1
EXHIBIT 10.27
STANDARD INDUSTRIAL "GROSS" LEASE FOR SINGLE TENANT
This Lease is made as of September 20, 1999 ("Execution Date"),
between Xxxxxx Springs LLC, a California limited liability company ("Landlord"),
and Xxxx.xxx, a California corporation ("Tenant").
1. BASIC LEASE INFORMATION; DEFINITIONS
1.1 Basic Lease Information. If there is a conflict between the Basic
Lease Information in this Section 1.1 and the remainder of the Lease, the latter
shall control.
Premises: The entire building at 000 Xxxxxx Xxxxxx, Xxx
Xxxxxxxxx, Xxxxxxxxxx ("Building"), as outlined
on the site plan attached as Exhibit A, as
further described in Sections 2.1 and 2.2.
Rentable Area: Approximately 40,410 rentable square feet,
subject to verification under Section 2.1
Term: Ten (10) years from Commencement Date (see
Section 3.1)
Extension Option: One (1) 5-year extension option (see Section
3.3)
Commencement Date: If Landlord performs the "Tenant Improvement
Work" (as defined in Section 2.4), then the
Commencement Date shall be the later of (a) the
date Landlord delivers the Premises to Tenant
with the Tenant Improvement Work substantially
completed in accordance with the Work Letter
attached as Exhibit B, or (b) April 1, 2000.
If Tenant elects to perform the Tenant
Improvement Work pursuant to the Work Letter;
the Commencement Date shall be fixed at
seventy-five (75) days from Landlord's Delivery
Date (as defined in Section 3.2(b)).
Estimated Commencement Date: April 1, 2000
Monthly Base Rent: Year Rent/Square Foot Monthly Base Rent*
------------------ ---- ---------------- ------------------
1-2 [*]/Year [*]
3-4 [*]/Year [*]
5-6 [*]/Year [*]
7-8 [*]/Year [*]
9-10 [*]/Year [*]
* Based on 40,410 rentable square feet, subject
to recalculation pursuant to Section 2.1
-1-
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
2
Base Year: 2000, except that with respect to Property Taxes
(as defined in Section 26), the Base Year shall
be tax year 2000/2001 Security Deposit:
[*] irrevocable letter of credit (see Section
4.5, including Tenant's right thereunder to
reduce the letter of credit)
Permitted Use: Multimedia, business services and general
office, to the extent general office use is
permitted under applicable zoning and other Laws
(see Section 6.1)
Parking Allotment: Thirty-three (33) unassigned parking spaces (see
Section 7)
Tenant's Liability Insurance: $2,000,000 (see Section 12.1)
Address of Landlord: Xxxxxx Springs LLC
0000 X. Xxxxxxxx, Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Attn: Xxxxxxx Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Address of Tenant: Before Commencement Date
Xxxx.xxx
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
After Commencement Date
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Brokers: Colliers International (Xxxxxxx X. XxXxxxxx)
(Landlord's broker); BT Commercial (Xxxx
Xxxxxxxxx) (Tenant's broker) (see Section 27.14)
TI Allowance: [*]/rentable square foot (see Work Letter
attached as Exhibit B)
1.2 Definitions. Unless otherwise provided, definitions of capitalized
words and phrases are set forth in Section 26 of this Lease.
-2-
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
3
2. PREMISES; CONDITION PRECEDENT
2.1 Demise of Premises. Landlord leases to Tenant and Tenant leases from
Landlord the premises described in the Basic Lease Information in Section 1.1
("Premises"), on and subject to the terms and conditions of this Lease. Tenant
acknowledges that, as of the Execution Date, the Premises consist of a two-story
building to which Landlord will add a third floor before the Commencement Date.
Before the Commencement Date, Landlord's architect shall verify the number of
rentable square feet in the Premises in accordance with standards published by
the Building Owners and Managers Association. Tenant's architect may consult
with Landlord's architect regarding such verification. Once the rentable square
footage of the Premises has been verified, the Monthly Base Rent stated in the
Basic Lease Information shall be recalculated if needed to reflect the correct
amount. Upon such verification, Tenant shall have no claim against Landlord or
defense to enforcing this Lease based on any difference between the agreed upon
rentable square footage and the actual rentable square footage in the Premises.
2.2 Landlord's Reserved Rights. Notwithstanding anything to the contrary
in this Lease, the Premises shall exclude the exterior walls, the foundation,
the roof and the structural components of the Building. In addition, Landlord
reserves the right, from time to time, to: (a) locate, install, repair and
replace any pipes, utility lines, ducts, wires, mains and structural elements
through the Premises in locations that will not materially interfere with
Tenant's use of or access to the Premises; (b) change the lines of the lot on
which the Building stands ("Lot") and make other reasonable changes and grant
others rights thereto, including without limitation grant easements, rights of
way and rights of ingress and egress and similar rights to users and owners of
adjacent parcels; and (c) alter or relocate any Base Building Facilities (as
defined in Section 26), without material impairment (other than temporary
interruptions as may be necessary in the case of emergency) to Tenant's use of
or access to the Premises.
2.3 Condition of Premises. Landlord agrees to perform, at its cost, the
addition of a third story to the Building, work on the Base Building Facilities
and other related work, all described as "Landlord's Work" in Exhibit C
attached. Landlord also agrees to perform, on Tenant's behalf, that certain
tenant improvement work described as "Tenant Improvement Work" in the Work
Letter attached as Exhibit B, in accordance with the terms and conditions of the
Work Letter, unless Tenant elects to perform the Tenant Improvement Work
pursuant to the Work Letter. Except for Landlord's Work and, if Tenant elects
not to perform the Tenant Improvement Work, the Tenant Improvement Work,
Landlord shall have no obligation to improve or otherwise modify the Premises
for Tenant's use. Subject to Landlord's representations and warranties in
Section 2.4, Tenant shall accept the Premises in its "as is" condition as of the
Execution Date, including but not limited to title, physical condition, size or
dimensions of the Premises, and the zoning, building and land use restrictions
applicable to the Premises.
2.4 Landlord's Representations. If Landlord performs the Tenant
Improvement Work, Landlord represents and warrants that, as of the Commencement
Date, the Premises and the Building are in good condition and repair, all
Building systems and equipment are in good operating condition, and the Premises
and the Building comply in all material respects with all
-3-
4
Laws (as defined in Section 26). If Tenant performs the Tenant Improvement Work,
Landlord represents and warrants that, as of the Commencement Date, Landlord's
Work is in good condition and repair and comply in all material respects with
all Laws. If Landlord becomes aware that any of the foregoing representations
and warranties was not true as of the Commencement Date, Landlord shall remedy
or cure any such violation promptly and diligently at Landlord's sole cost and
expense. This Lease shall not be void or voidable as a result of Landlord's
violation of any representation and warranty, nor shall Landlord or its
Authorized Representatives (as defined in Section 26) have any liability to
Tenant therefor provided Landlord remedies or cures any such violation promptly
and diligently at Landlord's sole cost and expense. Tenant acknowledges that,
except for the representations and warranties in this Section, neither Landlord
nor its Authorized Representatives have made any representations or warranties
to Tenant regarding the Premises or the Building.
2.5 Condition Precedent to Obligations. The obligations of the parties
under this Lease are expressly conditioned upon the issuance by the City of San
Francisco of a building permit for the Tenant Improvement Work for the Permitted
Use ("Permit"). If the City refuses to issue the Permit, then either Landlord or
Tenant shall have the right to terminate this Lease by written notice to the
other, delivered within fifteen (15) days after receipt of the City's notice.
Upon such termination, Landlord and Tenant shall have no further liability under
the Lease and each party shall be responsible for paying its own costs and fees.
3. TERM; EXTENSION OPTION; HOLDING OVER
3.1 Term. The initial term of this Lease shall be for the period
specified in the Basic Lease Information ("Initial Term"), unless sooner
terminated pursuant to other provisions of this Lease; provided, however, if the
Commencement Date is not the first day of the month, the Term will expire on the
last day of the calendar month during which the Term would otherwise expire. All
references in this Lease to "Term" shall mean the Initial Term and, upon the
exercise of the Extension Option (as defined in Section 3.3), shall mean the
Initial Term as extended by such Extension Option.
3.2 Term Commencement.
(a) If Landlord performs the Tenant Improvement Work, this
paragraph (a) shall govern. Landlord shall use reasonable diligence to cause the
Commencement Date to occur on or before the Estimated Commencement Date
specified in the Basic Lease Information, as such date is extended for any
delays caused by Force Majeure (as defined in Section 26) or Tenant Delays (as
defined in the Work Letter). The actual Commencement Date shall be the later of
the Estimated Commencement Date or the date Landlord delivers the Premises to
Tenant with Substantial Completion (as defined in the Work Letter) of the Tenant
Improvement Work. Notwithstanding the foregoing, if Landlord is delayed in the
Substantial Completion of the Tenant Improvement Work as a result of a Tenant
Delay, Landlord may determine, in its sole good-faith judgment, that the actual
Commencement Date is the date that Substantial Completion of the Tenant
Improvement Work would have occurred but for such delay.
(b) If Tenant elects to perform the Tenant Improvement Work, this
paragraph (b) shall govern. The Commencement Date shall be fixed at seventy-five
(75) days after
-4-
5
Landlord's Delivery Date. "Landlord's Delivery Date" shall be the date that
Landlord delivers the Premises to Landlord with the Minimal Landlord's Work
substantially completed. "Minimal Landlord's Work" shall consist of that portion
of Landlord's Work that, in Landlord's good-faith judgment, must be completed in
order for Tenant to commence the Tenant Improvement Work, including the
construction of the third floor of the Building. Tenant acknowledges that
Landlord shall continue to perform Landlord's Work even after Landlord's
Delivery Date, and that Landlord and Tenant shall cooperate with each other in
coordinating the performance of Landlord's Work and the Tenant Improvement Work.
(c) As soon as the actual Commencement Date is known, the parties
will execute an addendum to this Lease stating the actual Commencement Date and
termination date of this Lease.
3.3 Extension Option. Tenant shall have the option to renew this Lease
as to the entire Premises then demised under this Lease ("Extension Option") for
one (1) additional consecutive period of five (5) years ("Extended Term"),
commencing on expiration of the Initial Term on the following terms and
conditions:
(a) Tenant shall exercise the Extension Option, if at all, by
delivering to Landlord an irrevocable notice of option exercise no later than
nine (9) months and no earlier than twelve (12) months before the expiration of
the Initial Term. Any notice of option exercise delivered after the deadline
shall, at Landlord's option, be void.
(b) All terms and conditions of this Lease shall apply during the
Extended Term except that: (i) there shall be no further Extension Option; and
(ii) the Monthly Base Rent for the Extended Term shall be the greater of (x)
"Fair Market Rent" for the Premises as determined in Section 4.3 below, or (y)
the Monthly Base Rent for the last month of the Initial Term.
