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BASIC LEASE INFORMATION
OFFICE NET
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LEASE DATE: August 19, 1998
TENANT: Heuristic Physics Laboratories, Inc., a California
corporation
TENANT'S NOTICE ADDRESS: 2033 Gateway Place, Suite 400, San Jose, CA 95110
TENANT'S BILLING ADDRESS: 2033 Gateway Place, Suite 400, San Jose, CA 95110
TENANT CONTACT: David Y. Lepejian PHONE NUMBER: 408-263-1466
FAX NUMBER: 408-263-1584
LANDLORD: Spieker Properties, L.P., a California limited partnership
LANDLORD'S NOTICE ADDRESS: 2077 Gateway Place, Suite 100, San Jose, CA 95110
LANDLORD'S REMITTANCE ADDRESS: Spieker Properties, Dept. 11661, P. 0. Box 45587,
San Francisco, CA 94145-0587
Project Description: San Jose Gateway, San Jose, CA
Building Description: Building known as 2033 Gateway Place, San Jose
Premises: Approximately 12,516 rentable square feet, Suite 400
Permitted Use: General Office and Administrative
Occupancy Density: 50 people
Parking Density: 4/1000 sq.ft.
Scheduled Term Commencement Date: November 1, 1998
Scheduled Length of Term: 84 months
Scheduled Term Expiration Date: October 31, 2005
Rent:
Base Rent: See Addendum 1 attached hereto and made a part hereof
Estimated First Year Operating Expenses: See Addendum 1 attached hereto and made a part hereof
Security Deposit: $77,098.00
Tenant's Proportionate Share:
Of Building: 10.14% of 123,400 total square fed
Of Project: N/A
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The foregoing Basic Lease Information is incorporated into and made a part of
this Lease. Each reference in this Lease to any of the Basic Lease Information
shall mean the respective information above and shall be construed to
incorporate all of the terms provided under the particular Lease paragraph
pertaining to such information. In the event of any conflict between the Basic
Lease Information and the Lease, the latter shall control.
LANDLORD TENANT
Spieker Properties, L.P., Heuristic Physics Laboratories, Inc.
a California limited partnership a California corporation
By: Spieker Properties, Inc.
a Maryland corporation, By: /s/ DAVID Y. LEPEJIAN
its general partner ------------------------------
David Y. Lepejian
Its: President & CEO
By: /s/ JOSEPH D. RUSSELL, JR.
----------------------------------
Joseph D. Russell, Jr.
Its: Regional Senior Vice President
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TABLE OF CONTENTS
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1. Premises....................................................................................................1
2. Possession and Lease Commencement...........................................................................1
3. Term........................................................................................................2
4. Use.........................................................................................................2
5. Rules and Regulations.......................................................................................5
6. Rent........................................................................................................5
7. Operating Expenses..........................................................................................6
8. Insurance and Indemnification..............................................................................12
9. Waiver of Subrogation......................................................................................15
10. Landlord's Repairs and Maintenance.........................................................................15
11. Tenant's Repairs and Maintenance...........................................................................16
12. Alterations................................................................................................16
13. Signs......................................................................................................18
14. Inspection/Posting Notices.................................................................................18
15. Services and Utilities.....................................................................................19
16. Subordination..............................................................................................21
17. Financial Statements.......................................................................................22
18. Estoppel Certificate.......................................................................................22
19. Security Deposit...........................................................................................23
20. Limitation of Tenants Remedies.............................................................................23
21. Assignment and Subletting..................................................................................24
22. Authority..................................................................................................27
23. Condemnation...............................................................................................27
24. Casualty Damage............................................................................................28
25. Holding Over...............................................................................................30
26. Default....................................................................................................31
27. Liens......................................................................................................34
28. Substitution...............................................................................................34
29. Transfers by Landlord......................................................................................35
30. Right of Landlord to Perform Tenants Covenants.............................................................35
31. Waiver.....................................................................................................35
32. Notices....................................................................................................36
33. Attorneys' Fees............................................................................................37
34. Successors and Assigns.....................................................................................37
35. Force Majeure..............................................................................................37
36. Surrender of Premises......................................................................................37
37. Parking....................................................................................................38
38. Miscellaneous..............................................................................................39
39. Additional Provisions......................................................................................41
40. Jury Trial Waiver..........................................................................................42
Signatures.................................................................................................19
Addendum...................................................................................................20
Exhibits:
Exhibit A.................................................................................Rules and Regulations
Exhibit B.......................................................................Site Plan, Property Description
Exhibit C...........................................................................Lease Improvement Agreement
Additional Exhibits as Required
</TABLE>
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LEASE
THIS LEASE is made as of the 19th day of August, 1998, by and between
Spieker Properties, L.P., a California limited partnership (hereinafter called
"Landlord"), and Heuristic Physics Laboratories, Inc., a California corporation
(hereinafter called "Tenant").
1. PREMISES
Landlord leases to Tenant and Tenant leases from Landlord, upon the
terms and conditions hereinafter set forth, those premises (the "Premises")
outlined in red on Exhibit B and described in the Basic Lease Information. The
Premises shall be all or part of a building (the "Building") and of a project
(the "Project"), which may consist of more than one building and additional
facilities, as described in the Basic Lease Information. The Building and
Project are outlined in blue and green respectively on Exhibit B. Subject to
Paragraph 38.E. Landlord and Tenant acknowledge that physical changes may occur
from time to time in the Premises, Building or Project, and that the number of
buildings and additional facilities which constitute the Project may change from
time to time, which may result in an adjustment in Tenant's Proportionate Share,
as defined in the Basic Lease Information, as provided in Paragraph 7.A.
2. POSSESSION AND LEASE COMMENCEMENT
A. CONSTRUCTION OF IMPROVEMENTS. Landlord shall deliver possession of the
Premises to Tenant in broom-clean condition, free of debris and with the roof
in good repair and all electrical, HVAC, plumbing, sewer, water, gas and
other Building systems in good working condition. If during the first thirty
(30) days of the Term, any Building system or the roof is not in the
condition required hereby or any repair as aforesaid has not been properly
completed, Tenant shall notify Landlord in writing during such thirty (30)
day period, of the need for repair, and the repair shall be completed by
Landlord at no cost to Tenant in accordance with Landlord's repair obligation
per Paragraph 10 of this Lease, except to the extent that Tenant caused such
need for repair. If this Lease pertains to a Building to be constructed or
improvements to be constructed within a Building, the provisions of this
Paragraph 2.B. shall apply in lieu of the provisions of Paragraph 2.A. above
and the term commencement date ("Term Commencement Date") shall be the
earlier of the date on which: (1) Tenant takes possession of some or all of
the Premises; or (2) the improvements to be constructed or performed in the
Premises by Landlord (if any) shall have been substantially completed as
defined on Exhibit C and Tenant's taking of possession of the Premises or any
part thereof shall constitute Tenant's confirmation of substantial completion
for all purposes hereof, whether or not substantial completion of the
Building or Project shall have occurred. If for any reason Landlord cannot
deliver possession of the Premises to Tenant on the scheduled Term
Commencement Date, Landlord shall not be subject to any liability therefor,
nor shall Landlord be in default hereunder nor shall such failure affect the
validity of this Lease, and Tenant agrees to accept possession of the
Premises at such time as such improvements have been substantially completed,
as defined in the Lease Improvement Agreement which date shall then be deemed
the Term Commencement Date. Notwithstanding anything to the contrary
contained in the preceding sentence, if Landlord has not delivered possession
of the Premises to Tenant through no fault of Tenant and in the absence of
force majeure, with the Tenant Improvements substantially completed, by April
1, 1999, Tenant shall have the right to terminate this Lease and to receive a
refund of all monies previously tendered by Landlord which right Tenant must
exercise in writing prior to April 15, 1999. In the event Tenant fails to
exercise its right pursuant to this paragraph, Tenant shall have waived its
right to terminate this Lease. Tenant shall not be liable for any Rent for
any period prior to the Term Commencement Date (but without affecting any
obligations of Tenant under any improvement agreement appended to this
Lease). In the event of any dispute as to substantial completion of work
performed or required to be performed by Landlord, the certificate of
Landlord's architect or general contractor shall be conclusive. Substantial
completion shall have occurred notwithstanding Tenant's submission of a
punchlist to Landlord, which Tenant shall submit, if at all, within ten (10)
business days after the Term Commencement Date or otherwise in accordance
with any improvement agreement appended to this Lease. Upon Landlord's
request, following substantial completion, Tenant shall promptly execute and
return to Landlord a "Start-Up Letter" in which Tenant shall agree, among
other things, to acceptance of the Premises and to the determination of the
Term Commencement Date, in accordance with the terms of this Lease but
Tenant's failure or refusal to do so shall not negate Tenant's acceptance of
the Premises or affect determination of the Term Commencement Date.
3. TERM
The term of this Lease (the "Term") shall commence on the Term
Commencement Date and continue in full force and effect for the number of
months specified as the Length of Term in the Basic Lease Information or
until this Lease is terminated as otherwise provided herein. If the Term
Commencement Date is a date other than the first day of the calendar month,
the Term shall be the number of months of the Length of Term in addition to
the remainder of the calendar month following the Term Commencement Date.
Landlord agrees to permit Tenant to have access to the premises fourteen (14)
days prior to the Commencement Date for purposes of installing its telephone
and computer cabling, with all terms and conditions of the Lease in full
force and effect, except payment of Base Rent.
4. USE
A. GENERAL. Tenant shall use the Premises for the permitted use specified in the
Basic Lease Information ("Permitted Use") and for no other use or purpose.
Tenant shall control Tenant's employees, agents, customers, visitors, invitees,
licensees, contractors, assignees and subtenants (collectively, "Tenant's
Parties") in such a manner that Tenant and Tenant's Parties cumulatively do not
exceed the occupant density (the "Occupancy Density") or the parking density
(the "Parking Density") specified in the Basic Lease Information
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at any time. So long as Tenant is occupying the Premises, Tenant and Tenant's
Parties shall have the nonexclusive right to use, in common with other
parties occupying the Building or Project, the parking areas, driveways and
other common areas of the Building and Project, subject to the terms of this
Lease and such reasonable rules and regulations as Landlord may from time to
time prescribe. Landlord reserves the right, without notice or liability to
Tenant, and without the same constituting an actual or constructive eviction,
to alter or modify the common areas from time to time, including the location
and configuration thereof, and the amenities and facilities which Landlord
may determine to provide from time to time.
B. LIMITATIONS. Tenant shall not permit any odors, smoke, dust, gas, substances,
noise or vibrations to emanate from the Premises or from any portion of the
common area as a result of Tenant's or any Tenant's Party's use thereof, nor
take any action which would constitute a nuisance or would unreasonably disturb,
obstruct or endanger any other tenants or occupants of the Building or Project
or elsewhere, or interfere with their use of their respective premises or common
area. Storage outside the Premises of materials, vehicles or any other items is
prohibited. Tenant shall not use or allow the Premises to be used for any
immoral, improper or unlawful purpose, nor shall Tenant cause or maintain or
permit any nuisance in, on or about the Premises. Tenant shall not commit or
suffer the commission of any waste in, on or about the Premises. Tenant shall
not allow any sale by auction upon the Premises, or place any loads upon the
floors, walls or ceilings which could endanger the structure, or place any
harmful substances in the drainage system of the Building or Project. No waste,
materials or refuse shall be dumped upon or permitted to remain outside the
Promises. Landlord shall not be responsible to Tenant for the non-compliance by
any other tenant or occupant of the Building or Project with any of the
above-referenced rules or any other terms or provisions of such tenant's or
occupant's lease or other contract.
