CHESTNUT BAY LLC,
a California limited liability company
Landlord
and
IMPROVENET, INC.
a Delaware corporation
Tenant
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OFFICE / R&D LEASE
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Dated
June 10, 1999
OFFICE / R&D LEASE
Table of Contents
Summary of Terms
Recitals
Section 1. Lease of Premises
Section 2. Term of Lease
Section 3. Early Occupancy
Section 4. Possession; Delay in Delivery of Possession
Section 5. Rent
Section 6. Use
Section 7. Utilities
Section 8. Taxes
Section 9. Condition of Premises
Section 10. Repairs and Maintenance
Section 11. Alterations
Section 12. Entry
Section 13. Surrender of Premises; Holding Over
Section 14. Indemnity
Section 15. Insurance
Section 16. Trade Fixtures
Section 17. Communications Cables
Section 18. Signs
Section 19. Damage and Destruction
Section 20. Condemnation
Section 21. Assignment and Subletting
Section 22. Default
Section 23. Remedies
Section 24. Late Charge
Section 25. Default Interest
Section 26. Waiver
Section 27. Estoppel Certificates
Section 28. Attorney Fees
Section 29. Security for Tenant's Obligations
Section 30. Authority
Section 31. Notices
Section 32. Heirs and Successors
Section 33. Partial Invalidity
Section 34. Entire Agreement
Section 35. Time of Essence
Section 36. Amounts Deemed Rent
Section 37. Amendments
Section 38. Subordination, Nondisturbance and Attornment
Section 39. Merger
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Section 40. Right of Relocation (Intentionally Deleted)
Section 41. Options to Extend Term
Section 42. Determination of Monthly Rent for Extension Term
Section 43. Tenant Improvements
Section 44. Environmental Provisions
Section 45. Publicity
Section 46. Easements
Section 47. Covenants and Conditions
Section 48. Recordation
Section 49. Transfer by Landlord
Section 50. Security Measures
Section 51. Broker
Section 52. Offer
Section 53. Governing Law
Section 54. Parking
Schedule of Exhibits
Exhibit A. Legal Description of Property
Exhibit B. Description of Premises
Exhibit C. Work Letter Agreement
Exhibit D. Commencement Date Memorandum
Exhibit I. Environmental Documents
Exhibit S Subordination, Attornment and Non-Disturbance Agreement
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SUMMARY OF TERMS
Date: June 10, 1999
Landlord: Chestnut Bay LLC, a California limited liability company
Tenant: ImproveNet, Inc., a Delaware corporation
Guarantor: N/A
Premises: a portion of the second (2nd) floor of ▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ known as Suite 200 and shown as the shaded area in attached
Exhibit B.
Rentable Area of Premises: approximately 16,190 rentable square feet (subject to
calculation by Landlord's architect as set forth herein)
Common Area: All areas of the Property located exterior of the Building
including the Parking Lot and all landscaped areas and sidewalks as
well as all common stairways, hallways, lobby areas, elevators and
bathrooms shown in the un-shaded portion of Exhibit B but specifically
excluding the premises of other tenants of the Building.
Section 2. Estimated Delivery Date ("Estimated Delivery Date"): July 18, 1999
Section 2. Lease Term: Seven (7) years from the Commencement Date.
Section 5. Monthly Rent:
Lease Months Monthly Base Rent
1-12 $42,094
13-24 $43,357
25-36 $44,658
37-48 $45,997
49-60 $47,377
60-72 $48,798
72-84 $50,262
Section 5. Advance Rent: $42,094
Section 5. Tenant's Share: 26.55%
Section 29. Letter of Credit Security: $400,000
Section 29. Security Deposit: $50,262
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Section 31. Tenant's Address for Notices:
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Prior to the Commencement Date: After the Commencement Date:
ImproveNet, Inc. ImproveNet, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇. ▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇ ▇▇▇▇▇ Redwood City, California
With copy to: With copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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Section 31. Guarantor's Address for Notices: N/A
Section 31. Landlord's Address for Notices:
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With copy to:
Chestnut Bay LLC
c/o The ▇▇▇▇▇▇▇▇▇ Company Mackenzie & ▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇ Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
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Section 51. Broker: CB ▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc., exclusively representing Landlord
("Landlord Broker") and Cornish & ▇▇▇▇▇ exclusively representing Tenant ("Tenant
Broker").
Section 54. Parking Spaces: 53 non-exclusive spaces
The foregoing Summary of Terms is made primarily for the benefit of Landlord and
is not a part of this Lease. In the event of any conflict between any
information shown on this Summary and the Lease, the latter shall control.
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OFFICE/RESEARCH & DEVELOPMENT LEASE
THIS OFFICE/R&D LEASE (Lease) is entered into as of June 10, 1999 by
and between CHESTNUT BAY LLC, a California limited liability company (Landlord)
IMPROVENET, INC., a Delaware corporation (Tenant).
RECITALS
A. Landlord is owner of that certain building consisting of approximately 60,985
rentable square feet and improvements (collectively, the "Building") located at
▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, in the County of San Mateo (the
Property") as more particularly described in Exhibit A attached hereto and
incorporated herein.
B. Tenant desires to lease from Landlord and Landlord desires to lease to Tenant
that certain portion of the Building as more particularly shown cross hatched on
Exhibit B attached hereto and incorporated herein (the Premises), which Premises
constitute approximately Sixteen One Hundred Ninety (16,190) rentable square
feet of the Building.
C. Landlord desires to lease to Tenant and Tenant desires to lease from Landlord
the Premises on the terms and conditions contained in this Lease.
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
Section 1. Lease of Premises; Common Areas
(a) Premises: Landlord leases to Tenant and Tenant leases from Landlord the
Premises on the terms and conditions contained in this Lease. The Premises will
be improved with the Base Building Improvements to be constructed by Landlord.
The Base Building Improvements are described in the Work Letter, attached as
Exhibit C.
(b) Common Areas. In addition to the Premises, Landlord grants to Tenant a
non-exclusive license for use of the Common Areas with Landlord and other
tenants of the Building and their invitees, contractors, agents and employees.
Landlord reserves the right to modify the size, location and/or configuration of
all or any portion the Common Areas provided such modification does not
materially and adversely interfere Tenant's use of the Premises as permitted
under this Lease. The use of the Common Areas shall at all times be subject to
all reasonable, uniform and non-discriminatory applicable laws and the rules and
regulations adopted by Landlord from time to time and to any covenants,
conditions, restrictions, or easements placed of record in the San Mateo County
Recorder's Office.
Section 2. Term.
(a) Commencement Date. The Term of this Lease will commence ("Commencement
Date") on the earliest of the following dates:
(i) the date on which Tenant takes possession of all or a portion of the
Premises for Tenant's intended use under this Lease;
(ii) the date on which the Tenant Improvements (defined in Exhibit C) are
Substantially Complete (defined in Exhibit C); or
(iii) September 1, 1999 (except as may be extended pursuant to Section 5.02 of
Exhibit C).
The Term of the Lease will continue from the Commencement Date for the period of
time specified as the Term (seven (7) years) or until this Lease is terminated
as otherwise provided for in the Lease.