(c) Notwithstanding anything to the contrary in this Lease, the
Extension Option is personal to the Tenant originally named in the Lease (or its
Permitted Transferee, as defined in Section 15.10 below) and may be exercised
only if the Tenant originally named in the Lease physically occupies at least
two full floors of the Premises as of the date Tenant exercises the Extension
Option and as of the commencement of the Extension Term. At Landlord's option,
Tenant shall not have the right to exercise the Extension Option (and any
Extension Option exercised by Tenant will be voided) if (a) Landlord has given
Tenant written notice, on or before the date Tenant exercises the Extension
Option or the commencement of the Extension Term, that a default has occurred
and Tenant has not yet cured such default, or (b) Landlord has given Tenant
written notice from Landlord, on more than two (2) occasions in the preceding
twelve (12) month period, that a default in the payment of Rent or any other
material default has occurred (regardless of whether such defaults subsequently
are cured).
3.4 No Liability for Landlord. This Lease shall not be void or voidable,
nor shall Landlord or its Authorized Representatives have any liability to
Tenant, by reason of Landlord's failure to deliver the Premises by the Estimated
Commencement Date. Postponement of the Commencement Date shall be Tenant's
exclusive remedy and in sole satisfaction of all Claims
-5-
6
Tenant might otherwise have by reason of Landlord's failure to deliver the
Premises by the Estimated Commencement Date.
3.5 Holding Over. If Tenant, with Landlord's written consent, remains in
possession of the Premises after the Term ends, such holding over by Tenant
shall be a month-to-month tenancy only, terminable on thirty (30) days' notice
at any time by either party. The Monthly Base Rent during such holdover tenancy
shall be: (a) for the initial thirty (30) days of such holdover, one hundred
fifty percent (150%) of the Monthly Base Rent in effect for the month before the
Term end, and (b) thereafter, two hundred percent (200%) of the Monthly Base
Rent in effect for the month before the end of the Term, and all other terms and
conditions of this Lease shall apply to the holdover tenancy except those
pertaining to the Extension Option or the Right of First Offer in Section 25.
Nothing contained in this Lease shall be construed as Landlord's consent to any
holding over by Tenant, and Landlord expressly reserves the right to require
Tenant to surrender possession of the Premises to Landlord as provided in this
Lease upon the expiration or other termination of this Lease. If Tenant fails to
surrender the Premises upon the termination or expiration of this Lease, in
addition to any other liabilities to Landlord accruing therefrom, Tenant shall
indemnify, defend and hold Landlord harmless from all Claims resulting from such
failure, including, without limitation, any Claims by any succeeding tenant
based on such failure to surrender, and any lost profits to Landlord resulting
therefrom.
4. RENT
4.1 Monthly Base Rent. From and after the Commencement Date, Tenant
shall pay to Landlord as monthly base rent for the Premises the amount stated in
the Basic Lease Information as "Monthly Base Rent." Monthly Base Rent for the
first full month after the Commencement Date shall be paid upon Tenant's
execution of this Lease. Thereafter, Tenant shall pay the Monthly Base Rent on
the first day of each calendar month, in advance, without deduction, setoff,
prior notice or demand. If the Commencement Date is not the first day of the
month, then, on the Commencement Date, Tenant shall pay the prorated portion of
the Monthly Base Rent for the partial month during which the Commencement Date
falls.
4.2 Additional Rent. Tenant shall pay to Landlord, as additional Rent
(as defined in Section 26), any increase in Operating Costs (as defined in
Section 26) for each calendar year over the Operating Costs for the Base Year
("Increased Operating Costs"), in accordance with Section 5. Tenant shall pay
the Increased Operating Costs, together with Tenant's payment of the Monthly
Base Rent, without deduction, setoff, prior notice or demand except as provided
in Section 5.
4.3 Fair Market Rent. "Fair Market Rent" under Section 3.3 shall be the
then going market rental rate (including escalations and an adjusted base year),
calculated at the average effective rate after taking into account any "free
rent" or other equivalent concessions in lieu of free rent and tenant
improvements or allowances (including the value of the existing improvements in
the Premises, whether paid for by Landlord or Tenant), for comparable space in
comparable buildings in the area known as "South of Market" in San Francisco,
California, for a term equivalent to the Extended Term.
-6-
7
(a) If Landlord and Tenant do not agree on the Fair Market Rent
for the Premises within thirty (30) days after Landlord's receipt of Tenant's
notice exercising the Extension Option, the Fair Market Rent of the Premises
will be determined as follows:
(b) Each of Landlord and Tenant shall, by notice to the other,
appoint an appraiser with at least five (5) years' experience appraising the
rental values of buildings comparable to the Building in the South of Market
area. The appraisers appointed by the parties shall be independent and have no
economic interest in the outcome of the appraisal procedure apart from the
payment of customary appraisal fees.
(c) If either party fails to give notice of appointment of an
appraiser within ten (10) business days after receipt of the other party's
notice of appointment, the appraiser selected by the first party will solely
determine the Fair Market Rent of the Premises and, in the absence of fraud or
intentional misconduct, such appraiser's determination will be conclusive and
binding on the parties. If Fair Market Rent is determined by only one appraiser,
Landlord and Tenant each shall pay one-half of such appraiser's fees and costs.
(d) If two appraisers are timely appointed as described above,
they will jointly select an independent third appraiser who shall be a member of
the American Appraisal Institute holding the "MAI" designation and meeting the
qualifications described above. If the two appraisers appointed by the parties
cannot agree on a qualified third appraiser within ten (10) business days after
they have both been appointed, either Landlord or Tenant may apply to the
President or any Vice President of the local chapter of the American Appraisal
Institute for appointment of an independent appraiser meeting such
qualifications, in which case the appraiser first selected by such procedure
will serve as the third appraiser.
(e) Within thirty (30) days after the appointment of the third
appraiser, the appraisers will meet and attempt to determine the Fair Market
Rent for the Premises. If at least two (2) of the appraisers agree on the Fair
Market Rent for the Premises, such agreement will be conclusive and binding on
the parties and the appraisers will notify Landlord and Tenant of the Fair
Market Rent agreed upon.
(f) If at least two (2) appraisers cannot agree on the Fair
Market Rent for the Premises at their meeting, all appraisers shall submit to
Landlord and Tenant simultaneously an independent appraisal of the Fair Market
Rent for the Premises within thirty (30) days after appointment of the third
appraiser. The parties shall then determine the Fair Market Rent for the
Premises by averaging the appraisals, provided, however, that any high or low
appraisal that differs from the averaged appraisal by more than ten percent
(10%) shall be disregarded and the two remaining appraisals shall be averaged.
Each party shall pay the fees and costs of the appraiser it selects, and
one-half of the fees and costs of the third appraiser, if any.
(g) Upon determining the Fair Market Rent of the Premises,
Landlord and Tenant shall execute an amendment to this Lease setting forth the
Monthly Base Rent, the new Base Year and any other relevant economic terms and
conditions for the Extended Term. If such determination of Fair Market Rent is
not made before the commencement of the Extended Term, Tenant will continue
paying Monthly Base Rent at the rental rate in effect immediately before
-7-
8
the commencement of the Extended Term and an adjustment shall be made
retroactively when the Fair Market Rent is determined.
4.4 Late Charge and Interest. Late payment of Rent will cause Landlord
to lose the use of such funds and incur costs not contemplated by this Lease,
the exact amount of which is difficult and impracticable to fix. Accordingly, if
any Rent is not paid by the due date, Tenant shall pay to Landlord a late charge
equal to ten percent (10%) of the overdue amount. In addition, if any Rent is
not paid by the due date, all such past due Rent shall bear interest from the
due date until paid at the Interest Rate (as defined in Section 26). At any time
that Rent has been paid after the due date for two (2) consecutive months for
whatever reason, Landlord shall have the option to require that, beginning with
the first payment of Rent due following the second late payment, Tenant shall
pay Rent in quarterly installments (i.e., three months' Rent shall be paid with
each installment) until Tenant has made four (4) consecutive quarterly
installments on or before the due date at which time Tenant may commence paying
Rent on a monthly basis. Landlord's acceptance of late payment charges and
interest is not a release or waiver by Landlord of a default by Tenant.
4.5 Security Deposit.
(a) Within five (5) business days after execution of this Lease,
Tenant shall deposit with Landlord the amount specified in the Basic Lease
Information as security deposit ("Security Deposit") in the form of a clean,
irrevocable, standby letter of credit meeting the requirements in Section 4.5(b)
("Letter of Credit"). The Security Deposit shall secure Tenant's obligations
under this Lease, including Tenant's obligation to pay Rent and other monetary
amounts. If Tenant defaults under this Lease (even if an Event of Default (as
defined in Section 16.1) has not occurred), Landlord may, but without any
obligation to do so, apply any portion of the Security Deposit towards
fulfilling Tenant's unperformed obligations. If Landlord draws down the Letter
of Credit and uses, retains or applies all or a portion of the funds received
therefrom to cure Tenant's default under this Lease or to compensate Landlord
for damages resulting from Tenant's default, Tenant shall deposit with Landlord
cash in an amount equal to that used, retained or applied by Landlord so that
the total amount of Security Deposit held by Landlord equals that the amount
shown in the Basic Lease Information. Tenant 's failure to do so within five (5)
days after receipt of such demand shall constitute an incurable Event of
Default. Landlord shall hold the Security Deposit without liability for interest
on the same. Landlord is entitled to commingle the Security Deposit with its own
funds. Upon termination of this Lease, Landlord shall return the Security
Deposit to Tenant, less any amounts needed to compensate Landlord for Tenant's
failure to comply with the terms of this Lease. If Landlord sells or otherwise
transfers Landlord's right or interest under this Lease, Landlord shall deliver
the Security Deposit to the transferee, whereupon Landlord shall be released
from any further liability to Tenant with respect to the Security Deposit.
(b) The Letter of Credit shall be issued in favor of Landlord by
a reputable California financial institution reasonably satisfactory to Landlord
("Issuing Bank"). The Letter of Credit shall: (i) have a maturity date not less
than one (1) year from the date of issuance; (ii) require the Issuing Bank to
provide notice to Landlord of the scheduled expiration date not less than thirty
(30) days nor more than forty-five (45) days before the scheduled expiration of
the Letter of Credit; (iii) permit full or partial drawings to be made by
Landlord at any time before
-8-
9
expiration; (iv) require the Issuing Bank to pay on the Letter of Credit upon
Landlord's presentation thereof, together with a sight draft and a statement
signed by Landlord certifying that, under the provisions of Section 4.5 of the
Lease, Landlord is entitled to draw upon the Letter of Credit; and (v) prevent
Tenant from revoking, canceling, or otherwise modifying the Letter of Credit
before the Term expires.
