EXHIBIT 10.51
LEASE
by and between
Shearwater Partners, LLC
("Landlord")
and
Razorfish, Inc.
("Tenant")
dated
October 3, 2000
0000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
INDEX
1. LEASE
2. EXECUTED WORK LETTER
3. EXECUTED ESCROW AGREEMENT
LEASE
by and between
Shearwater Partners, LLC
("Landlord")
and
Razorfish, Inc.
("Tenant")
dated
October 3, 2000
0000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
TABLE OF CONTENTS
Page
1. LEASE OF PREMISES.................................................... 3
2. TERM................................................................. 4
3. POSSESSION........................................................... 6
4. RENTAL PAYMENTS; RENT DEPOSIT........................................ 6
5. BASE RENTAL.......................................................... 8
6. ADDITIONAL RENTAL.................................................... 8
7. LANDLORD'S OPERATING EXPENSES........................................ 10
8. TAX EXPENSES......................................................... 13
9. PAYMENTS............................................................. 14
10. LATE CHARGES......................................................... 15
11. [INTENTIONALLY DELETED].............................................. 15
12. ALTERATIONS.......................................................... 15
13. REPAIRS.............................................................. 17
14. LANDLORD'S RIGHT OF ENTRY............................................ 18
15. INSURANCE............................................................ 18
16. DEFAULT.............................................................. 21
17. WAIVER OF BREACH..................................................... 23
18. ASSIGNMENT AND SUBLETTING............................................ 24
19. DESTRUCTION.......................................................... 28
20. [INTENTIONALLY DELETED].............................................. 29
21. NO LIABILITY FOR INTERRUPTION OF UTILITIES........................... 29
22. ATTORNEYS' FEES...................................................... 30
23. TIME................................................................. 30
24. SUBORDINATION AND ATTORNMENT......................................... 30
25. ESTOPPEL CERTIFICATES................................................ 32
26. CUMULATIVE RIGHTS.................................................... 32
27. HOLDING OVER......................................................... 32
28. SURRENDER OF THE PREMISES............................................ 33
29. NOTICES.............................................................. 33
30. DAMAGE OR THEFT OF PERSONAL PROPERTY................................. 34
-i-
TABLE OF CONTENTS
(continued)
Page
31. EMINENT DOMAIN....................................................... 34
32. PARTIES.............................................................. 35
33. LIABILITY OF TENANT; LIABILITY OF LANDLORD........................... 35
34. FORCE MAJEURE........................................................ 36
35. LIMITATIONS ON LANDLORD'S LIABILITY.................................. 37
36. LANDLORD'S COVENANT OF QUIET ENJOYMENT............................... 37
37. SECURITY DEPOSIT..................................................... 37
38. HAZARDOUS SUBSTANCES................................................. 39
39. BROKER............................................................... 39
40. SIGNAGE.............................................................. 40
41. FORUM SELECTION...................................................... 40
42. WAIVER OF JURY TRIAL................................................. 41
43. OPTION TO EXTEND..................................................... 41
44. MISCELLANEOUS........................................................ 42
-ii-
LEASE
-----
Basic Lease Information
The foregoing Basic Lease Information is incorporated in 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.
Date of Lease: October 3, 2000
-------------
Landlord: SHEARWATER PARTNERS, LLC
-------- a California limited liability company
Landlord's Address:
------------------
(i) SHEARWATER PARTNERS, LLC
00 Xxxxxxx Xxxxxx, Xxxxx 0
Xxx Xxxxxxxxx, XX 00000
(ii) with a copy to:
Xxxxxx, Xxxxxxxx, Marcus, Xxxxxx & Xxxx LLP
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxx
Tenant: Razorfish, Inc.
------ a Delaware corporation
Tenant's Address:
----------------
(i) Before the Rent Commencement Date:
Razorfish, Inc.
000 Xxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX
Attn: Xx. Xxxxx Xxx
1
(ii) After the Rent Commencement Date:
0000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Managing Director
(iii) With a copy to:
Razorfish, Inc.
000 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx Xxxxx, Global Real Estate Manager
Premises Address: 0000 Xxxxxx Xxxxxx
---------------- Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Lease Term: Ten (10) years.
----------
Expiration Date: See Section 2
--------------- ---------
Use of Premises: Product design and general commercial and business
--------------- services uses (provided such use complies with all
applicable laws, including without limitation
applicable zoning and land use restrictions)
Initial Base Rental: $4,485,222.00 Annually
-------------------
Rent Deposit: One month's Base Rent [Section 4(c)]
------------
Security Deposit: $2,990,148.00
----------------
Broker(s): [See Section 39]
---------
Exhibits
--------
A Description of Premises
A-1 Description of Easement
B Work Letter
C Exclusion from Premises, Building Addition, Right of First Offer
D Escrow Agreement
E Form of Subordination, Non Disturbance and Attornment Agreement
2
This Lease (together with the Basic Lease Information and Exhibits A
----------
through D which are incorporated into the Lease by this reference, collectively,
the "Lease") is made as of the date specified in the Basic Lease Information, by
and between SHEARWATER PARTNERS, LLC, a California limited liability company
("Landlord"), and the tenant specified in the Basic Lease Information
("Tenant"), who hereby agree as follows:
1. LEASE OF PREMISES. Landlord hereby leases to Tenant, and Tenant
hereby leases from Landlord, for the term and subject to the covenants to be
performed by Tenant, those certain premises (the "Premises") at 0000 Xxxxxx
Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx, more particularly described on Exhibit "A",
------------
subject to (i) a non-exclusive easement, held by the property owner adjoining
the parking area, consisting of a 12 feet strip from such owner's building and
running the length of the Premises, for vehicular, pedestrian, utility and light
and air purposes as more particularly described on Exhibit A-1, and (ii) the
provisions of Exhibit "C". The "Premises" is comprised of the Building, the
Land, any walkways or other means of access to the Building, the Building's
existing surface parking and area adjoining the north side of the building, and
any other improvements or landscaping now or hereafter constructed on the Land,
subject to the exceptions described in the previous sentence. The Building shall
contain gross interior area (including the Mezzanine) of approximately 71,194
square feet, which includes approximately 12,944 square feet of mezzanine area
to be constructed on the 2nd and 3rd floors. Prior to commencement of the Lease
Term (as defined in Section 2 below,) Landlord shall, at Landlord's cost and
---------------
expense, construct the Base Project (as defined in Exhibit B hereto). The Base
Project shall be constructed in accordance with plans and specifications
("Landlord's Plans") prepared or caused to be prepared by Landlord at Landlord's
sole cost and expense, and approved by Tenant, which approval shall not be
unreasonably withheld or delayed, as the same may be modified from time to time
with Tenant's reasonable approval. A list describing Landlord's Base Project
improvements is attached to this Lease as Schedule A to Exhibit B and
-----------------------
incorporated herein by this reference. The Base Project shall be constructed in
accordance with all applicable Building Laws and ordinances, including, without
limitation, the Americans with Disabilities Act, which relate to the
construction or installation of the Base Project in the Building and/or the
Premises. Landlord shall procure, or shall arrange to have procured, all
permits, including building, use and temporary occupancy permits, as required
under all applicable zoning and building codes in connection with the Base
Project. Landlord's construction of the Base Project shall be deemed to be
substantially complete when no items of the Base Project set forth in Landlord's
Plans remain to be completed (excluding normal Punchlist items) which items
would impinge, interrupt or delay construction of the Tenant Improvements and
Landlord has obtained a Temporary Certificate of Occupancy. Prior to
commencement of the Lease Term, Landlord and Tenant shall cooperate to prepare a
list ("Punchlist") of any such immaterial Base Project and Tenant Improvement
items which remain to be completed, repaired or corrected and thereafter
Landlord shall promptly commence and diligently prosecute completion, repair or
correction, as applicable, of such punchlist items. Except as specifically set
forth in this
3
Lease and in the Work Letter attached hereto as Exhibit B, Landlord shall not be
---------
obligated to provide or pay for any improvement, work or services related to the
improvement of the Premises. Tenant also acknowledges that Landlord has made no
representation or warranty regarding the condition of the Premises, except as
specifically set forth in the Work Letter.
Except as provided in Section 18(i) of this Lease, Tenant shall have
the right to the exclusive use of a minimum of sixty-three (63) below grade and
adjacent surface area parking stalls (as shown on the final plans and
specifications), at no charge to Tenant, its customers or invitees during
Tenant's initial Lease Term. Landlord represents to Tenant that no such parking
stalls shall be located on the easement described in Exhibit A-1 and further
represents that Tenant's right to use the parking stalls delivered on the Lease
commencement shall not be adversely affected by the easement. If Landlord fails
to deliver a minimum of sixty-three (63) parking stalls to Tenant then the
monthly Base Rent shall be reduced by an amount equal to Two Hundred Fifty
Dollars ($250.00) times the difference between sixty-three (63) and the number
of parking spaces delivered to Tenant. If Landlord shall commence construction
on the Building Addition (as defined in Exhibit C attached hereto), and if
during such construction Tenant is deprived of a portion of its parking spaces
(the "Lost Spaces"), Landlord shall provide during construction at Landlord's
sole cost and expense (and not as an Operating Expense), off-site parking for as
many cars as is equal to the Lost Spaces up to a maximum of twenty (20) cars in
a parking lot with a shuttle bus connection, so that Tenant maintains its right
to the exclusive use of the parking spaces delivered to Tenant on the Rent
Commencement Date. Landlord shall use reasonable efforts to locate such
temporary parking within five (5) blocks of the Premises. If Tenant exercises
its Right of First Offer, as defined in Exhibit C, Tenant shall be allocated all
of the available additional parking spaces constructed in connection with the
Building Addition.
2. Term.
(a) The term of this Lease ("Lease Term") shall commence on the
earlier of (i) one hundred twenty (120) days after substantial completion of the
Base Project, with the sole exception of punchlist items; or (ii) the date on
which Tenant first occupies all or any portion of the Premises for purposes of
conducting its business (the "Rent Commencement Date"). Unless sooner terminated
as provided in this Lease, the Lease Term shall end on the "Expiration Date",
which shall be ten (10) years after the Rent Commencement Date. However, if the
Expiration Date would not otherwise fall on the last day of a calendar month,
then the Expiration Date shall be the last day of the calendar month in which
the Expiration Date would otherwise fall. Upon the Rent Commencement Date the
parties shall execute a Memorandum setting forth the Rent Commencement Date of
the Lease. A Lease Year shall be 12 months commencing with the first day of the
calendar month of the Commencement Date in any year.
4
If Landlord fails to obtain the necessary building and use permits
required for construction of the Base Project and the Tenant Improvements (as
defined in Exhibit B hereto) from the City and County of San Francisco on or
before March 30, 2001, then, unless such delay is the result of Tenant's changes
to the Plans and Specifications or Tenant's delay in approving the Plans and
Specifications, Tenant shall have the right to terminate this Lease by written
notice to Landlord with no further liability or obligation hereunder and
Landlord shall immediately return to Tenant all deposits paid by Tenant to
Landlord in connection with this Lease. If Landlord fails to deliver the
Premises "Ready for Occupancy", as defined in Section 5.1 of the Work Letter, to
Tenant subject to any Tenant caused delays, on or before June 1, 2001, Tenant
shall receive (i) a day for day abatement of Base Rent and additional rent for
each day beyond June 1, 2001 that Landlord shall have not delivered the Premises
in accordance with this Section, and (ii) a rent credit of Base Rent and
additional rent equal to one day for each two (2) days beyond June 1, 2001 that
Landlord shall have not delivered the Premises in accordance with this Section.
If Landlord fails to deliver the Premises "Ready for Occupancy" by December 31,
2001, then Tenant shall have the right to terminate this Lease effective
December 31, 2001 by providing written notice to Landlord by no later than
December 31, 2001 that such election is being exercised. If Tenant fails to
deliver such notice to Landlord by December 31, 2001, Tenant's right to
terminate shall expire and the Lease shall be in full force and effect. If the
Lease is terminated under this provision 2(b), the Security Deposit will be
released to the Tenant within 30 days of such termination.
(b) Except as expressly set forth in this Section 2, if for any
reason Landlord does not deliver possession of the Premises to Tenant on or
before the Rent Commencement Date Landlord shall not be liable to Tenant for any
loss or damage resulting therefrom.
(c) If Proposition L is passed by the voters of the City and
County of San Francisco on November 7, 2000 (and receives more votes than
Proposition K) then either Landlord or Tenant may, upon ten (10) days written
notice to the other, which notice shall be given no later than December 7, 2000,
elect to terminate this Lease (the "Termination Notice") in which event (i)
Landlord shall immediately return to Tenant all deposits paid by Tenant to
Landlord; (ii) the escrow established pursuant to the Escrow Agreement shall
terminate and all funds (including any interest earned thereon) held thereunder
shall be immediately returned to Tenant; and (iii) neither Landlord nor Tenant
shall have any further liability or obligation hereunder. If neither Landlord
nor Tenant notifies the other of their election to terminate the Lease pursuant
to this Section 2(c) on or before December 7, 2000 then such right to terminate
shall lapse and be of no further force or effect.
Notwithstanding that the Lease Term does not commence until the Rent
Commencement Date, the provisions of this Lease shall be effective and binding
upon Landlord and Tenant once this Lease has been executed and delivered by both
Landlord and Tenant.
5
3. POSSESSION.
(a) The obligations of Landlord and Tenant with respect to the
initial leasehold improvements to the Premises are set forth in the Work Letter
attached hereto as Exhibit "B" ("Work Letter"). By taking possession of the
-----------
Premises, Tenant shall be deemed conclusively to establish that Landlord's
construction obligations with respect to the Premises have been completed in
accordance with the plans and specifications therefor and that the Premises, to
the extent of Landlord's construction obligations with respect thereto, are in
good and satisfactory condition, subject only to completion of any incomplete or
corrective items specified in a "Punchlist" approved by Landlord and Tenant.
This provision shall not prevent or limit Tenant's rights or remedies with
respect to latent defects discovered in the work of the improvements completed
by Landlord pursuant to the Work Letter.
(b) Subject to Section 3(c) below, Tenant shall, at Tenant's
sole cost and expense, promptly comply with all laws, ordinances, rules,
regulations, orders and other requirements of any government or public authority
now in force or which may hereafter be in force, with all requirements of any
board of fire underwriters or similar body now or hereafter constituted, and
with all directions and certificates of occupancy issued pursuant to any law by
any governmental agency or officer (collectively "Requirements"), insofar as any
of the foregoing relate to or are required by the condition, use or occupancy of
the Premises or the operation, use or maintenance of any personal property,
trade fixtures, machinery, equipment or improvements in the Premises. The
judgment of any court of competent jurisdiction or the admission of Tenant in
any judicial action, regardless of whether Landlord is a party thereto, that
Tenant has violated any of the foregoing laws, ordinances, etc., shall be
conclusive of that fact as between Landlord and Tenant.
(c) Notwithstanding anything to the contrary contained in
Section 3(b) above, Landlord shall be solely responsible for complying with all
Requirements which necessitate the making of any improvements to the Premises
which are capital in nature and the cost of which would be capitalized under
generally accepted accounting principals consistently applied ("GAAP") and such
costs shall not be charged to Tenant as Additional Rental hereunder; provided,
however, that if the necessity for making such improvements is triggered by
Tenant's specific use of the Premises, then Landlord shall charge the costs of
such improvements to Tenant as Additional Rental in accordance with the last
sentence of the first paragraph of Section 7.
4. RENTAL PAYMENTS; RENT DEPOSIT.
(a) Commencing on the Rent Commencement Date and continuing
throughout the Lease Term, Tenant hereby agrees to pay all Rent due and payable
under this Lease. As used in this Lease, the term "Rent" shall mean the Base
Rental, Tenant's Forecast Additional Rental, Tenant's Additional Rental, and any
other amounts that Tenant assumes or agrees to pay under the provisions of this
Lease that are
6
owed to Landlord, including without limitation any and all other sums that may
become due by reason of any default of Tenant or failure on Tenant's part to
comply with the agreements, terms, covenants and conditions of this Lease to be
performed by Tenant. Base Rental and Tenant's Forecast Additional Rental shall
be due and payable in twelve (12) equal installments on the first day of each
calendar month, commencing on the Rent Commencement Date and continuing
thereafter throughout the Lease Term and any extensions or renewals thereof.
Tenant hereby agrees to pay such Rent to Landlord at Landlord's address as
provided herein (or such other address as Landlord designates from time to time)
monthly in advance. Tenant shall pay all Rent and other sums of money which are
due and payable by Tenant to Landlord at the times and in the manner provided in
this Lease, without demand, set-off, counterclaim or abatement (except as
specifically provided to the contrary herein).
(b) If the Rent Commencement Date is other than the first day of
a calendar month or if this Lease terminates on other than the last day of a
calendar month, then the installments of Base Rental, Tenant's Forecast
Additional Rental and Tenant's Additional Rental for such month or months shall
be prorated on a daily basis and the installment or installments so prorated
shall be paid in advance.
(c) As security for Tenant's obligations to take possession of
the Premises in accordance with the terms of this Lease and to comply with all
of Tenant's obligations hereunder, Tenant has deposited with Landlord on the
date of execution of the Lease the sum set forth under "Rent Deposit" in the
Basic Lease Information. Such amount shall be applied by Landlord to the first
monthly installment of Base Rental as it becomes due hereunder. In the event
Tenant fails to take possession of the Premises when required or otherwise fails
to comply with any of Tenant's obligation or warranties hereunder, said sum
shall be retained by Landlord for application in reduction, but not in
satisfaction, of damages suffered by Landlord as a result of Tenant's breach.
Landlord shall not be required to keep the Rent Deposit separate from its
general accounts.
(d) Tenant shall deliver to Landlord the Security Deposit
described in the Basic Lease Information as follows:
(i) cash in the sum of Two Million Nine Hundred Ninety
Thousand One Hundred Forty-eight Dollars ($2,990,148.00) shall be deposited in
escrow (the "Escrow") with First Republic Bank ("Escrow Holder") concurrently
with the execution of this Lease and shall be held in accordance with the terms
of the escrow agreement ("Escrow Agreement') attached hereto as Exhibit D and
incorporated herein. In accordance with the terms of the Escrow Agreement, the
funds held in the Escrow shall be (i) released and paid to Landlord on or before
November 15, 2000 if Proposition K is passed by the voters of the City and
County of San Francisco (and receives more votes than Proposition L) on November
7, 2000, or (ii) released and paid to Landlord on or before November 15, 2000 if
neither Proposition K nor Proposition L is passed by the
7
voters of the City and County of San Francisco on November 7, 2000; or (iii) if
Proposition L is passed by the voters of the City and County of San Francisco on
November 7, 2000 (and receives more votes than Proposition K) the funds shall
continue to be held in the Escrow subject to the terms of the Escrow Agreement
and the provisions of Section 2(c) of this Lease.
5. BASE RENTAL.
From and after the Rent Commencement Date Tenant shall pay to Landlord
a base annual rental (herein called "Base Rental") equal to the Base Rental set
forth in the Basic Lease Information, adjusted as provided below.
(a) Except as provided in section 18(i), beginning on the Sixty-First
Month after Lease commencement the Base Rent shall adjust to
$4,757,000.00 annually.
6. ADDITIONAL RENTAL.
(a) For purposes of this Lease, "Tenant's Forecast Additional
Rental" means Landlord's reasonable estimate of Tenant's Additional Rental,
including payment of Landlord's Operating Expenses as defined in Section 7 for
the initial period of the Lease Term from the Rent Commencement Date until the
end of the first calendar year of the Lease Term, and all subsequent calendar
years or portions thereof occurring during the balance of the Lease Term. If at
any time it appears to Landlord that Tenant's Additional Rental for the current
calendar year will vary plus or minus five percent (5%) from Landlord's
estimate, Landlord shall have the right to revise its estimate for such year by
notice to Tenant and subsequent payments by Tenant for such year shall be based
upon such revised estimate. Failure to make such a revision shall not prejudice
Landlord's right to collect the full amount of Tenant's Additional Rental.
Forty-five (45) days) prior to the Rent Commencement Date and thereafter prior
to the beginning of each calendar year during the Lease Term, including any
extensions thereof, Landlord shall present to Tenant a statement of Tenant's
Forecast Additional Rental for such calendar year; provided, however, that if
such statement is not given prior to the beginning of any calendar year, Tenant
shall continue to pay during the next ensuing calendar year on the same basis as
in the prior calendar year until the month after such statement is delivered to
Tenant. Commencing with the first day of the calendar month following the month
in which the Tenant's Forecast Additional Rental was delivered to Tenant, Tenant
shall pay Tenant's Forecast Additional Rental (less amounts, if any, previously
paid toward such excess for such year) to Landlord in equal monthly installments
over the remainder of such calendar year in advance on the first day of each
month.
(b) For purposes of this Lease, "Tenant's Additional Rental" or
"Additional Rental" means for each calendar year (or portion thereof) Landlord's
Operating Expenses (as defined in Section 7 below). "Expense Year" means each
calendar year (or portion thereof) during the Lease Term, although Landlord,
upon
8
reasonable prior notice to Tenant, may change the Expense Year from time to time
to any other twelve (12) consecutive-month period. In the event of any such
change, Tenant's Additional Rental shall be equitably adjusted for any Expense
Year involved in any change.
(c) Within ninety (90) days after the end of the calendar year
in which the Rent Commencement Date occurs and of each calendar year thereafter
during the Lease Term, or as soon thereafter as practicable, Landlord shall
provide Tenant a statement showing Landlord's Operating Expenses for said
calendar year, and a statement prepared by Landlord comparing Tenant's Forecast
Additional Rental with Tenant's Additional Rental (the "Reconciliation
Statement"). In the event Tenant's Forecast Additional Rental exceeds Tenant's
Additional Rental for said calendar year, Landlord shall credit such amount
against Rent next due hereunder or, if the Lease Term has expired or is about to
expire, refund such excess to Tenant if Tenant is not in default under this
Lease (in the instance of a default such excess shall be held as additional
security for Tenant's performance, may be applied by Landlord to cure any such
default, and shall not be refunded until any such default is cured). In the
event that Tenant's Additional Rental exceeds Tenant's Forecast Additional
Rental for said calendar year, Tenant shall pay Landlord, within thirty (30)
days of receipt of the statement, an amount equal to such difference. The
provisions of this paragraph (c) shall survive the expiration or earlier
termination of this Lease.
(d) Landlord's books and records pertaining to the calculation
of Operating Expenses for any calendar year within the Lease Term may be
audited, at Tenant's expense, by an authorized representative of Tenant for a
period of ninety (90) days following the delivery of a Reconciliation Statement
(or any Statement revising the same); provided, that Tenant shall give Landlord
not less than thirty (30) days' prior written notice of any such audit. For
purposes hereof, an authorized representative of Tenant shall mean a bona fide
employee of Tenant, any of the "big six" accounting firms (or their successors),
or any other party reasonably approved in writing by Landlord. In no event shall
an authorized representative of Tenant include the owner of any office building
in the metropolitan San Francisco, California area or any affiliate of such
owner. Prior to the commencement of any audit, Tenant shall cause its authorized
representative to agree in writing for the benefit of Landlord that such
representative will keep the results of the audit confidential and that such
representative will not disclose or divulge the results of such audit except to
Tenant and Landlord and except in connection with any dispute between Landlord
and Tenant relating to Landlord's Operating Expenses. Such audit shall be
conducted during reasonable business hours at Landlord's office where Landlord's
books and records are maintained. Tenant shall cause a written audit report to
be prepared by its authorized representative following any such audit and shall
provide Landlord with a copy of such report promptly after receipt thereof by
Tenant. If Landlord's calculation of Tenant's Additional Rental for the audited
calendar year is incorrect, then Tenant shall be entitled to a prompt refund of
any overpayment and if Landlord has overstated the Operating Expenses for the
relevant annual period by more
9
than five percent (5%) of the actual Operating Expenses, Landlord shall
reimburse Tenant for the reasonable cost of the audit or Tenant shall promptly
pay to Landlord the amount of any underpayment, as the case may be. Tenant
waives the right to dispute or contest, and shall have no right to dispute or
contest, any matter relating to the calculation of Landlord's Operating Expenses
or other forms of Rent under the Lease (and waives the right to inspect
Landlord's records with respect thereto) with respect to each calendar year of
the Lease Term for which a Reconciliation Statement is given to Tenant if no
claim or dispute with respect thereto is asserted by Tenant in writing to
Landlord within sixty (60) days of delivery to Tenant of the original or most
recent Reconciliation Statement with respect thereto.