(b) Commencement Date Memorandum. Following the Commencement Date, Tenant shall
execute and deliver to Landlord a memorandum of the Commencement Date in the
form of attached Exhibit D
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("Commencement Date Memorandum"). The Commencement Date Memorandum must
acknowledge: (i) the Commencement Date; and (ii) Tenant's acceptance of the
Premises.
Section 4. Possession; Delay in Delivery of Possession.
(a) Subject to Landlord's enforcement of Landlord's Contractor's warranties as
set forth in Section 4.04 of Exhibit C and the completion of Punch List Items as
set forth therein, as of the Delivery Date (defined in Exhibit C), Tenant
accepts possession of the Premises in its existing as is condition, including,
but not limited to, all patent and latent defects and subject to all applicable
laws, ordinances, and regulations governing and regulating the use of the
Property and/or the Premises and any recorded covenants, conditions,
restrictions, easements, licenses, or right of ways.
(b) If Landlord, for any reason whatsoever, cannot deliver possession of the
Premises to Tenant on or before the Estimated Delivery Date as it may be
extended by any Unavoidable Delays and Tenant Delays (defined in Exhibit C),
this Lease shall not be void or voidable and no obligation of Tenant shall be
affected thereby, and neither Landlord nor Landlord's agents shall be liable to
Tenant for any loss or damage resulting therefrom; provided however, that the
September 1, 1999 latest Commencement Date shall be extended one day for each
day after the Estimated Delivery Date that the actual Delivery Date occurs.
Section 5. Rent.
(a) Tenant agrees to pay monthly rent ("Monthly Rent") during the Lease Term in
the amounts set forth in the Summary of Terms. Monthly Rent shall be payable
without deduction, offset, abatement, prior notice or demand, except as may
otherwise provided herein.
(b) The Monthly Rent shall be payable in advance on the first day of each month
at Landlord's address as provided herein or at such other address that Landlord
may from time to time designate by written notice to Tenant. In the event that
the Term commences on a date other than the first day of a calendar month, then
on the date of commencement of the Term, Tenant shall pay to Landlord as Monthly
Rent for the period from such date of commencement to the first day of the next
succeeding calendar month that proportion of the first month's Monthly Rent due
hereunder which the number of days between such date of commencement and the
first day of the next succeeding calendar month bears to thirty (30). In the
event that the Term for any reason ends on a date other than the last day of a
calendar month, then on the first day of the last partial calendar month of such
term, Tenant shall pay to Landlord as Monthly Rent for the period from said
first day of said last partial calendar month to and including the last day of
the Term that proportion of that Monthly Rent then due hereunder which the
number of days between said first day of said last partial calendar month and
the last day of the term hereof bears to thirty (30).
(c) Upon execution of this Lease, Tenant shall pay Forty-Two Thousand Ninety
Four Dollars ($42,094), which amount shall be applied toward the first payment
of Monthly Rent due hereunder.
(d) In the event of a Chronic Delinquency (as hereinafter defined), at
Landlord's option, Landlord shall have the right, in addition to all other
remedies under this Lease and at law, to require that Monthly Rent be paid by
Tenant quarterly, in advance. This provision shall not limit in any way nor be
construed as a waiver of any rights and remedies of Landlord provided herein or
by law in the event of delinquency. Chronic Delinquency shall mean failure by
Tenant to pay Monthly Rent, or any other payments required to be paid by Tenant
under this Lease, when due in any of three (3) months (consecutive or
non-consecutive) during any twelve (12) month period.
(e) In addition to Monthly Rent, Tenant shall pay to Landlord as additional
rent, which shall be solely calculated and determined by Landlord, the
following:
(i) Tenant's Share (as hereinafter defined) of the Taxes relating to the
Property as set forth in Section 8 hereof;
(ii) Tenant's Share of the insurance premiums relating to the Property, as set
forth in Section 15 hereof;
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(iii) Tenant's Share of all maintenance, repair and replacement expenses
relating to the Property as set forth in Section 10 hereof and any deductibles
or uninsured restoration costs incurred under Section 19 hereof (provided if any
such cost is based in part on properly unrelated to the Premises (including
adjacent real properly owned by Landlord) then only that part of such cost that
is fairly allocable to the Premises shall be included in Operating Expenses);
(iv) Tenant's Share of any other operating expenses incurred by Landlord in the
operation of the Property including Landlord's management fee;
(v) All charges, costs, expenses, and other amounts which Tenant is required to
pay hereunder, together with all interest, late charges, penalties, costs and
expenses, including, without limitation, reasonable attorneys fees, legal and
accounting expenses, collection costs, and court costs, that may accrue thereto
or be incurred in the event of Tenant's default, refusal, or failure to pay such
amounts, and all damages, costs, and expenses, including, but not limited to,
reasonable attorneys fees, which Landlord may incur by reason of any default by
Tenant or failure on Tenant's part to comply with the terms of this Lease.
Amounts due from Tenant pursuant to Subsections 5(e)(i), 5(e)(ii), 5(e)(iii),
5(e)(iv) and 5(e)(v) above are collectively referred to herein as the Operating
Expenses. As used in this Lease, the term Tenant's Share shall mean such portion
of the total cost equal to the number of rentable square feet contained in the
Premises at the time of such computation divided by the total rentable square
footage of the Building. Tenant's Share as of the Commencement Date is set forth
in the Summary of Terms.
(f) The Operating Expenses shall be paid as follows. Prior to the commencement
of each year of the Term or as soon thereafter as practicable, Landlord shall
give Tenant notice of its estimate of the Operating Expenses for the ensuing
year of the Term. On or before the first day of each month during the ensuing
year of the Term, Tenant shall pay to Landlord 1/12 of such estimated amount,
provided that if such a notice is not given prior to the commencement of the
ensuing year of the Term, Tenant shall continue to pay on the basis of the prior
year's estimate until the month after such notice is given. If at any time or
times it appears to Landlord that the actual Operating Expenses for the current
year of the Term will vary from its estimate by more than five percent (5%),
Landlord may, by notice to Tenant, revise its estimate for such year, and
subsequent monthly payments by Tenant for such year shall be based on such
revised estimate. Landlord's estimate of Operating Expenses for the first
partial year of the Lease Term is Five Thousand Three Hundred Forty-three
Dollars ($5,343) per month. The first months estimated Operating Expenses shall
be paid upon execution of this Lease.
(g) Within ninety (90) days after the close of each calendar year of the Term or
as soon after such 90-day period as practicable, Landlord shall deliver to
Tenant (i) a statement of the Operating Expenses for such calendar year showing
in reasonable detail the actual Operating Expenses incurred by Landlord,
certified by Landlord, which certified statement shall be final and binding upon
Landlord and Tenant, subject only to Tenant's Section 5(h) review, and (ii) a
statement of the payments made by Tenant under Section 5(f) above for such year.
If on the basis of such statements Tenant owes an amount that is less than the
estimated Operating Expenses for such year previously made by Tenant, Landlord
at its election shall either promptly refund the amount of the overpayment to
Tenant or credit such excess against Tenant's subsequent obligations to
Estimated Operating Expenses. If on the basis of such statements Tenant owes an
amount that is more than the estimated Operating Expenses for such year
previously made by Tenant, Tenant shall pay the deficiency to Landlord within
thirty (30) days after delivery of such statements.
