1
EXHIBIT 10.5
000 XXXXXXXX XXXXXX
OFFICE LEASE
THIS LEASE is dated for reference purposes only as of March 25, 1997,
between SOMA PARTNERS, L.P., a California limited partnership ("Landlord"), and
MICROMUSE INC., a Delaware corporation ("Tenant").
W I T N E S S E T H:
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord
the Premises described in Paragraph 1(g) below, for the term and subject to the
terms, covenants, agreements and conditions hereinafter set forth.
1. DEFINITIONS. In addition to terms that are defined elsewhere in this
Lease, unless the context otherwise specifies or requires, the following terms
shall have the meanings herein specified:
(a) The term "Base Expense Year" shall mean the calendar year set
forth in Paragraph G of the Summary of Lease Terms.
(b) The term "Base Tax Year" shall mean the calendar year set
forth in Paragraph H of the Summary of Lease Terms.
(c) The term "Building" shall mean the office building located at
000 Xxxxxxxx Xxxxxx in San Francisco, California.
(d) The term "Building Standard Improvements" shall mean those
improvements installed in the Premises at Landlord's expense.
(e) The term "Land" means the parcels) of land on which the
Building and the connected underground garage are located.
(f) The term "Operating Expenses" shall mean the total costs and
expenses incurred by Landlord in connection with the management, operation,
maintenance, repair and ownership of the Real Property (as defined in Paragraph
1(h) hereof), including, without limitation, the following costs: (1) salaries,
wages, bonuses and other compensation (including hospitalization, medical,
surgical, retirement plan, pension plan, union dues, life insurance, including
group life insurance, welfare and other fringe benefits, and vacation, holidays
and other paid absence benefits) relating to employees of Landlord or its agents
engaged in the management, operation,
2
repair, or maintenance of the Real Property and costs of training such
employees; (2) payroll, social security, workers, compensation, unemployment and
similar taxes with respect to such employees of Landlord or its agents, and the
cost of providing disability or other benefits imposed by law or otherwise,
with respect to such employees; (3) uniforms (including the cleaning,
replacement and pressing thereof) provided to such employees; (4) premiums and
other charges incurred by Landlord with respect to fire, other casualty, boiler
and machinery, theft, rent interruption liability insurance, any other insurance
as is deemed necessary or advisable in the reasonable judgment of Landlord, or
any insurance required by the holder of any Superior Interest (as defined in
Paragraph 15), all in such amounts as Landlord determines to be appropriate,
and, after the Base Year, costs of repairing an insured casualty to the extent
of the deductible amount under the applicable insurance policy; (5) water
charges and sewer rents or fees; (6) license, permit and inspection fees and
charges; (7) sales, use and excise taxes on goods and services purchased by
Landlord in connection with the operation, maintenance or repair of the Real
Property and building systems and equipment; (8) telephone, telegraph, postage,
stationery supplies and other expenses incurred in connection with the
operation, maintenance, or repair of the Real Property; (9) management fees
(subject to the limitation set forth in clause (xi) below) and expenses
(including fees and expenses for accounting, financial management, data
processing and information services) and costs of tenant service programs; (10)
repairs to and physical maintenance of the Real Property, including building
systems and appurtenances thereto and normal repair and replacement of worn-out
equipment, facilities and installations, but excluding the replacement of major
building systems (except to the extent otherwise included as an Operating
Expense pursuant to this Paragraph 1(f)); (11) janitorial, window cleaning,
guard, extermination, water treatment, rubbish removal, plumbing and other
services and inspection or service contracts for elevator, electrical,
mechanical, sanitary, heating, ventilation and air conditioning, and other
building equipment and systems or as may otherwise be necessary or proper for
the operation or maintenance of the Real Property; (12) supplies, tools,
materials and equipment used in connection with the operation, maintenance or
repair of the Real Property; (13) accounting, legal and other professional,
consulting or service fees and expenses; (14) painting the exterior or the
public or common areas of the Building and the cost of maintaining the
sidewalks, landscaping and other common areas of the Real Property; (15) all
costs and expenses for electricity, chilled water, air conditioning, water for
heating, gas, fuel, steam, heat, lights, sewer service, communications service,
power and other energy related utilities required in connection with the
operation, maintenance and repair of the Real Property; (16) the cost of any
capital improvements made by Landlord to the Real Property or capital assets
acquired by Landlord after the Base Year required under any governmental law,
regulation or
2.
3
insurance requirement with which Real Property was not required to comply during
the Base Year, such cost or allocable portion to be amortized over the useful
life thereof, together with interest on the unamortized balance at a rate per
annum equal to the Reference Rate (as defined in Paragraph 3(d) hereof) charged
at the time such capital improvements or capital assets are constructed or
acquired or such higher rate as may have been paid by Landlord on funds borrowed
for the purpose of constructing or acquiring such capital improvements or
capital assets, but in either case not more than the maximum rate permitted by
law at the time such capital improvements or capital assets are constructed or
acquired; (17) the cost of any capital improvements made by Landlord to the
Building or capital assets acquired by Landlord after the Base Year for the
protection of the health and safety of the occupants of the Real Property or
that are designed to reduce other Operating Expenses, such cost or allocable
portion thereof to be amortized over the useful life thereof (except that
Landlord may include as an Operating Expense in any calendar year a portion of
the cost of such a capital improvement or capital asset equal to Landlord's
estimate of the amount of the reduction of other Operating Expenses in such year
resulting from such capital improvement or capital asset), together with
interest on the unamortized balance at a rate per annum equal to the Reference
Rate charged at the time such capital improvements or capital assets are
constructed or acquired or such higher rate as may have been paid by Landlord on
funds borrowed for the purpose of constructing or acquiring such capital
improvements or capital assets, but in either case not more than the maximum
rate permitted by law at the time such capital improvements or capital assets
are constructed or acquired; (18) the cost of furniture, window coverings,
carpeting, decorations, landscaping and other customary and ordinary items of
personal property provided by Landlord for use in common areas of the Real
Property or in the Building office (to the extent that such Building office is
dedicated to the operation and management of the Real Property), such costs to
be amortized over the useful life thereof; (19) the cost of any capital
improvements made by Landlord to the Real Property or capital assets acquired by
Landlord after the Base Year to the extent that the cost of any such improvement
or asset is less than ten thousand dollars ($10,300); (20) the cost of any
capital improvements made by Landlord to the Real Property or capital assets
acquired by Landlord after the Base Year which have a useful life of five (5)
years or less (and the cost of which is not otherwise included in Operating
Costs pursuant to this Paragraph 1(f)), such cost to be amortized over the
useful life thereof, together with interest on the unamortized balance at a rate
per annum equal to the Reference Rate charged at the time such capital
improvements or capital assets are constructed or acquired or such higher rate
as may have been paid by Landlord on funds borrowed for the purpose of
constructing or acquiring such capital improvements or capital assets, but in
either case not more than the maximum rate permitted by law at the time such
3.
4
capital improvements or capital assets are constructed or acquired; (21) any
such expenses and costs resulting from substitution of work, labor, material or
services in lieu of any of the above itemizations, or for any such additional
work, labor services or material resulting from compliance with any governmental
laws, rules, regulations or orders applicable to the Real Property or any part
thereof; (22) property management office rent or rental value; and (23) cost of
operation, repair and maintenance of the parking facility serving the Building,
including resurfacing, restriping and cleaning.
To the extent costs and expenses described above relate to both the Real
Property and other property, such costs and expenses shall, in determining the
amount of Operating Expenses, be equitably allocated as Landlord may determine
in good faith to be appropriate.
Operating Expenses shall not include the following: (i)
depreciation on the Building; (ii) debt service; (iii) rental under any ground
or underlying lease; (iv) interest (except as expressly provided in this
Paragraph 1(f)); (v) Real Property Taxes; (vi) attorneys' fees and expenses
incurred in connection with lease negotiations with prospective Building tenants
or in connection with disputes with tenants or other occupants of the Building
or enforcement of any leases or defense of Landlord's title to or interest in
the Building; (vii) the cost of any improvements or equipment which would be
properly classified as capital expenditures (except for any capital expenditures
expressly included in Operating Expenses pursuant to this Paragraph 1(f));
(viii) the cost of decorating, improving for tenant occupancy, painting or
redecorating portions of the Building to be demised to tenants; (ix) advertising
expenses relating to vacant space; (x) real estate brokers' or other leasing
commissions; (xi) property management fees to the extent in excess of two and
one-quarter percent (2.25%) of aggregate annual base rent for the Real Property
in any year; (xii) cost of repairing casualty damage to the extent of insurance
proceeds received by Landlord; (xiii) executive salaries and general overhead
expenses not related to the Building; (xiv) interest, penalties or other costs
arising out of Landlord's failure to make timely payment of its obligations;
(xv) the cost of any service provided to Tenant or other occupants of the
Building to the extent Landlord is reimbursed for such costs; (xvi) amounts paid
to subsidiaries or affiliates of Landlord for management or other services or
for supplies or other materials to the extent in excess of the amounts which
would have been paid for the same services, supplies or materials to an
unaffiliated third party on arms'-length terms under then-existing market
conditions; and (xvii) costs incurred to cleanup, xxxxx, remove or otherwise
remedy hazardous substances (as defined in Paragraph 7(b)) from the Land to the
extent such hazardous substances either (A) were spilled or released in or on
the Land prior to the Commencement Date, or (B) were spilled or released in or
on the Land by Landlord.
4.
5
(g) The term "Premises" shall mean the space in the Building
designated by cross-hatching on the floor plan(s) attached hereto as Exhibit A
(exclusive of the areas, if any, shown by shading) and situated on the floor(s)
of the Building specified in Paragraph D of the Summary of Lease Terms, together
with the appurtenant right to the use, in common with others, of lobbies,
entrances, stairs, elevators and other public portions of the Building. The
Premises shall include the space on the Mezzanine Level of the Building as shown
on Exhibit A (the "Mezzanine Space") and the space on the 5th Floor of the
Building as shown on Exhibit A (the "5th Floor Space"). Landlord and Tenant
agree that the premises contain the number of square feet of rentable area
specified in Paragraph E of the Summary of Lease Terms. All the outside walls
and windows of the Premises and any space in the premises used for shafts,
stacks, pipes, conduits, ducts, electric or other utilities, sinks or other
Building facilities, and the use thereof and access thereto through the Premises
for the purposes of operation, maintenance and repairs, are reserved to
Landlord.
(h) The term "Real Property" shall mean, collectively, the Land,
the Building, the connected parking garage, and the other improvements on the
Land.
(i) The term "Real Property Taxes" shall mean all taxes,
Assessments (whether general or special), excises, transit charges, housing fund
assessments or other housing charges, levies or fees, ordinary or extraordinary,
unforeseen as well as foreseen, of any kind, which are assessed, levied,
charged, confirmed or imposed on the Real Property or any part thereof, on the
Landlord with respect to the Real Property, on the act of entering into this
Lease or any other lease of space in the Real Property, on the use or occupancy
of the Real Property or any part thereof, with respect to services or utilities
consumed in the use, occupancy or operation of the Real Property, or on or
measured by the rent payable under this Lease or in connection with THE business
of renting space in the Real Property, including, without limitation, any gross
income tax or excise tax levied with respect to the receipt of such rent, by the
United States of America, the State of California, the City and County of San
Francisco, any political subdivision, public corporation, district or other
political or public entity or public authority, and shall also include any other
tax, fee or other excise, however described, which may be levied or assessed in
lieu of, as a substitute (in whole or in part) for, or as an addition to, any
other Real Property Taxes. Real Property Taxes shall include reasonable
attorneys' fees, costs and disbursements incurred in connection with proceedings
to contest, determine or reduce Real Property Taxes.
Real Property Taxes shall not include income, franchise,
transfer, inheritance or capital stock taxes, unless, due to a change in the
method of taxation, any of such taxes is levied or assessed against Landlord in
lieu of, as a substitute
5.
6
(in whole or in part) for, or as an addition to, any other charge which would
otherwise constitute a part of Real Property Taxes. Real Property Taxes shall
not include interest or penalties assessed for nonpayment or late payment.
Landlord and Tenant acknowledge and agree that certain other buildings exist or
encroach upon the Land, that Tenant shall have no liability as to any item of
Real Property Taxes attributable or allocable to, or assessed against, buildings
other than the Building and that Landlord's good faith determination of the
proper allocation of any item of Real Property Taxes allocable to buildings
other than the Building shall be binding on Landlord and Tenant.
(j) The term "Rental" shall include the Basic Monthly Rental set
forth in Paragraph J of the Summary of Lease Terms, all additional rent, and
any other charges payable by Tenant to Landlord hereunder.
(k) The term "Tenant's Extra Improvements" shall mean those
improvements in addition to Building Standard Improvements which are to be
installed in the Premises.
(1) The term "Tenant's Percentage Share" shall mean the
percentage figure specified in Paragraph F of the Summary of Lease Terms
(subject to Landlord's right, from time to time, to adjust such percentage to
reflect accurate measurements of the Premises or other portions of the Building
and/or to reflect changes in Landlord's standard common area load factor).
2. TERM.
(a) Subject to Paragraph 2(c) hereof, the term of this Lease
shall commence and, unless ended sooner as herein provided, shall expire on the
dates respectively specified in Paragraph I of the Summary of Lease Terms
(respectively referred to hereinafter as the "Commencement Date" and the
"Expiration Date").
(b) Tenant shall accept the Premises "as is" on the Commencement
Date or the Early Occupancy Date if applicable. Landlord has no actual knowledge
of any material defect in the Building systems as of the date of this Lease.
Landlord shall have no obligation to construct or install any improvements in
the Premises. Tenant acknowledges that Tenant's possession of the Premises shall
constitute Tenant's acknowledgment that the Premises are in all respects in the
condition in which Landlord is required to deliver the Premises to Tenant under
this Lease and that Tenant has examined the Premises and is fully informed to
Tenant's satisfaction of the physical and environmental condition and the
utility of the Premises. Tenant acknowledges that Landlord, its agents and
employees and other persons acting on behalf of Landlord have made no
representation or warranty of any kind in connection with any matter relating to
the physical or environmental condition, value, fitness, use or zoning of the
6.
7
Premises upon which Tenant has relied directly or indirectly for any purpose,
except as specifically set forth in this Lease.
(c) If Landlord for any reason whatsoever cannot deliver
possession of the Premises to Tenant on the Commencement Date, this Lease shall
not be void or voidable, no obligation of Tenant shall be affected hereby and
Landlord shall not be liable to Tenant for any loss or damage resulting
therefrom. Landlord agrees to use diligent efforts (including, if necessary in
Landlord's reasonable judgment, institution of unlawful detainer proceedings) to
recover possession of the 5th Floor Space from the existing tenant thereof as
promptly as practicable after the expiration of the existing tenant's lease
(April 30, 1997). If Landlord has not delivered possession of the Premises by
November 1, 1997, Tenant may terminate this Lease by notice to Landlord.