(c) If the Letter of Credit is due to expire before the
expiration date of the Lease and the Issuing Bank has not issued and Tenant has
not delivered to Landlord, at least thirty (30) days before the scheduled
expiration of the Letter of Credit, a new Letter of Credit meeting all of the
requirements stated above (except that the expiration date of the new Letter of
Credit need not extend beyond the expiration date of the Lease), then Landlord
may draw down the entire amount of the expiring Letter of Credit and retain such
amount as a cash Security Deposit and use any such amount pursuant to Section
4.5(a) above. If an Event of Default occurs, Landlord shall have the right to
draw down the Letter of Credit, in whole or in part, and to use, retain or apply
the funds thereupon obtained by Landlord in the manner permitted under Section
4.5(a) above.
(d) Provided an Event of Default has not occurred, Tenant shall
have the right to reduce the Letter of Credit to [*] after the second year of
the Initial Term, [*] after the fourth year of the Initial Term, [*] after
the sixth year of the Initial Term and [*] after the eighth year of the Initial
Term (which Tenant shall maintain for the remaining Term).
5. OPERATING COSTS
5.1 Increased Operating Costs. Before the start of each calendar year
during the Term, or as soon thereafter as practicable, Landlord shall furnish
Tenant with a statement of its estimate of the Increased Operating Costs for the
following calendar year ("Landlord's Estimate"). On the first day of each
calendar month during such calendar year, Tenant shall pay to Landlord
one-twelfth (1/12th) of the amount in Landlord's Estimate, together with the
Monthly Base Rent.
5.2 Reconciliation of Operating Costs. By April 30th after the end of
each calendar year, or as soon thereafter as Landlord has sufficient data,
Landlord shall submit to Tenant a statement showing the actual Operating Costs
paid or incurred by Landlord during the previous calendar year. If the actual
Increased Operating Costs is less than the amount Tenant paid under Section 5.1
for such calendar year, then Landlord shall credit the amount of such difference
against the next payments of Increased Operating Costs coming due or, if the
Term has expired, pay such difference directly to Tenant . If the actual
Increased Operating Costs is more than the amount Tenant paid under Section 5.1
for such calendar year, Tenant shall pay to Landlord the full amount of such
difference at the monthly rent payment date next following the submittal of such
statement to Tenant.
5.3 Tenant's Inspection Rights. Provided there is no Event of Default,
within thirty (30) days after receipt of Landlord's annual statement ("Audit
Period"), Tenant may, upon reasonable prior written notice to Landlord and
during normal business hours at the place where Landlord's records for the
Building are maintained, cause a certified public accountant ("CPA")
-9-
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
10
to copy (at Tenant's expense), inspect and audit those books and records of
Landlord relating to the determination of Operating Costs for the calendar year
for which such statement was prepared. If Landlord's computation of Increased
Operation Costs exceeds the actual Increased Operation Costs by more than five
percent (5%) and Tenant has conducted such an audit, Landlord shall pay within
thirty (30) days of its receipt of an invoice, the reasonable costs and expenses
of the audit which shall not exceed One Thousand Dollars ($1,000). If Tenant
fails to exercise its inspection rights or dispute Landlord's annual statement
within the Audit Period, Landlord's annual statement shall conclusively be
deemed to be correct, and Tenant shall be bound by Landlord's determination.
5.4 Proration. If the Term commences on a date other than January 1, or
ends on a date other than December 31, the Increased Operating Costs for such
first or last calendar year of the Term shall be prorated based on what the
number of days in the Term in that year bears to 365; and any amounts owed or to
be credited pursuant to Section 5.2 shall be paid in the year immediately
following the year in which the Term ends, in accordance with Section 5.2.
6. USE OF PREMISES
6.1 Permitted Use. Tenant shall use the Premises solely for the uses
specified in the Basic Lease Information as a "Permitted Use," and shall not use
or permit the Premises to be used for any other purpose, except with Landlord's
prior written consent (which may be withheld in Landlord's sole and absolute
discretion).
6.2 Limitations on Use. Tenant shall not do, bring, or keep anything in
or about the Premises that will cancel any insurance covering the Building. If
any insurance rate increases as a result of Tenant's use of the Premises, Tenant
shall pay for any such increase within ten (10) days after Landlord's notice.
Tenant shall not use or permit the Premises to be used in any way that will
constitute waste, nuisance, or unreasonable annoyance to other tenants in the
Building.
6.3 Compliance with Laws. Tenant shall comply with all Laws concerning
the Premises or Tenant's use and occupancy of the Premises, including, without
limitation, the obligation, at Tenant's cost, to alter, maintain, or restore the
Premises in compliance with all Laws. Notwithstanding the foregoing, except with
respect to the Tenant Improvement Work, Tenant shall not be responsible for
performing capital improvements to the Premises or the Building except to the
extent they arise from Tenant's particular use of the Premises, Tenant's
Alterations (as defined in Section 26), Tenant's employment practices or
Tenant's space design.
6.4 Heavy Load. Tenant shall not bring into the Building, or keep in the
Premises, any furniture, equipment, or other objects which individually or
collectively overload the Premises or the Building. Landlord reserves the right
to prescribe the weight and position of all safes, fixtures and heavy
installations in the Premises so as to distribute properly the weight, or to
require plans prepared by a qualified structural engineer, at Tenant's sole
cost, for such heavy objects. Furthermore, Tenant shall take such measures as
Landlord requires to eliminate any noise and/or vibration caused by Tenant's
machines and equipment if such noise and/or vibration may be transmitted to the
Building's structure. Notwithstanding the foregoing, Landlord shall have no
liability for damage caused by the installation of safes and heavy equipment, or
by the noise and/or vibration caused by Tenant's machines and equipment.
-10-
11
6.5 Hazardous Substances. Tenant shall not use, produce, manage,
contain, store, treat or dispose of ("Use") Hazardous Substances (as defined in
Section 26) in, on or about the Premises, except with Landlord's prior written
consent and in compliance with all Laws. Notwithstanding the foregoing, Tenant
may Use any ordinary and customary materials that are used as a routine part of
Tenant's business, so long as such Use (i) complies with all Laws, (ii) does not
require a permit from, or with respect to which a report, notice, registration
or business plan is required to be filed with, any governmental authority, and
(iii) does not expose the Premises or the Building, or the neighboring
properties to any meaningful risk of contamination or damage or expose Landlord
to any liability. Tenant shall notify Landlord in writing of the presence of any
Hazardous Substance in, on or about the Premises, of any regulatory action or
notice, and of any third party claim arising from any Hazardous Substance.
7. PARKING
7.1 Tenant's Right to Use. Tenant shall have the right to use up to
thirty-three (33) unassigned parking spaces ("Parking Allotment") in the parking
lot located behind the Building ("Parking Lot"), provided Tenant pays the
parking fee for such spaces ("Parking Fee"). For the first year of the Term, the
Parking Fee shall be $200 per month per parking space. Thereafter, the Parking
Fee shall be adjusted as of each anniversary of the Commencement Date to its
then current market rate as determined by Landlord in its sole determination
exercised in good faith, provided, however, that the Parking Fee shall not be
less than $200 per month per parking space. The Parking Fee shall be payable on
the first day of each calendar month during the Term. If at any time during the
Term Tenant elects to use fewer parking spaces than the Parking Allotment,
Tenant shall be able to use additional parking spaces up to the Parking
Allotment only as such spaces become available from time to time for rental.
Thus, for example, if in year three of the Lease, Tenant elects to use
twenty-five (25) parking spaces, and in year six of the Lease, Tenant desires to
use the four (4) parking spaces remaining in the Parking Allotment, Tenant shall
have the right to use those spaces only if they are then available for rental.
Notwithstanding anything to the contrary in this Lease, if Landlord "recaptures"
a portion of the Premises pursuant to Section 15.3, the Parking Allotment shall
be proportionately reduced to reflect the decreased size of the Premises leased
by Tenant.
7.2 Landlord's Management of Parking Lot. Landlord shall manage, operate
and control the Parking Lot in such manner as Landlord in its sole discretion
deems appropriate. Provided Tenant's right to use the permitted number of
parking spaces is not adversely and materially affected, Landlord shall have the
right to: (a) establish and enforce reasonable rules and regulations applicable
to all users of the Parking Lot (and Tenant and its Authorized Representatives
shall observe such rules and regulations); (b) change, alter or add to the
Parking Lot, or rearrange parking spaces therein, (c) temporarily close the
Parking Lot so long as Landlord makes alternative, temporary parking
arrangements for Tenant, and (d) repair, maintain, restore and perform such
other acts with respect to the Parking Lot that Landlord deem appropriate.
7.3 Additional Parking Rights. Once Landlord has received all required
approvals and permits to construct the building at 000 Xxxxxxx Xxxxxx ("Xxxxxxx
Building") and has constructed the Xxxxxxx Building and the parking facilities
therefor, Tenant shall have the right to lease an additional eight (8)
unassigned parking spaces ("Additional Parking") on the same
-11-
12
terms and conditions as the Parking Allotment except as otherwise provided in
this Section 7.3. The right to the Additional Parking shall be personal to the
Tenant originally named in the Lease and shall terminate automatically if
Landlord is no longer the owner of the Xxxxxxx Building. Landlord shall also
have the right to terminate Tenant's right to the Additional Parking by giving
Tenant thirty days' written notice, in which case Tenant shall have the right,
without payment of additional Parking Fees, to park eight (8) additional cars in
a tandem configuration ("Tandem Spaces") within the spaces originally used in
the Parking Lot for the Parking Allotment, but only to the extent the Tandem
Spaces permitted under Laws and do not interfere with driveways, firelanes and
the like. Notwithstanding anything to the contrary in this Lease, if Landlord
"recaptures" a portion of the Premises pursuant to Section 15.3, the Additional
Parking and the Tandem Spaces shall be proportionately reduced to reflect the
decreased size of the Premises leased by Tenant.
8. UTILITIES AND SERVICES
8.1 Tenant's Responsibility. Landlord shall cause gas, electricity,
water and sewer utility lines to be made available up to the Premises as part of
Landlord's Work. Tenant shall make all arrangements for and pay for all
utilities and services furnished to or used by it, including, without
limitation, gas, electricity, water, telephone service, trash removal,
telecommunications, fiber optic cable, and for all connection charges. Tenant
agrees that its normal business hours shall be from 7 AM to 6:30 PM Mondays
through Fridays, excluding holidays. Tenant shall also make all arrangements for
and pay for janitorial services to the Premises pursuant to a janitorial
contract with a provider approved by Landlord (which shall not unreasonably be
withheld). Tenant shall also be responsible for all trash removal from the
Premises.
