GOLDEN GATEWAY COMMONS BUILDING III
OFFICE LEASE
SHORENSTEIN REALTY INVESTORS, L.P.,
A CALIFORNIA LIMITED PARTNERSHIP,
Landlord
and
NORCAL WASTE SYSTEMS, INC.,
Tenant
DATED AS OF: January 12, 1998
TABLE OF CONTENTS
Paragraph Page
1. Premises 1
2. Certain Basic Lease Terms 1
3. Term; Delivery of Possession of Premises 2
4. Tenant Improvements 3
5. Monthly Rent 6
6. Deleted 7
7. Additional Rent: Increases in Operating Expenses and Tax Expenses 7
8. Use of Premises; Compliance with Law 11
9. Alterations and Restoration 13
10. Repair 14
11. Abandonment 15
12. Liens 15
13. Assignment and Subletting 15
14. Indemnification of Landlord 19
15. Insurance 20
16. Mutual Waiver of Subrogation Rights 22
17. Utilities 22
18. Personal Property and Other Taxes 24
19. Rules and Regulations 25
20. Surrender; Holding Over 25
21. Subordination and Attornment 26
22. Financing Condition 26
23. Entry by Landlord 26
24. Insolvency or Bankruptcy 27
25. Default and Remedies 27
26. Damage or Destruction 29
27. Eminent Domain 30
28. Landlord's Liability; Sale of Building 31
29. Estoppel Certificates 31
30. Right of Landlord to Perform 32
31. Late Charge 32
32. Attorneys' Fees; Waiver of Jury Trial 32
33. Waiver 33
34. Notices 33
35. Deleted 33
36. Defined Terms and Marginal Headings 33
37. Time and Applicable Law 34
38. Successors 34
39. Entire Agreement; Modifications 34
40. Light and Air 34
41. Name of Building 34
42. Severability 34
43. Authority 34
44. No Offer 34
45. Real Estate Broker 34
46. Consents and Approvals 35
47. Reserved Rights 35
48. Financial Statements 35
49. Parking 36
50. Deleted 37
51. Hazardous Substance Disclosure 37
52. Right of First Offer 37
53. Option to Renew 38
EXHIBITS:
A - Outline of Premises
B - Rules and Regulations
C - Outline of First Offer Area
D - Appraisal Procedure
LEASE
THIS LEASE is made as of the 12th day of January, 1998, between
SHORENSTEIN REALTY INVESTORS, L.P., a California limited partnership
("Landlord"), and NORCAL WASTE SYSTEMS, INC., a California corporation
("Tenant").
1. Premises. Landlord hereby leases to Tenant, and Tenant hereby leases
from Landlord, on the terms and conditions set forth herein, the space
outlined on the attached Exhibit A (the "Premises"). The Premises are located
on the floor(s) specified in Paragraph 2 below of the building which is
located on a parcel of land (the "Land") located on the block bounded by
Broadway, Xxxxx and Front Streets and Xxxxxx Xxxxxx Park in San Francisco,
California, which building is part of a combined office and residential
condominium project. As used herein, the term "Building" shall refer to the
portions of the ground floor and upper levels of the building in which the
Premises are located that are owned by Landlord. The term "Real Property"
shall mean the Building, its garage, the Land, and all other improvements on
the Land that are owned by Landlord, provided that (i) for the purpose of
Paragraph 7.a., the Real Property shall include the portion of the landscaped
pedestrian mall that is located on a parcel lying immediately to the north of
the Building and the portion of the emergency vehicle access corridor that is
located on the parcel lying immediately to the east of the Building, to the
extent Landlord is responsible for the maintenance of the portions of such
mall and such corridor, and (ii) for the purpose of Paragraph 7.b., the Real
Property shall include an undivided one-half interest in the Land and
foundations of the Building and the airspace above the Building.
Tenant's lease of the Premises shall include the right to use, in common
with others, and subject to the other provisions of this Lease, the public
lobbies, entrances, stairs, elevators and other public portions of the
Building. All of the windows and outside walls of the Premises and any space
in the Premises used for shafts, stacks, pipes, conduits, ducts, electrical
equipment or other utilities or Building facilities are reserved to Landlord,
the Golden Gateway Commons III Residential Association ("Residential
Association") and the owners of residential condominiums in the condominium
project of which the Building is a part, in accordance with the provisions of
that certain Golden Gateway Commons III Combined Condominium Declaration and
Covenants, Conditions and Restrictions that is referred to in Paragraph 21
below, and Landlord (and such Residential Association and owners) shall have
rights of access through the Premises for the purpose of operating,
maintaining and repairing the same.
2. Certain Basic Lease Terms. As used herein, the following terms shall
have the meaning specified below:
a. Floor on which the Premises are located: Second (2nd) floor. Landlord
and Tenant agree that for the purpose of this Lease, the Premises shall be
deemed to contain 24,653 rentable square feet of space.
b. Lease term: Approximately ten (10) years, commencing on the date of
Substantial Completion (as defined in Paragraph 4.e.ii. below) of the Tenant
Improvements to be constructed in the Premises as provided in Paragraph 4
below, and ending on April 30, 2009 (the "Expiration Date").
c. Monthly Rent: The respective sums set forth as follows:
Lease Year Monthly Rent
1 through 3 $65,741.00
4 through 7 $69,850.00
8 through 10 $73,959.00
Lease Year 1 shall be the period commencing on the Rent Commencement Date
and ending on April 30, 2000. Each one (1)-year period thereafter ending on
April 30 shall also constitute a "Lease Year."
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Rent Commencement Date: The date that is the later of (i) the Commencement
Date, or (ii) May 1, 1999.
d. Security Deposit: None.
e. Tenant's Share: 28.53%.
f. Base Year: The calendar year 1999.
Base Tax Year: The fiscal tax year ending June 30, 2000.
Notwithstanding the foregoing, Tenant's obligation to pay Tenant's Share
of increases in Operating Expenses and Tax Expenses pursuant to Paragraph 7
below shall be fully abated for the first twelve (12) full calendar months
following the Rent Commencement Date.
g. Business of Tenant: Corporate headquarters for company providing
integrated waste systems to residential, commercial, and industrial customers
in California.
h. Real estate brokers: Shorenstein Management, Inc., and The CAC Group.
3. Term; Delivery of Possession of Premises.
a. The term of this Lease shall commence on the Commencement Date (as
defined in Paragraph 2.b.) and, unless sooner terminated pursuant to the
terms hereof, shall expire on the Expiration Date (defined in Paragraph
2.b.). The Commencement Date and the Rent Commencement Date shall be
confirmed by the parties following the occurrence thereof.
b. Tenant acknowledges that the Premises are currently leased to another
tenant of Landlord pursuant to a lease which is scheduled to expire on
January 31, 1999. Possession of the Premises shall be delivered to
Shorenstein Construction Company, L.P. ("Shorenstein Construction"), for
construction of the Tenant Improvements upon recovering legal possession
thereof from the current tenant of the Premises (the "Existing Tenant"), and
possession of the Premises for Tenant's occupancy shall be delivered to
Tenant upon Substantial Completion of the Tenant Improvements. If Substantial
Completion of the Tenant Improvements and/or delivery of possession of the
Premises is delayed for any reason whatsoever, this Lease shall not be void
or voidable, nor shall any delay in delivery of possession of the Premises to
Tenant operate to extend the term of this Lease or amend Tenant's obligations
under this Lease; provided, however, that if (i) the Commencement Date does
not occur on or before May 1, 1999, and (ii) the sole and exclusive reason
for such delay is Landlord's inability to obtain possession of the Premises
from the Existing Tenant, and (iii) the Tenant Improvements being constructed
in the Premises do not vary materially from the improvements set forth in the
layout plans submitted by Tenant's architect, Xxxx Xxxxxxxxxxx, AIA, via
transmittal dated November 14, 1997, addressed to The Shorenstein Co., Attn:
Xxxx Xxxxxxx, and consisting of the drawings enclosed with such transmittal,
the cover sheet of which is labeled "SK-1", entitled "Proposed Office Layout
for Norcal Waste Systems, Inc." and identified as Job No. 9712, dated October
10, 1997; then for each day during the period commencing on May 2, 1999, and
ending on the Commencement Date (the "Credit Period"), Tenant shall receive a
rent credit equal to the lesser of (I) the "Net Collected Holdover Rent" (as
defined below), if any, for each such day during the Credit Period, or (II)
the excess holdover rental, if any, paid by Tenant to the landlord of its
current premises, over the rental that would have been payable by Tenant
without increase or penalty on account of Tenant's holdover, for each such
day during the Credit Period; provided, further, that Landlord shall use
commercially reasonable and diligent efforts, including initiation of
appropriate unlawful detainer proceedings, subject to the requirements of
applicable law, to recover possession of the Premises from the Existing
Tenant in the event the Existing Tenant shall wrongfully holdover beyond the
expiration of its lease (such period commencing on the first day after such
Existing Tenant's lease expiration, and continuing through the day Landlord
recovers possession from the Existing Tenant, being termed herein the
"Prohibited Holdover Period"). For the purposes of this paragraph, "Net
Collected Holdover Rent" shall be the amount calculated as:
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(A) the sum of:
(1) the rental, if any, actually received by Landlord from the
Existing Tenant with respect to the Prohibited Holdover Period, minus
(2) the sum of:
(x) the rental that would have been payable by the Existing
Tenant for the number of days as to which the rental under the preceding
clause (A)(1) was paid, calculated at the rental rate under the Existing
Tenant's lease in effect immediately prior to the Prohibited Holdover Period,
plus
(y) the fees, expenses and costs incurred by Landlord in order to
collect the rental under the preceding clause (A)(1) and/or recover
possession of the Premises;
divided by:
(B) the number of days in the Prohibited Holdover Period as to which
the rental under the preceding clause (A)(1) was paid.
In no event shall Landlord be liable to Tenant for any delay in completion
of the Tenant Improvements caused or occasioned by strikes, lockout, labor
disputes, shortages of material or labor, fire or other casualty, acts of God
or any other cause beyond the reasonable control of Landlord.
c. If, at Tenant's request, Landlord permits Tenant to take occupancy of
the Premises prior to the Commencement Date provided for in Paragraph 2.b.
above, then notwithstanding the provisions of Paragraph 2.c. above, the
Commencement Date and Rent Commencement Date shall be the date of such early
occupancy by Tenant; provided, however, that the Expiration Date shall not be
affected by such early occupancy.
4. Tenant Improvements. Improvements shall be constructed in the Premises
in accordance with this Paragraph 4.
a. Plans.
i. Space Plan. Tenant shall deliver to Landlord detailed layout plans,
prepared by Xxxx Xxxxxxxxxxx, AIA, Tenant's architect, for the improvements
Tenant desires in the Premises (the "Space Plan"). The Space Plan shall (i)
show all of the improvements which Tenant desires to be constructed in the
Premises, complying with all applicable building codes, laws, ordinances,
rules, governmental requirements and other Legal Requirements (as defined in
Paragraph 7.a.(16) below); (ii) include all applicable telephone and
electrical requirements, drywall, finish specifications and special
requirements; (iii) separately note any proposed structural work or
extraordinary or supplemental electrical, plumbing or HVAC requirements; and
(iv) contain sufficient detail and specifications to permit the preparation
of construction documents for such improvements. Landlord shall approve or
disapprove of the Space Plan within ten (10) days of Landlord's receipt
thereof. Tenant shall be responsible for causing the Space Plan, complying in
all respects with the requirements of this Paragraph 4.a., to be completed
and delivered to Landlord no later than October 1, 1998 (such plans termed
herein the "Final Space Plans").
ii. Working Drawings. Working plans and specifications based on the
Final Space Plans shall be prepared by Shorenstein Construction. The Working
Drawings shall show improvements that conform to the Final Space Plans
(except to the extent specifically noted therein or in accompanying
specifications) and the "Tenant Construction Standards" and "Conditions for
Construction" applicable to the Building (collectively, the "Building
Construction Standards"), and shall be in sufficient detail as to enable the
general contractor for the work to obtain all necessary governmental permits
for construction of all of the improvements and to secure complete bids from
qualified contractors to perform the work for all of the improvements to be
constructed in the Premises.
iii. The Working Drawings, as prepared by Shorenstein Construction, and
as may be revised by Tenant from time to time with Landlord's written
approval in accordance with the following provisions of this Paragraph 4, are
hereinafter collectively called the "Final Plans", and the improvements to be
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performed in accordance with the Final Plans are hereinafter called the
"Tenant Improvements".
iv. Landlord and Tenant shall cooperate with each other to resolve any
space planning or other issues that are raised by applicable local, state or
federal building codes during the planning, permit or construction process.
b. Construction of Tenant Improvements. Shorenstein Construction shall
construct the Tenant Improvements as shown on the Final Plans in compliance
with this Paragraph 4 on a cost basis, plus its fee for supervision,
overhead, profit and general conditions ("Contractor's Charge"). With regard
to telephones and computer systems, Landlord shall provide and cause to be
installed only those wall terminal boxes and/or floor monuments required for
Tenant's telephone or computer systems as are shown on the Final Plans.
Landlord will provide ordinary power wiring to locations shown on the Final
Plans and shall provide and cause to be installed conduits as required for
Tenant's telephone and computer systems as shown on the Final Plans, but
shall in no event install, pull or hook up such wires, supply jacks or plugs
or provide wiring necessary for special conditioned power to the Premises.
c. Landlord's Work. Landlord shall, at Landlord's sole cost and expense,
and in accordance with Landlord's building standard plans and specifications,
perform such modifications to the existing restrooms within the Premises and
the common areas of the second (2nd) floor of the Building to cause such
restrooms to comply with applicable handicap access and life safety codes,
but only to the extent such work is triggered by the issuance of a
construction permit for the Tenant Improvements (collectively, "Landlord's
Work"). Landlord's Work may be performed concurrently with the construction
of the Tenant Improvements.
d. Deleted.
e. Budget; Substantial Completion; Changes.
i. Budget. Within five (5) days of the date the Final Plans are
completed, Tenant may suggest the names of subcontractors from whom Tenant
wishes Shorenstein Construction to solicit bids. If Tenant proposes that
Shorenstein Construction include particular subcontractors on Shorenstein
Construction's bid list or that Shorenstein Construction award contracts to a
particular subcontractor, the subcontractor(s) shall be subject to Landlord's
prior written approval, which approval shall not be unreasonably withheld;
provided, however, that each such subcontractor proposed by Tenant shall (1)
have substantial recent experience in the construction of tenant improvements
in first class high-rise office buildings in the San Francisco financial
district, (2) be licensed by the State of California (as evidenced by
Tenant's submission to Landlord of such subcontractor's state license
number), and (3) have the capacity to be bonded by a recognized surety
company to assure full performance of the construction contract for the work
to be performed by such subcontractor (as evidenced by Tenant's submission to
Landlord of a commitment or other writing satisfactory to Landlord issued by
a recognized surety company confirming that such subcontractor is bondable
for construction projects having a contract price not less than the
approximate cost of the portion of the Tenant Improvements to be performed by
such subcontractor). Shorenstein Construction shall solicit bids from not
less than three (3) subcontractors for each major trade working on the Tenant
Improvements. When Shorenstein Construction has received responses to its bid
request, Shorenstein Construction will analyze the same and provide Tenant
with a copy of Shorenstein Construction's bid analysis, recommended winning
bidders and estimated budget for the Tenant Improvements, based upon the
selected subcontractors' bids and including Contractor's Charge (as defined
in Paragraph 4.b. above) and a reasonable contingency, but excluding the cost
of Landlord's Work. Tenant shall have three (3) days after the receipt of
Shorenstein Construction's bid analysis to approve or reasonably disapprove
Shorenstein Construction's selection of subcontractors and Shorenstein
Construction's estimated budget. Further, if Tenant disapproves of the
budget, then within three (3) days of Tenant's receipt thereof, Tenant shall
so notify Landlord and the Final Plans shall be modified within five (5)
days, at Tenant's cost, by Shorenstein Construction, in order to
satisfactorily reduce the cost of the work as shown on the budget. Any and
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all revisions to the Final Plans shall be subject to Landlord's reasonable
approval. Upon Tenant's disapproval of any subcontractor or the revision of
the Final Plans, Landlord shall cause Shorenstein Construction to promptly
prepare and submit to Tenant a revised estimated budget. Tenant shall respond
to the revised estimated budget in the manner described above. Any delay in
Substantial Completion of the Tenant Improvements resulting from any revision
to the Final Plans or the budget shall constitute a Tenant Delay as defined
in Paragraph 4.f. below. If Tenant fails to raise any written objections to
the analysis and/or budget within the period(s) described above, Tenant shall
be deemed to have approved Shorenstein Construction's recommended bid
acceptance and proposed budget.
ii. Construction; Substantial Completion. Upon Tenant's approval of the
budget, Shorenstein Construction shall diligently pursue to completion
construction of the Tenant Improvements. "Substantial Completion" of the
Tenant Improvements shall be deemed to have occurred when the Tenant
Improvements have been completed pursuant to the Final Plans, subject only to
the completion or correction of Punch List Items (as defined below), and the
Premises and the Tenant Improvements therein are in condition to receive a
certificate of occupancy or other governmental approval necessary for the
Premises to be legally occupied. "Punch List Items" shall mean incomplete or
defective work or materials in the improvements called for in the Final Plans
which do not materially impair Tenant's use of the Premises for the conduct
of Tenant's business therein.
iii. Changes. If Tenant desires any change in or to the Final Plans,
then Tenant shall request that Shorenstein Construction prepare Working
Drawings incorporating the requested Change; provided, however, that Landlord
reserves the right to reasonably disapprove any proposed Change. If Landlord
approves any proposed Change, then together with such approval, if
practicable, and if not practicable as soon thereafter as is practicable,
Landlord shall give Tenant Landlord's estimated increase or decrease in the
cost of the Tenant Improvements which would result from incorporating such
change and Landlord's estimate of the delay, if any, in the commencement or
completion of the Tenant Improvements which would result from incorporating
such change. Landlord will use reasonable care in preparing the estimates,
but they shall be good faith estimates only and will not limit Tenant's
obligation to pay for the actual increase in the cost of the Tenant
Improvements or Tenant's responsibility for the actual construction delay
resulting from the change. Within three (3) days after receipt of such cost
and delay estimates, Tenant shall notify Landlord in writing whether Tenant
approves the change. If Tenant fails to approve the change within such three
(3) day period, construction of the Tenant Improvements shall proceed as
provided in accordance with the Final Plans as they existed prior to the
requested change. If, following Tenant's review of the estimated costs and
delays, Tenant desires Landlord to incorporate the change into the Tenant
Improvements, then Tenant and Landlord shall execute a change order for such
change on Landlord's standard form therefor, and the term "Final Plans" shall
thereafter be deemed to refer to the Working Drawings as so revised and
approved.
f. Tenant Delays. Tenant shall be responsible for, and shall pay to
Landlord, any and all costs and expenses (including lost rent) incurred by
Landlord in connection with the following, or by reason of any delay in the
commencement or completion of the Tenant Improvements caused by the
following: (i) the failure of Tenant to submit the Final Space Plan to
Landlord by the date set forth in Paragraph 4.a. above, (ii) Tenant's failure
to approve or disapprove the budget within the time required in Paragraph
4.e. above, or Tenant's request for any revision to the budget, (iii) any
changes requested by Tenant in the Final Space Plans, Working Drawings or
Final Plans (including any such change that is a result of a revision of the
budget, and including any cost or delay resulting from proposed changes that
are not ultimately made), (iv) any failure by Tenant to timely pay any
amounts due from Tenant hereunder (it being acknowledged that if Tenant fails
to make or otherwise delays making such payments, Landlord may stop work on
the Tenant Improvements rather than incur costs which Tenant is obligated to
fund but has not yet done so and any delay from such a work stoppage will be
a Tenant Delay), (v) any delay by Tenant in responding to inquiries regarding
the construction of the Tenant Improvements or Landlord's Work or in granting
Tenant's approval or disapproval of materials or finishes for the Tenant
Improvements or Landlord's Work, (vi) the inclusion in the Tenant
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Improvements of any so-called "long-lead" materials (such as fabrics,
panelling, tiling, carpeting, light fixtures, HVAC equipment or other items
that must be imported or are of unusual character or limited availability),
(vii) any interference by Tenant with the construction of the Tenant
Improvements by Landlord or Landlord's Work, or (viii) any other delay
requested or caused by Tenant. Each of the foregoing is referred to herein
and in this Lease as a "Tenant Delay".
g. Cost of Improvements. The cost of the construction and installation of
the Tenant Improvements shall be borne as follows:
i. Landlord shall pay the entire cost of Landlord's Work (as described
in Paragraph 4.c. above).
ii. In addition to the sums referenced in clause i. above, Landlord
shall contribute toward the cost of constructing and installing the Tenant
Improvements an amount not to exceed Four Hundred Ninety-Three Thousand Sixty
Dollars ($493,060.00) ("Landlord's Contribution"). The following provisions
shall govern the payment of Landlord's Contribution:
A. Excess Cost. Tenant shall pay for all costs of the construction of
the Tenant Improvements in excess of Landlord's Contribution (the "Excess
Cost"). If the cost of construction (including Contractor's Charge as
described in Paragraph 4.b.i. above) exceeds the funds available therefor
from Landlord's Contribution, then Tenant shall be responsible for the
payment of such excess to Shorenstein Construction.