7. LANDLORD'S OPERATING EXPENSES.
This Lease is what is termed a "Net, Net, Net Lease," it being understood
that Landlord shall receive all Rent under this Lease free and clear of any and
all other impositions, taxes, liens, charges or expenses of any nature
whatsoever in connection with the ownership and operation of the Premises except
as specifically otherwise provided herein. In addition to the Rent reserved in
this Lease, Tenant shall, except as may otherwise be specifically provided
herein, pay to the parties respectively entitled thereto all reasonable
impositions, insurance premiums, operating charges, maintenance charges,
janitorial charges, construction costs and other charges, landscaping charges,
costs and expenses which arise or may be contemplated under any provision of
this Lease during the term hereof. Notwithstanding anything to the contrary
contained in Paragraph 6 above or this Paragraph 7, with respect to all sums
payable by Tenant as Additional Rent under Paragraphs 6 and 7 for the
acquisition, installation, repair or replacement of any item in connection with
the Premises which is capital in nature and the cost of which would be
capitalized under GAAP, Tenant shall be required to pay only the prorata share
of the cost of the item falling due within the Term (including the Option Term,
if any) based upon the amortization of the same over the useful life of such
item, as Landlord and Tenant shall mutually determine in accordance with GAAP
together with interest on the unamortized balance at the rate that was paid by
Landlord on funds borrowed for the purpose of such capital improvements, or, if
Landlord does not borrow such funds, at the rate equal to the Prime Rate
announced by Bank of America (or any successor) from time to time plus two
percent (2%).
(a) For the purposes of this Lease and Section 6, "Landlord's
Operating Expenses" shall mean all reasonable expenses, costs and disbursements
of every kind and nature (except for those paid directly by Tenant), computed on
the cash basis, relating to or incurred or paid in connection with the
ownership, management, operation, repair and maintenance of the Premises,
including but not limited to, the following:
10
(i) the cost of all utilities for the Premises, including
but not limited to the cost of electricity, gas, water, sewer services and power
for heating, lighting, air conditioning and ventilating;
(ii) the cost of casualty, rental loss, liability and other
insurance applicable to the Premises as set forth in Section 15;
(iii) the cost of trash and garbage removal, air quality
audits, vermin extermination, and snow, ice and debris removal;
(iv) a management fee contribution equal to one and one-
half percent (1.5%) of Tenant's Base Rental and Additional Rental; and
(v) all "Tax Expenses," which means all taxes, assessments
and governmental charges, whether or not directly paid by Landlord, whether
federal, state, county or municipal and whether they be by taxing districts or
authorities presently taxing the Project or by others subsequently created or
otherwise, and any other taxes and assessments attributable to the Premises or
its operation (and the reasonable costs of contesting any of the same),
including community improvement district taxes and business license taxes and
fees (excluding, however, federal and state taxes on income, death taxes,
franchise taxes, fees attributable to the permitting process necessary to
reclassify the use of the Building, and any taxes [other than business license
taxes and fees] imposed or measured on or by the income of Landlord from the
operation of the Premises, and further described in Section 8 below.
(b) Notwithstanding anything contained in the Lease or in the
foregoing list, no expenses incurred for the following shall be included in
Landlord's Operating Expenses for any Year:
(i) Any permitting costs or expenses and any pending
legislation impact fees incurred by Landlord in connection with any
reclassification of the use of the Building;
(ii) Repairs or other work occasioned by fire, windstorm or
other casualty of a nature mentioned in Section 19 of the Lease or by the
exercise of the right of eminent domain;
(iii) Depreciation and amortization;
(iv) Costs incurred due to violation by Landlord of the
terms and conditions of this Lease;
(v) Interest on debt or amortization payments on any
mortgages or deeds of trust;
11
(vi) Landlord's general corporate overhead and general
administrative expenses other than the management fee described in Section
7(b)(iv)
(c) Notwithstanding anything to the contrary contained in
Paragraph 6 above or this Paragraph 7, "Operating Expenses" shall not include,
and Tenant shall not be responsible for the payment of, any deductibles under
any policy of insurance maintained by Landlord, except as expressly set forth in
clauses (i) and (ii) of this Section 7(c):
(i) With respect to any policy or policies of property
insurance maintained by Landlord under Section 15(c) (specifically excluding,
however, earthquake coverage) covering the Premises, Operating Expenses shall
include any deductible paid by Landlord under any such policy or policies, up to
a maximum amount of Twenty-five Thousand Dollars ($25,000) per casualty or
series of related casualties; and
(ii) With regard to any policy of earthquake insurance,
Operating Expenses shall include any deductible paid by Landlord under such
policy, subject to the following limitations: (A) the deductible contained in
such policy shall not exceed an amount equal to ten percent (10%) of the then-
replacement cost of the Premises, and (B) Operating Expenses shall only include,
and Tenant shall only be responsible for, the Designated Percentage (as
hereinafter defined) of the deductible paid by Landlord under such policy. In
addition, if (A) the deductible is payable during Lease Year 8, 9 or 10 and (B)
Tenant exercises the option contained in Section 43 of the Lease, Tenant shall
pay to Landlord on the first day of the Option Term as Additional Rent an amount
equal to Twenty-five percent (25%) of the deductible paid by Landlord under such
policy. For purposes of this Lease, "Designated Percentage" shall mean the
applicable percentage set forth below for the "Lease Year" in which the
earthquake occurs (or, if Tenant exercises the renewal option contained in
Section 43 of the Lease, the applicable year of the Option Term):
----------
Lease Year Percentage of Deductible to Additional Percentage of
be included in Operating Deductible if Option
Expenses Exercised
-------------------------------------------------------------------------------------------
1 50% -
-------------------------------------------------------------------------------------------
2 45 -
-------------------------------------------------------------------------------------------
3 40 -
-------------------------------------------------------------------------------------------
4 35 -
-------------------------------------------------------------------------------------------
5 30 -
-------------------------------------------------------------------------------------------
6 25 -
-------------------------------------------------------------------------------------------
7 20 -
-------------------------------------------------------------------------------------------
8 15 25%
-------------------------------------------------------------------------------------------
12
-------------------------------------------------------------------------------------------
9 10 25%
-------------------------------------------------------------------------------------------
10 5 25%
-------------------------------------------------------------------------------------------
First year of Option Term 50 -
-------------------------------------------------------------------------------------------
Second year of Option Term 40 -
-------------------------------------------------------------------------------------------
Third year of Option Term 30 -
-------------------------------------------------------------------------------------------
Fourth year of Option Term 20 -
-------------------------------------------------------------------------------------------
Fifth year of Option Term 10 -
-------------------------------------------------------------------------------------------
For purposes of this Section 7(c)(ii), "Lease Year" shall mean a
period of twelve (12) months commencing on the Rent Commencement Date, and each
successive twelve-month period thereafter.
8. TAX EXPENSES.
(a) Taxes shall mean and include all Real Property Taxes,
Personal Property Taxes; and all other taxes directly or indirectly imposed or
assessed against the Premises, the personal property or other assets located
therein, or the lease, rental or business operations at the Premises and paid by
Landlord.
Real Property Taxes shall mean: all Real Property taxes and other assessments
imposed directly or indirectly on the Premises, including, but not limited to,
assessments, for special improvement districts and building improvement
districts, rental levy, taxes on rents received or leases, taxes and assessments
levied in substitution or supplementation in whole or in part of any of the
foregoing taxes and assessments and the Premises share of any real estate taxes
and assessments under any reciprocal easement agreement, common area agreement
or similar agreement as to the Premises. Personal Property Taxes shall mean all
taxes or charges imposed directly or indirectly for personal property or other
assets whether owned by Landlord or Tenant located on the Premises or used in
connection with the operation, maintenance or repair of the Premises, including
taxes on leasehold improvements, trade fixtures, furnishings, equipment,
inventory, and other assets. Taxes shall also include all costs and fees
reasonably incurred in connection with seeking reductions in any tax liabilities
for Real Property Taxes, Personal Property Taxes, or other Taxes, including,
without limitation, any costs reasonably incurred by Landlord for compliance,
review and appeal of tax liabilities. Taxes shall not include any income,
capital levy, franchise, capital stock, gift, estate or inheritance tax. If an
assessment is payable in installments, Taxes for the year shall include the
amount of the installment and any interest due and payable during that year. For
all other Real Property Taxes, Taxes for that year shall, at Landlord's
election, include either the amount accrued, assessed or otherwise imposed for
the year or the amount due and payable for that year, provided that Landlord's
election shall be applied consistently throughout the Term. If a change in Taxes
is obtained for any year of the Term during which Tenant paid Taxes as Tenant's
Additional Rent, then Taxes for that year will be retroactively adjusted and
Landlord
13
shall provide Tenant with a credit or charge Tenant the deficit, if any, based
on the adjustment.
(b) Tenant shall pay to Landlord as Tenant's Additional Rent all
Tax Expenses on the first day of each month with monthly Base Rental during the
term hereof as part of Tenant's Forecast Additional Rental. All monies paid to
Landlord under this section may be intermingled with other monies of Landlord
and shall not bear interest but Landlord shall apply such monies to discharge
Landlord's Tax Expenses. In the event of a breach by Tenant in the performance
of its obligations under this Lease, then any balance of funds paid to Landlord
under the provisions of this section may at the option of Landlord be treated as
an additional Security Deposit. Tenant shall pay prior to delinquency, all taxes
assessed against and levied upon Tenant. When possible, Tenant shall cause such
Property to be assessed and billed separately from the Real Property of
Landlord.
(c) Tenant, at its cost, shall have the right, at any time, to
seek a reduction in the assessed evaluation of the Premises or contest any Real
Property Taxes that are to be paid by Tenant. If Tenant seeks a reduction or
contests Real Property Taxes, the failure on Tenant's part to pay the Real
Property Taxes shall not constitute a default as long as Tenant complies with
the provisions of this paragraph.
Landlord shall cooperate with Tenant in any proceeding or contest
brought by Tenant so long as Landlord is not required to bear any cost. Tenant,
on final determination of the proceeding or contest shall immediately pay or
discharge any decision or judgment rendered, together with all costs, charges,
interest and penalties.
If Tenant does not pay the Real Property Taxes when due, and Tenant
seeks a reduction or contests as are provided in this paragraph, before the
commencement of the proceeding or contest, Tenant shall furnish to Landlord a
surety bond issued by an insurance company qualified to due business in
California. The amount of the bond shall equal one hundred ten percent (110%) of
the total amount of Real Property Taxes in dispute. The bond shall hold Landlord
and the Premises harmless from any damage arising out of the proceeding or
contest and shall insure the payment of any judgment that may be rendered.
9. PAYMENTS. All payments of Rent and other payments to be made to
Landlord shall be made on a timely basis and shall be payable to Landlord or as
Landlord may otherwise designate. All such payments shall be mailed or delivered
to Landlord's Address designated in the Basic Lease Information above or at such
other place as Landlord may designate from time to time in writing. If mailed,
all payments shall be mailed in sufficient time and with adequate postage
thereon to be received in Landlord's account by no later than the due date for
such payment. Tenant agrees to pay to Landlord One Hundred Dollars ($100.00) for
each check presented to Landlord in payment of any obligation of Tenant which is
not paid by the bank on which it is drawn, together with interest from and after
the due date for any payment not made when due at
14
the "interest Date" until paid of the lesser of (i) ten percent (10%) or (ii)
the maximum rate of interest permitted to be charged for such late payment under
California law.
Instead of requiring Tenant to pay Rent, Additional Rent, Late Fees and other
charges by check at the location designated in the Lease, Landlord may, at its
sole option, upon not less than thirty (30) days' prior written notice to
Tenant, require Tenant to promptly execute and deliver any documents,
instruments, authorizations, or certificates required by Landlord to give effect
to an electronic funds transfer ("EFT") method of payment, whereby any or all
such required payments by Tenant (as designated from time-to-time, as determined
by Landlord), are transferred from Tenant's account in a bank or financial
institution designated by Tenant and credited to Landlord's designated bank
account. Landlord may terminate the EFT method of payment upon thirty (30) days
prior written notice to Tenant after which payment shall be made as Landlord may
designate.
Tenant shall promptly pay all reasonable service fees and related bank charges
to Landlord resulting from insufficient funds in Tenant's designated bank
account or deauthorized EFT transactions and shall pay any late charges due
under this Lease. Landlord shall credit Tenant for any bonafide bank charges
charged by Tenant's bank or financial institution incurred by Tenant due to
Landlord's EFT system. Tenant's failure to comply with this provision when
requested by Landlord shall, upon notice, constitute an event of default of the
Lease if not cured within the time set forth in the Lease. For the purposes of
this paragraph, cure of an EFT default shall mean timely delivery to Landlord of
a cashier's check for all sums due and reactivation of EFT payments as required
by this paragraph.
10. LATE CHARGES. Any Rent or other amounts payable to Landlord
under this Lease, if not paid by the fifth day of the month for which such Rent
is due, or within 5 days of the receipt of any invoice from Landlord for any
other amounts payable hereunder, shall incur a late charge of ten percent (10%)
of the overdue amount (the "Late Charge") for Landlord's administrative expense
in processing such delinquent payment and in addition thereto shall bear
interest at the Interest Rate from and after the due date for such payment.
11. [INTENTIONALLY DELETED]
12. ALTERATIONS.
(a) Tenant shall not make, suffer or permit to be made any
alterations, additions or improvements to or of the Premises or any part
thereof, or remove any portion of the Premises which is affixed thereto, or
attach any fixtures or equipment thereto (collectively, the "Alterations"),
without first obtaining Landlord's written consent, which consent shall not be
unreasonably withheld or delayed and which consent shall be requested by Tenant
not less than thirty (30) days prior to the commencement of any such work.
However, Tenant may make Alterations in the Premises without Landlord's prior
approval if (i) the Alterations do not involve any
15
changes to the life safety system, structural portions of the Premises, or to
the roof of the Premises, and (ii) the cost of such work does not exceed Fifty
Thousand Dollars ($50,000.00) for any alteration project or One Hundred Thousand
Dollars ($100,000.00) for all alterations in a calendar year (the "Permitted
Alterations"). Notwithstanding the foregoing, the construction of the Tenant
Improvements (as defined in the Work Letter) shall be governed by the terms of
the Work Letter and not the terms of this Section 12.
----------
(b) Landlord may impose, as a condition of its consent to all
Alterations, such requirements as Landlord deems desirable, including, but not
limited to: (i) the requirement that upon Landlord's request, made at the time
such consent is given, Tenant shall, at Tenant's expense, remove such
Alterations upon the expiration or any early termination of the Lease Term and
repair any damage to the Premises and Building caused by such removal; and/or
(ii) the requirement that Tenant utilize for such purposes only contractors,
materials, mechanics and materialmen selected by Tenant and approved by
Landlord, which approval shall not be unreasonably withheld or delayed;
provided, however, that in any event, a contractor of Landlord's selection shall
perform all mechanical, electrical, plumbing, structural, and heating,
ventilation and air conditioning work. Tenant shall construct such Alterations
and Permitted Alterations and perform any repairs which Tenant is obligated to
perform hereunder at Tenant's cost and in conformance with any and all
applicable rules and regulations of any federal, state, county or municipal code
or ordinance and pursuant to a valid building permit, issued by the city in
which the Building is located, in conformance with Landlord's construction rules
and regulations. Landlord's approval of the plans, specifications and working
drawings for Alterations shall create no responsibility or liability on the part
of Landlord for their completeness, design sufficiency, or compliance with all
laws, rules and regulations of governmental agencies or authorities. All work
with respect to any Alterations and Permitted Alterations must be done in a good
and workmanlike manner and diligently prosecuted to completion to the end that
the Premises shall at all times be a complete unit except during the period of
work. Tenant shall cause all work to be performed in such manner as not to
obstruct access to the Building or Project or the common areas for any other
tenant of the Project, and as not to obstruct the business of Landlord or other
tenants in the Project, or interfere with the labor force working on the
Project. In the event that Tenant makes any Alterations and Permitted
Alterations, Tenant agrees to carry "Builder's All Risk" insurance in an amount
approved by Landlord covering the construction of such Alterations and Permitted
Alterations, and such other insurance as Landlord may require, it being
understood and agreed that all of such Alterations and Permitted Alterations
shall be insured by Tenant pursuant to Section 15 immediately upon completion
----------
thereof. In addition, Landlord may, in its discretion, require Tenant to obtain
a lien and completion bond or some alternate form of security satisfactory to
Landlord in an amount sufficient to ensure the lien-free completion of such
Alterations and naming Landlord as a co-obligee. Upon completion of any
Alterations, Tenant agrees to cause a Notice of Completion to be recorded in the
office of the Recorder of the county in which the Building is located in
accordance with Section 3093 of the Civil Code of the State of California or any
successor statute, and
16
Tenant shall deliver to the Building management office a reproducible copy of
the "as built" drawings of the Alterations and Permitted Alterations.
(c) All Alterations and Permitted Alterations which may be
installed or placed in or about the Premises, and all signs installed in, on or
about the Premises, from time to time, shall be at the sole cost of Tenant and
shall be and become the property of Landlord. In addition, in all situations in
which the Alterations or Permitted Alterations requires that a building permit
be obtained from the City and County of San Francisco, Tenant shall pay Landlord
five percent (5%) of the cost of any such Alterations as a supervision fee,
unless Landlord or its affiliate as contractor performs such Alterations for
Tenant, in which case the fees will be set by the contract between Landlord
and/or its affiliate and Tenant. If Tenant fails to complete such removal and/or
to repair any damage caused by the removal of any Alterations (including without
limitation any Permitted Alterations), then as a matter which shall survive
termination of this Lease, Landlord may do so and may charge the cost thereof to
Tenant. Tenant hereby indemnifies and holds Landlord harmless from any
liability, cost, obligation, expense or claim of lien in any manner relating to
the installation, placement, removal or financing of any Alterations (including
without limitation any Permitted Alterations).
13. REPAIRS. Tenant agrees that, at its sole cost and expense, it
will keep and maintain the Premises, including, but not limited to, all Building
systems, exterior (provided Landlord shall be responsible for the structural
condition and Tenant shall be responsible for the maintenance and repair of the
exterior), interior, roof membrane, parking areas and landscaping and all
alterations, additions and improvements thereto in good condition and repair,
except for normal wear and tear. Landlord shall assign to Tenant if, when and to
the extent necessary, the roofing system limited warranty from Firestone
Building Products Company which runs for a period of twelve (12) years from and
after January 25, 1999, and all other warranties received. Tenant shall at once
report, in writing, to Landlord any defective or dangerous condition known to
Tenant. At Landlord's option, if Tenant fails to maintain the Premises or to
make such repairs, Landlord may, but need not, perform such maintenance or make
such repairs after not less than five (5) business days notice to Tenant (except
in situations involving an emergency), in which case Tenant shall pay Landlord
the cost thereof, including twenty percent (20%) of the cost thereof sufficient
to reimburse Landlord for all overhead, general conditions, fees and other costs
or expenses arising from Landlord's involvement upon being billed for same.
Landlord may, but shall not be required to, enter the Premises at all reasonable
times to make such repairs and maintenance to the Premises or to any equipment
located in the Building as Landlord shall desire or deem necessary or as
Landlord may be required to do by governmental or quasi-governmental authority
or court order or decree. To the fullest extent permitted by law, Tenant hereby
waives and releases all rights to make repairs at the expense of Landlord or in
lieu thereof to vacate the Premises as may be provided by any law, statute or
ordinance now or hereafter in effect, including Sections 1941 and 1942 of the
California Civil Code. Except as
17
provided in the Work Letter, Landlord has no obligation and has made no promise
to alter, remodel, improve, repair, decorate or paint the Premises or any part
thereof. Notwithstanding the foregoing sentence, Landlord shall its sole cost
and expense be responsible for the repair and maintenance of the structural
elements, roof structure and foundation of the Premises, and such cost shall not
be charged to Tenant as "Additional Rental" hereunder.
14. LANDLORD'S RIGHT OF ENTRY. Landlord shall retain duplicate keys
to all doors of the Premises and Landlord and its agents, employees and
independent contractors shall have the right to enter the Premises at reasonable
hours to inspect and examine same, to make repairs, additions, alterations, and
improvements to exhibit the Premises to mortgagees, prospective mortgagees,
purchasers, tenants or invitees to post notices of non-responsibility and to
inspect the Premises to ascertain that Tenant is complying with all of its
covenants and obligations hereunder, all without being liable to Tenant in any
manner whatsoever for any damages arising therefrom; provided, however, that
Landlord shall, except in case of emergency, afford Tenant 48 hours prior
notification of an entry into the Premises provided that such notice is
reasonably practicable under the circumstances. Landlord shall be allowed to
take into and through the Premises any and all materials that may be required to
make any such repairs, additions, alterations or improvements. Notwithstanding
anything to the contrary contained in this Section 14, Landlord may enter the
----------
Premises at any time to (a) perform repairs, additions or services required of
Landlord or deemed necessary by Landlord; (b) take possession due to any breach
of this Lease in the manner provided herein; and (c) perform any covenants of
Tenant which Tenant fails to perform. Any such entries shall be without the
abatement of Rent and shall include the right to take such reasonable steps as
required to accomplish the stated purposes. Tenant hereby waives any claims for
damages or for any injuries or inconvenience to or interference with Tenant's
business, lost profits, any loss of occupancy or quiet enjoyment of the
Premises, and any other loss occasioned thereby; provided, however, that
Landlord shall be liable for all claims for damages or for any injuries or
inconvenience to or interference with Tenant's business, lost profits, any loss
of occupancy or quiet enjoyment of the Premises, and any other loss occasioned
thereby due to the gross negligence or willful misconduct of Landlord or its
agents, employees, invitees or assigns. In an emergency, Landlord shall have the
right to use any means that Landlord may deem proper to open the doors in and to
the Premises. Any entry into the Premises in the manner herein before described
shall not be deemed to be a forcible or unlawful entry into, or a detainer of,
the Premises, or an actual or constructive eviction of Tenant from any portion
of the Premises.
15. INSURANCE. Tenant shall pay for all insurance required under
this Section 15 to be carried by Tenant. Payment shall be made by Tenant to
Landlord on insurance carried and maintained by Landlord as Tenant's Additional
Rental. Premiums for policy periods commencing prior to or extending beyond the
Lease term shall be prorated to correspond to the Lease term.
18
(a) Landlord shall obtain and keep in force a Commercial General
Liability Policy of Insurance protecting Tenant and Landlord against claims for
bodily injury, personal injury and property damage based upon or arising out of
the ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be on an occurrence basis providing
single limit coverage in an amount not less than $5,000,000 per occurrence with
an "Additional Insured-Managers or Lessors of Premises Endorsement" and contain
the "Amendment of the Pollution Exclusion Endorsement" for damage caused by
heat, smoke or fumes from a hostile fire. The policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall
include coverage for liability assumed under this Lease as an "insured contract"
for the performance of Tenant's indemnity obligations under this Lease. The
limits of said insurance shall not, however, limit the liability of Tenant nor
relieve Tenant of any obligation hereunder. All insurance carried by Tenant
shall be primary to and not contributory with any similar insurance carried by
Landlord, whose insurance shall be considered excess insurance only.
(b) Landlord shall maintain liability insurance as described in
paragraph (a), in addition to, and not in lieu of, the insurance required to be
maintained by Tenant. Tenant shall not be named as an additional insured
therein.