C. COMPLIANCE WITH REGULATIONS. Subject to the other provisions of the Lease, by
entering the Premises to take possession, Tenant accepts the Premises in the
condition existing as of the date of such entry. Tenant shall at its sole cost
and expense strictly comply with all existing or future applicable municipal,
state and federal and other governmental statutes, rules, requirements,
regulations, laws and ordinances, including zoning ordinances and regulations,
and covenants, easements and restrictions of record governing and relating to
Tenant's and Tenant's Parties' use, occupancy or possession of the Premises, to
Tenant's use of the common areas, or to Tenant's and Tenant's Parties' use,
storage, generation or disposal of Hazardous Materials (hereinafter defined)
(collectively "Regulations"). Tenant shall at its sole cost and expense obtain
any and all licenses or permits necessary for Tenant's use of the Premises.
Tenant shall at its sole cost and expense promptly comply with the requirements
of any board of fire underwriters or other similar body now or hereafter
constituted. Tenant shall not do or permit anything to be done in, on, under or
about the Project or bring or keep anything which will in any way increase the
rate of any insurance upon the Premises, Building or Project or upon any
contents therein or cause a cancellation of said insurance or otherwise affect
said insurance in any manner. Tenant shall indemnify, defend (by counsel
reasonably acceptable to Landlord), protect and hold Landlord harmless from and
against any loss, cost, expense, damage, attorneys' fees or liability arising
out of the failure of Tenant to comply with any Regulation. Tenant's obligations
pursuant to the foregoing indemnity shall survive the expiration or earlier
termination of this Lease.
D. HAZARDOUS MATERIALS. As used in this Lease, "Hazardous Materials" shall
include, but not be limited to, hazardous, toxic and radioactive materials
and those substances defined as "hazardous substances," "hazardous
materials," "hazardous wastes" "toxic substances," or other similar
designations in any Regulation. Tenant shall not cause, or allow any of
Tenant's Parties to cause, any Hazardous Materials to be handled, used,
generated, stored, released or disposed of in, on, under or about the
Premises, the Building or the Project or surrounding land or environment in
violation of any Regulations. Tenant must obtain Landlord's written consent
prior to the introduction of any Hazardous Materials onto the Project.
Notwithstanding the foregoing, Tenant may handle, store, use and dispose of
products containing small quantities of Hazardous Materials for "general
office purposes" (such as toner for copiers) to the extent customary and
necessary for the Permitted Use of the Premises; provided that Tenant shall
always handle, store, use, and dispose of any such Hazardous Materials in a
safe and lawful manner and never allow such Hazardous Materials to
contaminate the Premises, Building, or Project or surrounding land or
environment. Tenant shall immediately notify Landlord in writing of any
Hazardous Materials' contamination of any portion of the Project of which
Tenant becomes aware, whether or not caused by Tenant. Landlord shall have
the right at all reasonable times to inspect the Premises and to conduct
tests and investigations to determine whether Tenant is in compliance with
the foregoing provisions, the costs of all such inspections, tests and
investigations to be borne by Tenant if Landlord has reasonable grounds to
believe that Tenant is in violation of the foregoing provisions of this
Paragraph 4D. Tenant shall indemnify, defend (by counsel reasonably
acceptable to Landlord), protect and hold Landlord harmless from and against
any and all claims, liabilities, losses, costs, loss of rents, liens,
damages, injuries or expenses (including attorneys' and consultants' fees and
court costs), demands, causes of action, or judgments directly or indirectly
arising out of or related to the use, generation, storage, release, or
disposal of Hazardous Materials by Tenant or any of Tenant's Parties in, on,
under or about the Premises, the Building or the Project or surrounding land
or environment, which indemnity shall include, without limitation, damages
for personal or bodily injury, property damage, damage to the environment or
natural resources occurring on or off the premises, losses attributable to
diminution in value or adverse effects on marketability, the cost of any
investigation, monitoring, government oversight, repair, removal,
remediation, restoration, abatement, and disposal, and the preparation of any
closure or other required plans, whether such action is required or necessary
prior to or following the expiration or earlier termination of this Lease.
Neither the consent by Landlord to the use, generation, storage, release or
disposal of Hazardous Materials nor the strict compliance by Tenant with all
laws pertaining to Hazardous Materials shall excuse Tenant from Tenant's
obligation of indemnification pursuant to this Paragraph 4.D. Tenant's
obligations pursuant to the foregoing indemnity shall survive the expiration
or earlier termination of this Lease.
Landlord shall indemnify, defend and hold Tenant, its affiliates, their
respective directors, officers, employees and agents harmless from and against
any and all claims, penalties, fines, costs, liabilities or losses and
attorneys' fees arising out of any Hazardous Material in, on or about the
Project or the Premises which was created, handled, placed, stored, used,
transported or disposed of by Landlord, excluding, however, any Hazardous
Material whose presence was caused by Tenant or its affiliates or their
respective agents.
5. RULES AND REGULATIONS
Tenant shall faithfully observe and comply with the building rules and
regulations attached hereto as Exhibit A and any other reasonable rules and
regulations and any modifications or additions thereto which Landlord may from
time to time prescribe in writing for the purpose of maintaining the proper
care, cleanliness, safety, traffic flow and general order of the premises or the
Building or Project. Tenant shall cause Tenant's Parties to comply with such
rules and regulations. Landlord shall not be responsible to Tenant for the
non-compliance by any other tenant or occupant of the Building or project with
any of such rules and regulations, any other tenant's or occupant's lease or any
Regulations. Landlord shall enforce the rules and regulations in a
non-discriminatory manner.
6. RENT
A. BASE RENT. Tenant shall pay to Landlord and Landlord shall receive, without
notice or demand throughout the Term, Base Rent as specified in the Basic Lease
Information, payable in monthly installments in advance on or before the first
day of each calendar month, in lawful money of the United States, without
deduction or offset whatsoever, at the Remittance Address specified in the Basic
Lease Information or to such other place as Landlord may from time to time
designate in writing. If the obligation for payment of Base Rent commences on a
day other than
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the first day of a month, then Base Rent shall be prorated and the prorated
installment shall be paid on the first day of the calendar month next
succeeding the Term Commencement Date. The Base Rent payable by Tenant
hereunder is subject to adjustment as provided elsewhere in this Lease, as
applicable. As used herein, the term "Base Rent" shall mean the Base Rent
specified in the Basic Lease Information as it may be so adjusted from time
to time.
B. ADDITIONAL RENT. All monies other than Base Rent required to be paid by
Tenant hereunder, including. but not limited to. Tenant's Proportionate Share of
Operating Expenses, as specified in Paragraph 7 of this Lease, charges to be
paid by Tenant under Paragraph 15, the interest and late charge described in
Paragraphs 26.C. and D., and any monies spent by Landlord pursuant to Paragraph
30, shall be considered additional rent ("Additional Rent"). "Rent" shall mean
Base Rent and Additional Rent.
7. OPERATING EXPENSES
A. OPERATING EXPENSES. In addition to the Base Rent required to be paid
hereunder, Tenant shall pay as Additional Rent, Tenant's Proportionate Share
of the Building and/or Project (as applicable), as defined in the Basic Lease
Information, of Operating Expenses (defined below) in the manner set forth
below. Tenant shall pay the applicable Tenant's Proportionate Share of each
such Operating Expenses. Subject to Paragraph 38.E., Landlord and Tenant
acknowledge that if the number of buildings which constitute the Project
increases or decreases, or if physical changes are made to the Premises,
Building or Project or the configuration of any thereof, Landlord may at its
discretion reasonably adjust Tenant's Proportionate Share of the Building or
Project to reflect the change. Landlord's determination of Tenant's
Proportionate Share of the Building and of the Project shall be conclusive so
long as it is reasonably and consistently applied. "Operating Expenses" shall
mean all expenses and costs of every kind and nature which Landlord shall pay
or become obligated to pay, because of or in connection with the ownership,
management, maintenance, repair, preservation. replacement and operation of
the Building or Project and its supporting facilities and such additional
facilities now and in subsequent years as may be determined by Landlord to be
necessary or desirable to the Building and/or Project (as determined in a
reasonable manner) other than those expenses and costs which are specifically
attributable to Tenant or which are expressly made the financial
responsibility of Landlord or specific tenants of the Building or Project
pursuant to this Lease. Operating Expenses shall include, but are not limited
to, the following:
(1) TAXES. All real property taxes and assessments, possessory interest
taxes, sales taxes, personal property taxes, business or license taxes
or fees, gross receipts taxes, service payments in lieu of such taxes or
fees, annual or periodic license or use fees. excises, transit charges,
and other impositions, general and special, ordinary and extraordinary,
unforeseen as well as foreseen, of any kind (including fees "in-lieu" of
any such tax or assessment) which we now or hereafter assessed, levied,
charged, confirmed, or imposed by any public authority upon the Building
or Project, its operations or the Rent (or any portion or component
thereof), or any tax, assessment or fee imposed in substitution,
partially or totally, of any of the above. Operating Expenses shall also
include any taxes, assessments, reassessments, or other fees or
impositions with respect to the development. leasing, management,
maintenance, alteration, repair, use or occupancy of the Premises.
Building or Project or any portion thereof, including, without
limitation, by or for Tenant, and all increases therein or reassessments
thereof whether the increases or reassessments result from increased
rate and/or valuation (whether upon a transfer of the Building or
Project or any portion thereof or any interest therein or for any other
reason). Operating Expenses shall not include inheritance or estate
taxes imposed upon or assessed against the interest of any person in the
Project, or taxes computed upon the basis of the net income of any
owners of any interest in the Project. If it shall not be lawful for
Tenant to reimburse Landlord for all or any part of such taxes, the
monthly rental payable to Landlord under this Lease shall be revised to
net Landlord the same net rental after imposition of any such taxes by
Landlord as would have been payable to Landlord prior to the payment of
any such taxes.
(2) INSURANCE. All insurance premiums and costs, including, but not
limited to, any deductible amounts, premiums and other costs of
insurance incurred by Landlord, including for the insurance coverage set
forth in Paragraph 8.A. herein.
(3) COMMON AREA MAINTENANCE.
(a) Repairs, replacements, and general maintenance of and for the
Building and Project and public and common areas and facilities of
and comprising the Building and Project, including, but not limited
to, the roof and roof membrane, windows, elevators, restrooms,
conference rooms, health club facilities, lobbies, mezzanines,
balconies, mechanical rooms, building exteriors, alarm systems,
pest extermination, landscaped areas parking and service areas,
driveways, sidewalks, loading areas, fire sprinkler systems,
sanitary and storm sewer lines, utility services,
heating/ventilation/air conditioning systems, electrical,
mechanical or other systems, telephone equipment and wiring
servicing, plumbing, lighting, and any other item or areas which
affect the operation or appearance of the Building or Project,
which determination shall be at Landlord's discretion. except for:
those items expressly made the financial responsibility of Landlord
pursuant to Paragraph 10 hereof; those items to the extent paid for
by the proceeds of insurance; and those items attributable solely
or jointly to specific tenants of the Building or Project.
(b) Repairs, replacements, and general maintenance shall include
the cost of any capital improvements made to or capital assets
acquired for the Project or Building that in Landlord's discretion
may reduce any other Operating Expenses, including present or
future repair work, are reasonably necessary for the health and
safety of the occupants of the Building or Project, or are required
to comply with any Regulation, such costs or allocable portions
thereof to be amortized over such reasonable period as Landlord
shall determine, together with interest on the unamortized balance
at the publicly announced "prime rate" charged by Wells Fargo Bank,
NA. (San Francisco) or its successor at the time such improvements
or capital asset are constructed or acquired, plus two (2)
percentage points, or in the absence of such prime rate, then at
the U.S. Treasury six-month market note (or bond, if so designated)
rate as published by any national financial publication selected by
Landlord, plus four (4) percentage points, but in no event more
than the maximum rate permitted by law, plus reasonable financing
charges.
(c) Payment under or for any easement, license, permit, operating
agreement, declaration, restrictive covenant or instrument relating
to the Building or Project.