B. Disbursement of Landlord's Contribution. Landlord shall disburse
Landlord's Contribution to Shorenstein Construction on a progress payment
basis, as requested by Shorenstein Construction from time to time, as the
Tenant Improvements are performed, and reserves the right to require that
copies of invoices with respect to the work covered by such disbursement be
furnished to Landlord as a condition to such disbursement.
C. Reimbursable Costs. If Landlord reasonably determines that, upon
Substantial Completion of the Tenant Improvements, Landlord's Contribution
would not be exhausted by construction of the Tenant Improvements, and the
remaining balance of Landlord's Contribution will exceed the amount needed to
fully pay for all outstanding anticipated costs relating to the Tenant
Improvements, then up to One Hundred Seventy-Two Thousand Five Hundred
Seventy-One Dollars ($172,571.00) of such excess Landlord's Contribution, at
Tenant's election, may be applied to reimburse Tenant for the reasonable
costs expended by Tenant for architectural, design and planning fees incurred
in connection with the Tenant Improvements, costs of installing telephone and
computer cabling for the Premises, and consultants' fees incurred in
connection with this Lease (such costs, up to the above-referenced limit,
being referred to herein as the "Reimbursable Costs"). Landlord shall
reimburse Tenant for the Reimbursable Costs within ten (10) days after
Landlord's receipt of a copy of the invoices covering such Reimbursable
Costs. No portion of Landlord's Contribution may be applied to the purchase
of signage, trade fixtures or furniture, moving expenses, free rent or any
other costs other than construction costs due under the terms of this Lease
and the Reimbursable Costs.
D. Entire Premises to be Improved. Tenant acknowledges that Landlord's
Contribution is to be applied to the Tenant Improvements (and the associated
costs described above) covering the entire Premises. If Tenant does not
improve the entire Premises, then, without limitation of any other rights or
remedies of Landlord hereunder, Landlord's Contribution shall be adjusted on
a prorata per rentable square foot basis to reflect the number of rentable
square feet actually being improved.
5. Monthly Rent.
a. On or before the first day of each calendar month during the term
hereof, Tenant shall pay to Landlord, as monthly rent for the Premises, the
Monthly Rent specified in Paragraph 2 above. If the term of this Lease
commences on a day other than the first day of a calendar month, or
terminates on a day other than the last day of a calendar month, then the
Monthly Rent payable for such partial month shall be appropriately prorated
on the basis of a thirty (30)-day month. Monthly Rent and the Additional Rent
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specified in Paragraph 7 shall be paid by Tenant to Landlord, in advance,
without deduction, offset, prior notice or demand, in immediately available
funds of lawful money of the United States of America, or by good check as
described below, at the office of Shorenstein Company, L.P., at 000
Xxxxxxxxxx Xxxxxx, 00xx xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, or to such
other person or at such other place as Landlord may from time to time
designate in writing. Payments made by check must be drawn either on a
California financial institution or on a financial institution that is a
member of the federal reserve system. Notwithstanding the foregoing, if the
date of Substantial Completion of the Tenant Improvements is delayed as a
result of a Tenant Delay, then Tenant's obligation to pay rent for the
Premises shall be accelerated by the number of days of such delay. Further,
notwithstanding the foregoing, Tenant shall pay to Landlord on or before
October 1, 1998, an amount equal to one (1) month's Monthly Rent hereunder,
which amount shall be applied to the Monthly Rent first due and payable
hereunder.
b. All amounts payable by Tenant to Landlord under this Lease, or
otherwise payable in connection with Tenant's occupancy of the Premises, in
addition to the Monthly Rent hereunder and Additional Rent under Paragraph 7,
shall constitute rent owed by Tenant to Landlord hereunder.
c. Any rent not paid by Tenant to Landlord when due shall bear interest
from the date due to the date of payment by Tenant at an annual rate of
interest (the "Interest Rate") equal to the lesser of (i) the maximum annual
interest rate allowed by law on such due date for business loans (not
primarily for personal, family or household purposes) not exempt from the
usury law, or (ii) a rate equal to the sum of five (5) percentage points over
the six-month United States Treasury xxxx rate (the "Treasury Rate") in
effect from time to time during such delinquency (or if there is no such
publicly announced rate, the rate quoted by the San Francisco Main Office of
Bank of America, NT&SA, or any successor bank thereto, in pricing ninety
(90)-day commercial loans to substantial commercial borrowers). Failure by
Tenant to pay rent when due, including any interest accrued under this
subparagraph, shall constitute an Event of Default (as defined in Paragraph
25 below) giving rise to all the remedies afforded Landlord under this Lease
and at law for nonpayment of rent.
d. No security or guaranty which may now or hereafter be furnished to
Landlord for the payment of rent due hereunder or for the performance by
Tenant of the other terms of this Lease shall in any way be a bar or defense
to any of Landlord's remedies under this Lease or at law.
6. Deleted.
7. Additional Rent: Increases in Operating Expenses and Tax Expenses.
a. Operating Expenses. Tenant shall pay to Landlord, at the times
hereinafter set forth, Tenant's Share, as specified in Paragraph 2.e. above,
of any increase in the Operating Expenses (as defined below) incurred by
Landlord in each calendar year subsequent to the Base Year specified in
Paragraph 2.f. above, over the Operating Expenses incurred by Landlord during
the Base Year, subject to the abatement provisions set forth in Paragraph
2.f. above. The amounts payable under this Paragraph 7.a. and Paragraph 7.b.
below are termed "Additional Rent" herein.
The term "Operating Expenses" shall mean the total costs and expenses
incurred by Landlord in connection with the management, operation,
maintenance, repair and ownership of the Real Property, including, without
limitation, the following costs: (1) salaries, wages, bonuses and other
compensation (including hospitalization, medical, surgical, retirement plan,
pension plan, union dues, life insurance, including group life insurance,
welfare and other fringe benefits, and vacation, holidays and other paid
absence benefits) relating to employees of Landlord or its agents engaged in
the operation, repair, or maintenance of the Real Property; (2) payroll,
social security, workers' compensation, unemployment and similar taxes with
respect to such employees of Landlord or its agents, and the cost of
providing disability or other benefits imposed by law or otherwise, with
respect to such employees; (3) the cost of uniforms (including the cleaning,
replacement and pressing thereof) provided to such employees; (4) premiums
and other charges incurred by Landlord with respect to fire, other casualty,
rent and liability insurance, any other insurance as is deemed necessary or
advisable in the reasonable judgment of Landlord, or any insurance required
by the holder of any Superior Interest (as defined in Paragraph 21 below)
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(provided that, with respect to earthquake insurance which Landlord does not
carry during the Base Year but obtains and/or carries in a calendar year
subsequent to the Base Year, for purposes of calculating Tenant's payments
pursuant to this Paragraph 7.a. for such subsequent calendar year, Operating
Expenses during the Base Year shall be deemed increased by an amount equal to
(A) the earthquake insurance premiums for the first calendar year in which
Landlord obtained such earthquake insurance (the "Initial EQ Year"),
decreased by a percentage equal to (B) the percentage increase in the CPI (as
defined below) from the CPI Base (as defined below) to the CPI as of January
1st in the Initial EQ Year), and, after the Base Year, costs of repairing an
insured casualty to the extent of the deductible amount under the applicable
insurance policy; (5) water charges and sewer rents or fees; (6) license,
permit and inspection fees; (7) sales, use and excise taxes on goods and
services purchased by Landlord in connection with the operation, maintenance
or repair of the Real Property and Building systems and equipment; (8)
telephone, telegraph, postage, stationery supplies and other expenses
incurred in connection with the operation, maintenance, or repair of the Real
Property; (9) management fees and expenses; (10) costs of repairs to and
maintenance of the Real Property, including building systems and
appurtenances thereto and normal repair and replacement of worn-out
equipment, facilities and installations, but excluding the replacement of
major building systems (except to the extent provided in (16) and (17)
below); (11) fees and expenses for janitorial, window cleaning, guard,
extermination, water treatment, rubbish removal, plumbing and other services
and inspection or service contracts for elevator, electrical, mechanical and
other building equipment and systems or as may otherwise be necessary or
proper for the operation, repair or maintenance of the Real Property; (12)
costs of supplies, tools, materials, and equipment used in connection with
the operation, maintenance or repair of the Real Property; (13) accounting,
legal and other professional fees and expenses; (14) fees and expenses for
painting the exterior or the public or common areas of the Building and the
cost of maintaining the sidewalks, landscaping and other common areas of the
Real Property; (15) costs and expenses for electricity, chilled water, air
conditioning, water for heating, gas, fuel, steam, heat, lights, power and
other energy related utilities required in connection with the operation,
maintenance and repair of the Real Property; (16) the cost of any capital
improvements made by Landlord to the Real Property or capital assets acquired
by Landlord after the Base Year in order to comply with any local, state or
federal law, ordinance, rule, regulation, code or order of any governmental
entity or insurance requirement (collectively, "Legal Requirement") with
which the Real Property was not required to comply during the Base Year, or
to comply with any amendment or other change to the enactment or
interpretation (by a relevant governmental or quasi-governmental authority,
professional or industry board or other organization, or independent expert)
of any Legal Requirement from its enactment or interpretation during the Base
Year; (17) the cost of any capital improvements made by Landlord to the
Building or capital assets acquired by Landlord after the Base Year (i) which
a prudent landlord would deem appropriate for the protection of the health
and safety of the occupants of the Real Property, or (ii) that are designed
to reduce other Operating Expenses; (18) the cost of furniture, draperies,
carpeting, landscaping and other customary and ordinary items of personal
property (excluding paintings, sculptures and other works of art) provided by
Landlord for use in common areas of the Building or in the Building office
(to the extent that such Building office is dedicated to the operation and
management of the Real Property); (19) any expenses and costs resulting from
substitution of work, labor, material or services in lieu of any of the above
itemizations, or for any additional work, labor, services or material
resulting from compliance with any Legal Requirement applicable to the Real
Property or any parts thereof; and (20) Building office rent or rental value.
With respect to the costs of items included in Operating Expenses under (16)
and (17), such costs shall be amortized over a reasonable period, as
determined by Landlord consistent with generally accepted property management
practices, together with interest on the unamortized balance at a rate per
annum equal to three (3) percentage points over the Treasury Rate charged at
the time such item is constructed or acquired, or at such higher rate as may
have been paid by Landlord on funds borrowed at commercially reasonable rates
for the purpose of constructing or acquiring such item, but in either case
not more than the maximum rate permitted by law at the time such item is
constructed or acquired.
Operating Expenses shall not include the following: (i) depreciation
on the Building or equipment or systems therein; (ii) debt service; (iii)
rental under any ground or underlying lease; (iv) interest (except as
expressly provided in this Paragraph 7.a.); (v) Tax Expenses (as defined in
Paragraph 7.b. below); (vi) attorneys' or accountants' fees and expenses
8
incurred in connection with lease enforcement, lease disputes or lease
negotiations with prospective or current Building tenants or occupants; (vii)
the cost (including any amortization thereof) of any improvements or
alterations which would be properly classified as capital expenditures
according to generally accepted property management practices (except to the
extent expressly included in Operating Expenses pursuant to this Paragraph
7.a.); (viii) the cost (including permit, license and inspection fees) of
decorating, improving for tenant occupancy, painting or redecorating portions
of the Building to be demised to tenants; (ix) executive salaries; (x)
advertising and promotional expenditures; (xi) real estate broker's or other
leasing commissions; (xii) subject to the provisions of item (4) above,
repairs and other work occasioned by an insured casualty, to the extent
Landlord is reimbursed by insurance proceeds, and other work paid from
insurance or condemnation proceeds; (xiii) the cost of services made
available at no special cost to any tenant in the Building but not to Tenant;
(xiv) penalties or other costs incurred due to a violation by Landlord, as
determined by written admission, stipulation, final judgment or arbitration
award, of any of the terms and conditions of any lease in the Building except
to the extent such costs reflect costs that would have been incurred by
Landlord absent such violation; (xv) overhead and profit increments paid to
Landlord or subsidiaries or affiliates of Landlord for management or other
services on or to the Building or for supplies or other materials to the
extent that the cost of the services, supplies or materials materially exceed
the amounts normally payable for similar goods and services under similar
circumstances (taking into account the market factors in effect on the date
any relevant contracts were negotiated) in comparable buildings in the San
Francisco financial district; (xvi) Landlord's general corporate office
overhead and administrative expenses (which shall not be deemed to include a
management fee); (xvii) costs directly and solely attributable to the garage
in the Building, including, without limitation, payroll for clerks,
attendants, book-keeping, parking, insurance premiums, parking management
fees, parking tickets, janitorial services, striping and painting of surfaces
(provided, however, that the cost of providing utilities to the garage shall
be included in Operating Expenses); (xviii) rentals and other related
expenses incurred in leasing air conditioning systems, elevators or other
equipment ordinarily considered to be of a capital nature (except equipment
that is not affixed to the Building and is used in providing janitorial
services, and except to the extent such costs would otherwise be includable
pursuant to items (16) and (17) as set forth in the immediately preceding
paragraph); (xix) any expense for which Landlord is actually directly
reimbursed by a tenant over and above rent and additional rent under such
tenant's lease; (xx) the costs of purchasing and installing sculptures,
paintings or other art work for the common areas; and (xxi) the cost of any
asbestos or hazardous substance abatement, removal, or other remedial
activities, provided, however, Operating Expenses may include the costs
attributable to those abatement, removal, or other remedial activities taken
by Landlord in connection with the ordinary operation and maintenance of the
Building, including costs incurred in removing limited amounts of asbestos
containing materials from the Building, and the cost of cleaning up any minor
chemical spills, when such removal or spill is related to such ordinary
maintenance and operation.
The term "CPI" as used herein means the Consumer Price Index for All
Urban Consumers (1982-84 = 100) San Francisco-Oakland-San Jose, California.
All Items, published by the Bureau of Labor Statistics of the U.S. Department
of Labor. The term "CPI Base" as used herein means the CPI in effect as of
January 1, 1999. If the Bureau of Labor Statistics ceases to publish the CPI,
or if the CPI is otherwise renamed, revised, discontinued or superseded, the
parties agree that the Bureau of Labor Statistics or any successor
governmental agency thereto will be sole judge of the comparability of
successive indexes, but if no such agency supplies and designates a
comparable index, or if no succeeding index is published, then the
calculations under this Lease based on the CPI shall be based on a
comparable index published by a responsible financial authority selected by
Landlord. In addition, if a substantial change is made in the method used to
calculate the CPI (provided, however, that any change in the method in which
CPI is calculated which is made in an attempt to more accurately reflect
changes in the cost of living shall be deemed a "substantial change"
hereunder), then, for the purposes of this Lease, the CPI shall be determined
without giving effect to the new methods and Landlord shall adjust the CPI in
a commercially reasonable manner to effect the same results as if the CPI
were calculated in the manner in effect as of the date hereof.
9
b. Tax Expenses. Tenant shall pay to Landlord as Additional Rent under
this Lease, at the times hereinafter set forth, Tenant's Share, as specified
in Paragraph 2.e. above, of any increase in Tax Expenses (as defined below)
incurred by Landlord in each calendar year, over Tax Expenses incurred by
Landlord during the Base Tax Year, subject to the abatement provisions set
forth in Paragraph 2.f. above. Notwithstanding the foregoing, if any
reassessment, reduction or recalculation of any item included in Tax Expenses
during the term results in a reduction of Tax Expenses, then for purposes of
calculating Tenant's Share of increases in Tax Expenses from and after the
calendar year in which such adjustment occurs, Tax Expenses for the Base Tax
Year shall be adjusted to reflect such reduction.
The term "Tax Expenses" shall mean all taxes, assessments (whether
general or special), excises, transit charges, housing fund assessments or
other housing charges, improvement districts, levies or fees, ordinary or
extraordinary, unforeseen as well as foreseen, of any kind, which are
assessed, levied, charged, confirmed or imposed on the Real Property, on
Landlord with respect to the Real Property, on the act of entering into
leases of space in the Real Property, on the use or occupancy of the Real
Property or any part thereof, with respect to services or utilities consumed
in the use, occupancy or operation of the Real Property, on any improvements,
fixtures and equipment and other personal property of Landlord located in the
Real Property and used in connection with the operation of the Real Property,
or on or measured by the rent payable under this Lease or in connection with
the business of renting space in the Real Property, including, without
limitation, any gross income tax or excise tax levied with respect to the
receipt of such rent, by the United States of America, the State of
California, the City and County of San Francisco, any political subdivision,
public corporation, district or other political or public entity or public
authority, and shall also include any other tax, fee or other excise, however
described, which may be levied or assessed in lieu of, as a substitute (in
whole or in part) for, or as an addition to, any other Tax Expense. Tax
Expenses shall include reasonable attorneys' fees, costs and disbursements
incurred in connection with proceedings to contest, determine or reduce Tax
Expenses. If it shall not be lawful for Tenant to reimburse Landlord for any
increase in Tax Expenses as defined herein, the Monthly Rent payable to
Landlord prior to the imposition of such increases in Tax Expenses shall be
increased to net Landlord the same net Monthly Rent after imposition of such
increases in Tax Expenses as would have been received by Landlord prior to
the imposition of such increases in Tax Expenses.
Tax Expenses shall not include income, franchise, transfer, inheritance
or capital stock taxes, unless, due to a change in the method of taxation,
any of such taxes is levied or assessed against Landlord in lieu of, as a
substitute (in whole or in part) for, or as an addition to, any other charge
which would otherwise constitute a Tax Expense. Landlord and Tenant
acknowledge and agree that certain other buildings exist or encroach upon the
Land, that Tenant shall have no liability as to any item of Tax Expense
attributable or allocable to, or assessed against, buildings other than the
Building and that Landlord's good faith determination of the proper
allocation of any item of Tax Expense allocable to buildings other than the
Building shall be binding on Landlord and Tenant.
c. Adjustment for Occupancy Factor. Notwithstanding any other provision
herein to the contrary, in the event the Building is not fully occupied
during any calendar year during the term after the Base Year, an adjustment
shall be made by Landlord in computing Operating Expenses for such year so
that the Operating Expenses shall be computed for such year as though the
Building had been fully occupied during such year. In addition, if any
particular work or service includable in Operating Expenses is not furnished
to a tenant who has undertaken to perform such work or service itself,
Operating Expenses shall be deemed to be increased by an amount equal to the
additional Operating Expenses which would have been incurred if Landlord had
furnished such work or service to such tenant. The parties agree that
statements in this Lease to the effect that Landlord is to perform certain of
its obligations hereunder at its own or sole cost and expense shall not be
interpreted as excluding any cost from Operating Expenses or Tax Expenses if
such cost is an Operating Expense or Tax Expense pursuant to the terms of
this Lease. In no event may Landlord, during any individual year, receive
from tenants of the Building as reimbursement for Operating Expenses for that
year, more than one hundred percent (100%) of the amount actually incurred by
Landlord for Operating Expenses during that year.
10
d. Intention Regarding Expense Pass-Through. It is the intention of
Landlord and Tenant that the Monthly Rent paid to Landlord throughout the
term of this Lease shall be absolutely net of all increases, respectively, in
Tax Expenses and Operating Expenses over, respectively, Tax Expenses for the
Base Tax Year and Operating Expenses for the Base Year, and the foregoing
provisions of this Paragraph 7 are intended to so provide.
e. Notice and Payment. On or before the first day of each calendar year
during the term hereof subsequent to the Base Year, or as soon as practicable
thereafter, Landlord shall give to Tenant notice of Landlord's estimate of
the Additional Rent, if any, payable by Tenant pursuant to Paragraphs 7.a.
and 7.b. for such calendar year subsequent to the Base Year. On or before the
first day of each month during each such subsequent calendar year, Tenant
shall pay to Landlord one-twelfth (1/12th) of the estimated Additional Rent;
provided, however, that if Landlord's notice is not given prior to the first
day of any calendar year Tenant shall continue to pay Additional Rent on the
basis of the prior year's estimate until the month after Landlord's notice is
given. If at any time it appears to Landlord that the Additional Rent payable
under Paragraphs 7.a. and/or 7.b. will vary from Landlord's estimate by more
than five percent (5%), Landlord may, by written notice to Tenant, revise its
estimate for such year, and subsequent payments by Tenant for such year shall
be based upon the revised estimate. On the first monthly payment date after
any new estimate is delivered to Tenant, Tenant shall also pay any accrued
cost increases, based on such new estimate.
f. Annual Accounting. Landlord shall maintain adequate records of the
Operating Expenses and Tax Expenses in accordance with standard accounting
principles. Within ninety (90) days after the close of each calendar year
subsequent to the Base Year, or as soon after such ninety (90) day period as
practicable, Landlord shall deliver to Tenant a statement of the Additional
Rent payable under Paragraphs 7.a. and 7.b. for such year. The statement
shall be based on the results of an audit of the operations of the Building
prepared for the applicable year by a nationally recognized certified public
accounting firm selected by Landlord. Upon Tenant's request, Landlord shall
promptly deliver to Tenant a copy of the auditor's statement on which
Landlord's annual statement is based. Landlord's annual statement shall be
final and binding upon Landlord and Tenant unless either party, no later than
June 30 after the close of the calendar year for which such annual statement
is provided, shall contest any item therein by giving written notice to the
other, specifying each item contested and the reason therefor.