(c) Landlord shall obtain and keep in force a policy or policies
of insurance in the name of Landlord, with loss payable to Landlord and to any
Lender insuring loss or damage to the Premises (including all Tenant
Improvements as defined in the Work Letter and Alterations as defined in this
Lease). The amount of such insurance shall be equal to the full replacement cost
of the Premises (to the extent reasonably available), as the same shall exist
from time to time, or the amount required by any lenders. Such policy or
policies shall insure against all risks of direct physical loss or damage,
earthquake, debris removal and the enforcement of any applicable ordinances
requiring the upgrading, demolition, reconstruction or replacement of any
portion of the Premises as the result of a covered loss. Said policy or policies
may also contain an agreed valuation provision in lieu of any coinsurance clause
and inflation guard protection causing an increase in the annual property
insurance coverage amount by a factor of not less than the adjusted U.S.
Department of Labor Consumer Price Index for All Urban Consumers for The San
Francisco-Oakland Metropolitan Area. The insurance coverage shall be subject to
a standard deductible, and Tenant shall be liable for such deductible amount in
the event of an insured loss. If Tenant owned alterations, trade fixtures, and
Tenant's personal property shall be insured by Tenant under paragraph (d) below
rather than by Landlord.
(d) Landlord shall obtain and keep in force a policy or policies
in the name of Landlord with loss payable to Landlord and any lender, insuring
the loss of the full rent for one (1) year. Said insurance shall provide that in
the event the Lease is terminated by reason of an insured loss, the period of
indemnity for such coverage shall be extended beyond the date of the completion
of repairs or replacement of the Premises,
19
to provide for one full year's loss of rent from the date of any such loss. Said
insurance shall contain an agreed valuation provision in lieu of any coinsurance
clause, and the amount of coverage shall be adjusted annually to reflect the
projected rent otherwise payable by Tenant, for the next twelve (12) month
period. Tenant shall be liable for any deductible amount in the event of such
loss.
(e) Property Damage. Tenant shall obtain and maintain insurance
coverage on all of Tenant's personal property and trade fixtures. Such insurance
shall be full replacement cost coverage with a standard deducible. The proceeds
from any such insurance shall be used by Tenant for the replacement of personal
property, trade fixtures and Tenant owned alterations. Tenant shall provide
Landlord with written evidence and an additional insured endorsement in
Landlord's favor that such insurance is in force.
(f) Business Interruption. Tenant shall obtain and maintain
loss of income and extra expense insurance in amounts as will reimburse Tenant
for direct or indirect loss of earnings attributable to all perils commonly
insured against by prudent lessees in the business of Tenant or attributable to
prevention of access to the Premises as a result of such perils.
(g) Tenant shall obtain and maintain Workers Compensation
insurance.
(h) Landlord may obtain and maintain or require Tenant to obtain
and maintain such other, additional, or increased insurance as may be reasonably
desirable or necessary.
(i) Lessor makes no representation that the limits or forms of
coverage of insurance specified herein are adequate to cover Lessee's property,
business operations or obligations under this Lease.
(j) Landlord shall obtain and maintain earthquake insurance (to
the extent reasonably available). Tenant shall not be named as an additional
insured therein.
(k) Insurance required in this Section 15 shall be by companies
duly licensed or admitted to transact business in the state where the Premises
are located, and maintaining during the policy term a "General Policyholders
Rating" of at least A-VII, as set forth in the most current issue of "Best's
Insurance Guide," or such other rating as may be required by a lender. Tenant
shall not do or permit to be done anything which invalidates the required
insurance policies. Tenant shall, prior to the start date, deliver to Landlord
certified copies of policies of such insurance or certificates evidencing the
existence and amounts of the required insurance. No such policy shall be
cancelable or subject to modification except after thirty (30) days prior
written notice to Landlord. Tenant shall, at least thirty (30) days prior to the
expiration of such policies,
20
furnish Landlord with evidence of renewals or "insurance binders" evidencing
renewal thereof, or Landlord may order such insurance and charge the cost
thereof to Tenant, which amount shall be payable by Tenant to Landlord upon
demand. Such policies shall be for a term of at least one (1) year, or the
length of the remaining term of this Lease, whichever is less. If either party
shall fail to procure and maintain the insurance required to be carried by it,
the other party may, but shall not be required to, procure and maintain the
same.
Landlord and Tenant shall each have included in all policies of fire, extended
coverage, business interruption and loss of rents insurance respectively
obtained by them covering the Premises, the Building and contents therein, a
waiver by the insurer of all right of subrogation against the other in
connection with any loss or damage thereby insured against. Any additional
premium for such waiver shall be paid by the primary insured. To the full extent
permitted by law, Landlord and Tenant each waives all right of recovery against
the other for, and agrees to release the other from liability for, loss or
damage to the extent such loss or damage is covered by valid and collectible
insurance in effect at the time of such loss or damage or would be covered by
the insurance required to be maintained under this Lease by the party seeking
recovery. To the extent necessary to accomplish the goals of this paragraph, the
policies will contain cross-liability endorsements.
16. DEFAULT.
(a) The following events shall be deemed to be events of default
("events of default") by Tenant under this Lease: (i) Tenant shall fail to pay
any installment of Rent or any other charge or assessment against Tenant
pursuant to the terms hereof within five (5) days after the due date thereof or
shall fail to pay any other charge or assessment against Tenant within five (5)
days of Tenant's receipt of an invoice or demand from Landlord; (ii) Tenant
shall fail to perform any obligation of Tenant or to comply with any provision
of this Lease, other than the payment of the Rent or any other charge or
assessment payable by Tenant, and shall not cure such failure within fifteen
(15) days after notice thereof to Tenant; provided however, that any such notice
shall be in lieu of, and not in addition to, any notice required under
California Code of Civil Procedure Section 1161 or any similar or successor law;
and provided further, that if the nature of such failure is that it cannot
reasonably be cured within a fifteen (15) day period, Tenant shall not be deemed
to be in default if it diligently commences such cure within such period and
thereafter diligently proceeds to cure said failure as soon as possible; (iii)
abandonment of the Premises by Tenant as defined in California Civil Code
Section 1951.3; (iv) Tenant or any guarantor of this Lease shall make a general
assignment for the benefit of creditors, or shall admit in writing its inability
to pay its debts as they become due, or shall file a petition in bankruptcy, or
shall be adjudicated as bankrupt or insolvent, or shall file a petition in any
proceeding seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future statute,
law or regulation, or shall file an answer
21
admitting or fail timely to contest the material allegations of a petition filed
against it in any such proceeding; (v) a proceeding is commenced against Tenant
or any guarantor of this Lease seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, and such proceeding shall not have
been dismissed within forty-five (45) days after the commencement thereof; (vi)
a receiver or trustee shall be appointed for the Premises or for all or
substantially all of the assets of Tenant or of any guarantor of this Lease;
(vii) Tenant shall fail to take possession of the Premises as provided in this
Lease; (viii) Tenant shall do or permit to be done anything which creates a lien
upon the Premises or the Project and such lien is not removed or discharged
within thirty (30) days after the filing thereof; (ix) Tenant shall fail to
return a properly executed instrument to Landlord in accordance with Section 24
----------
hereof within the time period provided therein; or (x) Tenant shall fail to
return a properly executed estoppel certificate to Landlord in accordance with
Section 25 hereof within the time period provided therein.
----------
(b) In the event of any such event of default by Tenant, in
addition to any other remedies available to Landlord at law or in equity,
Landlord shall have the immediate option to terminate this Lease and all rights
of Tenant hereunder and to remove Tenant from the Premises. In the event that
Landlord shall elect to so terminate this Lease then Landlord may recover from
Tenant:
(i) the worth at the time of award of any unpaid rent
which had been earned at the time of such termination; plus
(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 rental loss that Tenant proves could have been
reasonably avoided; plus
(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 rental loss that Tenant proves could be reasonably avoided; plus
(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
As used in clauses (i) and (ii) above, the "worth at the time of
--------------------
award" is computed by allowing interest at the maximum rate permitted by law per
annum. As used in clause (iii) above, the "worth at the time of award" is
------------
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%).
22
(c) In the event of any such event of default by Tenant,
Landlord shall also have the right, with or without terminating this Lease, to
re-enter the Premises and remove all persons and property from the Premises;
such property may be removed and stored in a public warehouse or elsewhere at
the cost of and for the account of Tenant for such period of time as may be
required by applicable law after which time Landlord may dispose of such
property in accordance with applicable law. No re-entry or taking possession of
the Premises by Landlord pursuant to this Section 16(c) shall be construed as an
-------------
election to terminate this Lease unless a written notice of such intention be
given to Tenant or unless the termination thereof be decreed by a court of
competent jurisdiction. In addition to its other rights under this Lease,
Landlord has the remedy described in California Civil Code Section 1951.4
--------------
(Landlord may continue the Lease in effect after Tenant's breach and abandonment
and recover the rent as it becomes due, if Tenant has the right to sublet or
assign, subject only to reasonable limitations).
(d) Upon the occurrence of an event of default, Landlord shall
have the right to exercise and enforce all rights and remedies granted or
permitted by law. The remedies provided for in this Lease are cumulative and in
addition to all other remedies available to Landlord at law or in equity by
statute or otherwise. Exercise by Landlord of any remedy shall not be deemed to
be an acceptance of surrender of the Premises by Tenant, either by agreement or
by operation of law. Surrender of the Premises can be effected only by the
written agreement of Landlord and Tenant.
(e) No reentry or taking possession of the Premises by Landlord
or any other action taken by or on behalf of Landlord shall be construed to be
an acceptance of a surrender of this Lease or an election by Landlord to
terminate this Lease unless written notice of such intention is given to Tenant.
Tenant agrees to pay to Landlord all costs and expenses incurred by Landlord in
the enforcement of this Lease, including, without limitation, the fees of
Landlord's attorneys. Tenant waives any right of redemption arising as a result
of Landlord's exercise of its remedies under this Section 16.
----------
(f) Tenant hereby waives any and all rights conferred by section
3275 of the Civil Code of California and by sections 1174(c) and 1179 of the
code of Civil Procedure of California and any and all other laws and rules of
law from time to time in effect during the lease term providing that Tenant
shall have any right to redeem, reinstate or restore this Lease following its
termination by reason of tenant's breach. Tenant also hereby waives, to the
fullest extent permitted by law, the right to trial by jury in any litigation
arising out of or relating to this Lease.
17. WAIVER OF BREACH. No waiver of any breach of the covenants,
warranties, agreements, provisions, or conditions contained in this Lease shall
be construed as a waiver of said covenant, warranty, provision, agreement or
condition or of any subsequent breach thereof, and if any breach shall occur and
afterwards be
23
compromised, settled or adjusted, this Lease shall continue in full force and
effect as if no breach had occurred.
18. ASSIGNMENT AND SUBLETTING.
(a) Tenant shall not, without the prior written consent of
Landlord (which consent shall not be unreasonably withheld or delayed) subject
to Sections 18(c), (h) and (i) below, assign this Lease or any interest herein
---------------------------
or in the Premises, or mortgage, pledge, encumber, hypothecate or otherwise
transfer or sublet the Premises or any part thereof or permit the use of the
Premises by any party other than Tenant (all of the following are hereinafter
sometimes referred to collectively as "Transfer", and any person to whom any
Transfer is made or sought to be made is hereinafter sometimes referred to as a
"Transferee"). In addition, Tenant shall not, without Landlord's prior written
consent, which consent shall not be unreasonably withheld or delayed, create or
distribute materials or information intended to market the Premises in this
Lease to any potential Transferee. Consent to one or more such Transfers shall
not destroy or waive this provision, and all subsequent Transfers shall likewise
be made only upon obtaining the prior written consent of Landlord.
(b) If Tenant desires to effect any Transfer, Tenant shall
notify Landlord in writing, which notice (the "Transfer Notice") shall include
(i) the proposed effective date of the Transfer, which shall not be less than
forty-five (45) days nor more than one hundred eighty (180) days after the date
of delivery of the Transfer Notice, (ii) a description of the portion of the
Premises to be transferred (the "Subject Space"), (iii) all of the terms of the
proposed Transfer and the consideration therefore, including a calculation of
the Transfer Premium (defined below), the name and address of the proposed
Transferee, and a copy of all existing and/or proposed documentation pertaining
to the proposed Transfer, including all existing operative documents to be
executed to evidence such Transfer or the agreements incidental or related to
such Transfer, and (iv) current financial statements of the proposed Transferee
certified by an officer, partner or owner thereof, and any other information
required by Landlord which will enable Landlord to determine the Transferee's
financial responsibility, character, and reputation of the proposed Transferee,
nature of such Transferee's business and proposed use of the Subject Space, and
such other information as Landlord may reasonably require. Landlord shall
respond within fifteen (15) business days after receiving the last of such
information. Any Transfer made without Landlord's prior written consent shall,
at Landlord's option, be void and shall constitute an event of default. Whether
or not Landlord grants consent, Tenant shall pay Landlord's reasonable review
and processing fees, as well as any reasonable legal fees incurred by Landlord,
within thirty (30) days after written request by Landlord. If Landlord consents
to any Transfer (and does not exercise any recapture rights Landlord may have
under Section 18 (h) below, Tenant may within six (6) months after Landlord's
--------------
consent, enter into such Transfer of the Premises or portion thereof, upon the
same terms and conditions as are set forth in the Transfer Notice.
24
(c) Notwithstanding Section 18 (a) above, in no event shall
--------------
Tenant assign this Lease or any interest herein, whether directly, indirectly or
by operation of law, or sublet the Premises or any part thereof or permit the
use of the Premises or any part thereof by any party (i) if the proposed
assignee or subtenant is a party who would (or whose use would) detract from the
character of the Building as a first-class building, (ii) if the proposed use of
the Premises shall involve an occupancy rate of more than one (1) person per 125
RSF within the Premises, (iii) if the proposed assignee or subtenant's use would
be a retail use, a bank, savings and loan or similar entity, restaurant,
delicatessen, or coffee shop, a dental, medical or chiropractic office,
counseling office, training center, or any other use with heavy public access,
or to a governmental subdivision or agency or any person or entity who enjoys
diplomatic or sovereign immunity.
(d) Sublessees or transferees of the Premises for the balance of
the Lease Term shall become directly liable to Landlord for all obligations of
Tenant hereunder, without relieving Tenant (or any guarantor of Tenant's
obligations hereunder) of any liability therefore, and Tenant shall remain
obligated for all liability to Landlord arising under this Lease during the
entire remaining Lease Term including any extensions thereof, whether or not
authorized herein.
(e) If Tenant is a partnership, an aggregate withdrawal or
change, whether voluntary, involuntary or by operation of law, of partners
owning a controlling interest in the Tenant shall be deemed a voluntary
assignment of this Lease and subject to the foregoing provisions. If Tenant is a
corporation, any merger, consolidation, or reorganization of Tenant, shall not
be deemed a voluntary assignment of this Lease requiring Landlord's consent if
immediately after such transaction the financial strength of the then Tenant is,
in Landlord's reasonable judgment, equal to or greater than that of the original
Tenant hereunder on the Rent Commencement Date, and Tenant delivers at least 45
days prior thereto a timely Transfer Notice to Landlord and proof of such
financial strength. Occupancy of all or part of the Premises by a parent,
subsidiary or affiliated companies of Tenant or Tenant's parent or Tenant's
subsidiary shall not be deemed an assignment or subletting.
(f) Fifty percent (50%) of any consideration (net of Tenant's
broker's commissions, if any, incurred in the assignment or subletting) which is
in excess of the Rent and other amounts due and payable by Tenant under this
Lease, and which is paid to Tenant by any assignee or sublessee of this Lease or
successor to Tenant (including pursuant to Section 18 (b)) for its
--------------
assignment, or by any sublessee under or in connection with its sublease, or
otherwise paid to Tenant by another party for use and occupancy of the Premises
or any portion thereof (the "Transfer Premium"), shall be promptly remitted by
Tenant to Landlord as additional rental hereunder and Tenant shall have no right
or claim thereto as against Landlord. Notwithstanding the foregoing, as Tenant
is initially leasing surplus space to provide for its future expansion, any
space identified by Tenant at any time within one (1) year after the lease
commencement shall
25
not be subject to the Landlord's recapture provided said space is not subleased
for more than three (3) years from the lease commencement or exceeds 1/3 of
Tenant's space.
(g) No assignment of this Lease consented to by Landlord shall
be effective unless and until Landlord shall receive an original assignment and
assumption agreement, in form and substance satisfactory to Landlord, signed by
Tenant and Tenant's proposed assignee, whereby the assignee assumes due
performance of this Lease to be done and performed for the balance of the then
remaining Lease Term, and additionally in case of assignment by a merger or
reorganization of Tenant into a subsidiary, the guarantee of this Lease by such
subsidiary's ultimate parent in such form as reasonably satisfactory to
Landlord. No subletting of the Premises, or any part thereof, shall be effective
unless and until there shall have been delivered to Landlord an agreement, in
form and substance satisfactory to Landlord, signed by Tenant and the proposed
sublessee, whereby the sublessee acknowledges the right of Landlord to continue
or terminate any sublease, in Landlord's sole discretion, upon termination of
this Lease, and such sublessee agrees to recognize and attorn to Landlord in the
event that Landlord elects under such circumstances to continue such sublease.
(h) Notwithstanding anything to the contrary contained in this
Article, upon receipt of any Transfer Notice which contemplates subletting or an
assignment of Tenant's interest in this Lease other than pursuant to the second
sentence of Section 18 (e) above, Landlord shall have the option exercisable
--------------
by written notice to Tenant given within thirty (30) days after receipt of the
Transfer Notice, to recapture the space proposed to be sublet or assigned
("Transfer Space"). If Landlord exercises this option, the Lease shall terminate
with respect to the Transfer Space as of the date of the proposed assignment or
subletting. In the event of a recapture by Landlord, if this Lease shall be
canceled with respect to less than the entire Premises, the Rent reserved herein
shall be prorated on the basis of the number of square feet of Rentable Floor
Area retained by Tenant in proportion to the number of square feet of Rentable
Floor Area contained in the Premises, and this Lease as so amended shall
continue thereafter in full force and effect, and upon request of either party,
the parties shall execute written confirmation of the same. If Landlord elects
to recapture the space, Landlord and Tenant shall share the costs reasonably
determined by Landlord, if any, in separating the recaptured space from the
balance of the Premises and in complying with any relevant law or ordinance with
which compliance is required in connection with such separation, in the ratio
that each will control the former Premises following recapture. If Landlord
declines, or fails to elect in a timely manner to recapture the Transfer Space
within such fifteen (15) business day period, then, provided Landlord has
consented to the proposed Transfer, Tenant shall be entitled to proceed to
transfer the Transfer Space to the proposed Transferee, subject to the
provisions of the last sentence of this Section. Any subsequent proposed
-------
Transfer of the applicable space shall be subject to this Section. If a
-------
proposed Transfer is not consummated within six months after the date of the
relevant Transfer Notice, Tenant shall again be required to submit a new
Transfer Notice to Landlord with respect to any contemplated Transfer of such
space.
26
(i) Notwithstanding anything contained in this Lease to the
contrary, Tenant shall have the one-time right to assign to Landlord and
Landlord shall accept from Tenant the portion of the Premises consisting of
approximately 19,252 gross square feet of the ground floor (the "Assigned
Space") on the terms and subject to the conditions set forth herein. If Tenant
desires to assign the Assigned Space, Tenant shall notify Landlord in writing
(the "Assigned Space Notice") on or before the substantial completion of the
Base Project (as determined in accordance with Section 1 above). Landlord shall
use its best reasonable efforts to give Tenant written notice of Landlord's
anticipated date of substantial completion of the Base Project, which notice
shall be given to Tenant not less than thirty (30) days prior to Landlord's
anticipated date of substantial completion of the Base Project. Provided Tenant
is not otherwise in default under the Lease, Landlord shall accept such
assignment of the Assigned Space and Landlord and Tenant agree that this Lease
shall be amended as follows:
(1) The Initial Base Rental set forth in the Basic
Lease Information shall be amended to provide that the Initial Base Rental shall
be the sum of $3,376,230.00 annually.
(2) Section 5(a) shall be amended to provide that
beginning on the sixty-first month after Lease Commencement the Base Rental
shall adjust to $3,635,940.00 annually.
(3) Section 1 of the Lease shall be amended to provide
that notwithstanding anything contained in Section 1 to the contrary, Tenant
shall have the right to the exclusive use of forty (40) below grade and/or
adjacent surface area parking stalls, at no charge to Tenant, its customers or
invitees during Tenant's initial Lease Term. Tenant shall not be entitled to any
reduction in the Base Rent as a result of the reduction in the number of parking
stalls set forth herein.
(4) Paragraph 3 of Exhibit C to this Lease shall be
deleted in its entirety.
Landlord and Tenant agree to take such further action and execute such further
documents including but not limited to an amendment to this Lease, as may be
necessary to effect the provision of this Section 18(i). Upon Landlord and
Tenant's execution of an amendment to this Lease in accordance with the
provisions of this Section 18(i), Tenant shall have no further liability or
responsibility for the Assigned Space, including any liability or responsibility
for the repair and maintenance of the Assigned Space or for the costs of any Tax
Expenses or insurance directly attributable to the Assigned Space. Landlord
shall notify Tenant of Tenant's proportion share of costs and expenses,
including but not limited to tax expenses and insurance, attributable to
Tenant's adjusted leasehold.
27
19. DESTRUCTION.
(a) If the Premises are damaged by fire or other casualty, the
same shall be repaired as speedily as practicable, subject to reasonable delay
for insurance adjustment or other matters beyond Landlord's reasonable control
under the circumstances, at the expense of the Landlord (subject to paragraph
---------
(c) below), unless this Lease is terminated as provided in this Section. During
--- -------
the period required for repair, the Base Rental shall be abated during the time
and to the extent the Premises are unfit for occupancy for the purposes
permitted under this Lease, and are not occupied by Tenant as a result thereof.
No rent abatement shall apply where such damage to the Premises is due to the
gross negligence or willful misconduct of Tenant or Tenant's employees,
contractors, licensees, or invitees.
(b) If the Premises are (i) damaged to such an extent that
repairs cannot, in Landlord's judgment, be completed within one (1) year after
the date of the casualty; (ii) damaged or destroyed as a result of a risk which
is not insured under standard special form/all-risk insurance policies; (iii)
damaged and the holder of any mortgage on the Building or ground or underlying
lessor with respect to the Project and/or the Building requires that the
insurance proceeds or any portion thereof be used to retire the mortgage debt,
or terminates the ground or underlying lease, as the case may be; or (iv)
damaged or destroyed during the last eighteen (18) months of the Lease Term, or
if more than 1/2 of the Building is damaged or destroyed, then in any such event
Landlord may at its option terminate this Lease by notice in writing to Tenant
within sixty (60) days after the date of such damage or destruction. If the
Premises are damaged to such an extent that repairs cannot, in Landlord's
judgment, be completed within one (1) year after the date of the casualty or if
the Premises are substantially damaged during the last eighteen (18) months of
the Lease Term as it may have been extended if permitted herein, then in either
such event Tenant may elect to terminate this Lease by notice in writing to
Landlord within thirty (30) days after notice from Landlord that Landlord will
not be able to repair the Premises within one (1) year after the date of the
casualty. Unless Landlord or Tenant elects to terminate this Lease as
hereinabove provided, this Lease will remain in full force and effect and
Landlord shall repair such damage to the extent required in this Article as
expeditiously as possible under the circumstances. If Landlord or Tenant
terminates the Lease pursuant to this Article, then Tenant shall pay the Base
Rental and Additional Rental properly apportioned up to such date of
termination, and both parties hereto shall thereafter be freed and discharged of
all further obligations hereunder, except as provided for in provisions of this
Lease, which by their terms survive the expiration or earlier termination of the
Lease Term.