(d) All expenses and rental related to services and costs of
supplies, materials and equipment used in operating, managing and
maintaining the Premises, Building and Project, the equipment
therein and the adjacent sidewalks, driveways, parking and service
areas, including, without limitation, expenses related to service
agreements regarding security, fire and other alarm systems,
janitorial services, window cleaning, elevator maintenance,
building exterior maintenance, landscaping and expenses related to
the administration, management and operation of the Project,
including without limitation salaries, wages and benefits and
management office rent.
(e) The cost of supplying any services and utilities which benefit
all or a portion of the Premises, Building or Project, including
without limitation services and utilities provided pursuant to
Paragraph 15 hereof.
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(f) Legal expenses and the cost of audits by certified public
accountants; provided, however, that legal expenses chargeable as
Operating Expenses shall not include the cost of negotiating
leases, collecting rents, evicting tenants nor shall it include
costs incurred in legal proceedings with or against any tenant or
to enforce the provisions of any lease.
(g) A management and accounting cost recovery fee equal to five
percent (50/6) of the sum of the Project's base rents and Operating
Expenses (other than such management and accounting fee).
If the rentable area of the Building and/or Project is not fully
occupied during any fiscal year of the Term as determined by Landlord, an
adjustment shall be made in Landlord's discretion in computing the Operating
Expenses for such year so that Operating Expenses shall be computed as though
the Building had been one hundred percent (100%) occupied. Tenant pays an
equitable portion of all variable items (e.g., utilities, janitorial services
and other component expenses at are affected by variations in occupancy
levels) of Operating Expenses, as reasonably determined by Landlord;
provided, however, that in no event shall Landlord be entitled to collect in
excess of one hundred percent (1001%) of the total Operating Expenses from
all of the tenants in the Building or Project, as the case may be.
Operating Expenses shall not include the cost of providing tenant
improvements or other specific costs incurred for the account of, separately
billed to and paid by specific tenants of the Building or Project, the
initial construction cost of the Building, or debt service on any mortgage or
dead of trust recorded with respect to the Project other than pursuant to
Paragraph 7.A.(3)(b) above. Notwithstanding anything herein to the contrary,
in any instance wherein Landlord, in Landlord's sole discretion, deems Tenant
to be responsible for any amounts greater than Tenant's Proportionate Share,
Landlord shall have the right to allocate costs in any manner Landlord
reasonably deems appropriate.
Notwithstanding anything in the definition of Operating, Expenses in
this Lease to the contrary, Operating Expenses shall not include the
following, except to the extent specifically permitted by a specific
exception to the following:
(i) Any ground lease rental;
(ii) Costs of capital improvements, replacements or equipment and
any depreciation or amortization expenses thereon, except as specifically set
forth in the definition of Operating Expenses in Paragraph 7.A of the Lease;
(iii) Rentals for items (except when needed in connection with
normal repairs and maintenance of permanent systems) which if purchased,
rather than rented. would constitute a capital improvement which is
specifically excluded in Subsection (ii) above (excluding, however, equipment
not affixed to the Building or Project which is used in providing janitorial
or similar services);
(iv) Costs incurred by Landlord for the repair of damage to the
Building or Project. to the extent that Landlord is reimbursed by insurance
proceeds;
(v) Costs, including permit, license and inspection costs. incurred
with respect to the installation of tenant or other occupant improvements
made for tenants or other occupants in the Building or the Project or
incurred in renovating or otherwise improving, decorating, painting or
redecorating vacant space for or the premises of other tenants or other
occupants of the Building;
(vi) Marketing costs, including leasing commissions, attorneys'
fees in connection with the negotiation and preparation of letters, deal
memos, letters of intent, leases, subleases and/or assignments, space
planning costs, and other costs and expenses incurred in connection with
lease, sublease and/or assignment negotiations and transactions with present
or Prospective tenants or other occupants of the Building or the Project;
(vii) Costs incurred by Landlord due to the violation by Landlord
of the terms and conditions of any lease of space in the Building or the
Project;
(viii) Interest, principal, points and fees on debt or amortization
payments on any mortgage or dead of trust or any other debt instrument
encumbering the Building or Project or the land on which the Building or
Project is situated;
(ix) Except for making repairs or keeping permanent systems in
operation while repairs are being made, 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 not affixed
to the Building which is used in providing janitorial or similar services;
(x) Advertising and promotional expenditures (except for retail
property promotions);
(xi) Costs incurred in connection with upgrading the Building or
Project to comply with disability, life, fire and safety codes in effect
prior to the issuance of the temporary certificate of occupancy for the
Building;
(xii) Interest, fines or penalties incurred as a result of
Landlord's failure to make payments when due unless such failure is
commercially reasonable under the circumstances;
(xiii) Costs arising from Landlord's charitable or political
contributions;
(xiv) Costs for acquisition of sculpture, paintings or other
objects of art in common areas;
(xv) The depreciation of the Building and other real property
structures in the Project;
(xvi) Landlord's general corporate overhead and general
administrative expenses not related to the operation of the Project, except
as specifically set forth in Paragraph 7.A;
(xvii) Any bad debt loss, rent loss or reserves for b ad debts or
rent loss, or reserves for equipment or capital replacement;
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The above enumeration of services and facilities shall not be deemed to
impose an obligation on Landlord to make available or provide such services
or facilities except to the extent if any that Landlord has specifically
agreed elsewhere in this Lease to make the same available or provide the
same. Without limiting the generality of the foregoing. Tenant acknowledges
and agrees that it shall be responsible for providing adequate security for
its use of the Premises, the Building and the Project and that Landlord shall
have no obligation or liability with respect thereto except to the extent if
that Landlord provide the same.
B. PAYMENT OF ESTIMATED OPERATING EXPENSES. Estimated Operating Expenses" for
any particular year shall mean Landlord's estimate of the Operating Expenses for
such fiscal year made with respect to such fiscal year as hereinafter provided.
Landlord shall have the right from time to time to revise its fiscal year and
interim accounting periods so long as the periods as so revised are reconciled
with prior periods in a reasonable manner. During the last month of each fiscal
year during the Term, or as soon thereafter as practicable, Landlord shall give
Tenant written notice of the Estimated Operating Expenses for the ensuing fiscal
year. Tenant shall pay Tenant's Proportionate Share of the Estimated Operating
Expenses with installments of Base Rent for the fiscal year to which the
Estimated Operating Expenses applies in monthly installments on the first day of
each calendar month during such year, in advance. Such payment shall be
construed to be Additional Rent for all purposes hereunder. If at any time
during the course of the fiscal year, Landlord determines that Operating
Expenses are projected to vary from the then Estimated Operating Expenses by
more than five percent (5%). Landlord may, by written notice to Tenant, revise
the Estimated Operating Expenses for the balance of such fiscal year, and
Tenant's monthly installments for the remainder of such year shall be adjusted
so that by the end of such fiscal year Tenant has paid to Landlord Tenant's
Proportionate Share of the revised Estimated Operating Expenses for such year,
such Additional Rent for all purposes hereunder.
C. COMPUTATION OF OPERATING EXPENSE ADJUSTMENT. "Operating Expense Adjustment"
"I mean the difference between Estimated Operating Expenses and actual Operating
Expenses for any fiscal year determined as hereinafter provided. Within one
hundred twenty (120) days after the end of each fiscal year, or as soon
thereafter as practicable, Landlord shall deliver to Tenant a statement of
actual Operating Expenses for the fiscal year just ended, accompanied by a
computation of Operating Expense Adjustment. If such statement shows that
Tenant's payment based upon Estimated Operating Expenses is less than Tenant's
Proportionate Share of Operating Expenses, then Tenant shall pay to Landlord the
difference within twenty (20) days after receipt of such statement, such payment
to constitute Additional Rent for all purposes hereunder. If such statement
shows that Tenant's payments of Estimated Operating Expenses exceed Tenant's
Proportionate Share of Operating Expenses, then (provided that Tenant is not in
default under this Lease) Landlord shall pay to Tenant the difference within
twenty (20) days after delivery of such statement to Tenant. If this Lease has
been terminated or the Term hereof has expired prior to the date of such
statement, then the Operating Expense Adjustment shall be paid by the
appropriate party within twenty (20) days after the date of delivery of the
statement. Should this Lease commence or terminate at any time other than the
first day of the fiscal year, Tenant's Proportionate Share of the Operating
Expense Adjustment shall be prorated based on a month of 30 days and the number
of calendar months during such fiscal year that this Lease is in effect.
Notwithstanding anything to the contrary contained in Paragraph 7.A or 7.B,
Landlord's failure to provide any notices or statements within the time periods
specified in those paragraphs shall in no way excuse Tenant from its obligation
to pay Tenant's Proportionate Share of Operating Expenses.
D. NET LEASE. This shall be a triple net Lease and Base Rent shall be paid to
Landlord absolutely net of all costs and expenses, except as specifically
provided to the contrary in this Lease. The provisions for payment of Operating
Expenses and the Operating Expense Adjustment are intended to pass on to Tenant
and reimburse Landlord for all costs and expenses of the nature described in
Paragraph 7.A. incurred in connection with the ownership, management,
maintenance, repair, preservation, replacement and operation of the Building
and/or Project and its supporting facilities and such additional facilities now
and in subsequent years as may be determined by Landlord to be necessary or
desirable to the Building and/or Project.
E. TENANT AUDIT. If Tenant shall dispute the amount set forth in any statement
provided by Landlord under Paragraph 7.B. or 7.C. above, Tenant shall have the
right, not later than sixty (60) days following receipt of such statement and
upon the condition that Tenant shall first deposit with Landlord the full amount
in dispute, to cause Landlord's books and records with respect to Operating
Expenses for such fiscal year to be audited by certified public accountants
selected by Tenant and subject to Landlord's reasonable right of approval. The
Operating Expense Adjustment shall be appropriately adjusted on the basis of
such audit. If such audit discloses a liability for a refund in excess of ten
percent (100%) of Tenant's Proportionate Share of the Operating Expenses
previously reported, the cost of such audit shall be home by Landlord; otherwise
the cost of such audit shall be paid by Tenant. If Tenant shall not request an
audit in accordance with the provisions of this Paragraph 7.E. within 60 days
after receipt of Landlord's statement provided pursuant to Paragraph 7.B. or
7.C., such statement shall be final and binding for all purposes hereof.
8. INSURANCE AND INDEMNIFICATION
A. LANDLORD'S INSURANCE. All insurance maintained by Landlord shall be for the
sole benefit of Landlord and under Landlord's sole control.
(1) PROPERTY INSURANCE. Landlord agrees to maintain property insurance
insuring the Building against damage or destruction due to risk
including fire, vandalism, and malicious mischief in an amount not less
than the replacement cost thereof. in the form and with deductibles and
endorsements as selected by Landlord. At its election, Landlord may
instead (but shall have no obligation to) obtain "All Risk" coverage,
and may also obtain earthquake, pollution, and/or flood insurance in
amounts selected by Landlord.
(2) OPTIONAL INSURANCE. Landlord, at Landlord's option, may also (but
shall have no obligation to) carry insurance against loss of rent, in an
amount equal to the amount of Base Rent and Additional Rent that
Landlord could be required to abate to all Building tenants in the event
of condemnation or casualty damage for a period of twelve (12) months.
Landlord may also (but shall have no obligation to) carry such other
insurance as Landlord may deem prudent or advisable, including, without
limitation, liability insurance in such amounts and on such terms as
Landlord shall determine. Landlord shall not e obligated to insure, and
shall have no responsibility whatsoever for any damage to, any
furniture, machinery, goods, inventory or supplies, or other personal
property or fixtures which Tenant may keep or maintain in the Premises,
or any leasehold improvements, additions or alterations within the
Premises.