(h) If Tenant disputes the amount of Additional Rent stated in the statement,
Tenant may designate, within thirty (30) days after receipt of that statement,
an independent certified public accountant to inspect Landlord's records. Tenant
is not entitled to request that inspection, however, if Tenant is then in
default under this Lease. The accountant must be a member of a nationally
recognized accounting firm and must not charge a fee based on the amount of
Additional Rent that the accountant is able to save Tenant by the inspection.
Tenant must give reasonable notice to Landlord of the request for inspection,
and the inspection must be conducted in Landlord's offices at a reasonable time
or times. If, after that inspection, Tenant still disputes the Additional Rent,
a certification of the proper amount shall be made, at Tenant's expense, by
Landlord's independent certified public accountant. That certification shall be
final and conclusive. If Tenant discovers an excess of five percent (5%) or
greater in the Operating Expenses charged to Tenant, then in addition to such
discrepancy amount Landlord shall pay the cost of Landlord's accountant's
certification and Tenant's accountant's review within thirty (30) days of such
certification.
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(i) At Landlord's election, Tenant shall pay to Landlord, within ten (10) days
after receipt of invoice(s) therefore, any present Operating Expense incurred by
Landlord. If Tenant shall fail to pay any additional rent in accordance with the
terms hereof, Landlord shall have all the rights and remedies with respect
thereto as Landlord has for nonpayment of Monthly Rent.
Section 6. Use.
(a) Tenant will occupy and use the Premises for sales, marketing and related
general office use and for no other use. Tenant agrees not to use the Premises
or Common Areas for any immoral or unlawful purpose. Tenant agrees that the
Premises shall not in any case at any time be used for a day care facility, a
school, a hospital, a medical center, a residence, the wholesale manufacture,
processing, or distribution of food, food products, or food ingredients or a
playground.
(b) Tenant shall not commit any acts on the Premises, nor use the Premises in
any manner that will increase the existing rotes for or cause the cancellation
of any fire, liability, or other insurance policy insuring or hereinafter
insuring the Premises or the improvements on the Premises. Tenant shall, at
Tenant's sole cost and expense, comply with all requirements of Landlord's
insurance carriers that are necessary for the continued maintenance at
reasonable rates of fire and liability insurance policies on the Premises and
the improvements on the Premises. However, if such compliance would result in
capital repairs or improvements to the Property, Landlord shall have the right
to effect such compliance and Tenant shall pay to Landlord the cost of such
improvement.
(c) Tenant shall not allow the Premises to be used for any unlawful purpose, nor
shall Tenant cause, maintain or permit any nuisance, either private or public,
in, on or about the Premises. No sale by auction which invites or permits
purchasers to enter the Premises or Property shall be permitted to be conducted
from the Premises. Tenant shall not place any loads upon the floors, walls or
ceiling which might endanger or damage the structure; shall not place or spill,
nor suffer to be released or spilled, any harmful substances or Hazardous
Materials (defined herein) in the drainage system of the Building, nor on the
Premises, the Building, or the Property; and shall not overload any electrical,
mechanical, plumbing, sprinkler, or other systems. No waste materials or refuse
shall be permitted to remain on any part of the Premises or outside of the
Building in which the Premises are a part, except in trash container(s) placed
inside exterior enclosures approved by Landlord for that purpose, or inside of
the Building proper where designated by Landlord. No materials, supplies,
equipment, finished products or semi-finished products, raw materials or
articles of any nature shall be stored or permitted to remain on the roof (other
than air conditioning units) nor outside the Premises. Tenant shall not place
anything or allow anything to be placed near any window or door which may appear
unsightly from outside the Premises. No loudspeaker or other device, system or
apparatus which can be heard outside the Premises shall be used in or at the
Premises. Tenant shall not commit or suffer to be committed any waste in or upon
the Premises. Tenant covenants and agrees Tenant shall not be entitled to any
reduction of rent hereunder nor shall Landlord have any liability to Tenant
because of diminution of light, air or view by any structure which may be
hereafter erected (whether or not by Landlord), by the use of the Building by
other occupants, or by the use of neighboring buildings or areas by others.
Tenant shall comply with any covenant, condition or restriction affecting the
Premises, which covenant, condition or restriction is of record as of the date
of this Lease or, as to covenants, conditions or restrictions not of record as
of the date of this Lease, only such covenants, conditions or restrictions which
do not materially and adversely affect the Tenant's occupancy or use of the
Premises. The provisions of this Section are for the benefit of Landlord only
and shall not be construed to be for the benefit of any other person, or
occupant of the Premises.
(d) Except as otherwise provided in Section 6(e) and following Tenant's
acceptance of delivery of the Premises under Exhibit C, Tenant shall,
thereafter, at Tenant's sole cost, promptly comply with all laws, statutes,
ordinances, roles, regulations, orders, recorded covenants and restrictions, and
requirements of all municipal, state, and federal authorities now or later in
force, including, but not limited to, all provisions of the Americans with
Disabilities Act (the ADA), all seismic and other earthquake protection measures
being required by any governmental entity with regard to the Premises, any
requirements of Title 24 of the California Code of Regulations, the requirements
of any board of fire underwriters or other similar body now or in the future
constituted, and the direction or occupancy certificate issued by public
officers (collectively, the Legal Requirements), insofar as they relate to the
condition, use, or occupancy of the
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Premises, the construction of any Alterations (as hereinafter defined). If
Tenant's compliance with Legal Requirements results in capital repairs or
improvements to the Property, Landlord shall effect such compliance and Tenant
shall pay to Landlord the cost of such improvement. The judgment of any court of
competent jurisdiction or the admission of Tenant in any action or proceeding
against Tenant that Tenant has violated any Legal Requirement in the condition,
use, or occupancy of the Premises, will be conclusive of that fact as between
Landlord and Tenant.
(e) Except in such circumstances where Tenant's compliance with Legal
Requirements arises in connection with Tenant's special use of the Premises, the
correction or remediation of a violation arising out of or in connection with
the construction of Tenant Improvements and Alterations done by or on behalf of
Tenant or which violation arises out of or results from the actions of Tenant or
any of Tenant's contractors, employees, licensees, invitees, or agents, Landlord
shall be responsible for compliance with Legal Requirements to the extent that
such compliance requires physical modifications to the foundation, roof, or
structural walls or Common Area of the Building.
Section 7. Utilities. Tenant shall pay promptly (as the same becomes due)
directly to the entity or authority providing and/or billing the same (or
reimburse the entity paying for the same, as the case may be), all charges for
water, gas, electricity, telephone, telex and other electronic communication
service, sewer service, waste and refuse collection, and any other utilities,
materials, or services furnished directly or indirectly to, for the benefit of,
and/or used by Tenant on or about the Premises during the Term, including,
without limitation, any charges imposed after the Term commences. In the event
such charges also apply jointly to other tenant(s) of Landlord where there is a
common meter or common usage with other tenant(s), such charges shall be
allocated to the Premises by square footage as reasonably calculated and
determined solely by Landlord. In no event shall Landlord be liable for
▇▇▇▇▇▇▇▇, payment, advancement of money for payment, or reimbursement to others
for or with respect to any of the above services, materials, or charges, and
Tenant shall not be entitled to any abatement or reduction of Rent nor any
rights of constructive eviction or termination by reason of any interruption or
failure of utilities, material, or services to the Premises during the Term,
except and to the extent that such interruption or failure of utilities,
material, or services to the Premises exceeds seven consecutive days and results
from the active gross negligence or willful misconduct of Landlord or any of
Landlord's constituent members, partners, agents, or employees.
