EXHIBIT 10.1
LEASE AGREEMENT
BASIC PROVISIONS ("BASIC PROVISIONS")
1.1 PARTIES: This Lease ("LEASE"), dated for reference purposes only
August 11, 1999, is made by and between The Xxxx and Xxxxxxxxx Company
("LESSOR") and Baby Center, Inc., a Delaware corporation ("LESSEE")
(collectively the "PARTIES," or individually a "PARTY").
1.2 PREMISES: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and
commonly known as 000 Xxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx, consisting
of approximately 24,000 rentable square feet ("PREMISES").
1.3 TERMS: The initial term of this Lease shall be five (5) years
("ORIGINAL TERM") and shall expire five (5) years after the Commencement Date
("EXPIRATION DATE"). The Original Term shall shall commence (the
"COMMENCEMENT DATE") on the date on which the Tenant Improvements described
in Paragraph 49 to be constructed by Lessor ("LESSOR'S TENANT IMPROVEMENTS")
shall have been substantially completed. "Substantial Completion" shall mean
that (i) Lessor shall have completed the Lessor Tenant Improvements in all
material respects in accordance with the Construction Documents (as defined
in paragraph 49), (ii) there remains no incomplete or defective item of
Lessor Tenant Improvements that would materially adversely affect Lessee's
intended use of the Premises, (iii) Lessor has delivered possession of the
applicable permits from appropriate governmental authorities required to be
obtained by Lessor for the legal occupancy of the Premises and completion of
Lessor's Tenant Improvements.
1.4 EARLY POSSESSION: As provided in Section 3.2.
1.5 BASE RENT: The Monthly rent for the Premises ("BASE RENT") shall
be as follows:
During the Early Possession period (based upon a pro rated rental
as described in Section 3.2, and during the initial 12
months of the Term: Forty-Eight Thousand Dollars ($48,000);
During months 13-24: Forty-Nine Thousand Nine Hundred Twenty
Dollars ($49,920);
During months 25-36: Fifty-One Thousand Nine Hundred Twenty
Dollars ($51,920);
During months 37-48: Fifty-Four Thousand Dollars ($54,000); and
During months 49-60: Fifty-Six Thousand Dollars ($56,160);
Base rent shall be payable in advance on the first day of each month
commencing on the Commencement Date.
1.6 BASE RENT PAID UPON EXECUTION: Upon execution of this Lease,
Lessee shall pay to Lessor the amount of Two Hundred Eighty-Eight Thousand
Dollars ($288,000) as Base Rent for the first six (6) months of the Original
Term.
1.7 SECURITY DEPOSIT: There shall be no security deposit.
1.8 AGREED USE: Lessee shall use the Premises for general industrial
use with supporting offices for an internet-multimedia company, consistent
with the use approval received from the San Francisco Planning Department.
Lessor assumes no obligation or liability if any proposed use by Lessee is
not in conformance with any such approval. Lessee shall not have access to,
or the use of, the roof of the Premises for any reason whatsoever and shall
advise its employees and invitees upon the Premises of such restriction and
shall take reasonable actions to prevent any such person from gaining access
to and using said roof, excepting only access to the roof by service
technicians who are providing maintenance services for the HVAC located upon
the roof or are keeping the roof and roof drainage free of debris.
1.9 REAL ESTATE BROKERS: The following real estate brokers
(collectively, the "BROKERS") and brokerage relationships exist in this
transaction:
Starboard Commercial Real Estate represents Lessor exclusively ("LESSOR'S
BROKER"). XXXX Properties represents Leesee exclusively ("LESSEE'S BROKER").
Upon execution and delivery of this Lease by both Parties and upon the taking
of possession by Lessee of the Premises, Lessor shall pay to Lessor's Broker
the fee agreed to in their separate written
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agreement. No brokerage fees shall be payable with respect to the Option
Period (as described in paragraph 39) if Lessee shall exercise the Option to
extend the Term of this Lease.
1.10 LETTER OF CREDIT. The obligations of the Lessee under this Lease
during the Original Term shall be secured by a standby letter of credit (the
"LETTER OF CREDIT") which shall permit drawings during the Original Term in
the event of a Breach (as defined in Section 13.1 hereof) in an aggregate
amount of Two Hundred Eighty-Eight Thousand Dollars ($288,000). The Letter
of Credit shall be in form satisfactory to Lessor and shall be issued by a
bank whose creditworthiness is satisfactory to Lessor. The Letter of Credit
shall be delivered to Lessor concurrently with the execution of this Lease.
If the letter of Credit by its terms shall expire prior to the expiration of
the Original Term, the Letter of Credit shall expressly provide that unless a
substitute Letter of Credit is delivered to Lessor no later than 30 days
prior to such stated expiration date, and notwithstanding that a Breach may
not have occurred, Lessor may draw upon the Letter of Credit for the full
amount drawable thereunder and hold such amounts as security for the
obligations of Lessee hereunder during the Original Term.
2. PREMISES
2.1 LETTING. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of size set forth in this Lease, or that may
have been used in calculating rental, is an approximation which the Parties
agree is reasonable and the rental based thereon is not subject to revision
whether or not the actual size is more or less.
2.2 CONDITION. Lessor shall deliver the Premises broom clean and free
of debris on the Commencement Date or the Early Possession Date, whichever
first occurs ("START DATE"), and warrants that the existing electrical,
plumbing, fire sprinkler, lighting, heating, ventilating and air conditioning
systems ("HVAC"), loading doors, if any, and all other such elements of the
building, in the Premises, other than those constructed by Lessee, shall be
in good operating condition on said date and that the surface and structural
elements of the roof, bearing walls and foundation of any buildings on the
Premises (the "BUILDING") shall be free of material defects. If a
non-compliance with said warranty exists as of the Start Date or shall occur
after the Start Date, Lessee shall provide written notice to Lessor setting
forth with specificity the nature and extent of such non-compliance. Except
as otherwise provided in this Lease, promptly after receipt of Lessee's
notice, Lessor shall repair or replace same at Lessor's expense; provided,
however, that if Lessor has not received any written notice from Lessee
within (i) six (6) months after the Start Date, as to the HVAC systems, or
(ii) ninety (90) days after the Start Date, as to the remaining systems and
other elements of the Building, Lessor shall have no further obligations with
respect thereto and correction of any such non-compliance shall be the
obligation of Lessee at Lessee's sole cost and expense, except for the roof,
foundations, beams, columns, HVAC, exterior and bearing walls, the
responsibility for which shall be determined in accordance with paragraph 7.
Lessor's obligations with respect to any such non-compliance shall be limited
to its obligation to repair or replace any defective elements and in no event
shall Lessor be responsible for any other damages which may be suffered by
Lessee as a direct or indirect result thereof, including without limitation,
consequential, special, incidental or punitive damages.
2.3 COMPLIANCE. Lessor warrants that, to the best of its knowledge, the
improvements on the Premises comply in all material respects with all
applicable laws, covenants or restrictions of record, building codes,
regulations and ordinances ("APPLICABLE REQUIREMENTS") in effect on the
Commencement Date, including the Americans With Disabilities Act of 1990 and
all Applicable Requirements relating to the seismic condition of the
Premises. Said warranty does not apply to the use to which Lessee will put
the Premises or to any Alterations or Utility Installations (as defined in
Paragraph 7.3(a) made or to be made by Lessee, NOTE: Lessee is responsible
for determining whether or not the zoning is appropriate for Lessee's
intended use, and acknowledges that past uses of the Premises may no longer
be allowed. If the Premises do not comply with said warranty, Lessor shall,
except as otherwise provided, promptly after receipt of written notice from
Lessee setting forth with specificity the nature and extent of such
non-compliance, rectify the same at Lessor's expense. If Lessee does not give
Lessor written notice of a non-compliance with the warranty within six (6)
months following the Commencement Date, correction of that non-compliance
shall be the obligation of Lessee at Lessee's sole cost and expense. If the
Applicable Requirements are hereafter changed (as opposed to being in
existence at the Commencement Date, which is addressed in Paragraph 6.2(e)
below) so as to require during the term of this Lease the construction of an
addition to or an alteration of the Building, the remediation of any
Hazardous Substance, or the reinforcement or other physical modification of
the Building ("Capital Expenditure"), Lessor and Lessee shall allocate the
cost of such work as follows:
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(a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures
are required as a result of the specific and unique use of the Premises by
Lessee as compared with uses by tenants in general, Lessee shall be fully
responsible for the cost thereof, provided, however that if such Capital
Expenditure is required during the last two (2) years of this Lease and the
cost thereof exceeds two (2) months' Base Rent, Lessee may instead terminate
this Lease unless Lessor notifies Lessee, in writing, within ten (10) days
after receipt of Lessee's termination notice that Lessor has elected to pay
the difference between the actual cost thereof and the amount equal to two
(2) months' Base Rent. If Lessee elects Termination, Lessee shall immediately
cease the use of the Premises which requires such Capital Expenditure and
deliver to Lessor written notice specifying a termination date at least
ninety (90) days thereafter. Such termination date shall, however, in no
event be earlier than the last day that Lessee could legally utilize the
Premises without commencing such Capital Expenditure.
(b) If such Capital Expenditure is not the result of the specific
and unique use of the Premises by Lessee (such as, governmentally mandated
seismic modifications), then Lessor and Lessee shall allocate the obligation
to pay for such costs pursuant to the provisions of Paragraph 7.1(c);
provided, however, that if such Capital Expenditure is required during the
last two years of this Lease or if Lessor reasonably determines that it is
not economically feasible to pay its share thereof, Lessor shall have the
option to terminate this Lease upon ninety (90) days prior written notice to
Lessee unless Lessee notifies Lessor, in writing, within ten (10) days after
receipt of Lessor's termination notice that Lessee will pay for such Capital
Expenditure. If Lessor does not elect to terminate, and fails to tender its
share of any such Capital Expenditure, Lessee may advance such funds and
deduct same, with interest, from Rent until Lessor's share of such costs have
been fully paid. If Lessee is unable to finance Lessor's share, or if the
balance of the Rent due and payable for the remainder of this Lease is not
sufficient to fully reimburse Lessee on an offset basis, Lessee shall have
the right to terminate this Lease upon thirty (30) days written notice to
Lessor.
(c) Notwithstanding the above, the provisions concerning Capital
Expenditures are intended to apply only to non-voluntary, unexpected, and new
Applicable Requirements. If the Capital Expenditures are instead triggered by
Lessee as a result of an actual or proposed change in use, change in
intensity of use, or modification to the Premises then, and in that event,
Lessee shall be fully responsible for the cost thereof, and Lessee shall not
have any right to terminate this Lease.
2.4 ACKNOWLEDGMENTS: Lessee acknowledges that: (a) it has been advised
by Lessor and/or Brokers to satisfy itself with respect to the condition of
the Premises (including but not limited to the electrical, HVAC and fire
sprinkler systems, security environmental aspects, and compliance with
Applicable Requirements), and their suitability for Lessee's intended use;
(b) Lessee has made such investigation as it deems necessary with reference
to such matters and assumes all responsibility therefor as the same relate to
its occupancy of the Premises; and (c) neither Lessor, Lessor's agents, nor
any Broker has made any oral or written representations or warranties with
respect to said matters other than as set forth in this Lease. In addition,
Lessor acknowledges that: (a) Broker has made no representations, promises or
warranties concerning Lessee's ability to honor the Lease or suitability to
occupy the Premises; and (b) it is Lessor's sole responsibility to
investigate the financial capability and/or suitability of all proposed
tenants.
3. TERM.
3.1 TERM. The Commencement Date, Expiration Date and Original Term of
this Lease are as specified in Paragraph 1.
3.2 EARLY POSSESSION. Lessee shall be granted access to the Premises
prior to the Commencement Date to allow Lessee to construct such improvements
to the Premises as shall be Lessee's responsibility and as shall have been
approved by Lessor. Lessee shall take possession and occupy the second floor
of the Premises following the substantial completion (as defined in Section
1.3) by Lessor of the Lessor Tenant Improvements for such floor. Upon such
occupancy by Lessee (the date of such occupancy being the "EARLY POSSESSION
DATE"), Lessee shall be obligated to pay Rent based upon portion of the
Premises so occupied, multiplied by the applicable Base Rent specified in
paragraph 1.5 until the Commencement Date specified in paragraph 1.3 above,
at which time the entire applicable monthly Base Rent specified in paragraph
1.5 shall be payable. The taking of early possession of all or a portion of
the Premises shall not shorten the Original Term of this Lease. All terms of
this Lease shall be in effect during the Early Possession period. Any such
early possession shall not affect the Expiration Date.