(c) If Landlord should elect or be obligated pursuant to
paragraph (a) above to repair because of any damage or destruction, Landlord's
-------------
obligation shall be limited to the original Building, the Base Project, the
Tenant Improvements and any Alterations in the Premises and shall not extend to
any furniture, equipment, supplies, trade fixtures or other personal property
owned or leased by Xxxxxx,
00
its employees, contractors, invitees or licensees. If the cost of performing
such repairs and restoration exceeds the actual proceeds of insurance paid or
payable to Landlord on account of such casualty, or if Landlord's mortgagee
under a mortgage or the lessor under an underlying lease shall require that any
insurance proceeds from a casualty loss be paid to it, Landlord may terminate
this Lease unless Tenant, within fifteen (15) days after demand therefore,
deposits with Landlord a sum of money sufficient to pay the difference between
the cost of repair and the proceeds of the insurance available to Landlord for
such purpose.
(d) In no event shall Landlord be liable for any loss or damage
sustained by Tenant or its visitors, or injury to Tenant's business by reason of
casualties mentioned hereinabove or any other accidental casualty.
(e) The provisions of this Lease, including this Section,
-------
constitute an express agreement between Landlord and Tenant with respect to any
and all damage to, or destruction of, all or any part of the Premises. Any
statute or regulation of the state in which the Building is located, including,
without limitation, Sections 1932(2) and 1933(4) of the California Civil Code,
with respect to any rights or obligations concerning damage or destruction in
the absence of an express agreement between the parties, shall have no
application to this Lease or any damage or destruction to all or any part of the
Premises.
(f) Notwithstanding anything in this Lease to the contrary, in
the event Landlord elects to terminate this Lease pursuant to this Section 19,
Landlord shall pay to Tenant within thirty (30) days of the date of the
termination of the Lease an amount equal to all Tenant Improvement Deposits made
by Tenant pursuant to the Work Letter.
20. [INTENTIONALLY DELETED]
21. NO LIABILITY FOR INTERRUPTION OF UTILITIES. Tenant agrees that
Landlord shall not be liable for damages, by abatement of Rent or otherwise, for
failure to furnish or delay in furnishing any service or utility, or for any
diminution in the quality or quantity thereof, when such failure or delay or
diminution is occasioned, in whole or in part, by repairs, replacements, or
improvements, by any strike, lockout or other labor trouble, by inability to
secure electricity, gas, water, or other fuel at the Premises after reasonable
effort to do so, by any accident or casualty whatsoever, by act or default of
Tenant or other parties, or by any other cause beyond Landlord's reasonable
control; and such failures or delays or diminution shall never be deemed to
constitute an eviction or disturbance of Tenant's use and possession of the
Premises, relieve Tenant from paying Rent or performing any of its obligations
under this Lease, or allow Tenant to terminate this Lease. Furthermore, Landlord
shall not be liable under any circumstances for a loss of, or injury to,
property or for injury to, or interference with, Tenant's business, including,
without limitation, loss of profits, however occurring, through or in connection
with or incidental to a failure to furnish any of the services or
29
utilities as set forth in this Article, unless due to the willful misconduct or
gross negligence of Landlord.
22. ATTORNEYS' FEES. If either party commences litigation against
the other for the specific performance of this Lease, for damages for the breach
hereof or otherwise for enforcement of any remedy hereunder, the prevailing
party shall be entitled to recover from the other party such costs and
reasonable attorneys' fees as may have been incurred, including any and all
costs incurred in enforcing, perfecting and executing such judgment.
23. TIME. Time is of the essence of this Lease and each of its
provisions and whenever a certain day is stated for payment or performance of
any obligation of Tenant or Landlord, the same enters into and becomes a part of
the consideration hereof.
24. SUBORDINATION AND ATTORNMENT.
(a) Tenant agrees that this Lease and all rights of Tenant
hereunder are and shall be subject and subordinate to any ground or underlying
lease which may now or hereafter be in effect regarding the Project or any
component thereof, to any mortgage now or hereafter encumbering the Premises or
the Project or any component thereof, to all advances made or hereafter to be
made upon the security of such mortgage, to all amendments, modifications,
renewals, consolidations, extensions, and restatements of such mortgage, and to
any replacements and substitutions for such mortgage. The terms of this
provision shall be self-operative and no further instrument of subordination
shall be required. Tenant, however, upon request of any party in interest, shall
execute within ten (10) days of request by Landlord such instrument or
certificates as may be reasonably required to carry out the intent hereof,
whether said requirement is that of Landlord or any other party in interest,
including, without limitation, any mortgagee.
(b) If any mortgagee or lessee under a ground or underlying
lease elects to have this Lease superior to its mortgage or lease and signifies
its election in the instrument creating its lien or lease or by separate
recorded instrument, then this Lease shall be superior to such mortgage or
lease, as the case may be. The term "mortgage", as used in this Lease, includes
any deed of trust, deed to secure debt, or security deed and any other
instrument creating a lien in connection with any other method of financing or
refinancing. The term "mortgagee", as used in this Lease, refers to the
holder(s) of the indebtedness secured by a mortgage.
(c) In the event any proceedings are brought for the foreclosure
of, or in the event of exercise of the power of sale under, any mortgage
covering the Premises or the Project, or in the event the interests of Landlord
under this Lease shall be transferred by reason of deed in lieu of foreclosure
or other legal proceedings, or in the event of termination of any lease under
which Landlord may hold title, Tenant shall, at
30
the option of the transferee or purchaser at foreclosure or under power of sale,
or the lessor of the Landlord upon such lease termination, as the case may be
(sometimes hereinafter called "such person"), attorn to such person, without any
deductions or off-set whatsoever, and shall recognize and be bound and obligated
hereunder to such person as the Landlord under this Lease; provided, however,
that no such person shall be (i) bound by any payment of Rent for more than one
(1) month in advance, except prepayments in the nature of security for the
performance by Tenant of its obligations under this Lease (and then only if such
prepayments have been deposited with and are under the control of such person);
(ii) bound by any amendment or modification of this Lease made without the
express written consent of the mortgagee or lessor of the Landlord, as the case
may be; (iii) obligated to cure any defaults under this Lease of any prior
landlord (including Landlord); (iv) liable for any act or omission of any prior
landlord (including Landlord); (v) subject to any offsets or defenses which
Tenant might have against any prior landlord (including Landlord); or (vi) bound
by any warranty or representation of any prior landlord (including Landlord)
relating to work performed by any prior landlord (including Landlord) under this
Lease. Tenant agrees to execute any attornment agreement not in conflict
herewith requested by Landlord, the mortgagee or such person. Tenant's
obligation to attorn to such person shall survive the exercise of any such power
of sale, foreclosure or other proceeding. Tenant agrees that the institution of
any suit, action or other proceeding by any mortgagee to realize on Landlord's
interest in the Premises or the Building pursuant to the powers granted to a
mortgagee under its mortgage, shall not, by operation of law or otherwise,
result in the cancellation or termination of the obligations of the Tenant
hereunder.
(d) Notwithstanding the foregoing, in the event of a foreclosure
of any mortgage or the termination of any ground lease or in the event of any
other action or proceeding for the enforcement of either of them, or of any sale
thereunder, this Lease shall not be terminated or extinguished, nor shall the
rights and possession of Tenant hereunder be disturbed, so long as Tenant
faithfully performs its obligations and no event of default then exists under
this Lease; and in such case, Tenant shall attorn to the person who acquires
Landlord's interest hereunder through any such mortgage or lease. In the event
Landlord elects to place a mortgage on its interest in the Premises, it shall
obtain for the benefit of its lender and of Tenant a subordination, non-
disturbance and attornment agreement ("SNDA") in substantially the form attached
hereto as Exhibit E. In the event Landlord obtains the same, Tenant agrees to
execute, acknowledge and deliver upon demand such agreement and further
instruments requested by the lender evidencing such subordination of this Lease
to the lien of the mortgage or lease. Landlord shall within sixty (60) days of
the date of this Lease obtain for the benefit of Tenant from Landlord's current
lender a SNDA in substantially the form attached hereto as Exhibit E. In the
event Landlord fails to obtain such SNDA within such sixty (60) day period,
Tenant shall have the right to terminate this Lease by giving Landlord written
notice of Tenant's election to terminate hereunder provided such notice is given
within thirty (30) days of the expiration of such sixty (60) day period.
31
25. ESTOPPEL CERTIFICATES. Tenant shall, within fifteen (15) days
after receipt of a written request from Landlord or any lender of Landlord or
any prospective purchaser of the Premises or any interest therein, execute,
acknowledge and deliver to Landlord or such lender or purchaser either a
statement in writing or a three-party agreement among Landlord, Tenant and such
lender or purchaser (a) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect) and the
date to which Rent is paid in advance, if any, (b) acknowledging that there are
not, to Tenant's knowledge, any uncured defaults on the part of Landlord under
this Lease, or specifying such defaults if any are claimed, and (c) specifying
any further information and agreeing to such notice provisions and other matters
reasonably requested by Landlord or such lender or purchaser. Any such statement
may be conclusively relied upon by a prospective lender or purchaser of the
Building or any interest therein. Tenant's failure to deliver such statement
within fifteen (15) days will constitute a default under this Lease and shall be
conclusive upon Tenant for the benefit of the prospective lender or purchaser
who requested the certificate, and any successor to such requesting party, that
this Lease is in full force and effect, that there are no uncured defaults on
the part of Landlord, and that the Lease has not been modified except as may be
represented by Landlord.
26. CUMULATIVE RIGHTS. All rights, powers and privileges conferred
hereunder upon the parties hereto shall be cumulative to, but not restrictive
of, or in lieu of those conferred by law.
27. HOLDING OVER. If Tenant remains in possession after expiration
or termination of the Lease Term with or without Landlord's written consent,
Tenant shall become a tenant-at-sufferance, and there shall be no renewal or
extension of this Lease by operation of law. During the period of any such
holding over, all provisions of this Lease shall be and remain in effect except
that (i) for the first three (3) months of the holdover period the monthly
rental shall be one hundred fifty percent (150%) of the Rent (including any
adjustments as provided herein) payable for the last full calendar month of the
Lease Term including renewals and extensions; and, (ii) thereafter the monthly
rent shall be two hundred percent (200%) of the amount of Rent (including any
adjustments as provided herein) payable for the last full calendar month of the
Lease Term including renewals or extensions. The inclusion of the preceding
sentence in this Lease shall not be construed as Landlord's consent for Tenant
to hold over. Landlord hereby expressly reserves the right to require Tenant to
surrender possession of the Premises to Landlord as provided in this Lease upon
the expiration or other termination of this Lease. The provisions of this
Article shall not be deemed to limit or constitute a waiver of any other rights
or remedies of Landlord provided herein or at law. If Tenant fails to surrender
the Premises upon the termination or expiration of this Lease, in addition to
any other liabilities to Landlord accruing therefrom, Tenant shall protect,
defend, indemnify and hold Landlord harmless from all loss, costs (including
reasonable attorneys' fees) and liability resulting from such failure,
including, without
32
limiting the generality of the foregoing, any claims made by any succeeding
tenant founded upon such failure to surrender, and any lost profits to Landlord
resulting therefrom.
28. SURRENDER OF THE PREMISES. Upon the expiration or other
termination of this Lease, Tenant shall quit and surrender to Landlord the
Premises and every part thereof, including any Alterations, broom clean and in
good condition and state of repair, reasonable wear and tear only excepted. If
Tenant is not then in default, Tenant shall remove all personalty and equipment
not attached to the Premises which it has placed upon the Premises, and Tenant
shall restore the Premises to the condition immediately preceding the time of
placement thereof. If Tenant shall fail or refuse to remove all of Tenant's
effects, personalty and equipment from the Premises upon the expiration or
termination of this Lease for any cause whatsoever or upon the Tenant being
dispossessed by process of law or otherwise, such effects, personalty and
equipment shall be deemed conclusively to be abandoned and may be appropriated,
sold, stored, destroyed or otherwise disposed of by Landlord without written
notice to Tenant or any other party and without obligation to account for them.
Tenant shall pay Landlord on demand any and all expenses incurred by Landlord in
the removal of such property, including, without limitation, the cost of
repairing any damage to the Building or Project caused by the removal of such
property and storage charges (if Landlord elects to store such property). The
covenants and conditions of this Article shall survive any expiration or
termination of this Lease.
29. NOTICES. All notices required or permitted to be given hereunder
shall be in writing and may be delivered in person to either party or may be
sent by nationally recognized overnight courier or by United States mail,
certified, return receipt requested, postage prepaid. Any such notice shall be
deemed received by the party to whom it was sent (i) in the case of personal
delivery or courier delivery, on the date of delivery to such party, and (ii) in
the case or certified mail, the date receipt is acknowledged on the return
receipt for such notice or, if delivery is rejected or refused or the U.S.
Postal Service is unable to deliver same because of changed address of which no
notice was given pursuant hereto, the first date of such rejection, refusal or
inability to deliver. All such notices shall be addressed to Landlord or Tenant
at their respective address set forth hereinabove in the Basic Lease Information
or at such other address as either party shall have theretofore given to the
other by notice as herein provided. Tenant hereby designates and appoints as its
agent to receive notice of all distraint proceedings and all other notices
required under this Lease, the person in charge of the Premises at the time said
notice is given or occupying said Premises at said time; and, if no person is in
charge of or occupying the said Premises, then such service or notice may be
made by attaching the same, in lieu of mailing, on the main entrance to the
Premises. If Tenant is notified of the identity and address of Landlord's
mortgagee or ground or underlying lessor, Tenant shall give to such mortgagee or
ground or underlying lessor written notice of any default by Landlord under the
terms of this Lease by registered or certified mail, and such mortgagee or
ground or underlying lessor shall be given a reasonable
33
opportunity to cure such default prior to Tenant's exercising any remedy
available to Tenant.
30. DAMAGE OR THEFT OF PERSONAL PROPERTY. As a material part of the
consideration to Landlord, all personal property brought into the Premises by
Tenant, or Tenant's employees or business visitors, shall be at the risk of
Tenant only, and Landlord shall not be liable for theft thereof or any damage
thereto occasioned by any act or omission of co-tenants, occupants, invitees or
other users of the Building or any other person. Landlord shall not at any time
be liable for damage to any property in or upon the Premises which results from
power surges or other deviations from the constancy of electrical service or
from gas, smoke, water, or rain, which issues or leaks from or forms upon any
part of the Building or from the pipes or plumbing work of the same, or from any
other place whatsoever. Notwithstanding the foregoing, Landlord shall be liable
for theft or any damage to all personal property brought into the Premises by
Tenant, or Tenant's employees or business visitors if such theft thereof or any
damage thereto is occasioned by the gross negligence or willful misconduct of
Landlord or Landlord's agents, employees or invitees.
31. EMINENT DOMAIN.
(a) If all or part of the Premises shall be taken for any public
or quasi-public use by virtue of the exercise of the power of eminent domain or
by private purchase in lieu thereof, this Lease shall terminate as to the part
so taken as of the date of taking, and, in the case of a partial taking, either
Landlord or Tenant shall have the right to terminate this Lease as to the
balance of the Premises by written notice to the other within thirty (30) days
after such date; provided, however, that a condition to the exercise by Tenant
of such right to terminate shall be that the portion of the Premises taken shall
be of such extent and nature as substantially to handicap, impede or impair
Tenant's use of the balance of the Premises. If title to so much of the Building
is taken that a reasonable amount of reconstruction thereof will not in
Landlord's sole discretion result in the Building being a practical improvement
and reasonably suitable for use for the purpose for which it is designed, then
this Lease shall terminate on the date that the condemning authority actually
takes possession of the part so condemned or purchased.
(b) If this Lease is terminated under the provisions of this
Article, Rent shall be apportioned and adjusted as of the date of termination.
(c) If there is a partial taking of the Building and this Lease
is not thereupon terminated under the provisions of this Article, then this
Lease shall remain in full force and effect, and Landlord shall, within a
reasonable time thereafter, repair or reconstruct the remaining portion of the
Building to the extent necessary to make the same a complete architectural unit;
provided that in complying with its obligations hereunder Landlord shall not be
required to expend more than the net proceeds of the condemnation award which
are paid to Landlord.
34
(d) All compensation awarded or paid to Landlord upon a total or
partial taking of the Premises or the Building shall belong to and be the
property of Landlord without any participation by Tenant. Nothing herein shall
be construed to preclude Tenant from prosecuting any claim directly against the
condemning authority for moving expenses, loss of business, for damage to, and
cost of removal of, trade fixtures, furniture and other personal property
belonging to Tenant, provided, however, that no such claim shall diminish or
adversely affect Landlord's award. In no event shall Tenant have or assert a
claim for the value of any unexpired term of this Lease. Subject to the
foregoing provisions of this paragraph (d), Tenant hereby assigns to Landlord
-------------
any and all of its right, title and interest in or to any compensation awarded
or paid for the fee as a result of any such taking.
(e) Notwithstanding anything to the contrary contained in this
Section, if, during the Lease Term, the use or occupancy of any part of the
-------
Building or the Premises shall be taken or appropriated temporarily for a period
of one hundred eighty (180) days or less for any public or quasi-public use
under any governmental law, ordinance, or regulations, or by right of eminent
domain, this Lease shall be and remain unaffected by such taking or
appropriation and Tenant shall continue to pay in full all Rent payable
hereunder by Tenant during the Lease Term. In the event of any such temporary
appropriation or taking, Tenant shall be entitled to receive that portion of any
award which represents compensation for the loss of use or occupancy of the
Premises during the Lease Term, and Landlord shall be entitled to receive that
portion of any award which represents the cost of restoration and compensation
for the loss of use or occupancy of the Premises after the end of the Lease
Term.
32. PARTIES. The term "Landlord", as used in this Lease, shall
include Landlord and its assigns and successors. It is hereby covenanted and
agreed by Tenant that should Landlord's interest in the Premises cease to exist
for any reason during the Lease Term, then notwithstanding the happening of such
event, this Lease nevertheless shall remain in full force and effect, and Tenant
hereby agrees to attorn to the then owner of the Premises. The term "Tenant"
shall include Tenant and its heirs, legal representatives and successors, and
shall also include Tenant's assignees and sublessees, if this Lease shall be
validly assigned or the Premises sublet for the balance of the Lease Term or any
renewals or extensions thereof. Landlord's right to transfer or assign
Landlord's interest in and to the Premises, or any part or parts thereof, shall
be unrestricted; in the event of any such transfer or assignment by Landlord
which includes the Premises, Landlord's obligations to Tenant hereunder shall
cease as of the date of transfer, and Tenant shall look only and solely to
Landlord's assignee or transferee for performance thereof.
33. LIABILITY OF TENANT; LIABILITY OF LANDLORD.
(a) Tenant hereby assumes all risk of damage to property and
injury to persons, in, on, or about the Premises from any cause whatsoever and
agrees
35
that Landlord, and its partners, joint venturers, members and shareholders, and
their respective officers, agents, property managers, servants, employees, and
independent contractors (collectively, "Landlord Parties") shall not be liable
for, and are hereby released from any responsibility for, any damage to property
or injury to persons or resulting from the loss of use thereof, which damage or
injury is sustained by Tenant or by other persons claiming through Tenant.
Tenant shall indemnify, defend, protect, and hold harmless the Landlord Parties
from any and all loss, cost, damage, injury, expense and liability, including,
without limitation, court costs and reasonable attorneys' fees (collectively,
"Claims") incurred in connection with or arising from any cause in, on or about
the Premises (including, without limitation, Tenant's installation, placement
and removal of Alterations, fixtures and/or equipment in, on or about the
Premises), and any acts, omissions or negligence of Tenant or of any person
claiming by, through or under Tenant, or of the contractors, agents, servants,
employees, licensees or invitees of Tenant in, on or about the Premises,
provided, however, that the terms of the foregoing assumption of risk, release
of Landlord and the Landlord Parties, and indemnity of the Landlord and Landlord
Parties shall not apply to any Claims to the extent resulting from the gross
negligence or willful misconduct of Landlord or Landlord's Parties acting within
the scope of their employment.
(b) Landlord shall indemnify, defend, protect and hold harmless
Tenant, and its partners, joint venturers, shareholders and their respective
officers, agents, employees and independent contractors (collectively, "Tenant
Parties") from any and all Claims incurred in connection with or arising from
any acts, omissions or negligence of Landlord or of any person claiming by,
through or under Landlord, or of the contractors, agents, servants, employees,
licensees or invitees of Landlord in, on or about the Premises, provided,
however, that the terms of the foregoing assumption of risk, release of Tenant
and the Tenant Parties and indemnity of the Tenant and Tenant Parties shall not
apply to any Claims to the extent resulting from the gross negligence or willful
misconduct of Tenant or Tenant Parties acting within the scope of their
employment.
The provisions of this Article shall survive the expiration or sooner
termination of this Lease.
34. FORCE MAJEURE. In the event of strike, lockout, labor trouble,
civil commotion, Act of God, or any other cause beyond a party's control
(collectively "Force Majeure") resulting in Landlord's inability to supply the
services or perform the other obligations required of Landlord hereunder, this
Lease shall not terminate and Tenant's obligation to pay Rent and all other
charges and sums due and payable by Tenant shall not be affected or excused and
Landlord shall not be considered to be in default under this Lease. If, as a
result of Force Majeure, Tenant is delayed in performing any of its obligations
under this Lease, other than Tenant's obligation to take possession of the
Premises on or before the Rent Commencement Date and to pay Rent and all other
charges and sums payable by Tenant hereunder, Tenant's performance shall
36
be excused for a period equal to such delay and Tenant shall not during such
period be considered to be in default under this Lease with respect to the
obligation, performance of which has thus been delayed. The provisions of this
Section 34 shall not apply to extend Landlord's obligation to obtain the
necessary building and use permits pursuant to Section 2(b) beyond March 30,
2001.
35. LIMITATIONS ON LANDLORD'S LIABILITY. Landlord shall have no
personal liability with respect to any of the provisions of this Lease. If
Landlord is in default with respect to its obligations under this Lease, Tenant
shall look solely to the equity of Landlord in the Property on which the
Premises is located (including any sale or insurance proceeds thereof) for
satisfaction of Tenant's remedies, if any, provided, however, that in the event
the Premises are sold, Tenant must notify Landlord in writing of any claim of
Tenant within four (4) years of Tenant's receipt of notice from Landlord of the
sale of the Premises. Tenant's failure to make a claim in writing under this
Section 35 within such four (4) year period shall constitute a waiver of
Tenant's rights under this Section 35. It is expressly understood and agreed
that Landlord's liability under the terms of this Lease shall in no event exceed
the amount of its interest in and to said Property. In no event shall any of the
Landlord Parties be personally liable with respect to any of the provisions of
this Lease and Tenant hereby expressly waives and releases such personal
liability on behalf of itself and all persons claiming by, through or under
Tenant. Tenant further waives any and all rights to claim or bring an action for
exemplary or punitive damages against Landlord or Landlord's Parties, and agrees
that Landlord and Landlord's Parties shall have no liability for the same.
Notwithstanding any contrary provision herein, neither Landlord nor the Landlord
Parties shall be liable under any circumstances for injury or damage to, or
interference with Tenant's business, including but not limited to loss of
profits, loss of revenues, loss of business opportunity, loss of goodwill, or
loss of use, in each case, however occurring.
36. LANDLORD'S COVENANT OF QUIET ENJOYMENT. Provided Tenant performs
the terms, conditions and covenants of this Lease, and subject to the terms and
provisions hereof, Landlord covenants and agrees to take all necessary steps to
secure and to maintain for the benefit of Tenant the quiet and peaceful
possession of the Premises, for the Lease Term, without hindrance, claim or
molestation by Landlord or any other person lawfully claiming under Landlord.
The foregoing covenant is in lieu of any other covenant, express or implied.