Section 8. Taxes.
(a) Tenant shall, as additional rent, reimburse Landlord for Tenant's Share of
all Taxes (as hereinafter defined) and increases in Taxes which result from
reassessment of the Property due to changes in ownership thereof during the Term
or which result from the reassessment of the Property due to the improvement
thereof subsequent to the Delivery Date, and all installments of assessments
that are due or become due from and after the Delivery Date and on or prior to
the expiration or sooner termination of this Lease. As used herein the term
Taxes shall mean and include (i) all taxes, assessments, levies, and other
charges of any kind or nature whatsoever, general and special, foreseen and
unforeseen (including, without limitation, all installments of principal and
interest required to pay any general or special assessments of public
improvements, and any increases resulting from reassessments caused by any
change in ownership of the Premises or otherwise) now or hereafter imposed by
any governmental or quasi-governmental authority or special district having the
direct or indirect power to tax or levy assessments, which are levied or
assessed against, or with respect to the value, occupancy, or use of: all or any
portion of the Property (as now constructed or as may at any time hereafter be
constructed, altered, or otherwise changed) or Landlord's interest therein; any
improvements located within the Premises (regardless of ownership); the
fixtures, equipment and other property of Landlord, real or personal, that are
an integral part of and located in the Premises; and landscaping areas,
walkways, Parking Lot (defined herein), parking areas, public utilities, or
energy within the Premises; (ii) all charges, levies, or fees imposed by reason
of environmental regulation or other governmental control of the Premises,
provided however that Taxes shall not include any charges, levies, or fees
imposed by reason of the Existing Environmental Conditions (defined herein);
(iii) any and all permit, inspection, and license fees and other public charges
of whatever nature that are assessed against the Property or arise because of
the occupancy, use, or possession of the Property (including, but not limited to
transit charges, traffic impact fees, housing fund assessments, open space
charges, childcare fees, school fees, or any taxes on, or which shall be
measured by, any rents or rental income, taxes on personal property, whether of
Landlord (if used for the maintenance or operation of the Building) or Tenant);
and (iv) all costs and fees (including reasonable attorney fees) incurred by
Landlord or Tenant in reasonably contesting any
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Tax and in negotiation with public authorities as to any Tax. If at any time
during the Term, the taxation or assessment of the Premises prevailing as of the
Commencement Date shall be altered so that in lieu of or in addition to any Tax
described above there shall be levied, assessed, or imposed (whether by reason
of a change in the method of taxation or assessment, creation of a new tax or
charge, or any other cause) an alternate or additional tax or charge; (v) on the
value, use, or occupancy of the Premises or Landlord's interest therein; (w) on
or measured by the gross receipts, income, or rentals from the Premises; (x) on
Landlord's business of leasing the Premises; (y) based on vehicular ownership,
parking, employment, production, or the like; or (z) computed in any manner with
respect to the operation of the Premises, then any such tax or charge, however,
designated, shall be included within the meaning of the term Taxes for purposes
of this Lease. If any Tax is based in part on property or rents unrelated to the
Premises (including adjacent real property owned by Landlord) then only that
part of such Tax that is fairly allocable to the Premises shall be included
within the meaning of the term Taxes. Notwithstanding the foregoing, the term
Taxes shall not include and Tenant shall not be responsible for any taxes in the
nature of estate, inheritance, transfer, gift, or franchise taxes of Landlord or
the federal or state net income tax imposed on Landlord's income from all
sources.
(b) Tenant shall pay directly to the public authorities charged with the
collection on or before the last day on which payment may be made without
penalty or interest, as additional rent, all taxes, permit, inspection, and
license fees, and other public charges of whatever nature that are assessed
against personal property or trade fixtures owned by Tenant or others and/or
placed by Tenant in or about the Premises, and any interest or penalties
applicable thereto (if any) for non-payment or late payments, arising subsequent
to the Commencement Date, and all installments of assessments that are due or
become due from and after the Commencement Date and on or prior to the
expiration or sooner termination of this Lease.
(c) All Taxes levied on the Premises for the tax year in which the Commencement
Date falls shall be appropriately prorated between Landlord and Tenant, so that
Tenant's Share will reflect the portion of that tax year after the Commencement
Date. Taxes levied on the Premises for the tax year in which the Termination
Date occurs shall be similarly prorated between Landlord and Tenant to reflect
the period of Tenant's possession of the Premises during that tax year.
(d) If Tenant has not paid any Tax required by this Lease to be paid by Tenant
before its delinquency, or if a Tax is contested by Tenant and that Tax has not
been paid within thirty (30) days after a final determination of the validity,
legality, or amount of the Tax, then Landlord may, but shall not be required to,
pay and discharge the Tax. If a Tax is paid by Landlord, the amount of that
payment shall be due and payable to Landlord by Tenant with the next succeeding
rental installment, and shall bear interest at the lesser of ten percent (10%)
per annum or the highest rate allowed by law from the date of the payment by
Landlord until repayment by Tenant.
(e) If any assessments for local improvements become a lien after the Delivery
Date, Tenant shall pay only the installments of the assessments that become due
and payable during the Term.
Section 9. Condition of Premises.
(a) Subject to Landlord's Contractor's warranties set forth in Section 4.04 of
Exhibit C regarding the Base Building Improvements and the completion of Punch
List Items as set forth therein, Tenant accepts the Premises, the Building and
Improvements included in the Premises in their condition as of the Commencement
Date and, except as otherwise may be set forth herein, without representation or
warranty by Landlord as to the condition of such Premises or as to the use of
occupancy which may be made thereof.
(b) Landlord represents, warrants and covenants that as of the date hereof it
has good and marketable title to the Premises in fee simple and that the same is
subject to no leases, tenancies, encumbrances, liens, defects in title or
restrictions on the transfer of all or a part thereof that would materially and
adversely affect Tenant's use or possession of the Premises. Landlord further
covenants that there are no restrictive covenants which will prevent the Tenant
from conducting the principally permitted business for the Premises under this
Lease.
Section 10. Repairs and Maintenance.
