LEASE AGREEMENT
BETWEEN
Xxxxxxxx Properties Natomas, L.P.
a Delaware limited partnership
(Landlord)
AND
EarthLink Network, Inc.,
a Delaware corporation
(Tenant)
Natomas Corporate Center
Sacramento, California
Dated: as of September 1, l999
TABLE OF CONTENTS
PAGE
ARTICLE 1 BASIC LEASE INFORMATION AND CERTAIN DEFINITIONS.................1
ARTICLE 2 PREMISES AND QUIET ENJOYMENT....................................4
ARTICLE 3 TERM; COMMENCEMENT DATE; DELIVERY AND ACCEPTANCE OF PREMISES....5
ARTICLE 4 RENT............................................................7
ARTICLE 5 OPERATING COSTS.................................................7
ARTICLE 6 PARKING........................................................15
ARTICLE 7 SERVICES OF LANDLORD...........................................16
ARTICLE 8 ASSIGNMENT AND SUBLETTING......................................21
ARTICLE 9 REPAIRS........................................................26
ARTICLE 10 ALTERATIONS....................................................27
ARTICLE 11 LIENS..........................................................29
ARTICLE 12 USE AND COMPLIANCE WITH LAWS...................................29
ARTICLE 13 DEFAULT AND REMEDIES...........................................31
ARTICLE 14 INSURANCE......................................................34
ARTICLE 15 DAMAGE BY FIRE OR OTHER CAUSE..................................36
ARTICLE 16 CONDEMNATION...................................................38
ARTICLE 17 INDEMNIFICATION................................................39
ARTICLE 18 SUBORDINATION AND ESTOPPEL CERTIFICATES........................41
ARTICLE 19 SURRENDER OF THE PREMISES......................................43
ARTICLE 20 LANDLORD'S RIGHT TO INSPECT....................................43
ARTICLE 21 PERSONAL PROPERTY..............................................44
ARTICLE 22 FIRST OPTION TO EXTEND.........................................44
ARTICLE 23 SECOND OPTION TO EXTEND........................................46
ARTICLE 24 RIGHT OF FIRST OFFER...........................................47
ARTICLE 25 OPTION TO CONTRACT PREMISES....................................49
ARTICLE 26 OPTION TO TERMINATE LEASE......................................50
ARTICLE 27 SIGNAGE, BUILDING NAME, AND USE OF NAME OF THE BUILDING........51
ARTICLE 28 BROKERAGE......................................................52
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ARTICLE 29 OBSERVANCE OF RULES AND REGULATIONS............................52
ARTICLE 30 ROOF TOP COMMUNICATIONS EQUIPMENT..............................53
ARTICLE 31 NOTICES........................................................53
ARTICLE 32 MISCELLANEOUS..................................................54
ARTICLE 33 OTHER DEFINITIONS..............................................58
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EXHIBITS AND RIDERS
The following Exhibits and Riders are attached hereto and by this
reference made a part of this Lease:
EXHIBIT A - FLOOR PLAN OF THE PREMISES
EXHIBIT B - PARKING FACILITY
EXHIBIT C - WORK LETTER
EXHIBIT D - FORM OF COMMENCEMENT NOTICE
EXHIBIT E - SERVICES
E-1--JANITORIAL SPECIFICATIONS
E-2--SECURITY GUIDELINES
E-3--UTILITY ALLOCATION FORMULA
EXHIBIT F - SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT
EXHIBIT G - ACQUIRED PROPERTY
EXHIBIT H - RULES AND REGULATIONS
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LEASE AGREEMENT
THIS LEASE AGREEMENT ("this Lease") is made and entered into by and
between XXXXXXXX PROPERTIES NATOMAS, L.P., a Delaware limited partnership
("Landlord") and EARTHLINK NETWORK, INC., a Delaware corporation ("Tenant"),
upon all the terms set forth in this Lease and in all Exhibits and Riders
hereto, to each and all of which terms Landlord and Tenant hereby mutually agree
as follows:
ARTICLE 1
BASIC LEASE INFORMATION AND CERTAIN DEFINITIONS
Section 1.1 Each reference in this Lease to information and definitions
contained in the Basic Lease Information and Certain Definitions and each use of
the terms capitalized and defined in this Section 1.1 shall be deemed to refer
to, and shall have the respective meaning set forth in, this Section 1.1.
A. Premises: An aggregate of 95,305 rentable square
feet of space located in 2495 Natomas
Park Drive, as said space is
identified by diagonal lines or shaded
area on the floor plans attached
hereto as Exhibit A and located as
follows:
First Floor North--7,269
rentable square feet
First Floor South--9,387 rentable
square feet
Second Floor--24,411 rentable
square feet
Third Floor--27,119 rentable
square feet
Fourth Floor 27,119 rentable square
feet.
Any additional space leased by Tenant
from time to time during the Term
shall also constitute a portion of the
Premises.
B. Building: The buildings located at 0000 Xxxxxxx
Xxxx Xxxxx and 0000 Xxxxxxx Xxxx
Xxxxx, Xxxxxxxxxx, Xxxxxxxxxx
C. Land: The land on which the Building and its
respective Parking Facility and
exterior Common Areas are located:
D. Parking Facility: The surface parking lots adjacent to
the Building which are more
particularly described in Exhibit B
which is attached hereto.
E. Project: The Natomas Corporate Center,
consisting of the following
buildings: 1740, 1750 and 0000
Xxxxxxxxx Xxxx Xxxxx and 2525, 2485
and 2495 Natomas Park
1
Drive together with the land upon
which each is situated and all
improvements thereon, and their
respective parking facilities, and
all Common Areas serving or
associated therewith, as the same
may be further improved or expanded.
F. Commencement Date September 1, l999
(estimated):
G. Expiration Date (estimated): August 31, 2009
H. Term: Ten (10) years, beginning on the
Commencement Date and ending at
11:59 p.m. on the Expiration Date,
unless this Lease is sooner
terminated or extended as provided
herein.
I. Rentable Area of the Premises: 95,305 square feet.
J. Rentable Area of the Building: 149,281 square feet
K. Tenant's Share: 63.84%, representing a fraction,
the numerator of which is the
rentable area of the Premises
and the denominator of which is the
rentable area of the Building,
subject to future adjustment
pursuant to the provisions of
Section 5.4 hereof.
L. Rent: The Base Rent and the Additional Rent.
M. Base Rent: Rent per Monthly
Months sq.ft/year Base Rent
1-20 $18.60 $147,722.75
21-40 $21.60 $171,549.00
41-60 $22.20 $176,314.25
61-80 $22.80 $181,079.50
81-100 $23.40 $185,844.75
101-120 $24.00 $190,610.00
N. Additional Rent: The Additional Rent shall be all other
sums due and payable by Tenant under
the Lease, including, but not limited
to, Tenant's Share of Operating Costs.
O. Base Year Operating Costs: The actual grossed up Operating Costs
for the calendar year 2000.
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P. Parking Spaces: Subject to Article 7, not to
exceed 5 parking spaces for
each 1,000 square feet of Rentable
Area of the Premises. The parking
spaces shall be available to Tenant
on a non-reserved basis.
Q. Tenant's Permitted Uses: Tenant may use the Premises for
general office use, and legally
permitted ancillary uses, including
call center and data center
operations.
R. Security Deposit: None
S. Broker: Landlord: Xxxxxxxx Properties, LTD.
Tenant: Xxxxxxx Realty Corporation
The term Broker means, collectively,
Landlord's Broker and Tenant's Broker
T. Landlord's Address for Notice: Xxxxxxxx Properties Acquisition
Partners, L.P.
c/o Prentiss Properties, Ltd.
Xxx Xxxxxx Xxxxx Xxxxx 000
Xxxxxxx, XX 00000
Attention: Vice President or
Regional Director
With a copy to:
Xxxxxxxx Properties Ltd., Inc.
0000 Xxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Property Manager
U. Landlord's Address for Payment: Xxxxxxxx Properties Natomas, L.P.
000 X. XxXxxxx Xxxxxx, Xxxx. 0000
Xxxxxxx, XX 00000-0000
V. Tenant's Address for Notice: EarthLink Network Inc.
0000 Xxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxxx
Corporate Real Estate Department
With a copy to:
Hunton & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Hobby, Esq.
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ARTICLE 2
PREMISES AND QUIET ENJOYMENT
Section 2.1 Landlord hereby leases the Premises to Tenant, and Tenant
hereby rents and hires the Premises from Landlord, for the Term. During the
Term, Tenant shall have the right to use, in common with others and in
accordance with the Rules and Regulations, the Common Areas. Notwithstanding the
foregoing, this Lease shall be null and void and of no further force and effect
if a termination agreement with Cable and Wireless with respect to the Premises
is not executed by Cable and Wireless within seven (7) days after the execution
of this Lease by Landlord and Tenant.
Section 2.2 For so long as (i) Tenant has not assigned this Lease,
sublet more than one floor, or exercised the Contraction Option (as hereinafter
defined in Article 25) or (ii) there is no uncured Event of Default with respect
to Tenant or event that with the giving of notice or the passage of time would
constitute an Event of Default, Landlord shall not enter into a lease with a new
tenant in 2525, 2485 or 0000 Xxxxxxx Xxxx Xxxxx ("Restricted Buildings") whose
primary use of the premises will be to operate a Call Center (as hereinafter
defined) and such leases shall prohibit such use as a Call Center. Although
Landlord will use good faith efforts not to approve an assignment or subletting
of other tenants in the Project if such subtenant or assignee's proposed use of
its premises is to operate a Call Center ("Call Center Subletting"), Landlord
shall not be required to institute or defend itself in any legal proceedings
arising out of a proposed assignment or subletting. Provided that Landlord has
used good faith efforts not to approve a Call Center Subletting, nothing herein
contained is intended to limit Landlord's right to approve subtenants and
assignees of other tenants in the Restricted Buildings even if such subtenant or
assignees use of its premises is to operate a Call Center. or to restrict
Landlord's rights with respect to existing tenants of the Project. For the
purposes of this Section, Call Center shall mean any center containing a
telephone facility support center providing external customer support which
phone center operates as either a computer support center, software support
center, customer support center, marketing support center or account maintenance
support center for external customers of the tenant and which shall specifically
exclude any centers providing any internal support system(s) which primarily
support a tenant's own businesses. Subject to interruption of use as a result of
a casualty or condemnation, the restrictions on use by other Tenants set forth
in this Section 2.2 shall terminate automatically if Tenant ceases to operate a
Call Center in at least thirty percent (30%) of the rentable square feet then
constituting the Premises for a period in excess of eight (8) months.
Section 2.3 Subject to Article 18 and to existing covenants, conditions
and restrictions affecting the Project, provided that Tenant fully and timely
performs all the terms of this Lease on Tenant's part to be performed, including
payment by Tenant of all Rent, Tenant shall have, hold and enjoy the Premises
during the Term without hindrance or disturbance from or by Landlord.
ARTICLE 3
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TERM; COMMENCEMENT DATE;
DELIVERY AND ACCEPTANCE OF PREMISES
Section 3.1 The Commencement Date shall be September 1, 1999. Upon
execution of a termination agreement with the existing tenant, Landlord shall
deliver the Premises to Tenant for the construction of the tenant improvement
work in accordance with the terms of the Work Letter which is attached to this
Lease as Exhibit C. The term of this Lease ("Term") shall commence on the
Commencement Date and shall survive, unless sooner terminated pursuant to the
provisions of this Lease, for the time period specified in Section 1.1H.
Notwithstanding the foregoing, Tenant acknowledges that the existing Tenant will
remain in occupancy in a portion of the Premises consisting of approximately
3,000 rentable square feet ("Occupied Premises") which space shall be delivered
to Tenant immediately upon its vacation by Tenant. Notwithstanding such
occupancy by the existing tenant, Tenant agrees to pay Base Rent on the Occupied
Premises commencing on the Commencement Date. Landlord and Tenant shall execute
the Commencement Date Notice in the form of Exhibit D attached hereto to confirm
the Commencement Date and Expiration Date.
Section 3.2 Landlord shall provide Tenant with the Tenant Improvement
Allowance described in the Work Letter which shall be used in connection with
the construction of the initial tenant improvements in the Premises. Provided
that there is no Event of Default with respect to Tenant or event with the
passage of time or the giving of notice would constitute an Event of Default, in
addition to the Tenant Improvement Allowance, Landlord shall provide Tenant with
an allowance equal to $3.00 per rentable square feet of the Premises on a date
chosen by Tenant which date shall be between the first day of the sixty-first
month of the Term and the last day of the sixty-sixth month of the Term (the
"Refurbishment Allowance"). Tenant shall provide Landlord notice of its election
to use the Refurbishment Allowance no later than the last day of the sixtieth
(60th) month of the Term. The Refurbishment Allowance shall be disbursed in
accordance with the procedure for the disbursement of the Tenant Improvement
Allowance which is set forth in the Work Letter and for the design and
construction expenses and costs described in the Work Letter. Tenant shall
perform the refurbishment in accordance with the construction processes and
procedures set forth in the Work Letter. Notwithstanding anything herein
contained to the contrary, the Refurbishment Allowance must be utilized for the
refurbishment of the Premises and for no other purposes. Notwithstanding
anything herein to the contrary, in no event may Tenant utilize the
Refurbishment Allowance (i) after the last day of the sixty-sixth month of the
Term or (ii) if Tenant exercises the Termination Option set forth in Article 26.
Section 3.3 The rentable area of the Premises and the Building are as
stated in Sections 1.1 I and J, respectively. By execution of this Lease,
Landlord and Tenant have agreed on the rentable area of the Premises and the
Building for all purposes of this Lease. By written instrument substantially in
the form of Exhibit D attached hereto, Landlord shall notify Tenant of the
Commencement Date, and all other matters stated therein. If within ten (10) days
following delivery of such Commencement Notice, Tenant fails to execute and
deliver the Commencement Date Notice to Landlord or to notify Landlord of the
reasons why it is not executing the Commencement Date Notice, such failure may
be deemed by Landlord to be an Event of Default hereunder. The foregoing
notwithstanding, Landlord's failure to deliver any Commencement Notice to Tenant
shall not affect Landlord's right to determine the Commencement Date in
5
accordance with the provisions of this Lease. Any additional space which Tenant
shall occupy in the Project in accordance with Article 24 of this Lease shall be
measured substantially in accordance with BOMA standards set forth in ANSI
Z65.1-1996 and Landlord and Tenant shall agree on such measurement prior to the
execution of an amendment incorporating such additional space into the Premises.
Section 3.4 Tenant may not enter or occupy the Premises prior to the
Commencement Date without Landlord's express written consent and any entry by
Tenant shall be subject to all of the terms of this Lease; provided however,
that no such early entry shall change the Expiration Date.
Section 3.5 Occupancy of the Premises or any portion thereof by Tenant
or anyone claiming through or under Tenant for the conduct of Tenant's, or such
other person's business therein shall be conclusive evidence that Tenant and all
parties claiming through or under Tenant (a) have accepted the Premises or such
portion as suitable for the purposes for which the Premises are leased
hereunder, (b) have accepted the Common Areas as being in a good and
satisfactory condition and (c) have waived any defects in the Premises and the
Project except only (i) for a period of twelve (12) months, latent defects in
the Premises (excluding latent defects in the Building structure or the Building
systems servicing the Premises) which are not otherwise knowable from an
inspection of the Premises conducted by persons knowledgeable in such areas and
(ii) latent defects in the Project (including the structure of the Building or
the Building systems) which are not otherwise knowable from an inspection of the
Project conducted by persons knowledgeable in such areas. Landlord shall have no
liability to Tenant or any of Tenant's agents, employees, licensees, servants or
invitees for any injury or damage to any person or property due to the condition
or design of, or any defect in, the Premises or the Building, including any
electrical, plumbing or mechanical systems and equipment of the Premises or the
Project; and Tenant, for itself and its agents, employees, licensees, servants
and invitees, expressly assumes all risks of injury or damage to person or
property, either proximate or remote, resulting from the condition of the
Premises or the Project; provided however, the foregoing shall not be applicable
to the extent such injury or damage is the result of the willful misconduct,
gross negligence, active negligence, or negligence, excluding, however,
negligent acts or omissions for which Landlord has no knowledge or is deemed to
have had imputed knowledge of Landlord, its agents, employees or contractors.
ARTICLE 4
RENT
Section 4.1 Tenant shall pay to Landlord, without notice, demand,
offset or deduction, in lawful money of the United States of America, at
Landlord's Address for Payment, or at such other place as Landlord shall
designate in writing from time to time: (a) the Base Rent in equal monthly
installments, in advance, on the first day of each calendar month during the
Term, and (b) the Additional Rent, at the respective times required hereunder.
The first monthly installment of Base Rent and the Additional Rent payable under
Article 5 hereof shall be paid in advance on the date of Tenant's execution of
this Lease and applied to the first installments of Base Rent and such
Additional Rent coming due under this Lease. Payment of Rent shall begin on the
Commencement Date; provided, however, that, if either the Commencement Date or
the
6
Expiration Date falls on a date other than the first day of a calendar
month, the Rent due for such fractional month shall be prorated on a per diem
basis between Landlord and Tenant so as to charge Tenant only for the portion of
such fractional month falling within the Term.
Section 4.2 All installments of Rent not paid as of the date due shall
be subject to a late charge of five percent (5%) of the amount of the late
payment and shall further bear interest until paid at a rate per annum (the
"Interest Rate") equal to the greater of fifteen percent (15%) or four percent
(4%) above the prime rate of interest from time to time publicly announced by
Bank of America, a national banking association, or any successor thereof;
provided, however, that, if at the time such interest is sought to be imposed
the rate of interest exceeds the maximum rate permitted under federal law or
under the laws of the State of California, the rate of interest on such past due
installments of Rent shall be the maximum rate of interest then permitted by
applicable law.
ARTICLE 5
OPERATING COSTS
Section 5.1 Tenant shall pay to Landlord, as Additional Rent, for each
year or fractional year during the Term, an amount ("Tenant's Operating Costs
Payment") of money equal to Tenant's Share of Operating Costs, for such year in
excess of Tenant's Share of Base Year Operating Costs, such amount to be
calculated and paid as follows:
A. Beginning on January 1st of the year following the year in which the
Commencement Date occurs, and on the first day of January of each year during
the Term thereafter, or as soon thereafter as is practicable, Landlord shall
furnish Tenant with a statement ("Landlord's Operating Costs Estimate") setting
forth Landlord's estimate of grossed up Operating Costs for the forthcoming year
and Tenant's Operating Costs Payment for such year. On the first day of each
calendar month during such year, Tenant shall pay to Landlord one-twelfth
(1/12th) of Tenant's Operating Costs Payment as estimated on Landlord's
Operating Costs Estimate. If for any reason Landlord has not provided Tenant
with Landlord's Operating Costs Estimate on or before the first day of January
of any year during the Term, then (a) until the first day of the calendar month
following the month in which Tenant is given Landlord's Operating Costs
Estimate, Tenant shall continue to pay to Landlord on the first day of each
calendar month the sum, if any, payable by Tenant under this Section 5.1 for the
month of December of the preceding year, and (b) promptly after Landlords'
Operating Costs Estimate is furnished to Tenant, Landlord shall give notice to
Tenant stating whether the installments of Tenant's Operating Costs Payments
previously made for such year were greater or less than the installments of
Tenant's Operating Costs Payments to be made for such year, and (i) if there
shall be a deficiency, Tenant shall pay the amount thereof to Landlord within
ten (10) days after the delivery of Landlord's Operating Costs Estimate, or (ii)
if there shall have been an overpayment, Landlord shall apply such overpayment
as a credit against the next accruing monthly installment(s) of Tenant's
Operating Costs Payment due from Tenant until fully credited to Tenant, and
(iii) on the first day of the calendar month following the month in which
Landlord's Operating Costs Estimate is given to Tenant and on the first day of
each calendar month throughout the remainder of such year, Tenant shall pay to
Landlord an amount equal to one-twelfth (1/12th) of Tenant's Operating Costs
Payment.
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B. On or about the first day of March of each year during the Term
(beginning on the first day of March of the second year following the year in
which the Commencement Date occurs), or as soon thereafter as is reasonably
practicable, Landlord shall furnish Tenant with a statement certified by the
property manager of the Project of the actual grossed up Operating Costs for the
preceding year, reconciling the actual amounts paid pursuant to Landlord's
Operating Costs Estimate and the actual amounts payable hereunder. The statement
shall be prepared in accordance with general accounting principles and will
provide comparison of categories of Operating Costs. Tenant may request Landlord
to provide additional information with respect to Operating Costs line items.
Within thirty (30) days after Landlord's giving of such statement, Tenant shall
make a lump sum payment to Landlord in the amount, if any, by which Tenants'
Operating Costs Payment for such preceding year as shown on such Landlord's
statement, exceeds the aggregate of the monthly installments of Tenant's
Operating Costs Payments paid during such preceding year. If Tenant's Operating
Costs Payment, as shown on such Landlord's statement, is less than the aggregate
of the monthly installments of Tenant's Operating Costs Payment actually paid by
Tenant during such preceding year, then Landlord shall apply such amount to the
next accruing monthly installment of Base Rent due from Tenant then unpaid;
provided, however that if such amount is more than one month's installment of
Base Rent and further provided that there is not then an Event of Default with
respect to Tenant, then and in such event, Landlord shall promptly refund the
balance of such amount to Tenant. Notwithstanding any provision of this Lease to
the contrary, Landlord's failure to deliver or delay in delivering a statement
of actual Operating Costs with respect to any calendar year shall in no event be
construed as Landlord's waiver of the right to so deliver such statement or
collect Tenant's Operating Costs as described herein.
C. If the Term ends on a date other than the last day of December, the
actual Operating Costs for the year in which the Expiration Date occurs, shall
be prorated so that Tenant shall pay that portion of Tenant's Operating Costs
Payment for such year represented by a fraction, the numerator of which shall be
the number of days during such fractional year falling within the Term, and the
denominator of which is 365 (or 366, in the case of a leap year). The provisions
of this Section 5.1 shall survive the Expiration Date or any sooner termination
provided for in this Lease.
Section 5.2 For purposes of this Lease, the term "Operating Costs"
shall mean any and all expenses, costs and disbursements of every kind which
Landlord pays, incurs or becomes obligated to pay in connection with the
operation, management, repair and maintenance of the Building, as well as an
equitable allocation of the costs and expenses which Landlord pays, incurs or
becomes obligated to pay with respect to the ownership, operation and
maintenance of the Land, the Project's Parking Facilities, landscaping, and
exterior Common Areas which serve the Project as a whole as well as any costs
incurred or required to be paid by Landlord for the maintenance or preservation
of the Xxxxxx Slough Preserve ("Allocable Project Expenses"). In no event shall
Operating Costs include costs which are not allocated to the maintenance and
operation of the Building, the Land and the Common Area of the Project. All
Operating Costs shall be determined according to principles which shall be
consistently applied. If there is a category of Operating Costs in the Base Year
which is not applicable to a subsequent year or years of the Term, ("Excluded
Category"), Landlord shall reasonably reduce Base Year Operating Costs to
reflect the Excluded Category of Operating Costs. Similarly, if there is a
category of Operating Costs in a subsequent year or years of the Term after the
Base
8
Year but which was not included in Base Year Operating Costs ("Included
Category"), Landlord shall reasonably adjust Base Year Operating Costs to
include the Included Category. Operating Costs shall include but not be limited
to the following:
(a) Wages, salaries, benefits and fees (including a reasonably
allocated portion of reasonable education and education related travel and
professional fees based on the percentage of such person's time engaged on
activities affecting the Allocable Project Expenses) of all personnel or
entities engaged in the operation, repair, maintenance, management, or
safekeeping of the Project, reasonably allocated to the Building based on the
percentage of such person's time engaged on Project activities, including taxes,
insurance, and benefits relating thereto and the costs of all supplies and
materials (including work clothes and uniforms) used in the operation, repair,
maintenance and security;
(b) Cost of performance by Landlord's personnel of, or of all service
agreements for, maintenance, janitorial services, access control, alarm service,
window cleaning, elevator maintenance and landscaping (such cost shall include
the rental of personal property used by Landlord's personnel in the maintenance
and repair);
(c) Cost of utilities, including water, sewer, power, electricity, gas,
fuel, lighting and all air-conditioning, heating and ventilating costs;
(d) Cost of all insurance, including casualty and liability insurance,
fixtures and personal property used in connection therewith, business
interruption or rent insurance against such perils as are commonly insured
against by prudent landlords, such other insurance as may be required by any
lessor or mortgagee of Landlord, and such other insurance which Landlord
considers reasonably necessary in the operation of the Project, together with
all appraisal and consultants' fees in connection with such insurance and any
deductible portion of any insured loss;
(e) All Taxes. For purposes hereof, the term "Taxes" shall mean, all
taxes, assessments, and other governmental charges, applicable to or assessed
against the Land on which the Building is located or any portion thereof, the
Building or applicable to or assessed against Landlord's personal property used
in connection therewith, whether federal, state, county, or municipal and
whether assessed by taxing districts or authorities presently taxing such Land
or the operation thereof or by other taxing authorities subsequently created, or
otherwise, and any other taxes and assessments attributable to or assessed
against all or any part of the Land or the Building or its operation or assessed
as a result of any governmental required upgrades to or changes in the Land,
Building, or any other improvements located on the Land; including any
reasonable expenses, including fees and disbursements of attorneys, tax
consultants, arbitrators, appraisers, experts and other witnesses, incurred by
Landlord in contesting any taxes or the assessed valuation of all or any part of
the Land or Building. If at any time during the Term there shall be levied,
assessed, or imposed on Landlord or all or any part of the Project constituting
Allocable Project Expenses by any governmental entity any general or special ad
valorem or other charge or tax directly upon rents received under leases, or if
any fee, tax, assessment, or other charge is imposed which is measured by or
based, in whole or in part, upon such rents, or if any charge or tax is made
based directly or indirectly upon the transactions represented by leases or the
occupancy or use of any portion of the Project constituting Allocable Project
Expenses, such taxes, fees, assessments or other charges shall be deemed to be
Taxes;
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provided, however, that any (1) franchise, corporation, income or net
profits tax, unless substituted for real estate taxes or imposed as additional
charges in connection with the ownership of any portion of the Project
constituting Allocable Project Expenses, which may be assessed against Landlord
or the Project or both, (2) transfer taxes assessed against Landlord or any
portion of the Project constituting Allocable Project Expenses or both, (3)
penalties or interest on any late payments of Landlord and, (4) personal
property taxes of Tenant or other tenants in any portion of the Project
constituting Allocable Project Expenses shall be excluded from Taxes.