37. SECURITY DEPOSIT.
(a) As security for the faithful performance by Tenant
throughout the Lease Term, and any extensions or renewals thereof, of all the
terms and conditions of this Lease on the part of Tenant to be performed, Tenant
has deposited with Landlord on the date of execution of the Lease the Security
Deposit set forth in the Basic Lease Information. The Security Deposit shall be
returned to Tenant, without interest, sixty (60) days after the expiration or
earlier termination of this Lease provided Tenant
37
has fully and faithfully observed and performed all of the terms, covenants,
agreements, warranties and conditions hereof on its part to be observed and
performed. Landlord shall have the right to use, retain or apply all or any part
of the Security Deposit, including all amounts which may be added thereto
pursuant to the terms hereof, toward the cure of any default of Tenant,
including, but not limited to, for the payment of any Rent or any other sum in
default, or for the payment of any amount that Landlord may spend or become
obligated to spend by reason of Tenant's default, or to compensate Landlord for
any other loss or damage that Landlord may suffer by reason of Tenant's default.
If all or any part of the Security Deposit is so applied by Landlord, then
Tenant shall within ten (10) days after written demand therefore, pay to
Landlord an amount sufficient to return the Security Deposit to the balance on
deposit with Landlord prior to said application (and Tenant's failure to do so
shall be a default under this Lease.)
(b) Beginning on the third (3) month of rent commencement and
ending with the twelfth (12) month, the sum of $198,200.00 of the Security
Deposit will be credited each month toward Tenant's monthly payment of the Base
Rental Amount. At any time after the eighteenth (18) month, with a thirty (30)
day notice to Landlord, Tenant may request conversion of the remaining One
Million Dollar ($1,000,000.00) cash security deposit to an irrevocable letter of
credit issued by a major banking institution mutually acceptable to Landlord and
Tenant.
(c) In the event of a sale or transfer of Landlord's interest in
the Premises or the Building or a lease by Landlord of the Building, Landlord
shall have the right to transfer the Security Deposit to the purchaser or
lessee, as the case may be, and Landlord shall be relieved of all liability to
Tenant for the return of the Security Deposit. The Tenant shall look solely to
the new owner or lessor for the return of said Security Deposit. The Security
Deposit shall not be mortgaged, assigned or encumbered by Tenant. In the event
of a permitted assignment or subletting under this Lease by Tenant, the Security
Deposit shall be held by Landlord as a deposit made by the permitted assignee or
subtenant and the Landlord shall have no further liability with respect to the
return of said Security Deposit to the original Tenant.
(d) Landlord shall not be required to keep the Security Deposit
separate from its general accounts.
38. HAZARDOUS SUBSTANCES. Tenant hereby covenants and agrees that
Tenant shall not cause or permit any "Hazardous Substances" (as hereinafter
defined) to be generated, placed, held, stored, used, located or disposed of at
the Project or any part thereof, except for Hazardous Substances as are commonly
and legally used or stored as a consequence of using the Premises for general
office and administrative purposes, but only so long as the quantities thereof
do not pose a threat to public health or to the environment or would necessitate
a "response action", as that term is defined in CERCLA (as hereinafter defined),
and so long as Tenant strictly complies or causes compliance with all applicable
governmental rules and regulations concerning the use,
38
storage, production, transportation and disposal of such Hazardous Substances.
Promptly upon receipt of Landlord's request, Tenant shall submit to Landlord
true and correct copies of any reports filed by Tenant with any governmental or
quasi-governmental authority regarding the generation, placement, storage, use,
treatment or disposal of Hazardous Substances on or about the Premises. For
purposes of this Article 42, "Hazardous Substances" shall mean and include those
elements or compounds which are contained in the list of Hazardous Substances
adopted by the United States Environmental Protection Agency (EPA) or in any
list of toxic pollutants designated by Congress or the EPA or which are defined
as hazardous, toxic, pollutant, infectious or radioactive by any other federal,
state or local statute, law, ordinance, code, rule, regulation, order or decree
regulating, relating to or imposing liability (including, without limitation,
strict liability) or standards of conduct concerning, any hazardous, toxic or
dangerous waste, substance or material, as now or at any time hereinafter in
effect (collectively "Environmental Laws"). Tenant hereby agrees to indemnify
Landlord and hold Landlord harmless from and against any and all losses,
liabilities, including strict liability, damages, injuries, expenses, including
reasonable attorneys' fees, costs of settlement or judgment and claims of any
and every kind whatsoever paid, incurred or suffered by, or asserted against,
Landlord by any person, entity or governmental agency for, with respect to, or
as a direct or indirect result of, the presence in, or the escape, leakage,
spillage, discharge, emission or release from, the Premises of any Hazardous
Substances caused by Tenant (including, without limitation, any losses,
liabilities, including strict liability, damages, injuries, expenses, including
reasonable attorneys' fees, costs of any settlement or judgment or claims
asserted or arising under the Comprehensive Environmental Response, Compensation
and Liability Act ["CERCLA"], any so-called federal, state or local "Superfund"
or "Superlien" laws or any other Environmental Law); provided, however, that the
foregoing indemnity is limited to matters arising solely from Tenant's violation
of the covenant contained in this Article. Landlord hereby agrees to indemnify
Tenant and hold Tenant harmless from and against any and all losses,
liabilities, including strict liability, damages, injuries, expenses, including
reasonable attorneys' fees, costs of settlement or judgment and claims of any
and every kind whatsoever paid, incurred or suffered by, or asserted against,
Tenant by any person, entity or governmental agency for, with respect to, or as
a direct or indirect result of, the presence in, or the escape, leakage,
spillage, discharge, emission or release from, the Premises of any Hazardous
Substances caused by Landlord or Landlord's agents, employees or invitees
(including, without limitation, any losses, liabilities, including strict
liability, damages, injuries, expenses, including reasonable attorneys' fees,
costs of any settlement or judgment or claims asserted or arising under the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
any so-called federal, state or local "Superfund" or "Superlien" laws or any
other Environmental Law which is caused by Landlord or Landlord's agents,
employees or invitees). The obligations of Landlord and Tenant under this
Article shall survive any expiration or termination of this Lease.
39. BROKER. Landlord and Tenant represent and warrant to each
39
other that no broker, agent, commission salesperson, or other person has
represented Landlord or Tenant in the negotiations for and procurement of this
Lease and of the Premises and that no commissions, fees, or compensation of any
kind are due and payable in connection herewith to any broker, agent, commission
salesperson, or other person as a result of any act or agreement of Landlord or
Tenant. Landlord and Tenant agree to indemnify and hold each other harmless from
all loss, liability, damage, claim, judgment, cost or expense (including
reasonable attorneys' fees and court costs) suffered or incurred by the other
party as a result of a breach by Landlord or Tenant, as applicable, of the
representation and warranty contained in the immediately preceding sentence or
as a result of Landlord's or Tenant's failure to pay commissions, fees, or
compensation due to any broker who represented Landlord or Tenant, whether or
not disclosed, or as a result of any claim for any fee, commission or similar
compensation with respect to this Lease made by any broker, agent or finder
claiming to have dealt with Landlord or Tenant, whether or not such claim is
meritorious. Notwithstanding the foregoing, ROK Properties is recognized by
Landlord as the procuring broker for the Tenant and HCM Commercial is recognized
as Landlord's broker. All brokerage fees shall be paid by Landlord.
40. SIGNAGE.
(a) Subject to governmental approval and permitting, Tenant
shall be entitled, at its sole cost and expense, to identification signage on
the entry door to the Premises. The location, quality, design, style, lighting
and size of such signage shall be subject to Landlord's prior written approval,
in its sole discretion. Upon the expiration or earlier termination of this
Lease, Tenant, at Landlord's option, shall be responsible, at its sole cost and
expense, for the removal of such signage and the repair of all damage caused by
such removal.
(b) Any signs, notices, logos, pictures, names or advertisements
which are installed and that have not been individually approved by Landlord may
be removed without notice by Landlord at the sole expense of Tenant. Tenant may
not install any signs on the exterior or roof of the Building or any areas
outside the Building without Landlord's approval, which will not be unreasonably
withheld. Any signs, window coverings, or blinds (even if the same are located
behind the Landlord approved window coverings for the Premise), or other items
visible from the exterior of the Premises are subject to the prior approval of
Landlord, in its sole discretion.
41. FORUM SELECTION. Any litigation based hereon, or arising out of,
under, or in connection with this Lease, or any course of conduct, course of
dealing, statements (whether oral or written) or actions or omissions of the
Landlord or Tenant or any party acting on behalf of either shall be brought and
maintained exclusively in the courts of the State of California for the City and
County of San Francisco and in the United States District Courts for the
Northern District of California.
40
Landlord and Tenant hereby expressly and irrevocably waive, to the fullest
extent permitted by law, any objection which it may have or hereafter may have
to the laying of venue of any such litigation brought in any such court referred
to above and any claim that any such litigation has been brought in an
inconvenient forum.
42. WAIVER OF JURY TRIAL. Landlord and Tenant hereby knowingly,
voluntarily and intentionally waive any rights they may have to a trial by jury
in respect of any litigation based hereon, or arising out of, under, or in
connection with, this Lease, or any course of conduct, course of dealing,
statements (whether oral or written) or actions or omissions of Landlord and
Tenant or any party acting on behalf of either.
43. OPTION TO EXTEND.
(a) Provided that Tenant shall not be in default on the
performance of its obligations hereunder, Tenant shall have an option to extend
the term of the Lease (the "Initial Term") for one additional period of five (5)
years (the "Option Term"), commencing immediately after the expiration of the
Initial Term, upon the same terms and conditions contained herein, except that
(i) the Base Rental for the Premises shall be equal to the fair market rent for
the Premises at the date of commencement of the Option Term determined in the
manner set forth in subparagraph (b) below; and (ii) there shall be no further
options to extend the term of the Lease.
(b) Tenant's election to exercise the option granted herein must
be given to Landlord in writing no less than six (6) months nor more than nine
(9) months prior to expiration of the Initial Term. If Tenant properly exercises
the option granted herein, references in the Lease to the Term shall be deemed
to mean the Option Term unless the context clearly provides otherwise.
Notwithstanding anything to the contrary contained herein, all option rights of
Tenant pursuant to this Section 43 shall automatically terminate without notice
----------
and shall be of no further force and effect, whether or not Tenant has timely
exercised the option granted herein, if an Event of Default exists at the time
of exercise of the option or at the time of commencement of the Option Term.
(c) If Tenant properly exercises its option to extend the Term
of this Lease, the Base Rental during the Option Term shall be determined in the
following manner. The Base Rental shall be adjusted to an amount equal to the
fair market rent for the Premises on the date of the commencement of the Option
Term for a term equal to the Option Term. As used herein, the term "fair market
rent" shall mean the base annual rental for such comparable space, taking into
account any additional rental and all other payments and escalations payable
hereunder and by tenants under leases of such comparable space, as well as any
free rent and other tenant inducements then being offered to tenants of such
comparable space. Landlord shall provide written notice to Tenant of its
determination of the fair market rent within twenty-one (21) days of receipt of
Tenant's notice exercising the Option Term. Within thirty (30) days after
41
receiving such determination ("Tenant's Review Period"), Tenant shall
irrevocably elect, in writing, to do one of the following: (i) accept the fair
market rent stated within Landlord's notice, or (ii) object to Landlord's
determination of the fair market rent and with such objection set forth Tenant's
determination of the fair market rent. If Tenant so objects, Landlord and Tenant
shall attempt in good faith to agree upon such fair market rent using their best
good faith efforts. If Landlord and Tenant fail to reach agreement within
fifteen (15) days following Tenant's Review Period ("Outside Agreement Date"),
then each party's determination shall be submitted to arbitration in accordance
with subsection (d) below. If Tenant fails to so accept or object in writing
--------------------
within Tenant's Review Period, Landlord's determination of the fair market rent
for the Premises shall be final and binding upon the parties.
(d) If Landlord and Tenant fail to reach agreement on or before
the Outside Agreement Date, then each party's determination of the fair market
rent set forth in their respective notices shall be submitted to arbitration in
accordance with the following: (i) not later than fifteen (15) days following
the Outside Agreement Date, Landlord and Tenant shall select an independent
arbitrator who shall by profession be a real estate broker or real estate
appraiser who shall have been active over the previous five (5) years in the
appraisal of commercial properties similar to and in the vicinity of the
Building in San Francisco, California; (ii) the determination of the arbitrator
shall be limited solely to the issue of whether Landlord's or Tenant's submitted
fair market rent for the Premises is the more accurate taking into account the
requirements of this Section 43; (iii) the arbitrator's decision as to the fair
----------
market rent to be used as the Base Rental during the Option Term shall be
binding upon Landlord and Tenant; and (iv) the cost of the arbitration shall be
borne by the party whose determination of the fair market rent was rejected by
the arbitrator.
44. MISCELLANEOUS.
(a) Submission of Lease. The submission of this Lease for
--------------------
examination does not constitute an offer to lease and this Lease shall be
effective only upon execution hereof by Landlord and Tenant.
(b) Severability. If any clause or provision of this Lease is
-------------
illegal, invalid or unenforceable under present or future laws, the remainder of
this Lease shall not be affected thereby, and in lieu of each clause or
provision of this Lease which is illegal, invalid or unenforceable, there shall
be added as a part of this Lease a clause or provision as nearly identical to
the said clause or provision as may be legal, valid and enforceable.
(c) Entire Agreement. This Lease contains the entire agreement
-----------------
of the parties and no representations, inducements, promises or agreements, oral
or otherwise, between the parties not embodied herein shall be of any force or
effect. This Lease supersedes and cancels any and all previous negotiations,
arrangements, brochures, agreements, and understandings, if any, between the
parties hereto or
42
displayed by Landlord to Tenant with respect to the subject matter thereof, and
none thereof shall be used to interpret or construe this Lease. There are no
representations or warranties between the parties, and all reliance with respect
to representation is based totally upon the representations and agreements
contained in this Lease. This Lease may not be altered, waived, amended or
extended except by an instrument in writing signed by Landlord and Tenant. This
Lease is not in recordable form, and Tenant agrees not to record or cause to be
recorded this Lease or any short form or memorandum thereof.
(d) Headings. The use of headings herein is solely for the
--------
convenience of indexing the various paragraphs hereof and shall in no event be
considered in construing or interpreting any provision of this Lease.
(e) Governing Law. The laws of the State of California shall
-------------
govern the validity, performance and enforcement of this Lease.
(f) Authority. If Tenant executes this Lease as a corporation,
---------
each of the persons executing this Lease on behalf of Tenant does hereby
personally represent and warrant that Tenant is a duly incorporated or a duly
qualified (if a foreign corporation) corporation and is fully authorized and
qualified to do business in the State in which the Premises are located, that
the corporation has full right and authority to enter into this Lease, and that
each person signing on behalf of the corporation is an officer of the
corporation and is authorized to sign on behalf of the corporation. If Tenant
signs as a partnership, joint venture, or sole proprietorship or other business
entity (each being herein called "Entity"), each of the persons executing on
behalf of Tenant does hereby covenant and warrant that Tenant is a duly
authorized and existing Entity, that Tenant has full right and authority to
enter into this Lease, that all persons executing this Lease on behalf of the
Entity are authorized to do so on behalf of the Entity, and that such execution
is fully binding upon the Entity and its partners, joint venturers, or
principal, as the case may be. Upon the request of Landlord, Tenant shall
deliver to Landlord documentation satisfactory to Landlord evidencing Tenant's
compliance with this Article, and Tenant agrees to promptly execute all
necessary and reasonable applications or documents as reasonably requested by
Landlord or required by the jurisdiction in which the Premises is located, to
permit the issuance of necessary permits and certificates for Tenant's use and
occupancy of the Premises.
(g) Financial Statements. Upon Landlord's written request
--------------------
therefore, but not more often than twice per year, Tenant shall promptly furnish
to Landlord a financial statement with respect to Tenant for its most recent
fiscal year prepared in accordance with generally accepted accounting principles
and certified to be true and correct by Tenant and Tenant's accounting firm,
which statement Landlord agrees to keep confidential and not use except in
connection with proposed sale or loan transactions.
(h) Joint and Several Liability. If Tenant comprises more than
---------------------------
one person, corporation, partnership or other entity, the liability hereunder of
all such
43
persons, corporations, partnerships or other entities shall be joint and
several.
(i) Non-Waiver. No waiver of any provision of this Lease shall
----------
be implied by any failure of Landlord to enforce any remedy on account of the
violation of such provision, even if such violation shall continue or be
repeated subsequently. Any waiver by Landlord of any provision of this Lease may
only be in writing, and no express waiver shall affect any provision other than
the one specified in such waiver and that one only for the time and in the
manner specifically stated. No receipt of monies by Landlord from Tenant after
the termination of this Lease shall in any way alter the length of the Lease
Term or of Tenant's right of possession hereunder or after the giving of any
notice shall reinstate, continue or extend the Lease Term or affect any notice
given Tenant prior to the receipt of such monies, it being agreed that after the
service of notice or the commencement of a suit or after final judgment for
possession of the Premises, Landlord may receive and collect any Rent due, and
the payment of said Rent shall not waive or affect said notice, suit or
judgment.
(j) Landlord's Right to Cure Default and Payments by Tenant.
-------------------------------------------------------
(i) All covenants and agreements to be kept or performed by
Tenant under this Lease shall be performed by Tenant at Tenant's sole cost and
expense and without any reduction of Rent. If Tenant shall fail to perform any
of its performance obligations under this Lease, within a reasonable time after
such performance is required by the terms of this Lease, Landlord may, but shall
not be obligated to, after reasonable prior notice to Tenant, make any such
payment or perform any such act on Tenant's part without waiving its right based
upon any default of Tenant and without releasing Tenant from any obligations
hereunder.
(ii) Except as may be specifically provided to the contrary
in this Lease, Tenant shall pay to Landlord, within fifteen (15) days after
delivery by Landlord to Tenant of statements therefore: (i) sums equal to
expenditures reasonably made and obligations incurred by Landlord in connection
with the remedying by Landlord of Tenant's defaults pursuant to the provisions
of the Article; (ii) sums equal to all losses, costs, liabilities, damages and
expenses referred to in Sections 15 and 34 of this Lease; and (iii) sums equal
------------------
to all expenditures made and obligations incurred by Landlord in collecting or
attempting to collect the Rent or in enforcing or attempting to enforce any
rights of Landlord under this Lease or pursuant to law, including, without
limitation, all legal fees and other amounts so expended. Tenant's obligations
under this Article shall survive the expiration or sooner termination of the
Lease Term.
(k) Terms. The necessary grammatical changes required to make
-----
the provisions hereof apply either to corporations, partnerships, limited
liability companies, individuals, men or women, as the case may require, shall
in all cases be assumed as though in each case fully expressed.
(l) Relationship of Parties. Nothing contained in this Lease
-----------------------
44
shall be deemed or construed by the parties hereto or by any third party to
create the relationship of principal and agent, partnership, joint venture or
any association between Landlord and Tenant, it being expressly understood and
agreed that neither the method of computation of Rent nor any act of the parties
hereto shall be deemed to create any relationship between Landlord and Tenant
other than the relationship of landlord and tenant.
(m) Application of Payments. Landlord shall have the right to
-----------------------
apply payments received from Tenant pursuant to this Lease, regardless of
Tenant's designation of such payments, to satisfy any obligations of Tenant
hereunder, in such order and amounts as Landlord, in its sole discretion, may
elect.
(n) Confidentiality. Tenant acknowledges that the content of
---------------
this Lease and any related documents are confidential information. Tenant shall
keep such confidential information strictly confidential and shall not disclose
such confidential information to any person or entity other than Tenant's
financial, legal, and space planning consultants.
(o) Exhibits. Exhibits "A" - "E", inclusive, and any other
-------- -----------------
attachments specified in the Basic Lease Information, are attached to and made a
part of this Lease and incorporated into this Lease by this reference.
(p) Transportation Management.
-------------------------
(i) Tenant shall fully comply with all present or future
programs intended to manage parking, transportation or traffic in and around the
Building, and in connection therewith, Tenant shall take responsible action for
the transportation planning and management of all employees located at the
Premises by working directly with Landlord, any governmental transportation
management organization or any other transportation-related committees or
entities. Such programs may include, without limitation: (i) restrictions on the
number of peak-hour vehicle trips generated by Tenant; (ii) increased vehicle
occupancy; (iii) implementation of an in-house ridesharing program and an
employee transportation coordinator; (iv) working with employees and any
Building or area-wide ridesharing program manager; (v) instituting employer-
sponsored incentives (financial or in-kind) to encourage employees to rideshare;
and (vi) utilizing flexible work shifts for employees.
(ii) Pursuant to the City of San Francisco Planning Code
Section 163, the Landlord may enter into an agreement with the San Francisco
Department of City Planning to provide and implement a transportation management
program for tenants of the Building and to participate in a program designed to
coordinate commute alternatives marketing and brokerage for employees in the
South of Market, San Francisco, California area. During the term of the Tenant's
tenancy, Landlord agrees to provide transportation brokerage and commute
assistance services, as part of Operating Expenses, to the Tenant to assist the
Tenant in meeting the
45
transportation needs of its employees. Tenant agrees to cooperate with and
assist the Landlord's transportation management coordinator (the "Coordinator"),
through designation of a responsible employee, to distribute to Tenant's
employees written materials promoting and encouraging the use of public transit
and/or ridesharing, and distribute and return to the Coordinator transportation
survey questionnaire forms. Tenant may agree, at its option, to participate in
other activities required of Landlord and/or ridesharing by employees in the
Building.
(q) Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument.
46
IN WITNESS WHEREOF, the parties have executed this Lease as of the
date first above written.
"LANDLORD"
SHEARWATER PARTNERS, LLC
a California limited liability company
By: /s/ XXXX XXXXXXXXX
-------------------------------------------
Name: Xxxx Xxxxxxxxx
-----------------------------------------
Title: Member
----------------------------------------
By: /s/ XXXXX X. PEDOR
-------------------------------------------
Name: Xxxxx X. Pedor
-----------------------------------------
Title: Member
----------------------------------------
"TENANT"
Razorfish, Inc.
a Delaware corporation
By: /s/ XXXXX X. XXX
-------------------------------------------
Name: Xxxxx X. Xxx
-----------------------------------------
Title: Vice President/Managing Director
----------------------------------------
By: /s/ XXXXXXX XXXXX
-------------------------------------------
Name: Xxxxxxx Xxxxx
-----------------------------------------
Title: EVP - Business Affairs & General Counsel
----------------------------------------
EXHIBIT A
LEGAL DESCRIPTION OF PREMISES
The land referred to in this policy is situated in the City and County of
San Francisco, State of California, and is described as follows:
PARCEL 1, as shown upon that certain Map entitled "PARCEL MAP OF THE XXXX'X
BREWERY, BEING XXXXXXX XXXXX XXXXX XX. 00 AND PORTIONS OF XXXXXXX XXXXX
XXXXXX XX. 00, 00 & 21, BEING ALSO ASSESSOR'S BLOCK NO. 3923, AND PORTIONS
OF ASSESSOR'S BLOCKS NO. 3903 AND 3924, AND BEING A PORTION OF 15TH STREET,
NOW CLOSED AND A PORTION OF ALAMEDA STREET, NOW CLOSED," filed for record
in the Office of Recorder of the City and County of San Francisco on
February 10th, 1976 in Book No. 2 of Parcel Maps at Pages 55 and 56.
Assessor's Xxx 0, Xxxxx 0000.
Exhibit A-1
Description of Easement
A non-exclusive for vehicular, pedestrian, public utility and light and air
purposes described as follows:
BEGINNING at a point on the westerly line of Xxxxxx Street, distant thereon
149.10 feet northerly from the northerly line of 00xx Xxxxxx; thence leaving
said line of Xxxxxx Street, south 85 degrees 39' 39" west 200.00 feet to the
easterly line of Florida Street; thence south 4 degrees 20' 21" east along said
easterly line of Florida Street 12 feet; thence leaving said easterly line North
85 degrees 39' 39" East 200.00 feet to the westerly line of Xxxxxx Street,
thence north 12 feet along said westerly line of Xxxxxx Street to the point of
beginning. In addition, said easement shall extend 150.0 feet in height over the
surface area described above.