3.3 DELAY IN POSSESSION. Lessor agrees to use its best commercially
reasonable efforts to (i) deliver possession of the second floor of the
Premises by August 27, 1999 and (ii) deliver possession of the first floor
of the Premises by September 3, 1999; provided, however, that such dates may
be extended if Lessor is not able to obtain new electrical service from
Pacific Gas & Electric Company. If, despite said efforts, Lessor is unable,
despite its diligent efforts, to deliver possession as agreed, Lessor shall
not be subject to any liability therefor, nor shall such failure affect the
validity of this Lease. Lessee shall not, however, be obligated to pay Rent
or perform its other obligations until it receives possession of a
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portion of the Premises as provided in paragraph 1.4. If possession of the
entire Premises with Lessor's Tenant Improvements is not delivered by
December 15, 1999 (the "OUTSIDE DELIVERY DATE"), Lessee may, at its option,
by notice in writing within forty-five (45) days after the Outside Delivery
Date, cancel this Lease, in which event the Parties shall be discharged from
all obligations hereunder, except that Lessor shall promptly refund to Lessee
all amounts previously rendered to Lessor pursuant to Paragraph 1.6 and shall
return the Letter of Credit to Lessee (or as Lessee shall direct). If such
written notice is not received by Lessor within said forty-five (45) day
period, Lessee's right to cancel shall terminate. Except as otherwise
provided, if possession of the entire Premises is not tendered to Lessee by
the Outside Delivery Date and Lessee does not terminate this Lease, as
aforesaid, the Original Term shall commence from the date of delivery of
possession of the entire Premises and continue for a period equal to what
Lessee would otherwise have enjoyed under the terms hereof, but minus any
days of delay caused by the acts or omissions of Lessee.
3.4 LESSEE COMPLIANCE. Lessor shall not be required to tender
possession of the Premises to Lessee until Lessee complies with its
obligation to provide evidence of insurance (Paragraph 8). Pending delivery
of such evidence. Lessee shall be required to perform all of its obligations
under this Lease from and after the Commencement Date, or any Early
Possession Date, including the payment of Rent, notwithstanding Lessor's
election to withhold possession pending receipt of such evidence of
insurance. Further, if Lessee is required to perform any other conditions
prior to or concurrent with the Commencement Date, the Commencement Date
shall occur but Lessor may elect to withhold possession until such conditions
are satisfied.
4.1 RENT.
4.1 RENT DEFINED. All monetary obligations of Lessee to Lessor under
the terms of this Lease are deemed to be rent ("RENT").
4.2 PAYMENT. Lessee shall cause payment of Rent to be received by
Lessor in lawful money of the United States, without offset or deduction
(except as specifically permitted in this Lease), on or before the day on
which it is due. Rent for any period during the term hereof which is for less
than one (1) full calendar month shall be prorated based upon the actual
number of days of said month. Payment of Rent shall be made to Lessor at its
address stated herein or to such other persons or place as Lessor may from
time to time designate in writing. Acceptance of a payment which is less than
the amount then due shall not be a waiver of Lessor's rights to the balance
of such Rent, regardless of Lessor's endorsement of any check so stating.
5. SECURITY DEPOSIT. None.
6. USE.
6.1 USE. Lessee shall use and occupy the Premises only for the Agreed
Use, or any other legal use which is reasonably comparable thereto and
permitted under the rules and regulations of the City of San Francisco, and
for no other purpose. Lessee shall not use or permit the use of the Premises
in a manner that is unlawful, creates damage, waste or a nuisance, or that
disturbs owners and/or occupants of, or causes damage to neighboring
properties. Lessor shall not unreasonably withhold or delay its consent to any
written request for a modification of the Agreed Use, so long as the same
will not impair the structural integrity of the improvements on the Premises
or the mechanical or electrical systems therein, or is not significantly more
burdensome to the Premises. If Lessor elects to withhold consent, Lessor
shall within five (5) business days after such request give written
notification of same, which notice shall include an explanation of Lessor's
objections to the change in use.
6.2 HAZARDOUS SUBSTANCES:
(a) REPORTABLE USES REQUIRE CONSENT. The term "HAZARDOUS SUBSTANCE"
as used in this Lease shall mean any product, substance, or waste whose
presence, use, manufacture, disposal, transportation, or release, either by
itself or in combination with other materials expected to be on the Premises,
is either: (i) regulated or monitored by any governmental authority, or (ii)
a basis for potential liability of Lessor to any governmental agency or third
party under any applicable statute or common law theory. Hazardous Substances
shall include, but not be limited to, hydrocarbons, petroleum, gasoline,
and/or crude oil or any products, by-products or fractions thereof. Lessee
shall not engage in any activity in or on the Premises which constitutes a
Reportable Use of Hazardous Substances without the express prior written
consent of Lessor and timely compliance (at Lessee's expense) with all
Applicable Requirements. "REPORTABLE USE" shall mean (i) the installation or
use of any above or below ground storage tank, (ii) the generation,
possession, storage, use, transportation, or disposal of a Hazardous
Substance that requires a permit from, or with respect to which a report,
notice,
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registration or business plan is required to be filed with, any governmental
authority, and/or (iii) the presence at the Premises of a Hazardous Substance
with respect to which any Applicable Requirements requires that a notice be
given to persons entering or occupying the Premises or neighboring properties.
Notwithstanding the foregoing, Lessee may use any ordinary and customary
materials reasonably required to be used in the normal course of the Agreed
Use, so long as such use is in compliance with all Applicable Requirements,
is not a Reportable Use, and does not expose the Premises or neighboring
property to any meaningful risk of contamination or damage or expose Lessor
to any liability therefor. In addition, Lessor may condition its consent to
any Reportable Use upon receiving such additional assurances as Lessor
reasonably deems necessary to protect itself, the public, the Premises and/or
the environment against damage, contamination, injury and/or liability,
including, but not limited to, the installation (and removal on or before
Lease expiration or termination) of protective modifications (such as
concrete encasements).
(b) DUTY TO INFORM LESSOR. If Lessee knows, or has reasonable cause
to believe, that a Hazardous Substance has come to be located in, on, under
or about the Premises as a result of the actions, or failure to act, of
Lessee, its agents, employees, or invitees, other than as previously
consented to by Lessor, Lessee shall immediately give written notice of such
fact to Lessor, and provide Lessor with a copy of any report, notice, claim
or other documentation which it has concerning the presence of such Hazardous
Substance.
(c) LESSEE REMEDIATIONS. Lessee shall not cause or permit any
Hazardous Substance to be spilled or released in, on, under, or about the
Premises (including through the plumbing or sanitary sewer system) and shall
promptly, at Lessee's expense, take all investigatory and/or remedial action
reasonably recommended, whether or not formally ordered or required, for the
cleanup of any contamination of, and for the maintenance, security and/or
monitoring of the Premises or neighboring properties, that was caused or
materially contributed to by Lessee, or pertaining to or involving any
Hazardous Substance brought onto the Premises during the term of this Lease,
by or for Lessee, or any third party.
(d) LESSEE INDEMNIFICATION. Lessee shall indemnify, defend,
reimburse and hold Lessor, its agents, employees, lenders and ground lessor,
if any, harmless from and against any end all loss of rents and/or damages,
liabilities, judgments, claims, expenses, penalties, and reasonable
attorneys' and reasonable consultants' fees arising out of or involving any
Hazardous Substance released, emitted, used, stored, manufactured,
transported or discharged upon the Premises by or for Lessee, its agents,
employees, contractors or invitees or any other third party under Lessee's
control (provided, however, that Lessee shall have no liability under this
Lease with respect to underground migration of any Hazardous Substance under
the Premises from adjacent properties). Lessee's obligations shall include,
but not be limited to, the effects of any contamination or injury to person,
property or the environment created or suffered by Lessee, and the cost of
investigation, removal, remediation, restoration and/or abatement, and shall
survive the expiration or termination of this Lease. NO TERMINATION,
CANCELLATION OR RELEASE AGREEMENT ENTERED INTO BY LESSOR AND LESSEE SHALL
RELEASE LESSEE FROM ITS OBLIGATIONS UNDER THIS LEASE WITH RESPECT TO
HAZARDOUS SUBSTANCES, UNLESS SPECIFICALLY SO AGREED BY LESSOR IN WRITING AT
THE TIME OF SUCH AGREEMENT.
(e) LESSOR INDEMNIFICATION. Lessee shall have no responsibility for
Lessor and its successors and assigns shall indemnify, defend, reimburse and
hold Lessee, its employees and lenders, harmless from and against any and all
damages, including the cost of remediation, arising out of or involving the
existence any Hazardous Substances in, under, about or on the Premises prior
to the Commencement Date or, with respect to Hazardous Substances, which are
caused by the negligence or willful misconduct of Lessor, its agents or
employees. Lessor's indemnification shall not be applicable to the extent
that any Hazardous Substances was released, emitted, used, stored,
manufactured, transported or discharged upon the Premises by or for Lessee,
its agents, employees, contractors or invitees or any other third party under
Lessee's control, Lessor's obligations, as and when required by the
Applicable Requirements, shall include, but not be limited to, the cost of
investigation, removal, remediation, restoration and/or abatement, and shall
survive the expiration or termination of this Lease.
(f) INVESTIGATIONS AND REMEDIATIONS. Lessor shall retain the
responsibility and pay for any investigations or remediation measures
required by governmental entities having jurisdiction with respect to the
existence of Hazardous Substances on the Premises prior to the Commencement
Date, unless such remediation measure is required as a result of Lessee's use
(including alterations) of the Premises, in which event Lessee shall be
responsible for such payment. Lessee shall cooperate fully in any such
activities at the request of Lessor, including allowing Lessor and Lessor's
agents to have reasonable access to the Premises at reasonable times in order
to carry out Lessor's investigative and remedial responsibilities.
(g) LESSOR TERMINATION OPTION. If a Hazardous Substance Condition
occurs during the term of this Lease, unless Lessee is legally responsible
therefor (in which case Lessee shall make the investigation and remediation
thereof required
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by the Applicable Requirements and this Lease shall continue in full force
and effect, but subject to Lessor's rights under Paragraph 6.2(d) and
Paragraph 13), Lessor may, at Lessor's option, either (i) investigate and
remediate such Hazardous Substance Condition, if required, as soon as
reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (ii) if the estimated cost to remediate
such condition exceeds twelve (12) times the then Monthly Base Rent or
$100,000, whichever is greater, give written notice to Lessee, within thirty
(30) days after receipt by Lessor of knowledge of the occurrence of such
Hazardous Substance Condition, of Lessor's desire to terminate this Lease as
of the date sixty (60) days following the date of such notice. In the event
Lessor elects to give a termination notice, Lessee may, within ten (10) days
thereafter, give written notice to Lessor of Lessee's commitment to pay the
amount by which the cost of the remediation of such Hazardous Substance
Condition exceeds an amount equal to twelve (12) times the then monthly Base
Rent or $100,000, whichever is greater. Lessee shall provide Lessor with said
funds or satisfactory assurance thereof within thirty (30) days following such
commitment. In such event, this Lease shall continue in full force and
effect, and Lessor shall proceed to make such remediation as soon as
reasonably possible after the required funds are available. If Lessee does
not give such notice and provided the required funds or assurance thereof
within the time provided, this Lease shall terminate as of the date specified
in Lessor's notice of termination.
6.3 LESSEE'S COMPLIANCE WITH APPLICABLE REQUIREMENTS. Except as
otherwise provided in this Lease, and subject to paragraph 2.3, Lessee shall,
at Lessee's sole expense, fully, diligently and in a timely manner,
materially comply with all Applicable Requirements, the requirements of any
applicable fire insurance underwriter or rating bureau, which relate to the
particular use or occupancy of the Premises by Lessee, without regard to
whether said requirements are now in effect or become effective after the
Commencement Date. Lessee shall, within ten (10) days after receipt of
Lessor's written request, provide Lessor with copies of all permits and other
documents, and other information evidencing Lessee's compliance with an
Applicable Requirements specified by Lessor, and shall immediately upon
receipt, notify Lessor in writing (with copies of any documents involved) of
any threatened or actual claim, notice, citation, warning, complaint or
report pertaining to or involving the failure of Lessee or the Premises to
comply with any Applicable Requirements.
6.4 INSPECTION; COMPLIANCE. Lessor and Lessor's "Lender" (as defined in
Paragraph 30 below) and consultants shall have the right to enter into
Premises at any time, in the case of an emergency, and otherwise at
reasonable times, upon at least 24 hours prior notice, for the purpose of
inspecting the condition of the Premises and for verifying compliance by
Lessee with this Lease. The cost of any such inspections shall be paid by
Lessor, unless a violation of Applicable Requirements by Lessee, its agents,
employees, or invitees, has occurred, or a contamination caused by Lessee,
its agents, employees, or invitees is found to exist or be imminent, or the
inspection is requested or ordered by a governmental authority with respect
to such violation or contamination or with respect to other obligations for
which Lessee is responsible hereunder. In such case, Lessee shall upon
request reimburse Lessor for the cost of such inspections, so long as such
inspection is reasonably related to the violation or contamination.