(d) Tenant shall have the right, upon and subject to the terms of
this Paragraph 2(d), to occupy all or any part of the Mezzanine Space at any
time after this Lease shall have been executed and delivered by Landlord and
Tenant, provided that (i) Tenant shall have made the payment required pursuant
to Paragraph 3(e) hereof, (ii) Tenant shall have delivered to Landlord, and
Landlord shall have approved, the certificates of insurance described in
Paragraph 14(d), and (iii) Tenant shall have given Landlord not less than five
(5) business days notice of Tenant's intent to take early occupancy. The date on
which Tenant takes occupancy pursuant to this Paragraph 2(d) is referred to
herein as the "Early Occupancy Date." From and after the Early Occupancy Date,
all of the terms of this Lease, to the extent applicable to the Mezzanine Space,
shall be in full force and effect and Landlord and Tenant shall observe all such
terms, except that Tenant shall not be required to pay Basic Monthly Rental
prior to the Commencement Date.
3. RENTAL; SECURITY DEPOSIT.
(a) Tenant agrees to pay to Landlord as Basic Monthly Rental for
the Premises the sum specified in Paragraph J of the Summary of Lease Terms.
Notwithstanding the foregoing, Tenant shall have no obligation to pay the
portion of the Basic Monthly Rental allocable to the Mezzanine Space ($6,195 per
month) during the period from the Commencement Date through October 31, 1997;
during such period, the Basic Monthly Rental shall be $14,802.
(b) Basic Monthly Rental shall be paid to Landlord, in advance,
on or before the first day of each and every successive calendar month during
the term hereof. In the event the term of this Lease commences on a day other
than the first day of a calendar month, or ends on a day other than the last day
of a calendar month, then the Basic Monthly Rental for the first and/or last
fractional months of the term shall be
7.
8
appropriately prorated. All such prorations shall be made on the basis of a
360-day year consisting of twelve 30-day months.
(c) (intentionally omitted)
(d) Rental shall be paid to Landlord without notice, demand,
deduction or offset in lawful money of the United States in immediately
available funds or by good check as described below at the office of Landlord at
Landlord's address for notices specified in the Summary of Lease Terms, or to
such other person or at such other place as Landlord from time to time may
designate in writing. Payments made by check must be drawn either on a
California financial institution or on a financial institution that is a member
of the federal reserve system. All amounts of Rental, if not paid within three
(3) days of the date when due, shall bear interest from the due date until paid
at an annual rate of interest (the "Interest Rate") equal to the lesser of (i)
the maximum annual interest rate allowed by law on such due date for business
loans (not primarily for personal, family or household purposes) not exempt from
the usury law, or (ii) a rate equal to the sum of five (5) percentage points
over the publicly announced reference rate (the "Reference Rate") charged on
such due date by the San Francisco Main Office of Bank of America NT & SA (or
any successor bank thereto) (or if there is no such publicly announced rate, the
rate quoted by such bank in pricing ninety (90) day commercial loans to
substantial commercial borrowers). In addition, Tenant acknowledges that late
payment by Tenant to Landlord of Rental will cause Landlord to incur costs not
contemplated by this Lease, the exact amount of such costs being extremely
difficult to fix. Such costs include, without limitation, processing and
accounting charges, and late charges that may be imposed on Landlord by the
terms of any encumbrance and/or note secured by an encumbrance covering the
Premises. Therefore, if any installment of Rental due from Tenant is not
received within ten (10) days of when due, Tenant shall pay to Landlord an
additional sum of ten percent (10%) of the overdue Rental as a late charge;
provided that, if Rental is not paid when due three (3) times during the term of
this Lease, then thereafter Tenant shall not be entitled to such ten (10) day
grace period, and such late charge shall be assessed on any Rental not paid by
5:00 p.m. on the date due. The parties agree that this late charge represents a
fair and reasonable estimate of the costs that Landlord will incur by reason of
late payment of Rental by Tenant. Acceptance of any late charge shall not
constitute a waiver of Tenant's default with respect to the overdue amount, or
prevent Landlord from exercising any of the other rights and remedies available
to Landlord.
(e) Upon signing this Lease, Tenant shall pay to Landlord (a) an
amount equal to the Basic Monthly Rental for the seventh (7th) full calendar
month of the term of this Lease, which amount Landlord shall apply to the Basic
Monthly Rental for such seventh (7th) month, and (b) the amount of the security
8.
9
deposit specified in Paragraph L of the Summary of Lease Terms (the "Deposit").
The Deposit shall be held by Landlord as security for the faithful performance
by Tenant of all of the provisions of this Lease to be performed or observed by
Tenant. If Tenant fails to pay any Rental, or otherwise defaults with respect to
any provision of this Lease, Landlord may (but shall not be obligated to) use,
apply or retain all or any portion of the Deposit for the payment of any Rental
in default or for the payment of any other sum to which Landlord may become
obligated by reason of Tenant's default, or to compensate Landlord for any loss
or damage which Landlord may suffer thereby. If Landlord so uses or applies all
or any portion of the Deposit, Tenant shall within ten (10) days after demand
therefor deposit cash with Landlord in an amount sufficient to restore the
Deposit to the full amount thereof, and Tenant's failure to do so shall, at
Landlord's option, be an Event of Default (as defined in Paragraph 18(a)) under
this Lease. Landlord shall not be required to keep the Deposit separate from its
general accounts. If Tenant performs all of Tenant's obligations hereunder, the
Deposit, or so much thereof as has not theretofore been applied by Landlord,
shall be returned, without payment of interest or other increment for its use,
to Tenant (or, at Landlord's option, to the last assignee, if any, of Tenant's
interest hereunder) at the expiration of the term hereof and after Tenant has
vacated the Premises. Landlord's return of the Deposit or any part thereof shall
not be construed as an admission that Tenant has performed all of its
obligations under this Lease. No trust relationship is created herein between
Landlord and Tenant with respect to the Deposit.
4. TENANT'S SHARE OF OPERATING EXPENSES AND REAL PROPERTY TAXES.
(a) in addition to the Basic Monthly Rental payable during the
term of this Lease, Tenant shall pay to Landlord, as additional rent, Tenant's
Percentage Share of (i) the amount, if any, by which Operating Expenses paid or
incurred by Landlord in any calendar year subsequent to the Base Expense Year
exceed the amount of operating Expenses paid or incurred by Landlord during the
Base Expense Year, and (ii) the amount, if any, by which Real Property Taxes
paid or incurred by Landlord in any calendar year subsequent to the Base Tax
Year exceed the amount of Real Property Taxes paid or incurred by Landlord
during the Base Tax Year. Notwithstanding the foregoing, if the Building is less
than 100% occupied in any year during the term of this Lease, Operating Expenses
and Real Property Taxes for such year shall be adjusted, for purposes of the
foregoing calculation, to the amount which they would have been if the Building
had been 100% occupied. If it shall not be lawful for Tenant to reimburse
Landlord for any increase in Real Property Taxes as defined herein, the Basic
Monthly Rental payable to Landlord prior to the imposition of such increases in
Real Property Taxes shall be increased to net Landlord the same net Basic
Monthly Rental after imposition of such increases in Real Property Taxes as
9.
10
would have been received by Landlord prior to the imposition of such increases
in Real Property Taxes.
(b) During December of each calendar year or as soon thereafter
as practicable, Landlord shall give Tenant notice of its estimate of the amounts
payable pursuant to Paragraph 4(a) above for the succeeding calendar year. On or
before the first day of each month during the succeeding calendar year, Tenant
shall pay to Landlord, as additional rent, one twelfth (1/12) of such estimated
amounts. If Landlord fails to deliver such notice to Tenant in December, Tenant
shall continue to pay Tenant's Percentage Share of increases in Operating
Expenses and Real Property Taxes on the basis of the prior year's estimate until
the first day of the next calendar month after such notice is given, provided
that on such date Tenant shall pay to Landlord the amount of such estimated
adjustment payable to Landlord for prior months during the year in question,
less any portion thereof previously paid by Tenant. If at any time it appears to
Landlord that the amounts payable under this paragraph 4(b) for the current
calendar year will vary from Landlord's estimate, Landlord may, by giving
written notice to Tenant, revise Landlord's estimate for such year, and
subsequent payments by Tenant for such year shall be based on such revised
estimate.
(c) (i) within ninety (90) days after the close of each calendar
year or AS soon after such ninety (90) day period as practicable, Landlord shall
deliver to Tenant a statement of the amounts payable under subparagraph (a)
above for such calendar year (the "annual statement") and such annual statement
shall be final and binding upon Landlord and Tenant, subject to the terms of
Paragraph 4(c)(ii) below. If on the basis of such statement Tenant owes an
amount that is more than the estimated payments for such calendar year
previously made by Tenant, Tenant shall pay the deficiency to Landlord within
fifteen (15) days after delivery of the statement. If on the basis of such
statement Tenant has paid to Landlord an amount in excess of the amounts payable
under subparagraph (a) above for the preceding calendar year and Tenant is not
in default in the performance of any of its covenants under this Lease, then
Landlord, at its option, shall either promptly refund such excess to Tenant or
credit the amount thereof to the Basic Monthly Rental next becoming due from
Tenant until such credit has been exhausted.
(ii) Tenant shall have the right, during the ninety (90) day period
following delivery of an annual statement, at Tenant's sole cost to review in
Landlord's offices Landlord's records of Operating Expenses and Real Property
Taxes for the subject calendar year. Such review shall be carried out only by
regular employees of Tenant or by a major national or regional firm of certified
public accountants, and not by any other third party. If, as of the ninetieth
day after delivery to Tenant of an annual statement, Tenant shall not have
delivered to Landlord an objection statement (as defined below), then such
annual
10.
11
statement shall be final and binding upon Landlord and Tenant, and Tenant shall
have no further right to object to such annual statement. If within such ninety
(90) day period, Tenant delivers to Landlord a written statement specifying
objections to such annual statement (an "objection statement"), then Tenant and
Landlord shall meet to attempt to resolve such objection within thirty (30) days
after delivery of the objection statement. If such objection is not resolved
within such thirty (30) day period, then Tenant shall have the right, at
Tenant's cost, to require that the dispute be submitted to binding determination
by an independent certified public accountant ("CPA") approved by Landlord and
Tenant. Landlord shall reimburse Tenant for the reasonable charges of the CPA in
connection with such binding determination if, but only if, (A) the CPA shall
have determined that the aggregate amount of all Operating Expenses and Real
Property Taxes payable by Tenant for the subject year in accordance with the
annual statement exceeds one hundred five percent (105%) of the aggregate amount
of all Operating Expenses and Real Property Taxes payable by Tenant for the
subject year in accordance with the CPA's determination, and (B) the discrepancy
between such amount as set forth in the annual statement and such amount as set
forth in the CPA's determination is a result of the gross negligence or willful
misconduct of Landlord. Landlord and Tenant agree that such determination by a
CPA shall be the exclusive method of resolving disputes under this Paragraph
4(c). If Tenant does not elect, by notice to Landlord within one hundred fifty
(150) days after delivery of the annual statement, to require such binding
determination, then the annual statement shall be final and binding. So long as
any such dispute remains unresolved, Tenant shall not be obligated to pay
Landlord the disputed amount, but shall pay all other amounts payable in
accordance with this Paragraph 4(c).
(d) If this Lease terminates on a day other than the last day of
a calendar year, the amounts payable by Tenant under Paragraph 4(a) above with
respect to the calendar year in which such termination occurs shall be prorated
on the basis which the number of days from the commencement of such calendar
year, to and including such termination date, bears to 360. The termination of
this Lease shall not affect the obligations of Landlord and Tenant pursuant to
Paragraph 4(c) above to be performed after such termination.
(e) It is the intention of Landlord and Tenant that the Basic
Monthly Rental paid to Landlord throughout the term of this Lease shall be
absolutely net of all increases, respectively, in Real Property Taxes over Real
Property Taxes for the Base Tax Year and of Operating Expenses over Operating
Expenses for the Base Expense Year, and the foregoing provisions of this
Paragraph 4 are intended to so provide.
5. OTHER TAXES PAYABLE BY TENANT. Tenant shall reimburse Landlord upon
demand for any and all taxes, but not including
11.
12
Real Property Taxes, payable by Landlord (other than net income taxes) whether
or not now customary or within the contemplation of the parties hereto:
(a) imposed upon, measured by or reasonably attributable to the
cost or value of Tenant's equipment, furniture, fixtures and other personal
property located in the Premises or by the cost or value of any leasehold
improvements made in or to the Premises by or for Tenant, other than Building
Standard Improvements made by Landlord, regardless of title to such improvements
shall be in Tenant or Landlord;
(b) imposed upon or measured by the Basic Monthly Rental payable
hereunder, including, without limitation, any gross income tax or excise tax
levied by the City and County of San Francisco, the State of California, the
federal government or any other governmental body with respect to the receipt of
such rental;
(c) imposed upon or with respect to the possession, leasing,
operation, management, maintenance, alteration, repair, use or occupancy by
Tenant of the Premises or any portion thereof; or
(d) imposed upon this transaction or any document to which Tenant
is a party creating or transferring an interest or an estate in the Premises.
In the event that it shall not be lawful for Tenant to so reimburse
Landlord, the Basic Monthly Rental payable to Landlord under this Lease shall be
revised to net Landlord the same income after imposition of any such tax upon
Landlord as would have been received by Landlord hereunder prior to the
imposition of any such tax.
6. USE. Tenant agrees to use the Premises for general office purposes
and agrees not to use nor permit the use of the Premises or any part thereof for
any other purpose. Tenant agrees not to do or permit to be done in or about the
Premises or the Building, nor to bring or keep or permit to be brought or kept
in or about the Premises or the Building, anything which is prohibited by or
will in any way conflict with any law, statute or governmental regulation now or
hereafter in effect, or which would subject Landlord or Landlord's agents to any
liability, or which is prohibited by the standard form of fire insurance policy,
or which will in any way increase the existing rate of (or otherwise affect)
fire or any other insurance on the Building or any of its contents. If any act
or omission of Tenant results in any such increase in premium rates, Tenant
shall pay to Landlord, as additional rent, upon demand the amount of such
increase. Tenant agrees not to do or permit to be done anything in, on or about
the Premises or the Building which will in any way obstruct or interfere with
the rights of other tenants or occupants of the Building, or injure or annoy
12.
13
them, or use or allow the Premises to be used for any improper, immoral,
unlawful or objectionable purpose. Tenant agrees not to cause, maintain or
permit any nuisance in, on or about the Premises or the Building, nor to use or
permit to be used any loudspeaker or other device, system or apparatus which can
be heard outside the Premises without the prior written consent of Landlord nor
to permit any objectionable odors, bright lights or electrical or radio
interference which may annoy or interfere with the rights of other tenants of
the Building or the public. Tenant agrees not to commit or suffer to be
committed any waste in or upon the Premises. The provisions of this Paragraph 6
are for the benefit of Landlord only and shall not be construed to be for the
benefit of any tenant or occupant of the Building.
