord's Broker a fee for brokerage services rendered by it in this
transaction if provided for in a separate written agreement between Landlord and
Landlord's Broker. Nothing contained in this Lease shall impose on Landlord any
obligation to pay a commission or fee to any party other than Landlord's Broker
and Tenant acknowledges that Landlord will not pay any commission or fee to
---
Tenant's Broker.
Each party hereto represents and warrants that it has dealt with no
broker in connection with this Lease and the transactions contemplated herein,
except those listed in the Basic Lease Information sheet. Each party shall
indemnify, protect, defend and hold the other party harmless from all costs and
expenses (including reasonable attorneys' fees) arising from or relating to a
breach of the foregoing representation and warranty.
9.03. No Waiver. No waiver by either party of the default or breach of any
term, covenant or condition of this Lease by the other shall be deemed a waiver
of any other term, covenant or condition hereof, or of any subsequent default or
breach by the other of the same or of any other term, covenant or condition
hereof. Landlord's consent to, or approval of, any act shall not be deemed to
render unnecessary the obtaining of Landlord's consent to, or approval of, any
subsequent or similar act by Tenant, or be construed as the basis of an estoppel
to enforce the provision or provisions of this Lease requiring such consent.
Regardless of Landlord's knowledge of a default or breach at the time of
accepting Rent, the acceptance of Rent by Landlord shall not be a waiver of any
preceding default or breach by Tenant of any provision hereof, other than the
failure of Tenant to pay the particular Rent so accepted. Any payment given
Landlord by Tenant may be accepted by Landlord on account of monies or damages
due Landlord, notwithstanding any qualifying statements or conditions made by
Tenant in connection therewith, which statements and/or conditions shall be of
no force or effect whatsoever unless specifically agreed to in writing by
Landlord at or before the time of deposit of such payment.
9.04. Recording. Neither this Lease nor a memorandum thereof shall be
recorded without the prior written consent of Landlord, which consent may be
withheld in Landlord's sole discretion.
9.05. Holding Over. If Tenant holds over after expiration or termination
of this Lease, Tenant shall pay for each month of hold-over tenancy one hundred
fifty percent (150%) times the Gross Rent which Tenant was obligated to pay for
the month immediately preceding the end of the Term for each month or any part
thereof of any such hold-over period, together with such other amounts as may
become due hereunder. No holding over by Tenant after the Term shall operate to
extend the Term. In the event of any unauthorized holding over, Tenant shall
indemnify, defend and hold Landlord harmless from and against all claims,
demands, liabilities, losses, costs, expenses (including attorneys' fees),
injury and damages incurred by Landlord as a result of Tenant's delay in
vacating the Leased Premises.
9.06. Transfers by Landlord. The term "Landlord" as used in this Lease
shall mean the owner(s) at the time in question of the fee title to the Leased
Premises or, if this is a sublease, of the Tenant's interest in the master
lease. If Landlord transfers, in whole or in part, its rights and obligations
under this Lease or in the Project, upon its transferee's assumption of
Landlord's obligations hereunder and delivery to such transferee of any unused
Security Deposit then held by Landlord, no further liability or obligations
shall thereafter accrue
32
against the transferring or assigning person as Landlord hereunder. Subject to
the foregoing, the obligations and/or covenants in this Lease to be performed by
the Landlord shall be binding only upon the Landlord as defined in this Section
9.06.
9.07. Attorneys' Fees. In the event either party places the enforcement of
this Lease, or any part of it, or the collection of any Rent due, or to become
due, hereunder, or recovery of the possession of the Leased Premises, in the
hands of an attorney, or files suit upon the same, the prevailing party shall
recover its reasonable attorneys' fees, costs and expenses, including those
which may be incurred on appeal. Such fees may be awarded in the same suit or
recovered in a separate suit, whether or not suit is filed or any suit that may
be filed is pursued to decision or judgment. The term "prevailing party" shall
include, without limitation, a party who substantially obtains or defeats the
relief sought, as the case may be, whether by compromise, settlement, judgment,
or the abandonment by the other party of its claim or defense. The attorneys'
fee award shall not be computed in accordance with any court fee schedule, but
shall be such as to fully reimburse all attorneys' fees reasonably incurred.