Notwithstanding the foregoing, the Tax Expenses included in any such annual
statement may be modified by any subsequent adjustment or retroactive
application of Tax Expenses affecting the calculation of such Tax Expenses.
If the annual statement shows that Tenant's payments of Additional Rent for
such calendar year pursuant to Paragraph 7.e. hereof exceeded Tenant's
obligations for the calendar year, Landlord shall at its option either pay
the excess to Tenant within thirty (30) days after delivery of such
statement. If the annual statement shows that Tenant's payments of Additional
Rent for such calendar year pursuant to Paragraph 7.e. hereof were less than
Tenant's obligation for the calendar year, Tenant shall pay the deficiency to
Landlord within thirty (30) days after delivery of such statement. In the
event of any dispute regarding Additional Rent, Landlord and Tenant agree to
use good faith efforts to work together to resolve such dispute.
g. Proration for Partial Lease Year. If this Lease terminates on a day
other than the last day of a calendar year, the Additional Rent payable by
Tenant pursuant to this Paragraph 7 applicable to the calendar year in which
this Lease terminates shall be prorated on the basis that the number of days
from the commencement of such calendar year to and including such termination
date bears to three hundred sixty-five (365).
8. Use of Premises; Compliance with Law.
a. Use of Premises. The Premises shall be used solely for general
office purposes for the business of Tenant as described in Paragraph 2.g.
hereof, and for no other use or purpose without the prior written consent of
Landlord, which consent shall not be unreasonably withheld for any other
general office use consistent with the operation of the Building as a first-
class office building, provided in no event shall Landlord be obligated to
consent to a change in use of the Premises to a use which materially
increases (a) the operating costs for the Building, (b) the burden on the
Building services, or (c) the foot traffic, elevator usage or security
concerns in the Building, or which creates an increased probability of the
11
comfort and/or safety of the Landlord or other tenants of the Building being
compromised or reduced.
Tenant shall not do or suffer or permit anything to be done in or about
the Premises or the Real Property, nor bring or keep anything therein, which
would in any way subject Landlord, Landlord's agents or the holder of any
Superior Interest (as defined in Paragraph 21) to any liability, increase the
premium rate of or affect any fire, casualty, liability, rent or other
insurance relating to the Real Property or any of the contents of the
Building, or cause a cancellation of, or give rise to any defense by the
insurer to any claim under, or conflict with, any policies for such
insurance. If any act or omission of Tenant results in any such increase in
premium rates, Tenant shall pay to Landlord upon demand the amount of such
increase. Tenant shall not do or suffer or permit anything to be done in or
about the Premises or the Real Property which will in any way materially
obstruct or materially interfere with the rights of other tenants or
occupants of the Building or materially injure or unreasonably annoy them, or
use or suffer or permit the Premises to be used for any purpose that would
reasonably be deemed to be immoral, unlawful or objectionable, nor shall
Tenant cause, maintain, suffer or permit any nuisance in, on or about the
Premises or the Real Property. Without limiting the foregoing, no
loudspeakers or other similar device which can be heard outside the Premises
shall, without the prior written approval of Landlord, be used in or about
the Premises. Tenant shall not commit or suffer to be committed any waste in,
to or about the Premises.
Tenant agrees not to employ any person, entity or contractor for any
work in the Premises (including moving Tenant's equipment and furnishings in,
out or around the Premises) whose presence may give rise to a labor or other
disturbance in the Building and, if necessary to prevent such a disturbance
in a particular situation, Landlord may require Tenant to employ union labor
for the work.
b. Compliance with Law. Tenant shall not do or permit anything to be
done in or about the Premises which will in any way conflict with any Legal
Requirement (as defined in Paragraph 7.a.(16) above) now in force or which
may hereafter be enacted. Tenant, at its sole cost and expense, shall
promptly comply with all such present and future Legal Requirements relating
to the condition, use or occupancy of the Premises, and shall perform all
work to the Premises or other portions of the Real Property required to
effect such compliance (or, at Landlord's election, Landlord may perform such
work at Tenant's cost); provided, however, that the foregoing shall not be
deemed to impose upon Tenant any obligation that is the responsibility of
Landlord under Paragraph 10.b. or Paragraph 17 below. Notwithstanding the
foregoing, however, Tenant shall not be required to perform any structural
changes to the Premises or other portions of the Real Property unless such
changes are related to or affected or triggered by (i) Tenant's Alterations
(as defined in Xxxxxxxxx 0 xxxxx), (xx) Tenant's particular use of the
Premises (as opposed to Tenant's use of the Premises for general office
purposes in a normal and customary manner), (iii) Tenant's particular
employees or employment practices, or (iv) the construction of initial
improvements to the Premises, if any (provided, however, that the parties
acknowledge that Landlord's Work shall be the responsibility of Landlord).
The judgment of any court of competent jurisdiction or the admission of
Tenant in an action against Tenant, whether or not Landlord is a party
thereto, that Tenant has violated any Legal Requirement shall be conclusive
of that fact as between Landlord and Tenant. Tenant shall immediately furnish
Landlord with any notices received from any insurance company or governmental
agency or inspection bureau regarding any unsafe or unlawful conditions
within the Premises or the violation of any Legal Requirement.
c. Hazardous Materials. Tenant shall not cause or permit the storage,
use, generation, release, handling or disposal (collectively, "Handling") of
any Hazardous Materials (as defined below), in, on, or about the Premises or
the Real Property by Tenant or any agents, employees, contractors, licensees,
subtenants, customers, guests or invitees of Tenant (collectively with
Tenant, "Tenant Parties"), except that Tenant shall be permitted to use
normal quantities of office supplies or products (such as copier fluids or
cleaning supplies) customarily used in the conduct of general business office
activities ("Common Office Chemicals"), provided that the Handling of such
Common Office Chemicals shall comply at all times with all Legal
Requirements, including Hazardous Materials Laws (as defined below).
Notwithstanding anything to the contrary contained herein, however, in no
event shall Tenant permit any usage of Common Office Chemicals in a manner
12
that may cause the Premises or the Real Property to be contaminated by any
Hazardous Materials or in violation of any Hazardous Materials Laws. Tenant
shall immediately advise Landlord in writing of (a) any and all enforcement,
cleanup, remedial, removal, or other governmental or regulatory actions
instituted, completed, or threatened pursuant to any Hazardous Materials Laws
relating to any Hazardous Materials affecting the Premises; and (b) all
claims made or threatened by any third party against Tenant, Landlord, the
Premises or the Real Property relating to damage, contribution, cost
recovery, compensation, loss, or injury resulting from any Hazardous
Materials on or about the Premises. Without Landlord's prior written consent,
Tenant shall not take any remedial action or enter into any agreements or
settlements in response to the presence of any Hazardous Materials in, on, or
about the Premises. Tenant shall be solely responsible for and shall
indemnify, defend and hold Landlord and all other Indemnitees (as defined in
Paragraph 14.b. below), harmless from and against all Claims (as defined in
Paragraph 14.b. below), arising out of or in connection with, or otherwise
relating to (i) any Handling of Hazardous Materials by any Tenant Party or
Tenant's breach of its obligations hereunder, or (ii) any removal, cleanup,
or restoration work and materials necessary to return the Real Property or
any other property of whatever nature located on the Real Property to their
condition existing prior to the Handling of Hazardous Materials in, on or
about the Premises. Tenant's obligations under this paragraph shall survive
the expiration or other termination of this Lease. For purposes of this
Lease, "Hazardous Materials" means any explosive, radioactive materials,
hazardous wastes, or hazardous substances, including without limitation
asbestos containing materials, PCB's, CFC's, or substances defined as
"hazardous substances" in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601-
9657; the Hazardous Materials Transportation Act of 1975, 49 U.S.C. Section
1801-1812; the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
Section 6901-6987; or any other Legal Requirement regulating, relating to, or
imposing liability or standards of conduct concerning any such materials or
substances now or at any time hereafter in effect (collectively, "Hazardous
Materials Laws").
d. Applicability of Paragraph. The provisions of this Paragraph 8 are
for the benefit of Landlord, the holder of any Superior Interest (as defined
in Paragraph 21 below), and the other Indemnitees only and are not nor shall
they be construed to be for the benefit of any tenant or occupant of the
Building.
9. Alterations and Restoration.
a. Tenant shall not make or permit to be made any alterations,
modifications, additions, decorations or improvements to the Premises, or any
other work whatsoever that would directly or indirectly involve the
penetration or removal (whether permanent or temporary) of, or require access
through, in, under, or above any floor, wall or ceiling, or surface or
covering thereof in the Premises (collectively, "Alterations"), except as
expressly provided in this Paragraph 9.
Tenant shall have the right, without Landlord's consent, to make any
Alteration to the Premises, provided that (a) the Alteration is decorative in
nature (such as paint, carpet or other wall or floor finishes, movable
partitions and work stations, or other such work) and with a total cost of
less than $25,000, (b) Tenant provides Landlord with ten (10) days' advance
notice of the commencement of any such Alteration, (c) such Alteration does
not affect the Building's electrical, mechanical or HVAC systems or any part
of the Building other than the Premises, (d) the work will not decrease the
value of the Premises, does not require a building permit or other
governmental permit, uses only first-class materials and is performed in a
xxxxxxx-like manner and in accordance with all applicable laws and
regulations, (e) the work does not involve opening the ceiling of the
Premises and (f) the work does not involve the Building's asbestos
procedures. At the time Tenant notifies Landlord of any such work, Tenant
shall give Landlord a copy of Tenant's plans for the work. If the Alterations
are of such a nature that formal plans will not be prepared for the work,
Tenant shall provide Landlord with a reasonably specific description of the
work. If Tenant desires any Alteration that is not covered in the preceding
two (2) sentences, Tenant must obtain Landlord's prior written approval of
such Alteration, which approval shall not be unreasonably withheld or
delayed.
13
All Alterations shall be made at Tenant's sole cost and expense
(including the expense of complying with all present and future Legal
Requirements, including those regarding asbestos, if applicable, and any
other work required to be performed in other areas within or outside the
Premises by reason of the Alterations). For those Alterations which require
Landlord's consent pursuant to the above, Landlord may elect to cause its
contractor to perform the Alterations, in which case Landlord's contractor
shall be entitled to receive a fee for such work equal to one hundred five
percent (105%) of the total fee for general conditions, overhead and profit
that would be charged by a general contractor of comparable reputation and
quality performing such Alterations. If the Alteration required Landlord's
consent and Landlord does not perform the work pursuant to the above, Tenant
shall pay Landlord on demand prior to or during the course of such
construction an amount (the "Alteration Operations Fee") equal to five
percent (5%) of the total cost of the Alteration (and for purposes of
calculating the Alteration Operations Fee, such cost shall include
architectural and engineering fees, but shall not include permit fees) as
compensation to Landlord for electrical energy consumed in connection with
the work, freight elevator operation, additional cleaning expenses,
additional security services, and for other miscellaneous costs incurred by
Landlord as result of the work.
All such work shall be performed diligently and in a first-class
workmanlike manner and in accordance with plans and specifications approved
by Landlord, and shall comply with all Legal Requirements and Landlord's
construction procedures and requirements for the Building (including
Landlord's requirements relating to insurance and contractor qualifications).
In no event shall Tenant employ any person, entity or contractor to perform
work in the Premises whose presence may give rise to a labor or other
disturbance in the Building. Default by Tenant in the payment of any sums
agreed to be paid by Tenant for or in connection with an Alteration
(regardless of whether such agreement is pursuant to this Paragraph 9 or
separate instrument) shall entitle Landlord to all the same remedies as for
non-payment of rent hereunder. Any Alterations and all carpeting, shall at
once become part of the Building and the property of Landlord. Tenant shall
give Landlord not less than five (5) days prior written notice of the date
the construction of the Alteration is to commence. Landlord may post and
record an appropriate notice of nonresponsibility with respect to any
Alteration and Tenant shall maintain any such notices posted by Landlord in
or on the Premises.
b. At Landlord's sole election any or all Alterations made for or by
Tenant shall be removed by Tenant from the Premises at the expiration or
sooner termination of this Lease (provided, however, that the foregoing shall
not apply to the Tenant Improvements, unless Landlord advises Tenant at the
time of Landlord's approval of any item of the Tenant Improvements that
Landlord requires that such item be removed), and the Premises shall be
restored by Tenant to their condition prior to the making of the Alterations,
ordinary wear and tear excepted. The removal of the Alterations and the
restoration of the Premises shall be performed by a general contractor
selected by Tenant and approved by Landlord, in which event Tenant shall pay
the general contractor's fees and costs in connection with such work. Any
separate work letter or other agreement which is hereafter entered into
between Landlord and Tenant pertaining to Alterations shall be deemed to
automatically incorporate the terms of this Lease without the necessity for
further reference thereto.
10. Repair.
a. By taking possession of the Premises, Tenant agrees that the
Premises are in good condition and repair, subject to completion of Punch
List Items. Tenant, at Tenant's sole cost and expense, shall keep the
Premises and every part thereof (including the interior walls and ceilings of
the Premises, those portions of the Building systems located within and
exclusively serving the Premises, and improvements and Alterations) in good
condition and repair, ordinary wear and tear excepted; provided that Tenant
shall not be responsible for repairs to the extent such repairs are
Landlord's obligation pursuant to Paragraph 10.b. below. Tenant waives all
rights to make repairs at the expense of Landlord as provided by any Legal
Requirement now or hereafter in effect. It is specifically understood and
agreed that, except as specifically set forth in this Lease, Landlord has no
obligation and has made no promises to alter, remodel, improve, repair,
decorate or paint the Premises or any part thereof, and that no
representations respecting the condition of the Premises or the Building have
been made by Landlord to Tenant. Tenant hereby waives the provisions of
14
California Civil Code Sections 1932(1), 1941 and 1942 and of any similar
Legal Requirement now or hereafter in effect.
b. Landlord shall repair and maintain in good condition and repair the
structural portions of the Building and all Building systems, including
plumbing, air conditioning, heating, electrical, life safety and other
systems installed or furnished by Landlord (other than the portions of those
systems that are Tenant's responsibility to maintain and repair pursuant to
Paragraph 10.a. above), but excluding (i) non-Building standard lighting and
electrical wiring and (ii) extraordinary quantities of electrical, plumbing,
HVAC or other Building facilities or distribution thereof; provided, however,
that to the extent repairs which Landlord is required to make pursuant to
this sentence are necessitated by the negligence or deliberate misconduct of
Tenant or Tenant's agents, employees or contractors, then Tenant shall
reimburse Landlord for the cost of such repair to the extent Landlord is not
reimbursed therefor by insurance. Landlord shall in no event be obligated to
repair any wear and tear to the Premises.
11. Abandonment. Tenant shall not abandon the Premises or any part thereof
at any time during the term hereof. If Tenant abandons or surrenders all or
any part of the Premises or is dispossessed of the Premises by process of
law, or otherwise, any movable furniture, equipment, trade fixtures, or other
personal property belonging to Tenant and left on the Premises shall at the
option of Landlord be deemed to be abandoned and, whether or not the property
is deemed abandoned, Landlord shall have the right to remove such property
from the Premises and charge Tenant for the removal and any restoration of
the Premises as provided in Paragraph 9. Landlord may charge Tenant for the
storage of Tenant's property left on the Premises at such rates as Landlord
may from time to time reasonably determine, or, Landlord may, at its option,
store Tenant's property in a public warehouse at Tenant's expense.
Notwithstanding the foregoing, neither the provisions of this Paragraph 11
nor any other provision of this Lease shall impose upon Landlord any
obligation to care for or preserve any of Tenant's property left upon the
Premises, and Tenant hereby waives and releases Landlord from any claim or
liability in connection with the removal of such property from the Premises
and the storage thereof and specifically waives the provisions of California
Civil Code Section 1542 with respect to such release. Landlord's action or
inaction with regard to the provisions of this Paragraph 11 shall not be
construed as a waiver of Landlord's right to require Tenant to remove its
property, restore any damage to the Premises and the Building caused by such
removal, and make any restoration required pursuant to Paragraph 9 above.
Tenant's vacancy of the Premises during the term hereof shall not constitute
an Event of Default (as provided in Paragraph 25.a.) so long as Tenant
continues to pay Monthly Rent, Additional Rent and all other sums due
Landlord under this Lease and maintains the insurance coverage required
pursuant to Paragraph 15 of this Lease.
12. Liens. Tenant shall not permit any mechanic's, materialman's or other
liens arising out of work performed at the Premises by or on behalf of Tenant
to be filed against the fee of the Real Property nor against Tenant's
interest in the Premises. Landlord shall have the right to post and keep
posted on the Premises any notices which it deems necessary for protection
from such liens. If any such liens are filed, Landlord may, upon ten (10)
days' written notice to Tenant, without waiving its rights based on such
breach by Tenant and without releasing Tenant from any obligations hereunder,
pay and satisfy the same and in such event the sums so paid by Landlord shall
be due and payable by Tenant immediately without notice or demand, with
interest from the date paid by Landlord through the date Tenant pays
Landlord, at the Interest Rate. Tenant agrees to indemnify, defend and hold
Landlord and the other Indemnitees (as defined in Paragraph 14.b. below)
harmless from and against any Claims (as defined in Paragraph 14.b. below)
for mechanics', materialmen's or other liens in connection with any
Alterations, repairs or any work performed, materials furnished or
obligations incurred by or for Tenant.
13. Assignment and Subletting.
a. Landlord's Consent. Landlord's and Tenant's agreement with regard to
Tenant's right to transfer all or part of its interest in the Premises is as
expressly set forth in this Paragraph 13. Tenant agrees that, except upon
Landlord's prior written consent, which consent shall not (subject to
Landlord's rights under Paragraph 13.d. below) be unreasonably withheld,
neither this Lease nor all or any part of the leasehold interest created
hereby shall, directly or indirectly, voluntarily or involuntarily, by
15
operation of law or otherwise, be assigned, mortgaged, pledged, encumbered or
otherwise transferred by Tenant or Tenant's legal representatives or
successors in interest (collectively an "assignment") and neither the
Premises nor any part thereof shall be sublet or be used or occupied for any
purpose by anyone other than Tenant (collectively, a "sublease"). Any
assignment or subletting without Landlord's prior written consent shall, at
Landlord's option, be void and shall constitute an Event of Default entitling
Landlord to terminate this Lease and to exercise all other remedies available
to Landlord under this Lease and at law.
The parties hereto agree and acknowledge that, among other
circumstances for which Landlord may reasonably withhold its consent to an
assignment or sublease, it shall be reasonable for Landlord to withhold its
consent where: (i) the assignment or subletting would materially increase
the operating costs for the Building or the burden on the Building services,
or generate material additional foot traffic, elevator usage or security
concerns in the Building, or create an increased probability of the comfort
and/or safety of Landlord and other tenants in the Building being compromised
or reduced, (ii) the space will be used for a school or training facility, an
entertainment, sports or recreation facility, retail sales to the public
(unless Tenant's permitted use is retail sales), a personnel or employment
agency, an office or facility of any governmental or quasi-governmental
agency or authority, a place of public assembly (including without limitation
a meeting center, theater or public forum), any use by or affiliation with a
foreign government (including without limitation an embassy or consulate or
similar office), or a facility for the provision of social, welfare or
clinical health services or sleeping accommodations (whether temporary,
daytime or overnight); (iii) the proposed assignee or subtenant is a current
tenant of the Building or a prospective tenant of the Building; (iv) Landlord
in good faith disapproves of the proposed assignee or subtenant's reputation
or creditworthiness; (v) Landlord determines in good faith that the character
of the business that would be conducted by the proposed assignee or subtenant
at the Premises, or the manner of conducting such business, would be
inconsistent with the character of the Building as a first-class office
building; (vi) the proposed assignee or subtenant is an entity or related to
an entity with whom Landlord or any affiliate of Landlord has had adverse
dealings; (vii) the assignment or subletting may conflict with any exclusive
uses granted to other tenants of the Real Property, or with the terms of any
easement, covenant, condition or restriction, or other agreement affecting
the Real Property; (viii) the assignment or subletting would involve a change
in use from that expressly permitted under this Lease; or (ix) Landlord in
good faith determines that there is a material risk that the proposed
assignee will be unable to perform all of Tenant's obligations under this
Lease or that the proposed subtenant will be unable to perform all of its
obligations under the proposed sublease. Landlord's foregoing rights and
options shall continue throughout the entire term of this Lease.