Notwithstanding the foregoing, if a "Change of Ownership" (as such term is
defined in Section 60 ET SEQ. of the California Revenue and Taxation Code)
occurs, on one or more occasions, (i) from the Commencement Date through May 31,
2001, fifty percent (50%) of the amount of any increase in Taxes which result
from a Change of Ownership shall be excluded from the computation of Taxes
("Excluded Taxes") and (ii) from June 1, 2001 through the last day of the
sixtieth (60) month of the Term, one hundred percent (100%) of the amount of any
increase in Taxes which result from a Change of Ownership shall be Excluded
Taxes. Commencing on the beginning of the first day of the sixty-first (61st)
month of the Term, Tenant shall pay Tenant's Proportion of all Taxes including,
without limitation, Excluded Taxes;
(f) Accounting costs and reasonable legal fees actually incurred by
Landlord or paid by Landlord to third parties (exclusive of legal fees with
respect to disputes with individual tenants, negotiations of tenant leases, or
with respect to contesting the ownership of the Project rather than related to
the operation of the Project, none of which shall be included as an Operating
Cost), appraisal fees, consulting fees, all other professional fees and
disbursements and all association dues;
(g) Cost of repairs and general maintenance for any portion of the
Project constituting Allocable Project Expenses (excluding repairs and general
maintenance paid by proceeds of insurance or by Tenant, other tenants of the
Project or other third parties);
(h) The cost of improvements or equipment which are capital in nature
and which (1) are for the purpose of reducing Operating Costs for the Project,
or (2) enhance the Project for the general benefit of tenants or occupants
thereof, or (3) are required by any governmental authority, or (4) replace any
Building equipment. All such costs, including interest thereon shall be
amortized on a straight-line basis over the useful life of the capital
investment items, as reasonably determined by Landlord;
(i) the Project management office rent or rental value;
(j) a management fee (whether or not Landlord engages a manager for the
Project or manages the Project with Landlord's personnel) and all items
reimbursable to the Project manager, if any, pursuant to any management contract
for the Project; provided that such fee shall not exceed three (3%) of gross
revenues per annum. In addition to such fee Landlord shall be entitled to
reimbursement for expenditures for comparable management functions performed by
comparable third parties taking into account the level and quality of management
activities;
(k) amounts payable to any associations created under any Conditions,
Covenants and Restriction governing the Building or the Land, as amended from
time to time.
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B. "Operating Costs" shall not include:
(i) specific costs for any capital repairs, replacements or
improvements, except as provided above;
(ii) expenses for which Landlord is reimbursed or indemnified
(either by an insurer, condemnor, tenant, warrantor or otherwise) to the extent
of funds received by Landlord;
(iii) expenses incurred in leasing or procuring tenants
(including lease commissions, attorney fees, advertising expenses and expenses
of renovating space for tenants);
(iv) notwithstanding Section 5.2(A)(h) above, payments for
rented equipment, the cost of which would constitute a capital expenditure not
permitted pursuant to the foregoing if the equipment were purchased;
(v) interest or amortization payments on any mortgages; net
basic rents under ground leases;
(vi) costs specially billed to and paid by specific tenants
and costs, fines or penalties incurred by Landlord in connection with a default
under leases with other tenants;
(vii) costs incurred by Landlord with respect to goods and
services (including utilities sold and supplied to tenants and occupants of the
Building) to the extent that Landlord is entitled to reimbursement for such
costs other than through the operating expense pass-through provisions of such
tenant's leases;
(viii) costs incurred by Landlord for the repair of damage to
the Building and/or the Project to the extent that Landlord is reimbursed by
insurance or condemnation proceeds or by tenants, warrantors or other third
parties;
(ix) expenses in connection with services or other benefits
which are not offered to Tenant or for which Tenant is charged directly but
which are provided to another tenant or occupant of the Building;
(x) cost of services to the extent Tenant or any other tenant
in the Building reimburses Landlord (other than through operating expense
pass-through provisions) and the portion of the costs of any services which
would have been allocable to other tenants as Operating Costs but which Landlord
does not allocate to such other tenants;
(xi) excess costs, fines or penalties incurred because
Landlord is determined (pursuant to final judicial determination or an agreed
settlement) in any litigation between Landlord and the tenant in question to be
in default of the terms of any lease in the Project; provided, that the phrase
"excess costs," as used above, shall mean the excess costs resulting solely and
directly from such violation and shall exclude the ordinary costs which would
have been incurred in performing the terms of such lease absent such violation
on the part of Landlord;
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(xii) any cost representing an amount paid to any person,
firm, corporation or other entity related to or affiliated with Landlord, to the
extent such amount exceeds the amount which would have reasonably been paid in
the absence of such relationship for comparable work or services involving the
Building or comparable buildings in the general vicinity of the Building;
(xiii) costs incurred in bringing the Building into compliance
with any code, regulation or law in existence and as enforced as of the
Commencement Date;
(xiv) any and all costs incurred by Landlord in connection
with the transfer or disposition of Landlord's interest in the Building;
(xv) any and all costs incurred by Landlord in the operation
of any health club or any luncheon or other restaurant, club or commercial
facility;
(xvi) expenses attributable to the development of new
buildings in the Project.
C. Notwithstanding the foregoing, in no event shall Tenant' Share of
the increase in Controllable Operating Costs (as hereinafter defined) over the
Controllable Operating Costs of the previous year increase by more than five
percent (5%) per annum on a non-cumulative basis. Controllable Operating Costs
shall mean those operating costs which are in the direct control of landlord and
are subject to contractual negotiation. By way of example and not by way of
limitation, increases in wages and salaries for employees, increases in utility
expenses, increases in Taxes, increases in insurance premiums and increases in
the performance of repairs and maintenance activities shall not be deemed
Controllable Operating Costs; however increases in the costs of service
agreements or vendor agreements which under existing market conditions are
reasonably subject to contractual negotiation by landlords in class A suburban
projects in South Natomas ("Comparison Projects") shall be deemed to be
Controllable Operating Expenses. Controllable Operating Costs pertain to the
costs of the services provided for the operation and management of the Project,
not to the efficiency of the operation and management of the Project or the
necessity for expenditures made for the operation and management of the Project.
Section 5.3 If the rentable area of the Building is less than fully
occupied during any full or fractional year of the Term (including the Base
Year), the actual Operating Costs shall be adjusted for such year to an amount
which Landlord estimates would have been incurred in Landlord's reasonable
judgment had the Building been one hundred percent (100%) occupied. In addition,
if any particular work or service otherwise included in Operating Costs is not
furnished to a tenant or occupant of the Building who is undertaking to perform
such work or service itself, Operating Costs shall be deemed to be increased by
an amount equal to the additional Operating Costs which would have been incurred
if Landlord had furnished such work to such tenant or occupant.
Section 5.4 If during the Term any change occurs in either the number
of square feet of the rentable area of the Premises by virtue of the addition of
additional space to the Premises or the reduction in the size of the Premises or
of the rentable area of the Building (for example, as a result of a partial
condemnation) by virtue of a similar addition or reduction, Tenant's Share of
Operating Costs shall be adjusted, effective as of the date of any such change.
Landlord shall
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promptly notify Tenant in writing of such change and the reason therefor. Any
changes made pursuant to this Section 5.4 shall not alter the computation of
Operating Costs as provided in this Article 5, but, on and after the date of
any such change, Tenant's Operating Costs Payment pursuant to Section 5.1A
shall be computed upon Tenant's Share thereof, as adjusted. If such estimated
payments of Tenant's Share are so adjusted during a year, a reconciliation
payment for Tenant's Share of Operating Costs pursuant to this Article 5 for
the calendar year in which such change occurs shall be computed pursuant to
the method set forth in Section 5.1C, such computation to take into account
the daily weighted average of Tenant's Share of Operating Costs during such
year.
Section 5.5 Notwithstanding the foregoing provisions of this Article 5,
and, provided that Tenant is not in default under the Lease and that no event
which, with notice, the passage of time, or both, would constitute a default on
the part of Tenant hereunder exists as of the date of Tenant's exercise of its
audit rights below, Tenant shall have the following audit rights ("Audit
Procedure").
A. Within ninety (90) days after receipt of a final statement setting
forth Operating Expenses and Property Taxes for a calendar year ("Audit
Period"), Tenant shall be entitled, upon five (5) days prior written notice to
Landlord and during normal business hours at Landlord's office, or such other
place as Landlord shall designate, to cause a current employee of Tenant, a
recognized regional or national accounting firm ("CPA") (but not a tenant of the
Project) or such other person designated by Tenant and reasonably acceptable to
Landlord to copy or cause to be copied (at Tenant's expense), inspect, examine
and audit those books and records of Landlord relating to the determination of
Operating Expenses and Property Taxes for the calendar year for which such
statement was prepared. In connection therewith, Tenant acknowledges that it
shall be reasonable for Landlord to object to the proposed use by Tenant of any
competitors engaged in the development and ownership of real estate, or persons
engaged in the business of auditing building owners' books and records on a
contingent fee basis.
B. If, after inspection and examination of such books and records
during the Audit Period, Tenant disputes the amount of Operating Expenses or
Property Taxes charged by Landlord, Tenant shall have twenty (20) days following
the date of completion of Tenant's audit ("Request Period") to request an
independent audit of such books and records, such request to be made by written
notice to Landlord, which notice shall specify with particularity all disputed
items and shall contain a true, correct and complete copy of any report or
summary prepared by Tenant's initial auditor. The independent audit of the books
and records shall be conducted by a CPA acceptable to both Landlord and Tenant.
If, within ten (10) days after Landlord's receipt of Tenant's notice requesting
an audit, Landlord and Tenant are unable to agree on the CPA to conduct such
audit, then Landlord shall designate a nationally recognized accounting firm
(other than Landlord's then current accounting firm) to conduct such audit. The
audit shall be limited to the determination of the proper amount of Operating
Expenses and Property Taxes payable by Tenant for the subject calendar years
specified by Tenant as disputed items based upon Tenant's initial audit.
C. If the audit discloses that the amount of such disputed Operating
Expenses and/or Property Taxes billed to Tenant was incorrect, the appropriate
party shall, within thirty (30) days following the date of such determination,
pay to the other party the deficiency or overpayment,
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as applicable. All costs and expenses of any audit shall be paid by Tenant
unless the audit shows that Landlord overstated Operating Expenses and
Property Taxes for the subject calendar year by more than five percent (5%),
in which case Landlord shall pay all costs and expenses of the audit. In the
event and only in the event that the audit discloses that the Landlord
overstated Operating Expenses for the subject year by more than five percent
(5%), Tenant may audit the Operating Expenses for the two year period
immediately preceding the year which was audited.
D. Tenant shall keep any information gained from any such audit
(including Tenant's initial review of Landlord's books and records) confidential
and shall not disclose, and shall use its best efforts not to allow the
disclosure of, any such information to any other party except for parties
employed by Tenant or where Tenant is legally required to do so (or in the case
of litigation or where such disclosure occurs as part of litigation between
Landlord and Tenant), and shall indemnify, defend, protect and hold Landlord
harmless from and against any and all loss, cost, damage or liability incurred
by Landlord arising out of Tenant's (or Tenant's accountants', consultants' or
employees') failure to maintain such confidentiality. Additionally, Tenant
acknowledges that Tenant's agreement to keep the results of any such audit
confidential as described herein is a material inducement to Landlord's
agreement to provide Tenant with the audit rights provided herein, and Tenant
expressly acknowledges that in the event of any breach by Tenant of its
confidentiality obligations set forth above may, at Landlord's option, be deemed
an incurable default by Tenant under this Lease, and Landlord in such event
shall have all remedies described in Article 13 below with respect to such
default.
E. The exercise by Tenant of any audit rights hereunder shall not
relieve Tenant of its obligation to pay, prior to the request for an inspection
and examination of Landlord's books and records or any audit, all sums due
hereunder, including, without limitation, any disputed Operating Expenses and/or
Property Taxes. Subject to the provisions set forth in this Article 5.5, if
Tenant does not elect to exercise its rights to audit during the Audit Period,
or does not elect to cause an independent audit of the books and records during
the Request Period, then Landlord's annual statement of Operating Expenses and
Property Taxes shall conclusively be deemed to be correct, and Tenant shall be
bound by Landlord's determination.
ARTICLE 6
PARKING
Section 6.1 Landlord hereby grants to Tenant a license to use, on a
non-exclusive basis, in common with other tenants and with the public, up to the
number of spaces within the Parking Facility that is set forth in the Basic
Lease Information. The location of the parking for the Premises is more
particularly described in Exhibit B. The parking allocation with respect to the
initial Premises shall be 5 spaces per thousand square feet of rentable area.
The parking allocation with respect to other space incorporated into the
Premises shall be 4 spaces per thousand square feet of rentable area.
Notwithstanding the foregoing, Tenant shall have the right to a parking ratio of
up to 6 spaces per thousand square feet of rentable area for the initial
Premises if it is determined by Landlord and Tenant in their reasonable judgment
that such additional spaces are necessary. Prior to requesting an increase in
the parking ratio, Tenant shall use substantial diligent efforts to stagger its
shifts or change shifts prior to 7:30 A.M. and after 5:30 P.M. in order to
alleviate parking congestion ("Alleviation Efforts"). If Tenant demonstrates
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to Landlord's reasonable satisfaction that it has undertaken Alleviation Efforts
but that such efforts were not successful in alleviating parking congestion,
Landlord shall, at its election, increase the number of parking spaces,
including without limitation, by cutting into the berm, by restriping the lots
or by using valet parking.
Section 6.2 If Tenant fails to observe the Rules and Regulations with
respect to the Parking Facility that now or in the future are in effect, as the
same may be amended from time to time, then Landlord, at its option, shall have
the right to treat such failure as a default under this Lease. Landlord shall
have the right, from time to time, without Tenant's consent, to change, alter,
add to, temporarily close or otherwise affect the Parking Facility in such
manner as Landlord, in its sole discretion, deems appropriate including, without
limitation, the right to designate reserved spaces available only for use by one
or more tenants, provided that, except in emergency situations beyond Landlord's
control, Landlord shall use reasonable efforts to provide an alternative Parking
Facility during such temporary closure.
Section 6.3 If all or any portion of the Parking Facility shall be
damaged or rendered unusable by fire or other casualty or any taking pursuant to
eminent domain proceeding (or deed in lieu thereof), and as a result thereof
Landlord is unable to make available to Tenant the parking provided for herein,
then the number of cars which Tenant shall be entitled to park hereunder shall
be proportionately reduced so that the number of cars which Tenant may park in
the Parking Facility after the casualty or condemnation in question shall bear
the same ratio to the total number of cars which can be parked in the Parking
Facility at such time as the number of cars Tenant had the right to park in the
Parking Facility prior to such casualty condemnation bore to the aggregate
number of cars which could be parked therein at that time. Notwithstanding the
foregoing, if as a result of such casualty or condemnation, the number of
parking spaces available for Tenant's use is reduced by twenty-five percent
(25%), then and in such event, Tenant may, as its sole remedy, terminate this
Lease upon sixty (60) days notice provided however that such notice of
termination shall not be effective if Landlord arranges for reasonable
alternative parking during the forty-five (45) day period after such notice is
provided.
Section 6.4 As of the date of this Lease, no parking charge is imposed
by Landlord to Tenant for the use of the Parking Facility, and Landlord will not
charge Tenant for parking during the Term. Notwithstanding the foregoing, in the
event that Landlord is required by applicable governmental authority to charge
for parking or is imposed fees or assessments on the Parking Facility, Landlord
reserves the right in the future to impose a corresponding reasonable charge
upon tenants of the Building for the use of the Parking Facility to compensate
for such governmental imposition, assessments, fees or requirements.
ARTICLE 7
SERVICES OF LANDLORD
Section 7.1
A. During the Term, Landlord shall furnish Tenant with the following
services: (a) hot and cold water in Building Standard bathrooms and chilled
water in Building Standard drinking fountains, if any; (b) electrical power
sufficient for lighting the Premises and for the operation
15
therein of typewriters, voicewriters, calculating machines, word processing
equipment, photographic reproduction equipment, copying machines, personal
computers, and similar items of business equipment, (c) heating, ventilating
or air-conditioning, as appropriate, during Business Hours (described below)
at such temperatures and in such amounts as customarily and seasonally
provided to tenants occupying comparable office space in Comparison Projects
in the Sacramento suburban area, or as reasonably determined by Landlord; (d)
electric lighting for the Common Areas of the Project; (e) passenger elevator
service, in common with others, for access to and from the Premises
twenty-four (24) hours per day, seven (7) day per week (subject to the
provisions of Article 15 below and to the Rules and Regulations); provided,
however, that Landlord shall have the right to limit the number of (but not
cease to operate all) elevators to be operated after Business Hours and on
Saturdays, Sundays and Holidays; (f) janitorial cleaning services in
accordance with the Janitorial Specifications attached to this Lease as
Exhibit E-1; (g) facilities for Tenant's loading, unloading, delivery and
pick-up activities, including access thereto during Business Hours, subject
to the Rules and Regulations, the type of facilities, and other limitations
of such loading facilities; (h) replacement, as necessary, of all Building
Standard lamps and ballasts in Building Standard light fixtures within the
Premises; (i) window washing; (j) security in accordance with the Security
Guidelines attached to this Lease as Exhibit E-2 provided that Landlord shall
have the right to modify the Security Guidelines from time to time throughout
the term in accordance with the types of security provided by other
Comparison Buildings; and (k) landscaping. All services referred to in this
Section 7.1A shall be provided by Landlord and paid for by Tenant as part of
Tenant's Operating Costs Payment.
B. If Tenant requires air-conditioning, heating or other services,
including cleaning services, routinely supplied by Landlord for hours or days in
addition to the hours and days specified in Section 7.1A, Landlord shall make
reasonable efforts to provide such additional service after reasonable prior
written request therefor from Tenant, and Tenant shall reimburse Landlord for
the cost of such additional service in accordance with Section 7.4. Landlord
shall have no obligation to provide any additional service to Tenant during the
occurrence of a monetary Event of Default with respect to Tenant unless Tenant
pays to Landlord, in advance, Landlord's charge for such additional service. If,
in Landlord's determination, any machinery or equipment which generates abnormal
heat or otherwise creates unusual demands on the air-conditioning or heating
system serving the Premises is used in the Premises (which shall be determined
without regard to the amount of electricity consumed by Tenant) and if Tenant
has not, within ten (10) days after demand from Landlord, taken such steps, at
Tenant's expense, as shall be necessary to cease such adverse affect on the air-
conditioning or heating system, Landlord shall have the right to install
supplemental air-conditioning or heating units in the Premises, and the full
cost of such supplemental units (including the cost of acquisition,
installation, operation, use and maintenance thereof) shall be paid by Tenant to
Landlord in advance or on demand.
C. If Tenant's requirements for or consumption of electricity exceed,
in Landlord's judgment the amount required for normal office occupancy (which,
for the purposes of this Lease shall be deemed to be five (5) xxxxx per square
foot of Rentable Area during Business Hours, calculated on a non-contiguous,
non-aggregated, non-annualized basis), Landlord shall, at Tenant's sole cost and
expense, make reasonable efforts to supply such service through the then
existing feeders and risers serving the Premises and shall xxxx Tenant
periodically for such additional service. The degree of such additional
consumption and potential consumption by
16
Tenant shall be determined at Landlord's election, by either or both (a) a
survey of Tenant's usage of electricity performed by a reputable consultant
selected by Landlord and paid for by Tenant, and (b) a separate meter in the
Premises to be installed, maintained, and read by Landlord, all at Tenant's
sole cost and expense. Tenant shall not install any electrical equipment
requiring special wiring unless approved in advance by Landlord. At no time
shall use of electricity in the Premises exceed the capacity of existing
feeders and risers to or wiring in the Premises. Any risers or wiring which
Landlord deems to be necessary to meet Tenant's excess electrical
requirements shall, be installed by Landlord, at Tenant's sole cost, if, in
Landlord's reasonable judgment, the same are necessary and shall not (i)
cause permanent damage or injury to the Project, the Building or the
Premises, (ii) cause or create a dangerous or hazardous condition, (iii)
entail excessive or unreasonable alterations, repairs or expenses or (iv)
interfere with or disturb other tenants or occupants of the Building.
D. If Tenant's requirements for janitorial services exceeds the
services included in the Janitorial Specifications, Tenant shall use
commercially reasonable efforts to contract, at Tenant's sole cost and expense,
with the Project's janitorial service provider for such additional services. If
Tenant, despite its commercially reasonable efforts, does not enter into an
agreement with the janitorial provider, Landlord and Tenant shall agree on a
third party which is qualified to provide such additional services. Tenant shall
pay for the cost of the additional janitorial services. The costs of the
janitorial services provided under the Janitorial Specifications shall be
included in Operating Costs.
E. If Tenant's requirements for security services exceeds the services
provided by Landlord, Tenant shall use commercially reasonable efforts to
contract, at Tenant's sole cost and expense, with the Project's security firm.
If Tenant, despite its commercially reasonable efforts, does not enter into an
agreement with the security firm, Landlord and Tenant shall agree on a third
party which is qualified to provide such additional services to Tenant. Tenant
shall pay for the cost of the additional security services which may include the
posting of a security guard within Tenant's Premises but not in the Common Areas
of the Project. The costs of the security provided by Landlord for the Project
shall be included in Operating Costs.
F. Landlord shall make available to Tenant the existing generator in
its "as is" condition, which Tenant shall have the right to use during the Term.
The repair, maintenance and use of the existing generator shall be at Tenant's
sole cost and expense. Tenant may, subject to (i) reasonable prior approval of
the plans and specifications by Landlord and (ii) compliance with applicable
laws and codes install, at its sole cost and expense, a second generator in a
location approved by Landlord. Unless otherwise expressly agreed by Landlord and
Tenant, Tenant shall remove the existing generator and the second generator at
the expiration of the Term. The installation of the generator shall be performed
in accordance with the terms and conditions of Article 10 with respect to the
Alterations.
Section 7.2 Landlord's obligation to furnish electrical and other
utility services shall be subject to the rules and regulations of the supplier
of such electricity of other utility services and the rules and regulations of
any municipal or other governmental authority regulating the business of
providing electricity and other utility services. Landlord shall have the right,
at Landlord's option, upon not less than thirty (30) days' prior written notice
to Tenant (provided such prior notice will be less if either the discontinuance
of such service is required by applicable
17
law or Landlord receives shorter notice from the utility company providing
electricity or other utility service), and without any interruption in the
continuity of the provision of such utilities services to the Premises, to
discontinue electric or other utility services to the Premises and arrange
for a direct connection thereof through a public utility supplying such
service. Tenant shall in such event, be responsible for contracting promptly
and directly with such public utility supplying such service and for paying
all deposits for, and all costs relating to, such service.
Section 7.3 No failure to furnish, or any stoppage of, the services
referred to in this Article 7 resulting from any cause (except to the extent
such failure or stoppage is a result of Landlord's willful misconduct, gross
negligence, active negligence, or negligence, excluding, however, negligent
acts or omissions for which Landlord has no knowledge or is deemed to have
had imputed knowledge), shall make Landlord liable in any respect for damages
to any person, property or business, or be construed as an eviction of
Tenant, or entitle Tenant to any abatement of Rent or other relief from any
of Tenant's obligations under this Lease. Additionally, Tenant expressly
acknowledges that Landlord reserves the right from time to time upon
reasonable advance notice to Tenant (except in the case of emergency) to
discontinue some or all of the services provided by Landlord hereunder if
necessary in Landlord's judgment to effect any repair or maintenance
obligations; provided that Landlord shall use commercially reasonable efforts
to minimize any interference or interruption to Tenant's use of the Premises.
Should any malfunction of any systems or facilities occur within the Project
or should maintenance or alterations of such systems or facilities become
necessary, Landlord shall repair the same promptly and with reasonable
diligence, and Tenant shall in no event have any claim for rebate, abatement
of Rent, or damages because of any malfunctions in or any interruptions of
any service to be provided however, except to the extent cause by a default
of Landlord's obligations under this Lease. Tenant hereby waives the
provisions of California Civil Code Section 1932(1) or any other applicable
existing or future law, ordinance or governmental regulation permitting the
termination of this Lease due to an interruption, failure or inability to
provide any services. Notwithstanding anything to the contrary contained in
this Section 7.3, if (a) Landlord ceases to furnish any service in the
Building for a period in excess of five (5) consecutive business days after
Tenant notifies Landlord of such cessation; (b) such cessation does not arise
as a result of an act or omission of Tenant; (c) such cessation is not caused
by a fire or other casualty (in which case Article 15 shall control); (d) the
restoration of such service is reasonably within the control of Landlord; and
(e) as a result of such cessation, the Premises, or a material portion
thereof, is rendered untenantable (meaning that Tenant is unable to use the
Premises, or such portion, in the normal course of its business operations)
and Tenant in fact ceases to use the Premises, or such material portion, then
Tenant, as its sole remedy, shall be entitled to receive an abatement of all
Rent payable hereunder during the period beginning on the sixth (6th)
consecutive business day of such cessation and ending on the day when the
service in question has been restored. In the event the entire Premises has
not been rendered untenantable by the cessation in service, the amount of
abatement that Tenant is entitled to receive shall be prorated based upon the
percentage of the Rentable Area of the Premises so rendered untenantable and
not used by Tenant.