9.08. Termination; Merger. No act or conduct of Landlord, including,
without limitation, the acceptance of keys to the Leased Premises, shall
constitute an acceptance of the surrender of the Leased Premises by Tenant
before the scheduled Term Expiration Date. Only a written notice from Landlord
to Tenant shall constitute acceptance of the surrender of the Leased Premises
and accomplish a termination of this Lease. Unless specifically stated otherwise
in writing by Landlord, the voluntary or other surrender of this Lease by
Tenant, the mutual termination or cancellation hereof, or a termination hereof
by Landlord for default by Tenant, shall automatically terminate any sublease or
lesser estate in the Leased Premises; provided, however, Landlord shall, in the
event of any such surrender, termination or cancellation, have the option to
continue any one or all of any existing subtenancies. Landlord's failure within
thirty (30) days following any such event to make any written election to the
contrary by written notice to the holder of any such lesser interest, shall
constitute Landlord's election to have such event constitute the termination of
such interest.
9.09. Amendments; Interpretation. This Lease may not be altered, changed
or amended, except by an instrument in writing signed by the parties in interest
at the time of the modification. The captions of this Lease are for convenience
only and shall not be used to define or limit any of its provisions.
9.10. Severability. If any term or provision of this Lease, or the
application thereof to any person or circumstances, shall to any extent be
invalid or unenforceable, the remainder of this Lease, or the application of
such provision to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each provision of
this Lease shall be valid and shall be enforceable to the fullest extent
permitted by law.
9.11. Notices. All notices, demands, consents and approvals which are
required or permitted by this Lease to be given by either party to the other
shall be in writing and shall be deemed to have been fully given by personal
delivery or by recognized overnight courier service or when deposited in the
United States mail, certified or registered, with postage prepaid, and addressed
to the party to be notified at the address for such party specified on the Basic
Lease Information sheet, or to such other place as the party to be notified may
from time to time designate by at least fifteen (15) days' notice to the
notifying party given in accordance with this Section 9.11, except that upon
Tenant's taking possession of the Leased Premises, the Leased Premises shall
constitute Tenant's address for notice purposes. A copy of all notices given to
Landlord under this Lease shall be concurrently transmitted to such party or
parties at such addresses as Landlord may from time to time hereafter designate
by notice to Tenant.
Any notice sent by registered or certified mail, return receipt requested,
shall be deemed given on the date of delivery shown on the receipt card, or if
no delivery date is shown, the postmark thereon. Notices
33
delivered by recognized overnight courier shall be deemed given twenty-four (24)
hours after delivery of the same to the courier. If notice is received on a
Saturday, Sunday or legal holiday, it shall be deemed received on the next
business day. Tenant hereby appoints as its agent to receive the service of all
default notices and notice of commencement of unlawful detainer proceedings the
person in charge of or apparently in charge of or occupying the Leased Premises
at the time, and, if there is no such person, then such service may be made by
attaching the same on the main entrance of the Leased Premises.
9.12. Force Majeure. Any prevention, delay or stoppage of work to be
performed by Landlord or Tenant which is due to strikes, labor disputes,
inability to obtain labor, materials, equipment or reasonable substitutes
therefor, acts of God, governmental restrictions or regulations or controls,
judicial orders, enemy or hostile government actions, civil commotion, or other
causes beyond the reasonable control of the party obligated to perform
hereunder, shall excuse performance of the work by that party for a period equal
to the duration of that prevention, delay or stoppage. Nothing in this Section
9.12 shall excuse or delay Tenant's obligation to pay Rent or other charges due
under this Lease.
9.13. Successors and Assigns. This Lease shall be binding upon and inure
to the benefit of Landlord, its successors and assigns (subject to the
provisions hereof, including, without limitation, Section 5.15), and shall be
binding upon and inure to the benefit of Tenant, its successors, and to the
extent assignment or subletting, may be approved by Landlord hereunder, Tenant's
assigns or subtenants.
9.14. Further Assurances. Landlord and Tenant each agree to promptly sign
all documents reasonably requested to give effect to the provisions of this
Lease.
9.15. Incorporation of Prior Agreements. This Lease, including the
exhibits and addenda attached to it, contains all agreements of Landlord and
Tenant with respect to any matter referred to herein. No prior agreement or
understanding pertaining to such matters shall be effective.
9.16. Applicable Law. This Lease shall be governed by, construed and
enforced in accordance with the laws of the State of California.