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(a) Tenant shall, at Tenant's sole expense, keep and maintain the Premises,
including, without limitation, interior walls, heating, ventilation and air
conditioning systems, operating systems, fire sprinklers, alarms, all windows
(interior and exterior), window frames, plate glass and glazing, plumbing
systems (such as water and drain lines, sinks, toilets, faucets, drains,
showers, and water fountains; but excluding any subsurface plumbing repairs
resulting from defects in Building construction), electrical systems (such as
panels, conduits, outlets, and lighting fixtures, including lamps, bulbs, tubes,
and ballasts), heating and air conditioning systems (such as compressors, fans,
air handlers, ducts, mixing boxes, thermostats, time clocks, supply and return
grills), interior surfaces of the Premises, store fronts, down mechanisms,
latches, locks, skylights (if any), fire extinguishing systems and equipment,
and all other interior improvements of any nature whatsoever, that are part of
the Premises. Tenant will keep such items in good, clean and first-class
condition and repair, including, without limitation, through a janitorial
service contract approved by Landlord, and by replacing such items as needed,
and deliver to Landlord physical possession of the Premises at the termination
of this Lease or any sooner expiration thereof, in good condition and repair,
reasonable wear and tear excepted. All repairs and replacements required of
Tenant shall be promptly made with new materials of like kind and quality. If
the work affects the structural elements of the Premises or if the estimated
cost of any item of repair or replacement is in excess of One Thousand Dollars
($1,000), Tenant shall first obtain Landlord's written approval of the scope of
the work, the plans for the work, the materials to be used, and the contractor
hired to perform the work. At Landlord's election, such maintenance
responsibilities and charges shall be performed by Landlord and Tenant shall
reimburse Landlord as additional rent the cost of such maintenance
responsibilities and charges. If any of the above maintenance responsibilities
jointly apply to Tenant and other tenant(s) of Landlord where there is common
usage with other tenant(s) such additional rent shall be allocated to the
Premises by square footage or other equitable basis as calculated and determined
by Landlord. Landlord elects as of the Commencement Date to perform the
foregoing maintenance obligations under this Section 10(a) at Tenant's cost and
shall provide Tenant with a minimum of sixty (60) days advance notice prior to
rescinding such election and returning the implementation of such responsibility
to Tenant. Notwithstanding such election as of the Commencement Date by
Landlord, Landlord shall not be liable to Tenant for the failure to provide any
such maintenance obligation, nor shall such failure provide Tenant with any
remedy under this Lease, until such time as Landlord has received written notice
from Tenant detailing such failure and reasonable opportunity perform such
obligation, or transfer such obligation to Tenant as permitted under this
Section, following receipt of such notice.
(b) At Landlord's election, Tenant shall maintain a service contract for the
maintenance of all heating, air conditioning, and ventilation equipment
servicing the Premises with a licensed repair and maintenance contractor
approved by Landlord. The contract should provide for periodic inspections and
servicing of the heating, air conditioning, and ventilation equipment at least
once every ninety (90) days during the term of the Lease.
(c) If at any time during the Term, including renewals or extensions thereof,
Tenant fails to maintain the Premises, make any repairs or replacements as
required by this Section, or maintain service contracts required by this
Section, Landlord shall have the right to, but shall not be required to, enter
the Premises and perform the maintenance or make the repairs or replacements or
enter into appropriate service contracts, as the case may be. Any sums expended
by Landlord in so doing, together with interest at the lesser of ten percent
(10%) per annum or the highest rate allowed by law, shall be deemed additional
rent and shall be immediately due from Tenant on demand of Landlord.
(d) Tenant waives the provisions of Civil Code 1941 and 1942 and any other law
that would require Landlord to maintain the Premises in a tenantable condition
or would provide Tenant with the right to make repairs and deduct the cost of
those repairs from the rent.
(e) Subject to reimbursement pursuant to Section 5(e), Landlord shall maintain
the Common Areas, Building foundation, the exterior wall structure, and the roof
of the Premises, load-bearing portions of interior walls of the Building,
(excluding wall coverings, painting, glass, and doors) and subsurface plumbing
repairs (but with respect to subsurface plumbing repairs, only to the extent
caused by construction defects). Except as set forth in Exhibit C, Landlord will
not be required to make any, and Tenant shall be responsible for the cost of,
any repair resulting from: any Alteration or modification to the Building or to
mechanical equipment within the Building performed by, for, or because of Tenant
or to special equipment or systems installed by, for, or because of Tenant; the
installation, use, or operation of Tenant's property, fixtures, and equipment;
7
the moving of Tenant's property in or out of the Building or in and about the
Premises; Tenant's use or occupancy of the Premises in violation of Section 6 of
this Lease or in the manner not contemplated by the parties at the time of the
execution of this Lease; the acts or omissions of Tenant and Tenant's employees,
agents, invitees, subtenants, licensees, or contractors; fire and other
casualty, except as provided by Section 19 of this Lease; or condemnation,
except as provided in Section 20 of this Lease. Landlord shall have no
obligation to make repairs under this Section until a reasonable time after
receipt of written notice from Tenant of the need for repairs. Tenant waives any
right to repair at the expense of Landlord under any applicable governmental
laws, ordinances, statutes, orders, or regulations now or later in effect.
(f) Subject to reimbursement pursuant to Section 5(e), Landlord shall keep and
maintain the Common Areas exterior of the Building and all grounds and
landscaping in good condition, and repair (collectively, Exterior Maintenance).
To the extent not included in Operating Expenses, upon Landlord's election,
within ten (10) days after receipt of an invoice from Landlord, Tenant shall, as
additional rent, reimburse Landlord for all extraordinary costs incurred by
Landlord in such Exterior Maintenance which repair or maintenance arises out of
or results from the actions of Tenant or any of Tenant's contractors, employees,
licensees, invitees, or agents.
Section 11. Alterations.
(a) Tenant shall not make or allow any alterations, additions, or improvements
to the Premises or any part of the Premises (collectively, Alterations), without
Landlord's prior consent, which shall not be unreasonably withheld. Consent,
however, may be conditioned on the receipt by, and approval of, Landlord of a
set of plans and specifications for the alterations no later than thirty (30)
days prior to the scheduled construction of the alterations as well as the use
by Tenant of a contractor or contractors approved by Landlord. Landlord may
withhold approval of any contractor which does not meet the qualifications
requirements of any Landlord lender; including the requirement that such
contractor employ union labor in accordance with the Labor Covenant (contained
in Exhibit S). The installation of furnishings, fixtures, equipment, or
decorative improvements, none of which shall affect operating systems or the
structure of the Premises shall not constitute Alterations. All Alterations and
any furnishings, fixtures, equipment, or decorative improvements remaining on
the Premises after the termination or earlier expiration of this Lease shall
immediately become Landlord's property and, at the termination or earlier
expiration of this Lease, shall remain on the Premises without compensation to
Tenant. Provided Landlord identifies such Alterations for possible removal at
the time of Landlord's initial approval for installation, and further provided
Landlord subsequently elects by notice to Tenant to have Tenant remove same at
the end of the Term, then Tenant shall cause such removal and/or restoration to
be done at Tenant's sole cost and expense and Tenant shall restore the portions
of the Premises subject to such removal to the condition of as of the
Commencement Date of this Lease. If Landlord requires Tenant to remove any
Alterations and any furnishings, fixtures, equipment, or decorative improvements
and Tenant fails to cause such removal and/or restoration on or prior to the
termination or other earlier expiration of this Lease, such failure shall be
deemed a holdover under Section 13(b) of this Lease, and in addition to any
other damages owing Landlord under this Section, Tenant shall owe Holdover Rent
(as hereinafter defined) for each and every day of such failure. All
improvements, additions, alterations, and repairs and the removal and
restoration thereof, if required under this Lease, shall be performed in
accordance with all applicable laws and at Tenant's sole expense. Tenant will
indemnify and defend Landlord for all liens, claims, or damages caused by
remodeling, improvements, additions, alterations, and repairs and the removal
and restoration thereof, if required under this Lease. The foregoing
notwithstanding, nothing in this Section 11 shall require Tenant to remove the
initial Tenant Improvements installed by Tenant in accordance with the Approved
Tenant Improvement Drawings as set forth in Exhibit C.