Section 7.4 Tenant agrees to pay to Landlord Landlord's cost in
providing HVAC services described in this Article which are in excess of the
amounts included in the Base Rent or which are provided to Tenant outside of
Business Hours ("Additional HVAC Services"). In calculating the costs of the
Additional HVAC Services, Landlord shall include the following:
18
(i) The cost of the utilities charged by the local
utility company and attributable to the Additional HVAC Services;
(ii) The cost of maintaining and repairing the HVAC system
attributable to the Additional HVAC Services;
(iii) The depreciation on the HVAC system attributable to
the Additional HVAC Services.
Section 7.5
A. In order to provide for current payments of the additional
utility expenses, including Additional HVAC Services ("Additional Utility
Expenses"), Tenant shall, at Landlord's request, pay as additional rent an
amount equal to the Additional Utility Expenses for the Utility Expenses
Payment Period, as reasonably estimated, by Landlord. The formula for
estimating and computing Additional Utility Expenses is attached to this
Lease as Exhibit E-3. "Utility Expenses Payment Period" shall refer to each
Lease Year, unless Landlord should elect to estimate Utility Expenses on a
biannual basis, in which event it shall refer to the period between January 1
through June 30, or July 1 through December 31, as the context may require.
Such payment shall be made in monthly installments, commencing on the first
day of the month following the month in which Landlord notifies Tenant in
writing of the amount it is to pay hereunder and continuing until the first
day of the month following the month in which Landlord gives Tenant a new
notice of estimated Additional Utility Expenses. It is the intention
hereunder to estimate the amount of the Additional Utility Expenses for each
Utility Expenses Payment Period, and then to make an adjustment in the
following Utility Expenses Payment Period based on the actual Additional
Utility Expenses paid or incurred for period covered by the prior estimated
statement.
B. On or before sixty (60) days from the close of each Utility
Expenses Payment Period, Landlord shall deliver to Tenant a statement setting
forth the actual Utility Expenses, and shall thereafter provide such
supporting documentation as requested by Tenant, for the preceding Utility
Expenses Pay Period; provided, however, that the failure of Landlord to
supply such statement shall not constitute a waiver of Landlord's right to
collect for such Additional Utility Expenses. If the actual Additional
Utility Expenses for the previous Utility Expenses Pay period exceed the
total of the estimated monthly payments made by Tenant for such Utility
Expenses Pay Period, Tenant shall pay Landlord the amount of the deficiency
within thirty (30) days after the receipt of the statement. If such total of
the estimated monthly payments made by Tenant exceeds the actual Additional
Utility Expenses for such Utility Expenses Pay Period, then Landlord shall
credit against Tenant's next ensuing monthly installment(s) of such estimated
Additional Utility Expenses for the then current Utility Expenses Pay Period
an amount equal to the difference until the credit is exhausted. If a credit
is due from Landlord at the expiration or earlier termination of this Lease,
Landlord shall promptly pay Tenant the amount of such credit. With respect to
the Utility Expenses Pay Period in which the Lease expires or is terminated,
Tenant shall, within thirty (30) days of Tenant's receipt of written demand
therefor (including any supporting documentation requested by Tenant), pay to
Landlord a reasonable estimate, as determined by Landlord of the actual
Additional Utility Expenses for any partial Utility Expenses Pay Period in
excess of Tenant's payment for such Utility Expenses Pay Period to date.
19
Even though the term of this Lease has expired or the Lease is sooner
terminated and Tenant has vacated the Premises when the actual Additional
Utility Expenses are determined for the final Utilities Expenses Pay Period
or partial Utility Expenses Pay Period, Tenant shall within thirty (30) days
from receipt of written demand therefor pay any deficiency in excess of the
total estimated monthly payments and Landlord shall immediately refund to
Tenant any overpayment in excess of the actual Additional Utility Expenses
along with the expense statement. Landlord and Tenant intend that the
obligations of the preceding sentence shall survive the expiration or earlier
termination of this Lease. The Additional Utility Expenses in any partial
Utility Expenses Pay Period shall be prorated on a daily basis utilizing a
365-day year.
C. Tenant shall have the right to audit the Additional Utility
Expenses in accordance with the Audit Procedures set forth in Article V.
Section 7.6 During the Term of this Lease, Landlord shall maintain
the Project and Building in a first class manner consistent with other
Comparison Projects.
Section 7.7 Tenant shall notify Landlord in the event that Tenant is
not receiving the services and utilities or Landlord is not maintaining the
Project in the manner or at the level or standard required under this Article
VII ("Service Defect"). The notice shall provide reasonable details of the
Service Defect ("Service Notice"). Landlord shall immediately confer with
Tenant and Landlord and Tenant shall attempt with all diligence to agree on a
solution to solve the Service Defect to the reasonable satisfaction of both
parties. If Landlord, after receipt of such notice and after a commercially
reasonable opportunity to cure the Service Defect fails to do so to the
reasonable satisfaction of Tenant, Tenant shall provide a second Service
Notice to Landlord which shall detail the manner and method that Tenant
proposes to effectuate the cure of the Service Defect, the estimated cost of
such repair or replacement and the proposed contractors or service providers
(which to the extent reasonably feasible shall be the contractors and service
providers for the Project) ("Tenant's Proposal"). If Landlord concurs with
Tenant's Proposal, Landlord shall undertake in its own name or,
alternatively, authorize Tenant to implement Tenant's Proposal. Such
implementation shall be done at the expense of Tenant or of Landlord as
otherwise provided under this Lease. If Landlord does not concur with
Tenant's Proposal, Landlord shall notify Tenant that it does not approve
Tenant's Proposal and provide the reasons for such disapproval ("Disapproval
Notice"). If Tenant elects to implement Tenant's Proposal ("Tenant
Implementation") notwithstanding the Disapproval Notice, Tenant may do so at
its sole risk. In the event that Tenant's Proposal adversely affects the
systems of the Building or the structure of the Building, Tenant shall assume
any and all risk and liability arising our of such work, including, without
limitation, claims of other tenants in the Project. In no event shall Tenant
offset against Rent or deduct the cost of the Tenant Implementation
("Implementation Costs") from the Rent without obtaining a final,
determination that (i) Landlord was in default of its obligations under the
Lease, (ii) that the scope of Tenant's Proposal was appropriate under the
circumstances and (iii) that the Implementation Costs were reasonable under
the circumstances ("Awarded Costs"); notwithstanding the foregoing, Tenant
may offset the amount of Awarded Costs (and the amount of any costs and
expenses awarded Tenant in such proceeding) against Rent if Landlord does not
pay the same within thirty (30) days after the date of such award. The rights
provided to Tenant under this Section 7.7 are personal to EarthLink Network,
Inc. and its Affiliates and may not be exercised by or on behalf of any
subtenants or assignees of EarthLink Network, Inc.
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ARTICLE 8
ASSIGNMENT AND SUBLETTING
Section 8.1 Except as expressly set forth herein, neither Tenant nor
its legal representatives or successors in interest shall, by operation of
law or otherwise, assign, mortgage, pledge, encumber or otherwise transfer
this Lease or any part hereof, or the interest of Tenant under this Lease, or
in any sublease or the rent thereunder without the prior written consent of
Landlord in each such instance. The Premises or any part thereof shall not be
sublet, occupied or used for any purpose by anyone other than Tenant, without
Tenant's obtaining in each instance the prior written consent of Landlord in
the manner hereinafter provided (subject to the provisions of Section 8.3
below). Tenant shall not modify, extend, or amend a sublease previously
consented to by Landlord without obtaining Landlord's prior written consent
thereto. With respect to any proposed assignment or subletting by Tenant,
Tenant shall pay Landlord on demand, as Additional Rent, Landlord's
reasonable attorneys' fees and administrative charge actually incurred
associated with such transaction, regardless of whether such transaction is
consummated.
Section 8.2 Tenant expressly covenants and agrees that (A) if Tenant
is a corporation, a transfer of more than twenty-five percent (25%) at any
one time or, in the aggregate from time to time of the shares of any class of
the issued and outstanding stock of Tenant, its successors or assigns, or the
issuance of additional shares of any class of its stock to the extent of more
than 25% of the number of shares of said class of stock issued and
outstanding at the time that it became the tenant hereunder or (B) if Tenant
is a partnership, limited liability company, unincorporated association of
other entity, the sale or transfer of more than 25% of the partnership,
membership, joint venture, unincorporated association interests or other form
of beneficial interests of Tenant, its successors or assigns, or (C) the
involvement by Tenant or its assets in any transaction, or series of
transactions (by way of merger, sale, acquisition, financing, refinancing,
transfer leveraged buy-out or otherwise) whether or not a formal assignment
or hypothecation of this Lease or Tenant's assets occurs (collectively, "Sale
or Merger"), which results or will result in a reduction of the "Net Worth"
of Tenant as hereinafter defined, by an amount equal to or greater than
twenty-five percent (25%) of the Net Worth of Tenant from the Tenant's Net
Worth at the time of the execution by Landlord of this Lease which for all
purposes shall conclusively be deemed to be $381,000,000.00 ("Net Worth
Reduction"), shall constitute an assignment of this Lease and, unless in each
instance the prior written consent of Landlord has been obtained, shall
constitute a default under this lease and shall entitle Landlord to exercise
all rights and remedies provided for herein in the case of default.
Notwithstanding the foregoing, with respect to (C) above, provided that
Tenant shall notify Landlord within thirty (30) days of the Sale or Merger if
a Net Worth Reduction has occurred, Tenant shall not be required to provide
the prior written consent of Landlord to a Sale or Merger which results in a
Net Worth Reduction. Thereafter, for a period of sixty (60) days, Landlord
and Tenant shall confer in good faith to attempt to agree on terms and
conditions, including without limitation, modifications of the Lease and/or
the requirement of a security deposit, which will provide Landlord with
reasonable adequate assurances of such entity's ability to perform fully all
of Tenant's obligations under the Lease. If, for any reason, Landlord and
Tenant do not agree such terms and conditions within such period of time, the
Sale or Merger shall constitute an Event of Default hereunder.
Notwithstanding the foregoing provisions of this Section 8.2, transfers of
stock in a corporation whose shares are traded in the "over-the-counter"
market or any recognized national
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securities exchange shall not constitute an assignment for purposes of this
lease, provided that the principal purpose of such transfer or transfers is
not to avoid the restrictions on assignment otherwise applicable under this
Article 8.
Section 8.3
A. If Tenant is a corporation, limited liability company,
partnership or similar entity, Landlord's consent shall not be required with
respect to sublettings to any corporation or similar entity or to any limited
liability company, partnership or similar entity which is an Affiliate of
Tenant, provided that (1) any such Affiliate is a reputable entity of good
character and (2) a duplicate original instrument of sublease in form and
substance reasonably satisfactory to Landlord, duly executed by Tenant and
such Affiliate, shall have been delivered to Landlord at least fifteen (15)
days prior to the effective date of any such sublease. For purposes of this
Article 8, the term "AFFILIATE" shall mean any entity which controls or is
controlled by or under common control with Tenant, and the term "control"
shall mean, in the case of a corporation, ownership or voting control,
directly or indirectly, of at least twenty-five (25%) percent of all the
voting stock, and in case of a joint venture, limited liability company,
partnership or similar entity, ownership, directly or indirectly, of at least
twenty-five (25%) percent of all the general or other partnership, membership
(or similar) interests therein.
B. If Tenant is a corporation, limited liability company,
partnership or similar entity, Landlord's consent shall not be required with
respect to an assignment of this lease to an Affiliate of Tenant, provided
that (1) the assignee is a reputable entity of good character, (2) a
duplicate original instrument of assignment in form and substance reasonably
satisfactory to Landlord, duly executed by Tenant, shall have been delivered
to Landlord at least fifteen (15) days prior to the effective date of any
such assignment, (3) an instrument in form and substance satisfactory to
Landlord, duly executed by the assignee, in which such assignee assumes (as
of the Commencement Date) observance and performance of, and agrees to be
personally bound by, all of the terms, covenants and conditions of this lease
on Tenant's part to be performed and observed shall have been delivered to
Landlord not more than ten (10) days after the effective date of such
assignment, (4) such assignment is for a legitimate business purpose and not
principally for the purpose of avoiding the restrictions on assignment
otherwise applicable under this Article 8 and (5) such assignee has a Net
Worth, computed in accordance with generally accepted accounting principles
(excluding goodwill and intangible assets) which is at least seventy-five
percent (75%) of Tenant's Net Worth as of the date of this Lease.
Section 8.4 Notwithstanding anything to the contrary in Section 8.1,
Tenant shall have the right, upon ten (10) days' prior written notice to
Landlord, to (a) sublet all or part of the Premises to any related
corporation or other entity which controls Tenant, is controlled by Tenant or
is under common control with Tenant; or (b) assign this Lease to a successor
corporation into which or with which Tenant is merged or consolidated or
which acquired substantially all of Tenant's assets and property; provided
that (i) such successor corporation assumes substantially all of the
obligations and liabilities of Tenant and shall have assets, capitalization
and net worth at least equal to the assets, capitalization and net worth of
Tenant as of the date of this Lease as determined by generally accepted
accounting principles, and (ii) Tenant shall provide in its notice to
Landlord the information required in Section 8.4. For the
22
purpose hereof "control" shall mean ownership of not less than 50% of all the
voting stock or legal and equitable interest in such corporation or entity.
Section 8.5 If Tenant should desire to assign this Lease or sublet
the Premises (or any part thereof), Tenant shall give Landlord written notice
at least twenty (20) business days in advance of the proposed effective date
of any other proposed assignment or sublease, specifying (a) the name,
current address, and business of the proposed assignee or sublessee, (b) in
the case of a proposed sublease, the amount and location of the space within
the Premises proposed to be so subleased, (c) the proposed effective date and
duration of the assignment or subletting, and (d) the proposed rent or
consideration to be paid to Tenant by such assignee or sublessee. Tenant
shall promptly supply Landlord with financial statements and other
information as Landlord may request to evaluate the proposed assignment or
sublease. For assignments and sublettings other than those permitted by
Section 8.3, Landlord shall have fifteen (15) days following receipt of such
notice and other information requested by Landlord within which to notify
Tenant in writing that Landlord elects: (i) to terminate this Lease as to the
space so affected as of the proposed effective date set forth in Tenant's
notice, in which event Tenant shall be relieved of all further obligations
hereunder as to such space, except for obligations under Articles 17 and 22
and all other provisions of this Lease which expressly survive the
termination hereof; or (ii) to permit Tenant to assign or sublet such space;
or (iii) to refuse, in Landlord's reasonable discretion, to consent to
Tenant's assignment or subleasing of such space and to continue this Lease in
full force and effect as to the entire Premises. If Landlord should fail to
notify Tenant in writing of such election within the aforesaid fifteen (15)
day period, Landlord shall be deemed to have elected option (iii) above.
Tenant agrees to reimburse Landlord for reasonable legal fees and any other
reasonable costs incurred by Landlord in connection with any proposed
assignment or subletting and such payment shall not be deducted from the
Additional Rent owed to Landlord pursuant to Section 8.6.
Section 8.6 If Landlord consents to such assignment and subletting
and if the rent rate agreed upon between Tenant and its proposed subtenant is
greater than the rent rate that Tenant must pay Landlord hereunder for that
portion of the Premises, or if any consideration shall be promised to or
received by Tenant in connection with such proposed assignment or sublease
(in addition to rent) ("Excess Proceeds"), then fifty percent (50%) of all
such Excess Proceeds shall be considered Additional Rent owed by Tenant to
Landlord. In determining Excess Proceeds, Tenant may deduct from each month's
payments the brokerage commissions, reasonable attorneys' fees, tenant
improvement costs and other disbursements reasonably incurred by Tenant for
such assignment and subletting ("Subletting Disbursements"). The Subletting
Disbursements shall be amortized over the sublease term or in the case of an
assignment the remaining Term. Tenant shall provide Landlord with acceptable
evidence of the Subletting Disbursements for its review and approval. The
Additional Rent shall be paid by Tenant to Landlord in the same manner that
Tenant pays Base Rent.
Section 8.7 Tenant shall deliver to Landlord copies of all documents
executed in connection with any permitted assignment or subletting, which
documents shall be in form and substance reasonably satisfactory to Landlord
and which shall require any assignee to assume performance of all terms of
this Lease to be performed by Tenant or any subtenant to comply with all the
terms of this Lease to be performed by Tenant. No acceptance by Landlord of
any
23
Rent or any other sum of money from any assignee, sublessee or other category
of transferee shall be deemed to constitute Landlord's consent to any
assignment, sublease, or transfer.
Section 8.8 The parties agree that it shall be deemed reasonable for
Landlord to refuse to consent to an assignment or subletting if:
(i) the proposed assignee or subtenant (a) is not, in
Landlord's judgment, financially creditworthy, or (b) is a governmental
authority or agency, an organization or person enjoying sovereign or
diplomatic immunity, a medical or dental practice or any user that will
attract a volume, frequency or type of visitor or employee to the Building
which is not, in Landlord's sole judgment, consistent with the standards of a
high quality office building or that will impose an excessive demand on or
use of the facilities or services of the Building;
(ii) in Landlord's judgment, the use of the Premises by the
proposed assignee or subtenant would entail any alterations which would
lessen the value of the leasehold improvements in the Premises or make the
Premises more difficult to re-lease at the expiration of the Term;
(iii) in Landlord's judgment, the proposed assignee or
subtenant does not have a good reputation as a tenant of property;
(iv) Landlord (or any affiliate of Landlord) has
experienced previous default by or is in litigation with the proposed
assignee or subtenant;
(v) the use of the Premises (or any portion proposed to be
sublet) by the proposed assignee or subtenant will violate any applicable
law, ordinance or regulation or will be inconsistent with the use of space
within the Project by first-class office tenants;
(vi) the proposed assignment or sublease fails to include
all the terms and provisions required to be included pursuant to the
provisions of this Lease;
(vii) Tenant is in default of any obligation of Tenant
under this Lease;
(viii) in the case of such assignment or subletting would
cause a default under another lease in the Building or under any ground
lease, deed of trust, mortgage, restrictive covenant, easement or other
encumbrance affecting the Project; or
(ix) in the case of a subletting of less than the entire
Premises, if the subletting would result in a division of the Premises into
more than two (2) subparcels or would require access to be provided through
space leased or held for lease to another tenant or improvements to be made
outside of the Premises.
Section 8.9 Any attempted assignment or sublease by Tenant in
violation of the terms and provisions of this Article 8 shall be void and
shall constitute a material breach of this Lease. In no event shall any
assignment, subletting or transfer, whether or not with Landlord's consent,
relieve Tenant of its primary liability under this Lease for the entire Term,
and Tenant shall in no way be released from the full and complete performance
of all the terms hereof. If Landlord takes possession of the Premises before
the expiration of the Term, Landlord shall have the right,
24
at its option, to terminate all subleases, or to take over any sublease of
the Premises or any portion thereof and such subtenant shall attorn to
Landlord, as its landlord, under all the terms and obligations of such
sublease occurring from and after such date, but excluding previous acts,
omissions, negligence or defaults of Tenant and any repair or obligation in
excess of available net insurance proceeds or condemnation award.
Section 8.10
A. Tenant acknowledges that this Lease is a lease of nonresidential
real property and therefore agrees that Tenant, as the debtor in possession,
or the trustee for Tenant (collectively the "Trustee") in any proceeding
under Title 11 of the United States Bankruptcy Code relating to Bankruptcy,
as amended (the "Bankruptcy Code"), shall not seek or request any extension
of time to assume or reject this Lease or to perform any obligations of this
Lease which arise from or after the order of relief.
B. The Trustee shall have the right to assume or assign Tenant's
rights and obligations under this Lease only if the Trustee: (a) promptly
cures or provides adequate assurance that the Trustee will promptly cure any
default under the Lease; (b) compensates or provides adequate assurance that
the Trustee will promptly compensate Landlord for any actual pecuniary loss
incurred by Landlord as a result of Tenant's default under this Lease; and
(c) provides adequate assurance of future performance under the Lease. All
payments of Rent required of Tenant under this Lease, whether or not
expressly denominated as such in this Lease, shall constitute rent for the
purposes of Title 11 of the Bankruptcy Code.
Section 8.11 The term "Landlord," as used in this Lease, so far as
covenants or obligations on the part of Landlord are concerned, shall be
limited to mean and include only the owner or owners, at the time in
question, of the fee title to, or a lessee's interest in a ground lease of,
the Land or the Building. In the event of any transfer, assignment or other
conveyance or transfers of any such title or interest, Landlord herein named
(and in case of any subsequent transfers or conveyances, the then grantor)
shall be automatically freed and relieved from and after the date of such
transfer, assignment or conveyance of all liability as respects the
performance of any covenants or obligations on the part of Landlord contained
in this Lease thereafter to be performed (but not before the date of such
transfer, assignment or conveyance) and, without further agreement, the
transferee of such title or interest shall be deemed to have assumed and
agreed to observe and perform any and all obligations of Landlord hereunder,
during its ownership of the Project. Landlord may transfer its interest in
the Project without the consent of Tenant and such transfer or subsequent
transfer shall not be deemed a violation on Landlord's part of any of the
terms of this Lease.
ARTICLE 9
REPAIRS
Section 9.1 Except for ordinary wear and tear and except as
otherwise provided in Section 9.2, Landlord shall perform all maintenance and
make all repairs and replacements to the Premises. Tenant shall pay to
Landlord the actual cost (including a fee equal to five percent (5%) of
actual costs for overhead and for supervision by Landlord's agent or manager
(the
25
"Supervision Fee") for (a) all maintenance, repairs and replacements within
the Premises (including the Tenant Improvements), other than (i) subject to
Section 14.4, repairs and replacements necessitated by the Landlord's or its
agents, employees, contractors, invitees or licensees willful misconduct,
gross negligence, active negligence, or negligence, excluding, however,
negligent acts or omissions for which Landlord has no knowledge or is deemed
to have had imputed knowledge, to the extent the cost thereof is not
collectible under Tenant's insurance, or, if Tenant is not carrying all of
the insurance described in Section 14.1A, to the extent such cost would not
be covered by the insurance described in Section 14.1A, if the same were in
effect, and (ii) maintenance, repairs and replacements to the Building
Systems (ie, the HVAC, electrical, sprinkler, plumbing, life-safety and
telephone systems) located within or exclusively serving the Premises; (b)
subject to Section 14.4, all repairs and replacements necessitated by damage
to the Project (including the Building structure and the Building Systems
within or exclusively serving the Premises) caused by the willful misconduct,
gross negligence, active negligence, or negligence (excluding negligent acts
or omissions for which Tenant had no knowledge or was deemed to have had
imputed knowledge) of Tenant or its agents, contractors, invitees and
licensees. Amounts payable by Tenant pursuant to this Section 9.1 shall be
Additional Rent hereunder and payable on demand after receipt of an invoice
therefor from Landlord. Landlord has no obligation and has made no promise to
maintain, alter, remodel, improve, repair, decorate, or paint the Premises or
any part thereof, except as specifically set forth in this Lease. In no event
shall Landlord have any obligation to maintain, repair or replace any
furniture, furnishings, fixtures or personal property of Tenant. Tenant
hereby waives the provisions of California Civil Code Sections 1932(1), 1941
and 1942 and of any similar law, statute or ordinance now or hereafter in
effect.
Section 9.2 Tenant shall keep the Premises (including the Tenant
Improvements) in good order and in a safe, neat and clean condition. No
representations respecting the condition of the Premises or the Building or
the other portions of the Project have been made by Landlord to Tenant except
as specifically set forth in this Lease. Except as provided in Section 10.1
or specifically consented to by Landlord, Tenant shall not perform any
maintenance or repair work or make any replacement in or to the Premises
(including the Tenant Improvements) but rather shall promptly notify Landlord
of the need for such maintenance, repair or replacement so that Landlord may
proceed to perform the same pursuant to the provisions of Section 9.1. In the
event Landlord specifically consents to the performance of any maintenance or
the making of any repairs or replacements by Tenant and Tenant fails to
promptly commence and diligently pursue the performance of such maintenance
or the making of such repairs or replacements, then Landlord, at its option,
may perform such maintenance or make such repairs and Tenant shall reimburse
Landlord, on demand after Tenant receives an invoice therefor, the reasonable
cost thereof plus the Supervision Fee".
Section 9.3 All repairs made by Tenant pursuant to Section 9.2 shall
be performed in a good and workmanlike manner by contractors or other repair
personnel selected by Tenant and approved in advance in writing by Landlord;
provided, however, that neither Tenant nor its contractors or repair
personnel shall be permitted to do any work affecting the Building Systems.
In no event shall such work be done for Landlord's account or in a manner
which allows any liens to be filed in violation of Article 11. To the extent
any repairs involve the making of alterations to the Premises, Tenant shall
comply with the provisions of Article 10.
26
Section 9.4 Subject to the other provisions of this Lease imposing
obligations regarding repair upon Tenant, Landlord shall repair all machinery
and equipment necessary to provide the services of Landlord described in Article
7 (provided that Tenant shall pay the costs of any repair to such systems or any
part thereof damaged by Tenant and Tenant's employees, customers, clients,
agents, licensees and invitees) and for repair of all portions of the Project
which do not comprise a part of the Premises and are not leased to others.
ARTICLE 10
ALTERATIONS
Section 10.1 Tenant shall not at any time during the Term make any
alterations to the Premises without first obtaining Landlord's written
consent thereto, which consent Landlord shall not unreasonably withhold;
provided, however, that Landlord shall not be deemed unreasonable by refusing
to consent to any alterations which are visible from the exterior of the
Building or the Project, which affect any part of the structure of the
Premises, the Building or the Project, which may affect the Building Systems,
which are prohibited by any underlying ground lease or mortgage or which
would, in Landlord's opinion, render the Premises more difficult to lease to
third parties following the expiration of the Term. Landlord shall provide
its consent or reasons for not consenting within seven (7) business days
after receipt of the request and the information required under this Article.