9.17. Time of the Essence. Time is of the essence of each and every
covenant of this Lease. Each and every covenant, agreement or other provision of
this Lease on Tenant's part to be performed shall be deemed and construed as a
separate and independent covenant of Tenant, not dependent on any other
provision of this Lease or on any other covenant or agreement set forth herein.
9.18. No Joint Venture. This Lease shall not be deemed or construed to
create or establish any relationship of partnership or joint venture or similar
relationship or arrangement between Landlord and Tenant hereunder.
9.19. Authority. If Tenant is a corporation, trust or general or limited
partnership, each individual executing this Lease on behalf of Tenant represents
and warrants that he or she is duly authorized to execute and deliver this Lease
on Tenant's behalf and that this Lease is binding upon Tenant in accordance with
its terms. If Tenant is a corporation, trust or partnership, Tenant shall,
within ten (10) business days after request by Landlord, deliver to Landlord
evidence satisfactory to Landlord of such authority.
9.20. [Intentionally deleted.]
9.21. Offer. Preparation of this Lease by Landlord or Landlord's agent and
submission of same to Tenant shall not be deemed an offer to lease to Tenant.
This Lease is not intended to be binding and shall not be effective until fully
executed by both Landlord and Tenant.
34
9.22. Exhibits; Addenda. The following Exhibits and addenda are attached
to, incorporated in and made a part of this Lease: Exhibit A Floor Plan of the
---------
Leased Premises; Exhibit B Initial Improvement of the Leased Premises; Exhibit C
--------- ---------
Confirmation of Term of Lease; and Exhibit D Building Rules and Regulations.
---------
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
day and year first written above.
"LANDLORD":
CEP-SANSOME INVESTORS LLC,
a Delaware limited liability company
By: CEP Investors IX LLC,
a Delaware limited liability company,
as Manager and Member
By: EPI Investors IX LLC,
a California limited liability
company, its Manager
By: Xxxxx Xxxxxxxx, Inc.,
a California corporation,
its Manager
By: /s/ Xxxxx X Xxxxx
---------------------
Name: Xxxxx X Xxxxx
-------------------
Title: Vice President
------------------
"TENANT":
PERSONIFY, INC.,
a California corporation
By: /s/ Xxxxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxxxx Xxxxxxxx
--------------------------------------
Title: CFO
-------------------------------------
35
EXHIBIT A
FLOOR PLAN
OF THE
LEASED PREMISES
1
EXHIBIT B
INITIAL IMPROVEMENT OF THE LEASED PREMISES
1. Tenant Improvements. Tenant shall select a contractor (the
-------------------
"Contractor") to construct and install the Tenant Improvements (as defined
below), which Contractor shall be reasonably approved by Landlord. Landlord
shall select a contractor ("Landlord's Contractor") to construct and install the
Landlord Improvements (as defined below). The Contractor shall construct and
install the tenant improvements (the "Tenant Improvements") in the Leased
Premises, substantially in accordance with plans, working drawings and
specifications ("Tenant's Plans") prepared by Tenant's architect, which
architect shall be reasonably approved by Landlord (the "Architect") and the
Tenant's Plans shall be approved by Landlord and Tenant, which approval shall
not be unreasonably withheld by either party. The costs of preparing Tenant's
Plans and performing the Tenant Improvements shall be allocated between, and
paid by, Landlord and Tenant as set forth in this Exhibit B.
---------
2. Tenant's Plans. Tenant and Landlord shall mutually approve Tenant's
--------------
Plans in writing, each party's approval shall not be unreasonably withheld.