7. COMPLIANCE WITH LAWS/ENVIRONMENTAL MATTERS.
(a) Tenant agrees at its sole cost and expense to promptly comply
with all laws, statutes, ordinances and governmental rules, regulations or
requirements now or hereafter constituted; with any direction or occupancy
certificate issued pursuant to law by any public officer; and with the
provisions of all recorded documents affecting the Premises, insofar as any
thereof relates to or affects the condition, use or occupancy of the Premises,
excluding structural changes not related to or affected by Tenant's
improvements, acts or particular use of the Premises. The judgment of any court
of competent jurisdiction or the admission of Tenant in any action against
Tenant (whether Landlord be a party thereto or not) that Tenant has violated any
such law, statute, ordinance or governmental rule, regulation, requirement,
direction or provision, shall be conclusive of that fact as between Landlord and
Tenant. If Tenant's use or operation of the Premises or any of Tenant's
equipment therein requires a governmental permit, license or other authorization
or any notice to any governmental agency, Tenant shall promptly provide a copy
thereof to Landlord. Notwithstanding anything in this Lease to the contrary,
Landlord, and not Tenant, shall be responsible for any action, with respect to
the common areas of the Real Property, necessary to cause the Real Property to
comply with the Americans with Disabilities Act and other applicable laws
relating to access for the handicapped.
(b) Tenant shall not bring or keep, or permit to be brought or
kept, in the Premises or in or on the Real Property any hazardous substance (as
hereinafter defined) other than reasonable quantities of normal office and
janitorial supplies provided they are stored, used and disposed of in compliance
with all applicable environmental laws (as hereinafter defined) Tenant shall not
manufacture, generate, treat, handle, store or dispose of any hazardous
substance in the Premises or in or on the Real Property, or use the Premises for
any such purpose, or emit, release or discharge any hazardous substance into any
air, soil, surface water or groundwater comprising the Premises or the Real
Property, or permit any person using or occupying the Premises to do any of the
foregoing. Tenant shall comply, and
13.
14
shall cause all persons using or occupying the Premises to comply, with all
environmental laws applicable to the Premises, the use or occupancy of the
Premises or any operation or activity therein. As used in this Lease, "hazardous
substance" shall mean any substance or material that is described as a toxic,
hazardous, corrosive, ignitable, flammable or reactive substance, waste or
material or a pollutant or contaminant, or words of similar import, in any of
the environmental laws, and includes asbestos, petroleum, petroleum products,
polychlorinated biphenyls, radon gas, radioactive matter, and chemicals which
may cause cancer or reproductive toxicity. As used in this Lease, "environmental
laws" shall mean all federal, state and local laws, ordinances, rules and
regulations now or hereafter in force, as amended from time to time, in any way
relating to or regulating human health or safety, or industrial hygiene or
environmental conditions, or protection of the environment, or pollution or
contamination of the air, soil, surface water or groundwater.
(c) Tenant shall immediately furnish Landlord with any (i)
notices received from any insurance company or governmental agency or inspection
bureau regarding any unsafe or unlawful conditions within the Premises, and (ii)
notices or other communications sent by or on behalf of Tenant to any person
relating to environmental laws or hazardous substances.
(d) Landlord is not aware of any violation of environmental laws
respecting the Real Property and acknowledges that Landlord shall be responsible
for correcting any such violation which exists as of the date hereof.
(e) The provisions of this Paragraph 7 are for the benefit of
Landlord only and shall not be construed to be for the benefit of any tenant or
occupant of the Building.
8. ALTERATIONS; LIENS.
(a) Tenant agrees not to make or suffer to be made any
alteration, addition or improvement to or of the Premises (hereinafter referred
to as "Alterations"), or any part thereof, without the prior written consent of
Landlord, which consent shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, Landlord's consent shall not be required for
alterations ("Minor Alterations") which (i) do not require a building permit
under applicable codes and (i) will not affect the structural components of the
Building, will not affect the appearance of the Building or any part thereof
outside of the Premises, and will not affect the Building systems, provided
however that all other provisions of this Paragraph 8 shall apply to all
Alterations, including Minor Alterations. Any such Alterations made by Tenant,
including without limitation any nonmovable partitions or carpeting, shall
become a part Of the Building and belong to Landlord; provided, however, that
equipment, trade fixtures and movable furniture shall remain the
14.
15
property of Tenant. If Landlord consents to the making of any Alterations, the
same shall be designed by Tenant or its architect or engineer, and constructed
or installed by Landlord or a contractor selected by Landlord at Tenant's
expense (including expenses incurred in complying with applicable laws,
including laws relating to the handling and disposal of ACM). Landlord shall
assure that the cost of the Alterations does not exceed the range of
competitive costs then prevailing for such work. Tenant shall use engineers and
architects which are on Landlord's approved list of design professionals or are
otherwise approved by Landlord in its reasonable discretion. All Alterations
shall be made in accordance with plans and specifications approved in writing
by Landlord and shall be designed and constructed in compliance with all
applicable codes, laws, ordinances, rules and regulations. The design and
construction of any Alterations shall be performed in accordance with
Landlord's applicable rules, regulations and requirements. Under no
circumstances shall Landlord be liable to Tenant for any damage, loss, cost or
expense incurred by Tenant on account of Tenant's plans and specifications, the
design of any work, construction of any work, or delay in completion of any
work. Except with respect to Minor Alterations, Tenant shall pay to Landlord a
fee in the amount of seven percent (7%) of the cost of the Alterations for its
review of plans and its management and supervision of the progress of the work.
All sums due to the contractors and subcontractors performing the construction
work, if paid by Landlord due to Tenant's failure to pay such sums when due,
shall bear interest payable to Landlord at the Interest Rate until fully paid.
Upon the expiration or sooner termination of this Lease, Tenant, at its
expense, shall promptly remove any such Alterations made by Tenant and
designated by Landlord so to be removed and repair any damage to the Premises
caused by such removal; provided, however, that Tenant shall not be required to
remove any Alteration as to which Landlord has waived such removal requirement
at the time Landlord consented to such Alteration. Tenant shall use the general
contractor designated by Landlord for such removal and repair.
(b) Tenant agrees to keep the Premises and the Real Property free from
any liens arising out of any work performed, materials furnished or obligations
incurred by Tenant. Tenant shall promptly and fully pay and discharge all
claims on which any such lien could be based. In the event that Tenant does
not, within ten (10) days following the recording of notice of any such lien,
cause the same to be released of record, Landlord shall have, in addition to
all other remedies provided herein and by law, the right, but not the
obligation, to cause the same to be released by such means as it shall deem
proper, including payment of the claim giving rise to such lien. All sums paid
by Landlord for such purpose, and all expenses incurred by it in connection
therewith, shall be payable to Landlord by Tenant, as additional rent, on
demand, together with interest at the Interest Rate from the date such expenses
are incurred by
15.
16
Landlord to the date of the payment thereof by Tenant to Landlord. Landlord
shall have the right at all times to post and keep posted on the Premises any
notices permitted or required by law, or which Landlord shall deem proper for
the protection of Landlord, the Premises, the Building, or the Real Property,
from mechanic's and materialmen's and like liens. Tenant shall give Landlord at
least ten (10) days' prior written notice of the date of commencement of any
construction on the Premises in order to permit the posting of such notices.
9. MAINTENANCE AND REPAIR.
(a) By taking possession of the Premises, Tenant accepts the Premises
as being in the condition in which Landlord is obligated to deliver the
Premises. Tenant, at its expense, shall at all times keep the Premises and every
part thereof and all equipment, fixtures and improvements therein in good and
sanitary order, condition and repair (except insofar as such repair is
Landlord's responsibility under Paragraph 9(b), damage thereto by fire, the
perils of the extended coverage endorsement, and earthquake excepted, and Tenant
waives all rights under, and benefits of, subsection 1 of Section 1932 and
Sections 1941 and 1942 of the California Civil Code and under any similar law or
ordinance now or hereafter in effect. Upon the expiration or sooner termination
of this Lease, Tenant shall surrender the Premises and (unless designated by
Landlord to be removed in accordance with Paragraph 8 above) all Alterations
thereto to Landlord in the same condition as when received, ordinary wear and
tear (except such as Tenant is obligated to repair to keep the Premises in good
condition and repair) and damage thereto by fire, the perils of the extended
coverage endorsement, and earthquake excepted. It is agreed that Landlord has no
obligation, and has made no promises, to alter, add to, remodel, improve,
repair, decorate or paint the Premises or any part thereof and that no
representations respecting the condition of the Premises, the Building or the
Real Property have been made by Landlord to Tenant except as may be specifically
set forth herein. No representation or warranty, express or implied, is made
with respect to (i) the condition of the Premises or the Building, (ii) the
fitness of the Premises for Tenant's intended use, (iii) the degree of sound
transfer within the Building, (iv) the absence of electrical or radio
interference in the Premises or the Building, (v) the condition, capacity or
performance of electrical or communications systems or facilities, or (vi) the
absence of objectionable odors, bright lights or other conditions which may
affect Tenant's use and enjoyment of the Premises or the Building.
(b) Landlord agrees, at its expense (subject to Paragraph 4), to make
all necessary repairs to the structure, the exterior (including walls, roof
structure and roof covering), and the public and common areas of the Building
and the building systems therein, and to maintain the same in reasonably good
order and condition. Notwithstanding the
16.
17
preceding sentence, any damage arising from the acts of Tenant, its agents,
employees, contractors, or invitees shall be repaired by Landlord at Tenant's
sole expense. Tenant shall pay Landlord on demand the cost of any such repair.
10. SERVICES.
(a) Provided that no Event of Default (as defined in Paragraph 18(a)
below) has occurred and is continuing and the Lease has not terminated,
Landlord, subject to the terms of this Paragraph 10 and the Building Rules and
Regulations attached hereto as Exhibit B and subject to applicable laws,
regulations and rules of public utilities, shall furnish, to the Premises
water, electrical power and elevator service; heating and air conditioning
suitable for the comfortable use and occupation of the Premises (assuming
normal office use thereof) during the period ("Business Hours") from 8:00 a.m.
to 6:00 p.m. on weekdays (excluding holidays), or during such other period as
may be prescribed by any applicable policies or regulations of any utility or
governmental agency; and basic janitorial service on weekdays (excluding union
holidays). Notwithstanding the foregoing, Tenant shall have access to the
Premises and use of the elevator twenty-four (24) hours per day every day of
the year. Tenant agrees that at all times it will cooperate fully with
Landlord and abide by all regulations and requirements that Landlord may
prescribe for the proper functioning and protection of the Building heating,
ventilating and air conditioning systems. Landlord shall not be liable for and
Tenant shall not be entitled to any abatement or reduction of Rental by reason
of Landlord's failure to furnish any of the foregoing or any other utilities or
services when such failure is caused by accident, breakage, repairs, strikes,
lockouts or other labor disturbances or disputes of any character, by the
limitation, curtailment, rationing or restrictions on use of electricity, gas
or any form of energy, or by any other cause, similar or dissimilar, beyond the
reasonable control of Landlord. No such failure and no interruption of
utilities or services from any cause whatsoever shall constitute an eviction of
Tenant, constructive or otherwise, or impose upon Landlord any liability
whatsoever, including, but not limited to, liability for consequential damage
or loss of business by Tenant. Tenant hereby waives the provisions of
California Civil Code Section 1932(1) or any other applicable existing or future
law, ordinance or governmental regulation permitting the termination of this
Lease due to such failure or interruption. Landlord shall not be liable under
any circumstances for injury to or death of any person or damage to or
destruction of property, however, occurring, through or in connection with or
incidential to the furnishing of or the failure to furnish any of the foregoing
utilities or services or any other utilities or services.
(b) Landlord makes no representation to Tenant regarding the
adequacy or fitness of the heating, air conditioning or ventilation equipment
in the Building to
17.
18
maintain temperatures that may be required for, or because of, any of Tenant's
equipment which uses other than the fractional horsepower normally required for
office equipment, and Landlord shall have no liability for loss or damage
suffered by Tenant or others in connection therewith. If the temperature
otherwise maintained in any portion of the Premises by the heating, air
conditioning or ventilation system is affected as a result of (i) any lights,
machines or equipment (including without limitation electronic data processing
machines) used by Tenant in the Premises, (ii) the occupancy of the Premises by
more than one person per two hundred (200) square feet of rentable area
therein, (iii) an electrical load for lighting or power in excess of the limits
per square foot of rentable area of the Premises specified in Paragraph 10(c)
below, or (iv) any rearrangement of partitioning or other improvements,
Landlord shall have the right to install supplementary air conditioning units
or other equipment Landlord reasonably deems appropriate in the Premises, and
the cost thereof, including the cost of installation, operation and maintenance
thereof, shall be paid by Tenant to Landlord, as additional rent, upon demand
by Landlord.
(c) Tenant agrees it will not, without the written consent of
Landlord, use any equipment, apparatus or device in the Premises (including,
without limitation, electronic data processing machines, computers or machines
using current in excess of 110 volts) which will, individually or in the
aggregate, in any way cause the amount of electricity, water or heating,
ventilation or air conditioning supplied to the Premises to exceed the amount
usually furnished or supplied to premises being used as general office space,
or connect with electric current (except through existing electrical outlets in
the Premises) or with water pipes any equipment, apparatus or device for the
purposes of using electric current or water. Landlord and Tenant agree that,
for purposes of this Paragraph 10, the amount of electricity normally furnished
to premises being used as general office space is .70 kilowatt hours per
rentable square foot per month (excluding electric power used in supplying
heating, ventilating and air conditioning). If Tenant shall require water or
electric current in excess of that usually furnished or supplied to premises
being used as general office space, Tenant shall first obtain the written
consent of Landlord, which consent shall not be unreasonably withheld or
delayed, and Landlord may cause an electric current or water meter to be
installed in the Premises in order to measure the amount of electric current or
water consumed for any such excess use. The cost of any such meter and of the
installation, maintenance and repair thereof; all charges for such excess water
and electric current consumed (as shown by such meters and at the rates then
charged by the furnishing public utility); and any additional expense reasonably
incurred by Landlord in keeping account of electric current or water so
consumed shall be paid by Tenant, and Tenant
18.
19
agrees to pay Landlord therefor, as additional rent, promptly upon demand by
Landlord.
(d) Tenant shall give reasonable notice in making any request for
utilities required outside of Business Hours. Tenant agrees to pay, as
additional rent, promptly on demand any and all costs reasonably incurred by
Landlord in connection with providing any additional utilities and services
Landlord may provide.
(e) In the event any governmental authority having jurisdiction over
the Real Property or the Building promulgates or revises any law, ordinance or
regulation or building, fire or other code or imposes mandatory or voluntary
controls or guidelines on Landlord or the Real Property or the Building
relating to the use or conservation of energy or utilities or the reduction of
automobile or other emissions (collectively "Controls") or in the event Landlord
is required or elects to make alterations to the Real Property or the Building
in order to comply with such mandatory or voluntary Controls, Landlord may, in
its sole discretion, comply with such Controls or make such alterations to the
Real Property or the Building related thereto. Such compliance and the making
of such alterations shall not constitute an eviction of Tenant, constructive or
otherwise, or impose upon Landlord any liability whatsoever, including, but not
limited to, liability for consequential damages or loss of business by Tenant.