Notwithstanding the foregoing, and subject to the other provisions of this
Article, Tenant may make non-structural alterations which do not require a
building permit and which do not affect the building systems up to a cost of
Twenty-Five Thousand Dollars ($25,000.00) without the necessity of obtaining
Landlord's prior consent. Should Tenant desire to make any alterations to the
Premises, Tenant shall submit all plans and specifications (meeting
reasonable industry standards) for such proposed alterations to Landlord for
Landlord's review before Tenant allows any such work to commence. Landlord
shall have the option of performing such alterations. Tenant shall select and
use only contractors, subcontractors or other repair personnel approved by
Landlord in writing in advance. Upon Tenant's receipt of written approval
from Landlord and any required approval of any mortgagee or lessor of
Landlord, and upon Tenant's payment to Landlord of (a) Landlord's fee for the
work of Landlord and Landlord's employees and representatives in reviewing
and approving such plans and specifications and (b) the fees, if any charged
by any mortgagee or lessor of Landlord for such review and approval, Tenant
shall have the right to proceed with the construction of all approved
alterations, but only so long as such alterations are in strict compliance
with the plans and specifications so approved by Landlord and with the
provisions of this Article 10. All alterations (except the alterations under
the Workletter) shall be made at Tenant's sole cost and expense, including,
the payment of the Supervision Fee to Landlord for supervising and
coordinating such work. In no event, however, shall anyone other than
Landlord, Landlord's employees or Landlord's related engineers or contractors
perform work to be done which affects the Central systems of the Building or
the Building rooftop. Tenant shall be solely responsible for the cost of any
work required by applicable law within or outside of the Premises (including,
without limitation, structural alterations or work affecting the Building
Systems) as a result of the performance of any improvements, alterations or
additions by or on behalf of Tenant.
Section 10.2 All construction, alterations and repair work done by
or for Tenant shall (a) be performed in such a manner as to maintain
harmonious labor relations; (b) not adversely
27
affect the safety of the Project, the Building or the Premises or the systems
thereof and not affect the Central systems of the Building; (c) comply with
all building, safety, fire, plumbing, electrical, and other codes and
governmental and insurance requirements; (d) not result in any excessive
usage of water, electricity, gas, or other utilities or of heating,
ventilating or air-conditioning (either during or after such work) unless
prior written arrangements satisfactory to Landlord are made with respect
thereto; (e) be completed promptly and in a good and workmanlike manner and
in compliance with all rules and regulations promulgated by Landlord; and (f)
not disturb Landlord or other tenants in the Building. After completion of
any alterations to the Premises, Tenant will deliver to Landlord a copy of
"as built" plans and specifications depicting and describing such alterations.
Section 10.3 All leasehold improvements, alterations and other
physical additions made to or installed by or for Tenant in the Premises
shall be and remain Landlord's property (except for Tenant's furniture,
personal property and trade fixtures) and shall not be removed without
Landlord's written consent. Tenant agrees to remove, at its sole cost and
expense, all of Tenant's furniture, personal property and trade fixtures,
and, if directed to or permitted to do so by Landlord in writing, all, or any
part of, the leasehold improvements, alterations and other physical additions
made by Tenant to the Premises (including, without limitation, any
non-Building standard items), on or before the Expiration Date or any earlier
date of termination of this Lease. Tenant shall repair, or promptly reimburse
Landlord for the cost of repairing, all damage done to the Premises or the
Building by such removal. Any leasehold improvements, alterations or physical
construction additions made by Tenant which Landlord does not direct or
permit Tenant to remove at any time during or at the end of the Term shall
become the property of Landlord at the end of the Term without any payment to
Tenant. If Tenant fails to remove any of Tenant's furniture, personal
property or movable trade fixtures by the Expiration Date or any sooner date
of termination of this Lease or if Tenant fails to remove any leasehold
improvements, alterations and other physical additions made by Tenant to the
Premises which Landlord has in writing directed Tenant to remove, Landlord
shall have the right, on the fifth (5th) day after Landlord's delivery of
written notice to Tenant, to deem such property abandoned by Tenant and to
remove, store, sell, discard or otherwise deal with or dispose of such
abandoned property in a commercially reasonable manner and to the extent
permissible under applicable law Tenant waives any claim against Landlord for
failure to comply with the provisions of Chapter 5 of the California Civil
Code. Tenant shall be liable for all costs of such disposition of Tenant's
abandoned property, and Landlord shall have no liability to Tenant in any
respect regarding such property of Tenant. The provisions of this Section
10.3 shall survive the expiration or any earlier termination of this Lease.
ARTICLE 11
LIENS
Section 11.1 Tenant shall keep the Project, the Building and the
Premises and Landlord's interest therein free from any liens arising from any
work performed, materials furnished, or obligations incurred by, or on behalf
of Tenant . Notice is hereby given that neither Landlord nor any mortgagee or
lessor of Landlord shall be liable for any labor or materials furnished to
Tenant except as furnished to Tenant by Landlord under the Work Letter. If
any lien is filed for such work or materials, such lien shall encumber only
Tenant's interest in
28
leasehold improvements on the Premises. Within fifteen (15) days after the
filing of any such lien, Tenant shall notify Landlord of such lien and shall
either discharge and cancel such lien of record or post a bond sufficient
under the laws of the State of California to cover the amount of the lien
claim plus any penalties, interest, attorneys' fees, court costs, and other
legal expenses in connection with such lien. If Tenant fails to so discharge
or bond such lien within fifteen (15) calendar days after written demand from
Landlord, Landlord shall have the right, at Landlord's option, to pay the
full amount of such lien without inquiry into the validity thereof, and
Landlord shall be promptly reimbursed by Tenant, as Additional Rent, for all
amounts so paid by Landlord, including expenses, interest, and attorneys'
fees, and Landlord's administrative charge.
ARTICLE 12
USE AND COMPLIANCE WITH LAWS
Section 12.1 The Premises shall be used only for executive and
administrative offices for the conduct of Tenant's business and as otherwise
specifically set forth in Section 1.1Q and for no other purposes whatsoever.
Tenant shall use and maintain the Premises in a clean, careful, safe, lawful
and proper manner and shall not allow within the Premises any offensive
noise, odor, conduct or private or public nuisance or permit Tenant's
employees, agents, licensees or invitees to create a public or private
nuisance or act in a disorderly manner within the Building or in the Project.
Any statement as to the particular nature of the business to be conducted by
Tenant in the Premises and uses to be made thereof by Tenant as set forth in
Section 1.1Q hereof shall not constitute a representation or warranty by
Landlord that such business or uses are lawful or permissible under any
certificate or occupancy for the Premises or the Building or are otherwise
permitted by law.
Section 12.2 Tenant shall, at Tenant's sole expense, (a) comply with
all laws, orders, ordinances, and regulations of federal, state, county, and
municipal authorities having jurisdiction over the Premises, (b) comply with
any directive, order or citation made pursuant to law by any public officer
requiring abatement of any nuisance or which imposes upon Landlord or Tenant
any duty or obligation arising from Tenant's occupancy or use of the Premises
or from conditions which have been created by or at the request or insistence
of Tenant, or required by reason of a breach of any of Tenant's obligations
hereunder or by or through other fault of Tenant, (c) comply with all
insurance requirements applicable to the Premises and (d) indemnify and hold
Landlord harmless from any loss, cost, claim or expense which Landlord incurs
or suffers by reason of Tenant's failure to comply with its obligations under
clauses (a), (b) or (c) above. If Tenant receives notice of any such
directive, order citation or of any violation of any law, order, ordinance,
regulation or any insurance requirement, Tenant shall promptly notify
Landlord in writing of such alleged violation and furnish Landlord with a
copy of such notice.
Section 12.3 Subject to compliance with all applicable laws, Tenant
shall have the right to use the Building stairwells between the floors
comprising the Premises on a non-exclusive basis with other tenants and their
employees, invitees and visitors for interfloor traffic purposes on the part
of its employees, invitees and visitors. Tenant may, subject to compliance
with all applicable laws and at its sole cost and expense, secure the entry
from the Building stairwells onto the floors comprising the Premises. The
plans and specifications for changes or securing of
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the stairwells shall be subject to the approval of Landlord and in no event
shall such changes or securing impede or hinder the ability of other tenants
in the Building, their employees, invitees and guests to use the Building
stairwells.
Section 12.4 Landlord and Tenant acknowledge that the ADA establish
requirements for business operations, accessibility and barrier removal, and
that such requirements may or may not apply to the Premises, the Building and
the Project depending on, among other things: (1) whether Tenant's business
is deemed a "public accommodation" or "commercial facility", (2) whether such
requirements are "readily achievable", and (3) whether a given alteration
affects a "primary function area" or triggers "path of travel" requirements.
The parties hereby agree that: (a) Landlord shall be responsible for ADA
Title III compliance (i) in the Common Areas or (ii) in the Premises that
results from or is triggered as a result of the construction by Tenant of the
initial Tenant Improvements but which is not part of the plans for the Tenant
Improvements and (b) except as set forth above, Tenant shall be responsible
for ADA Title III compliance in the Premises, including any leasehold
improvements or other work to be performed in the Premises under or in
connection with this Lease.
Section 12.5 Landlord shall (a) comply with all laws, orders,
ordinances, and regulations of federal, state, county, and municipal
authorities having jurisdiction over the Building and Project which are
applicable to its ownership and operation of the Building and Project, (b)
comply with any directive, order or citation made pursuant to law by any
public officer requiring abatement of any nuisance under its control, and (c)
comply with all insurance requirements applicable to the portions of the
Building and Common Area under its control. If Landlord fails to use
commercially reasonable efforts to attempt to comply with the foregoing, then
and in such event Landlord shall indemnify and hold Tenant harmless from any
damages in connection with loss of life, bodily or personal injury or
property damage arising from any failure to comply to the extent not covered
by insurance required to be maintained by Tenant.
ARTICLE 13
DEFAULT AND REMEDIES
Section 13.1 The occurrence of any one or more of the following
events shall constitute an Event of Default on the part of Tenant under this
Lease: (a) if Tenant fails to pay any Rent hereunder as and when such Rent
becomes due and such failure shall continue for more than five (5) days after
Landlord gives Tenant notice of past due Rent; (b) if Tenant fails to pay
Rent on time more than twice in any period of twelve (12) months,
notwithstanding that such payments have been made within the applicable cure
period; (c) if Tenant permits to be done anything which creates a lien upon
the Premises and fails to discharge or bond such lien or post such security
with Landlord as is required by Article 11; (d) if Tenant violates the
provisions of Article 8 by attempting to make an unpermitted assignment or
sublease; (e) if Tenant fails to maintain in force all policies of insurance
required by this Lease and such failure shall continue for more than ten (10)
days after Landlord gives Tenant notice of such failure; (f) if any petition
is filed by or against Tenant under any present or future section or chapter
of the Bankruptcy Code, or under any similar law or statute of the United
States or any state thereof (which, in the
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case of an involuntary proceeding, is not permanently discharged, dismissed,
stayed, or vacated, as the case may be, within sixty (60) days of
commencement), or if any order for relief shall be entered against Tenant in
any such proceedings; (g) if Tenant becomes insolvent or makes a transfer in
fraud of creditors or makes an assignment for the benefit of creditors; (h)
if a receiver, custodian, or trustee is appointed for the Premises or for all
or substantially all of the assets of Tenant, which appointment is not
vacated within sixty (60) days following the date of such appointment; or (i)
if Tenant fails to perform or observe any other terms of this Lease and such
failure shall continue for more than thirty (30) days after Landlord gives
Tenant notice of such failure, or, if such failure cannot be corrected within
such thirty (30) day period, if Tenant does not commence to correct such
default within said thirty (30) day period and thereafter diligently
prosecute the correction of same to completion within a reasonable time (not
to exceed one hundred twenty (120) days) and in any event prior to the time a
failure to complete such correction could cause Landlord to be subject to
prosecution for violation of any law, rule, ordinance or regulation or
causes, or could cause, a default under any mortgage, underlying lease,
tenant leases or other agreements applicable to the Project.
Section 13.2 If an Event of Default occurs, Landlord shall have the
right at any time to give a written termination notice to Tenant and, on the
date specified in such notice, Tenant's right to possession shall terminate
and this Lease shall terminate. Provided that Landlord serves such notice in
accordance with the provisions of this Lease, Tenant hereby waives any notice
required by Section 1161 of the California Code of Civil Procedure. Upon such
termination, Landlord shall have the right to recover from Tenant:
A. The worth at the time of award of all unpaid Base Rent and
Additional Rent which had been earned at the time of termination;
B. The worth at the time of award of the amount by which all unpaid
Base Rent and Additional Rent which would have been earned after termination
until the time of award exceeds the amount of such rental loss that Tenant
proves could have been reasonably avoided;
C. The worth at the time of award of the amount by which all unpaid
Base Rent and Additional Rent for the balance of the term of this Lease
(calculated, in the case of Operating Costs, by assuming annual increases at
the average annual increase over the three (3) calendar year period
immediately preceding such termination of the Consumer Price Index, All
Items, San Francisco - Oakland - San Xxxx) after the time of award exceeds
the amount of such rental loss that Tenant proves could be reasonably
avoided; and
D. All other amounts necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform all of Tenant's
obligations under this Lease or which in the ordinary course of things would
be likely to result therefrom. The "worth at the time of award" of the
amounts referred to in clauses (A) and (B) above shall be computed by
allowing interest at the maximum annual interest rate allowed by law for
business loans (not primarily for personal, family or household purposes) not
exempt from the usury law at the time of termination or, if there is no such
maximum annual interest rate, at the rate of eighteen percent (18%) per
annum. The "worth at the time of award" of the amount referred to in clause
(C) above shall be computed by discounting such amount at the discount rate
of the Federal Reserve Bank of San Francisco at the time of award plus one
percent (1%).
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Section 13.3 Notwithstanding the occurrence of an Event of Default,
pursuant to California Civil Code Section 1951.4, or any successor statute
thereof, at Landlord's option this Lease shall continue in effect for so long
as Landlord does not terminate Tenant's right to possession, and Landlord
shall have the right to enforce all its rights and remedies under this Lease,
including the right to recover all rent as it becomes due under this Lease,
provided that Landlord shall not unreasonably withhold its consent to any
proposed assignments of this Lease by Tenant or any proposed subletting by
Tenant. Acts of maintenance or preservation or efforts to relet the Premises
or the appointment of a receiver upon initiative of Landlord to protect
Landlord's interest under this Lease shall not constitute a termination of
Tenant's right to possession unless written notice of termination is given by
Landlord to Tenant.
Section 13.4
A. In the event of the occurrence of any of the events specified in
(f), (g) and (h) of Section 13.1 above, if Landlord shall not choose to
exercise, or by law shall not be able to exercise, its rights hereunder to
terminate this Lease, then, in addition to any other rights of Landlord
hereunder or by law, (1) Landlord may discontinue the services provided
pursuant to Article 7 of this Lease, unless Landlord has received
compensation in advance for such services (it being agreed that it is
reasonable for Landlord to require the deposit of three (3) months' estimated
cost of performing such services) in the amount of Landlord's reasonable
estimate of the compensation required with respect to such services, and (2)
neither Tenant, as debtor-in-possession, nor any trustee or other person
(collectively, the "Assuming Tenant") shall be entitled to assume this Lease
unless on or before the date of such assumption, the Assuming Tenant (a)
cures, or provides adequate assurance that the Assuming Tenant will promptly
cure, any existing default under this Lease, (b) compensates, or provides
adequate assurance that the Assuming Tenant will promptly compensate,
Landlord for any pecuniary loss (including, without limitation, attorneys'
fees and disbursements) resulting from such default, and (c) provides
adequate assurance of future performance under this Lease; provided, however,
that the Assuming Tenant shall also deposit with Landlord, as security for
the timely payment of all Rent, an amount equal to six months' Rent;
(i) The obligations imposed upon the Assuming Tenant shall
continue with respect to Tenant or any assignee of the Lease after the
completion of the bankruptcy proceedings; and
(ii) For purposes of this Section 13.4, Landlord and Tenant
acknowledge that, in the context of a bankruptcy proceeding of Tenant, at a
minimum "adequate assurance" shall mean:
(1) The Assuming Tenant has and will continue
to have sufficient unencumbered assets after the payment of all secured
obligations and administrative expenses to assure Landlord that the Assuming
Tenant will have sufficient funds to fulfill the obligations of Tenant under
this Lease as they become due, and to keep the Premises properly staffed with
sufficient employees to conduct a fully-operational, actively-promoted
business on the Premises; and
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(2) The Bankruptcy Court shall have entered an
order segregating sufficient cash payable to Landlord and the Assuming Tenant
shall have granted a valid and perfected first lien and security interest or
mortgage in property of Tenant or Trustee, acceptable as to value and kind to
Landlord, to secure to Landlord the obligation of the Trustee or Tenant to
cure monetary or non-monetary defaults under this Lease within the time
periods set forth above.
The foregoing shall not limit Landlord's other rights and remedies
under the United States Bankruptcy Code including but not limited to the
right to file a claim against Tenant and obtain the maximum amount allowed in
connection with such bankruptcy proceeding.
Section 13.5 If Tenant shall at any time fail to perform any
obligation required of Tenant hereunder, and provided Tenant has been
provided a thirty (30) day notice from Landlord concerning such obligation,
then Landlord may, at its option, perform such obligation to the extent
Landlord deems desirable, and may pay any and all reasonable expenses
incidental thereto and employ counsel. No such action by Landlord shall be
deemed a waiver by Landlord of any of Landlord's rights or remedies, or a
release of Tenant from performance of such obligation. All sums so paid by
Landlord, together with an administrative fee of five percent (5%) of the
amount so paid, shall accrue interest from the day of expenditure at the
Default Rate and shall be due and payable by Tenant to Landlord five (5)
business days after notice of payment is provided to Tenant. Landlord shall
have the same rights and remedies for the nonpayment of any such sums as for
default by Tenant in the payment of rent in addition to any other remedy
available to Landlord.
Section 13.6 No act or conduct of Landlord, including, without
limitation, efforts to relet the Premises, an action in unlawful detainer or
service of notice upon Tenant or surrender of possession by Tenant pursuant
to such notice or action, shall extinguish the liability of Tenant to pay
rent or other sums due hereunder or terminate this Lease, unless Landlord
notifies Tenant in writing of Landlord's election to terminate this Lease. No
act or conduct of Landlord, including the acceptance of the keys to the
Premises, other than a written acknowledgment of acceptance of surrender
signed by Landlord, shall be deemed to be or constitute an acceptance of the
surrender of the Premises by Tenant prior to the expiration of the Lease
term. The surrender of this Lease by Tenant, voluntarily or otherwise, shall,
at Landlord's option, operate as an assignment to Landlord of any and all
existing assignments and subleases, or Landlord may elect to terminate any or
all of such assignments and subleases by notifying the assignees and
sublessees of its election within fifteen (15) days after such surrender.
Section 13.7 No provision of this Lease shall be deemed to have been
waived by Landlord unless such waiver is in writing and signed by Landlord.
Landlord's acceptance of Rent following an Event of Default hereunder shall
not be construed as a waiver of such Event of Default. No custom or practice
which may grow up between the parties in connection with the terms of this
Lease shall be construed to waive or lessen Landlord's right to insist upon
strict performance of the terms of this Lease, without a written notice
thereof to Tenant from Landlord.
Section 13.8 The rights granted to Landlord in this Article 13 shall
be cumulative of every other right or remedy provided in this Lease or which
Landlord may otherwise have at law or in equity or by statute, and the
exercise of one or more rights or remedies shall not prejudice or impair the
concurrent or subsequent exercise of other rights or remedies or constitute a
33
forfeiture or waiver of Rent or damages accruing to Landlord by reason of any
Event of Default under this Lease. Tenant agrees to pay to Landlord all costs
and expenses incurred by Landlord in the enforcement of this Lease, including
all attorneys' fees incurred in connection with the collection of any sums
due hereunder or the enforcement of any right or remedy of Landlord.
Section 13.9 In the event of any failure by Landlord to perform any
of Landlord's obligations under this Lease, Tenant will give Landlord and any
mortgagee (as to which Tenant has been provided with notice of such
mortgagee's address) written notice specifying such default with
particularity, and Landlord shall thereupon have thirty (30) days in which to
cure any such default; provided, however, that if the nature of such default
requires more than thirty (30) days to cure, and Landlord is proceeding
diligently to effect a cure, Landlord shall have such reasonable additional
period in which to cure such default. Unless and until Landlord (or such
mortgagee) fails to so cure any default after such notice, Tenant shall not
have any remedy or cause of action by reason thereof. Notwithstanding
anything to the contrary set forth in this Lease, in no event shall Landlord
be liable for any consequential or remote damages, including, without
limitation, loss or interruption of Tenant's business.
ARTICLE 14
INSURANCE
Section 14.1
A. Tenant, at its sole expense, shall obtain and keep in force
during the Term the following insurance: (a) "All Risk" insurance insuring
the Tenant Improvements, Tenant's interest in the Premises and all property
located in the Premises, including furniture, equipment, fittings,
installations, fixtures, supplies and any other personal property, leasehold
improvements and alterations ("TENANT'S PROPERTY"), in an amount equal to the
full replacement value, it being understood that no lack or inadequacy of
insurance by Tenant shall in any event make Landlord subject to any claim by
virtue of any theft of or loss or damage to any uninsured or inadequately
insured property; (b) Business Interruption insurance in an amount that will
reimburse Tenant for direct or indirect loss of earnings attributable to all
perils insured against under Section 14.1A(a) or attributable to the
prevention of access to the Premises by civil authority; and sufficient to
reimburse Tenant for Rent in the event of a casualty to, or temporary taking
of, the Building or the Premises; (c) Comprehensive general public liability
insurance including personal injury, bodily injury, broad form property
damage, operations hazard, owner's protective coverage, contractual
liability, with a cross liability clause and a severability of interests
clause to cover Tenant's indemnities set forth herein, and products and
completed operations liability, in limits not less than $2,000,000.00
inclusive per occurrence or such higher limits as Landlord may reasonably
require from time to time during the Term; (d) Worker's Compensation and
Employer's Liability insurance, with a waiver of subrogation endorsement, in
form and amount as required by applicable law; and (e) In the event Tenant
performs any repairs or alterations in the Premises, Builder's Risk insurance
on an "All Risk" basis (including collapse) on a completed value
(non-reporting) form for full replacement value covering all work
incorporated in the Building and all materials and equipment in or about the
Premises; (f) tenant's "All Risk" Legal Liability insurance for the
replacement cost value of the Premises; and (g) any other form or forms of
insurance or any changes or endorsements to the insurance required herein as
34
Landlord, or any mortgagee or lessor of Landlord may require, from time to
time, in form or in amount.
B. Tenant shall have the right to include the insurance required by
Section 14.1A under Tenant's policies of "blanket insurance," provided that
no other loss which may also be insured by such blanket insurance shall
affect the insurance coverages required hereby and further provided that
Tenant delivers to Landlord a certificate specifically stating that such
coverages apply to Landlord, the Premises and the Project. All such policies
of insurance or certificates thereof shall designate Landlord, and Landlord's
property manager as additional insureds thereunder and shall designate all
mortgagees and lessors of Landlord, of which Tenant has been notified,
designate additional insureds, all as their respective interest may appear.
All such policies or certificates shall be issued by insurers acceptable to
Landlord and in form satisfactory to Landlord. Tenant shall deliver to
Landlord certificates with copies of policies, together with satisfactory
evidence of payment of premiums for such policies, by the earlier to occur of
(i) any entry by Tenant or Tenant's employees, contractors or agents into the
Premises to perform work of improvement or installation and (ii) the
Commencement Date and, with respect to renewals of such policies, not later
than thirty (30) days prior to the end of the expiring term of coverage. Upon
Landlord's request Tenant shall deliver to Landlord certified copies of such
policies. All policies of insurance shall be primary and Tenant shall not
carry any separate or additional insurance concurrent in form or contributing
in the event of any loss or damage with any insurance required to be
maintained by Tenant under this Lease. All such policies and certificates
shall contain an agreement by the insurers that the policies will not be
invalidated as they affect the interests of Landlord and Landlord's
mortgagees by reason of any breach or violation of warranties,
representations, declarations or conditions contained in the policies and
that the insurers shall notify Landlord and any mortgagee or lessor of
Landlord in writing, by Registered U.S. mail, return receipt requested, not
less than forty-five (45) days before any material change, reduction in
coverage, cancellation, including cancellation for nonpayment of premium, or
other termination thereof or change therein and shall include a clause or
endorsement denying the insurer any rights or subrogation against Landlord,
if such clause or endorsement is available without additional cost to Tenant.
Section 14.2 Landlord shall insure the Building against damage with
casualty and comprehensive general public liability insurance, all in such
amounts and with such deductible as Landlord reasonably deems appropriate.
Notwithstanding any contribution by Tenant to the cost of insurance premiums,
as provided hereinabove, Landlord shall not be required to carry insurance of
any kind on Tenant's Property, and Tenant hereby agrees that Tenant shall
have no right to receive any proceeds from any insurance policies carried by
Landlord.
Section 14.3 Tenant shall not knowingly conduct or permit to be
conducted in the Premises any activity, or place any equipment in or about
the Premises or the Building, which will invalidate the insurance coverage in
effect or increase the rate of fire insurance or other insurance on the
Premises or the Building, and Tenant shall comply with all requirements and
regulations of Landlord's casualty and liability insurer. If any invalidation
of coverage or increase in the rate of fire insurance or other insurance
occurs or is threatened by any insurance company due to any act or omission
by Tenant, or its agents, employees, representatives, or contractors, such
statement or threat shall be conclusive evidence that the increase in such
rate is due to such act of Tenant or the contents or equipment in or about
the Premises, and, as a result
35
thereof, Tenant shall be liable for such increase and shall be considered
Additional Rent payable with the next monthly installment of Base Rent due
under this Lease. In no event shall Tenant introduce or permit to be kept on
the Premises or brought into the Building any dangerous, noxious, radioactive
or explosive substance. Landlord shall not knowingly conduct or permit any
activity in the Building which will invalidate the insurance coverage in
effect nor shall Landlord knowingly bring or use any dangerous, noxious,
radioactive or explosive substance except in conformance with all applicable
laws and regulations.