For purposes of this Paragraph 13, the following events shall be deemed
an assignment or sublease, as appropriate: (i) the issuance of equity
interests (whether stock, partnership interests or otherwise) in Tenant or
any subtenant or assignee, or any entity controlling any of them, to any
person or group of related persons, in a single transaction or a series of
related or unrelated transactions, such that, following such issuance, such
person or group shall have Control (as defined below) of Tenant or any
subtenant or assignee; (ii) a transfer of Control of Tenant or any subtenant
or assignee, or any entity controlling any of them, in a single transaction
or a series of related or unrelated transactions (including, without
limitation, by consolidation, merger, acquisition or reorganization), except
that the transfer of outstanding capital stock or other listed equity
interests by persons or parties other than "insiders" within the meaning of
the Securities Exchange Act of 1934, as amended, through the "over-the-
counter" market or any recognized national or international securities
exchange, shall not be included in determining whether Control has been
transferred, nor shall transfers of Tenant's stock to the employee stock
option plan of the Tenant originally named herein (the "ESOP") or among
participants in the ESOP be considered a change in Control so long such
transfer(s) do not result in a person or entity other than the person or
entity, if any, that currently Controls Tenant, obtaining Control of Tenant;
(iii) a reduction of Tenant's assets to the point that this Lease is
substantially Tenant's only asset; (iv) a change or conversion in the form of
entity of Tenant, any subtenant or assignee, or any entity controlling any of
them, which has the effect of limiting the liability of any of the partners,
members or other owners of such entity; or (v) the agreement by a third party
to assume, take over, or reimburse Tenant for, any or all of Tenant's
16
obligations under this Lease, in order to induce Tenant to lease space with
such third party. "Control" shall mean direct or indirect ownership of 50% or
more of all of the voting stock of a corporation or 50% or more of the legal
and equitable interest in any other business entity, or the power to direct
the operations of any entity (by equity ownership, contract or otherwise).
If this Lease is assigned, whether or not in violation of the terms of
this Lease, Landlord may collect rent from the assignee. If the Premises or
any part thereof is sublet, Landlord may, upon an Event of Default by Tenant
hereunder, collect rent from the subtenant. In either event, Landlord may
apply the amount collected from the assignee or subtenant to Tenant's
monetary obligations hereunder.
The consent by Landlord to an assignment or subletting hereunder shall
not relieve Tenant or any assignee or subtenant from obtaining Landlord's
express prior written consent to any other or further assignment or
subletting. Neither an assignment or subletting nor the collection of rent by
Landlord from any person other than Tenant, nor the application of any such
rent as provided in this Paragraph 13.a. shall be deemed a waiver of any of
the provisions of this Paragraph 13.a. or release Tenant from its obligation
to comply with the provisions of this Lease and Tenant shall remain fully and
primarily liable for all of Tenant's obligations under this Lease. If
Landlord approves of an assignment or subletting hereunder and this Lease
contains any renewal options, expansion options, rights of first refusal,
rights of first negotiation or any other rights or options pertaining to
additional space in the Building, such rights and/or options shall not run to
the subtenant or assignee other than in connection with an approved
assignment (or sublease of the entire Premises for the balance of the Lease
term) to an Affiliate of Tenant (as defined below), it being agreed by the
parties hereto that any such rights and options are personal to the Tenant
originally named herein and its Affiliates and may not be transferred to any
party other than an Affiliate of the Tenant originally named herein. For the
purposes of this Paragraph 13.a., an "Affiliate" is any partnership,
corporation or other entity which controls, is controlled by, or is under
common control with Tenant or Tenant's parent (control being defined for such
purposes as ownership of at least 50% of the equity interests in, or the
power to direct the management of, the relevant entity) or any partnership,
corporation or other entity resulting from a merger or consolidation with
Tenant or Tenant's parent, or to any person or entity which acquires
substantially all the assets of Tenant as a going concern.
b. Processing Expenses. Tenant shall pay to Landlord, as Landlord's
cost of processing each proposed assignment or subletting, an amount equal to
the sum of (i) Landlord's reasonable attorneys' and other professional fees,
plus (ii) the sum of $750.00 for the cost of Landlord's administrative,
accounting and clerical time (collectively, "Processing Costs"), and the
amount of all direct and indirect costs and expenses incurred by Landlord
arising from the assignee or sublessee taking occupancy of the subject space
(including, without limitation, costs of freight elevator operation for
moving of furnishings and trade fixtures, security service, janitorial and
cleaning service, and rubbish removal service). Notwithstanding anything to
the contrary herein, Landlord shall not be required to process any request
for Landlord's consent to an assignment or subletting until Tenant has paid
to Landlord the amount of Landlord's estimate of the Processing Costs and all
other direct and indirect costs and expenses of Landlord and its agents
arising from the assignee or subtenant taking occupancy.
c. Consideration to Landlord. In the event of any assignment or
sublease, whether or not requiring Landlord's consent, Landlord shall be
entitled to receive, as additional rent hereunder, seventy-five percent (75%)
of any consideration (including, without limitation, payment for leasehold
improvements and any "Leasehold Profit" as defined below) paid by the
assignee or subtenant for the assignment or sublease and, in the case of a
sublease, seventy-five percent (75%) of the excess of the amount of rent paid
for the sublet space by the subtenant over the amount of Monthly Rent under
Paragraph 5 above and Additional Rent under Paragraph 7 above attributable to
the sublet space for the corresponding month; except that Tenant may
recapture, on an amortized basis over the term of the sublease or assignment,
any brokerage commissions paid by Tenant in connection with the subletting or
assignment (not to exceed commissions typically paid in the market at the
time of such subletting or assignment) and any improvement allowance or
moving allowance (not to exceed $3.00 per square foot of the sublet space)
17
incurred by Tenant for the benefit of the subtenant or assignee or paid by
Tenant to the subtenant or assignee (collectively the "Assignment or
Subletting Costs"), provided that, as a condition to Tenant recapturing the
Assignment or Subletting Costs, Tenant shall provide to Landlord, within
ninety (90) days of Landlord's execution of Landlord's consent to the
assignment or subletting, a detailed accounting of the Assignment or
Subletting Costs and supporting documents, such as receipts and construction
invoices. To effect the foregoing, Tenant shall deduct from the monthly
amounts received by Tenant from the subtenant or assignee as rent or
consideration (i) the Monthly Rent and Additional Rent payable by Tenant to
Landlord for the subject space and (ii) the incremental amount, on an
amortized basis, of the Assignment or Subletting Costs, and seventy-five
percent (75%) of the then remaining sum shall be paid promptly to Landlord.
Upon Landlord's request, Tenant shall assign to Landlord all amounts to be
paid to Tenant by any such subtenant or assignee and that belong to Landlord
and shall direct such subtenant or assignee to pay the same directly to
Landlord. "Leasehold Profit" shall be the value allocated to the leasehold
between the parties to the assignment or sublease, but in no event less than
the excess of the present value of the fair market rent of the Premises for
the remaining term of this Lease after such assignment or sublease, over the
Monthly Rent payable hereunder for such remaining term, as reasonably
determined by Landlord.
d. Procedures. If Tenant desires to assign this Lease or any interest
therein or sublet all or part of the Premises, Tenant shall give Landlord
written notice thereof and the terms proposed (the "Sublease Notice"), which
Sublease Notice, in the case of a proposed sublease, shall designate the
space proposed to be sublet. Landlord shall have the prior right and option
(to be exercised by written notice to Tenant given within thirty (30) days
after receipt of Tenant's notice) (i) to sublet from Tenant any portion of
the Premises proposed by Tenant to be sublet, for the term for which such
portion is proposed to be sublet, but at the lesser of the proposed sublease
rent or the same rent (including Additional Rent as provided for in Paragraph
7 above) as Tenant is required to pay to Landlord under this Lease for the
same space, computed on a pro rata square footage basis, and during the term
of such sublease Tenant shall be released of its obligations under this Lease
with regard to the subject space, (ii) to terminate this Lease as it pertains
to the portion of the Premises so proposed by Tenant to be sublet, or (iii)
to approve Tenant's proposal to sublet conditional upon Landlord's subsequent
written approval of the specific sublease obtained by Tenant and the specific
subtenant named therein. If Landlord exercises its option in (i) above, then
Landlord may, at Landlord's sole cost, construct improvements in the subject
space and, so long as the improvements are suitable for general office
purposes, Landlord shall have no obligation to restore the subject space to
its original condition following the termination of the sublease, unless such
sublease expires prior to the expiration or termination of this Lease and
such restoration is reasonably required by Tenant in order for Tenant to be
able to use the Premises for Tenant's business as described in Paragraph 2.g.
above. If Landlord exercises its option described in (iii) above, then Tenant
shall have four (4) months thereafter to submit to Landlord, for Landlord's
written approval, Tenant's proposed sublease agreement (in which the proposed
subtenant shall be named, and which agreement shall otherwise meet the
requirements of Paragraph 13.e. below), together with a current financial
statement of such proposed subtenant and any other information reasonably
requested by Landlord. If Tenant fails to submit the specific sublease and
other required information within such time, or if the terms of the specific
sublease submitted by Tenant vary from the terms set forth in the Sublease
Notice approved by Landlord pursuant to (iii) above, then Tenant shall be
required to submit a new Sublease Notice for Landlord's evaluation pursuant
to the procedures set forth in this paragraph. If Landlord fails to exercise
any such option to sublet or to terminate, this shall not be construed as or
constitute a waiver of any of the provisions of Paragraphs 13.a., b., c. or
d. herein. If Landlord exercises any such option to sublet or to terminate,
any costs of demising the portion of the Premises affected by such subleasing
or termination shall be borne by Tenant. In addition, Landlord shall have no
liability for any real estate brokerage commission(s) or with respect to any
of the costs and expenses that Tenant may have incurred in connection with
its proposed subletting, and Tenant agrees to indemnify, defend and hold
Landlord and all other Indemnitees harmless from and against any and all
Claims (as defined in Paragraph 14.b. below), including, without limitation,
claims for commissions, arising from such proposed subletting. Landlord's
foregoing rights and options shall continue throughout the entire term of
this Lease. For purposes of this Paragraph 13.d., a proposed assignment of
18
this Lease in whole or in part shall be deemed a proposed subletting of such
space.
e. Documentation. No permitted assignment or subletting by Tenant shall
be effective until there has been delivered to Landlord a fully executed
counterpart of the assignment or sublease which expressly provides that (i)
the assignee or subtenant may not further assign or sublet the assigned or
sublet space without Landlord's prior written consent (which, in the case of
a further assignment proposed by an assignee, shall not be unreasonably
withheld, subject to Landlord's rights under the provisions of this Paragraph
13), (ii) the assignee or subtenant will comply with all of the provisions of
this Lease, and Landlord may enforce the Lease provisions directly against
such assignee or subtenant, (iii) in the case of an assignment, the assignee
assumes all of Tenant's obligations under this Lease arising on or after the
date of the assignment, and (iv) in the case of a sublease, the subtenant
agrees to be and remain jointly and severally liable with Tenant for the
payment of rent pertaining to the sublet space in the amount set forth in the
sublease, and for the performance of all of the terms and provisions of this
Lease. In addition to the foregoing, no sublease by Tenant shall be
effective until there has been delivered to Landlord a fully executed
counterpart of Landlord's consent to sublease form. The failure or refusal of
a subtenant or assignee to execute any such instrument shall not release or
discharge the subtenant or assignee from its liability as set forth above.
Notwithstanding the foregoing, however, no subtenant or assignee shall be
permitted to occupy the Premises unless and until such subtenant or assignee
provides Landlord with certificates evidencing that such subtenant or
assignee is carrying all insurance coverage required of such subtenant or
assignee under this Lease.
f. No Merger. Without limiting any of the provisions of this Paragraph
13, if Tenant has entered into any subleases of any portion of the Premises,
the voluntary or other surrender of this Lease by Tenant, or a mutual
cancellation by Landlord and Tenant, shall not work a merger, and shall, at
the option of Landlord, terminate all or any existing subleases or
subtenancies or, at the option of Landlord, operate as an assignment to
Landlord of any or all such subleases or subtenancies. If Landlord does elect
that such surrender or cancellation operate as an assignment of such
subleases or subtenancies, Landlord shall in no way be liable for any
previous act or omission by Tenant under the subleases or for the return of
any deposit(s) under the subleases that have not been actually delivered to
Landlord, nor shall Landlord be bound by any sublease modification(s)
executed without Landlord's consent or for any advance rental payment by the
subtenant in excess of one month's rent.
g. Transfer to Acquiror. Notwithstanding anything to the contrary in
Paragraphs 13.a. and 13.d., but subject to Paragraphs 13.e. and 13.f., Tenant
may assign this Lease or sublet the Premises or any portion thereof, without
Landlord's consent, to any person or entity which acquires substantially all
the assets of Tenant as a going concern ("Acquiror"), provided that (i)
Landlord receives prior written notice of the assignment or subletting, (ii)
the Acquiror's net worth is not less than Tenant's net worth immediately
prior to the assignment or subletting, (iii) the Acquiror has proven
experience in the operation of a first-class business of a type consistent
with the use of the Building as a first-class office Building, (iv) the
Acquiror remains an affiliate for the duration of the subletting or the
balance of the term in the event of an assignment, (v) the Acquiror assumes
(in the event of an assignment) in writing all of Tenant's obligations under
this Lease and (vi) Landlord receives a fully executed copy of an assignment
or sublease agreement between Tenant and the Acquiror.
14. Indemnification of Landlord.
a. Landlord and the holders of any Superior Interests (as defined in
Paragraph 21 below) shall not be liable to Tenant and Tenant hereby waives
all claims against such parties for any loss, injury or other damage to
person or property in or about the Premises or the Real Property from any
cause whatsoever, including without limitation, water leakage of any
character from the roof, walls, basement, fire sprinklers, appliances, air
conditioning, plumbing or other portion of the Premises or the Real Property,
or gas, fire, explosion, falling plaster, steam, electricity, or any
malfunction within the Premises or the Real Property, or acts of other
tenants of the Building; provided, however, that the foregoing waiver shall
be inapplicable to any loss, injury or damage resulting directly from
Landlord's gross negligence or willful misconduct. Tenant acknowledges that
19
from time to time throughout the term of this Lease, construction work may be
performed in and about the Building and the Real Property by Landlord,
contractors of Landlord, or other tenants or their contractors, and that such
construction work may result in noise and disruption to Tenant's business;
provided, however, that Landlord shall use diligent, commercially reasonable
efforts (including payment of overtime), to minimize disruption to Tenant's
business. In addition to and without limiting the foregoing waiver or any
other provision of this Lease, Tenant agrees that Landlord shall not be
liable for, and Tenant expressly waives and releases Landlord and the other
Indemnitees (as defined in Paragraph 14.b. below) from any Claims (as defined
in Paragraph 14.b. below), including without limitation, any and all
consequential damages or interruption or loss of business, income or profits,
or claims of constructive eviction, arising or alleged to be arising as a
result of any such construction activity.
b. Tenant shall hold Landlord and the holders of any Superior Interest,
and the constituent shareholders, partners or other owners thereof, and all
of their agents, contractors, servants, officers, directors, employees and
licensees (collectively with Landlord, the "Indemnitees") harmless from and
indemnify the Indemnitees against any and all claims, liabilities, damages,
costs and expenses, including reasonable attorneys' fees and costs incurred
in defending against the same (collectively, "Claims"), to the extent arising
from (a) the acts or omissions of Tenant or any other Tenant Parties (as
defined in Paragraph 8.c. above) in, on or about the Real Property, or (b)
any construction or other work undertaken by or on behalf of Tenant
(excepting work performed by Landlord's contractor) in, on or about the
Premises, whether prior to or during the term of this Lease, or (c) any
breach or Event of Default under this Lease by Tenant, or (d) any accident,
injury or damage, howsoever and by whomsoever caused, to any person or
property, occurring in, on or about the Premises; except to the extent caused
by the gross negligence or willful misconduct of Landlord or its authorized
representatives. In case any action or proceeding be brought against any of
the Indemnitees by reason of any such Claim, Tenant, upon notice from
Landlord, covenants to resist and defend at Tenant's sole expense such action
or proceeding by counsel reasonably satisfactory to Landlord. The provisions
of this Paragraph 14.b. shall survive the expiration or earlier termination
of this Lease with respect to any injury, illness, death or damage occurring
prior to such expiration or termination.
c. The provisions of this Paragraph 14 are subject to the waiver of
subrogation provisions of Paragraph 16 below.
15. Insurance.
a. Tenant's Insurance. Tenant shall, at Tenant's expense, maintain
during the term of this Lease (and, if Tenant occupies or conducts activities
in or about the Premises prior to or after the term hereof, then also during
such pre-term or post-term period): (i) commercial general liability
insurance including contractual liability coverage, with minimum coverages of
$1,000,000 per occurrence combined single limit for bodily injury and
property damage, $1,000,000 for products-completed operations coverage,
$100,000 fire legal liability, $1,000,000 for personal and advertising injury
(which coverage shall not be subject to the contractual liability exclusion),
with a $2,000,000 general aggregate limit, for injuries to, or illness or
death of, persons and damage to property occurring in or about the Premises
or otherwise resulting from Tenant's operations in the Building, (ii)
property insurance protecting Tenant against loss or damage by fire and such
other risks as are insurable under then-available standard forms of "all
risk" insurance policies (excluding earthquake and flood but including water
damage), covering Tenant's personal property and trade fixtures in or about
the Premises or the Real Property, and any improvements and/or Alterations in
the Premises, for the full replacement value thereof without deduction for
depreciation; (iii) workers' compensation insurance in statutory limits; (iv)
at least three months' coverage for loss of business income and continuing
expenses, providing protection against any peril included within the
classification "all risk," excluding earthquake and flood but including water
damage; and (v) if Tenant operates owned, leased or non-owned vehicles on the
Real Property, comprehensive automobile liability insurance with a minimum
coverage of $1,000,000 per occurrence, combined single limit. The above
described policies shall protect Tenant, as named insured, and Landlord and
all the other Indemnitees and any other parties designated by Landlord, as
additional insureds; shall insure Landlord's and such other parties'
contingent liability with regard to acts or omissions of Tenant; shall
specifically include all liability assumed by Tenant under this Lease
20
(provided, however, that such contractual liability coverage shall not limit
or be deemed to satisfy Tenant's indemnity obligations under this Lease);
and, if subject to deductibles, shall provide for deductible amounts not in
excess of those approved in advance in writing by Landlord in its sole
discretion. Landlord reserves the right to increase the foregoing amount of
liability coverage from time to time as Landlord reasonably determines is
required to adequately protect Landlord and the other parties designated by
Landlord from the matters insured thereby (provided, however, that Landlord
makes no representation that the limits of liability required hereunder from
time to time shall be adequate to protect Tenant), and to require that Tenant
cause any of its contractors, vendors, movers or other parties conducting
activities in or about or occupying the Premises to obtain and maintain
insurance as determined by Landlord and as to which Landlord and such other
parties designated by Landlord shall be additional insureds.
b. Policy Form. Each insurance policy required pursuant to Paragraph
15.a. above shall be issued by an insurance company licensed in the State of
California and with a general policyholders' rating of "A+" or better and a
financial size ranking of "Class VIII" or higher in the most recent edition
of Best's Insurance Guide. Each insurance policy, other than Tenant's
workers' compensation insurance, shall (i) provide that it may not be
materially changed, cancelled or allowed to lapse unless thirty (30) days'
prior written notice to Landlord and any other insureds designated by
Landlord is first given, (ii) provide that no act or omission of Tenant shall
affect or limit the obligations of the insurer with respect to any other
insured, (iii) include all waiver of subrogation rights endorsements
necessary to effect the provisions of Paragraph 16 below, and (iv) provide
that the policy and the coverage provided shall be primary, that Landlord,
although an additional insured, shall nevertheless be entitled to recovery
under such policy for any damage to Landlord or the other Indemnitees by
reason of acts or omissions of Tenant, and that any coverage carried by
Landlord shall be noncontributory with respect to policies carried by Tenant.
Each such insurance policy or a certificate thereof shall be delivered to
Landlord by Tenant on or before the effective date of such policy and
thereafter Tenant shall deliver to Landlord renewal policies or certificates
at least thirty (30) days prior to the expiration dates of expiring policies.