B. TENANT'S INSURANCE.
(1) PROPERTY INSURANCE. Tenant shall procure at Tenant's sole cost and
expense and keep in effect from the date of this Lease and at all times
until the end of the Term, insurance on all personal property and
fixtures of Tenant and all improvements, additions or alterations made
by or for Tenant to the Premises on an "All Risk" basis, insuring such
property for the full replacement value of such property.
(2) LIABILITY INSURANCE. Tenant shall procure at Tenant's sole cost and
expense and keep in effect from the date of this Lease and at all times
until the end of the Term Commercial General Liability insurance
covering bodily injury and property damage liability occurring in or
about the Premises or arising out of the use and occupancy of the
Premises and the Project, and
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any part of either, and any areas adjacent thereto, and the business
operated by Tenant or by any other occupant of the Premises. Such
insurance shall include contractual liability insurance coverage
insuring all of Tenant's indemnity obligations under this Lease. Such
coverage shall have a minimum combined single limit of liability of at
least Two Million Dollars ($2.000,000.00). and a minimum general
aggregate limit of Three Million Dollars ($3,000.000.00), with an
"Additional Insured - Managers or Lessors of Premises Endorsement" All
such policies shall be written to apply to all bodily injury (including
death). property damage or loss, personal and advertising injury and
other covered loss, however occasioned, occurring during the policy
term. shall be endorsed to add Landlord and any party holding an
interest to which this Lease may be subordinated as an additional
insured, and shall provide that such coverage shall be "primary" and
non-contributing with any insurance maintained by Landlord, which shall
be excess insurance only. Such coverage shall also contain endorsements
including employees as additional insureds if not covered by Tenant's
Commercial General Liability Insurance. All such insurance shall provide
for the severability of interests of insureds; and shall be written on
an "occurrence" basis, which shall afford coverage for all claims based
on acts, omissions, injury and damage, which occurred or arose (or the
onset of which occurred or arose) in whole or in part during the policy
period.
(3) WORKERS' COMPENSATION AND EMPLOYERS' LIABILITY INSURANCE. Tenant
shall carry Workers* Compensation Insurance as required by any
Regulation, throughout the Term at Tenant's sole cost and expense.
Tenant shall also carry Employers' Liability Insurance in amounts not
less than One Million Dollars ($1,000,000) each accident for bodily
injury by accident; One Million Dollars ($1,000,000) policy limit for
bodily injury by disease; and One Million Dollars (S 1,000.000) each
employee for bodily injury by disease, throughout the Term at Tenant's
sole cost and expense.
(4) GENERAL INSURANCE REQUIREMENTS. All coverages described in this
Paragraph 8.B. shall be endorsed to (i) provide Landlord with thirty
(30) days' notice of cancellation or change in terms; and (ii) waive all
rights of subrogation by the insurance carrier against Landlord. If at
any time during the Term the amount or coverage of insurance which
Tenant is required to carry under this Paragraph 8.13. is, in Landlord's
reasonable judgment, materially less than the amount or type of
insurance coverage typically carried by owners or tenants of properties
located in the general area in which the Premises are located which are
similar to and operated for similar purposes as the Premises or if
Tenant's use of the Premises should change with or without Landlord's
consent, Landlord shall have the right to require Tenant to increase the
amount or change the types of insurance coverage required under this
Paragraph 8.13. All insurance policies required to be carried by Tenant
under this Lease shall be written by companies rated A X or better in
"Best's Insurance Guide" and authorized to do business in the State of
California. In any event deductible amounts under all insurance policies
required to be carried by Tenant under this Lease shall not exceed Five
Thousand Dollars ($5,000.00) per occurrence. Tenant shall deliver to
Landlord on or before the Term Commencement Date, and thereafter at
least thirty (30) days before the expiration dates of the expired
policies, certified copies of Tenant's insurance policies, or a
certificate evidencing the same issued by the insurer thereunder, and,
if Tenant shall fail to procure such insurance. or to deliver such
policies or certificates, Landlord may, at Landlord's option and in
addition to Landlord's other remedies in the event of a default by
Tenant hereunder, procure the same for the account of Tenant, and the
cost thereof shall be paid to Landlord as Additional Rent.
C. INDEMNIFICATION. Tenant shall indemnify, defend by counsel reasonably
acceptable to Landlord, protect and hold Landlord harmless from and against
any and all claims, liabilities, losses, costs, loss of rents. liens,
damages, injuries or expenses, including reasonable attorneys' and
consultants' fees and court costs, demands, causes of action, or judgments,
directly or indirectly arising out of or related to: (1) claims of injury to
or death of persons or damage to property occurring or resulting directly or
indirectly from the use or occupancy of the Premises. Building or Project by
Tenant or Tenant's Parties, or from activities or failures to act of Tenant
or Tenant's Parties; (2) claims arising from work or labor performed, or for
materials or supplies furnished to or at the request or for the account or
Tenant in connection with performance of any work done for the account of
Tenant within the Premises or Project, (3) claims arising from any breach or
default on the part of Tenant in the performance of any covenant contained in
this Lease; and (4) claims arising from the negligence or intentional acts or
omissions of Tenant or Tenant's Parties. The foregoing indemnity by Tenant
shall not be applicable to claims to the extent arising from the gross
negligence or willful misconduct of Landlord. Landlord shall not be liable to
Tenant and Tenant hereby waives all claims against Landlord for any injury or
damage to any person or property in or about the Premises. Building or
Project by or from any cause whatsoever (other than Landlord's gross
negligence or willful misconduct) and. without limiting the generality of the
foregoing, whether caused by water leakage of any character from the roof,
walls. basement or other portion of the Premises, Building or Project, or
caused by gas, fire, oil or electricity in, on or about the Premises,
Building or Project. The provisions of this Paragraph shall survive the
expiration or earlier termination of this Lease.
9. WAIVER OF SUBROGATION
To the extent permitted by law and without affecting Ac coverage
provided by insurance to be maintained hereunder or any other rights or
remedies, Landlord and Tenant each waive any right to recover against the other
for: (a) damages for injury to or death of persons. (b) damages to property,
including personal property; (c) damages to the Premises or any part thereof.
and (d) claims arising by reason or the foregoing due to hazards covered by
insurance maintained or required to be maintained pursuant to this Lease to the
extent of proceeds recovered therefrom, or proceeds which would have been
recoverable therefrom in the case of the failure of any party to maintain any
insurance coverage required to be maintained by such party pursuant to this
Lease. This provision is intended to waive fully. any rights and/or claims
arising by reason of the foregoing, but only to the extent that any of the
foregoing damages and/or claims referred to above arc covered or would be
covered, and only to the extent of such coverage, by insurance actually carried
or required to be maintained pursuant to this Lease by either Landlord or Tenant
This provision is also intended to waive fully, and for the benefit of each
party, any rights and/or claims which might give rise to a right of subrogation
on any insurance carrier. Subject to all qualifications of this Paragraph 9.
Landlord waives its rights as specified in this Paragraph 9 with respect to any
subtenant that it has approved pursuant to Paragraph 21 but only in "change for
the written waiver of such rights to be given by such subtenant to Landlord upon
such subtenant taking possession of the Premises or a portion thereof. Each
party shall cause each insurance policy obtained by it to provide that the
insurance company waives all right of recovery by way of subrogation against
either party in connection with any damage covered by any policy.
10. LANDLORD'S REPAIRS AND MAINTENANCE
Landlord shall at Landlord's expense maintain in good repair, reasonable
wear and tear excepted, the structural soundness of the roof, foundations,
and exterior walls of the Building. The term "exterior walls" as used herein
shall not include windows. glass or plate glass, doors, special store fronts
or office entries. Any damage caused by or repairs necessitated by any
negligence or act of Tenant or Tenant's Parties may be repaired by Landlord
at Landlord's option and Tenant's expense. Tenant shall immediately give
Landlord written notice of any defect or need of repairs in such components
of the Building for which Landlord is responsible, upon Tenant becoming
actually or constructively aware thereof, after which Landlord shall have a
reasonable opportunity and the right to enter the Premises at all reasonable
times to repair same. Landlord's liability with respect to any defects,
repairs, or maintenance for which Landlord is responsible under any of the
provisions of this Lease shall be limited to the cost of such repairs or
maintenance, and there shall be no abatement of rent and no liability of
Landlord by reason of any injury to or interference with Tenant's business
arising from the making of repairs, alterations or improvements in or to any
portion of the Premises, the Building or the Project or to fixtures,
appurtenances or equipment in the Building, except as provided in Paragraph
24. By taking possession of the Premises, Tenant accepts them "as is," as
being in good
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order, condition and repair and the condition in which Landlord
is obligated to deliver them and suitable for the Permitted Use Find Tenant's
intended operations in the Premises, whether or not any notice of acceptance
is given.
11. TENANT'S REPAIRS AND MAINTENANCE
Tenant shall at all times during the Tam at Tenant's expense maintain
all parts of the Premises and such portions of the Building as are within the
exclusive control of Tenant thereto, except for such repairs and replacements
to be made by Landlord at its sole cost and expense pursuant to Paragraph 10,
in a first-class, good, clean and secure condition and promptly make all
necessary repairs and replacements, as determined by Landlord, with materials
and workmanship of the same character, kind and quality as the original.
Notwithstanding anything to the contrary contained herein, Tenant shall, at
its expense, promptly repair any damage to the Premises or the Building or
Project resulting from or caused by any negligence or act of Tenant or
Tenant's Parties.
12. ALTERATIONS
A. Except for cosmetic alterations, Tenant shall not make, or allow to be made,
any alterations, physical additions, improvements or partitions, including
without limitation the attachment of any fixtures or equipment, in, about or to
the Premises ("Alterations") without obtaining the prior written consent of
Landlord, which consent shall not be unreasonably withheld or delayed with
respect to proposed Alterations which: (a) comply with all applicable
Regulations; (b) are, in Landlord's opinion, compatible with the Building or the
Project and its mechanical, plumbing, electrical, heating/ventilation/air
conditioning system and will not cause the Building or Project or such systems
to be required to be modified to comply with any Regulations (including. without
limitation, the Americans With Disabilities Act); and (c) will not unreasonably
interfere with the use and occupancy of any other portion of the Building or
Project by any other tenant or its invitees. Specifically, but-without limiting
the generality or the foregoing, Landlord shall have the right of written
consent for all plans and specifications for the proposed Alterations,
construction means and methods, all appropriate permits and licenses, any
contractor or subcontractor to be employed on the work of Alterations, and the
time for performance of such work, and may impose rules and regulations for
contractors and subcontractors performing such work. Landlord shall not require
Tenant to post any payment or performance bonds unless the cost of the proposed
Alterations exceeds $15,000.00. Tenant shall also supply to Landlord any
documents and information reasonably requested by Landlord in connection with
Landlord's consideration of a request for approval hereunder. Tenant shall cause
all Alterations to be accomplished in a first-class, good and workmanlike
manner, and to comply with all applicable Regulations and Paragraph 27 hereof
Tenant shall at Tenant's sole expense, perform any additional work required
under applicable Regulations due to the Alterations hereunder. No review or
consent by Landlord of or to any proposed Alteration or additional work shall
constitute a waiver of Tenant's obligations under this Paragraph 12, nor
constitute any warranty or representation that the same complies with all
applicable Regulations, for which Tenant shall at all times be solely
responsible. Tenant shall reimburse Landlord for all costs which Landlord may
incur in connection with granting approval to Tenant for any such Alterations,
including any costs or expenses which Landlord may incur in electing to have
outside architects and engineers review said plans and specifications. and shall
pay Landlord an administration fee of fifteen percent (15%) of the cost of the
Alterations as Additional Rent hereunder, provided that the Alteration work is
performed by contractors engaged by Landlord on Tenant's behalf. All such
Alterations shall remain the property of Tenant until the expiration or earlier
termination of this Lease, at which time they shall be and become the property
of Landlord; provided, however. that Landlord may, at Landlord's option, require
that Tenant, at Tenant's expense, remove any or all Alterations made by Tenant
and restore the Premises by the expiration or earlier termination of this Lease,
to their condition existing prior to the construction of any such Alterations.