Section 14.4 Landlord and Tenant each hereby waive any right of
subrogation and right of recovery or cause of action for injury or loss to
the extent that such injury or loss is covered by fire, extended coverage,
"All Risk" or similar policies covering real property or personal property
(or which would have been covered if Tenant or Landlord, as the case may be,
was carrying the insurance required by this Lease). Said waivers shall be in
addition to, and not in limitation or derogation or, any other waiver or
release contained in this Lease. Written notice of the terms of the above
mutual waivers shall be given to the insurance carriers of Landlord and
Tenant and the parties' insurance policies shall be properly endorsed, if
necessary, to prevent the invalidation of said policies by reason of such
waivers.
ARTICLE 15
DAMAGE BY FIRE OR OTHER CAUSE
Section 15.1 If the Building or any portion thereof is damaged or
destroyed by any casualty, Landlord shall, with reasonable promptness, cause
an architect or general contractor selected by Landlord to estimate the time
required to substantially complete repair and restoration of the changes
using standard working methods (the "Completion Estimate") but in no event
later than ninety (90) days after the occurrence. If (a) in Landlord's
reasonable judgment repair of such damage or destruction would not be
economically feasible, or (b) pursuant to the Completion Estimate, the damage
or destruction to the Building cannot be repaired within one hundred eighty
(180) days after the date of such damage or destruction, or (c) the proceeds
from insurance remaining after any required payment to any mortgagee or
lessor of Landlord are insufficient to repair such damage or destruction,
Landlord shall have the right, at Landlord's option, to terminate this Lease
by giving Tenant notice of such termination on or before the later to occur
of (x) thirty (30) days following receipt of the Completion Estimate or (y)
sixty (60) days after the event of destruction. Additionally, if, pursuant to
the Construction Estimate, the reconstruction of any damage to the Premises
(or damage which prevents or materially impairs access to the Premises) would
take in excess of one hundred eighty (180) days after the date of such damage
to repair, Tenant shall have the right to terminate this Lease, effective as
of the date specified in Tenant's notice (but no later than thirty (30) days
after such notice, by written notice to Landlord delivered within ten (10)
days following Landlord's delivery to Tenant of a copy of the Completion
Estimate.
Section 15.2 If a material portion of the Premises or the Building
is damaged such that Tenant is prevented from conducting its business in the
Premises in a manner reasonably comparable to that conducted immediately
before such damage and pursuant to the Completion Estimate, the damage caused
thereby cannot be repaired within 180 days after the date of destruction,
then Landlord may, at its expense, relocate Tenant to office space in the
Natomas
36
Corporate Center reasonably comparable to the Premises as to size, type and
contiguity of space. Such relocation shall be for the entire remaining amount
of the Term, Landlord give Tenant notice of such relocation within sixty (60)
of the event of destruction, and shall complete any such relocation within
180 days.
Section 15.3 In the event of partial destruction or damage to the
Building or the Premises which is not subject to Section 15.1, but which
renders the Premises partially but not wholly untenantable, this Lease shall
not terminate and Rent shall be abated in proportion to the area of the
Premises which, in Landlord's reasonable opinion, cannot be used or occupied
by Tenant as a result of such casualty. Landlord shall in such event, within
a reasonable time after the date of such destruction or damage, subject to
force majeure (as defined in Section 25.6) or to Tenant Delay and to the
extent and availability of insurance proceeds, restore the Premises to as
near the same condition as existed prior to such partial damage or
destruction, provided that Tenant pays to Landlord Tenant's insurance
proceeds as required in Section 15.5. In no event shall Rent xxxxx or shall
Tenant have any right to terminate this Lease if damage to or destruction of
the Premises is the result of the Tenant's or Tenant's agents, employees,
representatives, contractors, successors, assigns, licensees or invitees
willful misconduct, gross negligence, active negligence, or negligence,
excluding, however, negligent acts or omissions for which Tenant has no
knowledge or is deemed to have had imputed knowledge.
Section 15.4 If the Building or the Premises or any portion thereof
is destroyed by fire or other causes at any time during the last year of the
Term, then either Landlord or Tenant shall have the right, at the option of
either party, to terminate this Lease by giving written notice to the other
within sixty (60) days after the date of such destruction.
Section 15.5 Landlord shall have no liability to Tenant for
inconvenience, loss of business, or annoyance arising from any repair of any
portion of the Premises or the Building. If Landlord is required by this
Lease or by any mortgagee or lessor of Landlord to repair or if Landlord
undertakes to repair, Tenant shall pay to Landlord that amount of Tenant's
insurance proceeds (or the amount which would have been received by Tenant if
Tenant was carrying the insurance required by this Lease) which insures such
damage as a contribution towards such repair, and Landlord shall use
reasonable efforts to have such repairs made promptly and in a manner which
will not unnecessarily interfere with Tenant's occupancy. Tenant hereby
waives California Civil Code Sections 1932(2) and 1933(4), providing for
termination of hiring upon destruction of the thing hired and Sections 1941
and 1942, providing for repairs to and of the Premises.
Section 15.6 In the event of termination of this Lease pursuant to
Sections 15.1, 15.2, or 15.4, then all Rent shall be apportioned and paid to
the date on which possession is relinquished or the date of such damage,
whichever last occurs, and Tenant shall immediately vacate the Premises
according to such notice of termination; provided, however, that those
provisions of this Lease which are designated to cover matters of termination
and the period thereafter shall survive the termination hereof.
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ARTICLE 16
CONDEMNATION
Section 16.1 In the event the whole or substantially the whole of
the Building or the Premises are taken or condemned by eminent domain or by
any conveyance in lieu thereof (such taking, condemnation or conveyance in
lieu thereof being hereinafter referred to as "condemnation"), the Term shall
cease and this Lease shall terminate on the earlier of the date the
condemning authority takes possession or the date title vests in the
condemning authority.
Section 16.2 In the event any portion of the Building shall be taken
by condemnation (whether or not such taking includes any portion of the
Premises), which taking, in Landlord's judgment, is such that the Building
cannot be restored in an economically feasible manner for use substantially
as originally designed, then Landlord shall have the right, at Landlord's
option, to terminate this Lease, effective as of the date specified by
Landlord in a written notice of termination from Landlord to Tenant. Tenant
may terminate the Lease upon not less than thirty (30) days notice, if
twenty-five (25%) or more of the rentable area of the Premises is condemned
or if Tenant's access to the Premises is taken and not restored or replaced
with reasonably equivalent access.
Section 16.3 In the event any portion of the Parking Facility shall
be taken by condemnation, which taking in Landlord's judgment is such that
the Parking Facility cannot be restored in an economically feasible manner
for use substantially as originally designed, including in such consideration
the possible use of additional Parking Facility in the vicinity of the
Building, then Landlord shall have the right, at Landlord's option, to
terminate this Lease, effective as of the date specified by Landlord in a
written notice of termination from Landlord to Tenant. Tenant may terminate
the Lease upon not less than thirty (30) days notice, if twenty-five (25%) or
more of the parking spaces allocated to it have been condemned and Landlord
does not provide reasonable alternative parking arrangements in accordance
with the provisions of Section 6.3.
Section 16.4 In the event that a portion, but less than
substantially the whole, of the Premises shall be taken by condemnation, then
this Lease shall be terminated as of the date of such condemnation as to the
portion of the Premises so taken, and unless Landlord exercises its option to
terminate this Lease pursuant to Section 16.2, this Lease shall remain in
full force and effect as to the remainder of the Premises.
Section 16.5 In the event of termination of this Lease pursuant to
the provisions of Section 16.1, 16.2, or 16.3, the Rent shall be apportioned
as of such date of termination; provided, however, that those provisions of
this Lease which are designated to cover matters of termination and the
period thereafter shall survive the termination hereof.
Section 16.6 All compensation awarded or paid upon a condemnation of
any portion of the Project shall belong to and be the property of Landlord
without participation by Tenant. Nothing herein shall be construed, however,
to preclude Tenant from prosecuting any claim directly against the condemning
authority for loss of business, loss of good will, moving expenses, damage
to, and cost of removal of, trade fixtures, furniture and other personal
property
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belonging to Tenant; provided, however, that Tenant shall make no claim which
shall diminish or adversely affect any award claimed or received by Landlord.
Section 16.7 Subject to Sections 16.2 and 16.3, if any portion of
the Project other than the Building is taken by condemnation or if the
temporary use or occupancy of all or any part of the Premises shall be taken
by condemnation during the Term, this Lease shall be and remain unaffected by
such condemnation, and Tenant shall continue to pay in full the Rent payable
hereunder. In the event of any such temporary taking for use or occupancy of
all or any part of the Premises, Tenant shall be entitled to appear, claim,
prove and receive the portion of the award for such taking that represents
compensation for use or occupancy of the Premises during the Term and
Landlord shall be entitled to appear, claim, prove and receive the portion of
the award that represents the cost of restoration of the Premises and the use
or occupancy of the Premises after the end of the Term hereof. In the event
of any such condemnation of any portion of the Project other than the
Building, Landlord shall be entitled to appear, claim, prove and receive all
of that award.
Section 16.8 Landlord and Tenant each hereby waive the provisions of
California Code of Civil Procedure Section 1265.130 and any other applicable
existing or future law, ordinance or governmental regulation providing for,
or allowing either party to petition the courts of the state in which the
Project is located for, a termination of this Lease upon a partial taking of
the Premises and/or the Building.
ARTICLE 17
INDEMNIFICATION
Section 17.1 Tenant hereby waives all claims against Landlord for
damage to any property or injury to, or death of, any person in, upon, or
about the Project, including the Premises, arising at any time and from any
cause other than by reason of the willfull misconduct, gross negligence,
active negligence or negligence (excluding negligent acts or omissions for
which Landlord has no knowledge or is deemed to have had imputed knowledge)
of Landlord, its agents, employees, representatives, or contractors. To the
fullest extent permitted under applicable law, Tenant shall, and hereby
agrees to, indemnify and hold Landlord harmless from any loss, cost, damage
or liability, including without limitation any damage to any property or
injury to, or death of, any person, arising from the use or occupancy of the
Common Areas and the Premises by Tenant, its agents, employees,
representatives, contractors, successors, assigns, licensees, or invitees
except to the extent such damage is caused by the willful misconduct, gross
negligence, active negligence, or negligence (excluding, however, negligent
acts or omissions for which Landlord has no knowledge or is deemed to have
had imputed knowledge) of Landlord, its agents, employees, representatives,
or contractors, as well as for any default of Tenant hereunder or any failure
on the part of Tenant to timely execute and deliver any document, certificate
or statement required under Section 18.1 or 18.3 or to timely vacate the
Premises in accordance with the provisions of Article 19 below. Without
limiting the generality of the foregoing, Landlord shall not be liable for
any injury or damage to persons or property resulting from the condition or
design of, or any defects in the Building or its mechanical systems or
equipment which may exist or occur or from any fire, explosion, falling
plaster, steam, gas, electricity, water, rain, flood, snow, or leaks from any
part of the Premises or from the pipes,
39
appliances, plumbing works, roof, or subsurface of any floor or ceiling, or
from the street or any other place, or by dampness or by any other similar
cause except to the extent the same is caused by the willful misconduct,
gross negligence, active negligence, or negligence (excluding, however,
negligent acts or omissions for which Landlord has no knowledge or is deemed
to have had imputed knowledge) of Landlord, its agents, employees,
representatives or contractors. Landlord shall not be liable for any damage
caused by other tenants or persons in the Building or by occupants of
adjacent property thereto, or by the public, or caused by construction except
to the extent caused by the willful misconduct, gross negligence, active
negligence, or negligence, (excluding, however, negligent acts or omissions
for which Landlord has no knowledge or is deemed to have had imputed
knowledge) of Landlord or by any private, public or quasi-public work.
Tenant, for itself and its agents, employees, representatives, contractors,
successors, assigns, invitees and licensees, expressly assumes all risks of
injury or damage to person or property, whether proximate or remote,
resulting from the condition of the Project or any part thereof except to the
extent caused by the willful misconduct, gross negligence, active negligence,
or negligence (excluding, however, negligent acts or omissions for which
Landlord has no knowledge or is deemed to have had imputed knowledge) of
Landlord. Tenant's foregoing indemnity shall include attorneys' fees,
investigation costs, and all other reasonable costs and expenses incurred by
Landlord in any connection therewith. The provisions of this Article 17 shall
survive the expiration or termination of this Lease with respect to any loss,
damage, injury, or death occurring before such expiration or termination. If
Landlord is made a party to any litigation commenced by or against Tenant or
relating to this Lease or to the Premises, Tenant shall pay all costs and
expenses, including attorneys' fees and court costs, incurred by or imposed
upon Landlord because of any such litigation, and the amount of all such
costs and expenses, including attorneys' fees and court costs, shall be a
demand obligation owing by Tenant to Landlord, as and when such costs are
incurred; provided, that if in any such litigation Landlord's activity is
finally adjudicated to have been the result of its willful misconduct, gross
negligence, active negligence, or negligence (excluding, however, negligent
acts or omissions for which Landlord has no knowledge or is deemed to have
had imputed knowledge), then Landlord shall be obligated to reimburse Tenant
for such costs incurred. Notwithstanding anything in this Article 17 to the
contrary, Landlord shall not be liable to Tenant for any claims resulting
from the violation of the negligence standard set forth in this Lease to the
extent such claims are covered by the types of insurance Tenant is to
maintain pursuant to Section 14.1A.
Section 17.2 Landlord shall, and hereby agrees to, indemnify and
hold Tenant harmless from any damages in connection with loss of life, bodily
or personal injury or property damage arising from any occurrence in the
Common Areas or the Project to the extent the same result from the willful
misconduct, gross negligence, active negligence, or negligence (excluding,
however, negligent acts or omissions for which Landlord has no knowledge or
is deemed to have had imputed knowledge) of Landlord and to the extent not
covered by insurance required to be maintained by Tenant.
ARTICLE 18
SUBORDINATION AND ESTOPPEL CERTIFICATES
Section 18.1 This Lease and all rights of Tenant hereunder are
subject and subordinate to all underlying leases now or hereafter in
existence, and to any supplements, amendments,
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modifications, and extensions of such leases heretofore or hereafter made and
to any deeds to secure debt, mortgages, or other security instruments which
now or hereafter cover all or any portion of the Building or any interest of
Landlord therein, and to any advances made on the security thereof, and to
any increases, renewals, modifications, consolidations, replacements, and
extensions of any of such mortgages, subject to the nondisturbance rights of
Tenant provided herein. Landlord shall use commercially reasonable efforts to
obtain a subordination, nondisturbance and attornment agreement from
Landlord's existing lender for the benefit of Tenant substantially in the
form of the Subordination, Nondisturbance and Attornment Agreement attached
to this Lease as Exhibit F ("SNDA") or on Lender's current form if Lender has
updated such form. With respect to any future lender, Tenant shall execute
promptly any reasonable certificate or instrument that Landlord or any
mortgagee may request to evidence such subordination provided that such
document provides that so long as an Event of Default has not occurred with
respect to Tenant, such mortgagee shall grant Tenant nondisturbance and
recognize Tenant's rights under this Lease. This provision is declared by
Landlord and Tenant to be self-operative and no further instrument shall be
required to effect such subordination and nondisturbance of this Lease. If
Tenant fails to so execute, acknowledge and deliver such instruments within
ten (10) days after Landlord's request, Landlord is hereby empowered to do so
in Tenant's name and on Tenant's behalf; Tenant hereby irrevocably appoints
Landlord as Tenant's agent and attorney-in-fact for the purpose of executing,
acknowledging, and delivering any such instruments and certificates. Tenant
shall not unreasonably withhold, delay, or defer its written consent to
reasonable modifications in this Lease which are a condition of any
construction, interim or permanent financing for the Building provided that
such modifications do not increase the obligations of Tenant hereunder or
substantively and adversely affect Tenant's use and enjoyment of the Premises.
Notwithstanding the generality of the foregoing provisions of
Section 18.1, any mortgagee (or beneficiary under a deed of trust) or lessor
of Landlord shall have the right at any time to subordinate any such
mortgage, deed of trust or underlying lease to this Lease, or to any of the
provisions hereof, on such terms and subject to such conditions as such
mortgagee or lessor of Landlord may consider appropriate in its discretion.
At any time, before or after the institution of any proceedings for the
foreclosure of any such mortgage, or the sale of the Building under any such
mortgage, or the termination of any underlying lease, Tenant shall, upon
request of such mortgagee or any person or entities succeeding to the
interest of such mortgagee or the purchaser at any foreclosure sale
("Successor Landlord"), automatically become the Tenant (or if the Premises
has been validly subleased, the subtenant) of the Successor Landlord, without
change in the terms or other provisions of this Lease (or, in the case of a
permitted sublease, without change in this Lease or in the instrument setting
forth the terms of such sublease); provided, however, that the Successor
Landlord shall not be (i) bound by any payment made by Tenant of rent or for
more than one (1) month in advance, except for a security deposit previously
paid to Landlord (and then only if such security deposit has been deposited
with and is under the control of the Successor Landlord), (ii) bound by any
termination, modification, amendment or surrender of the Lease not expressly
allowed under the terms of this Lease which is done without the Successor
Landlord's consent, (iii) liable for any damages or subject to any offset or
defense by Tenant to the payment of rent by reason of any act or omission of
any prior landlord (including Landlord), or (iv) personally or corporately
liable, in any event, beyond the limitations on landlord liability set forth
in this Lease. This agreement of
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Tenant to attorn to a Successor Landlord shall survive any such foreclosure
sale, trustee's sale conveyance in lieu thereof or termination of any
underlying lease. Tenant shall upon demand at any time, before or after any
such foreclosure or termination execute, acknowledge, and deliver to the
Successor Landlord any written instruments and certificates evidencing such
attornment as such Successor Landlord may reasonably require provided that
such agreement provides for Tenant's right of nondisturbance as provided
herein.
Section 18.2 Tenant shall, from time to time, within ten (10) days
after request from Landlord, or from any mortgagee or lessor of Landlord,
execute, acknowledge and deliver in recordable form a certificate certifying,
to the extent true, that this Lease is in full force and effect and
unmodified (or, if there have been modifications, that the same is in full
force and effect as modified and stating the modifications); that the Term
has commenced and the full amount of the Rent then accruing hereunder; the
dates to which the Rent has been paid; that Tenant has accepted possession of
the Premises and that any improvements required by the terms of this Lease to
be made by Landlord have been completed to the satisfaction of Tenant; the
amount, if any, that Tenant has paid to Landlord as a Security Deposit; that
no Rent under this Lease has been paid more than thirty (30) days in advance
of its due date; that the address for notices to be sent to Tenant is as set
forth in this Lease (or has been changed by notice duly given and is as set
forth in the certificate); that Tenant, as of the date of such certificate,
has no charge, lien, or claim of offset under this Lease or otherwise against
Rent or other charges due or to become due hereunder; that, to the knowledge
of Tenant, Landlord is not then in default under this Lease; and such other
customary matters as may be reasonably requested by Landlord or any mortgagee
or lessor of Landlord. Any such certificate may be relied upon by Landlord,
any Successor Landlord, or any mortgagee or lessor of Landlord. Landlord
agrees periodically to furnish, within ten (10) days after requested in
writing by Tenant, certificates signed by Landlord containing information
similar to the foregoing information.
Section 18.3 No act or failure to act on the part of Landlord which
would entitle Tenant under the terms of this Lease, or by law, to be relieved
of Tenant's obligations hereunder or to terminate this Lease, shall result in
a release of such obligations or a termination of this Lease unless (a)
Tenant has given notice by registered or certified mail to any mortgagee or
lessor of Landlord whose address shall have been furnished to Tenant, and (b)
Tenant offers such mortgagee or lessor of Landlord a reasonable opportunity
to cure the default, including the statutory period of time to obtain
possession of the Premises by power of sale (which as of the date of this
Lease is one hundred twenty (120) days after the commencement of such
proceeding), if such should prove necessary to effect a cure and if Lender
proceeds to commence such proceedings immediately following the event of
default under its loan documents.
ARTICLE 19
SURRENDER OF THE PREMISES
Section 19.1 Upon the Expiration Date or earlier termination of this
Lease, or upon any re-entry of the Premises by Landlord without terminating
this Lease pursuant to Section 13.2(b), Tenant, at Tenant's sole cost and
expense, shall peacefully vacate and surrender the Premises to Landlord in
good order, broom clean and in the same condition as at the beginning of the
Term or as the Premises may thereafter have been improved by Landlord or
Tenant (provided that
42
Tenant's improvements were made with Landlord's consent, and subject to
Landlord's right to require the removal of alterations, additions or
improvements), casualty, condemnation and reasonable use and wear thereof and
repairs which are Landlord's obligations under Articles 9, 15 and 16 only
excepted, and Tenant shall remove all of Tenant's Property and turn over all
keys for the Premises to Landlord. No provision of this Lease shall impose
upon Landlord any obligation to care for or preserve any of Tenant's property
left upon the Premises, and Tenant hereby waives and releases Landlord from
any claim or liability in connection with the removal of such property from
the Premises and the storage thereof and specifically waives the provisions
of California Civil Code Section 1542 with respect to such release. Should
Tenant continue to hold the Premises after the expiration or earlier
termination of this Lease, such holding over, unless otherwise agreed to by
Landlord in writing, shall constitute and be construed as a tenancy at
sufferance at monthly installments of Rent equal the greater of one hundred
fifty percent (150%) of the monthly portion of Rent in effect as of the date
of expiration or earlier termination or two hundred percent (200%) of the
fair market rental value of the Premises, and subject to all of the other
terms, charges and expenses set forth herein except any right to renew this
Lease or to expand the Premises or any right to additional services. Tenant
shall also be liable to Landlord for all damage which Landlord suffers
because of any holding over by Tenant, and Tenant shall indemnify, defend,
protect and hold Landlord harmless from and against any and all loss, cost,
damage or liability arising out of such holding over, including without
limitation, all claims made by any other tenant or prospective tenant against
Landlord resulting from delay by Landlord in delivering possession of the
Premises to such other tenant or prospective tenant. The provisions of this
Article 19 shall survive the expiration or earlier termination of this Lease.
ARTICLE 20
LANDLORD'S RIGHT TO INSPECT
Section 20.1 Landlord shall retain and Tenant shall provide Landlord
with, duplicate keys to all doors of the Premises. Tenant shall provide
Landlord with new keys should Tenant receive Landlord's consent to change the
locks. Landlord shall have the right to enter the Premises at reasonable
hours and with prior reasonable notice (or, in the event of an emergency, at
any hour and without prior notice) (a) to exhibit the same to present to
prospective mortgagees, lessors or purchasers during the Term and to
prospective tenants during the last year of the Term, (b) to inspect the
Premises, (c) to confirm that Tenant is complying with all of Tenant's
covenants and obligations under this Lease, (d) to clean or make repairs
required of Landlord under the terms of this Lease, (e) to make repairs to
areas adjoining the Premises, and (f) to repair and service utility lines or
other components of the Building; provided, however, Landlord shall use
reasonable efforts to minimize interference with Tenant's business (the
foregoing shall not require Landlord to incur overtime costs).
ARTICLE 21
PERSONAL PROPERTY
Section 21.1 Tenant has acquired from Cable & Wireless, Inc., the
personal property, fixtures, and equipment listed in Exhibit G (the "Acquired
Property"). The Acquired Property shall be Tenant's Property for the purposes
of this Lease, including without limitation Article 19.
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ARTICLE 22
FIRST OPTION TO EXTEND
Section 22.1 Tenant shall have the option to extend the Term of this
Lease, for one (1) five (5) year period ("First Extension Term"), commencing
on the date immediately following the Expiration Date (the "First Option to
Extend"), subject to the terms and provisions of this Paragraph.
Section 22.2 Notice of Exercise. Tenant must exercise the First
Option to Extend, if at all, by written notice to Landlord delivered at least
nine (9) months prior to the Expiration Date. Tenant's failure to timely
exercise the First Option to Extend shall cause the First Option to Extend to
immediately become null and void. The rights granted Tenant under this
Section are strictly conditioned on (i) Tenant's not being in default (beyond
the giving of notice and the passage of applicable grace periods) of any of
the provisions of the Lease, at the time of Tenant's notice of the exercise
of the First Option to Extend or any time thereafter to and including the
Expiration Date and there not having been three of more Events of Default
with respect to Tenant hereunder, and (ii) Tenant's not having sublet more
than one floor of the Premises, provided, however, that if Tenant has
exercised the Contraction Option (as hereinafter defined in Article 25),
Tenant may not exercise the First Option to Extend if Tenant has subleased
any portion of the Premises or this Lease has been terminated with respect to
any portion of the Premises. Additionally, the option granted in this Section
is expressly made personal to Earthlink Network, Inc., and may not be
exercised by or on behalf of any subtenant of Earthlink Network, Inc. but may
be exercised by a permitted assignee or a permitted Affiliate.
Section 22.3 If Tenant properly exercises the First Option to
Extend, Tenant's exercise of the First Option to Extend shall be effective,
and the terms of the Lease shall apply during the First Extension Term,
except that the Base Rent for the Premises for the First Extension Term shall
be the Fair Market Rent (as hereinafter defined) for the Premises as of the
date of commencement of the First Extension Term. Fair Market Rent shall mean
as to the Base Rent, ninety-five percent (95%) of the annual gross annual
rental on a full service basis per rentable square foot which a willing,
non-renewal tenant would pay a willing landlord for the Premises (taking into
account the existing level and condition of tenant improvements) as of the
period for which such rental is to be paid for a lease in effect for such
period on terms substantially identical to those of this Lease, based on
prevailing market conditions at the time such determination is made.