Tenant's Plan's shall comply with all applicable codes, laws, ordinances, rules
and regulations, shall not adversely affect the Building shell or core or any
systems, components or elements of the Buading, shall be in a form sufficient to
secure the approval of all government authorities with jurisdiction over the
Building, and shall be otherwise satisfactory to Landlord in Landlord's
reasonable discretion. Tenant's Plans shall be complete plans, working drawings
and specifications for the layout, improvement and finish of the Leased Premises
consistent with the design and construction of the Building, including
mechanical and electrical drawings and decorating plans, showing as many of the
following as possible:
(a) Location and type of all partitions;
(b) Location and type of all doors, with hardware and keying schedule;
(c) Ceiling plans, including light fixtures;
(d) Location of telephone equipment room, with all special electrical
and cooling requirements;
(e) Location and type of all electrical outlets, switches, telephone
outlets, and lights;
(f) Location of all sprinklers;
(g) Location and type of all equipment requiring special electrical
requirements;
(h) Location, weight per square foot and description of any heavy
equipment or filing system exceeding fifty (50) pounds per square foot live
and dead load;
(i) Requirements for air conditioning or special ventilation;
(j) Type and color of floor covering,
(k) Location, type and color of wall covering;
1
(l) Location, type and color of paint or finishes;
(m) Location and type of plumbing;
(n) Location and type of kitchen equipment;
(o) Indicate critical dimensions necessary for construction;
(p) Details showing all millwork with verified dimensions and
dimensions of all equipment to be built in, corridor entrances, bracing or
support of special walls or glass partitions, and any other items or
information requested by Landlord; and
(q) Location of all cabling.
3. Landlord's review and approval of Tenant's Plans shall not constitute,
and Landlord shall not be deemed to have made, any representation or warranty as
to the compliance of the Tenant Improvements with any laws or as to the
suitability of the Leased Premises or the Tenant Improvements for Tenant's
needs.
4. Construction.
------------
(a) The Tenant Improvements in the Leased Premises shall be completed
substantially in accordance with Tenant's Plans by the Contractor in a good
and workmanlike manner. Subject to Section 5 of this Exhibit B. Tenant
--------- ---------
shall promptly pay when due the entire cost of all of the Tenant
Improvements (including the cost of all utilities, permits, fees, taxes,
and property and liability insurance in connection therewith) required by
Tenant's Plans. Except as otherwise expressly provided herein, Landlord
shall have no liability to Tenant if the Leased Premises is not suitable
for Tenant's occupancy or if Tenant or Landlord has not obtained all the
necessary permits for Tenant to occupy the Leased Premises by the Term
Commencement Date.
(b) Landlord, at its sole cost and expense, shall provide or construct
the following (collectively, the "Landlord Improvements") in the Leased
Premises:
(i) Floor Coverings: All existing floor coverings shall be
removed.
(ii) Elevator Lobby: The elevator lobbies on the floors of the
Leased Premises shall be restored pursuant to renderings provided to Tenant.
(iii) Partitions: All existing partitions shall be demolished.
(iv) Sprinkler System: Landlord shall provide the tap into the
main sprinkler riser and install the main sprinkler loop around the core area of
the Leased Premises.
(v) Life Safety Systems: Landlord shall provide Class "E" fire
life safety floor subpanels with adequate connection points on the floors of the
Leased Premises for code-required speaker and strobe lights as well as flow and
tamper switches for the sprinkler systems, in accordance with existing code. The
panels are to be installed in proximity to the Leased Premises. The code-
required speakers, strobe lights, flow and tamper switches, and other equipment
for the sprinkler systems shall be part of the Tenant Improvements.
2
(vi) Bathrooms: All restrooms on the floors of the Leased
Premises shall be brought to meet all local codes, as well as ADA. Cosmetically,
Landlord shall refurbish the restrooms in a manner consistent with a Class "A"
San Francisco office tower.
(vii) Chilled Water Riser: Landlord shall provide a chilled water
riser which can be accessed by Tenant for specialized cooling or air
conditioning needs (e.g., for a computer room) on each of the floors of the
Leased Premises; provided, however, Tenant, at its sole cost, shall be
responsible for the installation, operation and maintenance of such cooling or
air conditioning systems from the point of departure from such chilled water
riser, and, provided further, that the total Rentable Area receiving the benefit
of such specialized cooling or air conditioning shall not exceed 400 square
feet.