BEING a portion of Xxxxxxx Xxxxx Xxxxx Xx. 00.
Said easement is also shown on the map filed on February 10th, 1976 in Book
2 of Parcel Maps, at Page 55
And as modified by an instrument, executed by THE BREWERY, a general partnership
and DAV-CO BUILDING, a general partnership, dated June 15th, 1984, recorded
November 27th, 1985 in Book D971 of Official Records, Page 1638, under
Recorder's Serial Number D722923.
EXHIBIT B
WORK LETTER
This Work Letter (the "Work Letter") supplements the Lease (the "Lease")
dated October 3, 2000 by and between SHEARWATER PARTNERS, a California limited
liability company, as landlord ("Landlord") and Razorfish, Inc., a Delaware
corporation as tenant ("Tenant"), covering certain premises described in the
Lease (the "Premises"). All terms not defined herein shall have the same
meanings given to them in the Lease.
SECTION 1
LANDLORD'S CONSTRUCTION OF THE BASE BUILDING
Subject to Landlord obtaining all required governmental approvals and
permits, Landlord shall construct the Building Base at its cost through its
contractor, as described on Schedule A to this Exhibit B (the "Base Project").
Landlord represents to Tenant that, when complete, all Building systems (that
is, fire protection, HVAC, electrical and roof systems) will be operational and
in good condition and repair as of the Rent Commencement Date. To its actual
knowledge, without investigation, there are no Hazardous Materials currently
present on the Land and there will be none in the Building except those which
are customary for use in first class buildings. Landlord's "actual knowledge"
means the actual knowledge of Xxxx Xxxxxxxxx. Landlord shall have no obligation
to Tenant if, for reasons beyond its control, Landlord is unable to build and/or
complete the Base Project.
SECTION 2
TENANT IMPROVEMENTS
2.1 Landlord's Improvement Allowance. Landlord shall provide Tenant with
---------------------------------
an improvement allowance of $27.00 per rentable foot. At Tenant's option (which
shall be exercised by Tenant by delivering written notice to Landlord within ten
(10) days of the Landlord and Tenant's approval of the Cost Proposal, as defined
in Section 4.1), Landlord shall finance up to an additional $10.00 per rentable
square foot to be used for tenant improvements, which shall be added to the Base
Rent and amortized over a Ten (10) year term including interest at the rate of
Ten (10) Percent per annum.
2.2 Tenant Required Expenditure. Tenant shall spend such amount ("Tenant
---------------------------
Required Expenditure") for the costs (including the "Landlord's Improvement
Allowance", as that term is defined in Section 2.1 above) relating to the
initial design and construction of Tenant's improvements (excluding personal
property, furnishings, and furniture) which are permanently affixed to the
Premises (the "Tenant Improvements") as is necessary to develop the Premises in
a manner which is consistent in nature and quality with a first class building
in San Francisco, California. All Tenant Improvements shall be deemed
Landlord's property.
2.3 Tenant Expenditures. Upon Landlord securing the Tenant Improvement
-------------------
permit, as that term is defined in Section 3.7, and upon Landlord and Tenant's
mutual approval of the Cost Proposal (as defined in Section 4.1 below) which
approval shall not be unreasonably withheld or
delayed, Landlord's and Tenant's respective share of the cost of the Tenant
Improvements shall be determined in accordance with Section 2.1 above.
Immediately upon such determination and Landlord providing Tenant reasonable
adequate assurance of the availability of monies to fund the Landlord's
Improvement Allowance pursuant to Section 2.1, Tenant shall deposit with
Landlord its share of such Cost Proposal up to the sum of $2,000,000 and upon
such sum being drawn down to $500,000, Tenant shall deposit additional monies
with Landlord to insure Tenant's adequate "Tenant Improvement Deposits." The
Tenant Improvement Deposits shall total the amount of all amounts, less
Landlord's Improvement Allowance, to be disbursed by Landlord as set forth in
this Work Letter for and related to Tenant Improvements in accordance with the
Cost Proposal (as defined in Section 4.1). The Tenant Improvement Deposits shall
be held in a separate account by Landlord with First Republic Bank and shall not
be commingled with any other funds of Landlord. Upon exhaustion of Tenant's
portion of the "Tenant Improvement Deposits", Landlord shall be responsible for
and shall continue disbursement of Landlord's Improvement Allowance as described
in Section 2.1 above. All interest earned on the Tenant Improvement Deposits
shall be paid by Landlord to Tenant upon conclusion of and payment for the
Tenant Improvements.
Except as otherwise set forth in this Work Letter, the Tenant Improvement
Deposits shall be disbursed by Landlord (each of which disbursements shall be
made pursuant to Landlord's disbursement process) for costs related to the
construction of the Tenant Improvements and for the following items and costs:
(i) payment of the fees of the Architect and the Engineers (defined below), and
payment of the actual fees incurred by, and the cost of documents and materials
supplied by Landlord and Landlord's consultants in connection with the
preparation and review of the Drawings (defined below); (ii) the cost of any
changes in the Base, Shell and Core required by the Drawings (provided that any
such changes are approved by Landlord in Landlord's sole discretion); (iii) the
cost of any changes to the Drawings or Tenant Improvements required by
applicable building codes (collectively, the "Codes"); (iv) the cost of
miscellaneous fees relating to the cost of construction of the Tenant
Improvements, including, without limitation, testing and inspection costs, trash
removal costs, temporary HVAC and other utilities used in connection with such
construction work; and (v) the Construction Management Fee. No more than ten
percent (10%) of the Tenant Allowance may be spent or allocated to the costs
described in clause (i) above.
SECTION 3
DRAWINGS
3.1 Selection of Architect/Drawings. In accordance with Section 6.2
-------------------------------
below, Tenant shall retain Xxxxx Xxxxx Design and Architecture as its Tenant's
Representative. Xxxxx Xxxxx Design and Architecture, on behalf of Tenant, shall
set forth the "Design and Image Guidelines" for the Tenant Improvements, and
shall write the "Space Program." Landlord and Tenant acknowledge their mutual
intention that Xxxxx Xxxxx Design and Architecture work closely with METa
Architecture throughout the entire Tenant Improvement process.
Tenant shall retain METa Architecture (the "Architect") to prepare the
"Final Space
Plan," "Schematic Drawings," "Design Development Drawings," and "Final Working
Drawings," all as defined hereinbelow and collectively referred to as
"Drawings." Tenant shall retain engineering consultants approved by Landlord
(the "Engineers") to prepare all plans and engineering working drawings relating
to the structural, mechanical, electrical, plumbing, HVAC, life safety, and
sprinkler work of the Tenant Improvements. All Drawings shall comply with the
drawing format and specifications as determined by Landlord, and shall be
subject to Landlord's approval, which approval shall not be unreasonably
withheld or delayed. Tenant and Architect shall verify, in the field, all
relevant dimensions and conditions relating to the Base Project, and Tenant and
Architect shall be solely responsible for the same, and Landlord shall have no
responsibility in connection therewith. Landlord's review of the Drawings as set
forth in this Section 3, shall be for its sole purpose and shall not imply
Landlord's review of the same, or obligate Landlord to review the same, for
quality, design, compliance with the Codes or other like matters. Accordingly,
notwithstanding that any Drawings are reviewed by Landlord or its space planner,
architect, engineers and consultants, and notwithstanding any advice or
assistance that may be rendered to Tenant by Landlord or Landlord's space
planner, architect, engineers, and consultants, Landlord shall have no liability
whatsoever in connection therewith and shall not be responsible for any
omissions or errors contained in the Drawings, and Tenant's waiver and indemnity
set forth in the Lease shall specifically apply to the Drawings.
3.2 Space Program. On or before the date set forth in Schedule B attached
-------------
to this Exhibit "B" and entitled the "Tenant Improvement Time Deadlines", Tenant
and Xxxxx Xxxxx Design and Architecture shall prepare and deliver to Landlord
the space program for the Tenant Improvements in the Premises, which shall be a
study identifying Tenant's internal requirements for such Tenant Improvements
(the "Space Program"). The Space Program shall identify the proposed location
of Tenant's backup generator or Battery Storage, which Tenant shall have the
right to install at its expense in a location acceptable to Landlord in the
exercise of its reasonable discretion.
3.3 Space Plan. On or before the date set forth in Schedule B, Tenant and
----------
METa Architecture shall prepare a proposed space plan for the Tenant
Improvements in the Premises, which proposed space plan shall include a layout
and designation of all offices, rooms and other partitioning, their intended
use, and equipment to be contained therein, and shall deliver the proposed space
plan to Landlord for Landlord's approval. Landlord shall notify Tenant of its
approval or disapproval (with reasons for such disapproval specified) of the
proposed space plan within five (5) business days after receipt thereof. Any
failure by Landlord to notify Tenant of its approval or disapproval within such
five (5) business day period shall be deemed to be Landlord's approval thereof.
If Landlord disapproves the proposed space plan, this process shall be repeated
until Landlord's approval is obtained; provided, however, that Tenant shall only
make such changes to the proposed space plan which address the reasons Landlord
specified for its disapproval of the proposed space plan. The approved space
plan is hereinafter referred to as the "Final Space Plan."
3.4 Schematic Drawings. On or before the date set forth in Schedule B,
------------------
Tenant and METa Architecture shall prepare and deliver to Landlord for
Landlord's approval of the proposed schematic drawings, which shall be a
formalization of the Space Program and the Final Space Plan, including outlined
specifications. Landlord shall notify Tenant of its approval or disapproval
(with reasons for such disapproval specified) of the proposed schematic drawings
within five (5) business days after receipt thereof. Landlord shall work
diligently with Tenant to prepare a price check of estimated costs for the
Tenant Improvements contemplated by such proposed schematic drawings with the
expectation that the same will be completed within the week of such approval.
Any failure by Landlord to notify Tenant of its approval or disapproval within
such five (5) business day period shall be deemed to be Landlord's approval
thereof. If Landlord disapproves the proposed schematic drawings, this process
shall be repeated until Landlord's approval is obtained; provided, however, that
Tenant shall only make such changes to the proposed schematic drawings which
address the reasons Landlord specified for its disapproval of the proposed
schematic drawings. The approved schematic drawings are hereinafter referred to
as the "Final Schematic Drawings."
3.5 Design Development Drawings. On or before the date set forth in
---------------------------
Schedule B, Tenant and METa Architecture shall prepare and deliver to Landlord
for Landlord's approval the proposed design development drawings, which shall be
the refinement of the Final Schematic Drawings. Landlord shall notify Tenant of
its approval or disapproval (with reasons for such disapproval specified) of the
proposed design development drawings within five (5) business days after receipt
thereof. Landlord shall work diligently with Tenant to prepare a price check of
estimated costs for the Tenant Improvements contemplated by such proposed design
development drawings with the expectation that the same will be completed within
the week of such approval. Any failure by Landlord to notify Tenant of its
approval or disapproval within such five (5) business day period shall be deemed
to be Landlord's approval thereof. If Landlord disapproves the proposed design
development drawings, this process shall be repeated until Landlord's approval
is obtained; provided, however, that Tenant shall only make such changes to the
proposed design development drawings which address the reasons Landlord
specified for its disapproval of the proposed design development drawings. The
approved design development drawings are hereinafter referred to as the "Final
Design Development Drawings."
3.6 Working Drawings. On or before the date set forth in Schedule B,
----------------
Tenant, METa Architecture and the Engineers shall complete and deliver to
Landlord for its approval the proposed architectural and engineering drawings
for the Premises, in a form which is sufficiently complete to allow
subcontractors to bid on the work and to obtain all applicable permits.
Landlord shall notify Tenant of its approval or disapproval (with reasons for
any disapproval specified) of the proposed working drawings within five (5)
business days after receipt thereof. Landlord shall work diligently with Tenant
to prepare a price check of estimated costs for the Tenant Improvements
contemplated by such proposed working drawings with the expectation that the
same will be completed within the week of such approval. Any failure by
Landlord to notify Tenant of its approval or disapproval within such five (5)
business day period shall be deemed to be Landlord's approval thereof. If
Landlord disapproves the proposed working drawings, this process shall be
repeated until Landlord's approval is obtained; provided, however, that Tenant
shall only make such changes to the proposed working drawings which address the
reasons Landlord specified for its disapproval of the proposed working drawings.
The approved proposed working drawings are hereinafter referred to as the "Final
Working Drawings."
3.7 Permits. On or before the date set forth in Schedule B, Tenant shall
-------
submit the Final Working Drawings to Landlord for Landlord to process at
Tenant's expense with the appropriate municipal authorities for all applicable
building permits necessary to allow Contractor to
commence and fully complete the construction of the Tenant Improvements (the
"Permits"), and, in connection therewith, Tenant shall coordinate with Landlord
in order to allow Landlord to act on Tenant's behalf in all phases of the
permitting process and shall supply Landlord with all plan check numbers and
dates of submittal on or before the date set forth in Schedule B. No changes,
modifications or alterations in the Final Space Plan or the Final Working
Drawings may be made by Tenant without the prior written consent of Landlord,
which consent shall not be unreasonably withheld; provided, that Landlord may
withhold its consent, in its sole discretion, to any change in the Final Space
Plan or the Final Working Drawings if such change (i) would directly or
indirectly delay the "Substantial Completion" of the Premises (defined below),
unless Tenant agrees in writing to be responsible for any such delay as a
"Tenant Delay" and for any and all costs of any such delay resulting therefrom,
and/or (ii) might affect the Building systems and equipment, the structural
integrity of the Building, the Base Project, and/or the exterior appearance of
the Building.
3.8 Time Deadlines. Tenant shall use its best, good faith efforts and all
--------------
due diligence to cooperate with the Architect, the Engineers, and Landlord to
complete all phases of the Drawings and the permitting process and to receive
the Permits, and with Contractor for approval of the Cost Proposal (defined
below), as soon as possible after the execution of the Lease, and, in that
regard, shall meet with Landlord on a scheduled basis to be determined by
Landlord, to discuss Tenant's progress in connection with the same. The
applicable dates for approval of items, plans and drawings as described in this
Section 3, Section 4 below, and otherwise in this Work Letter are set forth and
further elaborated upon in Schedule B (the "Tenant Improvement Time Deadlines"),
attached hereto. Tenant agrees to comply with the Tenant Improvement Time
Deadlines.
SECTION 4
CONSTRUCTION OF THE TENANT IMPROVEMENTS
4.1 General Contractor. Landlord's general contractor, Xxx Ore
------------------
("Contractor"), shall construct the Tenant Improvements, provided that he is
competitive with the bid of any other contractor from whom Tenant obtains a
detailed written bid and who is able to perform the work on schedule. Xxx Ore
or the general contractor who performs the work for the Tenant Improvements
shall hereafter be referred to as Contractor. The Contractor shall
competitively bid all material subcontracts pertaining to the Final Working
Drawings pursuant to a competitive bidding procedure implemented by Landlord
with the prevailing subcontractors being approved by Landlord and Tenant. The
approved cost proposal from the selected and approved subcontractors shall
herein be referred to as "Cost Proposal." The Contractor shall include three
(3) subcontractor bids for each major trade (electrical, mechanical, metal work,
wood work, finish carpentry and finishes), which shall be mutually agreed upon
by Landlord and Tenant.
4.2 Construction of Tenant Improvements by Contractor under the
-----------------------------------------------------------
Supervision of Landlord.
-----------------------
4.2.1 Landlord's Retention of Contractor. Landlord shall retain
----------------------------------
Contractor to construct the Tenant Improvements in accordance with the Final
Working Drawings and the Cost Proposal and in compliance with all applicable
Codes in effect as of the date of construction, and Tenant
shall be solely responsible for the compliance of the Drawings with all
applicable Codes as set forth in Section 3.1 above. Landlord shall supervise the
construction by the Contractor and cause the Contractor to diligently construct
the Tenant Improvements following the issuance of all permits and the parties'
approval of the Final Working Drawings, and Tenant shall pay a construction
supervision and management fee (the "Construction Management Fee") to Landlord
in an amount equal to the product of (i) $.50 per square foot.
4.2.2 Warranties and Guaranties. Landlord agrees that, in its contract
-------------------------
for the construction of the Tenant Improvements, the Contractor shall be
required to guaranty, for the direct benefit of both Landlord and Tenant, for a
period of one (1) year beginning on the date of Substantial Completion of the
Premises, that all Tenant Improvements constructed pursuant to this Work Letter
shall be free from defect. Further, Landlord hereby assigns to Tenant, on a
nonexclusive basis, all warranties and guaranties by Contractor relating to the
Tenant Improvements, and Tenant hereby waives all claims against Landlord
relating to, or arising out of the construction of, the Tenant Improvements.
4.2.3 Tenant's Covenants. Tenant hereby indemnifies Landlord for any
------------------
loss, claims, damages or delays arising from the actions of Architect on the
Premises or in the Building. Promptly after the Substantial Completion of the
Premises, Tenant shall have prepared by the Architect and delivered to Landlord
a copy of the "as built" plans and specifications (including all working
drawings) for the Tenant Improvements.
SECTION 5
COMPLETION OF THE TENANT IMPROVEMENTS; TENANT DELAYS
5.1 Substantial Completion. For purposes of the Lease and this Work
----------------------
Letter, the Premises shall be deemed "Ready for Occupancy" upon Substantial
Completion of the Premises and obtaining a certificate of occupancy. For
purposes of the Lease commencement, "Substantial Completion" of the Premises
shall occur when the Tenant Improvements have been completed by Contractor in
accordance with the Final Working Drawings, subject only to completion of the
items set forth on the Punchlist.
SECTION 6
MISCELLANEOUS
6.1 Tenant's Entry Into the Premises Prior to Substantial Completion.
----------------------------------------------------------------
Provided that Tenant and its agents do not interfere with Contractor's work in
the Building and/or the Premises, Landlord shall allow Tenant access to the
Premises Thirty (30) Days prior to Substantial Completion of the Base Project
for construction of Tenant Improvements and installation of equipment, furniture
and fixtures (including Tenant's data, cabling and telephone equipment) in the
Premises. Prior to Tenant's entry into the Premises as permitted by the terms
of this Section 6.1, Tenant shall submit a schedule to Landlord and Contractor,
for their reasonable approval, which schedule shall set forth, in reasonable
detail, the timing and purpose of Tenant's entry. Tenant shall hold Landlord
and its Contractor harmless from and indemnify, protect and defend each of them
against any loss or damage to the Building or Premises and
against injury to any persons caused by Tenant's actions pursuant to this
Section 6.1, but excluding any loss, damage or injury to the extent caused by
Landlord's or Landlord's agents' or employees' negligence or willful misconduct.
In addition, prior to Tenant's entry into the Premises, Tenant shall be obliged
to obtain the insurance policies required pursuant to the Lease and to provide
Landlord with evidence thereof reasonably satisfactory to Landlord.
6.2 Tenant's Representative. Tenant has designated Xxxxx Xxxxx Design and
-----------------------
Architecture as its sole representative with respect to the matters set forth in
this Work Letter, and subject to a separate agreement between Tenant and Xxxxx
Xxxxx Design and Architecture who, until further notice from Tenant to Landlord,
shall have full authority and responsibility to act on behalf of the Tenant as
required in this Work Letter.
6.3 Landlord's Representative. Landlord has designated Xxxx Xxxxxxxxx as
-------------------------
its sole representative with respect to the matters set forth in this Work
Letter, who, until further notice to Tenant, shall have full authority and
responsibility to act on behalf of the Landlord as required in this Work Letter.
6.4 Time of the Essence. Time is of the essence in this Work Letter.
-------------------
Unless otherwise indicated, all references herein to a "number of days" shall
mean and refer to calendar days. In all instances where Tenant is required to
approve or deliver an item, if no written notice of approval is given or the
item is not delivered within the stated time period, then at Landlord's sole
option at the end of such period the item shall automatically be deemed approved
or delivered by Tenant and the next succeeding time period shall commence.
6.5 Tenant's Lease Default. Notwithstanding any provision to the contrary
----------------------
contained in the Lease, if an event of default beyond any applicable notice and
cure periods permitted in the Lease, or a default by Tenant beyond any
applicable notice and cure periods under this Work Letter, has occurred at any
time on or before the Substantial Completion of the Premises, then (i) in
addition to all other rights and remedies granted to Landlord pursuant to the
Lease, Landlord shall have the right to withhold payment of all or any portion
of the Tenant Improvement Allowance and/or Landlord may cause Contractor to
cease the construction of the Premises (in which case Tenant shall be
responsible, as a "Tenant Delay," for any delay in the Substantial Completion of
the Premises caused by such work stoppage as set forth in Section 5 of this Work
Letter), and (ii) all other obligations of Landlord under the terms of this Work
Letter shall be forgiven until such time as such default is cured pursuant to
the terms of the Lease.
6.6 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument.
"LANDLORD"
SHEARWATER PARTNERS, LLC
a California limited liability company
By: /s/ Xxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxx Xxxxxxxxx
---------------------------------------
Title: Member
--------------------------------------
By: /s/ Xxxxx X. Pedor
-----------------------------------------
Name: Xxxxx X. Pedor
---------------------------------------
Title: Member
--------------------------------------
(CORPORATE SEAL)
"TENANT"
Razorfish, Inc.
a Delaware corporation
By: /s/ Xxxxx X. Xxx
-----------------------------------------
Name: Xxxxx X. Xxx
---------------------------------------
Title: Vice President/Managing Director
--------------------------------------
By: /s/ Xxxxxxx Xxxxx
-----------------------------------------
Name: Xxxxxxx Xxxxx
---------------------------------------
Title: EVP - Business Affairs & General Counsel
--------------------------------------
SCHEDULE A TO EXHIBIT "B"
DESCRIPTION OF BUILDING BASE IMPROVEMENTS
Building Base, (also referred to herein as "Base Project"):
(a) Seismic upgrade to 104(f) standard or equivalent for remodeled
buildings.
(b) All work necessary for the Premises to comply with current building
code requirements including, but not limited to, exiting, fire control
system, life safety, and seismic.
(c) Repair, paint, waterproofing and re-glazing of structural and exterior
portions of the Premises.
(d) Main HVAC system installed with a supply and return stubbed to each
floor per Tenant's specifications.
(e) (i) Landlord shall provide 2200 AMPS at 277/480 volts 3 Phase as
follows:
. 277/480 volts 3 Phase to be provided to elevators and HVAC
equipment on roof
(ii) Electrical power provided to panels on each floor as follows:
. 1-Isolated Panel of 400 AMPS @ 120/208 volts 3 Phase
. 1-Convenience Panel of 400 AMPS @120/208 volts 3 Phase
. 1-House Panel of 100 AMPS @120/208 volts 3 Phase
. 1-Lighting Panel of 200 AMPS @277/480 3 Phase or 120/208
Single Phase
(f) Telephone/data room per floor with (i) backboard and (ii) riser
capacity (sleeves).
(g) Installation of a security system with an adequate supply of access
cards and keys per Tenant's specifications.
(h) Removal of any known hazardous materials.
(i) Primary sprinkler loop installed, ready for head distribution.
(j) Completion of all work necessary to comply with the Americans with
Disabilities Act (ADA) and the code.
(k) New or refurbished windows with internal covering.
(l) Roof in good working order and waterproofed.
(m) All floors finished smooth to meet a 1/4" in 10.0' tolerance, cleared
of existing coverings.
(n) Demolition of all existing non-structural partitioning.
(o) Gas and hot/cold water stubbed to Premises.
(p) New or refurbished ADA-compliant passenger elevator and ADA-compliant
restrooms. At a minimum, each women's restroom shall have two (2)
water closets and each men's restroom shall have one (1) water closet
and urinal.
(q) Refurbishing and/or refinishing of interior and exterior walls.
(r) Sandblasting of existing columns and beams.
(s) Construction of a new main lobby area. The look as well as the level
of finishes to be reasonably consistent with that which is found in
comparable renovated projects.
(t) Refurbishment of skylights.