8.2 No Liability for Interruption. Landlord shall not be liable in
damages or otherwise for any failure or interruption of any utility service or
other service being furnished to the Premises and no such failure or
interruption shall entitle Tenant to an abatement of Rent or to terminate this
Lease. Except as may be installed as part of the Tenant Improvement Work, Tenant
shall not, except with Landlord's prior written consent, either: (a) use any
heating or cooling apparatus or device in the Premises; or (b) connect with
electric current or water pipes any device or apparatus for the purpose of using
electrical current or water.
9. TENANT'S TAXES
9.1 Payment by Tenant. Tenant shall pay before delinquency all taxes,
assessments, license fees, and other charges (collectively, "Taxes") that are
levied or assessed against Tenant during the Term, including, but not limited
to, Taxes levied or assessed against Tenant's leasehold interest or Tenant's
Personal Property (as defined in Section 26), Alterations, Tenant Improvement
Work, or Tenant's Trade Fixtures (as defined in Section 26) installed or located
in or on the Premises. On demand by Landlord, Tenant shall furnish Landlord with
satisfactory evidence of these payments.
9.2 Reimbursement of Landlord. If any Taxes are levied against Landlord
or Landlord's property, or if the assessed value of the Building, or any portion
thereof, is increased by the inclusion of a value placed on Tenant's Personal
Property, Alterations, Tenant
-12-
13
Improvement Work or Tenant's Trade Fixtures (or Tenant's leasehold interest),
and if Landlord pays the Taxes on any of these items or the Taxes based on the
increased assessment of these items, Tenant, on demand, shall immediately
reimburse Landlord for the sum of the Taxes levied against Landlord, or the
proportion of the Taxes resulting from the increase in Landlord's assessment.
Landlord shall have the right but not the obligation to pay and be immediately
reimbursed by Tenant for these Taxes regardless of the validity of the levy.
10. MAINTENANCE AND REPAIR
10.1 Landlord's Obligations. Except as provided in Sections 13 and 14,
Landlord shall maintain in good condition, reasonable wear and tear excepted:
(a) at Landlord's cost, the foundation, bearing and exterior walls (but
excluding any glass, windows, doors and the interior surfaces of exterior
walls), subflooring, and the structural portions of the roof (and excluding
gutters and downspouts) of the Building, and (b) subject to Section 5 of this
Lease, the Base Building Facilities, the sidewalks and landscaped areas around
the Building and the Parking Lot. If any such maintenance and repair to any part
of the Building which Landlord is obligated to maintain or the Parking Lot is
required because of the acts or omissions of Tenant or Tenant's Authorized
Representatives, Landlord shall perform such maintenance and repair at Tenant's
sole cost. Tenant waives the benefit of any statute, ordinance or judicial
decision now or hereafter existing which permits Tenant to make repairs at
Landlord's expense.
10.2 Tenant's Maintenance. Except as provided in Sections 10.1, 13 and
14, Tenant at its cost shall maintain, in good operating condition and repair,
all portions of the Premises, including, without limitation, all fixtures,
interior walls, ceilings, floors, floor coverings, windows, doors, Tenant's
Personal Property, Alterations, Tenant Improvement Work and Tenant's Trade
Fixtures and signs. If Tenant fails to perform its obligations under this
Section, Landlord may, but need not, make such repairs and replacements and
Tenant shall pay Landlord the cost thereof as Rent under this Lease upon being
billed for same.
10.3 ADDITIONS AND ALTERATIONS
10.4 Landlord's Consent. Except for Minor Alterations (as defined
below), Tenant shall make any Alterations to the Premises only with Landlord's
prior written consent, which shall not be unreasonably withheld, conditioned or
delayed. Landlord hereby consents to Tenant's installation of a security system
in the Premises (which system shall include coverage of the stairwells),
provided, however, that all such work shall be performed at Tenant's sole cost
and in accordance with Section 11.2 below, and Tenant shall be responsible, at
its cost, for the maintenance and repair of such system. "Minor Alterations"
shall consist of nonstructural alterations, additions and improvements to the
Premises not involving the Base Building Facilities, not affecting the exterior
of the Building, not involving Alterations that may materially and adversely
affect the value of the Building and not exceeding Fifteen Thousand Dollars
($15,000) in hard costs per project. While Landlord's prior written consent
shall not be required for Minor Alterations, Tenant shall give Landlord at least
thirty (30) days' prior written notice describing the proposed Minor Alterations
and the construction schedule therefor.
10.5 Manner of Construction. Landlord may impose, as a condition of its
consent to any Alterations, such requirements as Landlord in its reasonable
discretion may deem desirable,
-13-
14
including (but not limited to) the requirement that Tenant use for such purposes
only contractors selected by Tenant and approved by Landlord (which approval
shall not be unreasonably withheld); provided, however, that Tenant shall use
subcontractors of Landlord's selection to perform all work that may affect the
Building systems and equipment, structural aspects of the Building, or exterior
appearance of the Building. Tenant shall construct all Alterations (including
Minor Alterations) in compliance with all Laws and pursuant to a valid building
permit, issued by the City of San Francisco and in accordance with Landlord's
construction rules and regulations. Any Alterations shall be performed in
conformance with plans, specifications and working drawings ("Plans") first
approved by Landlord. Landlord's approval of the Plans shall create no
responsibility or liability on Landlord's part for their completeness, design
sufficiency, or compliance with Laws. Tenant agrees to carry "Builder's All
Risk" insurance in an amount approved by Landlord, and such other insurance as
Landlord may reasonably require. In addition, for projects which will cost more
than One Hundred Thousand Dollars ($100,000), Landlord may, in its discretion,
require Tenant to obtain a lien and completion bond or some alternate form of
security satisfactory to Landlord in an amount sufficient to ensure the
lien-free completion of such Alterations and naming Landlord as a co-obligee.
Upon completion of any Alterations, Tenant agrees to cause a Notice of
Completion to be recorded in the Office of the Recorder of the City and County
of San Francisco in accordance with Section 3093 of the California Civil Code or
any successor statute and Tenant shall deliver to the Building management office
a reproducible copy of the "as built" drawings of the Alterations.
10.6 Payment for Alterations. Tenant shall pay for the cost of all
Alterations, even if such Alterations involve or affect areas outside the
Premises. If Tenant orders any Alteration directly from Landlord (or from
Landlord's contractor), the charges for such work shall be deemed Additional
Rent under this Lease, payable upon billing therefor. Once the Alterations are
completed, Tenant shall deliver to Landlord, if Tenant has paid contractors
directly, evidence of payment, contractors' affidavits and full and final
waivers of all liens for labor, services or materials. If Tenant does not order
any work directly from Landlord, Tenant shall reimburse Landlord for Landlord's
reasonable out-of-pocket costs and expenses actually incurred in connection with
Landlord's review of and/or involvement with such work.
10.7 Landlord's Property and Fixtures. All Alterations shall become
Landlord's property ad shall be surrendered with the Premises at the end of the
Term, except that Tenant may remove any Alterations which Tenant can
substantiate to Landlord have not been paid for with any funds from Landlord,
provided Tenant repairs any damage to the Premises and Building caused by such
removal. Furthermore, Landlord can elect at the end of the Term, by written
notice, to require Tenant to remove any Alterations. If Landlord so elects,
Tenant at its sole cost shall remove such Alterations and restore the Premises
to the condition designated by Landlord, before the last day of the Term. At
Tenant's request, Landlord shall advise Tenant in writing when Tenant requests
Landlord's consent to an Alteration whether Landlord will require Tenant to
remove such Alteration at the end of the Term. If Tenant fails to promptly
complete such removal and/or to repair any damage caused by the removal of any
Alterations, Landlord may do so and may charge the cost thereof to Tenant.
Tenant hereby indemnifies, defends and holds Landlord harmless from any Claims
(as defined in Section 26) relating to the installation, placement, removal or
financing of any Alterations.
-14-
15
10.8 Covenant Against Liens. Tenant shall give Landlord at least ten
(10) business days' written notice before commencing any Alterations so that
Landlord can post and record a notice of nonresponsibility. Tenant shall keep
the Building free of all liens resulting from work done or materials furnished
by or for Tenant. Tenant may contest such lien if Tenant records a lien release
bond for one and one-half times the lien amount. If such lien is not released
and removed within thirty (30) days after the date Landlord delivers notice of
such lien to Tenant, Landlord, at its sole option, may immediately take all
action necessary to release and remove such lien, without any duty to
investigate the validity thereof, and all sums, costs and expenses, including
attorneys' fees and costs, that Landlord incurs in connection with such lien
shall be deemed Additional Rent under this Lease and shall immediately be due
and payable by Tenant.
11. INSURANCE, WAIVERS, INDEMNIFICATION
11.1 Tenant's Liability Insurance. Tenant, at its cost, shall maintain
liability insurance on an occurrence basis, in the minimum amount specified in
the Basic Lease Information, insuring against all liability of Tenant and its
Authorized Representatives arising out of and in connection with Tenant's use or
occupancy of the Premises or the Building and the business conducted by Tenant
or any other persons within the Premises. Such insurance shall include
contractual liability insurance coverage insuring performance by Tenant of the
indemnity provisions of Section 12.7. Such coverage shall also contain
endorsements reasonably required by Landlord from time to time. Tenant shall
also maintain Workers' Compensation insurance in accordance with California law.
11.2 Tenant's Personal Property Insurance. Tenant, at its cost, shall
maintain on all Tenant's Personal Property, Tenant's Work and Alterations, in,
on, or about the Premises, an "all risk" policy, with vandalism and malicious
mischief endorsements, for one hundred percent (100%) of their replacement cost.
If there is any plate glass in the Premises, Tenant shall also, at its cost,
maintain full coverage plate glass insurance on the Premises.
11.3 Landlord's Insurance. Landlord shall maintain an "all risk" policy,
with vandalism and malicious mischief endorsements, for at least ninety percent
(90%) of replacement cost of the Building. Landlord shall maintain a policy of
public liability and property damage insurance insuring against death or injury
to persons or damage to property occurring in or about the Building. Landlord
may procure and maintain such other forms of insurance coverage as Landlord
deems necessary or appropriate for the protection of the Building or Landlord's
interest in the Building (including, without limitation, insurance for loss of
rental income or damage due to earthquake), or as may be required by any
Landlord's Lender (as defined in Section 20).