11. ACCESS CONTROL.
(a) Landlord shall have the right from time to time to adopt such
policies, procedures and programs as it shall, in Landlord's reasonable
discretion, deem necessary or appropriate for the security of the Building, and
Tenant shall cooperate with Landlord in the enforcement of, and shall comply
with, the policies, procedures and programs adopted by Landlord insofar as the
same pertain to Tenant, its agents, employees, contractors and invitees.
(b) In no event shall Landlord be liable for damages resulting from
any error with regard to the admission to or the exclusion from the Building of
any person. In the case of invasion, mob, riot, public demonstration or other
circumstances rendering such action advisable in Landlord's opinion, Landlord
reserves the right to prevent access to the Building during the continuance of
the same by such action as Landlord may deem appropriate, including closing
doors.
(c) In the event of any picketing, public demonstration or other
threat to the security of the Building that is attributable in whole or in
part to Tenant, Tenant shall reimburse Landlord for any costs reasonably
incurred by Landlord in connection with such picketing, demonstration or other
threat in order to protect the security of the Building, and Tenant
19.
20
shall indemnify and hold Landlord harmless from and protect and defend Landlord
against any and all claims, demands, suits, liability, damage or loss and
against all reasonable costs and expenses, including reasonable attorneys' fees
incurred in connection therewith, arising out of or relating to any such
picketing, demonstration or other threat. Tenant agrees not to employ any
person, entity or contractor for any work in the Premises (including moving
Tenant's equipment and furnishings in, our or around the Premises) whose
presence may give rise to a labor or other disturbance in the Building and, if
necessary to prevent such a disturbance in a particular situation, Landlord may
require Tenant to employ union labor for the work.
12. ASSIGNMENT AND SUBLETTING.
(a) Restriction on Transfers. Tenant shall not, either voluntarily
or by operation of law, (i) assign or transfer this Lease or any interest
herein, (ii) sublet the Premises, or any part thereof, or (iii) enter into a
license agreement or other arrangement whereby the Premises, or any portion
thereof, are held or utilized by another party (each of the foregoing defined
herein as a "Transfer"), without the express prior written consent of Landlord,
which consent Landlord shall not unreasonably withhold, condition or delay.
Any such act (whether voluntary or involuntary, by operation of law or
otherwise) without the consent of Landlord pursuant to the provisions of this
Paragraph 12 shall, at Landlord's option, be void and/or constitute an Event of
Default under this Lease. Consent to any Transfer shall neither relieve Tenant
of the necessity of obtaining Landlord's consent to any future Transfer nor
relieve Tenant from any liability under this Lease.
By way of example and without limitation, the failure to satisfy any of
the following conditions or standards shall be deemed to constitute sufficient
grounds for Landlord to refuse to grant its consent to the proposed Transfer.
(1) The proposed Transferee must expressly assume all of the
provisions, covenants and conditions of this Lease on the part of Tenant to
be kept and performed.
(2) The proposed Transferee must satisfy Landlord's then current
credit and other standards for tenants of the Building and, in Landlord's
reasonable opinion, have the financial strength and stability to perform
all of the obligations of the Tenant under this Lease (as they apply to the
transferred space) as and when they fall due.
(3) The proposed Transferee must be reasonably satisfactory to
Landlord as to character and professional standing and must not, in
Landlord's opinion, adversely affect the tenant mix in the Building.
20.
21
(4) The proposed use of the Premises by the proposed Transferee must be,
in Landlord's opinion: (a) lawful; (b) appropriate to the location and
configuration of the Premises; (c) not in conflict with any exclusive
rights in favor of any other tenant or proposed tenant of the Building;
(d) unlikely to cause an increase in insurance premiums for insurance
policies applicable to the Building; (e) absent any new tenant
improvements that Landlord would be entitled to disapprove pursuant to
Paragraph V8 hereof; (f) unlikely to cause an increase in services to be
provided to the Premises; (g) unlikely to create any increased burden in
the operation of the Building, or in the operation of any of its
facilities or equipment; and (h) unlikely to impair the dignity,
reputation or character of the Building.
(5) The proposed use of the Premises must not result in the division of
the Premises into more than three (3) parcels or tenant spaces.
(6) Tenant must pay to Landlord any security deposit which is consistent
with prevailing market conditions for leases to comparable tenants in
first-class office buildings in the San Francisco area.
(7) At the time of the proposed Transfer, an Event of Default (as defined
in paragraph 18(a) below) shall not have occurred and be continuing, and
not event may have occurred that with notice, the passage of time, or
both, would become an Event of Default.
(8) The proposed Transferee shall not be a governmental entity or hold
any exemption from the payment of ad valorem or other taxes which would
prohibit Landlord from collecting from such Transferee any amounts
otherwise payable under this Lease.
(9) The proposed Transferee shall not be a then present tenant or
affiliate or subsidiary of a then present tenant in the Building unless
there is no other space available in the Building.
(10) Landlord shall not be negotiating with, and shall not have at any
time within the past sixty (60) days negotiated with, the proposed
Transferee for space in the Building.
(11) Any other conditions reasonably required by Landlord under the
circumstances at such time in accordance with good business practices must
be complied with.
(b) Landlord's Right of First Offer; Termination Right. Except in the
event of a proposed Transfer pursuant to Paragraph 12(e) or 12(f) below,
Landlord shall have no
21
22
obligation to consent or consider granting its consent to any proposed Transfer
unless Tenant has first delivered to Landlord a written offer to enter into such
Transfer with Landlord, which offer shall include the base rent and other
economic terms of the proposed Transfer, the date upon which Tenant desires to
effect such Transfer and all of the other material terms of the proposed
Transfer ("Tenant's Offer"). Landlord shall have fifteen (15) days from receipt
of Tenant's Offer within which to notify Tenant in writing of its decision to
accept or reject such Transfer on the terms set forth in Tenant's Offer. If
Landlord does not accept Tenant's Offer within such fifteen (15) day period,
Tenant shall deliver to Landlord a second notice of such offer. If Landlord does
not accept Tenant's Offer within five (5) days after receipt of such second
notice, Tenant may enter into such Transfer with any bona fide independent
third-party Transferee (as defined in Paragraph 12(c) below) within one hundred
twenty (120) days of the end of such fifteen (15) day period, so long as such
Transfer is for base rent not less than ninety-five percent (95%) of that
offered to Landlord in Tenant's Offer and such Transfer otherwise contains terms
not more than five percent (5%) more favorable economically to the Transferee
than the terms stated in Tenant's Offer, taking into account all rent
concessions, tenant improvements, and any other terms which have an economic
impact on the Transfer; provided, however, that the prior written approval of
Landlord for such Transfer must be obtained, and the other provisions of this
Paragraph 12 must be complied with, all in accordance with this Paragraph 12. If
Landlord accepts Tenant's Offer, Landlord and Tenant shall enter into an
agreement for such Transfer within thirty (30) days of the date Landlord makes
its election. If Landlord accepts Tenant's Offer, then (i) Landlord may enter
into a new lease, sublease or other agreement covering the Premises or any
portion thereof with the intended Transferee on such terms as Landlord and such
Transferee may agree, or enter into a new lease or agreement covering the
Premises or any portion thereof with any other person or entity, and in any such
event, Tenant shall not be entitled to any portion of the profit, if any, which
Landlord may realize on account of such new lease or agreement, (ii) Landlord
may, at Landlord's sole cost, construct improvements in the subject space and,
so long as the improvements are suitable for general office purposes, neither
Tenant nor Landlord shall have any obligation to restore the subject space to
its original condition following the termination of a sublease, and (iii)
Landlord shall not have any liability for any real estate brokerage
commission(s) or with respect to any of the costs and expenses that Tenant may
have incurred in connection with its proposed Transfer, and Tenant agrees to
indemnify, defend and hold harmless Landlord from and against any and all claims
(including, without limitation, claims for commissions) arising from such
proposed Transfer.
Except in the event of a proposed Transfer pursuant to paragraph 12(e) or
12(f) below, in the case of a proposed assignment of this Lease or a sublease of
substantially the
22.
23
entire Premises for substantially the balance of the term of this Lease, then
in addition to the foregoing rights of Landlord. Landlord shall have the right,
by notice to Tenant within fifteen (15) days after receipt of Tenant's Offer,
to terminate this Lease, which termination shall be effective as of the date on
which the intended assignment or sublease would have been effective if Landlord
had not exercised such termination right. If Landlord elects to terminate this
Lease, then from and after the date of such termination, Landlord and Tenant
each shall have no further obligation to the other under this Lease with
respect to the Premises except for matters occurring or obligations arising
hereunder prior to the date of such termination.
Landlord's foregoing rights and options shall continue throughout the
entire term of this Lease.
(c) Landlord's Approval Process. Tenant shall, in each instance of
a proposed Transfer, give written notice to Landlord at least thirty (30) days
prior to the effective date of any proposed Transfer, specifying in such notice
(i) the nature of the proposed Transfer, (ii) the portion of the Premises to be
transferred, (iii) the intended use of the transferred Premises, (iv) all
economic terms of the proposed Transfer, (v) the effective date thereof, (vi)
the identity of the transferee under the proposed Transfer (the "Transferee"),
(vii) current financial statements of the Transferee, and (viii) detailed
documentation relating to the business experience of the Transferee
(collectively, "Tenant's Notice"). Tenant shall also promptly furnish Landlord
with any other information reasonably requested by Landlord relating to the
proposed Transfer or the proposed Transferee. Within twenty (20) days after
receipt by Landlord of Tenant's Notice and any additional information and data
requested by Landlord, Landlord shall notify Tenant of its determination to
either (i) consent to the proposed Transfer, or (ii) refuse to consent to such
proposed Transfer.
(d) Consideration for Transfer. One hundred percent (100%) of all
(i) consideration paid or payable by Transferee to Tenant as consideration for
any such Transfer, and (ii) rents received in connection with the Transfer by
Tenant from Transferee in excess of the Rental payable by Tenant to Landlord
under this Lease (net of actual out-of-pocket expenses incurred by Tenant for
reasonable legal fees, brokers commissions not in excess of prevailing rates,
and costs (amortized over the remaining term of the Lease) of tenant
improvements in connection with such Transfer) shall be paid by Tenant to
Landlord immediately upon receipt thereof by Tenant. If there is more than one
sublease under this Lease, the amounts (if any) to be paid by Tenant to
Landlord pursuant to the preceding sentence shall be separately calculated for
each sublease and amounts due Landlord with regard to any one sublease may not
be offset against rental and other consideration pertaining to or
23.
24
due under any other sublease. Upon Landlord's request, Tenant shall assign to
Landlord all amounts to be paid to Tenant by any Transferee and shall direct
such Transferee to pay the same directly to Landlord.
If this Lease is assigned, whether or not in violation of the terms of
this Lease, Landlord may collect rent from the assignee. If the Premises or
any part thereof is sublet, Landlord may, upon an Event of Default by Tenant
hereunder, collect rent from the subtenant. In either event, Landlord may
apply the amount collected from the assignee or subtenant to Tenant's monetary
obligations hereunder. Neither Landlord's collection of rent from a Transferee
nor any course of dealing between Landlord and any Transferee shall constitute
or be deemed to constitute Landlord's consent to any Transfer.
(e) Merger or Consolidation of Tenant; Major Changes. Any Transfer
to any corporation or entity Controlled (as hereinafter defined) by Tenant and
any merger, reorganization, refinancing, sale of all or substantially all of
the assets of Tenant or other transaction which does not constitute a Major
Change (as hereinafter defined) shall not require Landlord's consent but shall
be subject to all of the other terms and conditions of this Paragraph 12. Any
Major Change (as hereinafter defined) must be approved by Landlord in
accordance with Paragraph 12(c) above and, without such approval, shall at
Landlord's election to void and/or constitute an Event of Default. The term
"Controlled" as used herein shall mean the ownership of (i) fifty percent (50%)
or more of the voting stock of any corporation, or (ii) fifty percent (50%) or
more of the ownership interests in any other entity and, if any such entity is
a partnership, a general partner's interest in such partnership. The term
"Major Change" as used herein shall mean any merger, reorganization,
recapitalization, refinancing or other transaction or series of transactions
involving Tenant which results in the net worth of Tenant and its consolidated
subsidiaries immediately after such transaction(s) being less than fifty percent
(50%) of the net worth of Tenant and its consolidated subsidiaries as of the
end of the fiscal year immediately preceding the date of such Major Change.
(f) Transfer of Partnership Interest or Corporate Stock. Except in
the case of a Tenant described in Paragraph 12(e), a sale, transfer or
assignment of a general partner's interest or any portion thereof in Tenant, if
Tenant is a partnership, or a sale, transfer or assignment of twenty-five
percent (25%) or more of the voting stock of Tenant (other than transfers
through a major stock exchange) if Tenant is a corporation, whether such sale,
transfer or assignment occurs in a single transaction or a series of
transactions, shall be deemed a Transfer and require Landlord's consent in
accordance with the procedures specified in Paragraph 12(c) above.
24.
25
(g) Documentation. Tenant agrees that any instrument by which Tenant
assigns this Lease or any interest therein or sublets or otherwise Transfers
all or any portion of the Premises shall expressly provide that the Transferee
may not further assign this Lease or any interest therein or sublet the sublet
space without Landlord's prior written consent (which consent shall be subject
to the provisions of this Paragraph 12), and that the Transferee will comply
with all of the provisions of this Lease and that Landlord may enforce the
Lease provisions directly against such Transferee. No permitted subletting by
Tenant shall be effective until there has been delivered to Landlord a
counterpart of the sublease in which the subtenant agrees to be and remain
jointly and severally liable with Tenant for the payment of rent pertaining to
the sublet space and for the performance of all of the terms and provisions of
this Lease; provided, however, that the subtenant shall be liable to Landlord
for rent only in the amount set forth in the sublease. No permitted assignment
shall be effective unless and until there has been delivered to Landlord a
counterpart of the assignment in which the assignee assumes all of Tenant's
obligations under this Lease arising on or after the date of the assignment.
The failure or refusal of a subtenant or assignee to execute any such
instrument shall not release or discharge the subtenant or assignee from its
liability as set forth above.
(h) Options Personal to Original Tenant. If Landlord consents to a
Transfer hereunder and this Lease contains any renewal options, expansion
options, rights of first refusal, rights of first negotiation or any other
rights or options pertaining to additional space in the Building, such rights
and/or options shall not run to the Transferee, it being agreed by the parties
hereto that any such rights and options are personal to the original Tenant
named herein and may not be transferred.
(i) Encumbrance of Lease. Notwithstanding any provision of this Lease to
the contrary, Tenant shall not mortgage, encumber or hypothecate this Lease or
any interest herein without the prior written consent of Landlord, which
consent may be withheld in Landlord's sole and absolute discretion. Any such
act without the prior written consent of Landlord (whether voluntary or
involuntary, by operation of law or otherwise shall, at Landlord's option, be
void and/or constitute an Event of Default under this Lease.