SCHEDULE B TO EXHIBIT B
TENANT IMPROVEMENT DEADLINES*
October 3, 2000
Dates (1) Actions to be Performed
----- -----------------------
Tenant programming to be completed by Hooks Design and
Architecture and submitted to Landlord for review.
Space plan completed by Meta Architecture and submitted to
Landlord for approval. (Landlord has five days).
Meta Architecture to complete 50% design documents (drawings
and outline specs sufficient for thorough preliminary pricing
completed by Xxxxx Xxxxx Design and Architecture and submitted
to Landlord for approval and pricing.
Preliminary approval and pricing complete.
Construction Documents completed by Meta Architecture and
submitted to Landlord for approval and final pricing.
Bids complete and submitted to tenant for review and approval.
Razorfish makes any budget related decisions regarding the
scope of work and releases construction to begin.
Construction begins. (Note: it is likely that we will have
been able to already release certain long lead items such as
HVAC fabrication, etc.)
(1) All Tenant Improvement Deadlines to be determined upon the mutual agreement
of the parties within seven (7) days of the date of the Lease.
* Landlord encourages a close working relationship between Tenants
Representative (Xxxxx Xxxxx Design and Architecture), and Meta
Architecture. Deadlines have been established based upon this assumption.
EXHIBIT C
EXCLUSIONS FROM PREMISES, BUILDING ADDITION,
RIGHT OF FIRST OFFER
1. Building Addition. Landlord further reserves the right to construct an
adjoining building or building addition ("Building Addition") on all or a
portion of the existing surface parking area. During such time, it is
anticipated that Tenant could be deprived of its surface parking area or a
portion thereof for up to approximately six months. In such event, Landlord
will use reasonable efforts to obtain for Tenant at Landlord's sole cost and
expense, parking in the general area located within five (5) blocks from the
Premises. In the event of the construction of such Building Addition, the
Building Addition and area beneath it would be excluded from the Premises upon
commencement of construction and thereafter without any abatement of rent;
provided, however, that property taxes attributable to the Building Addition and
such other expenses incurred by or attributable to the Building Addition would
be allocated equitably between the Premises and the Building Addition and Tenant
would have no obligation or liability for the property taxes and expenses
attributable to or incurred by the Building Addition, unless Tenant leases the
Building Addition pursuant to its Right of First Offer set forth in Section 4
below. Upon completion of construction of the Building Addition, Tenant will
receive the same number of parking spaces, at no cost to Tenant, within the
boundary lines of the original Premises, under the Building Addition, under the
Building Tenant leases, and/or elsewhere on the Property, at Landlord's
election.
2. Easements; Entitlements. The Building Addition will have such rights
and easements over the Premises as necessary for pedestrian, vehicular, and
utility ingress and egress and such other easements and rights as are necessary
over the Premises for the Building Addition; provided such easements and rights
will not unreasonably interfere with Tenant's use
of the Premises which shall include, without limitation, allowing another tenant
to use Tenant's bathrooms. Tenant will not, or encourage others to, limit or
oppose, directly or indirectly, Landlord's authorizations, entitlements, or
permits relating to the construction of the Building Addition before any
governmental authority or to any other third person.
3. Right of First Offer. Landlord hereby grants personally only to Tenant
("Original Tenant") a right of first offer ("Right of First Offer") for all of
the available space in the Building Addition, under the same terms and
conditions as this lease. The Right of First Offer will be made by Landlord to
Tenant on or before commencement of construction of the Building Addition. If
Tenant does not exercise Tenant's Right of First Offer, Landlord agrees that
Landlord shall construct telephone closets as part of the Building Addition and
Tenant shall not be required to share telephone closets with the occupants of
the Building Addition.
a) Offer. Landlord shall notify Tenant in writing when and if the
Building Addition becomes available for lease to third parties. The Offer
Notice shall describe the space offered to Tenant, shall set forth the term of
Tenant's Lease which (i) in the event Tenant exercises its Right of First Offer
during the first five years of the Lease term shall end co-terminously with this
Lease, or (ii) in the event Tenant exercises its Right of First Offer following
the expiration of the fifth year of the Lease Term, shall in no event be less
than five years.
b) Procedure for Acceptance. If Tenant wishes to exercise Tenant's
Right of First Offer with respect to the space for Lease in the Building
Addition, then within 15 business days of delivery of the Offer Notice to
Tenant, Tenant shall deliver written notice to Landlord of Tenant's intention to
exercise its Right of First Offer with respect to the entire space described in
the Offer Notice on the terms contained in such Notice. If Tenant does not
notify
Landlord within the 15 business day period, then Landlord shall be free
to lease the space described in the Offer Notice to anyone to whom Landlord
desires on any terms Landlord desires; provided, however, that Tenant may submit
a list to Landlord of five (5) direct competitors to be excluded from leasing
the expansion space upon Tenant's written notice not to expand, which may be
updated at Tenant's sole discretion. Such list shall survive for each subsequent
leasing of the expansion space, so long as the Tenant (Original Tenant) occupies
the Main Premises.
c) Amendment to Lease. If Tenant timely exercises Tenant's right to
lease the First Offer space as set forth herein, Landlord and Tenant shall
within 15 business days thereafter execute an amendment to this Lease for such
First Offer space upon the terms and conditions set forth in the Offer Notice
and this Section 3. Tenant shall commence payment of rent for the First Offer
space and the term of the First Offer space shall commence upon the date of
delivery of the First Offer space to Tenant and terminate on the date set forth
in the Offer Notice.
d) Termination of Right of First Offer. The rights contained in this
Section 3 shall be personal to the Original Tenant, and may only be exercised by
the Original Tenant (and not any other assignee, sublessee or other transferee
of Tenant's interest in this Lease) if Tenant occupies the entire Premises as of
the date of the attempted exercise of the Right of First Offer by Tenant. The
Right of First Offer granted herein shall terminate upon the failure by Tenant
to exercise its Right of First Offer with respect to the First Offer space
offered by Landlord. Notwithstanding the foregoing, Landlord shall have no
obligation to offer the First Offer space to Tenant and Tenant shall not have
the right to lease the First Offer space as provided in this Section 3, if, as
of the date of the attempted exercise of the right of First Offer by
Tenant, or as of the scheduled date of delivery of such First Offer space to
Tenant, Tenant is in default under this Lease or Tenant has previously been in
material default under this Lease more than once.
4. Landlord's Rights and Tenant's Waivers. Tenant agrees that Landlord
will incur no liability to Tenant or reduction of Rent for engaging in
construction of the Building Addition and any and all nuisance or inconvenience
it may cause Tenant. Landlord hereby agrees to take all reasonable efforts to
mitigate all noise and effects caused by the construction of the Building
Addition, which may include, without limitation, pile-driving, punch-throughs,
dust and interference with outside parking. Landlord agrees to repair at its
sole cost and expense any damage to the Premises directly resulting from
construction of the Building Addition. Tenant agrees that no diminution of
light, air, or view caused by the Building Addition that Landlord erects shall
entitle Tenant to any reduction of Rent or result in any liability of Landlord
to Tenant. Landlord reserves the right, from time to time, to grant such
easements, rights and dedications as Landlord deems necessary or desirable, and
to cause the recordation of parcel maps and covenants, conditions and
restrictions affecting the Building Addition and/or Premises, so long as such
easements, rights, dedications, maps and covenants, conditions and restrictions,
do not unreasonably interfere with Tenant's use of the Premises. At Landlord's
request, Tenant shall properly join in the execution of any of the
aforementioned documents. Tenant hereby waives all claims for damages and/or
injuries and/or interference with Tenant's business, loss of occupancy and/or
quiet enjoyment and/or any other loss resulting from the exercise by Landlord of
any rights under this Exhibit C. No exercise by Landlord of any of its rights
under this Exhibit C shall constitute actual or constructive eviction, a breach
of any express or implied
covenant of quiet enjoyment, or allow Tenant to terminate the Lease or reduce or
xxxxx any of the Rent due under this Lease.
EXHIBIT D
ESCROW AGREEMENT
ESCROW AGREEMENT dated as of October 3, 2000 by and among SHEARWATER
PARTNERS, LLC, a California limited liability company (the "Landlord");
RAZORFISH, INC., a Delaware corporation (the "Tenant"); and FIRST REPUBLIC BANK,
doing business as FIRST REPUBLIC TRUST COMPANY, as escrow agent (the "Escrow
Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Landlord and Tenant have entered into a lease dated as of October
3, 2000 (the "Lease") pursuant to which Landlord has leased to Tenant the
premises located at 0000 Xxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx (the
"Property"); and
WHEREAS, pursuant to the terms of the Lease, the Security Deposit (as
defined in the Lease) paid by Tenant to the Landlord is to be deposited into an
escrow account (the "Escrow Fund") until the satisfaction of certain conditions;
and
WHEREAS, the parties hereto desire to arrange for such Escrow Fund and
appoint Escrow Agent as escrow agent in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, the parties intending to be legally bound hereby agree as
follows:
1. Concurrently with the execution and delivery of this Agreement, Tenant
has delivered to the Escrow Agent by wire transfer an amount equal to
$2,990,148.00 which shall be the Escrow Fund. The Escrow Agent hereby
acknowledges receipt of the Escrow Fund and acknowledges that the Escrow Fund
shall be held in an account entitled "Razorfish Security Deposit Escrow Fund"
and disbursed by the Escrow Agent subject to and in accordance with the
provisions of this Agreement.
2. Within one (1) business day after the date hereof, the Escrow Agent
shall cause the Escrow Fund deposited with it pursuant to this Agreement to be
invested and thereafter maintained in one or more investments with immediate
liquidity which are interests in a First Republic Bank money market deposit
account. Any interest earned on any portion of the Escrow Fund shall be deemed
to be part of the Escrow Fund and shall be held in escrow and shall be disbursed
in accordance with the terms of this Agreement.
3. The Escrow Agent shall not be responsible for any interest earned on
or from the Escrow Fund except such interest as is actually received.
4. The Escrow Agent shall hold the Escrow Fund in escrow and shall not
deliver any portion thereof to any party other than (i) pursuant to written
instruction executed and delivered
to the Escrow Agent by Landlord and Tenant, (ii) pursuant to the provisions of
Section 5 or 6 hereof, or (iii) by depositing the Escrow Fund with a court of
competent jurisdiction in accordance with the provisions of Section 7 hereof or
with a successor escrow agent in accordance with the provisions of Section 11
hereof. Landlord shall provide Tenant with a copy of any written instruction
Landlord delivers to the Escrow Agent hereunder. Tenant shall provide Landlord
with a copy of any written instruction Tenant delivers to the Escrow Agent
hereunder.
5. (a) Subject to Section 5(b) hereof, (i) in the event Proposition K is
passed by the voters of the City and County of San Francisco (and receives more
votes than Proposition L) on November 7, 2000 then the Escrow Agent shall
release and deliver the Escrow Funds to Landlord by no later than November 15,
2000 without the need for additional instructions from any party hereto; or (ii)
in the event neither Proposition K nor Proposition L is passed by the voters of
the City and County of San Francisco on November 7, 2000, then the Escrow Agent
shall release and deliver the Escrow Funds to Landlord by no later than November
15, 2000; or (iii) in the event Proposition L is passed by the voters of the
City and County of San Francisco (and receives more votes than Proposition K) on
November 7, 2000 then the Escrow Agent shall immediately release and deliver the
Escrow Funds to Tenant, without the need for additional instructions from any
party hereto.
(b) all disbursement of the Escrow Funds shall be made with interest,
if any, earned therein.
6. Except as set forth in clauses (i) through (iii) of Section 5(a), if
there is a dispute in existence regarding the Escrow Fund (or any proposed
disbursement thereof) of which the Escrow Agent has received written notice from
Landlord or Tenant, the Escrow Agent shall continue to hold the funds subject to
any unresolved dispute hereunder until the Escrow Agent shall have received any
of the following: (i) a written instruction to the Escrow Agent regarding
release of such disputed funds signed by Landlord and Tenant, or (ii) a
certified copy of an order, decree or judgment by a court of competent
jurisdiction regarding release of such disputed funds. Within two (2) business
days after the receipt of (i) or (ii) above, the Escrow Agent shall distribute
the amount in the Escrow Fund in accordance with such written instruction or
certified copy of any such order, decree or judgment.
7. The duties of the Escrow Agent are purely ministerial in nature. The
Escrow Agent may act or refrain from acting in respect of any matter arising in
connection with the administration of the Escrow Fund, shall have no duties or
obligations other than as stated herein and shall be protected in acting upon
any notice, certificate or other communication, not only as to the due execution
and the validity and effectiveness of its provisions, but also as to the truth
and acceptability of any information therein contained, which it shall in good
faith believe to be valid and to have been signed or presented by a proper
person or persons. The Escrow Agent shall have no responsibility or liability
for the completeness, correctness or accuracy of this Agreement or the
transactions contemplated hereby. The Escrow Agent shall have no liability or
responsibility hereunder for any act or omission to act except for its own
willful misconduct or negligence. The Escrow Agent shall not be bound by (a) any
notice, or demand with respect thereto unless in writing and delivered to the
Escrow Agent, or (b) any waiver, modification, amendment, termination or
rescission of this Agreement unless in writing and signed by all
parties hereto. The Escrow Agent may, at any time, upon notice to Landlord and
Tenant, for any reason whatsoever, either (a) hold the Escrow Fund until
otherwise directed by a written instrument signed by Landlord and Tenant or by
an order, decree or judgment by a court of competent jurisdiction, or (b)
deposit the Escrow Fund with any court of competent jurisdiction pending the
final determination of any dispute between the parties hereto or any other
dispute or disagreement between or among any persons in connection with all or
part of the Escrow Fund.
8. In executing funds transfers, the Escrow Agent will rely upon account
numbers or other identifying numbers of a beneficiary, beneficiary's bank or
intermediary bank rather than names. Upon receipt of a written instruction from
Landlord and Tenant in accordance with the disbursement provisions set forth in
Section 5 hereof directing the Escrow Agent to disburse amounts from the Escrow
Fund, the Escrow Agent will confirm the instructions set forth in such written
instruction with the authorized individuals making such request listed in
Section 13 hereof at the authorized telephone numbers appearing under each such
individual's name. The Escrow Agent will verify by telephone all payment orders
unless they call for a transfer to a pre-identified account.
9. Except as provided in Section 13, all reasonable costs and expenses
incurred by the Escrow Agent in performing its services under this Agreement
shall be born one-half by the Landlord and one-half by Tenant.
10. The Escrow Agent's duties and responsibilities shall be limited to
those expressly set forth in this Agreement.
11. The Escrow Agent may resign at any time upon ten (10) business days'
prior written notice to Landlord and Tenant. The Escrow Agent may be removed at
any time upon five (5) business days' prior written notice signed by Landlord
and Tenant. In the case of the Escrow Agent's resignation or removal, the Escrow
Agent's only duty shall be to deliver the Escrow Fund to a successor escrow
agent acceptable to Landlord and Tenant, which acceptance shall be evidenced by
the written and signed order of Landlord and Tenant. If no such order is
received by the Escrow Agent within ten (10) business days after giving notice,
in the case of its resignation, or receipt of notice, in the case of removal, it
is authorized and empowered, in its discretion, to transfer any and all items
deposited and maintained hereunder to any court of competent jurisdiction
located in the City and County of San Francisco.
12. Except as set forth in Section 7, all notices, requests and other
communications hereunder must be in writing and will be deemed to have been duly
given only if delivered personally against written receipt or by facsimile
transmission against facsimile confirmation or mailed by prepaid first class
certified mail, return receipt requested, or mailed by overnight courier
prepaid, to the parties at the following addresses or facsimile numbers:
If to Tenant, addressed to:
Razorfish, Inc.
000 Xxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX
Attn: Xx. Xxxxx Xxx
With a copy to:
Razorfish, Inc.
000 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx Xxxxx, Global Real Estate Manager
and a copy to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attn: Xxxxx Xxxxxxx, Esq.
If to Landlord:
SHEARWATER PARTNERS, LLC
00 Xxxxxxx Xxxxxx, Xxxxx 0
Xxx Xxxxxxxxx, XX 00000
with a copy to:
Xxxxxx Xxxxxxxx Xxxxxx Xxxxxx & Xxxx, LLP
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attn: Xxxxxx X. Xxxx, Esq.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section 12, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section 12, be deemed given upon facsimile confirmation, (iii)
if delivered by mail in the manner described above to the address as provided in
this Section 12, be deemed given on the earlier of the third business day
following mailing or upon receipt, and (iv) if delivered by overnight courier to
the address as provided in this Section 12, be deemed given on the earlier of
the first business day following the date sent by such overnight courier or upon
receipt. Any party from time to time may change its address, facsimile number or
other information for the purpose of notices to that party by giving notice
specifying such change to the other parties hereto.
13. Except for its obligations under Section 11, the Escrow Agent shall be
automatically released from all responsibility and liability under this
Agreement upon the Escrow Agent's delivery or deposit of the entire amount of
the Escrow Fund in accordance with the provisions of this Agreement.
14. Except for Sections 8, 11, and 12, this Agreement shall terminate at
such time on such date as the Escrow Agent no longer holds any portion of the
Escrow Fund, has received full reimbursement of its fees and expenses and has
fully discharged its duties hereunder.
15. This Agreement constitutes the entire understanding among the parties
as to the subject matter hereof and no waiver or modification of the terms
hereof shall be valid unless in writing signed by Landlord, Tenant and the
Escrow Agent and only to the extent therein set forth.
16. This Agreement and its validity, construction and performance shall be
governed in all respects by the laws of the State of California, without giving
effect to any choice of law or conflict of law provisions that would cause the
application of the laws of any jurisdiction other than the State of California.
17. This Agreement shall be binding upon and inure to the benefit of the
parties hereto, their respective heirs, administrators, executors, successors
and permitted assigns.
18. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date set forth above.
LANDLORD
SHEARWATER PARTNERS, LLC
By: /s/ Xxxx Xxxxxxxxx
------------------------------
Name: Xxxx Xxxxxxxxx
Title: Member
By: /s/ Xxxxx X. Pedor
------------------------------
Name: Xxxxx X. Pedor
Title: Member
TENANT
RAZORFISH, INC.
By: /s/ Xxxxx X. Xxx
------------------------------
Name: Xxxxx X. Xxx
Title: Managing Director, &
Vice President
By:
------------------------------
Name:
Title:
ESCROW AGENT
FIRST REPUBLIC BANK
dba FIRST REPUBLIC TRUST COMPANY
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: SVP
By:
------------------------------
Name:
Title:
EXHIBIT E
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxx, Esq.
--------------------------------------------------------------------------------
(Space above this line for Recorder's use)
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
This SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (the
"Agreement") is made and entered into as of the _____ day of October, 2000 by
and between XXXXX X. XXXXXXX AND XXXXXX X. XXXXXXX, Trustees of the Xxxxxxx
Family Revocable Trust dated December 12, 1993, XXXXXX XXXX, Trustee of the 1986
Hall Living Trust, XXXXXXX X. XXXXXXX, Trustee of the Xxxxxxx X. Xxxxxxx 1988
Trust dated December 19, 1988, XXXXXXX XXXXXXX XXXXXX, fka Xxxxxxx Xxxxxxx, and
XXXXXX XXXXXXX XXXXX, fka Xxxxxx Xxxxxxx (collectively, "Lender"), RAZORFISH,
INC., a Delaware corporation ("Tenant"), and SHEARWATER PARTNERS, LLC, a
California limited liability company ("Landlord").
RECITALS
A. Lender is the beneficiary under that certain Deed of Trust dated March
7, 2000 and recorded in the State of California, County of San Francisco (the
"County"), as instrument number G752242 in the official records for the County
(the "Deed of Trust") and is the holder of the indebtedness secured thereby; and
B. The Deed of Trust covers certain real property situated in the County
(the "Property"), more particularly described on Exhibit A attached hereto;
and
C. By a lease dated the _____ day of October, 2000 (the "Lease"), Tenant
leased certain space (the "Premises") in the Property from Landlord, which Lease
is subject to and subordinate to the Deed of Trust; and
D. Lender, Landlord and Tenant wish to recognize Tenant's right to occupy
the Premises according to the terms and conditions of the Lease for the original
term of the Lease and the renewal term of the Lease, if any.
Now, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto covenant and agree as follows:
1. So long as Tenant is not in default, after the expiration of all
applicable notice and cure periods, in the performance of any of the terms,
covenants or conditions of the Lease on Tenant's part to be performed;
(a) Lender, Tenant and Landlord do hereby covenant and agree that the
Lease with all rights, options, liens and charges created thereby, is and shall
continue to be subject and subordinate in all respects to the Deed of Trust and
to any renewals, modifications, consolidations, replacements and extensions
thereof and to all advancements made thereunder;
(b) Lender will not join Tenant under the Lease in any action or
proceeding for the purpose of terminating Tenant's interest and estate under the
Lease because of any default under the Deed of Trust, and any sale of the
Premises pursuant to the exercise of any rights and remedies under the Deed of
Trust or otherwise shall be subject to Tenant's right of possession under the
Lease; and
(c) Lender will not disturb the use, enjoyment and occupancy of Tenant
under the Lease nor shall any of Tenant's rights under the Lease be affected in
any way by reason of any default under the Deed of Trust.
2. If Lender shall become the owner of the Premises or the Premises shall
be sold by reason of foreclosure, trustee's sale or other proceedings brought to
enforce the Deed of Trust, or if the Premises shall be transferred by deed in
lieu of foreclosure, then Tenant agrees that Tenant shall not disaffirm the
Lease or any of its obligations under the Lease but shall attorn to Lender or
the then owner of the Premises and recognize Lender or the then owner of the
Premises as the landlord under the Lease.
Lender's obligations to Tenant hereunder are expressly conditioned upon
Tenant's performance of its rent payment obligations to Lender and faithful
performance of all other material terms and provisions of the Lease. Tenant's
obligations to Lender or the then owner of the Premises hereunder and under the
Lease are expressly conditioned upon Lender's or such owner's faithful
performance of all the terms and provisions of the Lease to be performed by
Landlord thereunder.
Any other such owner or Lender shall be deemed to have assumed and agreed
to be bound as a substitute landlord, by the terms and conditions of the Lease
until the resale or other disposition of its interest
All rights and obligations herein and hereunder shall continue as though
Lender had not become the owner of the Premises or as if the Premises has not
been sold by reason of foreclosure, trustee's sale or other proceedings to
enforce the Deed of Trust or as if the Premises has not been transferred by deed
in lieu of foreclosure, except as aforesaid.
3. This Agreement may not be modified orally or in any manner other than
by an agreement in writing to be signed by the parties hereto or their
respective successors in interest.
2
This Agreement shall inure to the benefit of and be binding upon the parties
hereto, their successors and assigns or legal representatives.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
LENDER: /s/ Xxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxxxx
-------------------------------------------
XXXXX X. XXXXXXX AND XXXXXX X. XXXXXXX,
Trustees of the Xxxxxxx Family Revocable
Trust dated December 12, 1993
/s/ Xxxxxx Xxxx
----------------------------------------
XXXXXX XXXX,
Trustee of the 1986 Hall Living Trust
/s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
XXXXXXX X. XXXXXXX,
Trustee of the Xxxxxxx X. Xxxxxxx
1988 Trust dated December 19, 1988
/s/ Xxxxxxx Xxxxxxx Xxxxxx
----------------------------------------
XXXXXXX XXXXXXX XXXXXX,
fka Xxxxxxx Xxxxxxx
/s/ Xxxxxx Xxxxxxx Xxxxx
----------------------------------------
XXXXXX XXXXXXX SACHS,
fka Xxxxxx Xxxxxxx
TENANT: RAZORFISH, INC.,
a Delaware corporation
By: /s/ Xxxxxxx Xxxxx
-------------------------------------
Name: Xxxxxxx Xxxxx
-----------------------------------
Title: EVP - Business Affairs and General
Counsel
----------------------------------
LANDLORD: SHEARWATER PARTNERS, LLC,
a California limited liability company
By: /s/ Xxxx Xxxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxxx
-----------------------------------
Title: Member
----------------------------------
EXHIBIT A
LEGAL DESCRIPTION
A-1
AMENDED TIMELINE FOR SCHEDULE B TO EXHIBIT B
TENANT IMPROVEMENT DEADLINES
December 10, 2000 Preliminary Tenant Programming to be completed by Xxxxx
Xxxxx Design.