7.1 MAINTENANCE; REPAIRS, UTILITY INSTALLATIONS; TRADE FIXTURES AND
ALTERATIONS,
7.1 LESSEE'S OBLIGATIONS.
(a) IN GENERAL. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code),
6.3 (Lessee's Compliance with Applicable Requirements), 7.2 (Lessor's
Obligations), 9 (Damage and Destruction), and 14 (Condemnation), Lessee
shall, at Lessee's sole expense, keep the Premises, Utility Installations,
and Alterations in good order, condition and repair (whether or not the
portion of the Premises requiring repairs, or the means of repairing the
same, are reasonably or readily accessible to Lessee, and whether or not the
need for such repairs occurs as a result of Lessee's use, any prior use, the
elements or the age of such portion of the Premises), including, but not
limited to, all equipment or facilities such as plumbing, heating,
ventilating, air-conditioning, electrical, lighting facilities, boilers,
pressure vessels, fire protection system, fixtures, walls (interior and
exterior) ceilings, floors, windows, doors, skylights, landscaping,
driveways, parking lots, fences, signs, sidewalks and parkways located in,
on, or adjacent to the Premises. Lessee is also responsible for keeping the
roof and roof drainage clean and free of debris. Lessor shall keep the
surface and structural elements of the roof, foundations, beams, columns,
exterior and bearing walls in good repair (see paragraph 7.2). Lessee, in
keeping the Premises in good order, condition and repair, shall exercise and
perform good maintenance practices. Lessee's obligations shall include
restorations, replacements or renewals when necessary to keep the Premises
and all improvements thereon or a part thereof in good order, condition and
state of repair. Lessee shall, during the term of this Lease, keep the
exterior appearance of the Building in a first-class condition (including,
e.g., graffiti removal) consistent with the exterior appearance of other
similar facilities of comparable age and size in the vicinity, including,
when necessary, the exterior repainting of the Building.
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(b) SERVICE CONTRACTS. Lessee shall, at Lessee's sole expense,
procure and maintain contracts, with copies to Lessor, in customary form and
substance for, and with contractors specializing and experienced in the
maintenance of the following equipment and improvements ("Basic Elements"),
if any, if and when installed on the Premises: (i) HVAC equipment, (ii)
boiler, and pressure vessels, (iii) fire extinguishing systems, including
fire alarm and/or smoke detection, (iv) landscaping and irrigation systems,
(v) clarifiers, and (vi) basic utility feed to the perimeter of the Building.
(c) REPLACEMENT. Subject to Lessee's indemnification of Lessor as
set forth in Paragraph 8.7 below, and without relieving Lessee of liability
resulting from Lessee's failure to exercise and perform good maintenance
practices, if the Basic Elements described in Paragraph 7.1(b), or the
plumbing and electrical systems serving the Premises, cannot be repaired
other than at a cost which is in excess of 50% of the cost of replacing such
Basic Elements or systems, then such Basic Elements or systems shall be
replaced by Lessor, and the cost thereof shall be prorated between the
Parties and Lessee shall only be obligated to pay, each month during the
remainder of the term of this Lease, on the date on which Base Rent is due,
an amount equal to the product of multiplying the cost of such replacement by
a fraction, the numerator of which is one, and the denominator of which is
the number of months of the useful life of such replacement as such useful
life is specified pursuant to Federal income tax regulations or guidelines
for depreciation thereof (including interest on the unamortized balance as is
then commercially reasonable in the judgment of Lessor's accountants, but not
to exceed six percent (6%) per annum), with Lessee reserving the right to
prepay its obligation at any time.
7.2 LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs
2.2 (Condition), 2.3 (Compliance with Covenants, Restrictions and Building
Code), 7.1(c) (Replacement), 9 (Damage or Destruction) and 14 (Condemnation),
it is intended by the Parties hereto that Lessor have no obligation, in any
manner whatsoever, to repair and maintain the Premises, or the equipment
therein, all of which obligations are intended to be that of the Lessee,
except for the surface and structural elements of the roof, foundations,
beams, columns, exterior and bearing walls, the repair of which shall be the
responsibility of Lessor upon receipt of written notice that such a repair is
necessary. It is the intention of the Parties that the terms of this Lease
govern the respective obligations of the Parties as to maintenance and repair
of the Premises, and they expressly waive the benefit of any statute now or
hereafter in effect to the extent it is inconsistent with the terms of this
lease.
7.3 UTILITY INSTALLATIONS; TRADE FIXTURES; ALTERATIONS.
(a) DEFINITIONS; CONSENT REQUIRED. The term "Utility Installations"
refers to all floor and window coverings, air lines, power panels, electrical
distribution, security and fire protection systems and signs, communication
systems, lighting fixtures, HVAC equipment, plumbing, and fencing in or on
the Premises. The term "TRADE FIXTURES" shall mean Lessee's machinery and
equipment that can be removed without doing material damage to the Premises.
The term "ALTERATIONS" shall mean any modification of the improvements, other
than Utility installations or Trade Fixtures, whether by addition or
deletion. "LESSEE OWNED ALTERATIONS AND/OR UTILITY INSTALLATIONS" are defined
as Alterations and/or Utility Installations made by Lessee that are not yet
owned by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make any
Alterations or Utility Installations to the Premises without Lessor's prior
written consent, which shall not be unreasonably withheld. Lessee may,
however, make non-structural Utility Installations to the interior of the
Premises (excluding the roof) without such consent but upon notice to Lessor,
as long as they are not visible from the outside, do not involve puncturing,
relocating or removing the roof or any existing walls, and the cumulative
cost thereof does not exceed $15,000 for any particular work of improvement.
(b) CONSENT. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. Consent shall be
deemed conditioned upon Lessee's: (i) acquiring all applicable governmental
permits, (ii) furnishing Lessor with copies of both the permits and the plans
and specifications prior to commencement of the work, and (iii) compliance
with all conditions of said permits and other Applicable Requirements in a
prompt and expeditious manner. Any Alterations or Utility Installations shall
be performed in a workmanlike manner with good and sufficient materials.
Lessee shall promptly upon completion furnish Lessor with as-built plans and
specifications. For work which costs an amount equal to the greater of one
month's Base Rent, or $75,000, Lessor may condition its consent upon Lessee
providing a lien and completion bond in an amount equal to one and one-half
times the estimated cost of such Alteration or Utility Installation and/or
upon Lessee's posting an additional Security Deposit with Lessor.
(c) INDEMNIFICATION. Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for
Lessee at or for use on the Premises, which claims are or may be secured by
any mechanic's or materialman's, lien against the premises or any interest
therein. Lessee shall give Lessor not less than ten (10) day's notice prior
to the commencement of any work in, on or about the Premises, and Lessor
shall have the right to post
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notices of non-responsibility. If Lessee shall contest the validity of any
such lien claim or demand, then Lessee shall, at its sole expense defend and
protect itself, Lessor and the Premises against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof. If Lessor shall require Lessee shall furnish a surety
bond in an amount equal to one and one-half times the amount of such
contested lien, claim or demand, indemnifying Lessor against liability for
the same. If Lessor elects to participate in any such action, Lessee shall
pay Lessor's attorneys' fees and costs.
7.4 OWNERSHIP; REMOVAL; SURRENDER; AND RESTORATION.
(a) OWNERSHIP. Subject to Lessor's right to require remove (or
elect ownership as hereinafter provided, all Alterations and Utility
Installations made by Lessee shall be the property of Lessee, but considered
a part of the Premises, Lessor may, at any time, elect in writing to be the
owner of all or any specified part of the Lessee Owned Alterations and
Utility Installations. Unless otherwise instructed per Paragraph 7.4(b)
hereof, all Lessee Owned Alterations and Utility installations shall, at the
expiration or termination of this Lease, become the property of Lessor and be
surrendered by Lessee with the Premises.
(b) REMOVAL. By delivery to Lessee of written notice from Lessor
not earlier than ninety (90) and not later than thirty (30) days prior to the
end of the term of this Lease, Lessor may require that any or all Lessee
Owned Alterations or Utility Installations be removed by the expiration or
termination of this Lease. Lessor may require the removal at any time of all
or any part of any Lessee Owned Alterations or Utility Installations made
without the required consent.
(c) SURRENDER/RESTORATION. Lessee shall surrender the Premises by
the Expiration Date or any earlier termination date, with all of the
improvements, parts and surfaces thereof broom clean and free of debris, and
in good operating order, condition end state of repair, ordinary wear and
tear excepted and excepting acts of God, casualties, condemnation, Hazardous
Substances (other than those Hazardous Substances stored, used, or disposed
of by Lessee, its agents, employees, or invitees, in or about the Premises in
violation of Applicable Requirements or this Lease) and Alterations with
respect to which Lessor has not required the removal thereof as provided
herein). "Ordinary wear and tear" shall not include any damage or
deterioration that would have been prevented by good maintenance practice.
Lessee shall repair any damage occasioned by the installation, maintenance or
removal of Trade Fixtures, Lessee Owned Alterations and/or Utility
Installations, furnishings, and equipment as well as the removal of any
storage tank installed by or for Lessee, and the removal, replacement, or
remediation of any soil material or groundwater contaminated by Lessee. Trade
Fixtures shall remain the property of Lessee and shall be removed by Lessee.
The failure by Lessee to timely vacate the Premises pursuant to this
Paragraph 7.4(c) without the express written consent of Lessor shall
constitute a holdover under the provisions of Paragraph 26 below. Lessor
agrees that the improvements to be constructed pursuant to Paragraph 49 shall
not be required to be removed at the expiration or earlier termination of
this Lease.
8. INSURANCE; INDEMNITY.
8.1 PAYMENT OF PREMIUM INCREASES.
(a) Lessee shall pay to Lessor any insurance cost increase
("INSURANCE COST INCREASE") occurring during the term of this Lease.
"Insurance Cost Increase" is defined as any increase in the actual cost of
the insurance required under Paragraph 8.2(b), 8.3(a) and 8.3(b), over and
above the annual "Base Premium" of $4,268.00. "Insurance Cost Increase" shall
include but not be limited to increases resulting from the nature of Lessee's
occupancy, any act or omission of Lessee, the reasonable requirements of the
holder of mortgage or deed of trust covering the Premises, increased
valuation of the Premises and/or a premium rate increase. The parties are
encouraged to fill in the Base Premium in the blank above, with a reasonable
premium for the Required Insurance based on the the Agreed Use of the
Premises. If the parties fail to insert a dollar amount in the blank above,
then the Base Premium shall be the lowest annual premium reasonably
obtainable for the Required Insurance as of the commencement of the Original
Term for the Agreed Use of the Premises. In no event, however, shall Lessee
be responsible for any portion of the increase in the premium cost
attributable to liability insurance carried by Lessor under Paragraph 8.2(b)
in excess of $2,000,000 per occurrence.
(b) Lessee shall pay any such Insurance Cost Increase to Lessor
within thirty (30) days after receipt by Lessee of a copy of the premium
statement or other reasonable evidence of the amount due. If the insurance
policies maintained hereunder cover other property besides the Premises,
Lessor shall also deliver to Lessee a statement of the amount of such
Insurance Cost Increase attributable only to the Premises showing in
reasonable detail the manner in which such amount was computed. Premiums for
policy periods commencing prior to, or extending beyond the term of this
Lease, shall be prorated to correspond to the term of this Lease.
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8.2 LIABILITY INSURANCE.
(a) CARRIED BY LESSEE. Lessee shall obtain and keep in force a
Commercial General Liability Policy of Insurance protecting Lessee and Lessor
against claims for bodily injury, personal injury and property damage based
upon or arising out of the ownership, use, occupancy or maintenance of the
Premises and all areas appurtenant thereto. Such insurance shall be on an
occurrence basis providing single limit coverage in an amount not less than
$2,000,000 per occurrence with an "ADDITIONAL INSURED-MANAGERS OR LESSORS OF
PREMISES ENDORSEMENT" and contain the "AMENDMENT OF THE POLLUTION EXCLUSION
ENDORSEMENT" for damage caused by heat, smoke or fumes from a hostile fire.
The Policy shall not contain any intra-insured exclusions as between insured
persons or organizations, but shall include coverage for liability assumed
under this Lease as an "insured contract" for the performance of Lessee's
indemnity obligations under this Lease. The limits of said insurance shall
not, however, limit the liability of Lessee nor relieve Lessee of any
obligation hereunder. All insurance carried by Lessee shall be primary to and
not contributory with any similar insurance carried by Lessor, whose
insurance shall be considered excess insurance only.