(j) No Merger. The voluntary or other surrender of this Lease or of the
Premises by Tenant or a mutual cancellation of this Lease shall not work a
merger, and at the option of Landlord any existing subleases may be terminated
or be deemed assigned to Landlord in which latter event the subleases or
subtenants shall become tenants of Landlord.
(k) Landlord's Costs. Tenant shall pay to Landlord the amount of
Landlord's reasonable cost of processing each
25.
26
proposed Transfer (including, without limitation, attorneys' and other
professional fees, and the cost of Landlord's administrative, accounting and
clerical time; collectively "Processing Costs"), and the amount of all
reasonable direct and indirect expenses incurred by Landlord arising from the
assignee or sublessee taking occupancy of the subject space (including, without
limitation, costs of freight elevator operation for moving of furnishings and
trade fixtures, security service, janitorial and cleaning service, and rubbish
removal service). Notwithstanding anything to the contrary herein, Landlord
shall not be required to process any request for Landlord's consent to a
Transfer until Tenant has paid to Landlord the amount of Landlord's estimate of
the Processing Costs and all other reasonable direct and indirect costs and
expenses of Landlord and its agents arising from the assignee or subtenant
taking occupancy.
13. WAIVER; INDEMNIFICATION. Neither Landlord nor Landlord's agents, nor
any shareholder, constituent partner or other owner of Landlord or any agent of
Landlord, nor any contractor, officer, director or employee of any thereof shall
be liable to Tenant and Tenant waives all claims against Landlord and such other
persons for any injury to or death of any person or for loss of use of or damage
to or destruction of property in or about the Premises or the Building by or
from any cause whatsoever, including without limitation, earthquake or earth
movement, gas, fire, oil, electricity or leakage from the roof, walls, basement
or other portion of the Premises or the Building, unless caused by the gross
negligence or willful misconduct of Landlord, its agents or employees. Tenant
agrees to indemnify and hold Landlord, Landlord's agents, the shareholders,
constituent partners and/or other owners of Landlord or any agent of Landlord,
and all contractors, officers, directors and employees of any thereof
(collectively, "Indemnitees"), and each of them, harmless from and to protect
and defend each Indemnitee against any and all claims, demands, suits,
liability, damage or loss and against all costs and expenses, including
reasonable attorneys' fees incurred in connection therewith, (a) arising out of
any injury or death of any person or damage to or destruction of property
occurring in, on or about the Premises, from any cause whatsoever, unless caused
by the gross negligence or willful misconduct of such Indemnitee, or (b)
occurring in, on or about any facilities (including without limitation
elevators, stairways, passageways or hallways) the use of which Tenant has in
common with other tenants, or elsewhere in or about the Building or in the
vicinity of the Building, when such claim, injury or damage is caused in whole
or in part by the act, neglect, default, or omission of any duty by Tenant, its
former or current agents, contractors, employees, invitees, or subtenants or
other persons in or about the Building by reason of Tenant's occupancy of the
Premises, or otherwise by any conduct of any of said persons in or about the
Premises or the Real Property, or (c) arising from any failure of Tenant to
observe or perform any of its
26.
27
obligations hereunder. If any action or proceeding is brought against any of the
Indemnitees by reason of any such claim or liability, Tenant, upon notice from
Landlord, covenants to resist and defend at Tenant's sole expense such action or
proceeding by counsel reasonably satisfactory to Landlord. The provisions of
this Paragraph shall survive the termination of this Lease with respect to any
claims or liability occurring prior to such termination.
14. INSURANCE.
(a) At Tenant's expense, Tenant shall procure, carry and maintain in
effect throughout the term of this Lease, in a form reasonably acceptable to
Landlord and with such insurance companies as are reasonably acceptable to
Landlord (which companies shall have a Best's rating of A-X or better), the
following insurance coverage:
(i) Commercial general liability insurance on an occurrence
basis, with limits in an amount not less than $5,000,000 combined single limit
per occurrence, for claims or losses arising out of or resulting from personal
injury (including bodily injury), death and/or property damage sustained or
alleged to have been sustained by any person for any reason on the Premises, for
liability arising out of or resulting from Tenant's covenant in Paragraph 13 to
indemnify Landlord and all other Indemnities, its agents and employees, and for
contractual liability;
(ii) All Risk Replacement Cost insurance with an agreed amount
endorsement upon property of every description and kind owned by Tenant and
located in the Premises and for Tenant's Extra Improvements and Alterations in
an amount equal to 100% of the full replacement value thereof; and
(iii) Workers' compensation insurance, in accordance with
applicable law.
(b) Not more often than every year and upon not less than sixty (60)
days' prior written notice, Landlord may require Tenant to increase the
insurance limits set forth in Paragraphs 14(a)(i) and 14(a)(ii) above to amounts
which Landlord reasonably determines to be appropriate.
(c) All policies of liability insurance so obtained and maintained
shall be carried in the name of Tenant, name Landlord and Landlord's designated
agents as additional insureds, and shall provide that the insurance policy so
endorsed will be the primary insurance providing coverage for Landlord, and
contain a cross-liability endorsement stating that the rights of insureds shall
not be prejudiced by one insured making a claim or commencing an action against
another insured. Any other liability insurance maintained by Landlord shall be
excess and non-contributing. At Landlord's election, such
27.
28
policies shall name the holder of any Superior Interest or any other interested
party as an insured party under a standard mortgagee endorsement.
(d) All insurance policies required under this Lease shall provide
that the insurer shall not cancel, reduce, modify or fail to renew such coverage
without thirty (30) days' prior written notice to Landlord. Tenant shall deliver
certificates of all insurance required hereunder upon the commencement of the
term of this Lease. In the event Tenant does not comply with the requirements of
this Xxxxxxxxx 00, Xxxxxxxx may, at its option and at Tenant's expense, purchase
such insurance coverage to protect Landlord. The cost of such insurance shall be
paid to Landlord by Tenant, as additional rent, immediately upon demand
therefor, together with interest at the Interest Rate until paid.
(e) The parties release each other, and their respective authorized
representatives, from any claims for loss or damage that are caused by or
result from perils insured under any insurance policies carried by the parties
in force at the time of any such damage. Each party shall cause each insurance
policy obtained by it to provide that the insurer waives all right of recovery
by way of subrogation against either party in connection with any loss or
damage covered by the policy. Neither party shall be liable to the other for
any loss or damage caused by the insured risks under any insurance policy
required by this Lease.
(f) Landlord shall maintain in force throughout the term of this
Lease commercial general liability insurance and an all-risk policy of casualty
insurance and such other insurance coverage as Landlord reasonable elects to
maintain, all in such amounts, on such terms and with such companies as
Landlord may, from time to time, reasonably determine is appropriate.
15. PROTECTION OF LENDERS.
(a) This Lease shall be subject and subordinate at all times to all
ground or underlying leases which may now or hereafter exist affecting the
Building or the Real Property, or both, and to the lien of any mortgage or deed
of trust in any amount or amounts whatsoever now or hereafter placed on or
against the Building or the Real Property, or both, or on or against Landlord's
interest or estate therein (such mortgages, deeds of trust and leases are
referred to herein, collectively, as "Superior Interests"), all without the
necessity of any further instrument executed or delivered by or on the part of
Tenant for the purpose of effectuating such subordination. Notwithstanding the
foregoing, Tenant covenants and agrees to execute and deliver, upon demand,
such further instruments evidencing such subordination of this Lease to any
such Superior Interest as may reasonably be required by Landlord, provided
28.
29
that such instruments shall contain the protection referred to in Paragraph
15(b).
(b) Notwithstanding the foregoing, in the event of a foreclosure of
any such mortgage or deed of trust or of any other action or proceeding for the
enforcement thereof, or of any sale thereunder, this Lease shall not be
terminated or extinguished, nor shall the rights and possession of Tenant
hereunder be disturbed, if no Event of Default then exists under this Lease,
and Tenant shall attorn to the person who acquires Landlord's interest
hereunder through any such mortgage or deed of trust. Landlord shall use
diligent efforts to obtain from any holder of a Superior Interest in existence
as of the Commencement Date a written confirmation (in a separate writing or
in a subordination agreement) of its concurrence with the provisions of this
Paragraph 15(b).
(c) Within ten (10) days after Landlord's written request, Tenant
shall deliver to Landlord, or to any actual or prospective holder of a Superior
Interest ("Holder") that Landlord designates, such financial statements as are
reasonably required by such Holder to verify the financial condition of Tenant
(or any assignee, subtenant or guarantor of Tenant). Tenant represents and
warrants to Landlord and such Holder that each financial statement delivered by
Tenant shall be accurate in all material respect as of the date of such
statement. All financial statements shall be confidential and used only for the
purposes stated herein, and prior to delivering any non-public financial
information Tenant shall have the right to receive a written confidentiality
agreement imposing reasonable restrictions on the use and disclosure of any
such financial information.
(d) If Landlord is in default, Tenant will accept cure of any
default by any Holder whose name and address shall have been furnished to
Tenant in writing. Tenant may not exercise any rights or remedies for
Landlord's default unless Tenant gives notice thereof to each such Holder and
the default is not cured within thirty (30) days thereafter or such greater
time as may be reasonably necessary to cure such default. A default which
cannot reasonably be cured within said 30-day period shall be deemed cured
within said period if work necessary to cure the default is commenced within
such time and proceeds diligently thereafter until the default is cured.
(e) If any prospective Holder should require, as a condition of any
Superior Interest, a modification of the provisions of this Lease, Tenant shall
approve and execute any such modifications promptly after request, provided no
such modification shall relate to the Rental payable hereunder or the length of
the term hereof or otherwise materially alter the rights or obligations of
Landlord or Tenant hereunder.
29.
30
16. ENTRY BY LANDLORD.
(a) Landlord reserves, and shall at all reasonable times have, the
right to enter the Premises to inspect them; to supply janitorial service and
any other service to be provided by Landlord hereunder; upon reasonable notice
to submit the Premises to prospective purchasers, mortgagees or tenants; to post
notices of nonresponsibility; and upon reasonable notice to alter, improve or
repair the Premises and any portion of the Building as permitted or provided
hereunder, all without abatement of Rental; and upon reasonable notice may erect
scaffolding and other necessary structures in or through the Premises where
reasonably required by the character of the work to be performed; provided,
however, that any such entrance or work shall not reasonably interfere with
Tenant's use of the Premises. If such entry is made as aforesaid, Tenant hereby
waives any claim for damages for any injury or inconvenience to or interference
with Tenant's business, any loss of occupancy or quiet enjoyment of the
Premises, and any other loss occasioned by such entry unless caused by the gross
negligence or willful misconduct of Landlord. For each of the foregoing
purposes, Landlord shall at all times have and retain a key and/or other access
device with which to unlock all of the doors in, on and about the Premises
(excluding Tenant's vaults, safes and similar areas designated in writing by
Tenant in advance and approved by Landlord); and Landlord shall have the right
to use any and all means which Landlord may deem proper to open said doors in an
emergency in order to obtain entry to the Premises, and any entry to the
Premises obtained by Landlord by any of said means, or otherwise, shall not
under any circumstances be construed or deemed to be a forcible or unlawful
entry into or a detainer of the Premises, or any portion thereof.
(b) Landlord shall also have the right at any time to change the
arrangement or location or times of access of entrances or passageways, doors
and doorways, and corridors, elevators, stairs, toilets or other public parts
of the Building (provided no such change shall unreasonably interfere in any
material respect with Tenant's use of the Premises), and to change the name,
number or designation by which the Building is commonly known, and none of the
foregoing shall be deemed an actual or constructive eviction of Tenant, nor
shall it entitle Tenant to any reduction of Rental hereunder or result in any
liability of Landlord to Tenant.
17. ABANDONMENT. Tenant shall not abandon the Premises or any part
thereof at any time during the term hereof. Tenant understands that if Tenant
leaves the Premises or any part thereof vacant, the risk of fire, other
casualty and vandalism to the Premises and the Building will be increased.
Accordingly, Tenant's abandonment of the Premises or any part thereof shall
constitute an Event of Default hereunder regardless of whether Tenant continues
to pay Basic Monthly Rental and other Rental under this Lease. If Tenant
abandons or
30.
31
surrenders all or any part of the Premises or is dispossessed of the Premises
by process of law, or otherwise, any movable furniture, equipment, trade
fixtures, or other personal property belonging to Tenant and left on the
Premises shall at the option of Landlord be deemed to be abandoned and, whether
or not the property is deemed abandoned, Landlord shall have the right to
remove such property from the Premises and charge Tenant for the removal and any
restoration of the Premises as provided in Paragraph 8(a). Landlord may charge
Tenant for the storage of Tenant's property left on the Premises at such rates
as Landlord may from time to time reasonably determine, or, Landlord may, at
its option, store Tenant's property in a public warehouse at Tenant's expense.
Notwithstanding the foregoing, neither the provisions of this Paragraph 17 nor
any other provision of this Lease shall impose upon Landlord any obligation to
care for or preserve any of Tenant's property left upon the Premises, and
Tenant hereby waives and releases Landlord from any claim or liability in
connection with the removal of such property from the Premises and the storage
thereof and specifically waives the provisions of California Civil Code Section
1542 with respect to such release. Landlord's action or inaction with regard
to the provisions of this Paragraph 17 shall not be construed as a waiver of
Landlord's right to require Tenant to remove its property, restore any damage
to the Building caused by such removal, an make any restoration required
pursuant to Paragraph 8(a) hereof.
18. DEFAULT AND REMEDIES.
(a) The occurrence of any one or more of the following events (each
an "Event of Default") shall constitute a breach of this Lease by Tenant:
(i) Tenant fails to pay any Basic Monthly Rental or additional
monthly rent under Paragraph 4(b) hereof as and when such rent becomes due and
payable and such failure continues for more than five (5) days after Landlord
gives written notice thereof to Tenant; provided, however, that after the
second such failure in a calendar year, only the passage of time, but no
further notice, shall be required to establish an Event of Default in the same
calendar year; or
(ii) Tenant fails to pay any additional rent or other amount of
money or charge payable by Tenant hereunder as and when such additional rent or
amount or charge becomes due and payable and such failure continues for more
than twenty (20) days after Landlord gives written notice thereof to Tenant;
provided, however, that after the second such failure in a calendar year, only
the passage of time, but no further notice, shall be required to establish an
Event of Default in the same calendar year; or
(iii) Tenant fails to perform or breaches any other agreement or
covenant of this Lease to be performed or
31.