Section 22.4 If Tenant properly exercises the First Option to
Extend, the Base Rent during the First Extension Term shall be changed to an
amount equal to the Fair Market Rent for the Premises, in effect as of the
commencement of the First Extension Term for a term equal to the First
Extension Term, as specified by Landlord by notice to Tenant not less than
thirty (30) days prior to commencement of the First Extension Term, subject
to Tenant's right of arbitration as set forth below. If Tenant believes that
the rent specified by Landlord exceeds the actual Fair Market Rent for the
Premises as of commencement of the First Extension Term, then Tenant shall so
notify Landlord within fifteen (15) days following receipt of Landlord's
notice. If Tenant fails to so notify Landlord within said fifteen (15) days,
Landlord's determination of the Base Rent for the Premises shall be final and
binding upon the parties. If the parties are unable to agree upon the Base
Rent for the Premises within twenty (20) days after Landlord's receipt of
44
notice of Tenant's objection, the Base Rent payable as of commencement of the
First Extension Term shall be determined as follows ("Fair Market Rent
Arbitration Procedure"):
(1) Within ten (10) days after the expiration of
the twenty (20) day period described above, Tenant, at its sole expense,
shall obtain and deliver in writing to Landlord a determination of the Fair
Market Rent for the Premises, for a term equal to the Extension Term from a
reputable real estate leasing agent or broker ("Tenant's Broker") licensed in
the State of California and continuously engaged in the leasing of commercial
office space in the South Natomas market in Sacramento, California for at
least the immediately preceding five (5) years; such determination shall be
based upon the definition of Fair Market Rent set forth above and shall be
stated in a single "per square foot per annum (or month)" figure, for ease of
comparison. If Landlord accepts such determination, the Base Rent payable by
Tenant during the First Extension Term shall be equal to the amount
determined by Tenant's Broker.
(2) If Landlord does not accept such
determination, within ten (10) business days after receipt of the
determination of Tenant's Broker, Landlord shall designate a similarly
qualified appraiser ("Landlord's Broker"). If the two Brokers are appointed
by the parties as set forth above, such Brokers shall promptly meet and
attempt to agree upon the applicable Fair Market Rent, using the guidelines
as described above. If such Brokers are unable to agree within fifteen (15)
days following the appointment of Landlord's Broker, the Brokers shall select
a third leasing agent or broker meeting the qualifications set forth above
within ten (10) days after the last date the two Brokers are given to agree
upon the applicable Fair Market Rent. The third Broker shall be a person who
has not previously acted and is not currently acting in any capacity for
either party.
(3) The Third Broker shall conduct its own
independent investigation of the applicable Fair Market Rent, using the
guidelines set forth above, and shall be instructed not to advise either
party of its determination of the applicable Fair Market Rent, except as
follows: when the Third Broker has made its determination, it shall advise
Landlord and Tenant and establish a date, at least five (5) days after the
giving of notice by such Third Broker to Landlord and Tenant, on which it
will disclose its determination of the Fair Market Rent. Such meeting shall
take place in Landlord's office unless otherwise mutually agreed by the
parties. After having initialed the paper on which its determination of Fair
Market Rent is set forth, the Third Broker shall place its determination of
the Fair Market Rent in a sealed envelope. Landlord's Broker and Tenant's
Broker shall each set forth their determination of the Fair Market Rent on a
separate piece of paper, initial the same, and place them in sealed
envelopes. Each of the three envelopes shall be marked with the name of the
party whose determination is inside the envelope. In the presence of the
Third Broker, the determination of the Fair Market Rent by Landlord's Broker
and Tenant's Broker shall be opened and examined. If the higher of the two
determinations is one hundred and five percent (105%) or less of the amount
set forth in the lower determination, the average of the two determinations
shall be the Fair Market Rent, the envelope containing the determination of
Fair Market Rent by the Third Broker shall be destroyed and the Third Broker
shall be instructed not to disclose its determination. If either party's
envelope is blank, or does not set forth a determination of Fair Market Rent,
the determination of the other party shall prevail and be treated as the Fair
Market Rent. If the higher of the two determinations is more than one hundred
and five percent (105%) of the amount of the Broker's determination, the
envelope containing the Third Broker's determination
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shall be opened; the Fair Market Rent shall, in such event, be the rent
proposed by either Landlord's Broker or Tenant's Broker which is closest to
the determination of Fair Market Rent by the Third Broker; if the two are
equidistant, the Fair Market Rent shall be equal to the Third Broker's
determination.
(4) Landlord shall pay the costs and fees of
Landlord's Broker in connection with any determination hereunder, and Tenant
shall pay the costs and fees of Tenant's Broker in connection with such
determination. The costs and fees of any Third Broker shall be paid one-half
by Landlord and one-half by Tenant. Tenant expressly acknowledges that any
costs and fees arising in favor of any broker or other party hired by Tenant
to represent Tenant in the negotiation of the extension of the term of the
Lease shall be borne solely by Tenant.
Section 22.5 If the amount of the Fair Market Rent is not known as
of the commencement of the First Extension Term, then Tenant shall continue
to pay the Base Rent in effect immediately prior to the expiration of the
initial Term until the amount of the Fair Market Rent is determined. When
such determination is made, Tenant shall pay to Landlord any deficiency to
Landlord upon demand.
ARTICLE 23
SECOND OPTION TO EXTEND
Section 23.1 Tenant shall have the option to extend the Term of this
Lease, for one (1) five (5) year period ("Second Extension Term"), commencing
on the date immediately following the Expiration Date of the First Extenstion
Term (the "Second Option to Extend"), subject to the terms and provisions of
this Paragraph.
Section 23.2 Notice of Exercise. Tenant must exercise the Second
Option to Extend, if at all, by written notice to Landlord delivered at least
nine (9) months prior to the Expiration Date of the First Option Term.
Tenant's failure to timely exercise the Second Option to Extend shall cause
the Second Option to Extend to immediately become null and void. The rights
granted Tenant under this Section are strictly conditioned on (i) Tenant's
not being in default (beyond the giving of notice and the passage of
applicable grace periods) of any of the provisions of the Lease, at the time
of Tenant's notice of the exercise of the Second Option to Extend or any time
thereafter to and including the Expiration Date and on there not having been
three of more Events of Default with respect to Tenant hereunder and (ii)
Tenant's not having sublet more than one floor of the Premises, provided,
however, that if Tenant has exercised the Contraction Option, Tenant may not
exercise the Second Option to Extend if Tenant has subleased any portion of
the Premises or this Lease has been terminated with respect to any portion of
the Premises. Additionally, the option granted in this Section is expressly
made personal to Earthlink Network, Inc., and may not be exercised by or on
behalf of any subtenant of Earthlink Network, Inc. but may be exercised by a
permitted assignee or permitted Affiliate.
Section 23.3 If Tenant properly exercises the Second Option to
Extend, Tenant's exercise of the Second Option to Extend shall be effective,
and the terms of the Lease shall apply during the Second Extension Term,
except that the Base Rent for the Premises for the Second
46
Extension Term shall be the Fair Market Rent for the Premises as of the date
of commencement of the Second Extension Term. Fair Market Rent shall have the
meaning set forth in Section 22.3.
Section 23.4 If Tenant properly exercises the Second Option to
Extend, the Base Rent during the Second Extension Term shall be changed to an
amount equal to the Fair Market Rent for the Premises, in effect as of the
commencement of the Second Extension Term for a term equal to the Second
Extension Term, as specified by Landlord by notice to Tenant not less than
thirty (30) days prior to commencement of the Second Extension Term, subject
to Tenant's right of arbitration as set forth in Section 22.4. If Tenant
believes that the rent specified by Landlord exceeds the actual Fair Market
Rent for the Premises as of commencement of the Second Extension Term, then
Tenant shall so notify Landlord within fifteen (15) days following receipt of
Landlord's notice. If Tenant fails to so notify Landlord within said fifteen
(15) days, Landlord's determination of the Base Rent for the Premises shall
be final and binding upon the parties. If the parties are unable to agree
upon the Base Rent for the Premises within twenty (20) days after Landlord's
receipt of notice of Tenant's objection, the Base Rent payable as of
commencement of the Second Extension Term shall be determined in accordance
with the Fair Market Rent Arbitration Procedure.
Section 23.5 If the amount of the Fair Market Rent is not known as
of the commencement of the Second Extension Term, then Tenant shall continue
to pay the Base Rent in effect immediately prior to the expiration of the
initial Term until the amount of the Fair Market Rent is determined. When
such determination is made, Tenant shall pay to Landlord any deficiency to
Landlord upon demand.
ARTICLE 24
RIGHT OF FIRST OFFER
Section 24.1 Tenant shall have the right of first offer (the "Right
of First Offer") to lease Available Premises (as hereinafter defined) which
becomes available in the Building, subject, however to the rights of other
tenants which are in existence as of the Commencement Date (the "Existing
Leases").
Section 24.2 Available Premises shall mean (i) all space in 0000
Xxxxxxx Xxxx Xxxxx which is or becomes vacant and unencumbered, and (ii) all
space in 0000 Xxxxxxx Xxxx Xxxxx greater than 10,000 rentable square feet
which is or becomes vacant and unencumbered. Space shall not be deemed to be
Available Premises if there is a lease, lease option or any right or option
of extension, renewal, expansion, or negotiation with respect to any Existing
Leases or if an existing tenant renews or extends its term.
Section 24.3 Landlord shall give Tenant written notice of any
Available Space which notice shall set forth the rent and other principal
terms that Landlord intends to list the space for (the "Available Space
Notice"). Tenant shall have a period of seven (7) business days in which to
notify Landlord whether it is interested in negotiating for the Available
Space (the "Interest Notice"). If Tenant does not deliver an Interest Notice,
Tenant's rights to the Available Space shall terminate and Landlord may lease
such space unencumbered by this Right of First Offer. After receipt of the
Interest Notice, Landlord and Tenant shall negotiate, in good faith, for a
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period of fifteen (15) days ("Negotiation Period") to try to reach agreement
upon the terms and conditions upon which Tenant will lease the Available
Premises. It is understood and agreed that the Base Rent for the Premises for
the Available Space shall be ninety-five percent (95%) of the Fair Market
Rent and that the term for the Available Premises shall be coterminous with
the Term; provided, however, that if there is less than thirty-six (36)
months remaining in the Term at the time an Available Space Notice is
delivered, then and in such event, Tenant shall exercise its Option to Extend
concurrently with the execution of an amendment to this Lease to incorporate
the Available Premises into the Premises ("Expansion Amendment"). The
Expansion Amendment shall amend the changes in the Premises, the Base Rent,
Tenant's Share, the number of parking spaces allocated to Tenant, the
Security Deposit and other appropriate terms. Upon delivery to Tenant of the
Available Premises, it shall be considered Premises, subject to all terms and
conditions of this Lease. Landlord and Tenant each acknowledge that the Base
Rent for the Available Premises may not be the same as the Base Rent of the
Premises.
Section 24.4 If, after the Negotiation Period, Landlord and Tenant
are unable to reach an agreement for the lease of the Available Premises,
then Tenant may, within five (5) days after the expiration of the Negotiation
Period provide Landlord with notice that it has irrevocably elected to lease
the Available Premises and to determine Fair Market Rent for the Available
Premises through the Fair Market Rent Arbitration Procedure set forth in
Section 22.4 ("Arbitration Notice"). If Tenant provides the Arbitration
Notice, Landlord and Tenant shall enter into the Expansion Amendment
immediately after the determination of Fair Market Rent. If Tenant does not
elect to provide the Arbitration Notice, then and in such event, Tenant's
rights with respect to the space covered by the Available Space Notice shall
be null and void and Landlord shall be free to enter into negotiations with
other prospective tenants and enter into a lease for such space upon such
terms and conditions it may choose; provided however that if such space
becomes Available Premises again during the Term, it shall again be subject
to this Article 24.
Section 24.5 This Right of First Offer is personal to Earthlink
Network, Inc. and may not be transferred or assigned in connection with an
assignment or sublease of the Premises except to a permitted Affiliate of
Tenant. Further, Tenant may not exercise the Right of First Offer if it has
sublet more than one floor of the Premises, provided, however, that if Tenant
has exercised the Contraction Option, Tenant may not exercise the Right of
First Offer if Tenant has subleased any portion of the Premises other than to
an Affiliate or this Lease has been terminated with respect to any portion of
the Premises.
Section 24.6 Notwithstanding anything to the contrary contained
herein, the Right of First Offer shall automatically terminate without notice
and shall be of no further force and effect, whether or not Tenant has timely
exercised such right, if (i) an Event of Default exists at the time of
exercise of the Right of First Offer or at the time of the commencement of
the term for the first offer space, or (iii) an Event of Default has occurred
with respect to Tenant three or more times hereunder.
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ARTICLE 25
OPTION TO CONTRACT PREMISES
Section 25.1 Tenant shall have the option ("Contraction Option") of
eliminating from the Premises all, but not part of, any full floor of the
Premises (the "Contraction Premises"). Tenant's exercise of the Contraction
Option must be exercised, if at all, on or before the last day of the 36th
month of the Term by sending a notice of such contraction to Landlord
("Contraction Notice").
Section 25.2 Within thirty (30) days after receipt of the
Contraction Notice, Landlord will notify Tenant of the effective date of such
contraction, which date shall not be earlier than the last day of the 42nd
month of the Term nor later than the last day of the 48th month of the Term
("Contraction Effective Date").
Section 25.3 In the event Tenant exercises the Contraction Option,
as a condition to such contraction, at least thirty (30) days prior to the
Contraction Effective Date, Tenant shall pay to Landlord a contraction fee
equal to (i) the unamortized portion of the tenant improvement allowance
allocable to the Contraction Premises on a per square foot basis, (ii) the
unamortized portion of the leasing commissions paid to Xxxxxxx Realty
Corporation allocable to the Contraction Premises on a per square foot basis,
and (iii) an imputed interest factor on the sum of (i) and (ii) equal to 8%
per annum, compounded, computed from the date of expenditure of such amounts
through the date of payment of the contraction fee (the "Contraction Fee").
For the purpose of determining the Contraction Fee, the tenant improvement
allowance and leasing commissions shall each be amortized over a period of 8
years, which period shall commence on June 1, 2001 and shall end on May 31,
2009. Landlord shall notify Tenant of the amount of tenant improvements and
leasing commissions after such expenditures have been completed.
Section 25.4 If Tenant exercises the Contraction Option, the
Expiration Date of the Lease with respect to the Contraction Premises shall
be the Contraction Effective Date. As a condition to such contraction, at
least thirty (30) days prior to the Contraction Effective Date, Landlord and
Tenant shall execute an amendment to this Lease with respect to the
Contraction Premises to amend the Premises, the Base Rent, Tenant's Share,
the number of parking spaces allocated to Tenant, the Security Deposit and
other appropriate terms.
Section 25.5 Notwithstanding anything to the contrary contained
herein, the Contraction Option shall automatically terminate without notice
and shall be of no further force and effect, whether or not Tenant has timely
exercised such right, if (i) an Event of Default exists at the time of
exercise of the Contraction Option or on the Contraction Effective Date, or
(ii) an Event of Default has occurred with respect to Tenant three or more
times hereunder, or (iii) Tenant has exercised a Right of First Offer with
respect to Available Space.
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ARTICLE 26
OPTION TO TERMINATE LEASE
Section 26.1 If and only if Tenant has elected to cease operating a
Call Center in the Sacramento Metropolitan Area ("SMA") and not to reopen
such Call Center for a period of at least four years ("SMA Cessation
Decision") , then and in such event, Tenant shall have the option
("Termination Option") of terminating the Lease in its entirety. Tenant's
exercise of the Termination Option must be exercised, if at all, between the
last day of the forty-eighth (48th) month and the sixtieth (60th) month of
the Term by sending a notice of such exercise to Landlord which shall include
information reasonably satisfactory to Landlord demonstrating that Tenant has
made the SMA Cessation Decision ("Termination Notice").
Section 26.2 Within thirty (30) days after receipt of the
Termination Notice, Landlord will notify Tenant of its approval or
disapproval of the Termination Notice and, if approved, the effective date of
such termination, which date shall be either the last day of the sixty-sixth
(66th) month, the last day of the seventy-second (72nd) month or the last day
of the seventy-eighth (78th) month, as specified by Landlord ("Termination
Effective Date"). Tenant acknowleges that Landlord is relying on the SMA
Cessation Decision in providing the Termination Option to Tenant and that
Landlord would not otherwise provide a Termination Option. Accordingly,
Landlord reserves its rights and remedies in the event that Tenant opens,
utilizes or establishes a Call Center within the SMA at any time within
thirty-six (36) months after the Termination Effective Date.
Section 26.3 In the event Tenant exercises the Termination Option,
as a condition to such termination, at least thirty (30) days prior to the
Termination Effective Date, Tenant shall pay to Landlord a termination fee
equal to (i) the unamortized portion of the tenant improvement allowance,
(ii) the unamortized portion of the leasing commissions paid to Xxxxxxx
Realty Corporation, and (iii) an imputed interest factor on the sum of (i)
and (ii) equal to 8% per annum, compounded, computed from the date of
expenditure of such amounts through the date of payment of the termination
fee (the "Termination Fee"). For the purpose of determining the Termination
Fee, the tenant improvement allowance and leasing commissions shall each be
amortized over a period of 8 years, which period shall commence on June 1,
2001 and shall end on May 31, 2009.
Section 26.4 If Tenant exercises the Termination Option, the
Expiration Date of the Lease shall be the Termination Effective Date. As a
condition to such termination, at least thirty (30) days prior to the
Termination Effective Date, Landlord and Tenant shall execute an amendment to
this Lease to modify the Expiration Date and provide for the payment of the
Termination Fee.
Section 26.5 Notwithstanding anything to the contrary contained
herein, the Termination Option shall automatically terminate without notice
and shall be of no further force and effect, whether or not Tenant has timely
exercised such right, if (i) an Event of Default exists at the time of
exercise of the Termination Option or on the Termination Effective Date, or
(iii) an Event of Default has occurred with respect to Tenant three or more
times hereunder.
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ARTICLE 27
SIGNAGE, BUILDING NAME, AND USE OF NAME OF THE BUILDING.
Section 27.1 On floors of the Building leased to Tenant in their
entirety, Tenant shall be permitted to install appropriate signage on the
walls of its lobbies and on entrance doors to its offices. On floors of the
Building which are not leased to Tenant in their entirety, Tenant may install
Building standard signage on the walls of the lobbies and on the entrance
doors to its Premises. All such signage shall be at Tenant's sole cost and
expense, including the costs of design, installation and removal. Tenant
shall be granted its pro-rata share of space on the lobby directory board.
Landlord shall install the initial directory listings at Landlord's cost.
Tenant shall pay for any changes made to the directory listings during the
Term.
Section 27.2 Tenant shall have the right to place Tenant's name on
the top slot of the existing grade-level monuments adjacent to the main
entrance to the Building.
Section 27.3 During the Lease Term and so long as Tenant and/or its
Affiliates occupies at least fifty thousand (50,000) square feet at Tenant's
sole cost and expense, Tenant may erect and maintain signage with its
corporate name and/or logo, subject to Landlord's approval, subject to
conformance with all applicable laws, statutes, ordinances and governmental
rules, regulations or requirements applicable to such signage and all
covenants, conditions and restrictions affecting the Property ("Signage
Laws"), on the exterior of the Building in a location mutually approved by
Landlord and Tenant. Tenant shall comply, at its sole cost and expense, with
any and all Signage Laws. The size, location, design, lettering, materials,
lighting and colors of such sign shall all be subject to Landlord's
reasonable approval.
Section 27.4 During the Lease Term and if and so long as EarthLink
Network, Inc. and/or its Affiliates and subtenants occupies no less than one
hundred percent (100%) of 2495 Natomas Park Drive, Landlord, shall adopt the
name "EarthLink Centre" for the Building and shall use such name in Building
marketing or promotional materials produced by or on behalf of Landlord;
provided, that, Tenant grants Landlord a license to use such name for said
purposes and in the case of a logo, Tenant provides Landlord with the
appropriate logo art work for use in connection with said materials. Tenant
agrees that (i) Landlord and other tenants of the Building may, but are not
required to, use such name as part of their address and that (ii) the postal
address for the Building will not be changed and will continue to be the
street address.
Section 27.5 In the event that EarthLink Network, Inc. and/or its
Affiliates and subtenants do not occupy one hundred percent (100%) of 2495
Natomas Park Drive, all use of the name "EarthLink Centre shall cease and
Landlord shall thereafter have the right, in its sole and absolute
discretion, to cease using such name in Building marketing and promotional
materials and to rename the Building.
Section 27.6 The rights granted to Tenant pursuant to Sections 27.2,
27.3, and 27.4 shall be personal to EarthLink Network, Inc.. and its
Affiliates, and such rights shall not inure to the benefit of any assignee or
subtenant of EarthLink Network, Inc. or its Affiliates.
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Section 27.7 Except for the rights provided to Tenant in Section
27.3, Tenant shall not, without the prior written consent of Landlord, use
the name of the Building for any purpose other than as the address of the
business to be conducted by Tenant in the Premises, and Tenant shall not do
or permit the doing of anything in connection with Tenant's business or
advertising (including brokers' flyers promoting sublease space) which in the
reasonable judgment of Landlord may reflect unfavorably on Landlord or the
Building or confuse or mislead the public as to any apparent connection or
relationship between Tenant and Landlord, the Building, or the Land.
ARTICLE 28
BROKERAGE
Section 28.1 Tenant and Landlord each represent and warrant to the
other that it has not entered into any agreement with, or otherwise had any
dealings with, any broker or agent in connection with the negotiation or
execution of this Lease which could form the basis of any claim by any such
broker or agent for a brokerage fee or commission, finder's fee, or any other
compensation of any kind or nature in connection herewith, other than with
Broker (whose fees shall be paid by Landlord pursuant to a separate
agreement), and each party shall, and hereby agrees to, indemnify and hold
the other harmless from all costs (including court costs, investigation
costs, and attorneys' fees), expenses, or liability for commissions or other
compensation claimed by any broker or agent with respect to this Lease which
arise out of any agreement or dealings, or alleged agreement or dealings,
between the indemnifying party and any such agent or broker, other than with
Broker. This provision shall survive the expiration or earlier termination of
this Lease.
ARTICLE 29
OBSERVANCE OF RULES AND REGULATIONS
Section 29.1 Tenant and Tenant's servants, employees, agents,
visitors, and licensees shall observe faithfully and comply strictly with all
Rules and Regulations attached to this Lease as Exhibit H as such Rules and
Regulations may be changed from time to time provided that the same are
applied to all tenants in a consistent and nondiscriminatory manner. Landlord
shall at all times have the right to make reasonable changes in and additions
to such Rules and Regulations; provided Landlord gives Tenant prior notice of
such changes and provided that such new rules and regulations or changes in
existing rules and regulations do not conflict with this Lease, and do not
materially interfere with the lawful conduct of Tenant's business in the
Premises or reduce the rights of Tenant hereunder in a manner which is more
than de minimis. Any failure by Landlord to enforce any of the Rules and
Regulations now or hereafter in effect, either against Tenant or any other
tenant in the Building, shall not constitute a waiver of any such Rules and
Regulations. Landlord shall not be liable to Tenant for the failure or
refusal by any other tenant, guest, invitee, visitor, or occupant of the
Building to comply with any of the Rules and Regulations.
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ARTICLE 30
ROOF TOP COMMUNICATIONS EQUIPMENT
Section 30.1 At Tenant's sole cost and expense, Tenant shall have
the right to install, use, maintain, repair and remove a satellite dish,
television antennas, and related equipment on the roof of the Building
("Telecommunications Equipment"). The location of the Telecommunication
Equipment on the roof, its size, dimension and capacity and the plans for its
construction and installation shall be subject to Landlord's prior written
approval. Prior to installing the satellite dish, Tenant shall obtain the
approval of all governmental authorities having jurisdiction over the
satellite dish and all permits required for its use and operation. Tenant
shall provide copies of all such approvals and permits to Landlord as a
condition to obtaining Landlord's consent for such installation. Tenant's use
and operation of the satellite dish shall conform to all applicable laws and
regulations and such usage shall not interfere with the operations of
Telecommunications Equipment of other tenants in the Project.
Section 30.2 Upon expiration of the Lease, Tenant shall be
responsible for all costs and expenses associated with the removal of the
Telecommunications Equipment and the restoration of the area where such
equipment is located to the condition it was in prior to such installation.
Tenant agrees to indemnify and hold Landlord harmless from and against any
losses, costs or damages incurred by Landlord, which arise from or result
from Tenant's use of the Telecommunications Equipment satellite dish.
Section 30.3 Tenant shall pay a monthly fee for the rights set forth
in this Article at a rate equal to the prevailing market fee, as it may be
increased or decreased from time to time during the Term. Notwithstanding the
foregoing, Tenant may install an 18 inch DSS dish and may use such DSS dish
during the Term. If Tenant installs such 18 inch DSS dish during the first
twelve months after the Commencement Date, Tenant may use such dish without
the necessity of paying a monthly fee. If Tenant installs such 18 inch DSS
dish after such twelve month period, Tenant shall pay a monthly fee for the
usage of such dish.
ARTICLE 31
NOTICES
Section 31.1 All notices, consents, demands, requests, documents, or
other communications (other than payment of Rent) required or permitted
hereunder (collectively, "notices") shall be deemed given, when hand
delivered or on the first business day after deposit for delivery by air
express courier (with signed receipts) to the other party, or on the second
Business Day after deposit in the United States mail, postage prepaid,
certified, return receipt requested, except for notice of change of address
which shall be deemed given only upon actual receipt. The addresses of the
parties for notices are set forth in Article 1, or any such other addresses
subsequently specified by each party in notices given pursuant to this
Section 24.1.
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ARTICLE 32
MISCELLANEOUS
Section 32.1 PROFESSIONAL FEES. In any action or proceeding brought
by either party against the other under this Lease, the prevailing party
shall be entitled to recover from the other party its professional fees for
attorneys, appraisers and accountants, its investigation costs, and any other
legal expenses and court costs incurred by the prevailing party in such
action or proceeding.
Section 32.2 REIMBURSEMENTS. Wherever the Lease requires Tenant to
reimburse Landlord for the cost of any item, such costs will be the customary
charge periodically established by Landlord for such item which may include,
at the discretion of Landlord, a reasonable allocation of overhead,
administrative, and related costs and a Supervision Fee, if applicable, all
as reasonably determined by Landlord. All such charges shall be payable upon
demand as Rent.