If Tenant fails to procure such insurance or to deliver such policies or
certificates, Landlord may, at its option, procure the same for Tenant's
account, and the cost thereof shall be paid to Landlord by Tenant upon
demand. Landlord may at any time, and from time to time, inspect and/or copy
any and all insurance policies required by this Lease.
c. Nothing in this Paragraph 15 shall be construed as creating or
implying the existence of (i) any ownership by Tenant of any fixtures,
additions, Alterations, or improvements in or to the Premises or (ii) any
right on Tenant's part to make any addition, Alteration or improvement in or
to the Premises.
d. Self-Insured Retention and Self-Insurance. Subject to the terms and
conditions of this Paragraph 15.d., Tenant shall be permitted to maintain a
self-insured retention of not more than $500,000 for the insurance coverage
required under Paragraph 15.a.(i) and (v), to carry a deductible of not more
than $25,000 for the insurance coverage required under Paragraph (ii), and to
provide the insurance coverage required under Paragraph 15.a.(iii) by a
program of "self-insurance", provided that (i) Tenant's net worth and
financial standing remains substantially similar to Tenant's net worth and
financial standing as of the date this Lease is executed, and (ii) in the
case of the self-insurance of the coverage under Paragraph 15.a.(iii), (A)
Tenant is and remains qualified with the State of California as a self-
insurer, (B) the self-insurance program, in the reasonable judgment of
Landlord, provides adequate, enforceable, sufficiently funded and long-term
coverage for Landlord and the risks to be insured against, (C) Tenant
warrants and represents it is adequately self-insured, which warranty and
representation shall be a continuing one throughout the term hereof, for all
purposes under this Lease for the particular risk, and (D) such program of
self-insurance shall otherwise provide Landlord with the same rights and
privileges to which Landlord is otherwise entitled under the terms of this
Lease when there is a third-party insurer (including without limitation
waiver of all rights of recovery by way of subrogation). Tenant shall provide
to Landlord all documents (including without limitation such financial
statements of Tenant as may be requested by Landlord from time to time) that
Landlord requests that are necessary to permit a complete review and analysis
of the self-insurance program. If, as a supplement to Tenant's self-insurance
21
program, Tenant obtains an insurance policy or policies from an insurance
company, the provisions of Paragraph 15.a. and 15.b. shall apply in full to
such insurance policy or policies and if Tenant ceases to self-insure Tenant
shall give notice thereof to Landlord and shall immediately comply with the
provisions of this Paragraph 15 relating to the policy of insurance required.
This right to self insure is personal to Norcal Waste Systems, Inc., and
shall not inure to the benefit of any successor, assign or subtenant of
Tenant.
e. Landlord's Insurance. During the term hereof, Landlord shall keep
the Building and all Tenant Improvements to the Premises made pursuant to
Paragraph 4 hereof (but excluding any Alterations made pursuant to Paragraph
9 hereof, and any personal property, fixtures, office equipment, furniture,
artwork and other decoration not affixed to and a part of the Building)
insured through reputable insurance underwriters against perils covered by a
standard "all risk" insurance policy or policies as such policies are in use
as of the date of this Lease (excluding perils such as earthquake, flood and
other standard "all risk" policy form exclusions) and including rental
interruption coverage, if such a policy is reasonably available, with a
deductible provision, if any, that does not materially exceed that which
prudent, efficient operators of first-class high-rise office buildings in the
downtown San Francisco financial district would carry from time-to-time in
the exercise of reasonable business judgment, in an amount or amounts equal
to not less than eighty percent (80%) of the full replacement value of the
Building (excluding the land and the footings, foundations and installations
below the basement level) and the Tenant Improvements made pursuant to
Paragraph 4 hereof, without deduction for depreciation, including the costs
of demolition and debris removal, or such other fire and property damage
insurance as Landlord shall reasonably determine to give substantially equal
or greater protection. During the term hereof, Landlord shall keep in force
general liability insurance in the amount and coverage as Landlord deems
commercially reasonable.
16. Mutual Waiver of Subrogation Rights. Each party hereto hereby releases
the other respective party and, in the case of Tenant as the releasing party,
the other Indemnitees, and the respective partners, shareholders, agents,
employees, officers, directors and authorized representatives of such
released party, from any claims such releasing party may have for damage to
the Building, the Premises or any of such releasing party's fixtures,
personal property, improvements and alterations in or about the Premises, the
Building or the Real Property that is caused by or results from risks insured
against under any fire and extended coverage insurance policies actually
carried by such releasing party or deemed to be carried by such releasing
party; provided, however, that such waiver shall be limited to the extent of
the net insurance proceeds payable by the relevant insurance company with
respect to such loss or damage (or in the case of deemed coverage, the net
proceeds that would have been payable). For purposes of this Paragraph 16,
Tenant shall be deemed to be carrying any of the insurance policies required
pursuant to Paragraph 15 but not actually carried by Tenant, and Landlord
shall be deemed to carry standard fire and extended coverage policies on the
Real Property. Each party hereto shall cause each such fire and extended
coverage insurance policy obtained by it to provide that the insurance
company waives all rights of recovery by way of subrogation against the other
respective party and the other released parties in connection with any matter
covered by such policy.
17. Utilities.
a. Basic Services. Landlord shall furnish the following utilities and
services ("Basic Services") for the Premises: (i) during the hours of 8 A.M.
to 6 P.M. ("Business Hours") Monday through Friday (except public holidays)
("Business Days"), electricity for Building standard lighting and power
suitable for the use of the Premises for ordinary general office purposes,
(ii) during Business Hours on Business Days, heat and air conditioning
required in Landlord's judgment for the comfortable use and occupancy of the
Premises for ordinary general office purposes, (iii) unheated water for the
restroom(s) and drinking fountain(s) in the public areas serving the
Premises, (iv) elevator service to the floor(s) of the Premises by
nonattended automatic elevators for general office pedestrian usage, and (v)
janitorial and other services as required to maintain the Premises and the
Building in a condition consistent with other first-class office buildings in
the San Francisco financial district. Notwithstanding the foregoing, however,
Tenant may use water, heat, air conditioning, electric current, elevator and
janitorial service in excess of that provided in Basic Services ("Excess
Services," which shall include without limitation any power usage other than
22
through existing standard 110-volt AC outlets; electricity and/or water
consumed by Tenant in connection with any dedicated or supplemental heating,
ventilating and/or air conditioning, computer power, telecommunications
and/or other special units or systems of Tenant; chilled, heated or condenser
water; or water used for any purpose other than ordinary drinking and
lavatory purposes), provided that the Excess Services desired by Tenant are
reasonably available to Landlord and to the Premises (it being understood
that in no event shall Landlord be obligated to make available to the
Premises more than the pro rata share of the capacity of any Excess Service
available to the Building or the applicable floor of the Building, as the
case may be), and provided further that Tenant complies with the procedures
established by Landlord from time to time for requesting and paying for such
Excess Services and with all other provisions of this Paragraph 17. Landlord
reserves the right to install in the Premises or the Real Property electric
current and/or water meters (including, without limitation, any additional
wiring, conduit or panel required therefor) to measure the electric current
or water consumed by Tenant or to cause the usage to be measured by other
reasonable methods (e.g. by temporary "check" meters or by survey).
Notwithstanding the above, (subject to any temporary shutdown for repairs,
for security purposes, for compliance with any legal restrictions, or due to
strikes, lockouts, labor disputes, fire or other casualty, acts of God, or
other causes beyond the reasonable control of Landlord) (A) Tenant shall have
access to the Premises 24 hours a day, each day of the Lease term, (B) the
services described in (iii) and (iv) above shall be provided to the Premises
24 hours a day, each day of the Lease term, without additional charge to
Tenant, and (C) subject to the provisions of Paragraph 17.b. below regarding
Tenant's payment for Excess Services, the electricity, heat and air
conditioning described in (i) and (ii) above shall be available to the
Premises 24 hours a day, each day of the Lease term.
b. Payment for Utilities and Services. The cost of Basic Services shall
be included in Operating Expenses. In addition, Tenant shall pay to Landlord
upon demand (i) the reasonable cost of any Excess Services used by Tenant,
(ii) the reasonable cost of installing, operating, maintaining or repairing
any meter or other device used to measure Tenant's consumption of utilities,
(iii) the cost of installing, operating, maintaining or repairing any
Temperature Balance Equipment (as defined in Paragraph 17.c. below) for the
Premises and/or any equipment required in connection with any Excess Services
requested by Tenant, and (iv) any cost otherwise reasonably incurred by
Landlord in keeping account of or determining any Excess Services used by
Tenant. Landlord's failure to xxxx Tenant for any of the foregoing shall not
waive Landlord's right to xxxx Tenant for the same at a later time.
c. Temperature Balance. If the temperature otherwise maintained in any
portion of the Premises by the heating, air conditioning or ventilation
system is materially affected as a result of (i) the type or quantity of any
lights, machines or equipment (including without limitation typical office
equipment) used by Tenant in the Premises, (ii) the occupancy of such portion
of the Premises by more than one person per two hundred (200) square feet of
rentable area therein, (iii) an electrical load for lighting or power in
excess of the limits specified in Paragraph 17.d. below, or (iv) any
rearrangement of partitioning or other improvements, then at Tenant's sole
cost, Landlord may install any equipment, or modify any existing equipment
(including the standard air conditioning equipment) Landlord reasonably deems
necessary to restore the temperature balance (such new equipment or
modifications to existing equipment termed herein "Temperature Balance
Equipment"). Tenant agrees to keep closed, when necessary, draperies which,
because of the sun's position, must be closed to provide for the efficient
operation of the air conditioning system, and Tenant agrees to cooperate with
Landlord and to abide by the regulations and requirements which Landlord may
prescribe for the proper functioning and protection of the heating,
ventilating and air conditioning system. Landlord makes no representation to
Tenant regarding the adequacy or fitness of the heating, air conditioning or
ventilation equipment in the Building to maintain temperatures that may be
required for, or because of, any computer or communications rooms, machine
rooms, conference rooms or other areas of high concentration of personnel or
electrical usage, or any other uses other than or in excess of the fractional
horsepower normally required for office equipment, and Landlord shall have no
liability for loss or damage suffered by Tenant or others in connection
therewith.
d. Utility Connections. Tenant shall not connect or use any apparatus
or device in the Premises (i) using current in excess of 110 volts, or (ii)
23
which would cause Tenant's electrical demand load to exceed 1.5 xxxxx per
rentable square foot for overhead lighting or 2.0 xxxxx per rentable square
foot for convenience outlets, or (iii) which would exceed the capacity of the
existing panel or transformer serving the Premises. Tenant shall not connect
with electric current (except through existing outlets in the Premises or
such additional outlets as may be installed in the Premises as part of
initial improvements or Alterations approved by Landlord), or water pipes,
any apparatus or device for the purpose of using electrical current or water.
Landlord will not permit additional coring of the floor of the Premises
in order to install new electric outlets in the Premises unless Landlord is
reasonably satisfied, on the basis of such information to be supplied by
Tenant at Tenant's expense, that coring of the floor in order to install such
additional outlets will not weaken the structure of the floor.
e. Interruption of Services. Landlord's obligation to provide utilities
and services for the Premises are subject to the Rules and Regulations of the
Building, applicable Legal Requirements (including the rules or actions of
the public utility company furnishing the utility or service), and shutdowns
for maintenance and repairs, for security purposes, or due to strikes,
lockouts, labor disputes, fire or other casualty, acts of God, or other
causes beyond the control of Landlord. In the event of an interruption in, or
failure or inability to provide any service or utility for the Premises for
any reason, such interruption, failure or inability shall not constitute an
eviction of Tenant, constructive or otherwise, or impose upon Landlord any
liability whatsoever, including, but not limited to, liability for
consequential damages or loss of business by Tenant. Tenant hereby waives the
provisions of California Civil Code Section 1932(1) or any other applicable
existing or future Legal Requirement permitting the termination of this Lease
due to such interruption, failure or inability. Notwithstanding the
foregoing, if any interruption in, or failure or inability to provide any of
the services or utilities described in Paragraph 17.a. is (i) within
Landlord's reasonable control and continues for fifteen (15) or more
consecutive days after Tenant's written notice thereof to Landlord, or (ii)
outside of Landlord's reasonable control (provided that such interruption,
failure or inability did not arise from the negligence or willful misconduct
of Tenant or any other Tenant Parties) and continues for forty-five (45) or
more consecutive days after Tenant's written notice thereof to Landlord, and
Tenant is unable to and does not use a material portion of the Premises for
Tenant's business purposes as a result thereof, then Tenant shall be entitled
to an abatement of Monthly Rent under Paragraph 5 hereof and Additional Rent
under Paragraph 7 hereof, which abatement shall commence as of the first day
after the expiration of such fifteen (15) day or forty-five (45) day period,
as the case may be, and shall be based on the extent of Tenant's inability to
use the Premises, and in the case of an interruption, failure or inability
described in clause (ii) above, such abatement shall also be limited to the
extent covered by proceeds of Landlord's rental interruption insurance.
f. Governmental Controls. In the event any governmental authority
having jurisdiction over the Real Property or the Building promulgates or
revises any Legal Requirement or building, fire or other code or imposes
mandatory or voluntary controls or guidelines on Landlord or the Real
Property or the Building relating to the use or conservation of energy or
utilities or the reduction of automobile or other emissions (collectively
"Controls") or in the event Landlord is required or elects to make
alterations to the Real Property or the Building in order to comply with such
mandatory or voluntary Controls, Landlord may, in its sole discretion, comply
with such Controls or make such alterations to the Real Property or the
Building related thereto. Such compliance and the making of such alterations
shall not constitute an eviction of Tenant, constructive or otherwise, or
impose upon Landlord any liability whatsoever, including, but not limited to,
liability for consequential damages or loss of business by Tenant. For
purposes of the foregoing, "voluntary" Controls shall mean those controls or
guidelines that, in Landlord's good faith business judgment, would be
appropriate for adoption by a prudent landlord of a first-class office
building in the San Francisco financial district.
18. Personal Property and Other Taxes. Tenant shall pay, at least ten (10)
days before delinquency, any and all taxes, fees, charges or other
governmental impositions levied or assessed against Landlord or Tenant (a)
upon Tenant's equipment, furniture, fixtures, improvements and other personal
property (including carpeting installed by Tenant) located in the Premises,
(b) by virtue of any Alterations made by Tenant to the Premises, and (c) upon
this transaction or any document to which Tenant is a party creating or
transferring an interest or an estate in the Premises. If any such fee,
24
charge or other governmental imposition is paid by Landlord, Tenant shall
reimburse Landlord for Landlord's payment upon demand.
19. Rules and Regulations. Tenant shall comply with the rules and
regulations set forth on Exhibit B attached hereto, as such rules and
regulations may be modified or amended by Landlord from time to time (the
"Rules and Regulations"). Landlord shall not be responsible to Tenant for the
nonperformance or noncompliance by any other tenant or occupant of the
Building of or with any of the Rules and Regulations.
20. Surrender; Holding Over.
a. Surrender. Upon the expiration or other termination of this Lease,
Tenant shall surrender the Premises to Landlord vacant and broom-clean, with
all improvements and Alterations (except as provided below) in their original
condition, except for reasonable wear and tear, damage from casualty or
condemnation and any changes resulting from approved Alterations; provided,
however, that prior to the expiration or termination of this Lease Tenant
shall remove from the Premises any Alterations that Tenant is required by
Landlord to remove under the provisions of this Lease, and all of Tenant's
personal property and trade fixtures, and, at Landlord's sole election, any
other improvements, whether installed by Landlord or Tenant, that are of a
type or quantity that would not be installed by or for a typical tenant using
space for general office purposes, or are otherwise nonstandard. If such
removal is not completed at the expiration or other termination of this
Lease, Landlord may remove the same at Tenant's expense. Any damage to the
Premises or the Building caused by such removal shall be repaired promptly by
Tenant (including the patching or repairing of ceilings and walls) or, if
Tenant fails to do so, Landlord may do so at Tenant's expense. The removal of
Alterations from the Premises shall be governed by Paragraph 9 above.
Tenant's obligations under this paragraph shall survive the expiration or
other termination of this Lease. Upon expiration or termination of this Lease
or of Tenant's possession, Tenant shall surrender all keys to the Premises or
any other part of the Building and shall make known to Landlord the
combination of locks on all safes, cabinets and vaults that may be located in
the Premises.
b. Holding Over. If Tenant remains in possession of the Premises after
the expiration or earlier termination of this Lease with the express written
consent of Landlord, Tenant's occupancy shall be a month-to-month tenancy at
a rent agreed upon by Landlord and Tenant, but in no event less than the
greater of (i) one hundred fifty percent (150%) of the Monthly Rent and
Additional Rent payable under this Lease during the last full month prior to
the date of the expiration of this Lease or (ii) the then fair market rental
(as reasonably determined by Landlord) for the Premises. Except as provided
in the preceding sentence, the month-to-month tenancy shall be on the terms
and conditions of this Lease, except that any renewal options, expansion
options, rights of first refusal, rights of first negotiation or any other
rights or options pertaining to additional space in the Building contained in
this Lease shall be deemed to have terminated and shall be inapplicable
thereto. Landlord's acceptance of rent after such holding over with
Landlord's written consent shall not result in any other tenancy or in a
renewal of the original term of this Lease. If Tenant remains in possession
of the Premises after the expiration or earlier termination of this Lease
without Landlord's consent, Tenant's continued possession shall be on the
basis of a tenancy at sufferance and Tenant shall pay as Monthly Rent during
the holdover period an amount equal to the greater of (i) one hundred fifty
percent (150%) of the fair market rental (as reasonably determined by
Landlord) for the Premises or (ii) two hundred percent (200%) of the Monthly
Rent and Additional Rent payable under this Lease for the last full month
prior to the date of such expiration or termination.
c. Indemnification. If Tenant fails to surrender the Premises as
required within thirty (30) days after the expiration or termination of this
Lease, Tenant shall indemnify, defend and hold Landlord harmless from and
against all Claims incurred by or asserted against Landlord and arising
directly or indirectly from Tenant's failure to timely surrender the
Premises, including but not limited to (i) any rent payable by or any loss,
cost, or damages, including lost profits, claimed by any prospective tenant
of the Premises or any portion thereof, and (ii) Landlord's damages as a
result of such prospective tenant rescinding or refusing to enter into the
prospective lease of the Premises or any portion thereof by reason of such
failure to timely surrender the Premises.
25
21. Subordination and Attornment. This Lease is expressly made subject and
subordinate to any mortgage, deed of trust, ground lease, underlying lease or
like encumbrance affecting any part of the Real Property or any interest of
Landlord therein which is now existing or hereafter executed or recorded, any
present or future modification, amendment or supplement to any of the
foregoing, and to any advances made thereunder (any of the foregoing being a
"Superior Interest"), including without limitation, that certain deed dated
March 13, 1978, from the Redevelopment Agency of the City of San Francisco,
recorded May 19, 1978, in the Office of the Recorder of the City and County
of San Francisco in Book C572 of the Official Records at Page 972, and that
certain Golden Gateway Commons III Combined Condominium Declaration and
Covenants, Conditions and Restrictions, without the necessity of any further
documentation evidencing such subordination. Notwithstanding the foregoing,
Tenant shall, within ten (10) days after Landlord's request, execute and
deliver to Landlord a document evidencing the subordination of this Lease to
a particular Superior Interest. Tenant hereby irrevocably appoints Landlord
as Tenant's attorney-in-fact to execute and deliver any such instrument in
the name of Tenant if Tenant fails to do so within such time. If the interest
of Landlord in the Real Property or the Building is transferred to any person
("Purchaser") pursuant to or in lieu of proceedings for enforcement of any
Superior Interest, Tenant shall immediately and automatically attorn to the
Purchaser, and this Lease shall continue in full force and effect as a direct
lease between the Purchaser and Tenant on the terms and conditions set forth
herein.
22. Financing Condition. If any lender or ground lessor that intends to
acquire an interest in, or holds a mortgage, ground lease or deed of trust
encumbering any portion of the Real Property should require either the
execution by Tenant of an agreement requiring Tenant to send such lender
written notice of any default by Landlord under this Lease, giving such
lender the right to cure such default until such lender has completed
foreclosure, and preventing Tenant from terminating this Lease unless such
default remains uncured after foreclosure has been completed, and/or any
modification of the agreements, covenants, conditions or provisions of this
Lease, then Tenant agrees that it shall, within ten (10) days after
Landlord's request, execute and deliver such agreement and modify this Lease
as required (provided that such requirement shall not materially and
adversely affect Tenant's rights hereunder) by such lender or ground lessor;
provided, however, that no such modification shall affect the length of the
term or increase the rent payable by Tenant under Paragraphs 5 and 7, or
otherwise materially and adversely affect Tenant's rights hereunder. Tenant
acknowledges and agrees that if Tenant fails to timely execute any such
agreement or modification required by such lender or ground lessor, and fails
to cure such failure within ten (10) days after a second (2nd) notice
thereof, such failure may cause Landlord serious financial damage by causing
the failure of a financing transaction and shall give Landlord all of its
rights and remedies under Paragraph 25 below, including its right to damages
caused by the loss of such financing.