32
observed by Tenant as and when performance or observance is due and such failure
or breach continues for more than twenty (20) days after Landlord gives written
notice thereof to Tenant; provided, however, that if, by the nature of such
agreement or covenant, such failure or breach cannot reasonably be cured within
such period of twenty (20) days, an Event of Default shall not exist as long as
Tenant commences with due diligence and dispatch the curing of such failure or
breach within such period of ten (10) days and, having so commenced, thereafter
prosecutes with diligence and dispatch and completes the curing of such failure
or breach within a reasonable time; or
(iv) Tenant (A) is generally not paying its debts as they become due,
(B) files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy, insolvency
or other debtors' relief law of any jurisdiction, (C) makes an assignment for
the benefit of its creditors, (D) consents to the appointment of a custodian,
receiver, trustee or other officer with similar powers of Tenant or of any
substantial part of Tenant's property, or (E) takes action for the purpose of
any of the foregoing; or
(v) Without consent by Tenant, a court or government authority enters
an order, and such order is not vacated within sixty (60) days, (A) appointing a
custodian, receiver, trustee or other officer with similar powers with respect
to Tenant or with respect to any substantial part of Tenant's property, or (B)
constituting an order for relief or approving a petition for relief or
reorganization or arrangement or any other petition in bankruptcy or for
liquidation or to take advantage of any bankruptcy, insolvency or other debtors'
relief law of any jurisdiction, or (C) ordering the dissolution, winding-up or
liquidation of Tenant; or
(vi) This Lease or any estate of Tenant hereunder is levied upon under
any attachment or execution and such attachment or execution is not vacated
within sixty (60) days; or
(vii) Tenant abandons the Premises.
(b) If an Event of Default occurs, Landlord shall have the right at any
time to give a written termination notice to Tenant and, on the date specified
in such notice, Tenant's right to possession shall terminate and this Lease
shall terminate. Upon such termination, Landlord shall have the right to recover
from Tenant:
(i) The worth at the time of award of all unpaid rent which had been
earned at the time of termination;
32.
33
(ii) The worth at the time of award of the amount by which all
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided;
(iii) The worth at the time of award of the amount by which all
unpaid rent for the balance of the term of this Lease after the time of award
exceeds the amount of such rental loss that Tenant proves could be reasonably
avoided; and
(iv) All other amounts necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform all of Tenant's
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom.
The "worth at the time of award" of the amounts referred to in clauses (i) and
(ii) above shall be computed by allowing interest at the maximum annual interest
rate allowed by law for business loans (not primarily for personal, family or
household purposes) not exempt from the usury law at the time of termination or,
if there is no such maximum annual interest rate, at the rate of eighteen
percent (18%) per annum. The "worth at the time of award" of the amount referred
to in clause (iii) above shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus one percent (1%). For the purpose of determining unpaid rent under clauses
(i), (ii) and (iii) above, the rent reserved in this Lease shall be deemed to be
the total rent payable by Tenant under Articles 3 and 4 hereof.
(c) Even though Tenant has breached this Lease, this Lease shall
continue in effect for so long as Landlord does not terminate Tenant's right to
possession, and Landlord shall have all of its rights and remedies including the
right, pursuant to California Civil Code section 1951.4, to recover all rent as
it becomes due under this Lease. Acts of maintenance or preservation or efforts
to relet the Premises or the appointment of a receiver upon initiative of
Landlord to protect Landlord's interest under this Lease shall not constitute a
termination of Tenant's right to possession unless written notice of termination
is given by Landlord to Tenant.
(d) The remedies provided for in this Lease are in addition to all
other remedies available to Landlord at law or in equity by statute or
otherwise.
19. DAMAGE BY FIRE OR OTHER CASUALTY.
(a) If the Premises are partially destroyed or damaged by fire or
other casualty, Landlord shall, subject to Paragraphs 19(b), 19(c), 19(d) and
19(e) below, promptly repair such damage if, in Landlord's reasonable judgment,
such repair
33.
34
can be completed within ninety (90) days under the laws and regulations of the
state, federal, county and municipal authorities having jurisdiction, and this
Lease shall remain in full force and effect, provided that if there shall be
damage to the Premises from any such cause and such damage is not the result of
the act, neglect, default or omission of Tenant, its agents, employees,
contractors or invitees, Tenant shall be entitled to a reduction of Basic
Monthly Rental from the date of the destruction while such repair is being made
in the proportion that the area of the Premises rendered untenantable by such
damage bears to the total area of the Premises. Tenant's right to a reduction
of Basic Monthly Rental under this Paragraph 19 shall be Tenant's sole remedy
in connection with any such damage.
(b) If such repairs cannot, in Landlord's reasonable judgment, be
completed within ninety (90) days, or if such damage occurs during the last six
(6) months of the term of this Lease, Landlord shall have the option either (i)
to repair such damage, this Lease continuing in full force and effect, but with
the Basic Monthly Rental proportionately reduced (subject to the condition set
forth in Paragraph 19(a) above), or (ii) to give notice to Tenant at any time
within thirty (30) days after the occurrence of such damage terminating this
Lease as of a date specified in such notice, which shall not be less than
thirty (30) nor more than sixty (60) days after the giving of such notice. If
such notice of termination is so given, the Lease and all interest of Tenant in
the Premises shall terminate on the date specified in such notice, and the
Basic Monthly Rental, reduced (subject to the condition set forth in Paragraph
19(a) above) in proportion to the area of the Premises rendered untenantable by
the damage, shall be paid up to the date of such termination, Landlord hereby
agreeing to refund to Tenant any Rental theretofore paid for any period of time
subsequent to the termination date.
(c) If the Building is damaged by fire or other casualty to the
extent that the repair cost would exceed twenty percent (20%) or more of its
replacement value, or if more than twenty percent (20%) of the rentable area of
the Building is affected by fire or other casualty and repairs to the
Building cannot, in Landlord's reasonable judgment, be completed within ninety
(90) days, or if insurance proceeds sufficient to complete the repairs are not
available due to exercise of rights of a Holder to collect such proceeds, then
in any such case, whether the Premises are damaged or not, Landlord shall have
the right, at its option, to terminate this Lease by giving Tenant notice
thereof within thirty (30) days of such casualty specifying the date of
termination which shall not be less than thirty (30) nor more than sixty (60)
days after the giving of such notice.
(d) If the Premises are damaged by fire or other casualty not
resulting in whole or in part from the negligence
34.
35
or willful misconduct of Tenant or its employees, agents, contractors or
subtenants and the repair to the Premises cannot, in Landlord's reasonable
judgment, be completed within one hundred eighty (180) days, assuming the
availability of labor and materials, Tenant, at its option, may terminate this
Lease. Tenant's notice to Landlord of its election to terminate the Lease must
be delivered to Landlord within thirty (30) days after the occurrence of such
damage and the termination shall be as of a date specified in such notice which
shall be no less than 30 days nor more than sixty (60) days after the giving of
such notice. In the event of a termination of the Lease by Tenant under this
Paragraph 19(d), the Basic Monthly Rental shall be reduced in the same manner as
provided under Paragraph 19(b) above. If Tenant shall notify Landlord as to
Tenant's election to terminate this Lease, Landlord shall have the right by
giving Tenant notice within twenty (20) days of Tenant's election, to relocate
Tenant in substantially similar office space in the Building within thirty (30)
days of the date of Tenant's notice to Landlord and the Lease will then not be
deemed to have been terminated. If Landlord so elects to relocate Tenant,
Landlord shall bear the cost of moving Tenant to such other office space, and
Tenant shall continue to pay Basic Monthly Rental and other Rental to Landlord
as provided herein and Landlord shall bear the cost of any rental in excess
thereof for such other office space. Tenant's occupancy of such other office
space shall not exceed one (1) year from the date of Tenant's commencement of
occupancy in such other office space, Landlord shall notify Tenant in writing
not later than sixty (60) days prior to the expiration of such one-year period
and upon expiration of such one-year period, this Lease shall terminate. In the
event Landlord can complete such repairs within such one-year period, Landlord
shall so notify Tenant in writing and shall move Tenant back into the Premises
as soon as practicable after such repairs have been completed. The cost of
moving Tenant back into the Premises shall be borne by Landlord.
(e) Notwithstanding any of the provisions of this Lease, Landlord shall in
no event be required to repair any injury or damage by fire or other cause
whatsoever to, or to make any repairs or replacements of, any panelings,
decorations, partitions, railings, ceilings, floor coverings, trade or office
fixtures or any other property of, or improvements (including Tenant's Extra
Improvements and any Alterations) installed on the Premises by or at the
election of Tenant. Tenant hereby agrees to promptly repair any damage to
Tenant's Extra Improvements and any Alterations at its sole cost and expense in
the event that Landlord is required to, or elects to, repair the remainder of
the Premises pursuant to Paragraphs 19(a) and 19(b) above.
35.
36
(f) Tenant hereby waives the provisions of subsection 2 of Section
1932, subsection 4 of Section 1933, and Sections 1941 and 1942 of the
California Civil Code.
20. EMINENT DOMAIN.
(a) If all or part of the Premises shall be taken by any public or
quasi-public authority under the power of eminent domain or conveyance in lieu
thereof, this Lease shall terminate as to any portion of the Premises so taken
or conveyed on the date when title or the right to possession vests in the
condemnor.
(b) If (i) a part of the Premises shall be taken by any public or
quasi-public authority under the power of eminent domain or conveyance in lieu
thereof; and (ii) Tenant is reasonably able to continue the operation of
Tenant's business in that portion of the Premises remaining; and (iii) Landlord
elects to restore the Premises to an architectural whole, then this Lease shall
remain in effect as to said portion of the Premises remaining, and the Basic
Monthly Rental payable from the date of the taking shall be reduced in the same
proportion as the area of the Premises taken bears to the total area of the
Premises. If, after a partial taking, Tenant is not reasonably able to continue
the operation of its business in the Premises or Landlord elects not to restore
the Premises as hereinabove described, this Lease may be terminated by either
Landlord or Tenant by giving written notice to the other party within thirty
(30) days of the date of the taking. Such notice shall specify the date of
termination which shall be not less than thirty (30) nor more than sixty (60)
days after the date of said notice.
(c) If a portion of the Building is taken, whether any portion of
the Premises is taken or not, and Landlord determines that it is not
economically feasible to continue operating the portion of the Building
remaining, then Landlord shall have the option for a period of thirty (30) days
after such determination to terminate this Lease. If Landlord determines that
it is economically feasible to continue operating the portion of the Building
remaining after such taking, then this Lease shall remain in effect, with
Landlord, at Landlord's cost, restoring the Building to an architectural whole.
(d) Landlord shall be entitled to any and all payment, income, rent,
award, or any interest therein whatsoever which may be paid or made in
connection with such taking or conveyance, and Tenant shall have no claim
against Landlord or otherwise for the value of any unexpired term of this Lease
or for the value of any improvements in or to the Premises. Tenant hereby
assigns any such claim to the Landlord. Notwithstanding the foregoing, to the
extent that the same shall not diminish Landlord's recovery for such taking,
Tenant shall have the right
36.
37
to make a claim directly to the entity expressing the power of eminent domain
for moving expenses and for loss or damage to Tenant's trade fixtures,
equipment and movable furniture.
(e) Tenant hereby waives sections 1265.110 through 1265.160 of the
California Code of Civil Procedure.
21. HOLDING OVER. Any holding over after the expiration or other
termination of the term of this Lease with the written consent of Landlord
delivered to Tenant shall be construed to be a tenancy from month to month at
the Basic Monthly Rental in effect on the date of such expiration or
termination (subject to adjustment as provided in Paragraph 3(c) hereof) on the
terms, covenants and conditions herein specified so far as applicable. Any
holding over after the expiration or other termination of the term of this
Lease without the written consent of Landlord shall be construed to be a
tenancy at sufferance on all the terms set forth herein, except that the Basic
Monthly Rental shall be an amount equal to: for the first thirty (30) days
after such expiration or termination, one hundred fifty percent (150%) of the
Basic Monthly Rental payable immediately prior to such holding over; and
thereafter, two hundred percent (200%) of the Basic Monthly Rental payable by
Tenant immediately prior to such holding over. Acceptance by Landlord of Rental
after the expiration or termination of this Lease shall not constitute a
consent by Landlord to any such tenancy from month to month or result in any
other tenancy or any renewal of the term hereof. The provisions of this
Paragraph are in addition to, and do not affect, Landlord's right to re-entry
or other rights hereunder or provided by law.
22. PARKING. (a) Tenant may lease on a monthly basis permits for parking
on an up to six (6) automobiles in the parking lot located at 000 Xxxxxxx
Xxxxxx (the "Lot") at the same monthly rates as are established from time to
time by the owner or operator for other spaces in the Lot. The use by Tenant,
its employees and invitees of the Lot shall be subject to the rules and
regulations established from time to time by the owner or operator of the Lot.
If Tenant has not rented the number of parking spaces to which it is entitled
within three months after the Commencement Date, or if any time thereafter
Tenant releases any parking space or spaces, Tenant shall lose its right to
rent the number of parking spaces by which its entitlement under this Paragraph
22(a) exceeds the parking spaces actually rented, but Landlord shall use
reasonable efforts to make such number of parking spaces available to
37.
38
Tenant within six (6) months after Tenant delivers notice to Landlord of
Tenant's desire to rent the same.
(b) In addition to the parking rights granted pursuant to Paragraph 22(a),
Tenant may lease on a month-to-month basis permits for parking up to an
additional four (4) automobiles in the Lot, subject to the above-referenced
rules and regulations. Either Landlord or Tenant may terminate any or all of
such additional four (4) permits upon thirty (30) days notice to the other.
23. MISCELLANEOUS.
(a) Limitation of Landlord's Liability. Any liability of Landlord
(including without limitation Landlord's partners, shareholders, affiliates,
agents, and employees) to Tenant under this Lease shall be limited to the equity
interest of Landlord in the Building and Tenant agrees to look solely to such
interest for the recovery of any judgment, it being intended that Landlord and
such other persons shall not be personally liable for any deficiency or
judgment. Notwithstanding any other provision of this Lease, Landlord shall not
be liable for any consequential damages, nor shall Landlord be liable for loss
of or damage to artwork, currency, jewelry, bullion, unique or valuable
documents, securities or other valuables, or for other property not in the
nature of ordinary fixtures, furnishings and equipment used in general
administrative and executive office activities and functions. Wherever in this
Lease Tenant (a) releases Landlord from any claim or liability, (b) waives or
limits any right of Tenant to assert any claim against Landlord or to seek
recourse against any property of Landlord or (c) agrees to indemnify Landlord
against any matters, the relevant release, waiver, limitation or indemnity shall
run in favor of and apply to Landlord, its agents, the constituent shareholders,
partners or other owners of Landlord or its agents, and the directors, officers,
and employees of Landlord and its agents and each such constituent shareholder,
partner or other owner.
(b) Sale by Landlord. In the event of a sale or conveyance of the
Building by any owner of the reversion then constituting Landlord, the
transferor shall thereby be released from any further liability upon any of the
terms, covenants or conditions (express or implied) herein contained in favor of
Tenant, and in such event, insofar as such transferor is concerned, Tenant
agrees to look solely to the successor in interest of such transferor in and to
the Building and this Lease. Tenant agrees to attorn to the successor in
interest of such transferor. If Tenant provides Landlord with any security for
Tenant's performance of its obligations hereunder, and Landlord transfers, or
provides a credit with respect to, such security to the grantee or transferee of
Landlord's interest in the Real Property, Landlord shall be released from any
further responsibility or liability for such security.
38.