All such removals and restoration shall be accomplished in a first-class and
good and workmanlike manner so as not to cause any damage to the Premises or
Project whatsoever. If Tenant fails to remove such Alterations or Tenant's trade
fixtures or furniture or other personal property, Landlord my keep and use them
or remove any of them and cause them to be stored or sold in accordance with
applicable law, at Tenant's sole expense. In addition to and wholly apart from
Tenant's obligation to pay Tenant's Proportionate Share of Operating Expenses,
but not in duplication thereof. Tenant shall be responsible for and shall pay
prior to delinquency any taxes or governmental service fees, possessory interest
taxes, fees or Ones in lieu of any such taxes, capital levies. or other charges
imposed upon, levied with respect to or assessed against its fixtures or
personal property, on the value of Alterations within the Premises, and on
Tenant's interest pursuant to this Lease, or any increase in any of the
foregoing based on such Alterations. To the extent that any such taxes arc not
separately assessed or billed to Tenant, Tenant shall pay the amount thereof as
invoiced to Tenant by Landlord.
Landlord will not require Tenant to remove the original Tenant
Improvements constructed Prior to commencement upon expiration of the Lease
or sooner termination thereof.
B. In compliance with Paragraph 27 hereof at least ten (10) business days before
beginning construction of any Alteration, Tenant shall give Landlord written
notice of the expected commencement date of that construction to permit Landlord
to post and record a notice of non-responsibility. Upon substantial completion
of construction, if the law so provides, Tenant "I cause a timely notice of
completion to be recorded in the office of the recorder of the county in which
the Building is located.
13. SIGNS
Tenant shall not place, install, affix, paint or maintain any signs,
notices, graphics or banners whatsoever or any window decor which is visible
in or from public view or corridors, the common areas or the exterior of the
Premises or the Building. in or on any exterior window or window fronting
upon any common areas or service area without Landlord's prior written
approval which Landlord shall have the right to withhold in its absolute and
sole discretion; provided that Tenant's name shall be included in any
Building-standard door and directory signage, if any, in accordance with
Landlord's Building signage program, including without limitation, payment by
Tenant of any reasonable fee charged by Landlord for maintaining such signage
which fee shall constitute Additional Rent hereunder. Any installation of
signs, notices, graphics or banners on or about the Premises or Project
approved by Landlord shall be subject to any Regulations and to any other
requirements imposed by Landlord. Tenant shall remove all such signs or
graphics by the expiration or any earlier termination of this Lease. Such
installations and removals shall be made in such manner as to avoid injury to
or defacement of the Premises, Building or Project and any other improvements
contained therein, and Tenant shall repair any injury or defacement including
without limitation discoloration caused by such installation or removal.
14. INSPECTION/POSTING NOTICES
After reasonable notice, except in emergencies where no such notice
shall be required, Landlord and Landlord's agents and representatives, shall
have the right to enter the Premises to inspect the same, to clean, to perform
such work as may be permitted or required hereunder. to make repairs,
improvements or alterations to die Premises, Building or Project or to other
tenant spaces therein, to deal with emergencies, to post such notices as may be
permitted or required by law to prevent the perfection of liens against
Landlord's
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interest in the Project or to exhibit the Premises in the last nine (9)
months of the Lease term to prospective tenants, purchasers, encumbrancers or
to others, or for any other purpose as Landlord may deem reasonably necessary
or desirable; provided, however. that Landlord shall use reasonable efforts
not to unreasonably interfere with Tenant's business operations. Landlord
shall use good faith efforts to abide by any safety or security precautions
of Tenant. provided that Landlord shall not incur any monetary costs and that
Landlord's access to the Premises as provided in this Lease shall not be
impeded Tenant shall not be entitled to any abatement of Rent by reason of
the exercise of any such right of entry. Tenant waives any claim for damages
for any injury or inconvenience to or interference with Tenant's business.
any loss of occupancy or quiet enjoyment of the Premises, and any other loss
occasioned thereby. excluding only losses due to Landlord's negligence or
willful misconduct. Landlord shall at all times have and retain a key with
which to unlock all of the doors in, upon and about the Premises, excluding
Tenant's vaults and sates or special security areas (designated in advance).
and Landlord shall have the right to use any and all means which Landlord may
deem necessary or proper to open said doors in an emergency, in order to
obtain entry to any portion of the Premises, and any entry to the Premises or
portions thereof obtained by Landlord by any of said means, or otherwise,
shall not be construed to be a forcible or unlawful entry into, or a detainer
of, the Premises, or an eviction, actual or constructive, of Tenant from the
Premises or any portions thereof. At any time within six (6) months prior to
the expiration of the Term or following any earlier termination of this Lease
or agreement to terminate this Lease, Landlord shall have the right to erect
on the Premises. Building and/or Project a suitable sign indicating that the
Premises are available for lease.
15. SERVICES AND UTILITIES
A. Provided Tenant "I not be in default hereunder beyond any applicable cure
period, and subject to the provisions elsewhere herein contained and to the
rules and regulations of the Building, Landlord shall furnish to the-Premises
during ordinary business hours of generally recognized business days, to be
determined by Landlord (but exclusive, in any event, of Saturdays, Sundays and
legal holidays), water for lavatory and drinking purposes and electricity, hem
and air conditioning as usually furnished or supplied for use of the Premises
for reasonable and normal office use as of the date Tenant takes possession of
the Premises as determined by Landlord (but not including above-standard or
continuous cooling for excessive heat-generating machines, excess lighting or
equipment), janitorial services during the times and in the manner that such
services or, in Landlord's judgment, customarily furnished in comparable office
buildings in the immediate market area, and elevator service, which shall mean
service either by nonattended automatic elevators or elevators with attendants,
or both, at the option of Landlord. Tenant acknowledges that Tenant has
inspected and accepts the water. electricity, heat and air conditioning and
other utilities and services being supplied or furnished to the Premises as of
the date Tenant takes possession of the Premises, as being sufficient for use of
the Premises for reasonable and normal office use in their present condition,
"as is," and suitable for the Permitted Use, and for Tenant's intended
operations in the Premises. Landlord shall have no obligation to provide
additional or after-hours heating or air conditioning, but if Landlord elects to
provide such services at Tenant's request, Tenant shall pay to Landlord a
reasonable charge for such services as determined by Landlord. Landlord shall
provide after-hours electricity provided that service providers do and are able
to deliver after-hours electricity to Premises building. Tenant agrees to keep
and cause to be kept closed all window covering when necessary because of the
sun's position, and Tenant also-agrees at all times to cooperate fully with
Landlord and to abide by all of the regulations and requirements which Landlord
may prescribe for the proper functioning and protection of electrical, heating,
ventilating and air conditioning systems. Wherever heat-generating machines,
excess lighting or equipment are used in the Premises which affect the
temperature otherwise maintained by the air conditioning system, Landlord
reserves the right to install supplementary air conditioning units in the
Premises and the cost thereof, including the cost of installation and the cost
of operation and maintenance thereof, shall be paid by Tenant to Landlord upon
demand by Landlord. Subject to the foregoing, Tenant shall have access to the
Premises seven (7) days a week and 24 hours per day.
B. Tenant shall not without written consent of Landlord use any apparatus,
equipment or device in the Premises. including without limitation, computers,
electronic data processing machines, copying machines, and other machines, using
excess lighting or using electric current, water, or any other resource in
excess of or which will in any way increase the amount of electricity, water. or
any other resource being furnished or supplied for the use of the Premises for
reasonable and normal office use, in each case as of the date Tenant takes
possession of the Premises as determined by Landlord, or which will require
additions or alterations to or interfere with the Building power distribution
systems; nor connect with electric current except through existing electrical
outlets in the Premises or water pipes, any apparatus, equipment or device for
the purpose of using electrical current, water, or any other resource. If Tenant
shall require water or electric current or any other resource in excess of that
being furnished or supplied for the use of the Premises as of the date Tenant
takes possession of the Premises as determined by Landlord, Tenant shall first
procure the written consent of Landlord which Landlord may refuse, to the use
thereof, and Landlord may cause a special meter to be installed in the Premises
so as to measure the amount of water. electric current or other resource
consumed for any such other use. Tenant "I pay directly to Landlord as an
addition to and separate from payment of Operating Expenses the cost of all such
additional resources. energy, utility service and meters (and of installation.
maintenance and repair thereof and of any additional circuits or other equipment
necessary to furnish such additional resources. energy. utility or service).
Landlord may add to the separate or metered charge a recovery of reasonable
additional expense incurred in keeping account of the excess water, electric
current or other resource so consumed. Landlord shall not be liable for any
damages directly or indirectly resulting from nor shall the Rent or any monies
owed Landlord under this Lease herein reserved be abated by reason of: (a) the
installation, use or interruption of use of any equipment used in connection
with the furnishing of any such utilities or services, or any change in the
character or means of supplying or providing any such utilities or services or
any supplier thereof, (b) the failure to furnish or delay in furnishing any such
utilities or services when such failure or delay is caused by acts of God or the
elements, labor disturbances of any character, or any other accidents or other
conditions beyond the reasonable control of Landlord or because of any
interruption of service due to Tenant's use of water, electric current or other
resource in excess of that being supplied or furnished for the use of the
Premises as of the date Tenant takes possession of the Promises; (c) the
inadequacy, limitation, curtailment, rationing or restriction on use of water,
electricity, gas or any other form of energy or any other service or utility
whatsoever serving the Premises or Project, whether by Regulation or otherwise;
or (d) the partial or total unavailability of any such utilities or services to
the Premises or the Building, whether by Regulation or otherwise; nor shall any
such occurrence constitute an actual or constructive eviction of Tenant.
Landlord shall take good faith efforts to cause any such utilities or services
which may be interrupted or curtailed to be promptly reinstated to full
capacity, provided that Landlord shall not incur any monetary costs and that
Landlord's access to the Premises as provided in this Lease shall not be
impeded. Landlord shall further have no obligation to protect or preserve any
apparatus, equipment or device installed by Tenant in the Premises. including
without limitation by providing additional or after-hours heating or air
conditioning, unless the same is paid for by Tenant. Landlord shall be entitled
to cooperate voluntarily and in a reasonable manner with the efforts of
national. state or local governmental agencies or utility suppliers in reducing
energy or other resource consumption. The obligation to make services available
hereunder shall be subject to the limitations of any such voluntary, reasonable
program. In addition. Landlord reserves the right to change the supplier or
provider of any such utility or service from time to time. Tenant shall have no
right to contract with or otherwise obtain any electrical or other such service
for or with respect to the Premises or Tenant's operations therein from any
supplier or provider of any such service. Tenant shall cooperate with Landlord
and any supplier or provider of such services designated by Landlord from time
to time to facilitate the delivery of such services to Tenant at the Premises
and to the Building and Project, including without limitation allowing Landlord
and Landlord's suppliers or providers, and their respective agents and
contractors. reasonable access to the Premises for the purpose of installing.
maintaining, repairing, replacing or upgrading such service or any equipment or
machinery associated therewith.
C. Tenant shall pay, upon demand, for all utilities furnished to the Premises,
or if not separately billed to or metered to Tenant, Tenant's Proportionate
Share of all charges jointly serving the Project in accordance with Paragraph 7.
All sums payable under this Paragraph 15 shall constitute Additional Rent
hereunder.