11.4 General Insurance Requirements. All insurance required to be
maintained by Tenant under this Lease shall: (a) be issued by insurance
companies authorized to do business in California, with a financial rating of at
least A-XII as rated in the most recent edition of Best's Insurance Reports; (b)
be issued as a primary policy, and any insurance held by Landlord shall be
excess insurance; (c) contain an endorsement requiring thirty (30) days' prior
written notice from the insurance company to both parties and Landlord's Lender,
if any, before cancellation or change in the coverage or amount of any policy;
(d) require Tenant to deposit with Landlord before the commencement of the Term,
a certificate of all insurance policies required under this
-15-
16
Lease and Tenant shall also deliver certificates of renewal at least thirty (30)
days before the term of each policy expires; (e) name Landlord and Landlord's
Lender as additional insureds; (f) provide for severability of interests and
that an act or omission of one of the parties insured under the policy shall not
reduce or avoid coverage to the other parties insured under the policy; (g)
contain an endorsement deleting any employee exclusion on personal injury
covered, endorsement including employees as additional insureds, endorsement
deleting any liquor liability exclusion and endorsement providing for coverage
of employer's automobile liability; and (h) be subject to increase, not more
frequently than every two (2) years, if in Landlord's broker's opinion, the
amount of insurance coverage maintained by Tenant at that time is not adequate.
In such case, Tenant shall increase the insurance coverage as required by
Landlord's insurance broker.
11.5 Waiver of Subrogation. Notwithstanding anything to the contrary in
the Lease, the parties release each other from any Claims for loss or damage
that are caused by risks covered under any insurance policies required by this
Lease and/or maintained in effect by the parties at the time of such damage.
Each party shall cause its insurer(s) to waive all right of recovery by way of
subrogation against either party for any loss or damage covered by such party's
insurance policy. Each party shall provide written notice to the other party if
such waiver is not obtained and shall indemnify, defend and hold the other
harmless from all Claims arising from the indemnifying party's failure to obtain
such a waiver from its insurance company unless such a waiver is not customarily
available.
11.6 Exculpation of Landlord. Neither Landlord nor Landlord's Authorized
Representatives shall be liable to Tenant for any damage to Tenant or Tenant's
property, including, but not limited to, lost profits and consequential damages
from any cause, except to the extent it is determined that the gross negligence
or wilful misconduct of Landlord or its Authorized Representatives acting within
the scope of their authority caused such damage.
11.7 Indemnification. Tenant shall indemnify, defend and hold Landlord
and Landlord's Authorized Representatives harmless from all Claims arising from
any cause in, on or about the Premises during the Term, or resulting from the
acts or omissions of Tenant or its Authorized Representatives (including,
without limitation, the Use of any Hazardous Substances or breach of Section
6.3), except to the extent it is determined that the gross negligence or wilful
misconduct of Landlord or its Authorized Representatives acting within the scope
of their authority caused such Claims.
12. DAMAGE AND DESTRUCTION
12.1 Repair of Damage. If during the Term the Premises are totally or
partially damaged ("Damage"), subject to Section 13.2, Landlord shall restore
the Premises (but excluding any of Tenant's Personal Property, equipment or
fixtures) to substantially the same condition as they were in immediately before
such damage, except for modifications required by zoning and building codes and
other Laws or by the Lender. If Landlord restores the Premises, Tenant shall be
required to restore Tenant's Alterations, Tenant Improvement Work, Tenant's
Trade Fixtures, and Tenant's Personal Property. Notwithstanding the foregoing,
Landlord may require Tenant to assign to Landlord all insurance proceeds payable
to Tenant under Tenant's insurance required under this Lease with respect to the
Alterations (including Tenant's payment of any deductible
-16-
17
amounts there under), and Landlord shall repair any damage to the Alterations.
Such items shall be the sole responsibility of Tenant to restore and Landlord
shall have no responsibility for such restoration.
12.2 Termination Rights. Landlord may terminate this Lease by written
notice to Tenant if: (a) Landlord's restoration costs exceed the amount of
Landlord's insurance proceeds released by Lender for restoration purposes plus
any deductible maintained by Landlord in connection therewith by more than Fifty
Thousand Dollars ($50,000); (b) restoration by Landlord will take longer than
two hundred and ten (210) days (in the opinion of a licensed architect,
contractor or engineer appointed by Landlord), or actually takes longer than two
hundred and ten (210) days; or (c) the damage results from a risk not covered by
insurance required to be carried by Landlord in Section 12.3. In addition,
either party may terminate this Lease by written notice to the other party if:
(x) existing Laws do not permit the restoration, (y) the Damage to the Building
exceeds fifty percent (50%) of the then replacement value of that Building or
(z) the Premises are materially damaged during the last twelve (12) months of
the Term. Such notice must be given within fifteen (15) days after determining
that the restoration cost will exceed such insurance proceeds or that
restoration will take longer than the above-specified period (as the case may
be) or, in the case of (c) or (z) above, within thirty (30) days of the
casualty, in which case this Lease shall terminate on the date as specified in
the notice given by the terminating party.
12.3 Tenant's Remedies; Rent Abatement. Tenant shall have no claim
against Landlord for any damage suffered by Tenant by reason of any such damage,
destruction, repair or restoration, and Landlord shall not be liable for any
inconvenience or annoyance to Tenant, or injury to Tenant's business resulting
therefrom. Notwithstanding the foregoing, unless the acts or omissions of Tenant
or its Authorized Representatives resulted in the Damage, Monthly Base Rent and
the Increased Operating Costs payable under this Lease shall be abated in
proportion to the degree to which Tenant's use of the Premises is impaired from
the date of the damage to the date repairs are completed.
12.4 Lease to Control Rights. This Lease will exclusively govern the
parties' obligations with respect to any damage or destruction of the Premises
or the Building. Accordingly, Landlord and Tenant waive any Law, including
(without limitation) California Civil Code Sections 1932(2) and 1933(4), or any
successor statutes, with respect to any damage or destruction of the Premises.
13. CONDEMNATION
13.1 Partial Condemnation. If any portion of the Premises is taken for
public or quasi-public use by right of eminent domain (with or without
litigation), or transferred by agreement in connection with public or
quasi-public use ("Condemnation"), this Lease shall remain in effect, except
that either party can elect to terminate this Lease if twenty-five percent (25%)
or more of the total rentable square footage in the Premises is taken. To
terminate this Lease, effective as of the date the condemnor has the right to
possession ("Date of Taking"), Landlord or Tenant must give written notice to
the other party within thirty (30) days after the nature and the extent of the
Condemnation have been finally determined. All Rent shall be apportioned as of
the date of such termination, or the Date of Taking, whichever occurs first.
-17-
18
13.2 Temporary Taking. Notwithstanding anything to the contrary, in the
event of a temporary taking of all or any portion of the Premises for a period
of one hundred and eighty (180) days or less, then this Lease shall not
terminate but the Rent shall be abated for the period of such taking in
proportion to the ratio that the amount of rentable square feet of the Premises
taken bears to the total rentable square feet of the Premises. Landlord shall be
entitled to receive the entire award made in connection with any such temporary
taking.
13.3 Total Taking. A total taking of the Building shall automatically
terminate this Lease.
13.4 Restoration of Premises. If there is a partial Condemnation of the
Premises and this Lease remains in effect, Landlord shall restore the Premises
to an architectural whole, except that Tenant shall be solely responsible for
Tenant Improvement Work, Tenant's Personal Property, Tenant's Trade Fixtures and
Alterations made to the Premises by Tenant.
13.5 Award-Distribution. Landlord shall receive the entire award for any
Condemnation, except that Tenant may receive any sum specifically awarded on
account of Tenant's Personal Property, Tenant's Trade Fixtures, or for moving
expenses.
14. ASSIGNMENT AND SUBLEASE
14.1 Landlord's Consent Required. Except with respect to Permitted
Transferees, Tenant shall not assign, mortgage, pledge, hypothecate, encumber or
otherwise transfer this Lease or any interest in this Lease, and shall not
sublet the Premises ("Transfer"), or suffer or permit the Premises to be
occupied by any third person other than Tenant's Authorized Representatives,
without Landlord's prior written consent. Subject to the terms and conditions of
this Section, Landlord shall not unreasonably withhold its consent to a Transfer
so long as the Transfer does not involve any change in the use of the Premises
authorized under Section 6.1.
14.2 Tenant's Application. Tenant shall submit in writing to Landlord,
at least fifteen (15) business days before the proposed effective date of the
Transfer ("Proposed Effective Date") the following information ("Tenant's
Application"): (a) the Proposed Effective Date; (b) the name, use and business
of the proposed transferee of the Transfer ("Transferee"); (c) the terms of the
proposed Transfer; (d) such certified financial information or other information
as Landlord may reasonably request; and (e) evidence satisfactory to Landlord
that the proposed Transferee will immediately occupy and thereafter use the
affected portion of the Premises for the entire term of the Transfer agreement.
If Landlord approves the proposed Transfer, it shall notify Tenant in writing
thereof. No purported Transfer shall be deemed effective and no proposed
Transferee shall take occupancy until Landlord has received a copy of the
executed Transfer document(s) and executed Landlord's consent thereto. If
Landlord disapproves the proposed Transfer, it shall notify Tenant in writing
thereof, specifying the reason(s) therefor. However, if Landlord and Tenant
dispute the reasonableness of Landlord's disapproval of the proposed Transfer,
Landlord shall not be limited to the reason(s) specified in its notice.
14.3 Landlord's Recapture Right. Notwithstanding anything to the
contrary, Landlord shall have the right, to be exercised in writing within
fifteen (15) days after receiving the completed Tenant's Application, to
terminate this Lease in the case of an assignment of the Lease
-18-
19
or to recapture the portion of the Premises subject to the proposed Transfer.
Such termination or recapture shall be effective as of the date specified in
Landlord's notice exercising such option, which effective date of termination or
recapture shall not be less than thirty (30) nor more than ninety (90) days
following the receipt of such notice. Notwithstanding the foregoing, Landlord's
recapture right shall not apply to subleases of the Premises (a) during the
first three (3) years of the Initial Term, provided no more than fifty percent
(50%) of the rentable area of the Premises is subleased at any one time during
such period (or, if Tenant leases the entire Xxxxxxx Building from Landlord, no
more than two (2) floors of the Premises are subleased at any one time during
such period) and (b) at any time thereafter, provided no more than one-third
(1/3) of the rentable area of the Premises is subleased at any one time
thereafter. If the area subleased exceeds those areas specified in clauses (a)
or (b) of the immediately preceding sentence, Landlord may, at any time,
terminate or recapture any and all spaces sublet. If Landlord exercises any
cancellation or recapture rights hereunder, Tenant and any subtenants shall
surrender possession of the Premises on the date specified in such notice and in
accordance with the provisions of this Lease relating to surrender of the
Premises at the expiration of the Term.