39
(c) Estoppel Letter. Tenant shall, at any time and from time to time
within ten (10) days following request from Landlord, execute, acknowledge and
deliver to Landlord a statement in writing, (i) 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), (ii) certifying that there are not, to Tenant's knowledge, any
uncured defaults on the part of the Landlord hereunder, and that Tenant has no
defenses to or offsets against its obligations under this Lease, or specifying
such defaults, defenses or offsets if any are claimed, (iii) certifying the date
that Tenant entered into occupancy of the Premises, (iv) certifying the amount
of the Basic Monthly Rental and the Rental payable under Paragraph 4(b) and the
date to which Rental is paid in advance, if any, and certifying that Tenant is
entitled to no rent abatement or other economic concessions not specified in the
Lease, (v) evidencing the status of this Lease as may be required either by a
lender making a loan affecting, or a purchaser of, the Premises, the Building,
the Real Property or any interest therein from Landlord, (vi) certifying the
amount of the Deposit, if any, (vii) certifying that all Improvements to be
constructed in the Premises by Landlord are completed (or specifying any
obligations of Landlord respecting Improvements), and (viii) certifying such
other matters relating to this Lease and/or the Premises as may reasonably be
requested by a lender making a loan to Landlord or a purchaser of the Premises,
the Building, the Real Property or any interest therein from Landlord. Any such
statement may be relied upon by, and shall upon Landlord's request be addressed
to, any prospective purchaser or encumbrancer of all or any portion of the Real
Property or any interest therein; provided that, prior to delivering any
non-public financial information, Tenant shall have the right to receive a
written confidentiality agreement imposing reasonable restrictions on the use
and disclosure of any such financial information. Tenant shall, within ten (10)
days following request of Landlord, deliver such other documents including
Tenant's financial statements as are reasonably requested in connection with the
sale of, or loan to be secured by, the Real Property or any part thereof or
interest therein. Tenant's failure to deliver said statement in the time
required shall be conclusive upon Tenant that: (i) the Lease is in full force
and effect, without modification except as may be represented by Landlord, (ii)
there are no uncured defaults in Landlord's performance and Tenant has no right
of offset, counterclaim or deduction against Rental under the Lease and (iii) no
more than one month's Basic Monthly Rental has been paid in advance.
(d) Financial Statements. On or before April 1 of each year, Tenant
shall deliver to Landlord Tenant's financial statements ("Financial Statements")
for the fiscal year of Tenant ended on the previous December 31, which Financial
Statements shall include a combined balance sheet of Tenant and
39.
40
its combined subsidiaries as at the end of such fiscal year, a combined
statement of operations of Tenant and its combined subsidiaries for such fiscal
year, and a certificate of Tenant's auditor (or, if audited Financial
Statements are not available, then a certificate of Tenant's Chief Financial
Officer) to the effect that such Financial Statements were prepared in
accordance with generally accepted accounting principles consistently applied
and fairly present the financial condition and operations of Tenant and its
combined subsidiaries for and as at the end of such fiscal year. Landlord
agrees that Landlord shall not disclose any non-public financial information
except to Landlord's agents and advisors (and Landlord shall take reasonable
steps to assure that such agents and advisors likewise agree not to disclose
such non-public financial information), and that the Financial Statements shall
be used solely for purposes related to Landlord's management and operation of,
and investment in, the Real Property.
(e) Right of Landlord To Perform. All terms and covenants of this
Lease to be performed or observed by Tenant shall be performed or observed by
Tenant at Tenant's expense and without any reduction of Rental. If Tenant fails
to pay any Rental hereunder or fails to perform any other term or covenant
hereunder on its part to be performed, and such failure shall continue for
twenty (20) days (or such shorter period as may be reasonable under emergency
circumstances) after written notice thereof by Landlord, Landlord, without
waiving or releasing Tenant from any obligation of Tenant hereunder, may make
any such payment or perform any such other term or covenant on Tenant's part to
be performed but shall not be obligated to do so. All sums so paid by Landlord
and all necessary costs of such performance by Landlord, together with interest
thereon at the Interest Rate from the date of such payment or performance by
Landlord, shall be paid (and Tenant covenants to make such payment) to Landlord
on demand by Landlord, and Landlord shall have (in addition to any other right
or remedy of Landlord) the same rights and remedies in the event of non-payment
thereof by Tenant as in the case of failure by Tenant in the payment of Rental
hereunder.
(f) Rules and Regulations. Tenant agrees to faithfully observe and
to comply with the Building Rules and Regulations attached hereto as Exhibit B
and incorporated herein by this reference, and all reasonable modifications of
and additions thereto from time to time put into effect by Landlord which are
applicable to all tenants of the Building and of which Tenant shall have
notice. Landlord shall not be responsible to Tenant for the non-performance by
any other tenant or occupant of the Building of any of said Building Rules and
Regulations. In the event any of the Building Rules and Regulations conflict
with any express provision of this Lease, the provisions of this Lease shall
govern.
40.
41
(g) Attorneys' Fees. In case any suit or other proceeding shall be
brought for an unlawful detainer of the Premises or for the recovery of any
Rental due under the provisions of this Lease or because of the failure of
performance or observance of any other term or covenant herein contained on the
part of Landlord or Tenant, the unsuccessful party in such suit or proceeding
shall pay to the prevailing party therein reasonable attorneys' fees and costs
which shall include fees and costs of any appeal, all as fixed by the Court. If
Landlord or Tenant should be named as a defendant in any suit brought against
the other in connection with Tenant's occupancy of the Premises under this
Lease, the party defendant primarily responsible for the bringing of such suit
shall pay to the other party its costs and expenses incurred in such suit and
reasonable attorneys' fees.
(h) Waiver of Jury Trial. If any action or proceeding between
Landlord and Tenant to enforce the provisions of this Lease (including an
action or proceeding between Landlord and the trustee or debtor in possession
while Tenant is a debtor in a proceeding under any bankruptcy law) proceeds to
trial, Landlord and Tenant hereby waive their respective rights to a jury in
such trial.
(i) Waiver. The failure of Landlord to object to or to assert any
remedy by reason of Tenant's failure to perform or observe any covenant or term
hereof or its failure to assert any rights by reason of the happening or
non-happening of any condition hereof shall not be deemed a waiver of its right
to assert and enforce any remedy it may have by reason of such failure on the
part of Tenant or the happening or non-happening of such condition or a waiver
of its rights to enforce any of its rights by reason of any subsequent failure
of Tenant to perform or observe the same or any other term or covenant or by
reason of the subsequent happening or non-happening of the same or any other
condition. No custom or practice which may develop between the parties hereto
during the term hereof shall be deemed a waiver of, or in any way affect, the
right of Landlord to insist upon performance and observance by Tenant in strict
accordance with the terms hereof. The acceptance of Rental hereunder by
Landlord shall not be deemed to be a waiver of any preceding failure of Tenant
to perform or observe any term or covenant of this Lease, other than the
failure of Tenant to pay the particular Rental so accepted, irrespective of any
knowledge on the part of Landlord of such preceding failure at the time of
acceptance of such Rental.
(j) Light, Air and View. Tenant agrees that no diminution or
shutting off of light, air or view by any structure which may be erected
(whether or not by Landlord) on property adjacent to the Building shall in any
way affect this Lease, entitle Tenant to any reduction of Rental hereunder or
result in any liability of Landlord to Tenant.
41
42
(k) Notices. All notices, demands, requests, advices or designations
("Notices") which may be or are required to be given by either party to the
other hereunder shall be in writing. All Notices by Landlord to Tenant shall be
sufficiently given, made or delivered if personally served on Tenant by leaving
the same at the Premises, or if sent by United States certified or registered
mail, postage prepaid, addressed to Tenant at Tenant's address for notices as
set forth in the Summary of Lease Terms. All Notices by Tenant to Landlord
shall be sufficiently given, made or delivered if personally served on
Landlord, or sent by United States certified or registered mail, postage
prepaid, addressed to Tenant at Tenant's address for notices as set forth in
the Summary of Lease Terms. All Notices by Tenant to Landlord shall be
sufficiently given, made or delivered if personally served on Landlord, or sent
by United States certified or registered mail, postage prepaid, addressed to
Landlord at Landlord's address for notices specified in Paragraph B of the
Summary of Lease Terms. Each Notice shall be deemed received on the date of the
personal service or three (3) days after the mailing thereof, in the manner
herein provided, as the case may be.
(l) Name. Tenant agrees that it shall not, without first obtaining
the written consent of Landlord (which consent may be withheld in Landlord's
sole and absolute discretion): (i) use the name of the Building for any purpose
other than as the address of the business conducted by Tenant in the Premises,
or (ii) use for any purpose any image of, rendering of, or design based on, the
exterior appearance or profile of the Building.
(m) Governing Law; Severability. This Lease shall in all respects be
governed by and construed in accordance with the laws of California. If any
provision of this Lease shall be invalid, unenforceable or ineffective for any
reason whatsoever, all other provisions hereof shall be and remain in effect.
(n) Definitions and Paragraph Headings; Successors. The words
"include," "includes" and "including" shall be deemed to be followed by the
phrase "without limitation." The term "Landlord" or any pronoun used in place
thereof includes the plural as well as the singular and the successors and
assigns of Landlord. The term "Tenant" or any pronoun used in place thereof
includes the plural as well as the singular and individuals, firms,
associations, partnerships and corporations, and their and each of their
respective heirs, executors, administrators, successors and permitted assigns,
according to the context hereof. The provisions of this Lease shall inure to
the benefit of and bind Landlord and Tenant and their respective heirs,
executors, administrators, successors and permitted assigns. The term "person"
includes the plural as well as the singular and individuals, firms,
associations, partnerships and corporations. Words used in any gender include
other genders. If there be more than one Tenant the obligations of Tenant
hereunder are joint and several. The paragraph headings of this Lease are for
convenience of reference only and shall have no effect upon the construction or
interpretation of any provision hereof.
42.
43
(o) Time. Time is of the essence of this Lease with respect to
the payment of Rental and the performance of all obligations.
(p) Examination of Lease. Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of or
option for a lease, and this instrument is not effective as a lease or
otherwise until its execution and delivery by both Landlord and Tenant.
(q) Brokerage. Tenant covenants and represents that it has
negotiated this Lease directly with the Tenant's Broker(s) designated on the
Summary of Lease Terms and has not acted by implication to authorize, nor has
authorized, any other real estate broker or salesman to act for it in these
negotiations. Tenant agrees to protect, defend, indemnify and hold Landlord
harmless from any and all claims, loss, cost, damage and/or expense (including,
without limitation, attorneys' fees and court costs) by any other real estate
broker or salesperson or other entity or party for a commission or finder's fee
as a result of Tenant's entering into this Lease to the extent Tenant has
agreed to pay such commission or fee. Landlord agrees to protect, defend,
indemnify and hold Tenant harmless from any and all claims, loss, cost, damage
and/or expense (including, without limitation, attorneys' fees and court costs)
by any real estate broker or salesperson or other entity or party for a
commission or finder's fee as a result of Tenant's entering into this Lease to
the extent Landlord has agreed to pay such commission or fee.
(r) Directory Board. Landlord agrees to list Tenant's name on the
directory board in the lobby of the Building and in the elevator lobbies on the
floors on which the Premises are located at Landlord's cost and expense;
provided, however, any change to the initial listing or any additional listings
shall be at Tenant's cost and expense. Landlord's acceptance of any name for
listing on the directory board shall in no event be, or be deemed to be, nor
will it substitute for, Landlord's consent, as required by this Lease, to any
sublease, assignment, or other occupancy of the Premises.
(s) Authority. If Tenant is a corporation (or other business
organization), Tenant and each person executing this Lease on behalf of Tenant
represents and warrants to Landlord that (a) Tenant is duly incorporated (or
organized) and validly existing under the laws of its state of incorporation
(or organization), (b) Tenant is qualified to do business in California, (c)
Tenant has full right, power and authority to enter into this Lease and to
perform all of Tenant's obligations hereunder, and (d) the execution, delivery
and performance of this Lease has been duly authorized by Tenant and each
person signing this Lease on behalf of the Tenant is duly and validly
authorized to do so. Concurrently with signing this Lease, Tenant shall
deliver to Landlord a true and correct copy of
43.
44
resolutions duly adopted by the board of directors or constituent partners or
members of Tenant, certified by the secretary of Tenant to be true and
correct, unmodified and in full force, which authorize and approve this Lease
and authorize each person signing this Lease on behalf of Tenant to do so.
(t) Amendments. This Lease may not be amended or modified in any
respect whatsoever except by an instrument in writing signed by Landlord and
Tenant.
(u) Exhibits and Addenda; Entire Agreement. The Exhibits and Addenda
referenced in the Summary of Lease Terms are a part of this Lease and are
incorporated herein by this reference. In the event of any discrepancy between
the Lease and any such Exhibit or Addendum, the Exhibit or Addendum shall
control. This Lease is the entire and integrated agreement between Landlord and
Tenant with respect to the subject matter of this Lease, the Premises and the
Building. There are no oral agreements between Landlord and Tenant affecting
this Lease, and this Lease supersedes and cancels any and all previous
negotiations, arrangements, brochures, offers, agreements and understandings,
oral or written, if any, between Landlord and Tenant or displayed by Landlord
to Tenant with respect to the subject matter of this Lease, the Premises or the
Building. There are no representations between Landlord and Tenant or between
any real state broker and Tenant other than those expressly set forth in this
Lease and all reliance with respect to any representations is solely upon
representations expressly set forth in this Lease.
44.
45
IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered this
Lease as of the day and year first above written.
LANDLORD:
SOMA PARTNERS, L.P., a California
limited partnership
By SKS/Xxxxxxxxx, LLC, a
Delaware limited liability
company, general partner
By Xxxxx Xxxxxxxx Xxxxx, a
California corporation,
Member
By /s/ Xxxx X. Xxxxx
--------------------------
Its President
-------------------
TENANT:
MICROMUSE INC., a Delaware
corporation
By: /s/ Xxxxxxxxxxx X. Xxxxx
--------------------------
Its: President
-----------------------
45.
46
EXHIBIT A
FLOOR PLAN
47
EXHIBIT A
---------
[MEZZANINE FLOOR PLAN]
[HUNTSMAN ASSOCIATES LETTERHEAD]
48
EXHIBIT A
(continued)
-----------
49
EXHIBIT B
BUILDING RULES AND REGULATIONS
1. Sidewalks, halls, passages, exits, entrances, elevators, escalators
and stairways shall not be obstructed by tenants or used by them for any purpose
other than for ingress to and egress from their respective premises. The halls,
passages, exits, entrances, elevators, escalators and stairways are not for the
use of the general public and Landlord shall in all cases retain the right to
control and prevent access thereto by all persons whose presence, in the
judgment of Landlord, would be prejudicial to the safety, character, reputation
and interests of the Building and its tenants.
2. No sign, placard, picture, name, advertisement or notice, visible
from the exterior of leased premises shall be inscribed, painted, affixed or
otherwise displayed by any tenant either on its premises or any part of the
Building without the prior written consent of Landlord, and Landlord shall have
the right to remove any such sign, placard, picture, name, advertisement, or
notice without notice to and at the expense of the Tenant.