(b) CARRIED BY LESSOR. Lessor shall maintain liability insurance as
described in Paragraph 8.2(a), in addition to, and not in lieu of, the
insurance required to be maintained by Lessee. Lessee shall not be named as
an additional insured therein.
8.3 PROPERTY INSURANCE - BUILDING, IMPROVEMENTS AND RENTAL VALUE.
(a) BUILDING AND IMPROVEMENTS. Lessor shall obtain and keep in
force a policy or policies in the name of Lessor, with loss payable to
Lessor, any ground lessor, and to any Lender(s) insuring loss or damage to
the Premises. The amount of such insurance shall be equal to the full
replacement cost of the Premises, as the same shall exist from time to time,
or the amount required by any Lenders, but in no event more than the
commercially reasonable and available insurable value thereof. Lessee Owned
Alterations and Utility Installations, Trade Fixtures, and Lessee's personal
property shall be insured by Lessee under Paragraph 8.4 rather than by
Lessor. Such policy or policies shall insure against all risks of direct
physical loss or damage (except the perils of flood and/or earthquake unless
required by a Lender or included in the Base Premium), including coverage for
debris removal and the enforcement of any Applicable Requirements requiring
the upgrading, demolition, reconstruction or replacement of any portion of
the Premises as the result of a covered loss. Said policy or policies shall
also contain an agreed valuation provision in lieu of any coinsurance
clause, waiver of subrogation, and inflation guard protection causing an
increase in the annual property insurance coverage amount by a factor of not
less than the adjusted U.S. Department of Labor Consumer Price Index for All
Urban Consumers for the city nearest to where the Premises are located.
(b) RENTAL VALUE. Lessor shall obtain and keep in force a policy or
policies in the name of Lessor, with loss payable to Lessor and any Lender,
insuring the loss of the full Rent for one (1) year. Said insurance shall
provide that in the event the Lease is terminated by reason of an insured
loss, the period of indemnity for such coverage shall be extended beyond the
date of the completion of repairs or replacement of the Premises, to provide
for one full year's loss of Rent from the date of any such loss. Said
insurance shall contain an agreed valuation provision in lieu of any
coinsurance clause, and the amount of coverage shall be adjusted annually to
reflect the projected Rent otherwise payable by Lessee, for the next twelve
(12) month period.
8.4 LESSEE'S PROPERTY/BUSINESS INTERRUPTION INSURANCE.
(a) PROPERTY DAMAGE. Lessee shall obtain and maintain insurance
coverage on all of Lessee's personal property, Trade Fixtures, and Lessee
Owned Alterations and Utility Installations. Such insurance shall be full
replacement cost coverage. The proceeds from any such insurance shall be used
by Lessee for the replacement of personal property, Trade Fixture's and
Lessee Owned Alterations and Utility installations. Lessee shall provide
Lessor with certificates of insurance confirming that such insurance is in
force.
(b) BUSINESS INTERRUPTION. Intentionally Deleted.
(c) NO REPRESENTATION OF ADEQUATE COVERAGE. Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee's property, business operations or
obligations under this Lease.
8.5 INSURANCE POLICIES. Insurance required herein shall be by companies
duly licensed or admitted to transact business in the state where the
Premises are located, and maintaining during the policy term a "General
Policyholders Rating" of at least B+, V, as set forth in the most current
issue of "Best's Insurance Guide", or such other rating as may be required by
a Lender.
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Lessee shall not do or permit to be done anything which invalidates the
required insurance policies. Lessee shall, prior to the Commencement Date,
deliver to Lessor certified copies of policies of such insurance or
certificates evidencing the existence and amounts of the required insurance.
No such policy shall be cancelable or subject to reduction or material and
adverse modification of coverage except after thirty (30) days prior written
notice to Lessor. Lessee shall, at least thirty (30) days prior [to] the
expiration of such policies, furnish Lessor with evidence of renewals or
"insurance binders" evidencing renewal thereof, or Lessor may order such
insurance and charge the cost thereof to Lessee, which amount shall be
payable by Lessee to Lessor upon demand. Such policies shall be for a term of
at least one year, or the length of the remaining term of this Lease,
whichever is less. If either party Party shall fail to procure and maintain
the insurance required to be carried by it, the other Party may, but shall
not be required to, procure and maintain the same.
8.6 WAIVER OF SUBROGATION. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and
waive their entire right to recover damages against the other, for loss of or
damage to its property arising out of or incident to the perils required to
be insured against herein or actually insured against by either party. The
effect of such releases and waivers is not limited by the amount of insurance
carried or required, or by any deductibles applicable hereto. The Parties
agree to have their respective property damage insurance carriers waive any
right to subrogation that such companies may have against Lessor or Lessee,
as the case may be, so long as the insurance is not invalidated thereby.
8.7 INDEMNITY
(a) Except for matters covered by Lessor's indemnity in
subparagraph (b) below, Lessee shall indemnify, protect, defend and hold
harmless the Premises, Lessor and its agents, employees, contractors and
invitees, Lessor's master or ground lessor, partners and Lenders, from and
against any and all claims, loss of rents and/or damages, liens, judgments,
penalties, reasonable attorneys' and reasonable consultants' fees, expenses
and /or liabilities arising out of, involving, or in connection with, the use
and/or occupancy of the Premises by Lessee, and/or liabilities arising from
the negligence or willful misconduct by Lessee, and its agents, employees,
contractors and invitees, Lessee's violation of Applicable Requirements not
required to be performed by Lessor, or a breach by Lessee of its obligations
hereunder. If any action or proceeding is brought against Lessor by reason of
any of the foregoing matters, Lessee shall upon notice defend the same at
Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessor need not have first paid
any such claim in order to be defended or indemnified.
(b) Except for matters covered by Lessee's indemnity in
subparagraph (a) above, Lessor shall indemnify, protect, defend and hold
harmless Lessee and its agents, employees, contractors and invitees, from and
against any and all claims, and/or damages, liens, judgments, penalties,
reasonable attorneys' and reasonable consultants' fees, expenses and/or
liabilities arising from the negligence or willful misconduct by Lessor, and
its agents, employees, contractors and invitees, Lessor's violation of
Applicable Requirements not required to be performed by Lessee, or a breach
by Lessor of its obligations hereunder. If any action or proceeding is
brought against Lessee by reason of any of the foregoing matters, Lessor
shall upon notice defend the same at Lessor's expense by counsel reasonably
satisfactory to Lessee and Lessee shall cooperate with Lessor in such
defense. Lessee need not have first paid any such claim in order to be
defended or indemnified.
8.8 EXEMPTION OF LESSOR FROM LIABILITY. Except to the extent directly
caused by the negligence or willful misconduct by Lessor, and its agents,
employees, contractors and invitees, Lessor shall not be liable for injury or
damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by
or results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, fire sprinklers,
wires, appliances, plumbing, HVAC or lighting fixtures, or from any other
cause, whether the said injury or damage results from conditions arising upon
the Premises or upon other portions of the Building of which the Premises are
a part, or from other sources or places. Lessor shall not be liable for any
damages arising from any act or neglect of any other tenant of Lessor.
Notwithstanding Lessor's negligence, Lessor shall under no circumstances be
liable for injury to Lessee's business or for any loss of income or profit
therefrom.
9. DAMAGE OR DESTRUCTION
9.1 DEFINITIONS
(a) "PREMISES PARTIAL DAMAGE" shall mean damage or destruction to
the improvements on the Premises, other [than] Lessee Owned Alterations,
Utility Installations and Trade Fixtures, which can reasonably be repaired in
six (6) months or less from the date of the damage or destruction. Lessor
shall notify Lessee in writing within thirty (30) days from the date of the
damage or destruction as to whether or not the damage is Partial or Total.
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(b) "PREMISES TOTAL DESTRUCTION" shall mean damage or destruction
to the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which cannot reasonably be repaired in six
(6) months or less from the date of the damage or destruction. Lessor shall
notify Lessee in writing within thirty (30) days from the date of the damage
or destruction as to whether or not the damage is Partial or Total.
(c) "INSURED LOSS" shall mean damage or destruction to improvements
on the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which was caused by an event required to be
covered by the insurance described in Paragraph 8.3(a), irrespective of any
deductible amounts or coverage limits involved.
(d) "REPLACEMENT COST" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of Applicable Requirements, and without
deduction for depreciation.
(e) "HAZARDOUS SUBSTANCE CONDITION" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.
9.2 PARTIAL DAMAGE - INSURED LOSS. If a Premises Partial Damage that is
an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such
damage to their condition (in all material respects) immediately prior to the
damage or destruction (but not Lessee's Trade Fixtures or Lessee Owned
Alterations and Utility installations) as soon as reasonably possible and
this Lease shall continue in full force and effect. Notwithstanding the
foregoing, if the required insurance was not in force or the insurance
proceeds are not sufficient to effect such repair, Lessor shall promptly
contribute the shortage in proceeds as and when required to complete said
repairs. In the event, however, such shortage was due to the fact that full
replacement cost insurance coverage was not commercially reasonable and
available. Lessor shall have no obligation to pay for the shortage in
insurance proceeds or to fully restore the unique aspects of the Premises
unless Lessee provides Lessor with the funds to cover same, or adequate
assurance thereof, within ten (10) days following receipt of written notice
of such shortage and request therefor. If Lessor receives said funds or
adequate assurance thereof within said ten (10) day period, the party
responsible for making the repairs shall complete them (and restore in all
material respects the Premises to its condition immediately prior to the
damage or destruction) as soon as reasonably possible and this Lease shall
remain in full force and effect. If such funds or assurance are not received,
Lessor may nevertheless elect by written notice to Lessee within ten (10)
days thereafter to: (i) make such restoration and repair as is commercially
reasonable with Lessor paying any shortage in proceeds, in which case this
Lease shall remain in full force and effect; or (ii) have this Lease
terminate thirty (30) days thereafter. Lessee shall not be entitled to
reimbursement of any funds contributed by Lessee to repair any such damage or
destruction. Premises Partial Damage due to flood or earthquake shall be
subject to Paragraph 9.3, notwithstanding that there may be some insurance
coverage, but the net proceeds of any such insurance shall be made available
for the repairs if made by either Party.
9.3 PARTIAL DAMAGE - UNINSURED LOSS. If a Premises Partial Damage that
is not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense and,
provided no Default exists, Lessor shall make all applicable insurance
proceeds available to Lessee on a reasonable basis for that purpose), Lessor
may either: (i) repair such damage as soon as reasonably possible at Lessor's
expense, in which event this Lease shall continue in full force and effect,
or (ii) terminate this Lease by giving written notice to Lessee within thirty
(30) days after receipt by Lessor of knowledge of the occurrence of such
damage. Such termination shall be effective sixty (60) days following the
date of such notice. In the event Lessor elects to terminate this Lease,
Lessee shall have the right within ten (10) days after receipt of the
termination notice to give written notice to Lessor of Lessee's commitment to
pay for the repair of such damage without reimbursement from Lessor. Lessee
shall provide Lessor with said funds or satisfactory assurance thereof within
thirty (30) days after making such commitment. In such event this Lease shall
continue in full force and effect, and Lessor shall proceed to make such
repairs as soon as reasonably possible after the required funds are
available. If Lessee does not make the required commitment, this Lease shall
terminate as of the date specified in the termination notice.
9.4 TOTAL DESTRUCTION. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs, this Lease shall terminate as of the date
of such Destruction. If the damage or destruction was caused by the
negligence or willful misconduct of Lessee, its agents, employees,
contractors and invitees, Lessor shall have the right to recover Lessor's
damages from Lessee, except as provided in Paragraph 8.6.
9.5 DAMAGE NEAR END OF TERM. If at any time during the last six (6)
months of this Lease there is damage for which the cost to repair exceeds
one (1) month's Base Rent, whether or not an Insured Loss, Lessor may
terminate this Lease effective sixty (60) days following the date of
occurrence of such damage by giving a written termination notice to Lessee
within thirty (30) days after the date of occurrence of such damage.
Notwithstanding the foregoing, if Lessee at that time has an exercisable
11
option to extend this Lease or to purchase the Premises, then Lessee may
preserve this Lease by, (a) exercising such option and (b) providing Lessor
with any shortage in insurance proceeds (or adequate assurance thereof)
needed to make the repairs on or before the earlier of (i) the date which is
thirty (30) days after Lessee's receipt of Lessor's written notice purporting
to terminate this Lease, or (ii) the day prior to the date upon which such
option expires, If Lessee duly exercises such option during such period and
provides Lessor with funds (or adequate assurance thereof) to cover any
shortage in insurance proceeds, Lessor shall at Lessor's commercially
reasonable expense, repair such damage as soon as reasonably possible and
this Lease shall continue in full force and effect. If Lessee fails to
exercise such option and provide such funds or assurance during such period,
then this Lease shall terminate on the date specified in the termination
notice and Lessee's option shall be extinguished.