14.4 No Release of Tenant. Landlord's consent to any Transfer shall not
relieve Tenant of its obligations under this Lease. Landlord's consent to any
Transfer shall not relieve Tenant from the obligation to obtain Landlord's prior
written consent to any other Transfer. Landlord's acceptance of payment from any
other person shall not be deemed a waiver by Landlord of any provision of this
Lease, or a consent to any Transfer, or a release of Tenant from any obligation
under this Lease. If this Lease is Transferred, or if the Premises are occupied
by any person other than Tenant, Landlord may, after default by Tenant, collect
the Rent from any such Transferee or occupant and apply the net amount collected
to the Rent payable under this Lease, and no such action by Landlord shall be
deemed a consent to such Transfer or occupancy.
14.5 Assumption of Obligations. Each Transferee shall assume Tenant's
obligations under this Lease and shall be liable, jointly and severally, with
Tenant under this Lease. Each Transferee shall observe and perform the
provisions of this Lease so far as applicable under the Transfer document. All
Transfer agreements shall be expressly subject and subordinate to this Lease and
shall not change this Lease in any way. No Transfer shall be binding on Landlord
unless the Transferee or Tenant delivers to Landlord a counterpart of the
Transfer document in a form approved by Landlord, duly executed by all parties.
Landlord shall have no obligation to perform any duty to or respond to any
request from any subtenant, it being the obligation of Tenant to administer the
terms of its subleases.
14.6 Deemed Transfers. If Tenant is a privately held corporation, or an
unincorporated association or partnership, the Transfer of any stock or interest
in such corporation, association or partnership in the aggregate from the date
of execution of this Lease in excess of fifty percent (50%) shall be deemed a
Transfer.
14.7 Assignment of Sublease Rents. Tenant immediately and irrevocably
assigns to Landlord all rent from any subletting of the Premises, and Landlord,
as assignee and as attorney-in-fact for Tenant for purposes hereof, or a
receiver for Tenant appointed on Landlord's application, may collect such rents
and apply same toward Tenant's obligations under this Lease; provided, however,
that Tenant shall have the right to collect such rents so long as an Event of
Default does not exist under this Lease.
-19-
20
14.8 Excess Rent. Landlord shall receive fifty percent (50%) of all
Excess Rent payable in connection with any Transfer. "Excess Rent" means the
excess of (a) all consideration received by Tenant from a Transfer over (b) Rent
payable under this Lease after deducting reasonable leasing commissions,
amortized cost of any improvement and any other reasonable out-of-pocket costs
paid by Tenant as a result of the Transfer. If Tenant has the license to collect
the rents from the Transferee under Section 15.6 above, within fifteen (15) days
after written request by Landlord, Tenant shall provide and certify to Landlord
all financial information required for the calculation of Excess Rent.
14.9 Fee for Review. Tenant shall pay, within thirty (30) days of
request, Landlord's legal fees and costs reasonably incurred in processing,
approving and documenting any Transfer.
14.10 Permitted Transfers. Notwithstanding anything to the contrary,
Tenant may, without Landlord's prior written consent, but upon at least thirty
(30) days' prior written notice to Landlord, and without being subject to
Sections 15.3 and 15.8 above, Transfer the Lease to the following parties
("Permitted Transferees"): (a) a corporation controlling, controlled by or under
common control with Tenant, (b) a successor corporation related to Tenant by
merger, consolidation, non-bankruptcy reorganization or government action, or
(c) a purchaser of substantially all of Tenant's assets, provided that in each
of the foregoing Transfers, the net worth of the surviving entity is equal to or
greater than that of Tenant immediately before the Transfer, and provided
further that, Tenant shall not be released from any liability hereunder.
Additionally, any sale or transfer of Tenant's capital stock in connection with
any public or private securities offering or any sale of Tenant's capital stock
over any nationally recognized public exchange (as opposed to a so-called "xxxxx
stock" exchange) shall not be deemed a Transfer hereunder.
15. TENANT'S DEFAULT
15.1 Curable Defaults. An "Event of Default" shall be deemed to have
occurred if Tenant: (a) fails to pay Rent within three (3) days after notice to
Tenant; (b) fails to perform any obligation described in Sections 12, 20 and 24
of this Lease within three (3) days after notice to Tenant; or (c) fails to
perform any other obligation of this Lease (other than those obligations
described in Section 16.2 as incurable) within thirty (30) days after notice to
Tenant (except that if the failure to perform cannot reasonably be cured within
thirty (30) days, Tenant shall not be in default of this Lease if Tenant
commences to cure within five (5) days after Landlord's notice and diligently
pursues the cure to completion). The notice periods under this Section are in
lieu of and not in addition to any notice required under California Code of
Civil Procedure Sections 1161 and 1162.
15.2 Incurable Defaults. The following constitute a incurable Event of
Default by Tenant: (a) any default identified as an incurable Event of Default
in this Lease or which is not capable of being cured, (b) if Tenant breaches its
obligations under Sections 4.5 or 15.1, (c) Tenant admits in writing its
inability to pay its debts as they mature; (d) Tenant makes an assignment or
takes other action for the benefit of creditors; (e) any action is taken or
suffered by Tenant under any insolvency, bankruptcy, reorganization or other
debtor relief law; (f) a trustee or receiver is appointed to take possession of
substantially all of Tenant's assets or Tenant's interest in this Lease, where
possession is not restored to Tenant within thirty (30) days, or (g)
-20-
21
substantially all of Tenant's assets or Tenant's interest is attached, executed
upon or judicially seized, where such seizure is not discharged within thirty
(30) days.
15.3 Landlord's Remedies. Landlord shall have the following remedies if
Tenant commits a default. These remedies are not exclusive and are cumulative
and in addition to any remedies now or later allowed by law.
(a) Landlord can continue this Lease in effect and enforce all
its rights and remedies under this Lease, including the right to recover Rent
when due, for so long as Landlord does not terminate Tenant's right to
possession, as provided in California Civil Code Section 1951.4. Acts of
maintenance or preservation, efforts to relet the Premises, or the appointment
of a receiver to protect Landlord's interests shall not constitute a termination
of Tenant's right to possession. No act by Landlord shall terminate this Lease
unless Landlord notifies Tenant in writing that Landlord elects to terminate
this Lease.
(b) Landlord can terminate this Lease and recover the worth at
the time of award of the amount by which the unpaid Rent for the balance of the
Term after the time of award exceeds the amount of Rent loss for the same period
that Tenant proves could reasonably be avoided, as computed under California
Civil Code Section 1951.2.
(c) Landlord can cure Tenant's default at Tenant's cost. Any sum
paid by Landlord shall bear interest at the Interest Rate from the date the sum
is paid by Landlord until Landlord is reimbursed by Tenant. The sum, together
with interest on it, shall be additional Rent.
(d) All third party costs and expenses (including attorneys'
fees) incurred by Landlord in collecting Rent or enforcing Tenant's obligations
under the Lease shall be paid by Tenant to Landlord upon demand.
16. LANDLORD'S DEFAULT
16.1 Cure Periods. Landlord shall have ten (10) days after written
notice from Tenant to cure a monetary default, and thirty (30) days after
written notice from Tenant to cure a nonmonetary default. However, if the
non-monetary default cannot be cured within thirty (30) days, Landlord shall
have such additional time as reasonably necessary to complete its performance so
long as Landlord diligently seeks to cure such default.
16.2 Notice to Landlord's Lender. Tenant shall deliver a copy of any
written notice of Landlord's default at the same time to any Lender (as defined
in Section 20), provided Landlord has delivered to Tenant prior notice of the
identity and address of Lender. Any such Lender shall have the same time periods
within which to cure Landlord's defaults as Landlord has to cure such defaults;
provided, however, such periods for the Lender shall commence ten (10) days
after Landlord's cure period commences and the Lender shall have such additional
time as may be needed to obtain control or ownership of the Building. In this
connection, any representative of Landlord's Lender shall have the right to
enter upon the Premises for the purpose of curing Landlord's default.
-21-
22
16.3 Limitation on Landlord's Liability. Notwithstanding anything to the
contrary in this Lease, if Tenant recovers any judgment against Landlord for a
default by Landlord under this Lease, the judgment shall be satisfied only out
of the interest of Landlord in the Building; the partners, including the general
partner, officers, employees and agents of Landlord shall not be personally
liable for any such default or for any deficiency. The foregoing limitation on
liability shall not apply to Landlord's obligation to return the Security
Deposit or if Landlord draws on the Letter of Credit without the right to do so.
17. SIGNAGE
17.1 Landlord's Consent. Tenant shall not place (or permit to be placed)
in or upon the Premises where visible from outside the Premises or any part of
the Building, any signs, notices, drapes, shutters, blinds or window coatings,
or displays of any type without Landlord's prior written consent (which shall
not unreasonably be denied or delayed). Landlord shall consent to one exterior
sign on the west side of the northwest corner of the Building ("Exterior Sign"),
on the terms and conditions of Section 18.2. The right to the Exterior Sign
shall be personal to the Tenant originally named in the Lease (and its Permitted
Transferees) and shall not be transferable to any party.
17.2 Tenant's Obligations. Tenant shall comply with the following terms
and conditions with respect to all signage, including the Exterior Sign: (a)
Tenant shall obtain, at its cost, all necessary governmental approvals (Landlord
makes no representation with respect to Tenant's ability to obtain such
approvals); (b) the signage shall be in accordance with detailed signage
specifications which Tenant shall submit to Landlord for its prior approval; (c)
Tenant shall be responsible, at its cost, for installing and maintaining the
signage strictly in accordance with all Laws; (d) Tenant shall be responsible,
at its sole cost, for installing, maintaining and repairing the signage and
removing it at the termination or expiration of the Lease and repairing any
damage resulting from such removal; (e) the location of the Exterior Sign shall
be determined on or before the Commencement Date of this Lease by Tenant, with
Landlord's reasonable approval; (f) Landlord shall have the right, at its cost,
to relocate the Exterior Sign from time to time, with Tenant's reasonable
approval over the new location of the Exterior Sign; (g) if any signage affects
the structural integrity of the Building, the signage shall be relocated, or if
needed, removed, at Tenant's sole cost and expense. Tenant shall indemnify,
defend, and hold Landlord harmless from and against any and all Claims arising
from or in connection with the signage, unless solely caused by the gross
negligence or wilful misconduct of Landlord or its Authorized Representatives
(it being agreed that Tenant's indemnity obligation shall cover the negligence
of Landlord, its agents, contractors or employees).
17.3 Landlord's Rights. Landlord reserves the right in Landlord's sole
discretion to place and locate on the roof and exterior of the Building and in
any area of the Building not leased to Tenant, such signs, notices, displays and
similar items as Landlord deems appropriate in the proper operation of the
Building.