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16. SUBORDINATION
Without the necessity of any additional document being executed by
Tenant for the purpose of effecting a subordination, this Lease shall be and
is hereby declared to be subject and subordinate at all times to: (a) all
ground leases or underlying leases which may now exist or hereafter be
executed affecting the Premises and/or the land upon which the Premises and
Project are situated, or both. and (b) any mortgage or deed of hug which may
now exist or be placed upon the Building, the Project and/or the land upon
which the Premises or the Project are situated, or said ground leases or
underlying leases, or Landlord's interest or estate in any of said items
which is specified as security. Notwithstanding the foregoing, Landlord shall
have the fight to subordinate or cause to be subordinated any such ground
leases or underlying leases or any such liens to this Lease. If any ground
lease or underlying lease terminates for any reason or any mortgage or deed
of trust is foreclosed or a conveyance in lieu of foreclosure is made for any
reason, Tenant shall, notwithstanding any subordination, attorn to and become
the Tenant of the successor in interest to Landlord provided that Tenant
shall not be disturbed in it-. possession under this Lease by such successor
in interest so long as Tenant is not in default under this Lease beyond any
applicable cure periods. Within ten (10) days after request by Landlord,
Tenant shall execute and deliver any additional documents evidencing Tenant's
attornment or the subordination of this Lease with respect to any such ground
leases or underlying leases or any such mortgage or deed of trust. in the
form requested by Landlord or by any ground landlord, mortgagee, or
beneficiary under a deed of trust, subject to such nondisturbance
requirement. If requested in writing by Tenant, Landlord shall use
commercially reasonable efforts to obtain a subordination. nondisturbance and
attornment agreement for the benefit of Tenant reflecting the foregoing from
any present or future ground landlord, mortgagee or beneficiary. at Tenant's
expense, subject to such other terms and conditions as the ground landlord,
mortgagee or beneficiary may require.
17. FINANCIAL STATEMENTS
At the request of Landlord from time to time, Tenant shall provide to
Landlord Tenant's and any guarantor's current financial statements or other
information discussing financial worth of Tenant and any guarantor, which
Landlord shall use solely for purposes of this Lease and in connection with
the ownership, management, financing and disposition of the Project. Tenant
shall be obligated to provide such financial statements to Landlord no more
than twice per calendar year. Landlord shall use commercially reasonable
efforts to maintain the confidentiality of such statements with respect to
third parties, except that disclosure is permitted to landlord's lenders and
prospective purchasers and to others as may be required to be disclosed by
law.
18. ESTOPPEL CERTIFICATE
Tenant agrees from time to time, within ten (10) days after request of
Landlord, to deliver to Landlord, or Landlord's designee, an estoppel
certificate stating that this Lease is in full force and effect, that this
Lease has not been modified (or stating all modifications, written or oral,
to this Lease), the date to which Rent has been paid, the unexpired portion
of this Lease, that there are no current defaults by Landlord or Tenant under
this Lease (or specifying any such defaults), that the leasehold estate
granted by this Lease is the sole interest of Tenant in the Premises and/or
the land at which the Premises are situated, and such other matters
pertaining to this Lease as may be reasonably requested by Landlord or any
mortgagee, beneficiary, purchaser or prospective purchaser of the Building or
Project or any interest therein. Failure by Tenant to execute and deliver
such certificate shall constitute an acceptance: of the Premises and
acknowledgment by Tenant that the statements included are true and correct
without exception. Tenant agrees that if Tenant fails to execute and deliver
such certificate within such ten (10) day period. Landlord may execute and
deliver such certificate on Tenant's behalf and that such certificate shall
be binding on Tenant. Landlord and Tenant intend that any statement delivered
pursuant to this Paragraph may be relied upon by any mortgagee, beneficiary,
purchaser or prospective purchaser of the Building or Project or any interest
therein. The parties agree that Tenant's obligation to furnish such estoppel
certificates in a timely fashion is a material inducement for Landlord's
execution of this Lease, and shall be an event of default (without any cure
period that might be provided under Paragraph 26.A(3) of this Lease) if
Tenant fails to fully comply or makes any material misstatement in any such
certificate.
19. SECURITY DEPOSIT
Tenant agrees to deposit with Landlord upon execution of this Lease, a
security deposit as stated in the Basic Lease Information (the "Security
Deposit"), which sum shall be held and owned by Landlord, without obligation
to pay interest, as security for the performance of Tenant's covenants and
obligations under this Lease. The Security Deposit is not an advance rental
deposit or a measure of damages incurred by Landlord in cast of Tenant's
default. Upon the occurrence of any event of default by Tenant, beyond any
applicable cure periods, Landlord may from time to time, without prejudice to
any other remedy provided herein or by law, use such fund as a credit to the
extent necessary to credit against any arrears of Rent or other payments due
to Landlord hereunder. and any other damage, injury. expense or liability
caused by such event of default, and Tenant "I pay to Landlord. on demand,
the amount so applied in order to restore the Security Deposit to its
original amount. Although the Security Deposit shall be deemed the property
of Landlord, any remaining balance of such deposit shall be returned by
Landlord to Tenant at such time after termination of this Lease that all of
Tenant's obligations under this Lease have been fulfilled, reduced by such
amounts as may be required by Landlord to remedy defaults on the part of
Tenant in the payment of Rent or other obligations of Tenant under this
Lease, to repair damage to the Premises, Building or Project caused by Tenant
or any Tenant's Parties and to clean the Premises. Landlord may use and
commingle the Security Deposit with other funds of Landlord.
20. LIMITATION OF TENANTS REMEDIES
The obligations and liability of Landlord to Tenant for any default by
Landlord under the tam of this Lease am not personal obligations of Landlord
or of the individual or other partners of Landlord or its or their partners,
directors, officers, or shareholders. and Tenant agrees to look solely to
Landlord's interest in the Project for the recovery of any amount from
Landlord. and shall not look to other assets of Landlord nor seek recourse
against the assets of the individual or other partners of Landlord or its or
their partners, directors, officers or shareholders. Any lien obtained to
enforce any such judgment and any levy of execution thereon shall be subject
and subordinate to any lien, mortgage or deed of bug on the Project. Under no
circumstances "I Tenant have the right to offset against or recoup Rent or
other payments due and to become due to Landlord hereunder except as
expressly provided in Paragraph 23.B. below, which Rent and other payments
shall be absolutely due and payable hereunder in accordance with the terms
hereof.
21. ASSIGNMENT AND SUBLETTING
A. (1) GENERAL. This Lease has been negotiated to be and is granted as an
accommodation to Tenant. Accordingly, this Lease is personal to Tenant,
and Tenant's rights granted hereunder do not include the right to assign
this Lease or sublease the Premises, or to receive any excess, either in
installments or lump sum, over the Rent which is expressly reserved by
Landlord as hereinafter provided, except as otherwise expressly
hereinafter provided. Tenant shall not assign or pledge this Lease or
sublet the Premises or any part thereof, whether voluntarily or by
operation of law, or permit the use or occupancy of the Premises or any
part thereof by anyone other than Tenant, or suffer or permit any such
assignment, pledge, subleasing or occupancy, without Landlord's prior
written consent except as provided herein. If Tenant desires to assign
this Lease or sublet any or all of the Premises, Tenant shall give
Landlord written notice (the "Transfer Notice") at least thirty (30)
days prior to the anticipated effective date of the proposed assignment
or sublease, which shall contain all of the information reasonably
requested by Landlord to address Landlord's decision criteria specified
hereinafter. Landlord shall then have a period of fifteen (15)
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days following receipt of the Transfer Notice to notify Tenant in writing
that Landlord elects either: (i) to terminate this Lease as to the space
so affected as of the date so requested by Tenant, provided that
cumulative fifty percent (50%) or more of the Premises is proposed to be
sublet; or (ii) to consent to the Proposed assignment or sublease,
subject, however, to Landlord's prior written consent of the proposed
assignee or subtenant and of any related documents or agreements
associated with the assignment or sublease. If Landlord should fail to
notify Tenant in writing of such election within said period, Landlord
shall be deemed to have waived option (i) above, but written consent by
Landlord of the proposed assignee or subtenant shall still be required.
If Landlord does not exercise option (i) above, Landlord's consent to a
proposed assignment or sublease shall not be unreasonably withheld.
Consent to any assignment or subletting shall not constitute consent to
any subsequent transaction to which this Paragraph 21 applies.
Notwithstanding anything to the contrary contained in this Lease, if
Landlord notifies Tenant of the exercise of its recapture right pursuant
to this Paragraph 21.A., Tenant shall have the right, within five (5)
business days after receipt of Landlord's notice, to rescind in writing,
its request for Landlord's consent to the transfer, in which case this
Lease shall continue in full force and effect.
(2) CONDITIONS OF LANDLORD'S CONSENT. Without limiting the other
instances in which it may be reasonable for Landlord to withhold
Landlord's consent to an assignment or subletting, Landlord and Tenant
acknowledge that it -hall be reasonable for Landlord to withhold
Landlord's consent in the following instances: if the proposed assignee
does not agree to be bound by and assume the obligations of Tenant under
this Lease in form and substance-reasonably satisfactory to Landlord.
the use of the Premises by such proposed assignee or subtenant would not
be a Permitted Use or would violate any exclusivity or other arrangement
which Landlord has with any other tenant or occupant or any Regulation
or would increase the Occupancy Density or Parking Density of the
Building or Project, or would otherwise result in an undesirable tenant
mix for the Project as determined by Landlord; the proposed assignee or
subtenant is not of sound financial condition as determined by Landlord
in Landlord's sole discretion; the proposed assignee or subtenant is a
governmental agency; the proposed assignee or subtenant does not have a
good reputation as a tenant of property or a good business reputation;
the proposed assignee or subtenant is a person with whom Landlord is
negotiating to lease space in the Project or is a present tenant of the
Project and Landlord then has space which will reasonably satisfy the
proposed transferee's space needs the assignment or subletting would
entail any Alterations which would lessen the value of the leasehold
improvements in the Premises or use of any Hazardous Materials or other
noxious use or use which may unreasonably disturb other tenants of the
Project; or Tenant is in default of any obligation of Tenant under this
Lease, beyond any applicable cure periods, or Tenant has defaulted under
this Lease on three (3) or more occasions during any twelve (12) months
preceding the date that Tenant "I request consent. Failure by or refusal
of Landlord to consent to a proposed assignee or subtenant shall not
cause a termination of this Lease. Upon a termination tinder Paragraph
21.A.(1)(i), Landlord may lease the Promises to any party, including
parties with whom Tenant has negotiated an assignment or sublease.
without incurring any liability to Tenant. At the option of Landlord, a
surrender and termination of this Lease shall operate as an assignment
to Landlord of some or all subleases or subtenancies. Landlord shall
exercise this option by giving notice of that assignment to such
subtenants on or before the effective date of the surrender and
termination. in connection with each request for assignment or
subletting. Tenant shall pay to Landlord Landlord's standard fee for
approving such requests, as well as all costs incurred by Landlord or
any mortgagee or ground lessor in approving each such request and
effecting any such transfer, including, without limitation, reasonable
attorneys' fees. All such costs shall not exceed actual costs incurred
by Landlord, plus an administration fee not to exceed $500.00 per
transaction.
B. BONUS RENT. Any Rent or other consideration realized by Tenant under any
such sublease or assignment in excess of the Rent payable hereunder, after
amortization of a reasonable brokerage commission and the cost of any tenant
improvements which Tenant is required to make under the proposed sublease or
assignment agreement amortized over the term of the proposed sublease or
assignment as the case may be, excluding any furniture, fixtures or equipment
leased or sold to the prospective tenant, incurred by Tenant. shall be
divided and paid, ten percent (10%) to Tenant, ninety percent (90%) to
Landlord. In any subletting or assignment undertaken by Tenant. Tenant shall
diligently seek to obtain the maximum rental amount available in the
marketplace for comparable space available for primary Leasing.