9.6 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) ABATEMENT. In the event of Premises Partial Damage or Premises
Total Destruction or a Hazardous Substance Condition for which Lessee is not
responsible under this Lease, the Rent payable by Lessee for the period
required for the repair, remediation or restoration of such damage shall be
abated in proportion to the degree to which Lessees use of the Premises is
impaired, but not to exceed the proceeds received from the Rental Value
insurance. All other obligations of Lessee hereunder shall be performed by
Lessee, and Lessor shall have no liability for any such damage, destruction,
remediation, repair or restoration except as provided herein.
(b) REMEDIES. If Lessor shall be obligated to repair or restore the
Premises and does not commence, in a substantial and meaningful way, such
repair or restoration within ninety (90) days after such obligation shall
accrue, Lessee may, at any time prior to the commencement of such repair or
restoration, give written notice to Lessor and to any Lenders of which Lessee
has actual notice, of Lessee's election to terminate this Lease on a date not
less than sixty (60) days following the giving of such notice. If Lessee
gives such notice and such repair or restoration is not commenced within
thirty (30) days thereafter, this Lease shall terminate as of the date
specified in said notice. If the repair or restoration is commenced within
said thirty (30) days, this Lease shall continue in full force and effect.
"Commence" shall mean either the unconditional authorization of the
preparation of the required plans, or the beginning of the actual work on the
Premises, whichever first occurs.
9.7 TERMINATION-ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall
be made concerning advance Base Rent and any other advance payments made by
Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of
Lessee's Security Deposit as has not been, or is not then required to be,
used by Lessor.
9.8 LESSEE'S TERMINATION RIGHT. Notwithstanding anything to the
contrary contained herein, excepting any damage or destruction the repair of
which is the responsibility of Lessee herein, Lessee shall have the option to
terminate this Lease if any of the following shall occur, the exercise of
such option being evidenced by delivery to Lessor of written notice of
Lessee's election to terminate within thirty (30) days after Lessee receives
from Lessor Lessor's estimate of the time needed to complete such
restoration: (i) the Premises, with reasonable diligence, cannot be fully
repaired by Lessor within one hundred eighty (180) days after the date of the
damage or destruction; or (ii) Lessor commences the repairs but fails to
complete them, in all material respects, within one hundred eighty (180) days
after the date of the damage or destruction; or (iii) if the Premises are
materially damaged by any peril within the last six (6) months of the Term.
9.9 WAIVE STATUTES. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
with respect to the termination of this Lease and hereby waive the provisions
of any present or future statute to the extent inconsistent herewith.
10. REAL PROPERTY TAXES.
10.1 DEFINITION OF "REAL PROPERTY TAXES." As used herein, the term "REAL
PROPERTY TAXES" shall include any form of assessment; real estate, general,
special, ordinary or extraordinary, or rental law or tax (other than
inheritance, personal income or estate taxes); improvement bond; and/or
license fee imposed upon or levied against any legal or equitable interest of
Lessor in the Premises, Lessor's right to other income therefrom, and/or
Lessor's business of leasing, by any authority having the direct or indirect
power to tax and where the funds are generated with reference to the Building
address and where the proceeds so generated are to be applied by the city,
county or other local taxing authority of a jurisdiction within which the
Premises are located. The term "REAL PROPERTY TAXES" shall also include any
tax, fee, levy, assessment or charge, or any increase therein, imposed by
reason of events occurring during the term of this Lease, including but not
limited to, a change in the ownership of the Premises. Notwithstanding
anything to the contrary contained
12
in this Lease, Lessee shall not be required to pay any portion of any tax or
assessment (i) levied on Lessor's rental income, unless such tax or
assessment is imposed in lieu of Real Property Taxes, (ii) imposed on land
and improvements other than with respect to the Premises, or (iii)
attributable to Lessor's net income, inheritance, gift, franchise, estate
taxes. Upon the request of Lessee, Lessor will cooperate or join with Lessee
in any application which is necessary to permit the payment of any assessment
in installments.
10.2
(a) PAYMENT OF TAXES. Lessor shall pay the Real Property Taxes
applicable to the Premises provided, however, that Lessee shall pay to Lessor
the amount, if any, by which Real Property Taxes applicable to the Premises
increase over the Real Property Taxes for the fiscal tax year ending June,
30, 1999 ("TAX INCREASE"). Subject to Paragraph 10.2(b), payment of any such
Tax Increase shall be made by Lessee to Lessor within thirty (30) days after
receipt of Lessor's written statement setting forth the amount due and the
computation thereof. If any such taxes shall cover any period of time prior to
or after the expiration or termination of this Lease, Lessee's share of such
taxes shall be prorated to cover only that portion of the tax xxxx applicable
to the period that this Lease is in effect.
(b) ADVANCE PAYMENT. In the event Lessee incurs a late charge on
any Tax Increase payment, Lessor may, at Lessor's option, estimate the
current Real Property Taxes, and require that the Tax increase be paid in
advance to Lessor by Lessee, either; (i) in a lump sum amount equal to the
amount due, at least twenty (20) days prior to the applicable delinquency
date; or (ii) monthly in advance with the payment of the Base Rent. If Lessor
elects to require payment monthly in advance, the monthly payment shall be an
amount equal to the amount of the estimated installment of the Tax Increase
divided by the number of months remaining before the month in which said
installment becomes delinquent. When the actual amount of the applicable Tax
Increase is known, the amount of such equal monthly advance payments shall be
adjusted as required to provide the funds needed to pay the applicable Tax
Increase. If the amount collected by Lessor is insufficient to pay the Tax
Increase then due, Lessee shall pay Lessor, upon demand, such additional sums
as are necessary to pay such obligations. All moneys paid to Lessor under
this Paragraph may be intermingled with other moneys of Lessor and shall not
bear interest. In the event of a Breach by Lessee in the performance of its
obligations under this Lease, then any balance of funds paid to Lessor under
the provisions of this Paragraph may at the option of Lessor, be treated as
an additional Security Deposit.
(c) ADDITIONAL IMPROVEMENTS. Notwithstanding anything to the
contrary in this Paragraph 10.2, Lessee shall pay to Lessor upon demand
therefor the entirety of any increase in Real Property Taxes assessed by
reason of Alterations or Utility Installations placed upon the Premises by
Lessee or at Lessee's request.
10.3 JOINT ASSESSMENT. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Tax Increase for
all of the land and improvements included within the tax parcel assessed,
such proportion to be reasonably determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information
as may be reasonably available, but excluding any Tenant Improvements made by
Lessor.
10.4 PERSONAL PROPERTY TAXES. Lessee shall pay, prior to delinquency,
all taxes assessed against and levied upon Lessee Owned Alterations, Utility
installations, Trade Fixtures, furnishings, equipment and all personal
property of Lessee. When possible, Lessee shall cause such property to be
assessed and billed separately from the real property of Lessor. If any of
Lessee's said personal property shall be assessed with Lessor's real
property, Lessee shall pay Lessor the taxes attributable to Lessee's property
within thirty (30) days after receipt of a written statement.
11. UTILITIES. Lessee shaft pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered.
12. ASSIGNMENT AND SUBLETTING.
12.1 LESSOR'S CONSENT REQUIRED.
(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or encumber (collectively, "ASSIGN OR ASSIGNMENT") or
sublet all or any part of Lessee's interest in this Lease or in the Premises
without Lessor's prior written consent, such consent not to be unreasonably
withheld. Lessor agrees to respond to Lessee's written request or consent to
a subleasing or assignment within fifteen (15) business days after Lessee has
delivered to Lessor the proposed sublease or assignment and current financial
statements of the proposed transferee. If lessor fails to respond to Lessee's
written request for such consent, Lessor shall be deemed to have consented to
the proposed sublessee or
13
assignee. if Lessor shall disapprove such proposed sublessee or assignee,
Lessor shall inform Lessee of the reasons for such disapproval during said
response period.
(b) The involvement of Lessee or its assets in any transaction, or
series of transactions (by way of merger, sale, acquisition, financing,
transfer, leveraged buy-out or otherwise), whether or not a formal
assignment or hypothecation of this Lease or Lessee's assets occurs, which
results or will result in a reduction of the Net Worth of Lessee by an
amount greater than twenty-five percent (25%) of such Net Worth as it was
represented at the time of the execution of this Lease or at the time of the
most recent assignment to which Lessor has consented, or as it exists
immediately prior to said transaction or transactions constituting such
reduction, whichever was or is greater, shall be considered an assignment of
this Lease to which Lessor may withhold its consent, "NET WORTH OF LESSEE"
shall mean the net worth of Lessee established under generally accepted
accounting principles.
(c) Lessee's remedy for any breach of Paragraph 12.1 by Lessor
shall be limited to compensatory damages and/or injunctive relief.
12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.
(a) Regardless of Lessor's consent, any assignment or subletting
shall not, unless evidenced by a written agreement signed by Lessor: (i) be
effective without the express written assumption by such assignee or
sublessee of the obligations of Lessee under this Lease; (ii) release Lessee
of any obligations hereunder; or (iii) alter the primary liability of Lessee
for the payment of Rent or for the performance of any other obligations to be
performed by Lessee.
(b) Lessor may accept Rent or performance of Lessee's obligations
from any person other than Lessee pending approval or disapproval of an
assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of Rent or performance shall constitute a waiver or
estoppel of Lessor's right to exercise its remedies for Lessee's Default or
Breach.
(c) Lessor's consent to any assignment, or subletting shall not
constitute a consent to any subsequent assignment or subletting.
(d) In the event of any Breach by Lessee, Lessor may proceed
directly against Lessee, or anyone else responsible for the performance of
Lessee's obligations under this Lease including any assignee or sublessee,
and/or may draw upon the Letter of Credit, at the same time or in any order,
without first exhausting Lessor's remedies against any other person or entity
responsible therefore to Lessor, or any security held by Lessor.
(e) Each request for consent to an assignment or subletting shall
be in writing, accompanied by information relevant to Lessor's determination
as to the financial and operational responsibility and appropriateness of the
proposed assignee or sublessee, including but not limited to the intended use
and/or required modification of the Premises, if any, together with a fee of
$500 as consideration for Lessor's considering and processing said request.
Lessee agrees to provide Lessor with such other or additional information
and/or documentation as may be reasonably requested.
(f) Any assignee of, or sublessee under, this Lease shall by reason
of accepting such assignment or entering into such sublease, be deemed to
have assumed and agreed to conform and comply with each and every term,
covenant, condition and obligation herein to be observed or performed by
Lessee during the term of said assignment or sublease, other than such
obligations as are contrary to or inconsistent with provisions of an
assignment or sublease to which Lessor has specifically consented to in
writing.
(g) In the case of a subletting, one-half (1/2) of any sums or
economic consideration received by Lessee as a result of or in connection
with the subletting shall be paid to Lessor upon receipt after first
deducting (i) the rental due under this Lease, prorated to reflect only
rental allocable to the sublet portion of the Premises, (ii) the cost of
leasehold improvements made to the sublet portion of the Premises at Lessee's
cost, amortized over the remaining term of this Lease at the time of such
subletting, except for leasehold improvements made for the specific benefit
of the sublessee, which shall be amortized over the term of the sublease, and
(iii) the cost of any real estate commissions, reasonable attorney fees, or
other third party professional services paid by Lessee in connection with the
subletting. In the case of an assignment of this Lease, one-half (1/2) of any
sums or economic consideration received by Lessee as a result of or in
connection with the assignment shall be paid to Lessor upon receipt after
first deducting the cost of any real estate commissions, reasonable attorney
fees, or other third party professional services paid by Lessee in connection
with the assignment. The consideration received by Lessee to be shared with
Lessor shall exclude any consideration fairly
14
attributable to Lessee's furniture, fixtures (other than the Tenant
Improvements) and equipment made available to the sublessee or the assignee,
but in no event greater than the fair market value thereof to a third party
purchaser who was not a sublessee or assignee.
(h) Without limiting other instances in which Lessor may reasonably
withhold consent to an assignment or subletting, Lessor and Lessee
acknowledge that it shall be reasonable for Lessor to withhold consent in the
following instances:
(i) if at the time consent is requested or at any time consent
is requested but prior to the granting of consent, but for the
pendency of any grace or cure period under paragraph 13, a Default
exists under this Lease;
(ii) if the proposed assignee or sublessee is a governmental
agency;
(iii) if, in Lessor's reasonable judgment, use of the Premises
by the proposed assignee or sublessee would entail alterations that
would materially lessen the value of the leasehold improvements in
the Premises (unless Lessee provides adequate security to ensure
that the Premises will be restored to their prior condition as
required herein), or would require substantially increased services
by Lessor;
(iv) if Lessor reasonably determines that circumstances
warrant a consideration of the financial worth of a proposed
assignee or sublessee, and the financial worth, in Lessor's
reasonable judgment, does not meet the credit standards required by
Lessor;
(v) if, in Lessor's reasonable judgment, the character,
reputation, or business of the proposed assignee or sublessee is
not consistent with the quality required by Lessor.