Section 32.3 SEVERABILITY. Every agreement contained in this Lease
is, and shall be construed as, a separate and independent agreement. If any
term of this Lease or the application thereof to any person or circumstances
shall be invalid or unenforceable, the remaining agreements contained in this
Lease shall not be affected.
Section 32.4 NON-MERGER. There shall be no merger of this Lease with
any ground leasehold interest or the fee estate in the Project or any part
thereof by reason of the fact that the same person may acquire or hold,
directly or indirectly, this Lease or any interest in this Lease as well as
any ground leasehold interest or fee estate in the Project or any interest in
such fee estate.
Section 32.5 LANDLORD'S LIABILITY. Anything contained in this Lease
to the contrary notwithstanding, Tenant agrees that Tenant shall look solely
to the lesser of (i) Landlord's equity interest in the Building and (ii)
twenty percent (20%) of the appraised value of the Building for the
collection of any judgment or other judicial process requiring the payment of
money by Landlord for any default or breach by Landlord under this Lease,
subject, however, to the prior rights of any mortgagee or lessor of the
Project. No other assets of Landlord or any partners, shareholders, or other
principals of Landlord shall be subject to levy, execution or other judicial
process for the satisfaction of Tenant's claim.
Section 32.6 FORCE MAJEURE. Whenever the period of time is herein
prescribed for action to be taken by Landlord, Landlord shall not be liable or
responsible for, and there shall be excluded from the computation for any such
period of time, any delays due to force majeure, which term shall include
strikes, riots, acts of God, shortages of labor or materials, war, governmental
approvals, laws, regulations, or restrictions, or any other cause of any kind
whatsoever which is beyond the reasonable control of Landlord.
Section 32.7 HEADINGS. The article headings contained in this Lease are
for convenience only and shall not enlarge or limit the scope or meaning of the
various and several articles hereof. Words in the singular number shall be held
to include the plural, unless the context otherwise requires. All agreements and
covenants herein contained shall be binding
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upon the respective heirs, personal representatives, and successors and
assigns of the parties thereto.
Section 32.8 SUCCESSORS AND ASSIGNS. All agreements and covenants
herein contained shall be binding upon the respective heirs, personal
representatives, successors and assigns or the parties hereto. If there be
more than one Tenant, the obligations hereunder imposed upon Tenant shall be
joint and several. Notwithstanding the foregoing, nothing contained in this
Section 32.8 shall be deemed to override Article 8.
Section 32.9 LANDLORD'S REPRESENTATIONS. Neither Landlord nor
Landlord's agents or brokers have made any representations or promises with
respect to the Premises, the Building, the Parking Facility, the Land, or any
other portions of the Project except as herein expressly set forth and all
reliance with respect to any representations or promises is based solely on
those contained herein. No rights, easements, or licenses are acquired by
Tenant under this Lease by implication or otherwise except as, and unless,
expressly set forth in this Lease.
Section 32.10 ENTIRE AGREEMENT; AMENDMENTS. This Lease and the
Exhibits and Riders attached hereto set forth the entire agreement between
the parties and cancel all prior negotiations, arrangements, brochures,
agreements, and understandings, if any, between Landlord and Tenant regarding
the subject matter of this Lease. No amendment or modification of this Lease
shall be binding or valid unless expressed in writing executed by both
parties hereto.
Section 32.11 AUTHORITY. If either party signs as a corporation,
execution hereof shall constitute a representation and warranty by such party
that it is a duly organized and existing corporation, that it has been and is
qualified to do business in the State of California and in good standing with
the State of California, that the corporation has full right and authority to
enter into this Lease, and that all persons signing on behalf of the
corporation were authorized to do so by appropriate corporate action. If
either party signs as a partnership, trust, or other legal entity, execution
hereof shall constitute a representation and warranty by such party that it
has complied with all applicable laws, rules, and governmental regulations
relative to its right to do business in the State of California, that such
entity has the full right and authority to enter into this Lease, and that
all persons signing on behalf of such entity were authorized to do so by any
and all necessary or appropriate partnership, trust, or other actions.
Section 32.12 GOVERNING LAW. This Lease shall be governed by and
construed under the laws of the State of California. Should any provision of
this Lease require judicial interpretation, Landlord and Tenant hereby agree
and stipulate that the court interpreting or considering same shall not apply
the presumption that the terms hereof shall be more strictly construed
against a party by reason of any rule or conclusion that a document should be
construed more strictly against the party who itself or through its agents
prepared the same, it being agreed that all parties hereto have participated
in the preparation of this Lease and that each party had full opportunity to
consult legal counsel of its choice before the execution of this Lease.
Section 32.13 CHANGES TO PROJECT BY LANDLORD. Landlord shall have
the unrestricted right to make changes to all portions of the Project in
Landlord's discretion for the purpose of improving access or security to the
Project or the flow of pedestrian and vehicular traffic therein.
55
Landlord shall have the right at any time, without the same constituting an
actual or constructive eviction and without incurring any liability to Tenant
therefor, on any multi-tenanted floor, to change the arrangement or location
of entrances or passageways, doors and doorways, corridors, elevators,
stairs, bathrooms, or any other Common Areas so long as reasonable access to
the Premises remains available. Landlord shall also have the right (a) to
rearrange, change, expand or contract portions of the Project constituting
Common Areas (b) to use Common Areas while engaged in making improvements,
repairs or alterations to the Project, or any portion thereof, and (c) to do
and perform such other acts and make such other changes in to or with respect
to the Project, or any portion thereof, as Landlord may deem to be
appropriate. Notwithstanding the foregoing, in the exercise of the rights
provided under this Article, Landlord shall not unreasonably interfere with
Tenant's use of its Premises and shall use commercially reasonable efforts to
minimize any such interference or interruption. Landlord shall be entitled to
change the name or address of the Building or the Project. Landlord shall
have the right to close, from time to time, the Common Areas and other
portions of the Project for such temporary periods as Landlord deems legally
sufficient to evidence Landlord's ownership and control thereof and to
prevent any claim of adverse possession by, or any implied or actual
dedication to, the public or any party other than Landlord.
Section 32.14 TIME OF ESSENCE. Time is of the essence of this Lease.
Section 32.15 LANDLORD'S ACCEPTANCE OF LEASE. The submission of this
Lease to Tenant shall not be construed as an offer and Tenant shall not have
any rights with respect thereto unless said Lease is consented to by any
mortgagee, and any lessor of Landlord, to the extent such consent is
required, and Landlord executes a copy of this Lease and delivers the same to
Tenant.
Section 32.16 PERFORMANCE BY TENANT. All covenants and agreements to
be performed by Tenant under any of the terms of this Lease shall be
performed by Tenant, at Tenant's sole cost and expense, and without any
abatement of Rent. If Tenant shall fail to pay any Rent, other than Base
Rent, required to be paid by it hereunder or shall fail to perform any other
act on its part to be performed hereunder, and such failure shall continue
for longer than the period of cure, if any, permitted in Section 13.1,
Landlord may, at its option, without waiving or releasing Tenant from
obligations of Tenant, make any such payment or perform any such other act on
behalf of Tenant. All sums so paid by Landlord and all necessary incidental
costs, together with interest thereon at the Interest Rate and Landlord's
Supervision Fee, if applicable, from the date of such payment by Landlord,
shall be payable to Landlord on demand. Tenant covenants to pay any such
sums, and Landlord shall have (in addition to any other right or remedy of
Landlord) the same rights and remedies in the event of the non-payment
thereof by Tenant as in the case of default by Tenant in the payment of Rent.
Section 32.17 FINANCIAL STATEMENTS. At any time during the term of
this Lease, Tenant shall, upon twenty (20) days prior written notice from
Landlord, provide Landlord with a current financial statement and financial
statements of the two (2) years prior to the current financial statement
year. Such statement shall be prepared in accordance with generally accepted
accounting principles and, if such is the normal practice of Tenant, shall be
audited by an independent certified public accountant.
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Section 32.18 TRAFFIC. Tenant hereby agrees to designate one of its
employees to act as a liaison with Landlord to facilitate and coordinate such
programs as may be required by governmental agencies to reduce the traffic
generated by Natomas Corporate Center as required by the City of Sacramento's
Trip Reduction Ordinance and to facilitate the use of public transportation.
Tenant further agrees, at Tenant's cost, to become a member of, and
participate in the programs initiated by, the South Natomas Transportation
Management Association.
Section 32.19 WAIVER OF TRIAL BY JURY. EACH PARTY HERETO (WHICH
INCLUDES ANY ASSIGNEE, SUCCESSOR, HEIR OR PERSONAL REPRESENTATIVE OF A PARTY)
SHALL NOT SEEK A JURY TRIAL, HEREBY WAIVES TRIAL BY JURY, AND HEREBY FURTHER
WAIVES ANY OBJECTION TO VENUE IN THE COUNTY IN WHICH THE PROJECT IS LOCATED,
AND AGREES AND CONSENTS TO PERSONAL JURISDICTION OF THE COURTS OF THE STATE
OF CALIFORNIA, IN ANY ACTION OR PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY
PARTY HERETO AGAINST THE OTHER ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN
ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT,
TENANT'S USE OR OCCUPANCY OF THE PREMISES, OR ANY CLAIM OF INJURY OR DAMAGE,
OR THE ENFORCEMENT OF ANY REMEDY UNDER ANY STATUTE, EMERGENCY OR OTHERWISE,
WHETHER ANY OF THE FOREGOING IS BASED ON THIS LEASE OR ON TORT LAW. NO PARTY
WILL SEEK TO CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY HAS BEEN WAIVED WITH
ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT OR HAS NOT BEEN WAIVED. IT IS
THE INTENTION OF THE PARTIES THAT THESE PROVISIONS SHALL BE SUBJECT TO NO
EXCEPTIONS. BY EXECUTION OF THIS LEASE THE PARTIES AGREE THAT THIS PROVISION
MAY BE FILED BY ANY PARTY HERETO WITH THE CLERK OR JUDGE BEFORE WHOM ANY
ACTION IS INSTITUTED, WHICH FILING SHALL CONSTITUTE THE WRITTEN CONSENT TO A
WAIVER OF JURY TRIAL PURSUANT TO AND IN ACCORDANCE WITH SECTION 631 OF THE
CALIFORNIA CODE OF CIVIL PROCEDURE. NO PARTY HAS IN ANY WAY AGREED WITH OR
REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION WILL NOT
BE FULLY ENFORCED IN ALL INSTANCES. THE PROVISIONS OF THIS SECTION SHALL
SURVIVE THE EXPIRATION OR EARLIER TERMINATION OF THIS LEASE.
Section 32.20 CONSENTS. Wherever the consent or approval shall be
required or requested of either Tenant or Landlord under the Lease, the
giving of such consent or approval shall not be unreasonably withheld,
conditioned or delayed by the party from whom such consent is required or
requested.
Section 32.21 ANCIENT LIGHTS. Any elimination or shutting off of
light, air, or view (including, without limitation, by any structure which
may be erected on lands adjacent to the Building) shall in no way affect this
Lease and Landlord shall have no liability to Tenant with respect thereto.
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ARTICLE 33
OTHER DEFINITIONS
When used in this Lease, the terms set forth below shall have the
following meanings: (a) "Business Days" shall mean Monday through Friday
(except for Holidays); "Business Hours" shall mean: 7:00 a.m. to 6:00 p.m. on
Monday through Friday and 9:00 a.m. to 1:00 p.m. on Saturdays; and "Holidays"
shall mean those holidays designated by Landlord, which holidays shall be
consistent with those holidays designated by landlords of other Comparison
Projects. (b) "Common Areas" shall mean those certain areas and facilities of
the Building and the Parking Facility and those certain improvements to the
Land which are from time to time provided by Landlord for the use of tenants
of the Building and their employees, clients, customers, licensees and
invitees or for use by the public, which facilities and improvements include
any and all corridors, elevator foyers, vending areas, bathrooms on
multi-tenant floors, electrical and telephone rooms, mechanical rooms,
janitorial areas and other similar facilities of the Building and of the
Parking Facility and any and all grounds, parks, landscaped areas, outside
sitting areas, sidewalks, walkways, tunnels, pedestrianways, skybridges, and
generally all other improvements located on the Land, or which connect the
Land to other buildings. (c) The words "day" or "days" shall refer to
calendar days, except where "Business Days" are specified. (d) The words
"herein", "hereof", "hereby", "hereunder" and words of similar import shall
be construed to refer to this Lease as a whole and not to any particular
Article or Section thereof unless expressly so stated. (e) The words
"include" and "including" shall be construed as if followed by the phrase
"without being limited to." (g) Reference to Landlord as having "no liability
to Tenant" or being "without liability to Tenant" or words of like import
shall include in its meaning that Tenant is not entitled to terminate this
Lease, or to claim actual or constructive eviction, partial or total, or to
receive any abatement or diminution of rent, or to be relieved in any manner
of any of Tenant's other obligations hereunder, or to be compensated for loss
or injury suffered or to enforce any other right or kind of liability
whatsoever against Landlord under or with respect to this Lease or with
respect to Tenant's use or occupancy of the Premises. (h) A "repair" shall be
deemed to include such rebuilding, replacement and restoration as may be
necessary to achieve and maintain good working order and condition. (i) The
"termination of this Lease" and words of like import includes the expiration
of the Term or the cancellation of this Lease pursuant to any of the
provisions of this Lease or to law. Upon the termination of this Lease, the
Term shall end at 11:59 p.m. on the date of termination as if such date were
the Expiration Date, and neither party shall have any further obligation or
liability to the other after such termination except (i) as shall be
expressly provided for in this Lease and (ii) for such obligations as by
their nature or under the circumstances can only be, or by the provisions of
this Lease, may be, performed after such termination and, in any event,
unless expressly otherwise provided in this Lease, any liability for a
payment (which shall be apportioned as of the date of such termination) which
shall have accrued to or with respect to any period ending at the time of
termination shall survive the termination of this Lease. (j) The "terms of
this Lease" shall be deemed to include all terms, covenants, conditions,
provisions, obligations, limitations, restrictions, reservations and
agreements contained in this Lease. (k) "Tenant" shall be deemed to include
Tenant's successors and assigns (to the extent permitted by Landlord) and any
and all occupants of the Premises permitted by Landlord and claiming by,
through or under Tenant. (l) A "year" shall mean a calendar year.
58
IN WITNESS WHEREOF, Landlord and Tenant have set their hands and seals
hereunto and have caused this Lease to be executed by duly authorized officials
thereof, as of the day and year set forth on the cover page hereof.
LANDLORD:
XXXXXXXX PROPERTIES NATOMAS, L.P.,
a Delaware limited partnership
By: Xxxxxxxx Properties Natomas, Inc.
a Delaware corporation,
general partner
By:______________________________________
Name:____________________________________
Title:___________________________________
By:______________________________________
Name:____________________________________
Title:___________________________________
TENANT:
EARTHLINK NETWORK, INC.,
A Delaware corporation
By:__________________________________________________
Name:________________________________________________
Title:_______________________________________________
By:__________________________________________________
Name:________________________________________________
Title:_______________________________________________
59
EXHIBIT A
FLOOR PLAN OF THE PREMISES
See Attachment
1
EXHIBIT B
PARKING FACILITY
See Attachment
1
EXHIBIT C
WORKLETTER AGREEMENT
This Workletter Agreement ("Workletter") is attached to and a part
of a certain Lease Agreement dated as of September 1, 1999 executed
concurrently herewith by XXXXXXXX PROPERTIES NATOMAS, LP. as Landlord, and
EARTHLINK NETWORK, INC., as Tenant, for the Premises as described therein
(the "Lease").
1. DEFINED TERMS. Capitalized terms used in this Workletter shall
have the same meanings set forth in the Lease except as otherwise specified
herein and except for terms capitalized in the ordinary course of
punctuation. For purposes of this Workletter the following capitalized terms
have the following meanings:
1.1. "Design Documents" means the layout plans and
specifications for the real property improvements to be constructed by Tenant
in the Premises which are the final product of the preliminary space planning
and which include, among other things, all partitions, doors, HVAC (heating,
ventilating and air conditioning systems) distribution, ceiling systems,
light fixtures, plumbing installations, electrical installations and outlets,
telephone installations and outlets, any other installations required by
Tenant, fire and life-safety systems, wall finishes and floor coverings,
whether to be newly installed or requiring changes from the as-is condition
of the Premises as of the date of execution of the Lease, all in sufficient
detail for Landlord's review;
1.2 "Construction Documents" means, collectively, (a) a
copy of the proposed construction contract for the Tenant Improvements, (b) a
written assignment of the construction contract, creating a prior perfected
security interest in all of Tenant's rights thereunder in favor of Landlord
and containing the written consent of Tenant's general contractor to the
assignment, (c) a copy of the architect's contract for the Tenant
Improvements, (d) a written assignment of the architect's contract, creating
a prior perfected security interest in all of Tenant's rights thereunder in
favor of Landlord and containing the written consent of Tenant's architect to
the assignment, and (e) a list of all subcontractors and materials suppliers
proposed to be used by Tenant in connection with the construction of the
Tenant Improvements;
1.3 "Construction Drawings" means the final architectural
plans and specifications, and engineering plans and specifications, for the
real property improvements to be constructed by Tenant in the Premises in
sufficient detail to be submitted for governmental approvals and building
permits and to serve as the detailed construction drawings and specifications
for the contractor, and shall include, among other things, all partitions,
doors, HVAC (heating, ventilating and air conditioning systems) distribution,
ceiling systems, light fixtures, plumbing installations, electrical
installations and outlets, telephone installations and outlets, any other
installations required by Tenant, fire and life-safety systems, wall finishes
and floor coverings, whether to be newly installed or requiring changes from
the as-is condition of the Premises as of the date of execution of the Lease;
1
1.4 "Schedule of Values" means the allocation of costs to
the various portions of the work involved in the construction and
installation of the Tenant Improvements and setting forth Tenant's
reasonable, good faith estimate of the timing of Landlord's disbursements of
the Tenant Improvement Allowance and the amount of each such disbursement;
1.5 "Tenant Improvements" means all real property
improvements to be constructed by Tenant as shown on the Construction
Drawings, as they may be modified as provided herein;
1.6 "Tenant Improvement Allowance" means an amount not in
excess of $1,429,575.00 [$15.00 per rentable square feet of the Premises] to
be paid by Landlord on account of all construction costs, space planning and
design fees, architecture and engineering fees, permit fees and construction
management fees incurred by Tenant in designing and constructing the Tenant
Improvements. Tenant shall not be entitled to any cash payment, credit,
offset or other benefit based on any excess of the Tenant Improvement
Allowance over the actual costs of the construction and installation of the
Tenant Improvements.
2. DEVELOPMENT OF PLANS
2.1 APPROVAL OF ARCHITECT AND CONTRACTOR. Tenant's
architect, contractor, major suppliers and major subcontractors shall each be
subject to the reasonable approval of Landlord. Landlord may request
information about these entities, including financial statements and a
summary of representative projects. Tenant shall use the Project's
electrical, fire and life safety and HVAC contractors who will provide
pricing competitive with the marketplace for such services. If the bids are
not competitive, Landlord and Tenant shall agree on other electrical and HVAC
contractors to bid the work. Tenant may designate the electrical contractor
for the installation and modification of electrical work in the Premises
provided that such electrical contractor shall work with the Project's
electrical contractor to insure that all electrical work in the Building's
systems is done to the satisfaction of Landlord.
2.2 APPROVAL OF CONTRACTORS. If Landlord does not approve
the architect, contractor, any major subcontractor or major supplier, the
parties shall negotiate in good faith to select another architect,
contractor, subcontractor or materials supplier mutually acceptable to the
parties. Landlord shall be entitled to withhold its approval of any entity or
person, who, in Landlord's determination, is financially or otherwise
professionally unqualified to design or construct the Tenant Improvements. In
addition, in the event Landlord determines that a performance bond and labor
and materials payment bond is necessary to ensure lien-free completion of the
Tenant Improvements, Landlord may condition its approval of a contractor upon
Tenant's obtaining such bonds, each in an amount equal to one hundred percent
(100 %) of the estimated cost of the Tenant Improvements and in a form
reasonably acceptable to Landlord. Notwithstanding the foregoing, Landlord's
approval of any architect, contractor, subcontractor or materials supplier
shall not constitute Landlord's representation or warranty that any such
architect, contractor, subcontractor or supplier is in fact qualified to
perform the Tenant Improvements.
2.3 DESIGN DOCUMENTS. Prior to Tenant's commencement of the
construction of the Tenant Improvements, Tenant shall prepare the Design
Documents and deliver them to
2
Landlord. Within five (5) business days following delivery of the Design
Documents, Landlord shall approve the Design Documents or deliver to Tenant
written notice of their disapproval which shall specify the changes that must
be made to the Design Documents as a condition of Landlord's approval. Within
five (5) business days following receipt of Landlord's notice of disapproval,
Tenant shall deliver a revised set of Design Documents to Landlord which
shall incorporate the changes specified in Landlord's notice of disapproval.
2.4 CONSTRUCTION DRAWINGS. As soon as the Design Documents
are approved by Landlord, Tenant shall prepare the Construction Drawings that
are consistent with and logical evolutions of the Design Documents and the
Schedule of Values. The Construction Drawings and Schedule of Values shall be
delivered to Landlord for approval. If Landlord does not approve the
Construction Drawings and/or the Schedule of Values, Landlord shall deliver
to Tenant, as soon as reasonably possible but within five (5) business days
following receipt thereof, written notice of such disapproval. The notice
shall specify the changes that must be made to the Construction Drawings
and/or the Schedule of Values as a condition for obtaining Landlord's
approval. Within five (5) business days following receipt of Landlord's
notice of disapproval, Tenant shall deliver a revised set of Construction
Drawings and/or Schedule of Values to Landlord, which incorporate the changes
specified in Landlord's notice of disapproval. Landlord and Tenant shall each
sign a copy of the approved Construction Drawings and Schedule of Values.
2.5 LANDLORD'S APPROVAL. If the Construction Drawings
conform to the Design Documents and this Workletter, Landlord's approval
shall not be unreasonably withheld. If the Construction Drawings show work
requiring a modification or change to the shell of the Building, Landlord
shall not be deemed unreasonable if Landlord disapproves such Construction
Drawings or if Landlord conditions its consent to such Construction Drawings
upon Tenant's paying to Landlord, prior to the commencement of construction,
the full cost of modifying or changing the shell of the Building. Landlord
may, at Landlord's option, have the Design Documents or the Construction
Drawings reviewed by Landlord's architect, engineer and/or construction
manager; provided, however, that any such review shall be performed within
the time periods set forth above for Landlord's review of the Design
Documents and the Construction Drawings. Tenant shall reimburse the cost of
any such review to Landlord within ten (10) days following demand therefor by
Landlord, to the extent reimbursable under the terms of this Workletter. In
no event shall the approval by Landlord (or Landlord's architect, engineer or
construction manager) of the Design Documents or the Construction Drawings
constitute a representation or warranty by Landlord (or Landlord's architect,
engineer or construction manager) of: (i) their accuracy, sufficiency or
completeness for their intended purpose; (ii) the absence of design defects
or construction flaws; or (iii) their compliance with applicable laws. Tenant
agrees that Landlord (and Landlord's architect, engineer and construction
manager) shall incur no liability by reason of its approval or disapproval of
any item.
2.6 COMPLIANCE WITH LAWS. Tenant covenants, agrees,
represents and warrants that the Design Documents and Construction Drawings
(i) shall be in a form satisfactory for filing with appropriate governmental
authorities and (ii) shall conform to all applicable codes, rules,
regulations and ordinances of all governing authorities, including all
building codes and the ADA.
3
2.7 CHANGES. No changes shall be made to the Design
Documents or the Construction Drawings without the prior written consent of
Landlord. All change orders requested by Tenant shall be made in writing and
shall specify any added or reduced cost resulting therefrom. Any change
proposed by Tenant shall be approved or disapproved by Landlord within five
(5) business days following Landlord's receipt of detailed information
pertaining to the proposed change. Landlord's failure to approve any proposed
change within five (5) business days shall be deemed Landlord's disapproval
thereof.
3. CONSTRUCTION OF TENANT IMPROVEMENTS
3.1 PERMITS AND APPROVALS. Tenant shall submit the
Construction Drawings to all appropriate governmental agencies for approval and
shall not commence construction or installation of the Tenant Improvements
unless and until Tenant has obtained all necessary permits and approvals and has
delivered copies of these documents to Landlord.
3.2 CONSTRUCTION DOCUMENTS. Prior to the commencement of
construction and installation of the Tenant Improvements, Tenant shall submit
to Landlord, for Landlord's approval, the Construction Documents. Within five
(5) business days following the delivery of all of the Construction
Documents, Landlord shall approve such information or deliver to Tenant
written notice of disapproval of all or any information contained therein. If
Landlord does not approve the proposed construction contract, proposed form
of subcontractor agreement or the proposed architect's contract for the
Tenant Improvements, Landlord's notice shall specify the changes that must be
made to these agreements as a condition of Landlord's approval. Within five
(5) business days following receipt of Landlord's notice of disapproval,
Tenant shall deliver to Landlord revised copies of the proposed architect's
and/or contractor's agreements and/or subcontractor's agreements which
incorporate the specified changes. Following approval of the Construction
Documents by Landlord, Tenant shall not materially amend, materially modify
or terminate any of the Construction Documents without Landlord's prior
written approval.
3.3 COMMENCEMENT AND COMPLETION OF CONSTRUCTION. Following
Tenant's satisfaction of all of the requirements of Section 2 above and this
Section 3, Tenant shall commence construction and installation of the Tenant
Improvements in accordance with the Construction Drawings and shall pursue
the same diligently to completion. Tenant covenants to give Landlord at least
ten (10) days' prior written notice of its commencement of construction or
delivery of materials to the Premises to enable Landlord to post a notice of
nonresponsibility respecting the Tenant Improvements.