5. Landlord's and Tenant's Contributions. As Landlord's contribution for
-------------------------------------
the costs of Tenant Plans and for the costs of constructing the Tenant
Improvements, Landlord shall give Tenant an allowance in the maximum amount of
$32.00 per square foot of Rentable Area, which equals $1,446,304.00 based upon
45,197 rentable square feet ("Landlord's Contribution"). Any costs of preparing
Tenant's Plans and constructing the Tenant Improvements in excess of Landlord's
Contribution shall be paid by Tenant. Landlord shall pay Landlord's Contribution
directly to Tenant's architects and engineers and to the Contractor for the
account of Tenant, in installments as professional services for Tenant's Plans
are rendered, and Tenant Improvements are completed, upon Landlord's receipt of
a written request for payment accompanied by written invoices and other written
evidence reasonably satisfactory to Landlord showing the costs incurred, until
Landlord's Contribution is exhausted. Unless such arises due to a breach by
Landlord of its obligations hereunder, Tenant shall indemnify and protect
Landlord against any liability for mechanics, materialmen's and other liens or
claims with respect to the Tenant Improvements and shall obtain releases to
liens as payments are made relating to such liens. Tenant shall also provide to
Landlord (at Tenant's expense or as a deduction from Landlord's Contribution),
if reasonably required by Landlord, lien insurance or a lien completion bond in
the amount provided for Section 5.07(c) of the Lease as reduced by Landlord's
Contribution. Any unused portion of Landlord's Contribution shall accrue to
Landlord. Tenant shall pay to Landlord (or Landlord may deduct from Landlord's
Contribution) a construction management fee the lesser of (i) three and one-half
percent (3.5%) of Landlord's Contribution, or (ii) $1.05 per square foot of
rentable Area.
Notwithstanding anything in this Exhibit B to the contrary, any costs
---------
that are due to the following shall not be included in the cost of Tenant
Improvements and shall be the sole responsibility of Landlord: any costs
incurred due to the remediation of Hazardous Materials, where such were not
caused by Tenant.
6. Changes. Except for minor and immaterial changes, if Tenant requests
-------
any change in Tenant's Plans, Tenant shall request such change in a written
notice to Landlord.
7. Other Work by Tenant. All work not within the scope of the normal
--------------------
construction trades employed on the Building, such as the furnishing and
installing of furniture, telephone equipment, office equipment and wiring, shall
be furnished and installed by Tenant at Tenant's expense.
8. Requirements for Work Performed by Tenant. All other work performed
----------------------------------
at the Building or in the Project by Tenant or Tenant's contractor or
subcontractors shall be subject to the following additional requirements:
(a) Such work shall not proceed until Landlord has approved in
writing: (i) Tenant's contractor, (ii) the amount and coverage of public
liability and property damage insurance, with Landlord named as an
additional insured, carried by Tenant's contractor, (iii) complete and
detailed plans and specifications for such work, and (iv) a schedule for
the work.
3
(b) All work shall be done in conformity with a valid permit when
required, a copy of which shall be furnished to Landlord before such work
is commenced. In any case, all such work shall be performed in accordance
with all applicable laws. Notwithstanding any failure by Landlord to object
to any such work, Landlord shall have no responsibility for Tenant's
failure to comply with applicable laws.
(c) Tenant or Tenant's contractor shall arrange for necessary utility,
hoisting and elevator service, on a nonexclusive basis, with Landlord.
Landlord shall have the right to require any necessary movement of
materials by the elevator to be done after regular working hours.
(d) Tenant shall be responsible for cleaning the Leased Premises, the
Building and the Project and removing all debris in connection with its
work. All completed work shall be subject to inspection and acceptance by
Landlord. Tenant shall reimburse Landlord for the cost all extra expense
incurred by Landlord by reason of faulty work done by Tenant or Tenant's
contractor or by reason of inadequate cleanup by Tenant or Tenant's
contractor. Landlord will provide Tenant with copies of third party
consultant invoices within five (5) business days of Tenant's request for
such invoices.
(e) Landlord shall not unreasonably withhold, delay or condition to
any consent that is required hereunder.
9. The Tenant Improvements shall be performed pursuant to a "fixed price"
or a "cost plus fee, subject to a guaranteed maximum price" construction
contract to be entered into by Tenant and the Contractor.
4
EXHIBIT C
CONFIRMATION OF TERM OF LEASE
This Confirmation of Term of Lease is made by and between _________,
_________, a ________, as Landlord, and _________, a ________ _________, as
Tenant, who agree as follows:
1. Landlord and Tenant entered into a Lease dated _____________, 19___
(the "Lease"), in which Landlord leased to Tenant and Tenant leased from
Landlord the Leased Premises described in the Basic Lease Information sheet of
the Lease (the "Leased Premises").
2. Pursuant to Section 3.01 of the Lease, Landlord and Tenant agree to
confirm the commencement date and expiration date of the Term of the Lease as
follows:
a. _________________, 19____, is the Term Commencement Date;
b. _________________, 19____, is the Term Expiration Date;
c. _________________, 19____, is the commencement date of Rent under
the Lease.