12.3 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. The
following terms and conditions shall apply to any subletting by Lessee of all
or any part of the Premises and shall be deemed included in all subleases
under this Lease whether or not expressly incorporated therin:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all Rent payable on any sublease, and Lessor may collect such
Rent and apply same toward Lessee's obligations under this Lease; provided,
however, that until a Breach shall occur in the performance of Lessee's
obligations, and subject to the provisions of Paragraph 12.2 (g), Lessee may
collect said Rent. Lessor shall not, by reason of the foregoing or any
assignment of such sublease, nor by reason of the collection of Rent, be
deemed liable to the sublessee for any failure of Lessee to perform and
comply with any of Lessee's obligations to such sublessee. Lessee hereby
irrevocably authorizes and directs and such sublessee, upon receipt of a
written notice from Lessor stating that a Breach exists in the performance of
Lessee's obligations under this Lease, to pay to Lessor all Rent due and to
become due under the sublease, Sublessee shall rely upon any such notice from
Lessor and shall pay all Rents to Lessor without any obligation or right to
inquire as to whether such Breach exists, notwithstanding any claim from
Lessee to the contrary.
(b) In the event of a Breach by Lessee, Lessor may, at its option,
require sublessee to attorn to Lessor, in which event Lessor shall undertake
the obligations of the sublessor under such sublease from the time of the
exercise of said option to the expiration of such sublease; provided,
however, Lessor shall not be liable for any prepaid rents or security
deposit paid by such sublessee to such sublessor or for any prior Defaults or
Breaches of such sublessor.
(c) Any matter requiring the consent of the sublessor under a
sublease shall also require the consent of Lessor.
(d) No sublessee shall further assign or sublet all or any part of
the Premises without Lessor's prior written consent, as specified above.
(e) Lessor shall deliver a copy of any notice of Default or Breach
by Lessee to the sublessee, who shall have the right to cure the Default of
Lessee within the grace period, if any, specified in such notice. The
sublessee shall have a right of reimbursement and offset from and against
Lessee for any such Defaults cured by the sublessee.
(f) notwithstanding anything to the contrary contained in this
Lease, Lessee, without Lessor's prior written consent, may sublet the
Premises or assign this Lease to: (i) a subsidiary, affiliate, franchise,
division or corporation controlling, controlled by or under common control
with Lessee; (ii) a successor corporation related to Lessee by merger,
consolidation, non-bankruptcy reorganization; or (iii) a purchaser of
substantially all of Lessee's assets by merger, stock
15
acquisition or otherwise (collectively, "PERMITTED TRANSFEREES"). For
purposes of this Lease, a sale of Lessee's capital stock through any public
exchange shall not be deemed an assignment, subletting or other transfer of
this Lease or the Premises requiring Lessor's consent.
3.1 DEFAULT; BREACH; REMEDIES.
13.1 DEFAULT; BREACH. A "DEFAULT" is defined as a failure by the Lessee
to comply with or perform any of the terms, covenants, conditions or rules
under this Lease. A "BREACH" is defined as the occurrence of one or more of
the following Defaults, and the failure of Lessee to cure such Default within
any applicable grace period.
(a) The abandonment of the Premises, coupled with Lessee's failure
to pay Rent when due; or the vacating of the Premises without providing a
commercially reasonable level of security, and/or Security Deposit or where
the coverage of the property insurance described in Paragraph 8.3 is
jeopardized as a result thereof, or without providing reasonable assurances to
minimize potential vandalism.
(b) The failure of Lessee to make any payment of Rent or any
Security Deposit required to be made by Lessee hereunder, whether to Lessor
or to a third party, when due, to provide reasonable evidence of insurance or
surety bond, or to fulfill any obligation under this Lease which endangers or
threatens life or property, where such failure continues for a period of
three (3) business days following written notice to Lessee (other than for
the payment of Rent, for which no notice from Lessor shall be required).
(c) The failure by Lessee to provide (i) reasonable written
evidence of compliance with Applicable Requirements if requested by Lessor,
(ii) the service contracts, (iii) the rescission of an unauthorized
assignment or subletting, (iv) a Tenancy Statement, (v) a requested
subordination, (vi) evidence concerning any guaranty, (vii) any document
requested under Paragraph 42 (easements), or (viii) any other documentation
or information which Lessor may reasonably require of Lessee under the terms
of this Lease, where any such failure continues for a period of ten (10) days
following written notice to Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
other than those described in subparagraphs 13.1(a), (b) or (c), above, where
such Default continues for a period of thirty (30) days after written notice;
provided, however, that if the nature of Lessee's Default is such that more
than thirty (30) days are reasonably required for its cure, then it shall not
be deemed to be a Breach if Lessee commences such cure within said thirty
(30) day period and thereafter diligently prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) the making
of any general arrangement or assignment for the benefit of creditors; (ii)
becoming a "DEBTOR" as defined in 11 U.S.C. Section 101 or any successor
statute thereto (unless, in the case of a petition filed against Lessee, the
same is dismissed within sixty (60) days; (iii) the appointment of a trustee
or receiver to take possession of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where
possession is not restored to Lessee within sixty (60) days; or (iv) the
attachment, execution or other judicial seizure of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this
Lease, where such seizure is not discharged within sixty (60) days; provided,
however, in the event that any provision of this subparagraph (e) is contrary
to any applicable law, such provision shall be of no force or effect, and not
affect the validity of the remaining provisions.
(f) The discovery that any financial statement of Lessee given to
Lessor was materially false.
(g)(i) The termination or withdrawal or purported termination or
withdrawal of the Letter of Credit by the issuer thereof, or (ii) the refusal
of the issuer of the Letter of Credit to honor any draw request by Lessor
thereunder, or (iii) the failure at any time during the Original Term of
Lessee to cause the Letter of Credit to maintained in full force and effect
as required by Section 1.10 hereof.
13.2 REMEDIES. If Lessee fails to perform any of its affirmative duties
or obligations within the time provided herein and the passage of ten (10)
days after written notice (or in case of an emergency, without notice),
Lessor may, at its option, perform such duty or obligation on Lessee's
behalf, including but not limited to the obtaining of reasonably required
bonds insurance policies, or governmental licenses, permits or approvals. The
costs and expenses of any such performance by Lessor shall be due and
payable, by Lessee upon receipt of invoice therefor. If any check given to
Lessor by Lessee shall not be honored by the bank upon which it is drawn,
Lessor, at its option, may require all future payments
16
to be made by Lessee to be by cashier's check, in the event of a Breach,
Lessor may, with or without further notice or demand, and without limiting
Lessor in the exercise of any right or remedy which Lessor may have by reason
of such Breach:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession to Lessor. In such event, Lessor shall be
entitled to recover from Lessee: (i) the unpaid Rent which had been earned at
the time of termination; (ii) the worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until
the time of award exceeds the amount of such rental loss that the Lessee
proves could have been reasonably avoided; (iii) the worth at the time of
award of the amount by which the unpaid rent for the balance of the term
after the time of award exceeds the amount of such rental loss that the Lessee
proves could be reasonably avoided; and (iv) any other amount necessary to
compensate Lessor for all the detriment proximately caused by the Lessee's
failure to perform its obligations under this Lease or which in the ordinary
course of things would be likely to result therefrom, including but not
limited to the cost of recovering possession of the Premises, expenses of
reletting, including necessary renovation and alteration of the Premises,
reasonable attorneys' fees, and that portion of any leasing commission paid
by Lessor in connection with this Lease applicable to the unexpired term of
this Lease. The worth at the time of award of the amount referred to in
provision (iii) of the immediately preceding sentence shall be computed by
discounting such amount at the discount rate of the Federal Reserve Bank of
the District within which the Premises are located at the time of award plus
one percent (1%). Efforts by Lessor to mitigate damages caused by Lessee's
Breach of this Lease shall not waive Lessor's right to recover damages under
Paragraph 12. If termination of this Lease is obtained through the
provisional remedy of unlawful detainer, Lessor shall have the right to
recover in such proceeding any unpaid Rent and damages as are recoverable
therein, or Lessor may reserve the right to recover all or any part thereof
in a separate suit. If a notice and grace period required under Paragraph
13.1 was not previously given, a notice to pay rent or quit, or to perform or
quit given to Lessee under the unlawful detainer statute shall also
constitute the notice required by Paragraph 13.1. In such case, the
applicable grace period required by Paragraph 13.1 and the unlawful detainer
statute shall run concurrently, and the failure of Lessee to cure the Default
within the greater of the two such grace periods shall constitute both an
unlawful detainer and a Breach of this Lease entitling Lessor to the remedies
provided for in this Lease and/or by said statute.
(b) Continue this Lease and Lessee's right to possession and
recover the Rent as it becomes due, in which event Lessee may sublet or
assign, subject only to reasonable limitations. Acts of maintenance, efforts
to relet, and/or the appointment of a receiver to protect the Lessor's
interests, shall not constitute a termination of the Lessee's right to
possession.
(c) Pursue any other remedy now or hereafter available under the
laws or judicial decisions of the state wherein the Premises are located. The
expiration or termination of this Lease and/or the termination of Lessee's
right to possession shall not relieve Lessee from liability under any
indemnity provisions of this Lease as to matters occurring or accruing during
the term thereof or by reason of Lessee's occupancy of the Premises.
13.3 INDUCEMENT RECAPTURE. Intentionally Deleted.
13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee of Rent will cause Lessor to incur costs not contemplated by this
Lease, the exact amount of which will be extremely difficult to ascertain.
Such costs include, but are not limited to, processing and accounting
charges, and late charges which may be imposed upon Lessor by any Lender.
Accordingly, if any Rent shall not be received by Lessor within five (5) days
after such amount shall be due, then, without any requirement for notice to
Lessee, Lessee shall pay to Lessor a one-time late charge equal to five
percent (5%) of each such overdue amount. The parties hereby agree that such
late charge represents a fair and reasonable estimate of the costs Lessor
will incur by reason of such late payment. Acceptance of such late charge by
Lessor shall in no event constitute a waiver of Lessee's Default or Breach
with respect to such overdue amount, nor prevent the exercise of any of the
other rights and remedies granted hereunder. In the even that a late charge
is payable hereunder, whether or not collected, for three (3) consecutive
installments of Base Rent, then notwithstanding any provision of this Lease
to the contrary, Base Rent shall, at Lessor's option, become due and payable
quarterly in advance.
13.5 INTEREST. Any monetary payment due Lessor hereunder not received by
Lessor, within three (3) days after the date when due as to scheduled
payments (such as Base Rent) or within ten (10) days after the date when due
as to non-scheduled payments, shall bear interest from the date when due. The
interest ("INTEREST") charged shall be equal to the prime rate reported in
the Wall Street Journal as published closest prior to the date when due plus
2%, but shall not exceed the maximum rate allowed by law. Interest is payable
in addition any late charge provided for in Paragraph 13.4.
17
13.6 BREACH BY LESSOR.
(a) NOTICE OF BREACH. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph, a
reasonable time shall in no event be less than thirty (30) days after receipt
by Lessor, and any Lender whose name and address shall have been furnished
Lessee in writing for such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed; provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) days are
reasonably required for its performance, then Lessor shall not be in breach
if performance is commenced within such thirty (30) day period and thereafter
diligently pursued to completion.
(b) PERFORMANCE BY LESSEE on Behalf of Lessor in the event that
neither Lessor nor Lender cures said breach within thirty (30) days after
receipt of said written notice, or if having commenced said cure they do not
diligently pursue it to completion, then Lessee may elect to cure said breach
at Lessee's expense and offset from Rent an amount equal to the greater of
one month's Base Rent or the Security Deposit, and to pay an excess of such
expense under protest, reserving Lessee's right to reimbursement from Lessor.
Lessee shall document the cost of said cure and supply said documentation to
Lessor.