If Landlord shall have given such consent to any tenant at any time,
whether before or after the execution of the Lease, such consent shall in no way
operate as a waiver or release of any of the provisions hereof or of such Lease,
and shall be deemed to relate only to the particular sign, placard, picture,
name, advertisement or notice so consented to by Landlord and shall not be
construed as dispensing with the necessity of obtaining the specific written
consent of Landlord with respect to any other such sign, placard, picture, name,
advertisement or notice.
No signs will be permitted on any entry door unless the door is
glass. All glass door signs must be approved by Landlord. Signs or lettering
shall be printed, painted, affixed or inscribed at the expense of the Tenant by
a person approved by Landlord.
3. The bulletin board or directory of the Building will be provided
exclusively for the display of the name and location of tenants only and
Landlord reserves the right to exclude any other names therefrom. Landlord
reserves the right to restrict the amount of directory space utilized by Tenant.
4. No curtains, draperies, blinds, shutters, shades, screens or other
coverings, hangings or decorations shall be attached to, hung or placed in, or
used in connection with, any window on any premises without the prior written
consent of Landlord. in any event, with the prior written consent of
50
Landlord, all such items shall be installed inside of Landlord's standard
draperies and shall in no way be visible from the exterior of the Building. No
articles shall be placed or kept on the window xxxxx so as to be visible from
the exterior of the Building.
5. Landlord reserves the right to exclude from the Building between the
hours of 6 P.M. and 6 A.M. and at all hours on Saturdays, Sundays and holidays
all persons who do not present a pass to the Building signed by Landlord.
Landlord will furnish passes to persons for whom any tenant requests the same in
writing. Each tenant shall be responsible for all persons for whom it requests
passes and shall be liable to Landlord for all acts of such persons.
Landlord shall in no case be liable for damages for any error with
regard to the admission to or exclusion from the Building of any person.
During any invasion, mob, riot, public excitement or other
circumstance rendering such action advisable in Landlord's opinion, Landlord
reserves the right to prevent access to the Building by closing the doors, or
otherwise, for the safety of tenants and protection of the Building and property
in the Building.
6. No tenant shall employ any person or persons other than the janitor
of Landlord for the purpose of cleaning the premises unless otherwise agreed to
by Landlord in writing. Except with the written consent of Landlord, no person
or persons other than those approved by Landlord shall be permitted to enter the
Building for the purpose of cleaning the same. No tenant shall cause any
unnecessary labor by reason of such tenant's carelessness or indifference in the
preservation of good order and cleanliness. Landlord shall in no way be
responsible to any tenant for any loss of property on the premises, however
occurring, or for any damage done to the property of any tenant by the janitor
or any other employee or any other person. Janitorial service shall include
ordinary dusting and cleaning by the janitor assigned to such work and shall not
include beating or cleaning of carpets or rugs or moving of furniture or other
special services. Janitorial service will not be furnished on nights when rooms
are occupied after 9:30 p.m. Window cleaning shall be done only by Landlord, and
at such intervals and such hours as Landlord shall deem appropriate.
7. No tenant shall obtain for use upon its premises ice, drinking
water, food, beverage, towel or other similar services, or accept barbering or
bootblacking services in its premises, except from persons authorized by
Landlord, and at hours and under regulations fixed by Landlord.
2.
51
8. Each tenant shall see that the doors of its premises are closed and
securely locked and must observe strict care and caution that all water faucets
or water apparatus are entirely shut off before the Tenant or its employees
leave such premises, and that all utilities shall likewise be carefully shut
off, so as to prevent waste or damage, and for any default or carelessness the
Tenant shall make good all injuries sustained by ocher tenants or occupants of
the Building or Landlord. On multiple-tenancy floors all tenants shall keep the
door or doors to the Building corridors closed at all times except for ingress
and egress.
9. No tenant shall alter any lock or install a new or additional lock
or any bolt on any door of its premises without the prior written consent of
Landlord. If Landlord shall give its consent, the tenant shall in each case
furnish Landlord with a key for any such lock.
10. Landlord will furnish Tenant without charge with two (2) keys to
each door lock provided in the Premises by Landlord. Landlord may make a
reasonable charge for any additional keys. Tenant shall not have any such keys
copied or any keys made. Each tenant, upon the termination of the tenancy, shall
deliver to Landlord all the keys of or to the Building, offices, rooms and
toilet rooms which shall have been furnished to the Tenant or which the Tenant
shall have had made. In the event of the loss of any keys so furnished by
Landlord, Tenant shall pay Landlord therefor.
11. The toilet rooms, toilets, urinals, wash bowls and other apparatus
shall not be used for any purpose other than that for which they were
constructed and no foreign substance of any kind whatsoever shall be thrown
therein, and the expense of any breakage, stoppage or damage resulting from the
violation of this rule shall be borne by the tenant who, or whose employees or
invitees, shall have caused it.
12. No tenant shall use or keep in its premises or the Building any
kerosene, gasoline or inflammable or combustible fluid or material or use any
method of heating or air conditioning other than that supplied by Landlord.
13. No tenant shall use, keep or permit to be used or kept in its
premises any foul or noxious gas or substance or permit or suffer such premises
to be occupied or used in a manner offensive or objectionable to Landlord or
other occupants of the Building by reason of noise, odors and/or vibrations or
interfere in any way with other tenants or those having business therein, nor
shall any animals or birds be brought or kept in or about any premises or the
Building.
14. No cooking shall be done or permitted by any tenant on its premises,
except that the preparation of coffee, tea, hot
3.
52
chocolate and similar items for tenants and their employees shall be permitted,
nor shall such premises be used for lodging.
15. Except with the prior written consent of Landlord, no tenant shall
sell, or permit the sale, at retail of newspapers, magazines, periodicals,
theater tickets or any other goods or the merchandise in or on any premises, nor
shall any tenant carry on, or permit or allow any employee or other person to
carry on, the business of stenography, typewriting or any similar business in or
from any premises for the service or accommodation of occupants of any other
portion of the Building, nor shall the premises of any tenant be used for the
storage of merchandise or for manufacturing of any kind, or the business of a
public xxxxxx shop, beauty parlor, or any business or activity other than that
specifically provided for in such tenant's lease.
16. Landlord will direct electricians as to where and how telephone,
telegraph and electrical wires are to be introduced or installed. No boring or
cutting for wires will be allowed without the prior written consent of Landlord.
The location of telephones, call boxes and other office equipment affixed to all
premises shall be subject to the written approval of Landlord. All electrical
appliances must be grounded and must meet UL Label Standards.
17. No tenant shall install any radio or television antenna, loudspeaker
or any other device on the exterior walls of the Building.
18. No tenant shall lay linoleum, tile, carpet or any other floor
covering so that the same shall be affixed to the floor of its premises in any
manner except as approved in writing by Landlord. The expense of repairing any
damage resulting from a violation of this rule or the removal of any floor
covering shall be borne by the tenant by whom, or by whose contractors,
employees or invitees, the damage shall have been caused.
19. No furniture, freight, equipment, packages or merchandise will be
received in the Building or carried up or down the elevators, except between
such hours, through such entrances and in such elevators as shall be designated
by Landlord. Landlord reserves the right to require that moves be scheduled and
carried out during nonbusiness hours of the Building. Landlord shall have the
right to prescribe the weight, size and position of all safes and other heavy
equipment brought into the Building. Safes or other heavy objects shall, if
considered necessary by Landlord, stand on wood strips of such thickness as is
necessary to properly distribute the weight thereof. Landlord will not be
responsible for loss of or damage to any such safe or property from any cause,
and all damage done to the Building by moving or maintaining any such safe or
other property shall be repaired at the expense of the Tenant.
4.
53
20. No tenant shall overload the floor of its premises or xxxx, or drive
nails, screw or drill into, the partitions, woodwork or plaster or in any way
deface such premises or any part thereof.
21. There shall not be used in any space, or in the public areas of the
Building, either by any tenant or others any hand trucks except those equipped
with rubber tires and side guards. No other vehicles of any kind shall be
brought by any tenant into or kept in or about any premises in the Building.
22. Each tenant shall store all its trash and garbage within the
interior of its premises. No material shall be placed in the trash boxes or
receptacles if such material is of such nature chat it may not be disposed of in
the ordinary and customary manner of removing and disposing of trash and garbage
in the City of San Francisco without violation of any law or ordinance governing
such disposal. All trash, garbage and refuse disposal shall be made only through
entryways and elevators provided for such purposes and at such times as Landlord
shall designate.
23. Canvassing, soliciting, distribution of handbills and other written
materials and peddling in the Building are prohibited and each tenant shall
cooperate to prevent the same.
24. Landlord shall have the right, exercisable without notice and
without liability to any tenant, to change the name and address of the Building.
25. The requirements of tenants will be attended to only upon
application at the office of the Building. Employees of Landlord shall not
perform any work or do anything outside of their regular duties unless under
special instructions from Landlord, and no employee will admit any person
(tenant or otherwise) to any office without specific instructions from
Landlord.
26. Landlord may waive any one or more of these Rules and Regulations
for the benefit of any particular tenant or tenants, but no such waiver by
Landlord shall be construed as a waiver of such Rules and Regulations in favor
of any other tenant or tenants, nor prevent Landlord from thereafter enforcing
any such Rules and Regulations against any or all tenants of the Building.
27. These Rules and Regulations may be changed from time to time, as
Landlord may deem appropriate, and are in addition to, and shall not be
construed to in any way modify, alter or amend, in whole or in part, the terms,
covenants and conditions of the Lease.
5.
54
OFFICE LEASE
SUMMARY OF LEASE TERMS
000 Xxxxxxxx Xxxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx
A. Date: March 25, 1997
B. Landlord: SOMA PARTNERS, L.P., a California limited partnership
Landlord's address for notices: c/x Xxxxx Xxxxxxxx Xxxxx
[Paragraph 22(j)]
000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
C. Tenant: MICROMUSE INC., a Delaware corporation
Tenant's address for notices: 000 Xxxxxxxx Xxxxxx
[Paragraph 22(j)] Xxx Xxxxxxxxx, XX 00000
Tenant Contact Person: Xx. Xxxxxxxxxxx Xxxxx
D. Floor(s) on which Premises situated: 5th and Mezzanine
[Paragraph 1(g)]
E. Rentable area of Premises: Suite 500: 7,105 rsf
[Paragraph 1(g)] Mezzanine: 4,130 rsf
Total : 11,235
F. Tenant's Percentage Share: 19.65%
[Paragraph l(l)]
G. Base Expense Year: 1997
[Paragraph 1(a)]
H. Base Tax Year: 1997
[Paragraph 1(b)]
I. Term; Commencement and Expiration Dates:
[Paragraph 2]
five (5) years, commencing on May 1, 1997, and
expiring on April 30, 2002.
J. Basic Monthly Rental: $20,997.00 ($14,802 for Suite 500
[Paragraph 3(a)] and $6,195 for Mezzanine)
Basic Annual Rental: $251,965 ($177,625 for Suite 500
and $74,340 for Mezzanine)
i.
55
K. CPI Adjustment Dates: N/A
[Paragraph 3(c)]
L. Security Deposit: $37,170
[Paragraph 3(e)]
M. Landlord's Broker(s): None
[Paragraph 23(p)]
N. Tenant's Broker(s): None
[Paragraph 23(p)]
0. Exhibits and addenda: Exhibit A - Floor Plan
[Paragraph 23(t)] Exhibit B - Building Rules and
Regulations
The provisions of the Lease identified above in brackets are those provisions
where references to particular Lease Terms appear. Each such reference shall
incorporate the applicable Lease Terms. In the event of any conflict between the
Summary of Lease Terms and the Lease, the latter shall control.
LANDLORD:
SOMA PARTNERS, L.P., a California
limited partnership
By SKS/Xxxxxxxxx, LLC, a
Delaware limited liability
company, general partner
By Xxxxx Xxxxxxxx Xxxxx, a
California corporation,
Member
BY [sig]
-----------------------------
Its President
------------------------
(Signatures Continued on Next Page)
ii.
56
TENANT:
MICROMUSE INC., a Delaware
Corporation
By: [sig]
------------------------------
Its: President
------------------------
57
TABLE OF CONTENTS
1. DEFINITIONS............................................................ 1
2. TERM................................................................... 6
3. RENTAL; SECURITY DEPOSIT............................................... 7
4. TENANT'S SHARE OF OPERATING EXPENSES AND REAL PROPERTY TAXES........... 9
5. OTHER TAXES PAYABLE BY TENANT..........................................11
6. USE....................................................................12
7. COMPLIANCE WITH LAWS/ENVIRONMENTAL MATTERS.............................13
8. ALTERATIONS; LIENS.....................................................14
9. MAINTENANCE AND REPAIR.................................................16
10. SERVICES...............................................................16
11. ACCESS CONTROL.........................................................19
12. ASSIGNMENT AND SUBLETTING..............................................20
(a) Restriction on Transfers........................................20
(b) Landlord's Right of First Offer; Termination
Right...........................................................21
(c) Landlord's Approval Process.....................................23
(d) Consideration for Transfer......................................23
(e) Merger or Consolidation of Tenant: Major Changes................24
(f) Transfer of Partnership Interest or Corporate
Stock...........................................................24
(g) Documentation .. . . ...........................................24
(h) Options Personal to Original Tenant.............................25
(i) Encumbrance of Lease............................................25
(j) No Merger.......................................................25
(k) Landlord's Costs................................................25
13. WAIVER; INDEMNIFICATION................................................26
14. INSURANCE..............................................................27
15. PROTECTION OF LENDERS..................................................28
16. ENTRY BY LANDLORD......................................................29
17. ABANDONMENT............................................................30
18. DEFAULT AND REMEDIES...................................................31
iv.
58
19. DAMAGE BY FIRE OR OTHER CASUALTY.......................................33
20. EMINENT DOMAIN.........................................................35
21. HOLDING OVER...........................................................36
22. PARKING................................................................37
23. MISCELLANEOUS..........................................................38
(a) Limitation of Landlord's Liability..............................38
(b) Sale by Landlord................................................38
(c) Estoppel Letter.................................................38
(d) Financial Statements............................................39
(e) Right of Landlord To Perform....................................40
(f) Rules and Regulations...........................................40
(g) Attorneys' Fees.................................................40
(h) Waiver of Jury Trial............................................41
(i) Waiver..........................................................41
(j) Light, Air and View.............................................41
(k) Notices.........................................................41
(1) Name............................................................42
(m) Governing Law; Severability.....................................42
(n) Definitions and Paragraph Headings; Successors..................42
(o) Time............................................................42
(p) Examination of Lease............................................42
(q) Brokerage.......................................................43
(r) Directory Board.................................................43
(s) Authority.......................................................43
(t) Amendments......................................................44
(u) Exhibits and Addenda; Entire Agreement..........................44
EXHIBIT A FLOOR PLAN
EXHIBIT B BUILDING RULES AND REGULATIONS
v.