18. LANDLORD'S ENTRY ON PREMISES
Landlord and its Authorized Representatives shall have the right to enter the
Premises at all reasonable times (with reasonable prior notice except in an
emergency when no notice is
-22-
23
required) for any reasonable purpose, including, without limitation, the
following: (a) to inspect the Premises; (b) to alter, improve or maintain the
Premises and the Building; (c) to show the Premises to prospective brokers,
agents, buyers, tenants or lenders; and (d) to post notices of
nonresponsibility, all without reduction or abatement of Rent. Landlord shall
have at all times a key to unlock all the doors in and about the Premises,
excluding Tenant's vaults and safes and other secure areas identified by Tenant
in a written notice to Landlord. Landlord shall have the right to use any means
which Landlord deems in good-faith to be proper to open the doors in an
emergency. Any such entry by Landlord and Landlord's Representatives shall
comply with all reasonable security measures of Tenant of which Landlord has
been given prior written notice and shall not impair Tenant's operations more
than reasonably necessary. Landlord shall not be liable in any manner for any
inconvenience, disturbance, loss of business, nuisance, or other damage arising
out of such entry on the Premises as provided in this Section, except damage
resulting from the gross negligence or wilful misconduct of Landlord or its
Authorized Representatives acting within the scope of their authority, and
Tenant waives any Claims arising thereunder.
19. SUBORDINATION AND NONDISTURBANCE
"Lender" means the holder of any ground or underlying lease or loan
(including all extensions and modifications of, and any additional advances
under, such loan) affecting the Building or Landlord's interest therein, now or
later entered into by Landlord, and any deed of trust, mortgage or other device
securing such lease or loan ("Loan"). This Lease is and subordinate to any Loan.
Within ten (10) business days of Landlord's written request, Tenant shall from
time to time execute and deliver an agreement in Lender's customary form to
effectuate such subordination, which agreement shall contain commercially common
protections for Lender's benefit. Landlord agrees to obtain from Lender a
nondisturbance agreement in such Lender's customary form providing that Lender
shall not disturb Tenant's possession of the Premises or terminate the Lease,
provided Tenant is not in default under this Lease and Tenant recognizes or
"attorns" to Lender (or the buyer of the Building at a foreclosure or as a
result of a transfer in lieu of foreclosure) as the new Landlord.
20. NONWAIVER
No delay, waiver or omission in either party's exercise of any right or
remedy on a default of any provision by the other party shall be construed as a
waiver of such provision. Landlord's receipt and acceptance shall not constitute
a waiver of any other default. No act or conduct of Landlord, including, without
limitation, the acceptance of the keys to the Premises, shall constitute an
acceptance of Tenant's surrender of the Premises before the Term expires. Any
waiver by Landlord or Tenant of any default must be in writing and shall not be
a waiver of any other default concerning the same or any other provision of this
Lease.
21. SALE OR TRANSFER OF PREMISES
If Landlord sells or transfers all or any portion of the Premises or the
Building, on consummation of the sale or transfer, Landlord shall be released
from any liability thereafter accruing under this Lease if Landlord's successor
has assumed in writing Landlord's obligations under this Lease and Landlord has
transferred the Security Deposit to Landlord's successor.
-23-
24
22. SURRENDER OF PREMISES
22.1 Condition. At the end of the Term, Tenant shall surrender to
Landlord the Premises and all Alterations and the Tenant Improvement Work in
good condition and repair (except for ordinary wear and tear and damage and
destruction to the Premises) except for Alterations that Tenant is obligated to
remove under Section 11.4, with all of Tenant's Personal Property and Tenant's
Trade Fixtures removed. Before the end of the Term, Tenant shall repair any
damage caused by the removal of any Alterations, Tenant's Personal Property or
Tenant's Trade Fixtures.
22.2 Removal of Tenant's Property. If, within ten (10) days after
written notice from Landlord to Tenant, Tenant fails to remove at the end of the
Term all Alterations that Tenant is obligated to remove at such time and all
Tenant's Personal Property and Tenant's Trade Fixtures from the Premises,
Landlord can elect to retain or dispose of such Alterations, Tenant's Personal
Property or Tenant's Trade Fixtures. Tenant waives all Claims against Landlord
for any damage resulting from Landlord's retention or disposition of any such
Alterations, Tenant's Personal Property or Tenant's Trade Fixtures. Tenant shall
be liable to Landlord for Landlord's costs for storing, removing, and disposing
of any such Alterations, Tenant's Personal Property or Tenant's Trade Fixtures.
23. ESTOPPEL CERTIFICATE, FINANCIALS
23.1 Estoppel Certificate. Tenant shall, within ten (10) business days
of Landlord's written request, execute and deliver to Landlord a statement in
writing (i) certifying that this Lease (including any modifications) is in full
force and effect, the Rent is as stated in this Lease, and the dates to which
the Rent is paid in advance, any, (ii) acknowledging that there are not, to
Tenant's knowledge, any uncured defaults by Landlord under this Lease, or
specifying such defaults if any are claimed, and (iii) covering such other
matters as may be reasonably requested by Landlord or by any present or
prospective Lender. Any such statement may be relied upon by any prospective
purchaser, ground lessor or encumbrancer of the Premises or of all or any
portion of the real property of which the Premises are a part.
23.2 Failure to Deliver. Tenant's failure to deliver such statement
within such time shall constitute an incurable Event of Default and shall be
conclusive upon Tenant (i) that this Lease is in full force and effect, without
modification except as may be represented by Landlord, (ii) that there are no
uncured defaults in Landlord's performance, (iii) that not more than one month's
Monthly Base Rent has been paid in advance, and (iv) as to such other matters as
may be specified in the requested statement.
23.3 Tenant's Financial Data. Within fifteen (15) days after Landlord's
written request, Tenant shall furnish Landlord with accurate financial
statements and other documentation (such as organizational documents) reasonably
required by Landlord, Lender or a prospective buyer of the Building. Landlord
shall keep such statements confidential except from those with a reasonable
business need to know, provided, however, that Landlord shall not be liable for
the inadvertent disclosure of any information or the disclosure of any
information that is publicly available or is required by Laws to be disclosed.
-24-
25
24. RIGHT OF FIRST OFFER
24.1 Grant of Right. Landlord grants to Tenant a one-time right of first
offer ("First Offer Right") during the Term with respect to that certain
building adjacent to the Building, to be known as 000 Xxxxxxx Xxxxxx ("Xxxxxxx
Xxxxxxxx") xx the terms and conditions of Section 25. The First Offer Right
shall be with respect to the entire Xxxxxxx Building and not any portion
thereof. Notwithstanding anything to the contrary in this Lease, the First Offer
Right shall be personal to the Tenant originally named in the Lease (or its
Permitted Transferee) and shall be exercisable only if the Tenant originally
named in the Lease (or its Permitted Transferee) occupies two full floors in the
Building as of the date of Landlord's Notice and as of the Projected Delivery
Date (as those terms are defined in Section 25.2).
24.2 Procedure.
(a) If Landlord desires to lease the Xxxxxxx Building, Landlord
shall notify Tenant of the availability of the Xxxxxxx Building for leasing
("Landlord's Notice"). Landlord's Notice shall state the approximate square
footage of the Xxxxxxx Building, the projected delivery date for the Xxxxxxx
Building in its then "as is" condition ("Projected Delivery Date") and the rent
and other economic and major terms acceptable to Landlord. If Tenant wishes to
exercise the First Offer Right, Tenant shall so notify Landlord in writing
immediately and Landlord and Tenant shall negotiate for a period of ten (10)
business days after delivery of Landlord's Notice to Tenant ("Negotiation
Period").
(b) If Landlord and Tenant fail to execute in writing within the
Negotiation Period an agreement regarding the rent and other economic and major
terms acceptable to both parties in their sole discretion ("Basic Agreement"),
the First Offer Right shall terminate and Landlord shall be free to lease the
Xxxxxxx Building to any party on any terms whatsoever. If Landlord and Tenant
execute a Basic Agreement within the Negotiation Period, the parties shall
promptly execute a new lease for the Xxxxxxx Building using the terms and
conditions of this Lease except for the terms contained in the Basic Agreement
and that Landlord shall grant to Tenant the right to use all available parking
on the property of which the Xxxxxxx Building is a part.
24.3 Limitations on Tenant's Rights. At Landlord's option, Tenant shall
not have the right to exercise the First Offer Right or the First Parking Offer
Right (and any First Offer Right and First Parking Offer Right exercised by
Tenant will be voided) if (a) Landlord has given Tenant written notice, on or
before the date of Landlord's Notice or the Project Delivery Date, that a
default has occurred and Tenant has not yet cured such default, or (b) Landlord
has given Tenant written notice from Landlord, on more than two (2) occasions in
the preceding twelve (12) month period, that a default in the payment of Rent or
any other material default has occurred (regardless of whether such defaults
subsequently are cured). Notwithstanding anything to the contrary in this Lease,
in no event shall Tenant be allowed to exercise the First Offer Right if fewer
than twelve (12) months remain in the Term after Landlord's Notice.
25. DEFINITIONS. Unless otherwise provided, definitions of capitalized words
and phrases are as follows:
-25-
26
25.1 "Alterations" means any addition, change, improvement, alteration
or modification to the Premises by Tenant, including, without limitation,
fixtures, but excluding Tenant's Trade Fixtures as defined below and the Tenant
Improvement Work as defined in the Work Letter.
25.2 "Authorized Representatives" means any director, officer, agent,
partner, employee, or independent contractor of the specified party, including
Landlord's Property Manager.
25.3 "Base Building Facilities" means the primary heating, ventilation
and air-conditioning equipment for the Building, the utility closets, the life
safety systems (including the sprinkler systems), the main telephone terminal
panels, the conduit for the fiber optic line (but not the actual extension or
connection thereof), the passenger elevators, and other improvements customarily
considered to be part of "Base Building" but only to the extent any of the
foregoing is installed as part of Landlord's Work".
25.4 "Claims" means losses, judgments, liabilities, demands, claims,
causes of action, costs and expenses (including the reasonable fees and costs of
attorneys and other consultants).
25.5 "Force Majeure" shall mean any prevention, delay or stoppage due to
strikes, lockouts, labor disputes, acts of God, inability to obtain labor or
materials or reasonable substitutes therefor, governmental restrictions,
governmental regulations, governmental controls, judicial orders, enemy or
hostile governmental action, civil commotion, fire or other casualty, and other
causes (except financial) beyond the reasonable control of the party obligated
to perform.
25.6 "Hazardous Substance" means any substance, material, waste,
pollutant or contaminant which is regulated by law as being hazardous, toxic,
flammable, carcinogenic, explosive or radioactive, or is potentially injurious
to the public health, safety or welfare or the environment.
25.7 "Interest Rate" means the lesser of (a) four per cent (4%) per
annum over the prime rate of interest announced from time to time by Bank of
America, San Francisco, California (or its successor), or (b) the maximum lawful
rate.