14. CONDEMNATION. If the Premises or any portion thereof are taken
under the power of eminent domain or sold under the threat of the exercise of
said power (collectively "CONDEMNATION"), this Lease shall terminate as to the
part taken as of the date the condemning authority takes title or possession,
whichever first occurs. If more than ten percent (10%) of any building
portion of the premises, or more than twenty-five percent (25%) of the land
area portion of the premises not occupied by any building, is taken by
Condemnation, Lessee may, at Lessee's option, to be exercised in writing
within ten (10) days after Lessor shall have given Lessee written notice of
such taking (or in the absence of such notice, within ten (10) days after the
condemning authority shall have taken possession) terminate this Lease as of
the date the condemning authority takes such possession. If Lessee does not
terminate this Lease in accordance with the foregoing, this Lease shall
remain in full force and effect as to the portion of the Promises remaining,
except that the Base Rent shall be reduced in proportion to the reduction in
utility of the Premises caused by such Condemnation. Condemnation awards
and/or payments shall be the property of Lessor, whether such award shall be
made as compensation for diminution in value of the leasehold, the value of
the part taken, or for severance damages; provided, however, that Lessee
shall be entitled to any compensation for Lessee's relocation expenses, loss
of business goodwill and/or Trade Fixtures, without regard to whether or not
this Lease is terminated pursuant to the provisions of this Paragraph. All
Alterations and Utility Installations made to the Premises by Lessee, for
purposes of Condemnation only, shall be considered the property of the Lessee
and Lessee shall be entitled to any and all compensation which is payable
therefor. In the event that this Lease is not terminated by reason of the
condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.
15. REPRESENTATIONS AND INDEMNITIES OF BROKER RELATIONSHIPS. Lessee and
Lessor each represent and warrant to the other that it has had no dealings
with any person, firm, broker or finder (other than the Brokers, if any) in
connection with this Lease, and that no one other than said named Brokers is
entitled to any commission or finder's fee in connection herewith, Lessee and
Lessor do each hereby agree to indemnify, protect, defend and hold the other
harmless from and against liability for compensation or charges which may be
claimed by any such unnamed broker, finder or other similar party by reason of
any dealings or actions of the indemnifying Party, including any costs,
expenses, attorneys' fees reasonably incurred with respect thereto.
16. ESTOPPEL CERTIFICATES.
(a) Each Party (as "RESPONDING PARTY") shall within ten (10)
business days after written notice from the other Party (the "REQUESTING
PARTY") execute, acknowledge and deliver to the Requesting Party a statement
in writing in form similar to the then most current "ESTOPPEL CERTIFICATE"
form published by the American Industrial Real Estate Association, plus such
additional information, confirmation and/or statements as may be reasonably
requested by the Requesting Party.
(b) If the Responding Party shall fail to execute or deliver the
Estoppel Certificate within such ten day period, the Requesting Party may
execute an Estoppel Certificate stating that: (i) the Lease is in full force
and effect without modification except as may be represented by the
Requesting Party; (ii) there are no uncured defaults in the Requesting
Party's performance; and (iii) if Lessor is the Requesting Party, not more
than one month's rent has been paid in advance. Prospective purchasers and
encumbrancers may rely upon the Requesting Party's Estoppel Certificate, and
the Responding Party shall be estopped from denying the truth of the facts
contained in said Certificate.
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(c) Upon request by Lessor, Lessee shall deliver to Lessor and to
any potential lender or purchaser designated by Lessor (but not more than two
times in any twelve month period) such financial statements as may be
reasonably required by such lender or purchaser, including but not limited
to Lessee's financial statements or the past three (3) years. All such
financial statements shall be received by Lessor and such lender or purchaser
in confidence and shall be used only for the purposes herein set forth.
17. DEFINITION OF LESSOR. The term "LESSOR" as used herein shall mean
the owner or owners at the time in question of the fee title to the Premises,
or, if this is a sublease, of the Lessee's interest in the prior lease. In
the event of a transfer of Lessor's title or interest in the Premises or this
Lease, Lessor shall deliver to the transferee or assignee (in cash or by
credit) any unused Security Deposit held by Lessor. Except as provided in
Paragraph 15, upon such transfer or assignment and delivery of the Security
Deposit, as aforesaid, the prior Lessor shall be relieved of all liability
with respect to the obligations and/or covenants under this Lease thereafter
to be performed by the Lessor. Subject to the foregoing, the obligations
and/or covenants in this Lease to be performed by the Lessor shall be binding
only upon the Lessor as hereinabove defined. Notwithstanding the above, and
subject to the provisions of Paragraph 20 below, the original Lessor under
this Lease, and all subsequent holders of the Lessor's interest in this Lease
shall remain liable and responsible with regard to the potential duties and
liabilities of Lessor pertaining to Hazardous Substances as outlined in
Paragraph 6 above.
18. SEVERABILITY. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
19. DAYS. Unless otherwise specifically indicated to the contrary, the
word "days" as used in this Lease shall mean and refer to calendar days.
20. LIMITATION ON LIABILITY. Subject to the provisions of Paragraph 17
above, the obligations of Lessor under this Lease shall not constitute
personal obligations of Lessor, the individual partners of Lessor or its or
their individual partners, directors, officers or shareholders, and Lessee
shall look to the Premises, the rents from the Premises, and insurance
proceeds relating to a casualty at the Premises (subject in all such cases to
prior rights of any lenders to Lessor), and to no other assets of Lessor, for
the satisfaction of any liability of Lessor with respect to this Lease, and
shall not seek recourse against the individual partners of Lessor, or its or
their individual partners, directors, officers or shareholders, or any of
their personal assets for such satisfaction.
21. TIME OF ESSENCE. Time is of the essence with respect to the
performance of all obligations to be performed or observed by the Parties
under this Lease.
22. NO PRIOR OR OTHER AGREEMENTS. This Lease contains all agreements
between the Parties with respect to any matter mentioned herein, and no other
prior or contemporaneous agreement or understanding shall be effective.
23. NOTICES.
23.1 NOTICE REQUIREMENTS. All notices required or permitted by this
Lease shall be in writing and may be delivered in person (by hand or by
courier) or may be sent by regular, certified or registered mail or U.S.
Postal Service Express Mail, with postage prepaid, or by facsimile
transmission, and shall be deemed sufficiently given if served in a manner
specified in this Paragraph 23. The addresses noted adjacent to a Party's
signature on this Lease shall be that Party's address for delivery or mailing
of notices. Either Party may by written notice to the other specify a
different address for notice, except that upon Lessee's taking possession of
the Premises, the Premises shall constitute Lessee's address for notice. A
copy of all notices to Lessor shall be concurrently transmitted to such party
or parties at such addresses as Lessor may from time to time hereafter
designate in writing.
23.2 DATE OF NOTICE. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the data of delivery shown
on the receipt card, or if no delivery date is shown, the postmark thereon.
If sent by regular mail the notice shall be deemed given forty-eight (48)
hours after the same is addressed as required herein and mailed with postage
prepaid. Notices delivered by United States Express Mail or overnight courier
that guarantee next day delivery shall be deemed given twenty-four (24) hours
after delivery of the same to the Postal Service of courier. Notices
transmitted by facsimile transmission or similar means shall be deemed
delivered upon telephone confirmation of receipt, provided a copy is also
delivered via delivery or mail. If notice is received on a Saturday, Sunday
or legal holiday, it shall be deemed received on the next business day.
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24. WAIVERS. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or of any other term, covenant or condition hereof.
Lessor's consent to, or approval of, any act shall not be deemed to render
unnecessary the obtaining of Lessor's consent to, or approval of, any
subsequent or similar act by Lessee, or be construed as the basis of an
estoppel to enforce the provision or provisions of this Lease requiring such
consent. The acceptance of Rent by Lessor shall not be a waiver of any
Default or Breach by Lessee. Any payment Lessee may be accepted by Lessor on
account of moneys or damages due Lessor, notwithstanding any qualifying
statements or conditions made by Lessee in connection therewith, which such
statements and/or conditions shall be of no force or effect whatsoever unless
specifically agreed to in writing by Lessor at or before the time of deposit
of such payment.
25. RECORDING. Either Lessor or Lessee shall, upon request of the
other, execute, acknowledge and deliver to the other a short form memorandum
of this Lease for recording purposes. The Party requesting recordation shall
be responsible for payment of any fees applicable thereto.
26. NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of
the Premises or any part thereof beyond the expiration or termination of this
Lease. In the event that Lessee holds over, then the Base Rent shall be
increased to one hundred fifty percent (150%) of the Base Rent applicable
during the month immediately preceding the expiration or termination. Nothing
contained herein shall be construed as consent by Lessor to any holding over
by Lessee.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
28. COVENANTS AND CONDITIONS; CONSTRUCTION OF AGREEMENT. All provisions
of this Lease to be observed or performed by Lessee are both covenants and
conditions. In construing this Lease, all headings and titles are for the
convenience of the parties only and shall not be considered a part of this
Lease. Whenever required by the context, the singular shall include the
plural and vice versa. This Lease shall not be construed as if prepared by
one of the parties, but rather according to its fair meaning as a whole, as
if both parties had prepared it.
29. BINDING EFFECT; CHOICE OF LAW. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be
governed by the laws of the State in which the Premises are located. Any
litigation between the Parties hereto concerning this Lease shall be
initiated in the county in which the Premises are located.
30. SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.
30.1 SUBORDINATION. This Lease and any Option granted hereby shall
be subject and subordinate to any ground lease, mortgage, deed of trust, or
other hypothecation or security device (collectively, "Security Device"), now
or hereafter placed upon the Premises, to any and all advances made on the
security thereof, and to all renewals, modifications and extensions thereof.
Lessee agrees that the holders of any such Security Devices (in this Lease
together referred to as Lessors Lender") shall have no liability or
obligation to perform any of the obligations of Lessor under this Lease. Any
Lender may elect to have this Lease and/or any Option granted hereby superior
to the lien of its Security Device by giving written notice thereof to Lessee
whereupon this Lease and such Options shall be deemed prior to such Security
Device, notwithstanding the relative dates of the documentation or
recordation thereof.
30.2 ATTORNMENT. Subject to the non-disturbance provisions of
Paragraph 30.3, Lessee agrees to attorn to a Lender or any other party who
acquires ownership of the Premises by reason of a foreclosure of a Security
Device, and that in the event of such foreclosure, such new owner shall not:
(i) be liable for any act or omission of any prior lessor or with respect to
events occurring prior to acquisition of ownership; (ii) be subject to any
offsets or defenses which Lessee might have against any prior lessor; or
(iii) be bound by prepayment of more than one (1) month's rent.
30.3 NON-DISTURBANCE. With respect to Security Devices entered
into by Lessor after the execution of this Lease, Lessee's subordination of
this Lease shall be subject to receiving a commercially reasonable
non-disturbance agreement (a "NON-DISTURBANCE AGREEMENT") from the Lender
which Non-Disturbance Agreement provides that Lessee's possession of the
Premises, and this Lease, including any options to extend the term hereof,
will not be disturbed so long as Lessee is not in Breach hereof and attorns
to the record owner of the Premises. Further, within sixty (60) days after
the execution of this Lease, Lessor shall use its commercially reasonable
efforts to obtain a Non-Disturbance Agreement from the holder of any
pre-existing Security Device which is secured by the Premises. In the event
that Lessor is unable to provide the Non-Disturbance Agreement within said
sixty (60) days, then Lessee may, at Lessee's option, directly contact
Lessor's lender and attempt to negotiate for the execution and delivery of a
Non-Disturbance Agreement.
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30.4 SELF-EXECUTING. The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents; provided,
however, that, upon written request from Lessor or a Lender in connection
with a sale, financing or refinancing of the Premises, Lessee and Lessor
shall execute such further writings as may be reasonably required to
separately document any subordination, attornment and/or Non-Disturbance
Agreement provided for herein.
31. ATTORNEYS' FEES. If any Party or Broker brings an action or
proceeding involving the Premises to enforce the terms hereof or to declare
rights hereunder, the Prevailing Party (as hereafter defined) in any such
proceeding, action, or appeal thereon, shall be entitled to reasonable
attorneys' fees. Such fees may be awarded in the same suit or recovered in a
separate suit, whether or not such action or proceeding is pursued to
decision or judgment. The term, "PREVAILING PARTY" shall include, without
limitation, a Party or Broker who substantially obtains or defeats the
relief sought, as the case may be, whether by compromise, settlement,
judgment, or the abandonment by the other Party or Broker of its claim or
defense. The attorneys' fees award shall not be computed in accordance with
any court fee schedule, but shall be such as to fully reimburse all attorneys'
fees reasonably incurred, in addition, Lessor shall be entitled to attorneys'
fees, costs and expenses incurred in the preparation and service of notices of
Default and consultations in connection therewith, whether or not a legal
action is subsequently commenced in connection with such Default or resulting
Breach.
32. LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's
agents shall have the right to enter the Premises at any time, in the case of
an emergency, and otherwise at reasonable times upon at least 24 hours prior
notice for the purpose of showing the same to prospective purchasers,
lenders, or lessees, and making such alterations, repairs, improvements or
additions to the Premises as Lessor may deem necessary. All such activities
shall be without abatement of rent or liability to Lessee. Lessor may at any
time place on the Premises any ordinary "FOR SALE" signs and Lessor may
during the last six (6) months of the term hereof place on the Premises any
ordinary "FOR LEASE" signs. Lessee may at any time place on or about the
Premises any ordinary "FOR SUBLEASE" sign.