3. Tenant hereby confirms that the Lease is in full force and effect and:
a. It has accepted possession of the Leased Premises as provided in
the Lease;
b. The improvements and space required to be furnished by Landlord
under the Lease have been furnished;
c. Landlord has fulfilled all its duties of an inducement nature;
d. The Lease has not been modified, altered or amended, except as
follows: _____________________________________________; and
e. There are no setoffs or credits against Rent and no security
deposit has been paid except as expressly provided by the Lease.
1
4. The provisions of this Confirmation of Term of Lease shall inure to the
benefit of, or bind, as the case may require, the parties and their respective
successors, subject to the restrictions on assignment and subleasing contained
in the Lease.
DATED: , 19
----------------- --
"LANDLORD": "TENANT":
--------------------------, -------------------------------,
a a
------------------------- -----------------------------
By: By:
----------------------- ----------------------------
Typed Name: Name:
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Title: Title:
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EXHIBIT D
BUILDING RULES AND REGULATIONS
1. The sidewalks, doorways, halls, stairways, vestibules and other similar
areas shall not be obstructed by Tenant or used by it for any purpose other than
ingress to and egress from the Leased Premises, and for going from one part of
the Building to another part. Corridor doors, when not in use, shall be kept
closed. Before leaving the Building, Tenant shall ensure that all doors to the
Leased Premises are securely locked and all water faucets and electricity are
shut off.
2. Plumbing fixtures shall be used only for their designated purpose, and
no foreign substances of any kind shall be deposited therein. Damage to any
such fixtures resulting from misuse by Tenant or any employee or invitee of
Tenant shall be repaired at the expense of Tenant.
3. Nails, screws and other attachments to the Building require prior
written consent from Landlord, except for the routine hanging of pictures and
diplomas or certifications. Tenant shall not mar or deface the Leased Premises
in any way. Tenant shall not place anything on or near the glass of any window,
door or wall which may appear unsightly from outside the Leased Premises.
4. All contractors and technicians rendering any installation service to
Tenant shall be subject to Landlord's approval and supervision prior to
performing services. This applies to all work performed in the Building,
including, but not limited to, installation of telephones, telegraph equipment,
wiring of any kind, and electrical devices, as well as all installations
affecting floors, walls, woodwork, windows, ceilings and any other physical
portion of the Building.
5. Movement in or out of the Building of furniture, office equipment,
safes or other bulky material which requires the use of elevators, stairways, or
the Building entrance and lobby shall be restricted to hours established by
Landlord. All such movement shall be under Landlord's supervision, and the use
of an elevator for such movements shall be restricted to the Building's freight
elevator. Arrangements shall be made at least 24 hours in advance with Landlord
regarding the time, method, and routing of such movements. Tenant shall pay for
the services of the employees of the elevator service company employed when
safes and other heavy articles are moved into or from the Building, and Tenant
shall assume all risks of damage and pay the cost of repairing or providing
compensation for damage to the Building, to articles moved and injury to persons
or property resulting from such moves. Landlord shall not be liable for any
acts or damages resulting from any such activity.
6. Landlord shall have the right to limit the weight and size of, and to
designate the location of, all safes and other heavy property brought into the
Building.
7. Tenant shall cooperate with Landlord in maintaining the Leased
Premises. Tenant shall not employ any person for the purpose of cleaning the
Leased Premises other than the Building's cleaning and maintenance personnel.
Window cleaning shall be done only by Landlord's agents at such times and during
such hours as Landlord shall elect. Janitorial services will not be furnished
on nights when rooms are occupied after 7:00 P.M.
8. Deliveries of water, soft drinks, newspapers or other such items to the
Leased Premises shall be restricted to hours established by Landlord and made by
use of the freight elevator if Landlord so directs.
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9. Nothing shall be swept or thrown into the corridors, halls, elevator
shafts or stairways. No birds, fish or animals of any kind shall be brought
into or kept in, on or about the Leased Premises, with the exception of guide
dogs where necessary.
10. No cooking shall be done in the Leased Premises except in connection
with a convenience lunch room (use of a microwave oven shall be permitted) for
the sole use of employees and guests (on a non-commercial basis) in a manner
which complies with all of the provisions of the Lease and which does not
produce fumes or odors. The cooking/heating of food using a microwave oven
shall be permitted.