23. Entry by Landlord. Landlord may, at any and all reasonable times, and
upon reasonable advance notice (provided that no advance notice need be given
if an emergency necessitates an immediate entry or prior to entry to provide
routine janitorial services), enter the Premises to (a) inspect the same and
to determine whether Tenant is in compliance with its obligations hereunder,
(b) supply janitorial and any other service Landlord is required to provide
hereunder, (c) show the Premises to prospective lenders, purchasers or
tenants, (d) post notices of nonresponsibility, and (e) alter, improve or
repair the Premises or any other portion of the Real Property. In connection
with any such alteration, improvement or repair, Landlord may erect in the
Premises or elsewhere in the Real Property scaffolding and other structures
reasonably required for the work to be performed. In no event shall such
entry or work entitle Tenant to an abatement of rent, constitute an eviction
of Tenant, constructive or otherwise, or impose upon Landlord any liability
whatsoever, including but not limited to liability for consequential damages
or loss of business or profits by Tenant; provided, however, that Landlord
shall use good faith efforts to cause all such work to be done in such a
manner as to cause as little interference to Tenant as reasonably possible.
Landlord shall at all times retain a key with which to unlock all of the
doors in the Premises, except Tenant's vaults and safes. If an emergency
necessitates immediate access to the Premises, Landlord may use whatever
force is necessary to enter the Premises and any such entry to the Premises
shall not constitute a forcible or unlawful entry into the Premises, a
detainer of the Premises, or an eviction of Tenant from the Premises, or any
portion thereof.
26
24. Insolvency or Bankruptcy. The occurrence of any of the following shall
constitute an Event of Default under Paragraph 25 below:
1. Tenant ceases doing business as a going concern, makes an assignment
for the benefit of creditors, is adjudicated an insolvent, files a petition
(or files an answer admitting the material allegations of such petition)
seeking for Tenant any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar arrangement under any state
or federal bankruptcy or other law, or Tenant consents to or acquiesces in
the appointment, pursuant to any state or federal bankruptcy or other law, of
a trustee, receiver or liquidator for the Premises, for Tenant or for all or
any substantial part of Tenant's assets; or
2. Tenant fails within sixty (60) days after the commencement of any
proceedings against Tenant seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any state or
federal bankruptcy or other Legal Requirement, to have such proceedings
dismissed, or Tenant fails, within sixty (60) days after an appointment
pursuant to any state or federal bankruptcy or other Legal Requirement
without Tenant's consent or acquiescence, of any trustee, receiver or
liquidator for the Premises, for Tenant or for all or any substantial part of
Tenant's assets, to have such appointment vacated; or
3. Tenant is unable, or admits in writing its inability, to pay its
debts as they mature; or
4. Tenant gives notice to any governmental body of its insolvency or
pending insolvency, or of its suspension or pending suspension of operations.
In no event shall this Lease be assigned or assignable by reason of any
voluntary or involuntary bankruptcy, insolvency or reorganization
proceedings, nor shall any rights or privileges hereunder be an asset of
Tenant, the trustee, debtor-in-possession, or the debtor's estate in any
bankruptcy, insolvency or reorganization proceedings.
25. Default and Remedies.
a. Events of Default. The occurrence of any of the following shall
constitute an "Event of Default" by Tenant:
1. Tenant fails to pay when due Monthly Rent, Additional Rent or
any other rent due hereunder (provided that the first occurrence of such a
delinquency in any twelve (12)-month period shall be an Event of Default only
if Tenant fails to cure such delinquency within three (3) days of written
notice from Landlord thereof); or
2. Tenant fails to occupy and use the Premises for ninety (90)
consecutive days, which failure shall be deemed an abandonment of the
Premises by Tenant; or
3. Tenant fails to deliver any estoppel certificate pursuant to
Paragraph 29 below, subordination agreement pursuant to Paragraph 21 above,
or document required pursuant to Paragraph 22 above, within the applicable
period set forth therein; or
4. Tenant violates the bankruptcy and insolvency provisions of
Paragraph 24 above; or
5. Tenant assigns this Lease or subleases any portion of the
Premises in violation of Paragraph 13 above; or
6. A default by Tenant occurs under any other lease between Tenant
and Landlord or any affiliate of Landlord, and Tenant fails to cure such
default within the applicable period set forth therein; or
7. Tenant fails to comply with any other provision of this Lease in
the manner required within ten (10) days after written notice of such failure
(or if the noncompliance cannot by its nature be cured within the 10-day
period, if Tenant fails to commence to cure such noncompliance within the 10-
day period and thereafter diligently prosecute such cure to completion, but
in all events within sixty (60) days).
27
b. Remedies. Upon the occurrence of an Event of Default Landlord shall
have the following remedies, which shall not be exclusive but shall be
cumulative and shall be in addition to any other remedies now or hereafter
allowed by law:
1. Landlord may terminate Tenant's right to possession of the
Premises at any time by written notice to Tenant. Tenant expressly
acknowledges that in the absence of such written notice from Landlord, no
other act of Landlord, including, but not limited to, its re-entry into the
Premises, its efforts to relet the Premises, its reletting of the Premises
for Tenant's account, its storage of Tenant's personal property and trade
fixtures, its acceptance of keys to the Premises from Tenant, its appointment
of a receiver, or its exercise of any other rights and remedies under this
Paragraph 25 or otherwise at law, shall constitute an acceptance of Tenant's
surrender of the Premises or constitute a termination of this Lease or of
Tenant's right to possession of the Premises.
Upon such termination in writing of Tenant's right to possession of
the Premises, this Lease shall terminate and Landlord shall be entitled to
recover damages from Tenant as provided in California Civil Code Section
1951.2 or any other applicable existing or future Legal Requirement providing
for recovery of damages for such breach, including but not limited to the
following:
(i) The reasonable cost of recovering the Premises; plus
(ii) The reasonable cost of removing Tenant's Alterations, trade
fixtures and improvements; plus
(iii) All unpaid rent due or earned hereunder prior to the date of
termination, less the proceeds of any reletting or any rental received from
subtenants prior to the date of termination applied as provided in Paragraph
25.b.2. below, together with interest at the Interest Rate, on such sums from
the date such rent is due and payable until the date of the award of damages;
plus
(iv) The amount by which the rent which would be payable by Tenant
hereunder, including Additional Rent under Paragraph 7 above, as reasonably
estimated by Landlord, from the date of termination until the date of the
award of damages, exceeds the amount of such rental loss as Tenant proves
could have been reasonably avoided, together with interest at the Interest
Rate on such sums from the date such rent is due and payable until the date
of the award of damages; plus
(v) The amount by which the rent which would be payable by Tenant
hereunder, including Additional Rent under Paragraph 7 above, as reasonably
estimated by Landlord, for the remainder of the then term, after the date of
the award of damages exceeds the amount such rental loss as Tenant proves
could have been reasonably avoided, discounted at the discount rate published
by the Federal Reserve Bank of San Francisco for member banks at the time of
the award plus one percent (1%); plus
(vi) Such other amounts in addition to or in lieu of the foregoing
as may be permitted from time to time by applicable law, including without
limitation any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform its obligations
under this Lease or which in the ordinary course of things would be likely to
result therefrom.
2. Landlord has the remedy described in California Civil Code
Section 1951.4 (a landlord may continue the lease in effect after the
tenant's breach and abandonment and recover rent as it becomes due, if the
tenant has the right to sublet and assign subject only to reasonable
limitations), and may continue this Lease in full force and effect and may
enforce all of its rights and remedies under this Lease, including, but not
limited to, the right to recover rent as it becomes due. After the occurrence
of an Event of Default, Landlord may enter the Premises without terminating
this Lease and sublet all or any part of the Premises for Tenant's account to
any person, for such term (which may be a period beyond the remaining term of
this Lease), at such rents and on such other terms and conditions as Landlord
deems advisable. In the event of any such subletting, rents received by
Landlord from such subletting shall be applied (i) first, to the payment of
the costs of maintaining, preserving, altering and preparing the Premises for
subletting, the other costs of subletting, including but not limited to
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brokers' commissions, attorneys' fees and expenses of removal of Tenant's
personal property, trade fixtures and Alterations; (ii) second, to the
payment of rent then due and payable hereunder; (iii) third, to the payment
of future rent as the same may become due and payable hereunder; (iv) fourth,
the balance, if any, shall be paid to Tenant upon (but not before) expiration
of the term of this Lease. If the rents received by Landlord from such
subletting, after application as provided above, are insufficient in any
month to pay the rent due and payable hereunder for such month, Tenant shall
pay such deficiency to Landlord monthly upon demand. Notwithstanding any such
subletting for Tenant's account without termination, Landlord may at any time
thereafter, by written notice to Tenant, elect to terminate this Lease by
virtue of a previous Event of Default.
During the continuance of an Event of Default, for so long as
Landlord does not terminate Tenant's right to possession of the Premises and
subject to Paragraph 13, entitled Assignment and Subletting, and the options
granted to Landlord thereunder, Landlord shall not unreasonably withhold its
consent to an assignment or sublease of Tenant's interest in the Premises or
in this Lease.
3. During the continuance of an Event of Default, Landlord may
enter the Premises without terminating this Lease and remove all Tenant's
personal property, Alterations and trade fixtures from the Premises and store
them at Tenant's risk and expense. If Landlord removes such property from the
Premises and stores it at Tenant's risk and expense, and if Tenant fails to
pay the cost of such removal and storage after written demand therefor and/or
to pay any rent then due, then after the property has been stored for a
period of thirty (30) days or more Landlord may sell such property at public
or private sale, in the manner and at such times and places as Landlord deems
commercially reasonable following reasonable notice to Tenant of the time and
place of such sale. The proceeds of any such sale shall be applied first to
the payment of the expenses for removal and storage of the property, the
preparation for and the conducting of such sale, and for attorneys' fees and
other legal expenses incurred by Landlord in connection therewith, and the
balance shall be applied as provided in Paragraph 25.b.2. above.
Tenant hereby waives all claims for damages that may be caused by
Landlord's reentering and taking possession of the Premises or removing and
storing Tenant's personal property pursuant to this Paragraph 25, and Tenant
shall indemnify, defend and hold Landlord harmless from and against any and
all Claims resulting from any such act. No reentry by Landlord shall
constitute or be construed as a forcible entry by Landlord.
4. Landlord may require Tenant to remove any and all Alterations
from the Premises or, if Tenant fails to do so within ten (10) days after
Landlord's request, Landlord may do so at Tenant's expense.
5. Landlord may cure the Event of Default at Tenant's expense, it
being understood that such performance shall not waive or cure the subject
Event of Default. If Landlord pays any sum or incurs any expense in curing
the Event of Default, Tenant shall reimburse Landlord upon demand for the
amount of such payment or expense with interest at the Interest Rate from the
date the sum is paid or the expense is incurred until Landlord is reimbursed
by Tenant. Any amount due Landlord under this subsection shall constitute
additional rent hereunder.
c. Waiver of Redemption. Tenant hereby waives, for itself and all
persons claiming by and under Tenant, all rights and privileges which it
might have under any present or future Legal Requirement to redeem the
Premises or to continue this Lease after being dispossessed or ejected from
the Premises.
26. Damage or Destruction. If all or a part of the Premises are damaged by
fire or other casualty, or if the Building is so damaged that access to or
use and occupancy of the Premises is materially impaired, Landlord shall
promptly give Tenant notice of Landlord's reasonable estimate of the time
required to make such repairs (the "Damage Estimate"). If the Damage Estimate
is one hundred eighty (180) days or less, then Landlord shall use diligent
and commercially reasonable efforts to commence promptly and pursue to
completion the repair the damage and this Lease shall remain in full force
and effect. If the Damage Estimate is more than one hundred eighty (180)
days, Landlord, at its option exercised by written notice to Tenant within
sixty (60) days of the date of the damage, shall either (a) repair the
damage, in which event this Lease shall continue in full force and effect, or
(b) terminate this Lease as of the date specified by Landlord in the notice,
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which date shall be not less than thirty (30) days nor more than sixty (60)
days after the date such notice is given, and this Lease shall terminate on
the date specified in the notice.
Notwithstanding anything to the contrary contained in this Paragraph
26, if the initial Damage Estimate is more than ninety (90) days, and the
date on which Landlord reasonably anticipates the repairs of such damage will
be completed is during the last twelve (12) months of the Lease term,
Landlord and Tenant shall each have the option to terminate this Lease as of
the date of such damage by giving written notice to the other, in the case of
Landlord together with the Damage Estimate, or, in the case of Tenant, within
thirty (30) days of Tenant's receipt of the Damage Estimate.
Notwithstanding anything to the contrary in this Paragraph 26, if
damage which would otherwise lead to a right to terminate this Lease results
from the willful misconduct of Landlord or Tenant, the party from whose
misconduct such damage results shall have no right to terminate this Lease.
If the fire or other casualty damages the Premises or the common areas
of the Real Property necessary for Tenant's use and occupancy of the
Premises, Tenant ceases to use any portion of the Premises as a result of
such damage, and the damage does not result from the negligence or willful
misconduct of Tenant or any other Tenant Parties, then during the period the
Premises or portion thereof are rendered unusable by such damage and repair,
Tenant's Monthly Rent and Additional Rent under Paragraphs 5 and 7 above
shall be proportionately reduced based upon the extent to which the damage
and repair prevents Tenant from conducting, and Tenant does not conduct, its
business at the Premises. Landlord shall not be obligated to repair or
replace any of Tenant's movable furniture, equipment, trade fixtures, and
other personal property, nor any Alterations installed in the Premises by
Tenant, and no damage to any of the foregoing shall entitle Tenant to any
abatement, and Tenant shall, at Tenant's sole cost and expense, repair and
replace such items. All such repair and replacement of Alterations shall be
constructed in accordance with Paragraph 9 above regarding Alterations.
A total destruction of the Building shall automatically terminate this
Lease. In no event shall Tenant be entitled to any compensation or damages
from Landlord for loss of use of the whole or any part of the Premises or for
any inconvenience occasioned by any such destruction, rebuilding or
restoration of the Premises, the Building or access thereto, except for the
rent abatement expressly provided above. 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 premises.
27. Eminent Domain.
a. If all or any material part of the Premises are taken by any public
or quasi-public authority under the power of eminent domain, or any agreement
in lieu thereof (a "taking"), this Lease shall terminate as to the portion of
the Premises taken effective as of the date of taking. If only a portion of
the Premises is taken, Landlord or Tenant may terminate this Lease as to the
remainder of the Premises upon written notice to the other party within
ninety (90) days after the taking; provided, however, that Tenant's right to
terminate this Lease is conditioned upon the remaining portion of the
Premises being of such size or configuration that such remaining portion of
the Premises is unusable or uneconomical for Tenant's business. Landlord
shall be entitled to all compensation, damages, income, rent awards and
interest thereon whatsoever which may be paid or made in connection with any
taking and Tenant shall have no claim against Landlord or any governmental
authority for the value of any unexpired term of this Lease or of any of the
improvements or Alterations in the Premises; provided, however, that the
foregoing shall not prohibit Tenant from prosecuting a separate claim against
the taking authority for an amount separately designated for Tenant's
relocation expenses or the interruption of or damage to Tenant's business or
as compensation for Tenant's personal property, trade fixtures, Alterations
or other improvements paid for by Tenant so long as any award to Tenant will
not reduce the award to Landlord.
In the event of a partial taking of the Premises which does not result
in a termination of this Lease, the Monthly Rent and Additional Rent under
Paragraphs 5 and 7 hereunder shall be equitably reduced. If all or any part
of the Real Property other than the Premises is taken, Landlord may terminate
30
this Lease upon written notice to Tenant given within ninety (90) days after
the date of taking.
b. Notwithstanding the foregoing, if all or any portion of the Premises
is taken for a period of time ending prior to the end of the term of this
Lease, this Lease shall remain in full force and effect and Tenant shall
continue to pay all rent and to perform all of its obligations under this
Lease; provided, however, that Tenant shall be entitled to all compensation,
damages, income, rent awards and interest thereon that is paid or made in
connection with such temporary taking of the Premises (or portion thereof),
except that any such compensation in excess of the rent or other amounts
payable to Landlord hereunder shall be promptly paid over to Landlord as
received. Landlord and Tenant each hereby waive the provisions of California
Code of Civil Procedure Section 1265.130 and any other applicable existing or
future Legal Requirement providing for, or allowing either party to petition
the courts of the state in which the Real Property is located for, a
termination of this Lease upon a partial taking of the Premises and/or the
Building.
28. Landlord's Liability; Sale of Building. The term "Landlord," as used
in this Lease, shall mean only the owner or owners of the Real Property at
the time in question. Notwithstanding any other provision of this Lease, the
liability of Landlord for its obligations under this Lease is limited solely
to Landlord's interest in the Real Property as the same may from time to time
be encumbered, and no personal liability shall at any time be asserted or
enforceable against any other assets of Landlord or against the constituent
shareholders, partners or other owners of Landlord, or the directors,
officers, employees and agents of Landlord or such constituent shareholder,
partner or other owner, on account of any of Landlord's obligations or
actions under this Lease. In addition, in the event of any conveyance of
title to the Real Property, then the grantor or transferor shall be relieved
of all liability with respect to Landlord's obligations to be performed under
this Lease after the date of such conveyance. In no event shall Landlord be
deemed to be in default under this Lease unless Landlord fails to perform its
obligations under this Lease, Tenant delivers to Landlord written notice
specifying the nature of Landlord's alleged default, and Landlord fails to
cure such default within thirty (30) days following receipt of such notice
(or, if the default cannot reasonably be cured within such period, to
commence action within such thirty (30)-day period and proceed diligently
thereafter to cure such default). Upon any conveyance of title to the Real
Property, the grantee or transferee shall be deemed to have assumed
Landlord's obligations to be performed under this Lease from and after the
date of such conveyance, subject to the limitations on liability set forth
above in this Paragraph 28. If Tenant provides Landlord with any security for
Tenant's performance of its obligations hereunder, and Landlord transfers
such security to the grantee or transferee of Landlord's interest in the Real
Property, Landlord shall be released from any further responsibility or
liability for such security. Any claim, defense or other right of Tenant
arising in connection with this Lease shall be barred unless Tenant files an
action or interposes a defense based thereon within one hundred eighty (180)
days after the date of the alleged event on which Tenant is basing its claim,
defense or right. Notwithstanding any other provision of this Lease, but not
in limitation of the provisions of Paragraph 14.a. above, Landlord shall not
be liable for any consequential damages or interruption or loss of business,
income or profits, or claims of constructive eviction, nor shall Landlord be
liable for loss of or damage to artwork, currency, jewelry, bullion, unique
or valuable documents, securities or other valuables, or for other property
not in the nature of ordinary fixtures, furnishings and equipment used in
general administrative and executive office activities and functions.
Wherever in this Lease Tenant (a) releases Landlord from any claim or
liability, (b) waives or limits any right of Tenant to assert any claim
against Landlord or to seek recourse against any property of Landlord or (c)
agrees to indemnify Landlord against any matters, the relevant release,
waiver, limitation or indemnity shall run in favor of and apply to Landlord,
the constituent shareholders, partners or other owners of Landlord, and the
directors, officers, employees and agents of Landlord and each such
constituent shareholder, partner or other owner.
29. Estoppel Certificates. At any time and from time to time, upon not
less than ten (10) days' prior notice from Landlord, Tenant shall execute,
acknowledge and deliver to Landlord a statement certifying the commencement
date of this Lease, stating that this Lease is unmodified and in full force
and effect (or if there have been modifications, that this Lease is in full
force and effect as modified and the date and nature of each such
modification), that Landlord is not in default under this Lease (or, if
Landlord is in default, specifying the nature of such default), that Tenant
31
is not in default under this Lease (or if Tenant is in default, specifying
the nature of such default), the current amounts of and the dates to which
the Monthly Rent and Additional Rent has been paid, and setting forth such
other matters as may be reasonably requested by Landlord and are within
Tenant's knowledge; provided, however, that Tenant's statement as to any of
the foregoing may be limited to Tenant's knowledge, provided that "Tenant's
knowledge" shall be deemed to include matters of which Tenant should have
reasonably been aware. Any such statement may be conclusively relied upon by
a prospective purchaser of the Real Property or by a lender obtaining a lien
on the Real Property as security. If Tenant fails to deliver such statement
within the time required hereunder, and fails to cure such failure within ten
(10) days after a second (2nd) notice thereof, such failure shall be
conclusive upon Tenant that (i) this Lease is in full force and effect,
without modification except as may be represented by Landlord, (ii) there are
no uncured defaults in Landlord's performance of its obligations hereunder,
(iii) not more than one month's installment of Monthly Rent has been paid in
advance, and (iv) any other statements of fact included by Landlord in such
statement, and which are of a nature that would be within Tenant's knowledge,
are correct. Tenant acknowledges and agrees that its failure to execute such
certificate may cause Landlord serious financial damage by causing the
failure of a sale or financing transaction and, if such failure continues
after the two (2) notices described in the immediately preceding sentence,
such failure shall Landlord all of its rights and remedies under Paragraph 25
above, including its right to damages caused by the loss of such sale or
financing.
30. Right of Landlord to Perform. If Tenant fails to make any payment
required hereunder (other than Monthly Rent and Additional Rent) or fails to
perform any other of its obligations hereunder, Landlord may, but shall not
be obliged to, and without waiving any default of Tenant or releasing Tenant
from any obligations to Landlord hereunder, make any such payment or perform
any other such obligation on Tenant's behalf. All sums so paid by Landlord
and all necessary incidental costs in connection with the performance by
Landlord of an obligation of Tenant (together with interest thereon from the
date of such payment by Landlord until paid at the Interest Rate) shall be
payable by Tenant to Landlord upon demand, and Tenant's failure to make such
payment upon demand shall entitle Landlord to the same rights and remedies
provided Landlord in the event of non-payment of rent.