January 8, 2001 Complete Tenant Programming to be completed by Hooks Design
and Submitted to Landlord for Review.
January 8, 2001 Preliminary Space Plan completed by METa Architecture.
January 17, 2001 Review of Preliminary Space Plan with Razorfish and Xxxxx
Xxxxx Design.
January 24, 2001 METa to submit final Space Plan to Landlord for Review.
Landlord has 2 days for review.
February 7, 2001 METa Architecture to complete 50% design documents (drawings
and outline specs sufficient for thorough preliminary
pricing completed by Xxxxx Xxxxx Design and Architecture).
February 21, 2001 Preliminary pricing and approval completed by Xxxxx Xxxxx
Design and Architecture and submitted to Landlord for
approval. Landlord has 5 days for review.
April 9, 2001 Construction Documents and Working Drawings completed by
METa Architecture and submitted to Landlord and Tenant for
approval and pricing. Tenant and Landlord have 3 days for
review.
May 4, 2001 Final pricing complete and submitted to Tenant for review
and approval.
(Note: Xxxxx Xxxxx Design and Architecture shall release
certified budgetary items prior to May 4, 2001.)
May 11, 2001 Razorfish makes any budgetary decisions regarding scope of
work and releases construction to begin.
Construction begins. (Note: it is likely that we will have
been able to already release certain long lead items such as
HVAC fabrication, etc.)
1
TIMELINE FOR SCHEDULE B TO EXHIBIT B
TENANT IMPROVEMENT DEADLINES
October 20, 2000 Preliminary Tenant Programming to be completed by Xxxxx
Xxxxx Design.
November 1, 2000 Complete Tenant Programming to be completed by Hooks Design
and Submitted to Landlord for Review.
November 1, 2000 Preliminary Space Plan completed by METa Architecture.
November 8, 2000 Review of Preliminary Space Plan with Razorfish and Xxxxx
Xxxxx Design.
November 15, 2000 METa to submit final Space Plan to Landlord for Review.
Landlord has 2 days for review.
December 1 , 2000 METa Architecture to complete 50% design documents (drawings
and outline specs sufficient for thorough preliminary
pricing completed by Xxxxx Xxxxx Design and Architecture).
December 15, 2000 Preliminary pricing and approval completed by Xxxxx Xxxxx
Design and Architecture and submitted to Landlord for
approval. Landlord has 5 days for review.
February 2, 2001 Construction Documents and Working Drawings completed by
METa Architecture and submitted to Landlord and Tenant for
approval and pricing. Tenant and Landlord have 3 days
for review.
February 28, 2001 Final pricing complete and submitted to Tenant for review
and approval.
(Note: Xxxxx Xxxxx Design and Architecture shall release
certified budgetary items prior to March 7, 2001.)
March 7, 2001 Razorfish makes any budgetary decisions regarding scope of
work and releases construction to begin.
Construction begins. (Note: it is likely that we will have
been able to already release certain long lead items such as
HVAC fabrication, etc.)
2
WORK LETTER
This Work Letter (the "Work Letter") supplements the Lease (the "Lease")
dated October 3, 2000 by and between SHEARWATER PARTNERS, a California limited
liability company, as landlord ("Landlord") and Razorfish, Inc., a Delaware
corporation as tenant ("Tenant"), covering certain premises described in the
Lease (the "Premises"). All terms not defined herein shall have the same
meanings given to them in the Lease.
SECTION 1
LANDLORD'S CONSTRUCTION OF THE BASE BUILDING
Subject to Landlord obtaining all required governmental approvals and
permits, Landlord shall construct the Building Base at its cost through its
contractor, as described on Schedule A to this Exhibit B (the "Base Project").
Landlord represents to Tenant that, when complete, all Building systems (that
is, fire protection, HVAC, electrical and roof systems) will be operational and
in good condition and repair as of the Rent Commencement Date. To its actual
knowledge, without investigation, there are no Hazardous Materials currently
present on the Land and there will be none in the Building except those which
are customary for use in first class buildings. Landlord's "actual knowledge"
means the actual knowledge of Xxxx Xxxxxxxxx. Landlord shall have no obligation
to Tenant if, for reasons beyond its control, Landlord is unable to build and/or
complete the Base Project.
SECTION 2
TENANT IMPROVEMENTS
2.1 Landlord's Improvement Allowance. Landlord shall provide Tenant with an
improvement allowance of $27.00 per rentable foot. At Tenant's option (which
shall be exercised by Tenant by delivering written notice to Landlord within ten
(10) days of the Landlord and Tenant's approval of the Cost Proposal, as defined
in Section 4.1), Landlord shall finance up to an additional $10.00 per rentable
square foot to be used for tenant improvements, which shall be added to the Base
Rent and amortized over a Ten (10) year term including interest at the rate of
Ten (10) Percent per annum.
2.2 Tenant Required Expenditure. Tenant shall spend such amount ("Tenant
Required Expenditure") for the costs (including the "Landlord's Improvement
Allowance", as that term is defined in Section 2.1 above) relating to the
initial design and construction of Tenant's improvements (excluding personal
property, furnishings, and furniture) which are permanently affixed to the
Premises (the "Tenant Improvements") as is necessary to develop the Premises in
a manner which is consistent in nature and quality with a first class building
in San Francisco, California. All Tenant Improvements shall be deemed Landlord's
property.
2.3 Tenant Expenditures. Upon Landlord securing the Tenant Improvement
permit, as that term is defined in Section 3.7, and upon Landlord and Tenant's
mutual approval of the Cost Proposal (as defined in Section 4.1 below) which
approval shall not be unreasonably withheld or
3
delayed, Landlord's and Tenant's respective share of the cost of the Tenant
Improvements shall be determined in accordance with Section 2.1 above.
Immediately upon such determination and Landlord providing Tenant reasonable
adequate assurance of the availability of monies to fund the Landlord's
Improvement Allowance pursuant to Section 2.1, Tenant shall deposit with
Landlord its share of such Cost Proposal up to the sum of $2,000,000 and upon
such sum being drawn down to $500,000, Tenant shall deposit additional monies
with Landlord to insure Tenant's adequate "Tenant Improvement Deposits." The
Tenant Improvement Deposits shall total the amount of all amounts, less
Landlord's Improvement Allowance, to be disbursed by Landlord as set forth in
this Work Letter for and related to Tenant Improvements in accordance with the
Cost Proposal (as defined in Section 4.1). The Tenant Improvement Deposits shall
be held in a separate account by Landlord with First Republic Bank and shall not
be commingled with any other funds of Landlord. Upon exhaustion of Tenant's
portion of the "Tenant Improvement Deposits", Landlord shall be responsible for
and shall continue disbursement of Landlord's Improvement Allowance as described
in Section 2.1 above. All interest earned on the Tenant Improvement Deposits
shall be paid by Landlord to Tenant upon conclusion of and payment for the
Tenant Improvements.
Except as otherwise set forth in this Work Letter, the Tenant Improvement
Deposits shall be disbursed by Landlord (each of which disbursements shall be
made pursuant to Landlord's disbursement process) for costs related to the
construction of the Tenant Improvements and for the following items and costs:
(i) payment of the fees of the Architect and the Engineers (defined below), and
payment of the actual fees incurred by, and the cost of documents and materials
supplied by Landlord and Landlord's consultants in connection with the
preparation and review of the Drawings (defined below); (ii) the cost of any
changes in the Base, Shell and Core required by the Drawings (provided that any
such changes are approved by Landlord in Landlord's sole discretion); (iii) the
cost of any changes to the Drawings or Tenant Improvements required by
applicable building codes (collectively, the "Codes"); (iv) the cost of
miscellaneous fees relating to the cost of construction of the Tenant
Improvements, including, without limitation, testing and inspection costs, trash
removal costs, temporary HVAC and other utilities used in connection with such
construction work; and (v) the Construction Management Fee. No more than ten
percent (10%) of the Tenant Allowance may be spent or allocated to the costs
described in clause (i) above.
SECTION 3
DRAWINGS
3.1 Selection of Architect/Drawings. In accordance with Section 6.2 below,
Tenant shall retain Xxxxx Xxxxx Design and Architecture as its Tenant's
Representative. Xxxxx Xxxxx Design and Architecture, on behalf of Tenant, shall
set forth the "Design and Image Guidelines" for the Tenant Improvements, and
shall write the "Space Program." Landlord and Tenant acknowledge their mutual
intention that Xxxxx Xxxxx Design and Architecture work closely with METa
Architecture throughout the entire Tenant Improvement process.
Tenant shall retain METa Architecture (the "Architect") to prepare the
"Final Space
4
Plan," "Schematic Drawings," "Design Development Drawings," and "Final Working
Drawings," all as defined hereinbelow and collectively referred to as
"Drawings." Tenant shall retain engineering consultants approved by Landlord
(the "Engineers") to prepare all plans and engineering working drawings relating
to the structural, mechanical, electrical, plumbing, HVAC, life safety, and
sprinkler work of the Tenant Improvements. All Drawings shall comply with the
drawing format and specifications as determined by Landlord, and shall be
subject to Landlord's approval, which approval shall not be unreasonably
withheld or delayed. Tenant and Architect shall verify, in the field, all
relevant dimensions and conditions relating to the Base Project, and Tenant and
Architect shall be solely responsible for the same, and Landlord shall have no
responsibility in connection therewith. Landlord's review of the Drawings as set
forth in this Section 3, shall be for its sole purpose and shall not imply
Landlord's review of the same, or obligate Landlord to review the same, for
quality, design, compliance with the Codes or other like matters. Accordingly,
notwithstanding that any Drawings are reviewed by Landlord or its space planner,
architect, engineers and consultants, and notwithstanding any advice or
assistance that may be rendered to Tenant by Landlord or Landlord's space
planner, architect, engineers, and consultants, Landlord shall have no liability
whatsoever in connection therewith and shall not be responsible for any
omissions or errors contained in the Drawings, and Tenant's waiver and indemnity
set forth in the Lease shall specifically apply to the Drawings.
3.2 Space Program. On or before the date set forth in Schedule B attached
to this Exhibit "B" and entitled the "Tenant Improvement Time Deadlines", Tenant
and Xxxxx Xxxxx Design and Architecture shall prepare and deliver to Landlord
the space program for the Tenant Improvements in the Premises, which shall be a
study identifying Tenant's internal requirements for such Tenant Improvements
(the "Space Program"). The Space Program shall identify the proposed location of
Tenant's backup generator or Battery Storage, which Tenant shall have the right
to install at its expense in a location acceptable to Landlord in the exercise
of its reasonable discretion.
3.3 Space Plan. On or before the date set forth in Schedule B, Tenant and
METa Architecture shall prepare a proposed space plan for the Tenant
Improvements in the Premises, which proposed space plan shall include a layout
and designation of all offices, rooms and other partitioning, their intended
use, and equipment to be contained therein, and shall deliver the proposed space
plan to Landlord for Landlord's approval. Landlord shall notify Tenant of its
approval or disapproval (with reasons for such disapproval specified) of the
proposed space plan within five (5) business days after receipt thereof. Any
failure by Landlord to notify Tenant of its approval or disapproval within such
five (5) business day period shall be deemed to be Landlord's approval thereof.
If Landlord disapproves the proposed space plan, this process shall be repeated
until Landlord's approval is obtained; provided, however, that Tenant shall only
make such changes to the proposed space plan which address the reasons Landlord
specified for its disapproval of the proposed space plan. The approved space
plan is hereinafter referred to as the "Final Space Plan."
3.4 Schematic Drawings. On or before the date set forth in Schedule B,
Tenant and METa Architecture shall prepare and deliver to Landlord for
Landlord's approval of the proposed schematic drawings, which shall be a
formalization of the Space Program and the Final Space Plan, including outlined
specifications. Landlord shall notify Tenant of its approval or disapproval
(with reasons for such disapproval specified) of the proposed schematic drawings
5
within five (5) business days after receipt thereof. Landlord shall work
diligently with Tenant to prepare a price check of estimated costs for the
Tenant Improvements contemplated by such proposed schematic drawings with the
expectation that the same will be completed within the week of such approval.
Any failure by Landlord to notify Tenant of its approval or disapproval within
such five (5) business day period shall be deemed to be Landlord's approval
thereof. If Landlord disapproves the proposed schematic drawings, this process
shall be repeated until Landlord's approval is obtained; provided, however, that
Tenant shall only make such changes to the proposed schematic drawings which
address the reasons Landlord specified for its disapproval of the proposed
schematic drawings. The approved schematic drawings are hereinafter referred to
as the "Final Schematic Drawings."
3.5 Design Development Drawings. On or before the date set forth in
Schedule B, Tenant and METa Architecture shall prepare and deliver to Landlord
for Landlord's approval the proposed design development drawings, which shall be
the refinement of the Final Schematic Drawings. Landlord shall notify Tenant of
its approval or disapproval (with reasons for such disapproval specified) of the
proposed design development drawings within five (5) business days after receipt
thereof. Landlord shall work diligently with Tenant to prepare a price check of
estimated costs for the Tenant Improvements contemplated by such proposed design
development drawings with the expectation that the same will be completed within
the week of such approval. Any failure by Landlord to notify Tenant of its
approval or disapproval within such five (5) business day period shall be deemed
to be Landlord's approval thereof. If Landlord disapproves the proposed design
development drawings, this process shall be repeated until Landlord's approval
is obtained; provided, however, that Tenant shall only make such changes to the
proposed design development drawings which address the reasons Landlord
specified for its disapproval of the proposed design development drawings. The
approved design development drawings are hereinafter referred to as the "Final
Design Development Drawings."
3.6 Working Drawings. On or before the date set forth in Schedule B,
Tenant, METa Architecture and the Engineers shall complete and deliver to
Landlord for its approval the proposed architectural and engineering drawings
for the Premises, in a form which is sufficiently complete to allow
subcontractors to bid on the work and to obtain all applicable permits. Landlord
shall notify Tenant of its approval or disapproval (with reasons for any
disapproval specified) of the proposed working drawings within five (5) business
days after receipt thereof. Landlord shall work diligently with Tenant to
prepare a price check of estimated costs for the Tenant Improvements
contemplated by such proposed working drawings with the expectation that the
same will be completed within the week of such approval. Any failure by Landlord
to notify Tenant of its approval or disapproval within such five (5) business
day period shall be deemed to be Landlord's approval thereof. If Landlord
disapproves the proposed working drawings, this process shall be repeated until
Landlord's approval is obtained; provided, however, that Tenant shall only make
such changes to the proposed working drawings which address the reasons Landlord
specified for its disapproval of the proposed working drawings. The approved
proposed working drawings are hereinafter referred to as the "Final Working
Drawings."
3.7 Permits. On or before the date set forth in Schedule B, Tenant shall
submit the Final Working Drawings to Landlord for Landlord to process at
Tenant's expense with the appropriate municipal authorities for all applicable
building permits necessary to allow Contractor to
6
commence and fully complete the construction of the Tenant Improvements (the
"Permits"), and, in connection therewith, Tenant shall coordinate with Landlord
in order to allow Landlord to act on Tenant's behalf in all phases of the
permitting process and shall supply Landlord with all plan check numbers and
dates of submittal on or before the date set forth in Schedule B. No changes,
modifications or alterations in the Final Space Plan or the Final Working
Drawings may be made by Tenant without the prior written consent of Landlord,
which consent shall not be unreasonably withheld; provided, that Landlord may
withhold its consent, in its sole discretion, to any change in the Final Space
Plan or the Final Working Drawings if such change (i) would directly or
indirectly delay the "Substantial Completion" of the Premises (defined below),
unless Tenant agrees in writing to be responsible for any such delay as a
"Tenant Delay" and for any and all costs of any such delay resulting therefrom,
and/or (ii) might affect the Building systems and equipment, the structural
integrity of the Building, the Base Project, and/or the exterior appearance of
the Building.
3.8 Time Deadlines. Tenant shall use its best, good faith efforts and all
due diligence to cooperate with the Architect, the Engineers, and Landlord to
complete all phases of the Drawings and the permitting process and to receive
the Permits, and with Contractor for approval of the Cost Proposal (defined
below), as soon as possible after the execution of the Lease, and, in that
regard, shall meet with Landlord on a scheduled basis to be determined by
Landlord, to discuss Tenant's progress in connection with the same. The
applicable dates for approval of items, plans and drawings as described in this
Section 3, Section 4 below, and otherwise in this Work Letter are set forth and
further elaborated upon in Schedule B (the "Tenant Improvement Time Deadlines"),
attached hereto. Tenant agrees to comply with the Tenant Improvement Time
Deadlines.
SECTION 4
CONSTRUCTION OF THE TENANT IMPROVEMENTS
4.1 General Contractor. Landlord's general contractor, Xxx Ore
("Contractor"), shall construct the Tenant Improvements, provided that he is
competitive with the bid of any other contractor from whom Tenant obtains a
detailed written bid and who is able to perform the work on schedule. Xxx Ore or
the general contractor who performs the work for the Tenant Improvements shall
hereafter be referred to as Contractor. The Contractor shall competitively bid
all material subcontracts pertaining to the Final Working Drawings pursuant to a
competitive bidding procedure implemented by Landlord with the prevailing
subcontractors being approved by Landlord and Tenant. The approved cost proposal
from the selected and approved subcontractors shall herein be referred to as
"Cost Proposal." The Contractor shall include three (3) subcontractor bids for
each major trade (electrical, mechanical, metal work, wood work, finish
carpentry and finishes), which shall be mutually agreed upon by Landlord and
Tenant.
4.2 Construction of Tenant Improvements by Contractor under the Supervision
of Landlord.
4.2.1 Landlord's Retention of Contractor. Landlord shall retain Contractor
to construct the Tenant Improvements in accordance with the Final Working
Drawings and the Cost Proposal and in compliance with all applicable Codes in
effect as of the date of construction, and Tenant
7
shall be solely responsible for the compliance of the Drawings with all
applicable Codes as set forth in Section 3.1 above. Landlord shall supervise the
construction by the Contractor and cause the Contractor to diligently construct
the Tenant Improvements following the issuance of all permits and the parties'
approval of the Final Working Drawings, and Tenant shall pay a construction
supervision and management fee (the "Construction Management Fee") to Landlord
in an amount equal to the product of (i) $.50 per square foot.
4.2.2 Warranties and Guaranties. Landlord agrees that, in its contract for
the construction of the Tenant Improvements, the Contractor shall be required to
guaranty, for the direct benefit of both Landlord and Tenant, for a period of
one (1) year beginning on the date of Substantial Completion of the Premises,
that all Tenant Improvements constructed pursuant to this Work Letter shall be
free from defect. Further, Landlord hereby assigns to Tenant, on a nonexclusive
basis, all warranties and guaranties by Contractor relating to the Tenant
Improvements, and Tenant hereby waives all claims against Landlord relating to,
or arising out of the construction of, the Tenant Improvements.
4.2.3 Tenant's Covenants. Tenant hereby indemnifies Landlord for any loss,
claims, damages or delays arising from the actions of Architect on the Premises
or in the Building. Promptly after the Substantial Completion of the Premises,
Tenant shall have prepared by the Architect and delivered to Landlord a copy of
the "as built" plans and specifications (including all working drawings) for the
Tenant Improvements.
SECTION 5
COMPLETION OF THE TENANT IMPROVEMENTS; TENANT DELAYS
5.1 Substantial Completion. For purposes of the Lease and this Work Letter,
the Premises shall be deemed "Ready for Occupancy" upon Substantial Completion
of the Premises and obtaining a certificate of occupancy. For purposes of the
Lease commencement, "Substantial Completion" of the Premises shall occur when
the Tenant Improvements have been completed by Contractor in accordance with the
Final Working Drawings, subject only to completion of the items set forth on the
Punchlist.
SECTION 6
MISCELLANEOUS
6.1 Tenant's Entry the Premises Prior to Substantial Completion. Provided
that Tenant and its agents do not interfere with Contractor's work in the
Building and/or the Premises, Landlord shall allow Tenant access to the Premises
Thirty (30) Days prior to Substantial Completion of the Base Project for
construction of Tenant Improvements and installation of equipment, furniture and
fixtures (including Tenant's data, cabling and telephone equipment) in the
Premises. Prior to Tenant's entry into the Premises as permitted by the terms of
this Section 6.1, Tenant shall submit a schedule to Landlord and Contractor,
for their reasonable approval, which schedule shall set forth, in reasonable
detail, the timing and purpose of Tenant's entry. Tenant shall hold Landlord and
its Contractor harmless from and indemnify, protect and defend each of them
against any loss or damage to the Building or Premises and
8
against injury to any persons caused by Tenant's actions pursuant to this
Section 6.1, but excluding any loss, damage or injury to the extent caused by
Landlord's or Landlord's agents' or employees' negligence or willful misconduct.
In addition, prior to Tenant's entry into the Premises, Tenant shall be obliged
to obtain the insurance policies required pursuant to the Lease and to provide
Landlord with evidence thereof reasonably satisfactory to Landlord.
6.2 Tenant's Representative. Tenant has designated Xxxxx Xxxxx Design and
Architecture as its sole representative with respect to the matters set forth in
this Work Letter, and subject to a separate agreement between Tenant and Xxxxx
Xxxxx Design and Architecture who, until further notice from Tenant to Landlord,
shall have full authority and responsibility to act on behalf of the Tenant as
required in this Work Letter.
6.3 Landlord's Representative. Landlord has designated Xxxx Xxxxxxxxx as
its sole representative with respect to the matters set forth in this Work
Letter, who, until further notice to Tenant, shall have full authority and
responsibility to act on behalf of the Landlord as required in this Work Letter.
6.4 Time of the Essence. Time is of the essence in this Work Letter. Unless
otherwise indicated, all references herein to a "number of days" shall mean and
refer to calendar days. In all instances where Tenant is required to approve or
deliver an item, if no written notice of approval is given or the item is not
delivered within the stated time period, then at Landlord's sole option at the
end of such period the item shall automatically be deemed approved or delivered
by Tenant and the next succeeding time period shall commence.
6.5 Tenant's Lease Default. Notwithstanding any provision to the contrary
contained in the Lease, if an event of default beyond any applicable notice and
cure periods permitted in the Lease, or a default by Tenant beyond any
applicable notice and cure periods under this Work Letter, has occurred at any
time on or before the Substantial Completion of the Premises, then (i) in
addition to all other rights and remedies granted to Landlord pursuant to the
Lease, Landlord shall have the right to withhold payment of all or any portion
of the Tenant Improvement Allowance and/or Landlord may cause Contractor to
cease the construction of the Premises (in which case Tenant shall be
responsible, as a "Tenant Delay," for any delay in the Substantial Completion of
the Premises caused by such work stoppage as set forth in Section 5 of this Work
Letter), and (ii) all other obligations of Landlord under the terms of this Work
Letter shall be forgiven until such time as such default is cured pursuant to
the terms of the Lease.
6.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument.
9
"LANDLORD"
SHEARWATER PARTNERS, LLC
a California limited liability company
by: /s/ Xxxx Xxxxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxxxx
---------------------------------
Title: Member
--------------------------------
By: /s/ Xxxxx X. Pedor
-----------------------------------
Name: Xxxxx X. Pedor
---------------------------------
Title: Member
--------------------------------
(CORPORATE SEAL)
"TENANT"
Razorfish, Inc.
a Delaware corporation
By: /s/ Xxxxx X. Xxx
-----------------------------------
Name: Xxxxx X. Xxx
---------------------------------
Title: Vice President & Managing Director
--------------------------------
By: /s Xxxxxxx Xxxxx
-----------------------------------
Name: Xxxxxxx Xxxxx
---------------------------------
Title: EVP - Business Affairs & General
Counsel
--------------------------------