11. Food, soft drink or other vending machines shall not be placed within
the Leased Premises without Landlord's prior written consent.
12. Tenant shall not install or operate on the Leased Premises any
electric heater, stove or similar equipment without Landlord's prior written
consent. Tenant shall not use or keep on the Leased Premises any kerosene,
gasoline, or inflammable or combustible fluid or material other than limited
quantities reasonably necessary for the operation and maintenance of office
equipment utilized at the Leased Premises. No explosives shall be brought onto
the Project at any time.
13. Tenant shall not waste electricity or water and agrees to cooperate
fully with Landlord to assure the most effective operation of the Building's
heating and to comply with any governmental energy-saving rules, laws or
regulations of which Tenant has actual notice.
14. [Intentionally deleted]
15. Tenant, its employees, agents and invitees shall each comply with all
requirements necessary for the security of the Leased Premises, including, if
implemented by Landlord, the use of service passes issued by Landlord for after-
hours movement of office equipment/packages, and the signing of a security
register in the Building lobby after hours. Landlord reserves the right to
refuse entry to the Building after normal business hours to Tenant, its
employees, agents or invitees, or any other person without satisfactory
identification showing his or her right of access to the Building at such time.
Landlord shall not be liable for any damages resulting from any error in regard
to any such identification or from such admission to or exclusion from the
Building. Landlord shall not be liable to Tenant for losses due to theft or
burglary, or for damage by unauthorized persons in, on or about the Project, and
Tenant assumes full responsibility for protecting the Leased Premises from
theft, robbery and pilferage, which includes keeping doors locked and other
means of entry closed.
16. Landlord will furnish Tenant with a reasonable number of initial keys
for entrance doors into the Leased Premises, and may charge Tenant for
additional keys thereafter. All such keys shall remain the property of
Landlord. No additional locks are allowed on any door of the Leased Premises
without Landlord's prior written consent and Tenant shall not make any duplicate
keys. Upon termination of this Lease, Tenant shall surrender to Landlord all
keys to the Leased Premises, and give to Landlord the combination of all locks
for safes and vault doors, if any, in the Leased Premises.
17. Tenant shall not bring into (or permit to be brought into) the
Building any bicycle or other type of vehicle.
18. Landlord retains the right at any time, without liability to Tenant,
to change the name and street address of the Building, except as otherwise
expressly provided in the Lease with respect to signage.
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19. Canvassing, peddling, soliciting, and distribution of handbills in or
at the Project are prohibited and Tenant will cooperate to prevent these
activities.
20. The Building hours of operation are 7:00 A.M. to 6:00 P.M., Monday
through Friday, excluding holidays. Landlord reserves the right to close and
keep locked all entrance and exit doors of the Building on Saturdays, Sundays
and legal holidays, and between the hours of 6:01 P.M. of any day and 6:59 A.M.
of the following day, and during such other hours as Landlord may deem advisable
for the protection of the Building and the tenants thereof. Notwithstanding the
foregoing Tenant shall have access to the Premises 24 hours per day, seven days
per week.
21. The requirements of Tenant will be attended to only upon application
to the Project manager. Employees will not perform any work or do anything
outside of their regular duties unless under specific instruction from the
Project manager.
22. Tenant shall cooperate fully with the life safety program of the
Building as established and administered by Landlord. This shall include
participation by Tenant and its employees in exit drills, fire inspections, life
safety orientations and other programs relating to fire and life safety that may
be established by Landlord.
23. No smoking shall be permitted in the Building.
24. Landlord reserves the right to rescind any of these rules and
regulations and to make future rules and regulations required for the safety,
protection and maintenance of the Project, the operation and preservation of the
good order thereof, and the protection and comfort of the tenants and their
employees and visitors. Such rules and regulations, when made and written
notice thereof given to Tenant, shall be binding as if originally included
herein. Landlord shall not be responsible to Tenant for the non-observance or
violation of these rules and regulations by any other tenant of the Building.
Landlord reserves the right to exclude or expel from the Project any person who,
in Landlord's judgment, is under the influence of liquor or drugs, or who shall
in any manner do any act in violation of any of these rules and regulations.
25. Following a written request from Tenant, Landlord shall use
commercially reasonable efforts to enforce the rules and regulations against
other tenants of the Building.
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