31. Late Charge. Tenant acknowledges that late payment of any installment
of Monthly Rent or Additional Rent or any other amount required under this
Lease will cause Landlord to incur costs not contemplated by this Lease and
that the exact amount of such costs would be extremely difficult and
impracticable to fix. Such costs include, without limitation, processing and
accounting charges, late charges that may be imposed on Landlord by the terms
of any encumbrance or note secured by the Real Property and the loss of the
use of the delinquent funds. Therefore, if any installment of Monthly Rent or
Additional Rent or any other amount due from Tenant is not received within
three (3) Business Days after the date due, Tenant shall pay to Landlord on
demand, on account of the delinquent payment, an additional sum equal to the
greater of (i) five percent (5%) of the overdue amount, or (ii) $100.00,
which additional sum represents a fair and reasonable estimate of the costs
that Landlord will incur by reason of late payment by Tenant. Acceptance of
any late charge shall not constitute a waiver of Tenant's default with
respect to the overdue amount, nor prevent Landlord from exercising its right
to collect interest as provided above, rent, or any other damages, or from
exercising any of the other rights and remedies available to Landlord.
32. Attorneys' Fees; Waiver of Jury Trial. In the event of any action or
proceeding between Landlord and Tenant (including an action or proceeding
between Landlord and the trustee or debtor in possession while Tenant is a
debtor in a proceeding under any bankruptcy law) to enforce any provision of
this Lease, the losing party shall pay to the prevailing party all costs and
expenses, including, without limitation, reasonable attorneys' fees and
expenses, incurred in such action and in any appeal in connection therewith
by such prevailing party. The "prevailing party" will be determined by the
court before whom the action was brought based upon an assessment of which
party's major arguments or positions taken in the suit or proceeding could
fairly be said to have prevailed over the other party's major arguments or
positions on major disputed issues in the court's decision. Notwithstanding
the foregoing, however, Landlord shall be deemed the prevailing party in any
unlawful detainer or other action or proceeding instituted by Landlord based
upon any default or alleged default of Tenant hereunder if (i) judgment is
entered in favor of Landlord, or (ii) prior to trial or judgment Tenant pays
32
all of the rent claimed by Landlord, vacates the Premises, or otherwise cures
the default as claimed by Landlord.
If Landlord becomes involved in any litigation or dispute, threatened
or actual, by or against anyone not a party to this Lease, but arising by
reason of or related to any act or omission of Tenant or any Tenant Party,
Tenant agrees to pay Landlord's reasonable attorneys' fees and other costs
incurred in connection with the litigation or dispute, regardless of whether
a lawsuit is actually filed.
IF ANY ACTION OR PROCEEDING BETWEEN LANDLORD AND TENANT TO ENFORCE THE
PROVISIONS OF THIS LEASE (INCLUDING AN ACTION OR PROCEEDING BETWEEN LANDLORD
AND THE TRUSTEE OR DEBTOR IN POSSESSION WHILE TENANT IS A DEBTOR IN A
PROCEEDING UNDER ANY BANKRUPTCY LAW) PROCEEDS TO TRIAL, LANDLORD AND TENANT
HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY IN SUCH TRIAL. Landlord and
Tenant agree that this paragraph constitutes a written consent to waiver of
trial by jury within the meaning of California Code of Civil Procedure
Section 631(a)(2), and Tenant does hereby authorize and empower Landlord to
file this paragraph and/or this Lease, as required, with the clerk or judge
of any court of competent jurisdiction as a written consent to waiver of
jury trial.
33. Waiver. No provisions of this Lease shall be deemed waived by Landlord
unless such waiver is in a writing signed by Landlord. The waiver by Landlord
of any breach of any provision of this Lease shall not be deemed a waiver of
any subsequent breach of the same or any other provision of this Lease. No
delay or omission in the exercise of any right or remedy of Landlord upon any
default by Tenant shall impair such right or remedy or be construed as a
waiver. Landlord's acceptance of any payments of rent due under this Lease
shall not be deemed a waiver of any default by Tenant under this Lease
(including Tenant's recurrent failure to timely pay rent) other than Tenant's
nonpayment of the accepted sums, and no endorsement or statement on any check
or accompanying any check or payment shall be deemed an accord and
satisfaction. Landlord's consent to or approval of any act by Tenant
requiring Landlord's consent or approval shall not be deemed to waive or
render unnecessary Landlord's consent to or approval of any subsequent act by
Tenant.
34. Notices. All notices and demands which may or are required to be given
by either party to the other hereunder shall be in writing. All notices and
demands by Landlord to Tenant shall be delivered personally or sent by United
States mail, postage prepaid, or by any reputable overnight or same-day
courier, addressed to Tenant at the Premises, or to such other place as
Tenant may from time to time designate by notice to Landlord hereunder. All
notices and demands by Tenant to Landlord shall be sent by United States
mail, postage prepaid, or by any reputable overnight or same-day courier,
addressed to Landlord in care of Shorenstein Company, L.P., 000 Xxxxxxxxxx
Xxxxxx, 00xx xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, or to such other place
as Landlord may from time to time designate by notice to Tenant hereunder.
Notices delivered personally or sent same-day courier will be effective
immediately upon delivery to the addressee at the designated address; notices
sent by overnight courier will be effective one (1) Business Day after
acceptance by the service for delivery; notices sent by mail will be
effective two (2) Business Days after mailing. In the event Tenant requests
multiple notices hereunder, Tenant will be bound by such notice from the
earlier of the effective times of the multiple notices.
35. Deleted.
36. Defined Terms and Marginal Headings. When required by the context of
this Lease, the singular includes the plural. If more than one person or
entity signs this Lease as Tenant, the obligations hereunder imposed upon
Tenant shall be joint and several, and the act of, written notice to or from,
refund to, or signature of, any Tenant signatory to this Lease (including
without limitation modifications of this Lease made by fewer than all such
Tenant signatories) shall bind every other Tenant signatory as though every
other Tenant signatory had so acted, or received or given the written notice
or refund, or signed. The headings and titles to the paragraphs of this Lease
are for convenience only and are not to be used to interpret or construe this
Lease. Wherever the term "including" or "includes" is used in this Lease it
shall be construed as if followed by the phrase "without limitation." The
language in all parts of this Lease shall in all cases be construed as a
whole and in accordance with its fair meaning and not construed for or
against any party simply because one party was the drafter thereof.
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37. Time and Applicable Law. Time is of the essence of this Lease and of
each and all of its provisions, except as to the conditions relating to the
delivery of possession of the Premises to Tenant. This Lease shall be
governed by and construed in accordance with the laws of the State of
California, and the venue of any action or proceeding under this Lease shall
be the City and County of San Francisco, California.
38. Successors. Subject to the provisions of Paragraphs 13 and 28 above,
the covenants and conditions hereof shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, personal
representatives, successors, executors, administrators and assigns.
39. Entire Agreement; Modifications. This Lease (including any exhibit,
rider or attachment hereto) constitutes the entire agreement between Landlord
and Tenant with respect to Tenant's lease of the Premises. No provision of
this Lease may be amended or otherwise modified except by an agreement in
writing signed by the parties hereto. Neither Landlord nor Landlord's agents
have made any representations or warranties with respect to the Premises, the
Building, the Real Property or this Lease except as expressly set forth
herein, including without limitation any representations or warranties as to
the suitability or fitness of the Premises for the conduct of Tenant's
business or for any other purpose, nor has Landlord or its agents agreed to
undertake any alterations or construct any improvements to the Premises
except those, if any, expressly provided in this Lease, and no rights,
easements or licenses shall be acquired by Tenant by implication or otherwise
unless expressly set forth herein. Neither this Lease nor any memorandum
hereof shall be recorded by Tenant.
40. Light and Air. Tenant agrees that no diminution of light, air or view
by any structure which may hereafter be erected (whether or not by Landlord)
shall entitle Tenant to any reduction of rent hereunder, result in any
liability of Landlord to Tenant, or in any other way affect this Lease.
41. Name of Building. Tenant shall not use the name of the Building for
any purpose other than as the address of the business conducted by Tenant in
the Premises without the written consent of Landlord. Landlord reserves the
right to change the name of the Building at any time in its sole discretion
by written notice to Tenant and Landlord shall not be liable to Tenant for
any loss, cost or expense on account of any such change of name.
42. Severability. If any provision of this Lease or the application
thereof to any person or circumstance shall be invalid or unenforceable to
any extent, the remainder of this Lease and the application of such
provisions to other persons or circumstances shall not be affected thereby
and shall be enforced to the greatest extent permitted by law.
43. Authority. If Tenant is a corporation, partnership, trust, association
or other entity, Tenant and each person executing this Lease on behalf of
Tenant, hereby covenants and warrants that (a) Tenant is duly incorporated or
otherwise established or formed and validly existing under the laws of its
state of incorporation, establishment or formation, (b) Tenant has and is
duly qualified to do business in the state in which the Real Property is
located, (c) Tenant has full corporate, partnership, trust, association or
other appropriate power and authority to enter into this Lease and to perform
all Tenant's obligations hereunder, and (d) each person (and all of the
persons if more than one signs) signing this Lease on behalf of Tenant is
duly and validly authorized to do so.
44. No Offer. Submission of this instrument for examination and signature
by Tenant does not constitute an offer to lease or a reservation of or option
for lease, and is not effective as a lease or otherwise until execution and
delivery by both Landlord and Tenant.
45. Real Estate Brokers. Tenant represents and warrants that it has
negotiated this Lease directly with the real estate broker(s) identified in
Paragraph 2 and has not authorized or employed, or acted by implication to
authorize or to employ, any other real estate broker or salesman to act for
Tenant in connection with this Lease. Tenant shall indemnify, defend and hold
Landlord harmless from and against any and all Claims by any real estate
broker or salesman other than the real estate broker(s) identified in
Paragraph 2 for a commission, finder's fee or other compensation as a result
of Tenant's entering into this Lease.
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46. Consents and Approvals. Wherever the consent, approval, judgment or
determination of Landlord is required or permitted under this Lease, such
consent, approval, judgment or determination shall be subject to a standard
of commercial reasonableness, unless the provision providing for such
consent, approval, judgment or determination specifies that Landlord may
exercise its sole discretion or otherwise specifies the standards under which
Landlord may withhold its consent or approval or make the judgment or
determination. Whenever Tenant requests Landlord to take any action or give
any consent or approval, Tenant shall reimburse Landlord for all of
Landlord's out-of-pocket costs reasonably incurred in reviewing the proposed
action or consent (whether or not Landlord consents to any such proposed
action), including without limitation reasonable attorneys' or consultants'
fees and expenses, within ten (10) days after Landlord's delivery to Tenant
of a statement of such costs. If it is determined that Landlord failed to
give its consent or approval where it was required to do so under this Lease,
Tenant's sole remedy will be an order of specific performance or mandatory
injunction of the Landlord's agreement to give its consent or approval,
unless such equitable remedy would be impracticable to perform. The review
and/or approval by Landlord of any item shall not impose upon Landlord any
liability for accuracy or sufficiency of any such item or the quality or
suitability of such item for its intended use. Any such review or approval is
for the sole purpose of protecting Landlord's interest in the Real Property,
and neither Tenant nor any Tenant Party nor any person or entity claiming by,
through or under Tenant, nor any other third party shall have any rights
hereunder by virtue of such review and/or approval by Landlord.
47. Reserved Rights. Landlord retains and shall have the rights set forth
below, exercisable without notice and without liability to Tenant for damage
or injury to property, person or business and without effecting an eviction,
constructive or actual, or disturbance of Tenant's use or possession of the
Premises or giving rise to any claim for rent abatement:
(a) To grant to anyone the exclusive right to conduct any business or
render any service in or to the Building and its tenants, provided that such
exclusive right shall not operate to require Tenant to use or patronize such
business or service or to exclude Tenant from its use of the Premises
expressly permitted herein.
(b) To perform, or cause or permit to be performed, at any time and
from time to time, including during Business Hours, construction in the
common areas and facilities or other leased areas in the Real Property;
provided that Landlord shall use commercially reasonable efforts consistent
with the operation of a first class project to minimize noise and disruption
to Tenant's business during the performance of such work provided that such
efforts do not diminish the quality of work performed.
(c) To reduce, increase, enclose or otherwise change at any time and
from time to time the size, number, location, lay-out and nature of the
common areas and facilities and other tenancies and premises in the Real
Property and to create additional rentable areas through use or enclosure of
common areas.
48. Financial Statements. Upon submission of this Lease to Landlord and at
any time thereafter within thirty (30) days after Landlord's request
therefor, Tenant shall furnish to Landlord copies of true and accurate
financial statements reflecting Tenant's then current financial situation
(including without limitation balance sheets, statements of profit and loss,
and changes in financial condition), Tenant's most recent audited or
certified annual financial statements, and Tenant's federal income tax
returns pertaining to Tenant's business, and in addition shall cause to be
furnished to Landlord similar financial statements and tax returns for any
guarantor(s) of this Lease. Tenant agrees to deliver to any lender,
prospective lender, purchaser or prospective purchaser designated by Landlord
such financial statements of Tenant as may be reasonably requested by such
lender or purchaser. Notwithstanding the foregoing, however, so long as
Tenant is a publicly traded company, the foregoing requirements shall be
satisfied by delivery to Landlord of the Tenant's then most recent 10-K
report as filed with the Securities and Exchange Commission.
35
49. Parking.
a. Commencing upon the date that Tenant first conducts its business
from the Premises, Landlord shall provide Tenant, on an unassigned, non-
exclusive and unlabelled basis, fifteen (15) parking spaces in such areas of
the parking facility for the Building as Landlord may designate from time to
time (which spaces shall comprise five (5) single spaces and five (5) pairs
of tandem spaces), and Tenant shall pay for such parking at the rate or
charge in effect from time to time for parking in the Building.
b. Tenant shall provide Landlord with advance written notice of the
names of each individual to whom Tenant from time to time distributes
Tenant's parking rights hereunder, and shall cause each such individual to
execute Landlord's standard waiver form for garage users. If the parking
charge is not paid when due, and such failure continues for ten (10) days
after written notice to Tenant of such failure, then in addition to any other
remedies afforded Landlord under this Lease by reason of nonpayment of rent,
Landlord may terminate Tenant's rights under this Paragraph 49. Further, if
at any time Tenant releases to Landlord any parking space provided for in
this Paragraph 49, then Tenant's right under this Paragraph 49 to use such
released parking space shall automatically terminate.
c. The parking spaces to be made available to Tenant hereunder may
contain a reasonable mix of spaces for compact cars. Landlord shall take
reasonable actions to ensure the availability of the parking spaces leased by
Tenant, but Landlord does not guarantee the availability of those spaces at
all times against the actions of other tenants of the Building and users of
the parking facility. Without limiting the foregoing, in no event shall this
Lease be void or voidable, nor shall Landlord be liable to Tenant for any
loss or damage, nor shall there be any abatement of rent hereunder (other
than the parking charge paid hereunder for any parking space no longer made
available), by reason of any reduction in Tenant's parking rights hereunder
by reason of strikes, lock-outs, labor disputes, shortages of material or
labor, fire, flood or other casualty, acts of God or any other cause beyond
the control of Landlord. Access to the parking spaces to be made available to
Tenant shall, at Landlord's option, be by card, pass, bumper sticker, decal
or other appropriate identification issued by Landlord, and Tenant's right to
use the parking facility is conditioned on Tenant's abiding by and shall
otherwise be subject to such rules and regulations as may be reasonably
promulgated by Landlord from time to time for the parking facility.
d. If Tenant desires to enter into a contract for additional parking
rights in the Building, Tenant may notify the Building manager of such
desire. Provided that no default has occurred under this Lease, Landlord
agrees to give Tenant's request for additional parking rights a higher
priority than any proposed grant of parking rights to any party (a "Third
Party") which is not a tenant or other occupant of a building owned or
managed by Landlord, by Landlord's building manager, or by an affiliate of
Landlord or Landlord's building manager, provided that Landlord shall not be
required to terminate any Third Party's parking contract then in place in
order to make additional parking space(s) available to Tenant, and Landlord
shall not be required to make such additional parking available to Tenant at
less than the rate which Landlord would from time to time receive from a
Third Party.
e. The parking rights set forth in this Paragraph 49 are non-
transferrable, are personal to the Tenant originally named herein, and shall
not inure to the benefit of any successor, assignee or subtenant of Tenant.
In the event of any assignment or sublease of parking space rights that is
approved by Landlord (provided, however, that such approval may be granted or
withheld by Landlord in its sole and absolute discretion), Landlord shall be
entitled to receive one hundred percent (100%) of any profit received by
36
Tenant in connection with such assignment or sublease.
50. Deleted.
51. Hazardous Substance Disclosure. California law requires landlords to
disclose to tenants the existence of certain hazardous substances.
Accordingly, the existence of gasoline and other automotive fluids,
maintenance fluids, copying fluids and other office supplies and equipment,
certain construction and finish materials, tobacco smoke, cosmetics and other
personal items, and asbestos-containing materials ("ACM") must be disclosed.
Gasoline and other automotive fluids are found in the garage area of the
Building. Cleaning, lubricating and hydraulic fluids used in the operation
and maintenance of the Building are found in the utility areas of the
Building not generally accessible to Building occupants or the public. Many
Building occupants use copy machines and printers with associated fluids and
toners, and pens, markers, inks, and office equipment that may contain
hazardous substances. Certain adhesives, paints and other construction
materials and finishes used in portions of the Building may contain hazardous
substances. Although smoking is prohibited in the public areas of the
Building, these areas may, from time to time, be exposed to tobacco smoke.
Building occupants and other persons entering the Building from time-to-time
may use or carry prescription and non-prescription drugs, perfumes, cosmetics
and other toiletries, and foods and beverages, some of which may contain
hazardous substances. Further, certain portions of the Building contain ACM
in the form of fireproofing on structural elements, heat insulation sealed
within fire doors, and small areas of resilient floor tile, but these areas
are generally inaccessible to Building occupants and visitors, such as
machinery and utility rooms, the inside of sealed walls and above suspended
ceilings. Landlord has made no special investigation of the Premises with
respect to any hazardous substances. Tenant agrees not to expose or disturb
any ACM unless Landlord has given Tenant prior written consent thereto and
Tenant complies with all applicable Legal Requirements and Landlord's
written procedures for handling ACM. Tenant's failure to comply with the
immediately preceding sentence shall constitute an Event of Default under
Paragraph 25 of this Lease. Tenant may obtain a copy of Landlord's written
procedures for handling ACM from the Building office.
52. Right of First Offer.
a. First Offer Right; Available Space. Tenant shall have a one-time
right of first offer to lease each increment of space ("First Offer Space")
within the area that is located on the second (2nd) floor of the Building and
outlined and labeled the "First Offer Area" on Exhibit C attached hereto,
which becomes "available for lease" (as defined below) during the period
commencing on the Rent Commencement Date and ending on the day immediately
preceding the fifth (5th) anniversary of the Rent Commencement Date (the
"Offer Period"), subject to the provisions of this Paragraph 52. Upon the
first occasion during the Offer Period that any First Offer Space becomes
"available for lease", as hereinafter defined, Landlord shall notify Tenant
of such availability in writing, which notice shall state the Monthly Rent to
be applicable to such First Offer Space under Paragraph 5 hereof, which
Monthly Rent shall be the fair market rental as reasonably determined by
Landlord in accordance with the definition of that term as set forth in
Paragraph 53 hereof, but in no event will the Monthly Rent per square foot
for the First Offer Space, as of the date the First Offer Space is added to
the Lease, be less than the amount produced by multiplying the rentable
square footage of the First Offer Space by the aggregate of the rental rate
per rentable square foot per month that is payable by Tenant for all Premises
then leased under this Lease under Paragraphs 2, 5 and 7 hereof for the
calendar month immediately preceding the date the First Offer Space is added
to the Lease, and, if, during the period that the First Offer Space is
covered by the Lease, Tenant's Monthly Rent for the initial Premises covered
by the Lease is from time-to-time increased pursuant to Paragraph 2.c. of the
Lease, then in no event shall Tenant's Monthly Rent for the First Offer Space
ever be less than the Monthly Rent that Tenant would pay if, at the same time
the Monthly Rent for the initial Premises is so increased, the Monthly Rent
then in effect for the First Offer Space were increased by the same amount
per rentable square foot that the Monthly Rent for the initial Premises is so
increased. For a period of five (5) days after the date of such notice from
Landlord, Tenant shall have a one-time right to elect to lease such First
Offer Space. If Tenant does not elect to lease such First Offer Space within
such five (5) day period, Landlord shall have the right to lease such First
Offer Space to any third party for a term and on such other conditions as
Landlord may determine in Landlord's sole discretion and all rights of Tenant
37
under this Paragraph 52 shall cease with respect to the particular First
Offer Space increment so offered by Landlord. For purposes of this Paragraph
52, space shall not be deemed "available for lease" if the tenant then
occupying such space extends the term of its lease of the space, whether
pursuant to a renewal option or a new arrangement with Landlord, or if any
tenant of the Building exercises an option or right of first offer to lease
such space, which option or right of first offer has been granted prior to
the date hereof.
b. Terms and Conditions. Upon Tenant's election to lease any First
Offer Space, Landlord and Tenant shall promptly enter into an amendment of
this Lease, adding such First Offer Space to the Premises on all the terms
and conditions set forth in this Lease as to the Premises originally demised
under this Lease, except that (i) the term of the lease to Tenant of the
First Offer Space shall commence upon the date on which the First Offer Space
is delivered to Tenant and shall continue coextensively with the remaining
term hereof and any extension thereof, (ii) Tenant shall take the First Offer
Space in its then "as-is" condition and the provisions of Paragraph 4 above
shall not apply to the First Offer Space, and (iii) the Monthly Rent payable
by Tenant under Paragraph 5 of this Lease for the First Offer Space shall be
the amount stated in Landlord's notice to Tenant, (iv) Tenant's Share payable
under Paragraph 7 hereof shall be increased appropriately to reflect the
lease of the First Offer Space, (v) the Base Year with respect to such First
Offer Space shall be the calendar year in which such First Offer Space is
added to the Lease, and (vi) the Base Tax Year with respect to the First
Offer Space shall be the fiscal tax year ending on June 30 of the calendar
year immediately following the calendar year in which the First Offer Space
is added to the Lease.