(b) Before any contract or subcontract is let or other agreement executed for
the performance of any service, or the furnishing of any materials, and before
any work of any kind or nature is commenced on the construction of Alterations,
Tenant shall procure and deliver to Landlord a completion bond and a payment
bond, both in form and substance satisfactory to Landlord, issued by reputable
surety corporations or bonding corporations qualified to do business in
California, guaranteeing or otherwise assuring Landlord that the construction of
the Alterations will proceed to completion with due diligence, that the
reconstruction, when completed, will be fully paid for, and that the Premises
will remain free of all mechanics', laborers' or materialmen's liens or claimed
liens on account of any services or materials furnished or labor or work
performed in connection with the construction of the Alterations.
8
(c) At least ten (10) days before any construction commences or materials are
delivered for any alterations that Tenant is making to the Premises, whether or
not Landlord's consent is required, Tenant shall give written notice to Landlord
as to when the construction is to commence or the materials are to be delivered.
Landlord shall then have the right to post and maintain on the Premises any
notices that are required to protect Landlord and Landlord's interest in the
Premises from any liens for work and labor performed or materials furnished in
making the alterations. It shall be Tenant's duty to keep the Premises free and
clear of all liens, claims, and demands for work performed, materials furnished,
or operations conducted on the Premises by or on behalf of Tenant. In the event
that Tenant fails to provide Landlord with the notice required by this Section
11(c), Landlord shall have the right to cause the cessation of such construction
and shall have the further right to file notices of cessation and/or completion,
so as to allow the Premises to be protected from mechanics' liens.
(d) Tenant will not at any time permit any mechanics', laborers', or
materialmen's liens to stand against the Premises for any labor or material
furnished to Tenant or claimed to have been furnished to Tenant or Tenant's
agents, contractors, or subtenant's, in connection with work of any character
performed or claimed to have been performed on the Premises by or at the
direction or sufferance of Tenant. Tenant shall have the right to contest the
validity or amount of any lien or claimed lien, upon giving to Landlord a bond
assuring that the lien or claimed lien will be paid, when and to the extent that
the lien is finally determined to be valid and owing. On final determination of
the lien or claim of lien, Tenant will immediately pay any final judgment
rendered, with all property costs and charges and shall have the lien released
or judgment satisfied at Tenant's sole expense. If, within ten (10) days of the
filing of any such lien, Tenant fails to pay or provide to Landlord a bond
assuring that the lien or claimed lien will be paid, Landlord shall have the
right, upon five (5) days' written notice to Tenant, to pay or bond over such
lien, and take such actions as are necessary to have the lien released and
prevent a judgment against the Premises or Property, and the amount paid by
Landlord shall be immediately due and payable to Landlord, and shall bear
interest at the lesser of ten percent (10%) per annum or the highest rate
allowed by law from the date of payment by Landlord until repayment by Tenant.
Section 12. Entry.
(a) Landlord and its agents may enter the Premises at any reasonable time upon
reasonable notice to Tenant, or immediately in the case of an emergency, for the
purpose of (i) inspecting the Premises; (ii) posting notices of
nonresponsibility; (iii) supplying any service to be provided by Landlord to
Tenant; (iv) showing the Leased Premises to prospective purchasers, mortgagees,
or during the last six months of the term to prospective tenant's; (v) making
necessary alterations, additions, or repairs as required by this Lease or to
otherwise perform Landlord's duties under this Lease; (vi) determining whether
Tenant is complying with the terms of this Lease; (vii) performing Tenant's
obligations when Tenant has failed to do so after written notice from Landlord,
if required by the terms of this Lease; (viii) placing on the Leased Premises
ordinary for sale signs or for lease signs; (ix) doing of other lawful acts that
may be necessary to protect Landlord's interest in the Premises under this
Lease; and (x) responding to an emergency.
(b) Landlord shall have the right to use any means Landlord deems necessary and
proper to enter the Premises in an emergency. Any entry into the Premises
obtained by Landlord in accordance with this Section shall not be a forcible or
unlawful entry into, or a detainer of, the Premises, or an eviction, actual or
constructive, of Tenant from the Premises, nor shall such entry give rise to a
claim for rent abatement.
Section 13. Surrender of Premises; Holding Over.
(a) Tenant agrees on the last day of the Term, or on the sooner termination of
this Lease, to surrender the Premises, together with all alterations, additions,
and improvements which may have been made in, to, or on the Premises (except
moveable trade fixtures installed at the expense of Tenant and subject to
Landlord's election under Section 11(a), if any), promptly and peaceably to
Landlord in good condition and repair (normal wear and tear excepted),
including, without limitation: all interior walls freshly painted or cleaned so
that they appear freshly painted; all tile floors cleaned and waxed; all carpets
cleaned and shampooed; all broken, marred, stained or non-conforming acoustical
ceiling tiles replaced; all windows washed inside; the
9
air conditioning and heating systems serviced by a reputable and licensed
service firm, left in good operating condition and repair as so certified to by
such firm; the plumbing, electrical, and lighting systems left in good order and
repair, including replacement of any burned out, discolored, or broken light
bulbs, ballasts, or lenses. If Tenant fails to surrender the Premises at the end
of the Term or other sooner termination of this Lease, then Tenant shall
indemnify Landlord against loss or liability resulting from the delay by Tenant
in so surrendering the Premises, including, without limitation, any claims made
by any succeeding tenant founded on such delay. No act of conduct of Landlord,
whether consisting of the acceptance of the keys to the Premises, or otherwise,
shall be deemed to be or constitute an acceptance of the surrender of the
Premises by Tenant prior to the expiration of the Term hereof, and acceptance by
Landlord of surrender by Tenant shall only flow from and must be evidenced by a
written acknowledgment of acceptance of surrender signed by Landlord. The
voluntary or other surrender of this Lease or the Premises by Tenant or a mutual
cancellation of this Lease shall not work as a merger and, at the option of
Landlord, shall either terminate all existing subleases or operate as an
assignment or attornment to Landlord of such subleases as Landlord may elect to
retain. After the expiration or earlier termination of this Lease, Tenant shall
execute, acknowledge, and deliver to Landlord, within ten (10) days after
written demand from Landlord to Tenant, any quitclaim deed or other document
required by any reputable title company, licensed to operation in the State of
California, to remove the cloud or encumbrance created by this Lease from the
real property containing the Premises.
(b) At the end of the Term, or any extension, should Tenant hold over for any
reason, it is agreed that in the absence of a written agreement to the contrary,
that tenancy shall be at sufferance only and not a renewal of this Lease, nor an
extension for any further term. Tenant shall pay, for each month or portion
thereof of such holdover, Monthly Rent in an amount equal to one hundred fifty
percent (150%) of the Monthly Rent payable for the month immediately prior to
the end of the Term or any extension thereof thereafter (Holdover Rent) and such
tenancy shall be subject to every other term, covenant, and condition in this
Lease that is consistent with and not contrary to a tenancy at sufferance.
Section 14. Indemnity.