C. CORPORATION. If Tenant is a corporation, a transfer of corporate shares by
sale, assignment, bequest, inheritance, operation of law or other disposition
(including such a transfer to or by a receiver or trustee in federal or state
bankruptcy, insolvency or other proceedings) resulting in a change in the
present control of such corporation or any of its parent corporations by the
person or persons owning a majority of said corporate shares, shall constitute
an assignment for purposes of this Lease. The transfer of outstanding capital
stock or other listed equity interests, or the purchase of equity interests
issued in an initial public offering of stock, by persons or parties other than
"insiders" within the meaning or the Securities Exchange Act of 1934, as
amended, through "over-the-counter" market to any recognized national or
international securities exchange shall not be included in determining whether
Control (as defined below) has been transferred. "Control" shall mean direct or
indirect ownership of fifty percent (50%) or more of the voting stock of a
corporation of fifty percent (50%) or more of the legal or equitable interest in
any other business entity, or the power to direct the operations of any entity
(by equity ownership, contract or otherwise).
Notwithstanding the provisions of this Paragraph 21, Tenant may assign
this Lease or sublet the entire Premises to any corporation which controls,
is controlled by or is under common control with, Tenant (each a "Permitted
Tenant Affiliate"), provided that the Permitted Tenant Affiliate assumes, in
full, the obligations off Tenant under this Lease and has a net worth at
least equal to the net worth of Tenant as of the date of this Lease. If
Tenant is a corporation, a dissolution of the corporation or a transfer (by
one (1) or more transactions) of a majority of the voting stock of Tenant
shall be deemed to be an assignment of this Lease subject to the provisions
of this Paragraph 21; provided, however, that the provisions of this sentence
shall not apply to transactions with a corporation into or with which Tenant
is merged or consolidated or to which substantially all of Tenant's assets
are transferred (each a "surviving corporation") where (i) the surviving
corporation is a Permitted Tenant Affiliate, (ii) the surviving. corporation
has a net worth at least equal to the net worth of Tenant as of the date of
this Lease and (iii) the surviving corporation assumes, in full, the
obligations of Tenant under this Lease.
D. UNINCORPORATED ENTITY. If Tenant is a partnership, joint venture,
unincorporated limited liability company or other unincorporated business form,
a transfer of the interest of persons, firms or entities responsible for
managerial control of Tenant by sale.
E. LIABILITY. No assignment or subletting by Tenant, permitted or otherwise,
shall relieve Tenant of any obligation under this Lease or alter the primary
liability of the Tenant named herein for the payment of Rent or for the
performance of any other obligations to be performed by Tenant, including
obligations contained in Paragraph 25 with respect to any assignee or subtenant.
Landlord may collect rent or other amounts or any portion thereof from any
assignee, subtenant or other occupant of the Premises, permitted or otherwise,
and apply the net rent collected to the Rent payable hereunder, but no such
collection shall be deemed to be a waiver of this Paragraph 21, or the
acceptance of the assignee, subtenant or occupant as tenant, or a release of
Tenant from the further performance by Tenant of the obligations of Tenant under
this Lease. Any assignment or subletting which conflicts with the provisions
hereof shall be void.
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22. AUTHORITY
Landlord represents and warrants that it has full right and authority to
enter into this Lease and to perform all of Landlord's obligations hereunder
and that all persons signing this Lease on its behalf are authorized to do.
Tenant and the person or persons, if any, signing on behalf of Tenant,
jointly and severally represent and warrant that Tenant has full right and
authority to enter into this Lease, and to perform all of Tenant's
obligations hereunder, and that all persons signing this Lease on its behalf
are authorized to do so.
23. CONDEMNATION
A. CONDEMNATION RESULTING IN TERMINATION. If the whole or any substantial part
of the Premises should be taken or condemned for any public use under any
Regulation, or by right of eminent domain, or by private purchase in lieu
thereof, and the taking would prevent or materially interfere with the Permitted
Use of the Premises, either party shall have the right to terminate this Lease
at its option. If any material portion of the Building or Project is taken or
condemned for any public use under any Regulation, or by right of eminent
domain, or by private purchase in lieu thereof, Landlord may terminate this
Lease at its option. In either of such events, the Rent shall be abated during
the unexpired portion of this Lease, effective when the physical taking of said
Premises shall have occurred.
B. CONDEMNATION NOT RESULTING IN TERMINATION. If a portion of the Project of
which the Premises are a part should be taken or condemned for any public use
under any Regulation, or by right of eminent domain, or by private purchase in
lieu thereof, and the taking prevents or materially interferes with the
Permitted Use of the Premises, and this Lease is not terminated as provided in
Paragraph 23.A. above, the Rent payable hereunder during the unexpired portion
of this Lease shall be reduced, beginning on the date when the physical taking
shall have occurred, to such amount as may be fair and reasonable under all of
the circumstances, but only after giving Landlord credit for all sums received
or to be received by Tenant by the condemning authority. Notwithstanding
anything to the contrary contained in this Paragraph, if the temporary use or
occupancy of any part of the Premises shall be taken or appropriated under power
of eminent domain during the Term, this Lease shall be and remain unaffected by
such taking or appropriation and Tenant shall continue to pay in full all Rent
payable hereunder by Tenant during the Term; in the event of any such temporary
appropriation or taking, Tenant shall be entitled to receive that portion of any
award which represents compensation for the use of or occupancy of the Premises
during the Term, and Landlord shall be entitled to receive that portion of any
award which represents the cost of restoration of the Premises and the use and
occupancy of the Premises. If the temporary taking or appropriation under the
power of eminent domain does not exceed two hundred forty (240) days and such
taking shall prevent or materially interfere with the Permitted Use of the
Premises, Tenant shall have the right to terminate this Lease.
C. AWARD. Landlord shall be entitled to (and Tenant shall assign to Landlord)
any or all payment, income, rent, award or any interest therein whatsoever which
may be paid or made in connection with such taking or conveyance and Tenant
shall have no claim against Landlord or otherwise for any sums paid by virtue of
such proceedings, whether or not attributable to the value of any unexpired
portion of this Lease, except as expressly provided in this Lease.
Notwithstanding the foregoing, any compensation specifically and separately
awarded Tenant for Tenant's personal property and moving costs, shall be and
remain the property of Tenant.
D. WAIVER OF CCP SS. 1265.130. Each party waives the provisions of California
Civil Code Procedure Section 1265.130 allowing either party to petition the
superior court to terminate this Lease as a result of a partial taking.
24. CASUALTY DAMAGE
A. GENERAL. If the Premises or Building should be damaged or destroyed by fire,
tornado, or other casualty (collectively, "Casualty"), Tenant shall give
immediate written notice thereof to Landlord. Within thirty (30) days after
Landlord's receipt of such notice Landlord shall notify Tenant whether in
Landlord's estimation material restoration of the Premises can reasonably be
made within one hundred eighty (180) days from the date of Landlord's notice and
receipt of required permits for such restoration. Landlord's determination shall
be binding on Tenant.
B. WITHIN 180 DAYS. If the Premises or Building should be damaged by Casualty to
such extent that material restoration can in Landlord's estimation be reasonably
completed within one hundred eighty (180) days after the date of Landlord's
notice and, receipt of required permits for such restoration, this Lease shall
not terminate. Provided that insurance proceeds are received by Landlord to
fully repair the damage, Landlord shall proceed to rebuild and repair the
Premises in the manner determined by Landlord, except that Landlord shall not be
required to rebuild, repair or replace any part of the Alterations which may
have been placed on or about the Premises by Tenant. If the Premises are
untenantable in whole or in part following such damage, the Rent payable
hereunder during the period in which they are untenantable shall be abated
proportionately, but only to the extent of rental abatement insurance proceeds
received by Landlord during the time and to the extent the Premises are unfit
for occupancy.
C. GREATER THAN 180 DAYS. If the Premises or Building should be damaged by
Casualty to such extent that rebuilding or repairs cannot in Landlord's
estimation be reasonably completed within one hundred eighty (180) days after
the date of such notice and receipt of required permits for such rebuilding or
repair, then Landlord shall have the option of either (1) terminating this Lease
effective upon the date of the occurrence of such damage, in which event the
Rent shall be abated during the unexpired portion of this Lease; or (2) electing
to rebuild or repair the Premises diligently and in the manner determined by
Landlord. Landlord shall notify Tenant of its election within thirty (30) days
after Landlord's receipt of notice of the damage or destruction. Notwithstanding
the above, Landlord shall not be required to rebuild, repair or replace any part
of any Alterations which may have been placed, on or about the Premises by
Tenant. If the Premises are untenantable in whole or in part following such
damage, the Rent payable hereunder during the period in which they are
untenantable shall be abated proportionately, but only to the extent of rental
abatement insurance proceeds received by Landlord during the time and to the
extent the Premises are unfit for occupancy.
D. TENANT'S FAULT. Notwithstanding anything herein to the contrary, if the
Premises or any other portion of the Building are damaged by Casualty resulting
from the fault, negligence, or breach of this Lease by Tenant or any of Tenant's
Parties, Base Rent and Additional Rent shall not be diminished during the repair
of such damage and Tenant shall be liable to Landlord for the cost and expense
of the repair and restoration of the Building caused thereby to the extent such
cost and expense is not covered by insurance proceeds.
E. INSURANCE PROCEEDS. Notwithstanding anything herein to the contrary, if the
Premises or Building are damaged or destroyed and are not fully covered by the
insurance proceeds received by Landlord or if the holder of any indebtedness
secured by a mortgage or deed of trust covering the Premises requires that the
insurance proceeds be applied to such indebtedness then in either case Landlord
shall have the right to terminate this Lease by delivering written notice of
termination to Tenant within thirty (30) days after the date of notice to
Landlord that said damage or destruction is not fully covered by insurance or
such requirement is made by any such holder, as the case may be, whereupon this
Lease shall terminate.
F. WAIVER. This Paragraph 24 shall be Tenant's sole and exclusive remedy in the
event of damage or destruction to the Premises or the Building. As a material
enhancement to Landlord entering into this Lease, Tenant hereby waives any
rights it may have under Sections 1932, 1933(4), 1941 or 1942 of the Civil Code
of California with respect to my destruction of the Premises, Landlord's
obligation for
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tenantability of the Premises and Tenant's right to make repairs and deduct
the expenses of such repairs, or under any similar law, statute or ordinance
now or hereafter in effect.
G. TENANT'S PERSONAL PROPERTY. In the event of any damage or destruction of the
Premises or the Building, under no circumstances shall Landlord be required to
repair any injury or damage to, or make any repairs to or replacements of,.
Tenant's personal property.
H. TENANT'S RIGHT TO TERMINATE. If all or a substantial part of the Premises are
rendered unusable for the Permitted Use by damage to all or any part of the
Project from fire or other casualty, and Landlord does not elect to terminate
the Lease as provided in Paragraph 24.C., then Tenant may elect to terminate
this Lease if Landlord's estimate of the time required to complete Landlord's
repair obligations under this Lease is greater than two hundred ten (210) days
after commencement of the repair or restoration work.
25. HOLDING OVER
Unless Landlord expressly consents in writing to Tenant's holding over,
Tenant shall be unlawfully and illegally in possession of the Premises,
whether or not Landlord accepts any rent from Tenant or any other person
while Tenant remains in possession of the Premises without Landlord's written
consent. If Tenant shall retain possession of the Premises or any portion
thereof without Landlord's consent following the expiration of this Lease or
sooner termination for any reason, then Tenant shall pay to Landlord for each
day of such retention triple the amount of daily rental as of the last month
prior to the date of expiration or earlier termination. Tenant shall also
indemnify, defend, protect and hold Landlord harmless from any loss,
liability or cost, including consequential and incidental damages and
reasonable attorneys' fees, incurred by Landlord resulting from delay by
Tenant in surrendering the Premises, including, without limitation, any
claims made by the succeeding tenant founded on such delay. Acceptance of
Rent by Landlord following expiration or earlier termination of this Lease,
or following demand by Landlord for possession of the Premises, shall not
constitute a renewal of this Lease, and nothing contained in this Paragraph
25 shall waive Landlord's right of reentry or any other right. Additionally,
if upon expiration or earlier termination of this Lease, or following demand
by Landlord for possession of the Premises, Tenant has not fulfilled its
obligation with respect to repairs and cleanup of the Premises or any other
Tenant obligations as set forth in this Lease, then Landlord shall have the
right to perform any such obligations as it deems necessary at Tenant's sole
cost and expense, and any time required by Landlord to complete such
obligations shall be considered a period of holding over and the terms of
this Paragraph 25 shall apply. The provisions of this Paragraph 25 shall
survive any expiration or earlier termination of this Lease.