If Tenant shall exercise the right of first offer granted herein with
respect to any First Offer Space, Landlord does not guarantee that the First
Offer Space will be available on the stated availability date for the lease
thereof, if the existing tenant of the First Offer Space shall hold over, or
for any other reason beyond Landlord's reasonable control. In such event,
rent with respect to the First Offer Space shall be abated until Landlord
legally delivers the same to Tenant, as Tenant's sole recourse.
c. Limitation on Tenant's Right of First Offer. Notwithstanding the
foregoing, if (i) on the date of exercise of the right of first offer, or the
date immediately preceding the date the Lease term for the First Offer Space
is to commence, any Event of Default, or default that subsequently matures
into an Event of Default, has occurred and is continuing under this Lease, or
(ii) on the date immediately preceding the date the Lease term for the First
Offer Space is to commence Tenant named herein (a) is not in occupancy of one
hundred percent (100%) of the entire Premises then leased under this Lease or
(b) does not intend to occupy one hundred percent (100%) of the entire
Premises then leased under this Lease, together with the entire First Offer
Space, then, at Landlord's election, Tenant shall have no right to lease the
First Offer Space and the exercise of the right of first offer shall be null
and void.
53. Option to Renew.
a. Option to Renew. Tenant shall have the option to renew this Lease
for one (1) additional term of five (5) years, commencing upon the expiration
of the initial term of the Lease. The renewal option must be exercised, if at
all, by written notice given by Tenant to Landlord not later than fifteen
(15) months prior to the expiration of the initial term of this Lease.
Notwithstanding the foregoing, this renewal option shall be null and void and
Tenant shall have no right to renew this Lease if (i) as of the date
immediately preceding the commencement of the renewal period Tenant is not in
occupancy of the entire Premises then demised hereunder or Tenant does not
intend to continue to occupy the Premises (but intends to assign this Lease
or sublet the space in whole or in part), or (ii) on the date Tenant
exercises the option or on the date immediately preceding the commencement
date of the renewal period any Event of Default, or default that subsequently
matures into an Event of Default, has occurred and is continuing under this
Lease.
b. Terms and Conditions. If Tenant exercises the renewal option, then
during the renewal period all of the terms and conditions set forth in this
Lease as applicable to the Premises during the initial term shall apply
during the renewal term, except that (i) Tenant shall have no further right
to renew this Lease, (ii) Tenant shall take the Premises in their then "as-
is" state and condition, and (iii) the Monthly Rent payable by Tenant for the
Premises shall be the then-net effective fair market rent for the Premises
based upon the terms of this Lease, as renewed. Fair market rent shall
38
include the periodic rental increases, if any, that would be included for
space leased for the period the space will be covered by the Lease. For
purposes of this Paragraph 53, the term "net effective fair market rent"
shall mean (A) the aggregated rental rate (including Operating Expenses and
Tax Expenses, taking into account the applicable base years for calculation)
for comparable space under primary lease (and not sublease) to new tenants,
taking into consideration the unique quality and prestige of the Building and
such amenities as existing improvements, view, floor on which the Premises
are situated and the like, less (B) the value of any concessions, allowances,
abatements or other similar items. Leases considered in the determination of
net effective fair market rent must be for space situated in first-class,
reputable, established office buildings in comparable locations in the San
Francisco Financial District, in comparable physical and economic condition,
taking into consideration the then-prevailing ordinary rental market
practices with respect to tenant concessions (if any) (e.g. not offering
extraordinary rental, promotional deals and other concessions to tenants
which deviate from what is the then-prevailing ordinary practice in an effort
to alleviate cash flow problems, difficulties in meeting loan obligations or
other financial distress, or in response to a greater than average vacancy
rate). The fair market rent shall be mutually agreed upon by Landlord and
Tenant in writing within the thirty (30) calendar day period commencing six
(6) months prior to commencement of the renewal period. If Landlord and
Tenant are unable to agree upon the fair market monthly rent within said
thirty (30)-day period, then the fair market rent shall be established by
appraisal in accordance with the procedures set forth in Exhibit D attached
hereto.
c. Minimum Rental. Notwithstanding anything in the foregoing or Exhibit
D attached hereto to the contrary, in no event shall the Monthly Rent during
the renewal period be less than the Monthly Rent and Additional Rent payable
by Tenant (for all of the Premises leased hereunder) under Paragraphs 2.c., 5
and 7 hereof for the calendar month immediately preceding the commencement of
the renewal period.
THIS LEASE IS EXECUTED by Landlord and Tenant as of the date set forth at
the top of page 1 hereof.
SHORENSTEIN REALTY INVESTORS, L.P., NORCAL WASTE SYSTEMS, INC.,
a California limited partnership a California corporation
By Shorenstein Company, L.P.,
a California limited partnership,
Manager
By Shorenstein Management, Inc.,
a California corporation,
its Agent
By /s/ Xxxxxxx X. Xxxxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxxx
Xxxxxxx X. Xxxxxxxxxxx Name: Xxxxxxx X. Xxxxxxxxxx
President Title: President & CEO
Landlord Tenant
39
EXHIBIT A
GOLDEN GATEWAYS COMMONS - XXXX. 0 0xx XXXXX
XXXXX XXXX XXXXXXX
XXXXXXX X
RULES AND REGULATIONS
GOLDEN GATEWAY COMMONS
1. No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed or printed or affixed on or to any part of the outside
or inside of the Building or any part of the Premises visible from the
exterior of the Premises without the prior written consent of Landlord, which
consent may be withheld in Landlord's sole discretion. Landlord shall have
the right to remove, at Tenant's expense and without notice to Tenant, any
such sign, placard, picture, advertisement, name or notice that has not been
approved by Landlord.
All approved (whether as approved as part of the Tenant Improvements, or
otherwise) signs or lettering on doors and walls shall be printed, painted,
affixed or inscribed at the expense of Tenant by a person approved of by
Landlord.
If Landlord notifies Tenant in writing that Landlord objects to any
curtains, blinds, shades or screens attached to or hung in or used in
connection with any window or door of the Premises, such use of such
curtains, blinds, shades or screens shall be removed immediately by Tenant.
No awning shall be permitted on any part of the Premises.
2. No ice, towel, barbering or bootblacking, shoeshining or repair
services, or other similar services shall be provided to the Premises, except
from persons authorized by Landlord and at the hours and under regulations
fixed by Landlord.
3. The bulletin board or directory of the Building will be provided
exclusively for the display of the name and location of tenants only and
Landlord reserves the right to exclude any other names therefrom. Tenant
shall be entitled, at no cost to Tenant, to have the name of Tenant's company
and up to six (6) individual listings of Tenant's employees listed on (i) the
Building directory situated in the lobby of the Building and (ii) the Tenant
directory in the lobby of the second (2nd) floor of the Building. If,
subsequent to the time Tenant's name and such individual listings are
initially listed on the directories, Tenant requests a change in any such
listing as printed thereon, Tenant shall reimburse Landlord for Landlord's
cost of reprinting such listing for the directories.
4. The sidewalks, halls, passages, exits, entrances, elevators and
stairways shall not be obstructed by any of the Tenant Parties or used by
Tenant for any purpose other than for ingress to and egress from its
Premises. The halls, passages, exits, entrances, elevators, stairways,
balconies and roof are not for the use of the general public and Landlord
shall in all cases retain the right to control and prevent access thereto by
all persons whose presence in the judgment of Landlord shall be prejudicial
to the safety, character, reputation and interests of the Building and its
tenants. No tenant and no employees or invitees of any tenant shall go upon
the roof of the Building.
5. Tenant shall not alter any lock or install any new or additional locks
or any bolts on any interior or exterior door of the Premises without the
prior written consent of Landlord.
6. The toilet rooms, toilets, urinals, wash bowls and other apparatus
shall not be used for any purpose other than that for which they were
constructed and no inappropriate foreign substance shall be thrown therein
and the expense of any breakage, stoppage or damage resulting from the
violation of this rule shall be borne by the tenant who, or whose employees
or invitees, shall have caused it.
7. Tenant shall not overload the floor of the Premises or xxxx, drive
nails (except to the extent necessary to install Tenant's routine wall-hung
certificates, plaques, and artwork), screw or drill into the partitions,
woodwork or plaster or in any way deface the Premises or any part thereof.
1
8. No furniture, freight or equipment of any kind shall be brought into
the Building without the consent of Landlord and all moving of the same into
or out of the Building shall be done at such time and in such manner as
Landlord shall designate. Landlord shall have the right to prescribe the
weight, size and position of all safes and other heavy equipment brought into
the Building and also the times and manner of moving the same in and out of
the Building. Safes or other heavy objects shall, if considered necessary by
Landlord, stand on a platform of such thickness as is necessary to properly
distribute the weight. Landlord will not be responsible for loss of or damage
to any such safe or property from any cause, and all damage done to the
Building by moving or maintaining any such safe or other property shall be
repaired at the expense of Tenant. The elevator designated for freight by
Landlord shall be available for use by all tenants in the Building during the
hours and pursuant to such procedures as Landlord may determine from time to
time. The persons employed to move Tenant's equipment, material, furniture or
other property in or out of the Building must be acceptable to Landlord. The
moving company must be a locally recognized professional mover, whose primary
business is the performing of relocation services, and must be bonded and
fully insured. In no event shall Tenant employ any person or company whose
presence may give rise to a labor or other disturbance in the Real Property.
A certificate or other verification of such insurance must be received and
approved by Landlord prior to the start of any moving operations. Insurance
must be sufficient in Landlord's sole opinion, to cover all personal
liability, theft or damage to the Real Property, including, but not limited
to, floor coverings, doors, walls, elevators, stairs, foliage and
landscaping. Special care must be taken to prevent damage to foliage and
landscaping during adverse weather. All moving operations shall be conducted
at such times and in such a manner as Landlord shall direct, and all moving
shall take place during non-business hours unless Landlord agrees in writing
otherwise.
9. Tenant shall not employ any person or persons other than the janitor of
Landlord for the purpose of cleaning the Premises, unless otherwise agreed to
by Landlord. Except with the written consent of Landlord, no person or
persons other than those approved by Landlord shall be permitted to enter the
Building for the purpose of cleaning the Building or the Premises. Tenant
shall not cause any unnecessary labor by reason of Tenant's carelessness or
indifference in the preservation of good order and cleanliness.
10. Tenant shall not use, keep or permit to be used or kept any foul or
noxious gas or substance in the Premises, or permit or suffer the Premises to
be occupied or used in a manner that would reasonably be deemed to be
offensive or objectionable to Landlord or other occupants of the Building by
reason of noise, odors and/or vibrations, or materially interfere with other
tenants or those having business therein, nor shall any animals or birds be
brought in or kept in or about the Premises or the Building. In no event
shall Tenant keep, use, or permit to be used in the Premises or the Building
any guns, firearm, explosive devices or ammunition.
11. No cooking shall be done or permitted by Tenant in the Premises, nor
shall the Premises be used for the storage of merchandise, for washing
clothes, for lodging, or for any improper, objectionable or immoral purposes.
Notwithstanding the foregoing, Tenant may maintain and use microwave ovens
and equipment for brewing coffee, tea, hot chocolate and similar beverages;
provided that Tenant shall (i) prevent the emission of any food or cooking
odor from leaving the premises, (ii) be solely responsible for cleaning the
areas where such equipment is located and removing food-related waste from
the premises and the building, or shall pay Landlord's standard rate for such
service as an addition to cleaning services ordinarily provided, (iii)
maintain and use such areas solely for Tenant's employees and business
invitees, not as public facilities, and (iv) keep the premises free of vermin
and other pest infestation and shall exterminate, as needed, in a manner and
through contractors reasonably approved by Landlord, preventing any emission
of odors, due to extermination, from leaving the premises. Notwithstanding
clause (ii) above, Landlord shall, without special charge, empty and remove
the contents of one (i) 15 gallon (or smaller) waste container from the food
preparation area so long as such container is fully lined with, and the
contents can be removed in, a waterproof plastic liner or bag, supplied by
Tenant, which will prevent any leakage of food related waste or odors;
provided, however, that if at any time Landlord must pay a premium or special
charge to Landlord's cleaning or scavenger contractors for the handling of
2
food-related or so-called "wet" refuse, Landlord's obligation to provide such
removal, without special charge, shall cease.
12. Tenant shall not use or keep in the Premises or the Building any
kerosene, gasoline, or inflammable or combustible fluid or material, or use
any method of heating or air-conditioning other than that supplied by
Landlord.
13. Landlord will direct electricians as to where and how telephone and
telegraph wires are to be introduced into the Premises and the Building. No
boring or cutting for wires will be allowed without the prior consent of
Landlord. The location of telephones, call boxes and other office equipment
affixed to the Premises shall be subject to the prior approval of Landlord.
14. Upon the expiration or earlier termination of the Lease, Tenant shall
deliver to Landlord the keys of offices, rooms and toilet rooms which have
been furnished by Landlord to Tenant and any copies of such keys which Tenant
has made. In the event Tenant has lost any keys furnished by Landlord, Tenant
shall pay Landlord for such keys.
15. Tenant shall not lay linoleum, tile, carpet or other similar floor
covering so that the same shall be affixed to the floor of the Premises,
except to the extent and in the manner approved in advance by Landlord. The
expense of repairing any damage resulting from a violation of this rule or
removal of any floor covering shall be borne by the tenant by whom, or by
whose contractors, employees or invitees, the damage shall have been caused.
16. No furniture, packages, supplies, equipment or merchandise will be
received in the Building or carried up or down in the elevators, except
between such hours and in such elevators as shall be reasonably designated by
Landlord, which elevator usage shall be subject to the Building's customary
charge therefor as established from time to time by Landlord.
17. On Saturdays, Sundays and legal holidays, and on other days and
between the hours of 6:00 P.M. and 8:00 A.M. access to the Building, or to
the halls, corridors, elevators or stairways in the Building, or to the
Premises may be refused unless the person seeking access is known to the
person or employee of the Building in charge and has a pass or is properly
identified. Landlord shall in no case be liable for damages for any error
with regard to the admission to or exclusion from the Building of any person.
In case of invasion, mob, riot, public excitement, or other commotion,
Landlord reserves the right to prevent access to the Building during the
continuance of the same by closing the doors or otherwise, for the safety of
the tenants and protection of property in the Building.
18. Tenant shall be responsible for insuring that the doors of the
Premises are closed and securely locked before leaving the Building and must
observe strict care and caution that all water faucets or water apparatus are
entirely shut off before Tenant or Tenant's employees leave the Building, and
that all electricity, gas or air within the Premises shall likewise be
carefully shut off, so as to prevent waste or damage, and for any default or
carelessness Tenant shall make good all injuries sustained by other tenants
or occupants of the Building or Landlord. Landlord shall not be responsible
to Tenant for loss of property on the Premises, however occurring, or for any
damage to the property of Tenant caused by the employees or independent
contractors of Landlord or by any other person.
19. Landlord reserves the right to exclude or expel from the Building any
person who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act in
violation of any of the rules and regulations of the Building.
20. The requirements of any tenant will be attended to only upon
application at the office of the Building. Employees of Landlord shall not
perform any work or do anything outside of their regular duties unless under
special instructions from Landlord, and no employee will admit any person
(tenant or otherwise) to any office without specific instructions from
Landlord.
3
21. No vending machine or machines of any description shall be installed,
maintained or operated upon the Premises without the prior written consent of
Landlord.
22. Subject to Tenant's right of access to the Premises in accordance with
Building security procedures, Landlord reserves the right to close and keep
locked all entrance and exit doors of the Building on Saturdays, Sundays and
legal holidays and on other days between the hours of 6:00 P.M. and 8:00
A.M., and during such further hours as Landlord may deem advisable for the
adequate protection of the Building and the property of its tenants.
4
EXHIBIT C
GOLDEN GATEWAYS COMMONS - XXXX. 0 0xx XXXXX
XXXXX XXXX DIAGRAM "FIRST OFFER AREA"
EXHIBIT D
Appraisal Procedure
Within fifteen (15) days after the expiration of the thirty (30)-day
period set forth in Paragraph 53 of the Lease for the mutual agreement of
Landlord and Tenant as to the fair market monthly rental, each party hereto,
at its cost, shall engage a real estate appraiser to act on its behalf in
determining the fair market monthly rental. The appraisers each shall have at
least ten (10) years' experience with leases in first-class high-rise and
low-rise office buildings in the San Francisco Financial District and shall
submit to Landlord and Tenant in advance for Landlord's and Tenant's
reasonable approval the appraisal methods to be used. If a party does not
appoint an appraiser within such fifteen (15)-day period but an appraiser is
appointed by the other respective party, the single appraiser appointed shall
be the sole appraiser and shall set the fair market monthly rental. If the
two appraisers are appointed by the parties as stated in this paragraph, such
appraisers shall meet promptly and attempt to set the fair market monthly
rental. If such appraisers are unable to agree within thirty (30) days after
appointment of the second appraiser, the appraisers shall elect a third
appraiser meeting the qualifications stated in this paragraph within ten (10)
days after the last date the two appraisers are given to set the fair market
monthly rental. If the two appraisers are unable to select such third
appraiser within such time, the third appraiser shall be selected by a single
former California trial or appellate judge employed by or associated with the
San Francisco office of JAMS/Endispute, or successor thereto. The third
appraiser shall be a person who has not previously acted in any capacity for
either party.
The third appraiser shall conduct his own investigation of the fair market
monthly rent, and shall be instructed not to advise either party of his
determination of the fair market monthly rent except as follows: When the
third appraiser has made his determination, he shall so advise Landlord and
Tenant and shall establish a date, at least five (5) days after the giving of
notice by the third appraiser to Landlord and Tenant, on which he shall
disclose his determination of the fair market monthly rent. Such meeting
shall take place in the third appraiser's office unless otherwise agreed by
the parties. After having initialed a paper on which his determination of
fair market monthly rent is set forth, the third appraiser shall place his
determination of the fair market monthly rent in a sealed envelope.
Landlord's appraiser and Tenant's appraiser shall each set forth their
determination of fair market monthly rent on a 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 appraiser, the determination of the fair
market monthly rent by Landlord's appraiser and Tenant's appraiser shall be
opened and examined. If the higher of the two determinations is 105% or less
of the amount set forth in the lower determination, the average of the two
determinations shall be the fair market monthly rent, the envelope containing
the determination of the fair market monthly rent by the third appraiser
shall be destroyed and the third appraiser shall be instructed not to
disclose his determination. If either party's envelope is blank, or does not
set forth a determination of fair market monthly rent, the determination of
the other party shall prevail and be treated as the fair market monthly rent.
If the higher of the two determinations is more than 105% of the amount of
the lower determination, the envelope containing the third appraiser's
determination shall be opened. If the value determined by the third appraiser
is the average of the values proposed by Landlord's appraiser and Tenant's
appraiser, the third appraiser's determination of fair market monthly rent
shall be the fair market monthly rent, and in such case each of the parties
shall bear one-half (1/2) the cost of appointing the third appraiser and of
the third appraiser's fee. If such is not the case, fair market monthly rent
shall be the rent proposed by either Landlord's appraiser or Tenant's
appraiser which is closest to the determination of fair market monthly rent
by the third appraiser. Except as provided in the second sentence preceding
this sentence, the party whose determination is not selected (or who failed
to submit a determination) shall bear the other party's appraiser's fee, and
the cost of appointing the third appraiser and of the third appraiser's fee.
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