(a) Except to the extent caused by Landlord's gross negligence or willful
misconduct, Tenant agrees to indemnify, defend, and hold Landlord, and
Landlord's employees, agents, constituent parties, members, shareholders,
directors, lenders, affiliates and contractors harmless from all liability,
penalties, losses, damages, costs, expenses, causes of action, claims, or
judgments, including, but not limited to, attorney fees and costs, arising by
reason of any death, bodily injury, personal injury, or property damage
resulting from: (i) any cause occurring in or about or resulting from an
occurrence in or about the Premises during the Term, (ii) act, work, or things
done or permitted to be done or otherwise suffered, or any omission to act; in
or about the Premises or Common Areas by Tenant or by any of Tenant's agents,
subtenants, officers, directors, employees, contractors, licensees, or invitees,
(iii) the negligence or willful misconduct of Tenant or Tenant's agents,
subtenants, employees, invitees, licensees, contractors, and subcontractors,
wherever it occurs, or (iv) an Event of Default by Tenant. The provisions of
this Section 14(a) shall survive the expiration or sooner termination of this
Lease.
(b) Except as otherwise provided in this Lease, Landlord shall not be liable to
Tenant, nor shall Tenant be entitled to terminate this Lease or to any abatement
of rent for any damage to Tenant's property or any injury to Tenant or any of
Tenant's employees, agents, or invitees, or loss to Tenant's business arising
out of any cause, other than Landlord's active gross negligence or willful
misconduct, including, but not limited to, (i) the failure, interruption, or
installation of any heating, air conditioning, or ventilation equipment; (ii)
the failure, interruption, or installation of any fire sprinklers or alarms;
(iii) the loss or interruption of any utility service; (iv) the failure to
furnish or delay in furnishing any utilities or services; (v) the limitation,
curtailment, rationing, or restriction on the use of water or electricity, gas
or any other form of utility; (vi) vandalism, malicious mischief, or forcible
entry by unauthorized persons or the criminal act of any person; or (vii)
seepage, flooding, or other penetration of water into any portion of the
Premises. The provisions of this Section 14(b) shall survive the expiration or
sooner termination of this Lease.
Section 15. Insurance.
(a) Landlord agrees at all times during the Term and during any extension
thereof, to purchase and keep in force policy(ies) of insurance covering: (i)
loss or damage to the Premises by reason of fire (extended
10
coverage), flood, systems breakdown and those perils included within the
classification of all risks insurance (with sprinkler damage and other
appropriate endorsements), which insurance shall be in the amount of the full
replacement value of the Premises as determined by insurance company appraisers
or Landlord's insurance agent; (ii) Landlord's liability insurance; and (iii)
rental income insurance in the amount of one hundred (100%) percent of up to
twelve (12) months' Monthly Rent (plus sums paid during such period as
additional rent), and (iv) such other coverages as Landlord deems in Landlord's
reasonable discretion to be customary and necessary for the Building and Common
Areas, including earthquake coverage or as may be required by Landlord's lender
having a first lien on the Premises. Such coverage shall exclude routine
maintenance and repairs and incidental damage or destruction caused by accidents
or vandalism for which Tenant is responsible under this Lease. Tenant agrees to
pay Landlord as additional rent in accordance with Section 5(e) of this Lease
Tenant's proportionate share of the cost of such insurance coverage which shall
be allocated during the Term to the Premises by building square footage or other
equitable basis as calculated and reasonably determined by Landlord. If such
insurance cost is increased due to Tenant's particular use of the Premises, then
Tenant agrees to pay to Landlord the full cost of such increase. Tenant shall
have no interest in nor any right to the proceeds of any insurance procured by
Landlord for or with respect to the Premises, except for amounts specifically
designated by the carrier as compensation for (i) tenant Alterations installed
and paid for by Tenant; (ii) Tenant's furniture, fixtures, and equipment; or
(iii) Tenant's moving or relocation costs.
(b) At all times during the Lease Term and during any holdover period, Tenant,
at its sole expense, shall procure and maintain the following types of
insurance:
(i) General Liability and Workers' Compensation Insurance. Tenant shall, at
Tenant's expense, obtain and keep in force during the Term of this Lease a
policy of workers' compensation insurance and a policy of commercial general
liability insurance with Broad Form Liability, and cross-liability endorsements,
insuring Landlord and Tenant against any liability arising out of the use or
occupancy of the Premises and all areas appurtenant thereto, including parking
areas. Such insurance shall be in an amount satisfactory to Landlord of not less
than $3,000,000 per occurrence and $3,000,000 annually in the aggregate for all
claims. Such policy shall insure performance by Tenant of the indemnity
provisions of Section 14 hereof.
(ii) Insurance for Tenant's Personal Property, Fixtures and Equipment. Tenant
shall, at Tenant's expense, obtain and keep in force during the Term of this
Lease an all risk insurance policy with a sprinkler damage endorsement for
Tenant's personal property, inventory, alterations, fixtures, equipment, plate
glass, and any Tenant non-standard leasehold improvements located on the
Premises, in an amount not less than one hundred percent (100%) of their actual
replacement value, providing coverage for risk of direct physical loss or
damage, including sprinkler leakage, vandalism, and malicious mischief. The
proceeds of such insurance, so long as this Lease remains in effect, shall be
used to repair or replace the personal property, inventory, Alterations,
fixtures, equipment, and leasehold improvements so insured. Provided such
proceeds are applied as set forth in this Section 15(b)(ii), any insurance
proceeds received by Tenant under such policy shall be the sole property of
Tenant, and Landlord shall have no rights thereto.
(c) Each policy of insurance required to be carried by Tenant shall be issued by
a responsible insurance company authorized to do business in California with an
A.M. Best rating of at least A-, or a higher rating if required by a lender
having the first lien on the Premises, and shall be issued in the names of
Landlord, Tenant, and any beneficiary under any deed of trust covering the
Premises, if required by the deed of trust, as their respective interests may
appear. Tenant shall deliver a certificate for each insurance policy to Landlord
with all relevant endorsements. Each policy of insurance shall be primary and
noncontributory with any policies carried by Landlord, to the extent obtainable,
shall provide that any loss shall be payable notwithstanding any act or
negligence of Landlord or any of Landlord's agents, employees, or contractors
that might otherwise result in forfeiture of insurance, shall contain a cross
liability endorsement, and shall contain a severability clause. Each insurance
policy shall provide that a thirty (30) day notice of cancellation and of any
material modification of coverage shall be given to all named insureds. The
insurance coverage required under this Section may be carried by Tenant under a
blanket policy insuring other locations of Tenant's business, provided that the
Premises covered by this Lease are specifically identified as included under
that policy. Tenant agrees that upon the failure to insure as provided in this
Lease, or to pay the premiums in the insurance, Landlord may contract for the
insurance and pay the premiums, and all sums expended by Landlord for the
insurance shall be considered additional rent under this Lease and shall be
immediately repayable by Tenant. Each policy of insurance required to be carried
by Landlord shall be
11
issued by a responsible insurance company authorized to do business in
California with an A.M. Best rating of at least A-, or a alternate rating
required by a lender having the first lien on the Premises.
(d) At all times during the Term and any extensions or renewals, Tenant agrees
to keep and maintain, or cause Tenant's agents, subtenants, contractors, or
subcontractors to keep and maintain, workmen's compensation insurance and other
forms of insurance as may from time to time be required by law or may otherwise
be necessary to protect Landlord and the Premises from claims of any person who
may at any time work on the Premises, whether as a servant, agent, or employee
of Tenant or otherwise. This insurance shall be maintained at the expense of
Tenant or Tenant's agents, subtenants, contractors, or subcontractors and not at
the expense of Landlord.