25.8 "Law(s)" means all laws, statutes, ordinances (including zoning
ordinances), judicial decisions, or other governmental rules, regulations,
orders or requirements (including those of a quasi-official entity or body such
as the board of fire examiners or public utilities or those imposed in
connection with conditional use permits or other governmental actions), now or
hereafter in force.
25.9 "Operating Costs" means all expenses, costs and disbursements of
every kind and nature which Landlord shall pay or become obligated to pay
because of or in connection with the ownership, management, operation,
maintenance and repair of the Building, except those items which are expressly
excluded below. Operating Costs shall include, without limitation, the
following:
-26-
27
(a) Wages, salaries, taxes, insurance and related expenses and
benefits of all onsite and offsite employees to the extent engaged in the
operation or maintenance of the Building.
(b) All supplies, tools, equipment and materials used in
operating and maintaining the Building, including any lease payments therefor.
(c) Cost of utilities for the Building to the extent not payable
by Tenant under Section 6.
(d) Cost of all maintenance, repair and replacement expenses,
janitorial, building engineering, landscaping, security, legal, other consulting
fees and service agreements for the Building and the equipment therein which are
not otherwise directly paid by Tenant, including without limitation window
cleaning and elevator maintenance.
(e) Cost of all insurance carried by Landlord in connection with
the Building and Landlord's personal property used in connection therewith,
including any deductible amounts paid by Landlord with respect to such
insurance.
(f) All Property Taxes (as defined below).
(g) Repairs, replacements and general maintenance (excluding sums
paid by insurance proceeds or by Tenant or other third parties).
(h) All maintenance and repair costs relating to the sidewalks,
landscaped areas and, to the extent Operating Costs therefor exceed the Parking
Fees received with respect to the same, the Parking Lot.
(i) Amortization over the useful life of the cost of capital
improvement items, including interest at the one per cent (1%) per annum over
the prime rate of interest announced from time to time by Bank of America, San
Francisco, California (or its successor), which may reasonably reduce Operating
Costs or enhance the Building's operational efficiency or which may be required
by governmental authority.
(j) Landlord's central accounting costs and audit fees
attributable to the Building.
(k) A fee for building management, provided such fee does not
exceed ten percent (10%) of Operating Costs.
Notwithstanding the foregoing to the contrary, Operating Costs shall exclude the
following: the cost of repairs or other work occasioned by fire or other
casualty or hazard to the extent that Landlord receives insurance proceeds;
charges and fees incurred on debt and ground leases, including fines and
penalties incurred thereunder; cost for which Landlord receives reimbursement
from insurance carriers or any other third party; cost for any service for which
Tenant pays (either Landlord or a third party provider) on a direct basis; any
costs incurred in connection with repairing the structural parts of the Building
under Section 11.1.
-27-
28
25.10 "Property Taxes" means all taxes, assessments and government
charges levied against the real property and improvements in the Building and
the Lot, all personal property taxes levied on Landlord's personal property used
in managing, operating, maintaining and repairing the Building, all taxes,
assessments and reassessments of every kind and nature whatsoever levied or
assessed in lieu of or in substitution for existing or additional real or
personal property taxes and assessments on the Building, service payment in lieu
of taxes, excises, transit charges and fees, development and other assessments,
reassessments, levies, fees or charges, general and special, ordinary and
extraordinary, unforeseen as well as foreseen, of any kind which are assessed,
levied, charged, confirmed, or imposed during the Term by any public authority
upon the Building, the Building's operations or the rent received from the
Building, or amounts required to be expended because of governmental orders for
public improvements, services, benefits, or other similar purposes. Property
Taxes shall also include all expenses reasonably incurred by Landlord in
contesting or otherwise seeking reduction of Property Taxes if Landlord realizes
tax savings equal or greater to such expenses. Notwithstanding anything to the
contrary, Property Taxes shall exclude any franchise, estate, inheritance or
succession transfer tax of Landlord, or any income, profits or revenue tax or
charge, upon Landlord's net income from all sources.
25.11 "Rent" means all amounts payable by Tenant to Landlord under this
Lease, including, but not limited to, Monthly Base Rent, Increased Operating
Costs, late charges, interest on late payments and reimbursements of costs.
Landlord shall have the same remedies against Tenant for the failure to pay any
Rent when and as due, as Landlord has for Tenant's failure to pay Monthly Base
Rent.
25.12 "Tenant's Personal Property" means Tenant's equipment, furniture,
merchandise, inventory, accounts receivable, insurance proceeds, contracts,
intangibles and movable property placed in the Premises by Tenant, including
Tenant's Trade Fixtures.
25.13 "Tenant's Trade Fixtures" means any property installed in or on
the Premises by Tenant for purpose of trade, manufacture, ornament or related
use, provided the same may be removed without material damage to the Premises.
26. MISCELLANEOUS
26.1 Rules and Regulations. Landlord shall have the right from time to
time to promulgate rules and regulations for the safety, care and cleanliness of
the Premises, the Building, and the Parking, or for the preservation of good
order ("Rules and Regulations"). Attached to this Lease as Exhibit D is a set of
the current Rules and Regulations. Tenant shall comply with the Rules and
Regulations, together with all modifications and additions thereto adopted by
Landlord from time to time of which Tenant has been given prior written notice.
If there is a conflict between the Rules and Regulations and the remainder of
this Lease, the remainder of this Lease shall prevail.
26.2 Keys and Locks. Landlord shall furnish Tenant with a reasonable
number of keys to the Premises. Additional keys shall be furnished at a charge
by Landlord on an order signed by Tenant. All such keys shall remain Landlord's
property. Tenant shall not install any additional locks without Landlord's prior
written consent, and Tenant shall not make or permit to
-28-
29
be made any duplicate keys. Upon termination of this Lease, Tenant shall
surrender to Landlord all keys of the Premises.
26.3 Force Majeure. Force Majeure shall excuse the performance by that
party for a period equal to the prevention, delay or stoppage, except the
obligations imposed with regard to Rent to be paid by Tenant pursuant to this
Lease; provided the party prevented, delayed or stopped shall have given the
other party written notice thereof within thirty (30) days of such event causing
the prevention, delay or stoppage. Notwithstanding anything to the contrary
contained in this Section 27.2, if any work performed by Tenant or Tenant's
contractor results in a strike, lockout and/or labor dispute, the strike,
lockout and/or labor dispute shall not excuse the performance by Tenant of this
Lease.
26.4 Time of Essence. Except as to performance of the Tenant Improvement
Work and delivery to Tenant of possession of the Premises, time is of the
essence of each provision of this Lease in which time is an element.
26.5 Construction. The definitions contained in this Lease shall be used
to interpret the Lease. All rights and remedies of Landlord and Tenant, except
as otherwise expressly provided, are cumulative and non-exclusive of any other
remedy at law or in equity. Tenant acknowledges that it has been represented by
counsel and the terms of this Lease have been fully negotiated; accordingly,
neither Landlord nor Tenant shall be deemed the drafter of the Lease in
interpreting any ambiguities in the provisions of this Lease.
26.6 Corporate Authority. If Tenant is a corporation, Tenant shall
deliver to Landlord on execution of this Lease a certified copy of a resolution
of Tenant's board of directors authorizing the execution of this Lease and
naming the officers that are authorized to execute this Lease on behalf of
Tenant.
26.7 Successors. Subject to Section 15 and except as otherwise specified
in this Lease, this Lease shall be binding on and inure to the benefit of the
parties and their successors and assigns.
26.8 Governing Law. This Lease shall be construed and interpreted in
accordance with the Laws of the State of California.
26.9 Joint and Several Obligations. If more than one person or entity is
Landlord or Tenant, the obligations imposed on that party shall be joint and
several.
26.10 Severability. The unenforceability, invalidity or illegality of
any provision of this Lease shall not render the other provisions unenforceable,
invalid, or illegal.
26.11 Entire Agreement; Amendments. This Lease contains the entire
agreement of the parties with respect to the subject matter contained herein and
supersedes any previous negotiations or agreements. This Lease cannot be amended
or modified except by a written agreement signed by the parties.
-29-
30
26.12 Attorneys' Fees. If either party commences an action against the
other party arising out of or in connection with this Lease, the prevailing
party shall be entitled to have and recover from the losing party reasonable
attorney's fees and costs of suit.
26.13 Notices. Any notice, demand, request, consent, approval, or
communication that either party desires or is required to give to the other
party or any other person shall be in writing and given personally, by overnight
courier, by facsimile transmission during regular business hours (in which case
a copy thereof shall also be sent by prepaid, certified or registered mail) or
by prepaid, certified or registered mail, addressed to the other party at the
address set forth in the Basic Lease Information. Either party may change its
address by notifying the other party of the change of address in writing. Notice
shall be deemed communicated on the date of delivery except that, with respect
to notices sent by certified or registered mail, notice shall be deemed received
within forty-eight (48) hours from the time of mailing.
26.14 Brokers. Landlord and Tenant each represents and warrants that it
has had no dealings with any real estate broker or agent in connection with this
Lease other than the brokers identified in the Basic Lease Information, whose
commissions shall be paid by Landlord. Landlord and Tenant shall indemnify,
defend and hold Landlord harmless from and against all Claims arising from any
breach of the warranty specified in this Section.
26.15 Recording. Tenant shall not record this Lease or a memorandum
hereof without Landlord's prior written consent which may be withheld in
Landlord's sole discretion. Tenant agrees to execute and acknowledge a short
form lease in recordable form at Landlord's request, which may be recorded by
Landlord.
26.16 Survival of Tenant's Obligations. All of Tenant's indemnities,
waivers, assumptions of liability, duties and obligations under this Lease shall
survive the termination of this Lease to the extent required for the full
observance and performance thereof.
26.17 Execution by Landlord. The submission of this document for
examination and negotiation does not constitute an offer to lease, or a
reservation of, or option for, the Premises. This document becomes effective and
binding only upon execution and delivery hereof by Tenant and by Landlord. No
act or omission of any employee or agent of Landlord or of Landlord's broker
shall alter, change or modify any of the provisions hereof.
-30-
31
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the Execution Date.
Landlord: Tenant:
Xxxxxx Springs LLC, Xxxx.xxx,
a California limited liability company a California corporation
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxxx Xxxxxxxxxx
----------------------------------- ---------------------------------
Name: Xxxx X. Xxxxxxx Name: Xxxxx Xxxxxxxxxx
--------------------------------- -------------------------------
Title: Manager Title: CEO
-------------------------------- ------------------------------
By: /s/ D. Xxxxxxx Xxxxx By: /s/ Xxxxx Xxxx
----------------------------------- ---------------------------------
Name: D. Xxxxxxx Xxxxx Name: Xxxxx Xxxx
--------------------------------- -------------------------------
Title: Manager Title: President
-------------------------------- ------------------------------
-31-