33. AUCTIONS. Lessee shall not conduct nor permit to be conducted, any
auction upon the Premises without Lessor's prior written consent. Lessor
shall not be obligated to exercise any standard of reasonableness in
determining whether to permit an auction.
34. SIGNS. Except for ordinary "For Sublease" signs, Lessee shall not
place any sign upon the Premises without Lessor's prior written consent. All
signs must comply with all Applicable Requirements. Lessee, at its sole cost
and expense, shall have the right to install signage on the exterior of the
Premises, upon the prior written consent of Lessor, which consent shall not
be unreasonably withheld or delayed, which sign shall be a permit table sign;
provided that Lessee shall provide evidence that such signage shall conform
to all Applicable Requirements and all required permits shall have been
obtained.
35. TERMINATION; MERGER. Unless specifically stated otherwise in
writing by Lessor, the voluntary or other surrender of this Lease by Lessee,
the mutual termination or cancellation hereof, or a termination hereof by
Lessor for Breach by Lessee, shall automatically terminate any sublease or
lesser estate in the Premises; provided, however, that Lessor may elect to
continue any one or all existing subtenancies. Lessor's failure within ten
(10) days following any such event to elect to the contrary by written notice
to the holder of any such lesser interest, shall constitute Lessor's election
to have such event constitute the termination of such interest.
36. CONSENTS. Except as otherwise provided herein, wherever in this
Lease the consent of a Party is required to an act by or for the other Party,
such consent shall not be unreasonably withheld or delayed. Lessor's actual
reasonable costs and expenses (including but not limited to architects',
attorneys', engineers' and other consultants' fees) incurred in the
consideration of, or response to, a request by Lessee for any Lessor consent,
including but not limited to consents to an assignment, a subletting or the
presence or use of a Hazardous Substance, shall be paid by Lessee upon
receipt of an invoice and supporting documentation therefor. Lessor's consent
to any act, assignment or subletting shall not constitute an acknowledgment
that no Default or Breach by Lessee of this Lease exists, nor shall such
consent be deemed a waiver of any then existing Default or Breach, except as
may be otherwise specifically stated in writing by Lessor at the time of such
consent. In the event that either Party disagrees with any determination made
by the other hereunder and reasonably requests the reasons for such
determination, the determining party shall furnish its reasons in writing and
in reasonable detail within ten (10) business days following such request.
37. INTENTIONALLY DELETED.
38. QUIET POSSESSION. Subject to payment by Lessee of the Rent and
performance of all of the covenants, conditions and provisions on Lessee's
part to be observed and performed under this Lease, Lessee shall have quiet
possession and quiet enjoyment of the Premises during the term hereof.
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39. OPTION TO EXTEND ORIGINAL TERM.
39.1 Lessee shall have the option to extend the Original Term of
this Lease (the "OPTION") for one (1) additional period of five (5) years
(the "OPTION PERIOD") commencing on the Expiration Date upon the following
terms and conditions:
(a) That Lessee is not in Default under any of the terms,
covenants, conditions or provisions of this Lease either at the time Lessee
exercises the Option or at any time thereafter prior to the Expiration Date;
(b) That Lessee shall have notified Lessor of Lessee's
election to exercise such Option in the manner provided below; and
(c) Lessee shall have provided to Lessor Lessee's audited
financial statements for the Lessee's fiscal year most recently completed,
along with unaudited financial statements for the interim periods thereafter,
and Lessor shall have determined, in the sole and absolute discretion of
Lessor, that Lessee's creditworthiness is satisfactory to Lessor.
(d) The "OPTION PERIOD RENT" shall be equal to the greater
of (i) the Rent paid by Lessee for the one year period prior to the
Expiration Date, or (ii) the Fair Market Rental Value for the Premises for
the Option Period as of the Expiration Date. "FAIR MARKET RENTAL VALUE" shall
mean the prevailing market rental rate charged in an arms length transaction
by a willing lessor and a willing lessee for substantially similar space, in
substantially the same physical condition as the Premises in comparable
buildings in the immediate area of the Premises.
(e) If Lessee desires to exercise the Option, Lessee shall
deliver to Lessor written notice of exercise not more than twelve (12), and
not less than eight (8), months prior to the expiration of the Original Term.
Within fifteen (15) days after receipt of such notice of exercise, Lessor
shall notify Lessee of Lessor's determination of the Fair Market Rental Value
for the Premises. Within ten (10) days of Lessee's receipt of Lessor's
determination of Fair Market Rental Value, Lessee shall notify Lessor as to
one of the following (i) Lessee's decision to confirm its exercise of the
Option at Fair Market Rental Value as determined by Lessor; (ii) Lessee's
decision to confirm its exercise of the Option, but that Lessee disagrees with
Lessor's calculation of Fair Market Rental Value; or (iii) that Lessee waives
and releases its Option. If Lessee does not respond during this ten (10) day
notice period, Lessee will be deemed to have elected not to exercise its
Option. If during the ten (10) day notice period, Lessee notifies Lessor
that Lessee desires to exercise its Option, but Lessee disputes Lessor's
calculation of Fair Market Rental Value, Lessee and Lessor shall have fifteen
(15) days following receipt of Lessee's notice to agree as to the Fair Market
Rental Value. If within the fifteen (15) day negotiation period Lessor and
Lessee cannot so agree, then within ten (10) days after the expiration of the
fifteen (15) day negotiation period, Lessor and Lessee each, at its own cost
and by giving notice to the other party, shall appoint a real estate broker
with at least ten (10) years' full-time commercial real estate leasing
experience in San Francisco County to determine Fair Market Rental Value. If
either Lessor or Lessee does not appoint a broker within ten (10) days after
the other party has given notice of the name of its broker, the single
broker appointed shall be the sole broker and shall set the Fair Market Rental
Value. If the two (2) brokers are unable to agree within thirty (30) days
after the second broker has been appointed, they shall attempt to select a
third broker meeting the qualifications stated in this paragraph 39 within
ten (10) days after the last day the two (2) brokers are given to set the
Fair Market Rental Value. If they are unable to agree on the third broker,
either Lessor or Lessee by giving ten (10) days' notice to the other party
can apply to the then president of the real estate board of San Francisco
County, or to the Presiding Judge of the Superior Court of San Francisco
County, for the selection within fifteen (15) days thereafter of a third
broker who meets the qualifications stated in this paragraph 39. Lessor and
Lessee each shall bear one-half (1/2) of the cost of appointing the third
broker and of paying the third Broker's fee. Within thirty (30) days after
the selection of a third broker, a majority of the brokers shall set the Fair
Market Rental Value. If a majority of the brokers are unable to set the Fair
Market Rental Value within the stipulated period of time, the three (3)
estimates shall be added together and their total divided by three (3); and
the resulting quotient shall be the Fair Market Rental Value. If, however,
the low estimate and/or high estimate and/is more than ten percent (10%)
lower and/or higher than the middle estimate, the low estimate and/or the high
estimate shall be disregarded, the remaining two (2) estimates shall be added
together and their total divided by two (2); and the resulting quotient shall
be the Fair Market Rental Value. If both the low estimate and the high
estimate are disregarded as stated in this paragraph 39, the middle estimate
shall
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be the Fair Market Rental Value. After the Fair Market Rental Value has been
set, the brokers shall immediately notify Lessor and Lessee. The
determination of the brokers as set forth above shall be binding on Lessor
and Lessee.
39.2 The Option granted to Lessee in this Lease is personal to
the original Lessee (except with respect to a permitted Transferee), and
cannot be assigned or exercised by anyone other than said original Lessee (or
such Permitted Transferee) and only while the original Lessee (or such
Permitted Transferee) is in full possession of the Premises.
40. MULTIPLE BUILDINGS. If the Premises are a part of a group of
buildings controlled by Lessor, Lessee agrees that it will observe all
reasonable rules and regulations which Lessor may make from time to time for
the management, safety, and care of said properties, including the care and
cleanliness of the grounds and including the parking, loading and unloading
of vehicles, and that Lessee will pay its fair share of common expenses
incurred in connection therewith.
41. SECURITY MEASURES. Lessee hereby acknowledges that the rental
payable to Lessor hereunder does not include the cost of guard service or
other security measures, and that Lessor shaft have no obligation whatsoever
to provide same. Lessee assumes all responsibility for the protection of the
Premises, Lessee, its agents and invitees and their property from the acts of
third parties.
42. RESERVATIONS. Lessor reserves to itself the right, from time to
time, to grant, without the consent or joinder of Lessee, such easements,
rights and dedications that Lessor deems necessary to, and cause the
recordation of parcel maps and restrictions, so long as such easements,
rights, dedications, maps and restrictions do not unreasonably interfere with
the use of the Premises by Lessee, or diminish Lessee's parking as provided
in Paragraph 50. Lessee agrees to sign any documents reasonably requested by
Lessor to effectuate any such easement rights, dedication, map or restrictions.
43. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as
to any amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such
payment shall not be regarded as a voluntary payment and there shall survive
the right on the part of said Party to institute suit for recovery of such
sum, if it shall be adjudged that there was no legal obligation on the part
of said Party to pay such sum or any part thereof, said Party shall be
entitled to recover such sum or so much thereof as it was not legally
required to pay.
44. AUTHORITY. If either Party hereto is a corporation, trust, limited
liability company, partnership, or similar entity, each individual executing
this Lease on behalf of such entity represents and warrants that he or she is
duly authorized to execute and deliver this Lease on its behalf. Each party
shall, within thirty (20) days after request, deliver in the other party
satisfactory evidence of such authority.
45. CONFLICT. Any conflict between the printed provisions of this Lease
and the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.
46. OFFER. Preparation of this Lease by either Party or their agent and
submission of same to the other Party shall not be deemed an offer to lease
to the other Party. This Lease is not intended to be binding until executed
and delivered by all Parties hereto.
47. AMENDMENTS. This Lease may be modified only in writing, signed by
the Parties in interest at the time of the modification. As long as they do
not materially change Lessee's obligations hereunder, Lessee agrees to make
such reasonable non-monetary modifications to this Lease as may be reasonably
required by a Lender in connection with the obtaining of normal financing or
refinancing of the Premises.
48. MULTIPLE PARTIES. If more than one person or entity is named herein
as either Lessor or Lessee, such multiple Parties shall have joint and
several responsibility to comply with the terms of this Lease.
49. TENANT IMPROVEMENTS. Attached hereto as Exhibit 2 are the space
plans and specifications) the "CONSTRUCTION DOCUMENTS") which describe the
improvements to be constructed in the Premises (the "TENANT IMPROVEMENTS").
The Construction Documents specify the entire scope of the Tenant
Improvements to be made by Lessor. Any changes to the Construction Documents
may be made only in writing and with the approval of Lessor and Lessee.
Lessor shall construct the Tenant Improvements in accordance with the
Construction Documents and in accordance with all Applicable Requirements
including without limitation the Americans With Disabilities Act of 1990, in
a good and workmanlike manner, free of defects and using new materials and
equipment of good quality. Within thirty (30) days after the Commencement
Date, Lessee and Lessor shall conduct a joint "walk-through" of the Premises
in order to determine and agree upon a written "punch list", setting
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forth those items which Lessor and Lessee agree are defective items of
construction. Lessor shall promptly cause such punch list items to be
corrected. Lessee's acceptance of the Premises or agreement to a "punch list"
shall not be deemed a waiver of Lessee's right to have defects in the Tenant
Improvements or the Premises which are latent defects repaired at no cost to
Lessee. Lessee shall provide notice to Lessor whenever any such latent defect
becomes reasonably apparent and Lessor shall repair such latent defect as
soon as practicable. Lessor shall cooperate with Lessee in the enforcement of
any warranties available to Lessor which would reduce Lessee's maintenance
obligations under this Lease.
50. PARKING. During the Initial Term, Lessor shall make available to
Lessee three (3) parking stalls at the prevailing market rate (which is
currently $150 per month per stall) in the Freelon Street gated parking lot
located behind 000 Xxxxxxx Xxxxxx. Lessor does not provide any assurance that
such parking will be provided to Lessee by Lessor following the Initial Term
and Lessor has no obligation to provide same.
The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.
THE XXXX AND XXXXXXXXX COMPANY BABY CENTER, INC.
By /s/ XXXXXXX XXXXXXX By /s/ XXXXXXX XXXXXXXX
------------------------------------- -------------------------------
Name: XXXXXXX XXXXXXX Name: XXXXXXX XXXXXXXX
---------------------------------- ----------------------------
Title: PRESIDENT Title: CEO
--------------------------------- ---------------------------
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EXHIBITS
Exhibit 1 Form of Letter of Credit
Exhibit 2 Construction Documents for Tenant Improvements
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