26. DEFAULT
A. EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an event of default on the part of Tenant:
(1) ABANDONMENT. Abandonment or vacation of the Premises for a
continuous period in excess of five (5) days. Tenant waives any right to
notice Tenant may have under Section 1951.3 of the Civil Code of the
State of California, the terms of this Paragraph 26.A. being deemed such
notice to Tenant as required by said Section 1951.3.
(2) NONPAYMENT OF RENT. Failure to pay any installment of Rent or any
other amount due and payable hereunder within three (3) days after the
date when said payment is due, as to which time is of the essence.
(3) OTHER OBLIGATIONS. Failure to perform any obligation, agreement or
covenant under this Lease other than those matters specified in
subparagraphs (1) and (2) of this Paragraph 26A., such failure
continuing for fifteen (15) days after written notice of such failure,
as to which time is of the essence provided that Tenant shall not be in
default hereunder if Tenant commences the cure within the fifteen (15)
day period and thereafter diligently prosecutes the cure to completion
with an additional fifteen (15) days.
(4) GENERAL ASSIGNMENT. A general assignment by Tenant for the benefit
of creditors.
(5) BANKRUPTCY. The filing of any voluntary petition in bankruptcy by
Tenant, or the filing of an involuntary petition by Tenant's creditors,
which involuntary petition remains undischarged for a period of thirty
(30) days. If under applicable law, the trustee in bankruptcy or Tenant
has the right to affirm this Lease and continue to perform the
obligations of Tenant hereunder, such trustee or Tenant shall, in such
time period as may be permitted by the bankruptcy court having
jurisdiction, cure all defaults of Tenant hereunder outstanding as of
the date of the affirmance of this Lease and provide to Landlord such
adequate assurances as may be necessary to ensure Landlord of the
continued performance of Tenant's obligations under this Lease.
(6) RECEIVERSHIP. The employment of a receiver to take possession of
substantially all of Tenant's assets or Tenant's leasehold of the
Premises, if such appointment remains undismissed or undischarged for a
period of thirty (30) days after the order therefor.
(7) ATTACHMENT. The attachment, execution or other judicial seizure of
all or substantially all of Tenant's assets or Tenant's leasehold of the
Premises, if such attachment or other seizure remains undismissed or
undischarged for a period of thirty (30) days after the levy thereof.
(8) INSOLVENCY. The admission by Tenant in writing of its inability to
pay its debts as they become due.
B. REMEDIES UPON DEFAULT
(1) TERMINATION. In the event of the occurrence of any event of default,
Landlord shall have the right to give a written termination notice to
Tenant, and on the day specified in such notice, Tenant's right to
possession shall terminate, and this Lease shall terminate unless on or
before such date all Rent in arrears and all costs and expenses incurred
by or on behalf of Landlord hereunder shall have been paid by Tenant and
all other events of default of this Lease by Tenant at the time existing
shall have been fully remedied to the satisfaction of Landlord. At any
time after such termination, Landlord may recover possession of the
Premises or any part thereof and expel and remove therefrom Tenant and
any other person occupying the same, including any subtenant or
subtenants notwithstanding Landlord's consent to any sublease, by any
lawful means, and again repossess and enjoy the Premises without
prejudice to any of the remedies that Landlord may have under this
Lease, or at law or equity by any reason of Tenant's default or of such
termination. Landlord hereby reserves the right, but shall not have the
obligation to recognize the continued possession of any subtenant. The
delivery or surrender to Landlord by or on behalf of Tenant of keys,
entry codes or other means to bypass security at the Premises shall not
terminate this Lease.
(2) CONTINUATION AFTER DEFAULT. Even though an event of default may have
occurred, this Lease shall continue in effect for so long as Landlord
does not terminate Tenant's right to possession under Paragraph 26.B.(1)
hereof, and Landlord may enforce all of Landlord's rights and remedies
under this Lease and at law or in equity, including without limitation,
the right to recover Rent as it becomes due, and Landlord, without
terminating this Lease, may exercise all of the rights and remedies of a
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landlord under Section 1951.4 of the Civil Code of the State of
California or any successor code section. Acts of maintenance,
preservation or efforts to lease the Premises or the appointment of a
receiver under application of Landlord to protect Landlord's interest
under this Lease or other entry by Landlord upon the Premises shall not
constitute an election to terminate Tenant's right to possession.
(3) INCREASED SECURITY DEPOSIT. If Tenant is in default under Paragraph
26.A.(2) hereof and such default remains uncured for ten (10) days after
such occurrence or beyond any applicable cure periods, whichever is late
or such default occurs more than three times in any twelve (12) month
period, Landlord may require that Tenant increase the Security Deposit
to the amount of three times the current month's Rent at the time of the
most recent default.
C. DAMAGES AFTER DEFAULT. Should Landlord terminate this Lease pursuant to
the provisions of Paragraph 26.B.(i) hereof, Landlord shall have the rights
and remedies of a Landlord provided by Section 1951.2 of the Civil Code of
the State of California, or any successor code sections. Upon such
termination, in addition to any other rights and remedies to which Landlord
may be entitled under applicable law or at equity, Landlord shall be entitled
to recover from Tenant: (1) the worth at the time of award of the unpaid Rent
and other amounts which had been earned at the time of termination, (2) the
worth at the time of award of the amount by which the unpaid Rent and other
amounts that would have been earned after the date of termination until the
time of award exceeds the amount of such Rent loss that Tenant proves could
have been reasonably avoided; (3) the worth at the time of award of the
amount by which the unpaid Rent and other amounts for the balance of the Term
after the time of award exceeds the amount of such Rent loss that the Tenant
proves could be reasonably avoided; and (4) any other amount and court costs
necessary to compensate Landlord for all detriment proximately caused by
Tenant's failure to perform Tenant's obligations under this Lease or which,
in the ordinary course of things, would be likely to result therefrom. The
"worth at the time of award" as used in (1) and (2) above shall be computed
at the Applicable Interest Rate (defined below). The "worth at the time of
award" as used in (3) above shall be computed by discounting such amount at
the Federal Discount Rate of the Federal Reserve Bank of San Francisco at the
time of award plus one percent (1%). If this Lease provides for any periods
during the Term during which Tenant is not required to pay Base Rent or if
Tenant otherwise receives a Rent concession, then upon the occurrence of an
event of default, Tenant shall owe to Landlord the full amount of such Base
Rent or value of such Rent concession, plus interest at the Applicable
Interest Rate, calculated from the date of such Base Rent or Rent concession
would have been payable.
D. LATE CHARGE. In addition to its other remedies, Landlord shall have the
right without notice or demand to add to the amount of any payment required
to be made by Tenant hereunder, and which is not paid and received by
Landlord on or before the third day of each calendar month, an amount equal
to ten percent (10%) of the delinquency for each month or portion thereof
that the delinquency remains outstanding to compensate Landlord for the loss
of the use of the amount not paid and the administrative costs caused by the
delinquency, the parties agreeing that Landlord's damage by virtue of such
delinquencies would be extremely difficult and impracticable to compute and
the amount stated herein represents a reasonable estimate thereof. Any waiver
by Landlord of any late charges or failure to claim the same shall not
constitute a waiver of other late charges or any other remedies available to
Landlord.
E. INTEREST. Interest shall accrue on all sums not paid when due hereunder at
the lesser of eighteen percent (18%) per annum or the maximum interest rate
allowed by law ("Applicable Interest Rate") from the due date until paid.
F. REMEDIES CUMULATIVE. All rights, privileges and elections or remedies of the
parties are cumulative and not alternative, to the extent permitted by law and
except as otherwise provided herein.
27. LIENS
Tenant shall at all times keep the Premises and the Project free from
liens arising out of or related to work or services performed, materials or
supplies furnished or obligations incurred by or on behalf of Tenant or in
connection with work made, suffered or done by or on behalf of Tenant in or
on the Premises or Project. If Tenant shall not, within ten (10) days
following the imposition of any such lien, cause the same to be released of
record by payment or posting of a proper bond, Landlord shall have, in
addition to all other remedies provided herein and by law, the right, but not
the obligation, to cause the same to be released by such means as Landlord
shall deem proper, including payment of the claim giving rise to such lien.
All sums paid by Landlord on behalf of Tenant and all expenses incurred by
Landlord in connection therefor shall be payable to Landlord by Tenant on
demand with interest at the Applicable Interest Rate as Additional Rent.
Landlord shall have the right at all times to post and keep posted on the
Premises any notices permitted or required by law, or which Landlord shall
deem proper, for the protection of Landlord, the Premises, the Project and
any other party having an interest therein, from mechanics' and materialmen's
liens, and Tenant shall give Landlord not less than ten (10) business days
prior written notice or the commencement of any work in the Premises or
Project which could lawfully give rise to a claim for mechanics' or
materialmen's liens to permit Landlord to post and record a timely notice of
non-responsibility, as Landlord may elect to proceed or as the law may from
lime to time provide, in accordance with the entry provisions set forth in
Paragraph 14, or which purpose, if Landlord shall so determine, Landlord may
enter the Premises. Tenant shall not remove any such notice posted by
Landlord without Landlord's consent, and in any event not before completion
of the work which could lawfully give rise to a claim for mechanics' or
materialmen's liens.
28. SUBSTITUTION
A. At any time after execution and commencement of this Lease, landlord may
substitute for the Premises other premises in the Project or owned by
Landlord in the vicinity of the Project (the "New Premises") upon not less
than sixty (60) days prior written notice, in which event the New Premises
shall be deemed to be the Premises for all purposes hereunder and this Lease
shall be deemed modified accordingly to reflect the new location and shall
remain in full force and effect as so modified, provided that:
(1) The New Premises shall be similar in area and in function for
Tenant's purposes; and
(2) If Tenant is occupying the Premises at the time of such
substitution, Landlord shall pay the expense of physically moving Tenant,
Tenant's property and equipment to the New Premises and shall at
Landlord's sole cost, improve the New Premises with improvements
substantially similar to those the Landlord has committed to provide or
has provided in the Premises.
29. TRANSFERS BY LANDLORD
In the event of a sale or conveyance by Landlord of the Building or a
foreclosure by any creditor of Landlord, the same shall operate to release
Landlord from any liability upon any of the covenants or conditions, express
or implied, herein contained in favor of Tenant, to the extent required to be
performed after the passing of title to Landlord's successor-in-interest. In
such event, Tenant agrees to look solely to the responsibility of the
successor-in-interest of Landlord under this Lease with respect to the
performance of the covenants and duties of "Landlord" to be performed after
the passing of title to Landlord's successor-in-interest. This Lease shall
not be affected by any such sale and Tenant agrees to attorn to the purchaser
or assignee. Landlord's successor(s)-in-interest shall not have liability to
Tenant with respect to the failure to perform any of the obligations of
"Landlord," to the extent required to be performed prior to the date such
successor(s)-in-interest became the owner of the Building, except that such
successor shall be responsible for the proper disposition of the security
deposit made by Tenant hereunder, but only to the extent that such successor
has actually received the security deposit.
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30. RIGHT OF LANDLORD TO PERFORM TENANT'S COVENANTS
All covenants and agreements to be performed by Tenant under any of the
terms of this Lease shall be performed by Tenant at Tenant's sole cost and
expense and without any abatement of Rent.