3.4 BUILDING SYSTEMS. In no event shall Tenant interfere
with the provision of heating, plumbing, electrical or mechanical system
services to the Building, make any structural changes to the Building, make
any changes to the heating, plumbing, electrical or mechanical systems of the
Building, or make any changes to the Premises which would weaken or impair
the structural integrity of the Building, alter the aesthetic appearance of
the Building exterior, or which would affect any warranties applicable to the
Building or any improvements constructed or installed by Landlord therein,
without Landlord's prior written consent, which consent may be withheld in
Landlord's sole discretion. If Tenant performs works that pertains to the
structure of the building or the building's systems, Landlord may require
Tenant to engage Landlord's
4
structural engineer to design, supervise and monitor any construction work
affecting either the Building systems or the structure of the Building.
3.5 INSPECTIONS. Landlord and its officers, agents or
employees shall have the right at all reasonable times to enter upon the
Premises and inspect the Tenant Improvements and to determine that the same
are in conformity with the Construction Drawings and all of the requirements
of this Workletter. Tenant acknowledges, however, that Landlord is under no
obligation to supervise, inspect or inform Tenant of the progress of
construction and Tenant agrees that it shall not rely upon Landlord to
perform any of these activities. Neither the inspection rights granted to
Landlord in this Workletter, nor the making of such inspections by Landlord,
shall operate as a waiver of any rights of Landlord to require that the
construction and installation of the Tenant Improvements conform with this
Workletter, the Construction Drawings and all requirements of applicable law.
3.6 WALK-THROUGH OF TENANT IMPROVEMENTS. Within two (2)
business days following the completion of the Tenant Improvements, Tenant
shall notify Landlord and shall provide Landlord an opportunity to inspect
the Tenant Improvements. Within seven (7) business days following Tenant's
notice, Landlord (or its representative) shall walk-through and inspect
Tenant's work on the Tenant Improvements and shall either approve Tenant's
work or advise Tenant in writing of any defects or uncompleted items. Tenant
shall promptly repair such defects or uncompleted items to Landlord's
reasonable satisfaction. Landlord's approval of the Tenant Improvements, or
Landlord's failure to advise Tenant of any defects or uncompleted items in
the Tenant Improvements, shall not relieve Tenant of responsibility for
constructing and installing the Tenant Improvements in accordance with the
Construction Drawings, this Workletter and all applicable laws.
3.7 FINAL DOCUMENTS. Following completion of the Tenant
Improvements, Tenant shall (a) obtain and deliver to Landlord a copy of the
certificate of occupancy for the Tenant Improvements from the governmental
agency having jurisdiction thereof; (b) promptly cause a notice of completion
to be validly recorded for the Tenant Improvements; (c) furnish Landlord with
unconditional waivers of lien in statutory form from all parties performing
labor and/or supplying equipment and/or materials in connection with the
Tenant Improvements, including Tenant's architect(s); (d) deliver to Landlord
a certificate of Tenant's architect(s) certifying completion of the Tenant
Improvements in substantial accordance with the Construction Drawings; (e)
deliver to Landlord a certificate of Tenant's contractor(s) certifying
completion of the Tenant Improvements in substantial accordance with the
Construction Drawings; (f) deliver to Landlord a full set of reproducible
as-built drawings (signed and dated by the contractor and each responsible
subcontractor) for the Tenant Improvements; and (g) Tenant shall deliver to
Landlord copies of all written construction and equipment warranties and
manuals related to the Tenant Improvements.
4. PAYMENT OF COSTS OF TENANT IMPROVEMENTS.
4.1 TENANT'S COST. Any cost incurred in the design or
construction of the Tenant Improvements in excess of the Tenant Improvement
Allowance shall be borne by Tenant in accordance with the terms and
conditions set forth below. The costs of the Tenant Improvements shall
include the following items:
5
(a) The costs of the architect, contractor,
suppliers and subcontractors and any other consultants retained by Tenant in
connection with the preparation of Design Documents and Constructions
Drawings, including, engineering costs associated with completion of the
State of California energy utilization calculations under Title 24
legislation;
(b) All costs of obtaining from the City of
Sacramento and any other governmental authority, approvals, building permits
and occupancy permits, if any;
(c) All costs of interior design and finish
schedule plans and specifications including as-built drawings;
(d) All costs of procuring, installing and
constructing the Tenant Improvements, including the cost of any services or
utilities made available by Landlord and including telephone and cabling
installation costs;
(e) All costs of designing, procuring,
constructing and installing Tenant Improvements in compliance with all
applicable laws, including with all building codes and the ADA;
(f) All fees payable to Landlord's architectural
or engineering firm if they are required to review, monitor or design any
portion of the Tenant Improvements; provided however that at the time that
Landlord reviews Tenant's Construction Documents, Landlord shall inform
Tenant of any such architects and engineers which it intends to engage and
the estimated cost of such services; and,
(g) A construction management and supervision fee,
in an amount of up to $200.00 per hour for supervisory work performed by
Landlord's in-house personnel ("Supervisory Fee"). The Supervisory Fee shall
not exceed 3% of the actual total costs of the Tenant Improvements Costs.
In no event shall the Tenant Improvement Allowance be used to pay
any costs of procuring or installing in the Premises any trade fixtures,
equipment, furniture, furnishings, or other personal property to be used in
the Premises by Tenant, which cost shall be paid by Tenant.
4.2 ESTIMATED TENANT IMPROVEMENT COST. Prior to the
construction of the Tenant Improvements, Tenant shall cause its general
contractor to submit an estimate of the total cost of constructing the Tenant
Improvements. In the event that the aggregate of the cost estimated by
Tenant's general contractor and the cost of designing the Tenant Improvements
(collectively, the "Estimated Tenant Improvements Cost") exceeds the Tenant
Improvement Allowance, Landlord and Tenant shall determine Landlord's share
of the Estimated Tenant Improvements Cost ("Landlord's Share") and Tenant's
share of the Estimated Tenant Improvements Cost ("Tenant's Share") as follows:
A. Landlord's Share shall be a fraction, the
numerator of which is the Tenant Improvement Allowance, and the denominator
of which is the Estimated Tenant Improvements Cost.
6
B. Tenant's Share shall be a fraction, the
numerator of which is the portion of the Estimated Tenant Improvements Cost
that exceeds the Tenant Improvement Allowance, and the denominator of which
is the Estimated Tenant Improvements Cost.
C. If Tenant's Share is more than $25,000.00,
prior to the commencement of construction of the Tenant Improvements, Tenant
shall deposit in with Landlord ("Tenant's Construction Account") funds equal
to Tenant's Share. Tenant's Construction Account shall be used by Landlord
only for the purpose of funding Tenant's Share of the Estimated Tenant
Improvements Cost. In the event of any change order or other event which
would increase the Estimated Tenant Improvements Cost, Tenant's Share shall
be appropriately adjusted to reflect the increase, and Tenant shall promptly
deposit sufficient funds with Landlord to equal the then outstanding unpaid
amount of Tenant's Share of such increased amount.
4.3 PROCEDURE FOR DISBURSEMENT OF THE TENANT IMPROVEMENT
ALLOWANCE. On or before the twenty-fifth (25th) day of each calendar month
during the construction of the Tenant Improvements, but in no event more
frequently than once every thirty (30) days, Tenant shall deliver to Landlord
such invoices marked paid and other evidence as Landlord shall reasonably
require of the cost of the design of the Tenant Improvements and the cost of
the Tenant Improvements already constructed and Landlord shall pay within
thirty (30) days of confirmation of such amount Landlord's Share and the
portion of Tenant's Share from Tenant's Construction Account of each amount
invoiced by Tenant's architect or Tenant's contractor; provided, however,
that no invoices or other evidence shall not be submitted by Tenant to
Landlord until all of the following, if appropriate, have occurred: (i)
Landlord has reasonably and timely determined that all of the Tenant
Improvements constructed to date have been satisfactorily completed in
accordance with the Construction Documents, based upon certifications
satisfactory to Landlord delivered by Tenant and Tenant's architect; and (ii)
Tenant has delivered to Landlord unconditional partial lien releases from the
general contractor and each subcontractor. Following substantial completion
of the Tenant Improvements and prior to Landlord's final disbursement of the
Tenant Improvement Allowance, Tenant shall comply with the requirements set
forth in Section 3.8 above, together with the following: (a) Tenant shall
have submitted to Landlord a cost breakdown of Tenant's final and total
construction costs incurred in connection with the Tenant Improvements,
together with receipted invoices showing evidence of full payment therefor;
(b) Tenant shall have completed Landlord's punchlist items, and (c) the Lease
shall be in full force and effect and there shall exist no event of default
under the Lease or this Workletter, and no condition, event or act which,
with the passage of time or the giving of notice, or both, would constitute
an event of default under the Lease or this Workletter.
5. RENT COMMENCEMENT DATE. Notwithstanding anything in this
Workletter, Tenant shall commence payment of Rent on the Commencement Date of
the Lease and all activities of Tenant under this Workletter are subject to
and governed by all other provisions of the Lease, including without
limitation, Tenant's indemnification and insurance obligations.
6. GENERAL REQUIREMENTS FOR CONSTRUCTION.
7
6.1 TENANT'S OBLIGATION TO CONSTRUCT. Tenant shall
construct and install the Tenant Improvements in a good and workmanlike
manner in accordance with the Construction Drawings, this Workletter and all
applicable laws. Tenant shall be solely responsible for the payment of all
cost and expenses related to the construction and installation of the Tenant
Improvements, subject to reimbursement by Landlord as provided for in this
Workletter.
6.2 TENANT'S ACCESS TO THE PREMISES. Tenant shall
coordinate with the Building's project manager for access to the Premises and
the scheduling of construction work. Tenant shall exercise due diligence and
best efforts to ensure that Tenant's construction and installation of the
Tenant Improvements does not unreasonably interfere with the use and
enjoyment of other tenants of the Building or the Project. Landlord shall use
commercially reasonable efforts to accommodate Tenant's scheduling of
deliveries and construction activities.
6.3 COORDINATION OF CONSTRUCTION ACTIVITIES. If any
shutdown of plumbing, electrical or air conditioning equipment of the
Building becomes necessary during the course of construction of the Tenant
Improvements, Tenant shall notify Landlord and Landlord and Tenant shall
agree upon when, and upon what conditions, such shutdown may be made in order
to cause the least disruption to other tenants in the Building. Any damage to
the Building or the Project caused by Tenant or its contractor or
subcontractors in connection with the construction of the Tenant Improvements
shall be immediately repaired at Tenant's sole cost and expense.
6.4 PROTECTION AGAINST LIEN CLAIMS. Tenant agrees to fully
pay and discharge all claims for labor done and materials and services
furnished in connection with the construction of the Tenant Improvements, to
diligently file or procure the filing of a valid notice of completion within
ten (10) days following completion of construction of the Tenant
Improvements, to diligently file or procure the filing of a notice of
cessation upon any cessation of labor on the Tenant Improvements for a
continuous period of thirty (30) days or more, and to take all reasonable
steps to forestall the assertion of claims of lien against the Premises, the
Building or the Project. Upon the request of Landlord, Tenant shall provide
Landlord with satisfactory evidence of the release or removal (including
removal by appropriate surety bond) of all liens recorded against the
Premises, the Project, or any portion thereof, and all stop notices received
by Tenant.
6.5 INDEMNIFICATION. Tenant shall, at Tenant's sole cost
and expense, defend, indemnify, save and hold Landlord harmless from and
against any and all claims, liabilities, demands, losses, expenses, damages
or causes of actions (whether legal or equitable in nature) asserted by any
person, firm, corporation, governmental body or agency or entity arising out
of the construction of the Tenant Improvements. Tenant shall pay to Landlord
upon demand all claims, judgments, damages, losses or expenses (including
attorneys' fees) incurred by Landlord as a result of any legal action arising
out of the construction of the Tenant Improvements. This indemnification
shall be in addition to the insurance requirements set forth in the Lease and
this Workletter and the obligations hereunder shall survive the expiration or
termination of the Lease.
7. INSURANCE.
8
7.1 TENANT'S REQUIRED INSURANCE COVERAGE. At least five (5)
days prior to the date Tenant commences construction of the Tenant
Improvements, Tenant shall submit to Landlord evidence of (i) the insurance
coverage required under Article 16 of the Lease; and (ii) broad form
"Builder's Risk" property damage insurance with limits of not less than one
hundred percent (100%) of the estimated value of the Tenant Improvements. All
such policies shall provide that thirty (30) days' written notice must be
given to Landlord prior to termination or cancellation. The insurance
policies shall name Landlord and Landlord's property manager as additional
insureds and shall provide that Landlord, although an additional insured, may
recover for any loss suffered by Landlord or Landlord's agents by reason of
the negligence of Tenant or Tenant's contractors, subcontractors and/or
employees.
7.2 OTHER INSURANCE COVERAGE. At least five (5) business
days prior to the date Tenant commences construction of the Tenant
Improvements, Tenant shall deliver to Landlord certificates of insurance from
the carrier(s) providing insurance to Tenant's contractor and Tenant's
architect evidencing the following types of coverage in such amounts as are
reasonably determined by Landlord to be necessary for the construction of the
Tenant Improvements: (i) professional liability insurance; (ii) commercial
general liability insurance; (iii) business automobile liability insurance;
(iv) workers' compensation insurance; and (v) umbrella liability insurance.
The insurance specified in (i), (ii), (iii) and (v) above shall name Landlord
and Landlord's property manager as additional insureds, and all such policies
shall provide that thirty (30) days' written notice must be given to Landlord
prior to termination or cancellation.
7.3 WAIVERS OF CLAIMS AGAINST LANDLORD. Tenant waives, and
Tenant shall use best efforts to cause each of its architects, contractors,
suppliers and subcontractors to waive, all rights to recover against Landlord
and its agents, contractors and employees for any loss or damage arising from
a cause covered by insurance required to be carried by Tenant hereunder and
shall cause each respective insurer to waive all rights of subrogation
against Landlord and its agents, contractors and employees in connection
therewith to the same extent.
8. Default and Remedies.
8.1 DEFAULTS. Each of the following events shall constitute
an event of default ("Default") under this Workletter:
(a) Failure by Tenant to commence and/or complete
construction and installation of the Tenant Improvements in accordance with
the terms and conditions set forth in this Workletter or the failure by
Tenant to comply with any of the covenants, provisions or conditions of this
Workletter;
(b) Substantive deviations in construction from
the Construction Drawings (as determined by Landlord or its representative)
without the approval of Landlord, the appearance of defective workmanship or
materials in the construction of the Tenant Improvements which are not
corrected by Tenant within thirty (30) days after notice from Landlord (or if
the defect is such that it cannot reasonably be corrected within said thirty
(30) day period, the correction of such defect is not initiated by Tenant
within said thirty (30) day period and thereafter prosecuted diligently to
completion); and
9
(c) The default or breach by Tenant of any
provision of the Lease.
8.2 REMEDIES. In the event of a Default by Tenant under this
Workletter, Landlord shall thereafter have no further obligation to disburse
any portion of the Tenant Improvement Allowance unless and until such Default
is cured. Any such Default shall be a default under the Lease and shall
entitle Landlord to exercise all remedies set forth in the Lease. In
addition, upon the occurrence of a Default, Landlord shall have the right
(but not the obligation), at Tenant's sole cost and expense, to enter upon
the Premises and take over and complete construction and installation only as
to those areas where the construction or installation of the Tenant
Improvements has been commenced and such other areas to the extent necessary
to relet the Premises, and to make disbursements from the Tenant Improvement
Allowance toward completion of the Tenant Improvements. In connection with
undertaking such work, Landlord may discharge or replace the contractors or
subcontractors performing such work. Where substantial deviations from the
Construction Drawings have occurred which have not been approved by Landlord,
or defective or unworkmanlike labor or materials are being used in
construction of the Tenant Improvements, Landlord shall have the right to
demand that such labor or materials be corrected, and if the same are not so
corrected, shall have the right to immediately order the stoppage of all
construction until such condition is corrected, until the defective work is
corrected to Landlord's satisfaction.
9. FORCE AND EFFECT. The terms and conditions of this Workletter
supplement the Lease and shall be construed to be a part of the Lease and are
incorporated in the Lease. Without limiting the generality of the foregoing,
any default by any party hereunder shall have the same force and effect as a
default under the Lease. Should any inconsistency arise between this
Workletter and the Lease as to the specific matters that are the subject of
this Workletter, the terms and conditions of this Workletter shall control.
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EXHIBIT D
FORM OF COMMENCEMENT NOTICE
This Commencement Notice is delivered this ______ day of _______________, 1999,
by Xxxxxxxx Properties Natomas, L.P., a Delaware limited partnership
("Landlord") to Earthlink Network, Inc., a Delaware corporation ("Tenant"),
pursuant to the provisions of Section 3.03 of that certain Lease Agreement (the
"Lease") dated _______________, 19_____, by and between Landlord and Tenant
covering certain space in the Building known as ____________________. All terms
used herein with their initial letter capitalized shall have the meaning
assigned to such terms in the Lease.
W I T N E S S E T H:
The Premises, and all other improvements required to be constructed and
furnished by Landlord in accordance with the terms of the Lease have been
satisfactorily completed by the Landlord and accepted by the Tenant.
The Premises have been delivered to, and accepted by, the Tenant, subject to the
completion of "punch list" items.
The Commencement Date of the Lease is the ______ day of _______________,
19_____, and the Expiration Date is the ______ day of _______________, 19__.
The Base Rent is $_______________ per annum, payable in monthly installments of
$_______________, subject, however, to the provisions of the Lease relating to
adjustments of Tenant's Operating Costs Payment.
Remittance of the foregoing payments shall be made on the first day of each
month in accordance with the terms and conditions of the Lease at the following
address:
Xxxxxxxx Properties Natomas, L.P.
000 X. XxXxxxx Xxxxxx, Xxxx. 0000
Xxxxxxx, XX 00000-0000
1
IN WITNESS WHEREOF, this instrument has been duly executed by Landlord
as of the date first written above.
LANDLORD:
XXXXXXXX PROPERTIES NATOMAS, L.P.,
a Delaware limited partnership
By: Xxxxxxxx Properties Natomas Inc.
a Delaware corporation,
general partner
By:_______________
Name:_____________
Title:____________
By:_______________
Name:_____________
Title:____________
CONFIRMED AND AGREED
TENANT: EARTHLINK NETWORK, INC.,
A Delaware corporation
By:__________________________________________________
Name:________________________________________________
Title:_______________________________________________
By:__________________________________________________
Name:________________________________________________
Title:_______________________________________________
EXHIBIT - DO NOT EXECUTE
2
EXHIBIT E-1
SERVICES
JANITORIAL SPECIFICATIONS
SEE ATTACHMENT
1
EXHIBIT E-2
SERVICES
SECURITY GUIDELINES
Hours of Service:
Xxxx 1: 0700 - 1500 Hours, Sunday through Saturday
1500 - 2300 Hours, Sunday through Saturday
2300 - 0700 Hours, Sunday through Saturday
* (Monday through Friday this position is the Site Supervisor; Saturday and
Sunday this position is a regular officer)
Xxxx 2: 0700 - 1500 Hours, Sunday through Saturday
1500 - 2300 Hours, Sunday through Saturday
2300 - 0700 Hours, Sunday through Saturday
Xxxx 3: 1630 - 0030 Hours, Monday through Friday (overlap)
These hours are subject to change in order to meet the needs of the property.
BASIC DUTIES
Exterior/Interior Foot Patrol and Motor Patrol of Natomas Corporate Center
Parking/Speed Control in and around property during business hours (including
processing parking citations)
Walkdown/Lockdown Inspections of Property
Occasional security escort of employees from property to vehicles after hours
(request basis)
2
EXHIBIT E-3
SERVICES
UTILITY ALLOCATION FORMULA
SEE ATTACHMENT
3
EXHIBIT F
FORM OF SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
AGREEMENT
SEE ATTACHMENT
1
EXHIBIT G
ACQUIRED PROPERTY
SEE ATTACHMENT
1
EXHIBIT H
RULES AND REGULATIONS
1. Sidewalks, doorways, vestibules, halls, stairways and similar
areas shall not be obstructed by tenants or their officers, agents, servants,
and employees, or used for any purpose other than ingress and egress to and
from the Premises and for going from one part of the Building to another part
of the Building.
2. Plumbing fixtures and appliances shall be used only for the
purpose for which constructed, and no sweepings, rubbish, rags, or other
unsuitable material shall be thrown or placed therein. The cost of repairing
any stoppage or damage resulting to any such fixtures or appliances from
misuse on the part of a tenant or such tenant's officers, agents, servants,
and employees shall be paid by such tenant.
3. No signs, posters, advertisements, or notices shall be painted or
affixed on any of the windows or doors, or other part of the Building, except
of such color, size, and style, and in such places, as shall be first
approved in writing by the building manager. No nails, hooks, or screws shall
be driven into or inserted in any part of the structural portion Building,
except by Building maintenance personnel provided that Tenant may hang
pictures and decorative items in its Premises.
4. Directories will be placed by Landlord, at Landlord's own
expense, in conspicuous places in the Building. No other directories shall be
permitted.
5. The Premises shall not be used for conducting any barter, trade,
or exchange of goods or sale through promotional give-away gimmicks or any
business involving the sale of second-hand goods, insurance salvage stock, or
fire sale stock, and shall not be used for any auction or pawnshop business,
any fire sale, bankruptcy sale, going-out-of-business sale, moving sale,
bulk sale, or any other business which, because of merchandising methods or
otherwise, would tend to lower the first-class character of the Building.
6. Tenants shall not do anything, or permit anything to be done, in
or about the Building, or bring or keep anything therein, that will in any
way increase the possibility of fire or other casualty or obstruct or
interfere with the rights of, or otherwise injure or annoy, other tenants, or
do anything in conflict with the valid pertinent laws, rules, or regulations
of any governmental authority.
7. Tenant shall not place a load upon any floor of the premises
which exceeds to floor load per square foot which such floor was designed to
carry or which is allowed by applicable building code. Landlord may prescribe
the weight and position of all safes and heavy installations which Tenant
desires to place in the premises so as properly to distribute the weight
thereof. All damage done to the Building by the improper placing of heavy
items which overstress the floor will be repaired at the sole expense of the
Tenant.
8. A tenant shall notify the building manager when safes or other
heavy equipment are to be taken into or out of the Building. Moving of such
items shall be done under the supervision of the building manager, after
receiving written permission from him/her.
9. Corridor doors, when not in use, shall be kept closed.
10. All deliveries must be made via the service entrance and service
elevators during normal business hours or as otherwise directed or scheduled
by Landlord. Prior approval must be obtained from Landlord for any deliveries
that must be received after normal business hours.
11. Each tenant shall cooperate with building employees in keeping
the premises neat and clean.
12. Nothing shall be swept or thrown into the corridors, halls,
elevator shafts, or stairways. No birds, animals, or reptiles, or any other
creatures, shall be brought into or kept in or about the building.
13. Should a tenant require telegraphic, telephonic, annunciator, or
any other communication service, Landlord will direct the electricians and
installers where and how the wires are to be introduced and placed, and none
shall be introduced or placed except as Landlord shall direct.
14. Tenants shall not make or permit any improper noises in the
Building, or otherwise interfere in any way with other tenants or persons
having business with them.
15. No equipment of any kind shall be operated on the premises that
could in any way annoy any other tenant or impair any Building systems in the
Building without written consent of Landlord.
16. Business machines and mechanical equipment belonging to Tenant
which cause noise and/or vibration that my be transmitted to the structure of
the Building or to any leased space so as to be objectionable to Landlord or
any tenants in the Building shall be placed and maintained by Tenant, at
Tenant's expense, in setting of cork, rubber, or spring type noise and/or
vibration eliminators sufficient to eliminate vibration and/or noise.
17. Tenants shall not use or keep in the Building any inflammable or
explosive fluid or substance, or any illuminating material, unless it is
battery powered, UL approved. Notwithstanding the foregoing, Tenant may keep
customary amounts of materials customarily used in office environments, such
as cleaning fluids, copying machine inks, etc.
18. Tenants employees or agents, or anyone else who desires to enter
the Building after normal business hours, may be required to provide
appropriate identification and sign in upon entry, and sign out upon leaving,
giving the location during such person's stay and such person's time of
arrival and departure, and shall otherwise comply with any reasonable access
control procedures as Landlord may from time to time institute.
19. Landlord has the right to evacuate the Building in event of
emergency or catastrophe or as a drill.
20. If any governmental license or permit shall be required for the
proper and lawful conduct of Tenant's business, Tenant, before occupying the
Premises, shall procure and maintain such license or permit and submit it for
Landlord's inspection. Tenant shall at all times comply with the terms of any
such license or permit.
21. Landlord shall have the right, exercisable without notice and
without liability to any tenant, to change the name and street address of the
Building.
22. No animals shall be brought into the Building other than those
required by law (eg, seeing eye dogs).
23. Landlord reserves the right to rescind any of these Rules and
Regulations and make such other and further rules and regulations not
inconsistent with the express terms of the lease as in the judgment of
Landlord shall from time to time be needed for the safety, protection, care,
and cleanliness of the Building, the operation thereof, the preservation of
good order therein, and the protection and comfort of its tenants, their
agents, employees, and invitees, which Rules and Regulations when made and
notice thereof given to a tenant shall be binding upon him in like manner as
if originally herein prescribed; provided that such new Rules and Regulations
shall not reduce the rights of Tenant hereunder in a manner which is more
than de minimus. In the event of any conflict, inconsistency, or other
difference between the terms and provisions of these Rules and Regulations,
as now or hereafter in effect and the terms and provisions of any lease now
or hereafter in effect between Landlord and any tenant in the Building,
Landlord shall have the right to rely on the term or provision in either such
lease or such Rules and Regulations which is most restrictive on such tenant
and most favorable to Landlord. Notwithstanding the foregoing, Landlord shall
apply the Rules and Regulations consistently with respect to tenants in the
Building and in a nondiscriminatory manner.