(e) Landlord agrees that it will tender and turn over to Tenant or to Tenant's
insurers the defense of any claims, demands, or suits instituted, made, or
brought against Landlord or against Landlord and Tenant jointly, within the
scope of this Section 15. However, Landlord shall have the right to approve the
selection of legal counsel, to the extent that selection is within Tenant's
control, which approval shall not be unreasonably withheld or delayed.
(f) The parties hereto release each other, and their respective agents and
employees, from any liability for injury to any person or damage to property
that is caused by or results from any risk insured against under any valid and
collectible insurance policy carried by either of the parties which contains a
waiver of subrogation by the insurer and is in force at the time of such injury
or damage. However, neither party shall be released from any such liability to
the extent any damages resulting from such injury or damage are not covered by
the recovery obtained by the damaged party from such insurance. This release
shall be in effect only so long as the applicable insurance policy contains a
clause to the effect that this release shall not affect the right of the insured
to recover under such policy. Each party shall use reasonable efforts to cause
each insurance policy obtained by it to provide that the insurer waives all
right of recovery by way of subrogation against the other party and its agents
and employees in connection with any injury or damage covered by such policy.
However, if any insurance policy cannot be obtained with such a waiver of
subrogation, or if such waiver of subrogation is only available at additional
cost and the party for whose benefit the waiver is to be obtained does not pay
such additional cost, then the party obtaining such insurance shall notify the
other party of that fact and thereupon shall be relieved of the obligation to
obtain such waiver of subrogation rights from the insurer with respect to the
particular insurance involved.
Section 16. Trade Fixtures.
(a) Tenant shall have the right, at any time and from time to time during the
Term and any renewals or extensions, at Tenant's sole cost and expense, to
install and affix on the Premises items for use in Tenant's trade or business,
which Tenant, in Tenant's sole discretion, deems advisable (collectively, Trade
Fixtures). Trade Fixtures installed in the Premises by Tenant shall always
remain the property of Tenant and may be removed at the expiration of the Term
or any extension, provided that any damage to the Premises caused by the removal
of the Trade Fixtures shall be repaired by Tenant, and further provided that
Landlord shall have the right to keep any Trade Fixtures or to require Tenant to
remove any Trade Fixtures that Tenant might otherwise elect to abandon. Tenant
shall not in any case remove as Trade Fixtures or otherwise, any equipment which
includes any integral portion of the Building mechanical, electrical or plumbing
systems.
(b) Any Trade Fixtures that are not removed from the Premises by Tenant within
thirty (30) days after the Termination Date shall be deemed abandoned by Tenant
and shall automatically become the property of Landlord as owner of the real
property to which they are affixed.
Section 17. Communications Cables.
Regardless of any provisions of this Lease to the contrary, Landlord and Tenant
agree as follows:
(a) Cabling and Equipment. Tenant will be responsible, at Tenant's sole cost,
for the installation, maintenance, and repair of all telecommunication cabling,
wiring, and risers running throughout the Premises, together with all of
Tenant's telephones, telecopiers, computers, telephone switching, telephone
panels, and related equipment. Tenant agrees to install, maintain, and repair
the telecommunication cabling, wiring, and risers running throughout the
Premises in a good and proper manner.
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(b) Right of Entry. In addition to Landlord's other rights of entry under this
Lease, Landlord may enter the Leased Premises after advance reasonable notice to
inspect the telecommunication cabling, wiring, and risers to assure that the
installation, maintenance, and repair are being performed in a good and proper
manner.
(c) Designated Provider. Tenant has informed Landlord that Tenant plans to
utilize its own personnel in the installation, maintenance, and repair of the
telecommunication cabling, wiring, and risers within the Premises. Tenant
represents, warrants, and covenants that such personnel are and at all times
shall be qualified to conduct such installation, maintenance, and repair of the
telecommunication cabling, wiring, and risers. In the event that Landlord in its
reasonable opinion determines that the installation, maintenance, and repair of
the telecommunication cabling, wiring, and risers by Tenant's personnel creates
a significant risk of adversely effecting the telecommunication cabling, wiring,
and risers running through the portion of the Building not occupied by Tenant,
Landlord may require and Tenant agrees to have the installation, maintenance,
and repair of the telecommunication cabling, wiring, and risers done by an
independent contractor approved by Landlord.
(d) Indemnity. Tenant agrees to indemnify, release, defend, and hold Landlord
harmless against any damages, claims, or other liability resulting from Tenant's
installation, repair, or maintenance of the telecommunication cabling, wiring,
and risers, including, but not limited to, the costs of repair.
(e) Release. Tenant releases Landlord from all losses, claims, injuries,
damages, or other liability, including, but not limited to, consequential
damages, whether to persons or property and no matter how caused, in any way
connected with the interruption of telecommunications services due to the
failure of any telecommunications cabling, wiring, or risers. Tenant expressly
waives the right to claim that any interruption constitutes grounds for a claim
of abatement of rent, of constructive eviction, or for termination of the Lease.
Section 18. Signs.
Tenant shall comply with any criteria as to signs in both applicable ordinances
and in any covenants, conditions, and restrictions recorded prior to the date of
this Lease. Subject thereto, Tenant may erect and maintain on the Premises and
the Building a sign advertising Tenant's logo, subject to Landlord's reasonable
approval, at Tenant's sole cost or expense, and utilizing no more than Tenant's
Share of the available Building signage under local ordinances. Furthermore,
Tenant shall not place any decoration, lettering, or advertising matter on the
glass of any exterior window of the Premises without the prior written approval
of Landlord, which approval shall not be unreasonably withheld. If Tenant
maintains any sign, awning, canopy, marquee, decoration, or advertising matter
in accordance with the terms of this Section, Tenant shall maintain it in good
appearance and repair at all times during this Lease. At the Termination Date,
any of the items mentioned in this Section that are not removed from the
Premises by Tenant may, without damage or liability, be removed and destroyed by
Landlord and Tenant shall be liable to Landlord for the cost of such removal and
destruction.
Section 19. Damage and Destruction.
(a) If, during the Term, the Premises or other improvements located thereon or
therein are damaged or destroyed, whether partially or entirely, from any
insured casualty, Landlord shall, within one hundred twenty (120) days after the
discovery of such damage or destruction, commence to restore the Premises to
substantially the same condition as prior to such casualty and, subject to the
availability of necessary governmental permits to complete such restoration,
prosecute same to diligent completion within two hundred seventy (270) days
after Landlord commences to restore the Premises. Landlord's obligation shall
not include repair or replacement of Tenant's equipment, furnishings, fixtures,
personal property or nonstandard tenant improvements. Damage to or destruction
of any portion of the building, fixtures, or other improvements on the Premises
by fire, the elements, or any other cause shall not terminate this Lease or
entitle Tenant to surrender the Premises or otherwise affect the respective
obligations of the parties, any present or future law to the contrary
notwithstanding. If the existing laws do not permit the Premises to be restored
to substantially the same condition as they were in immediately before such
casualty and Landlord is unable to get a variance to such laws to permit the
commencement of restoration of the Premises within
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the 120 day period, then either party may terminate this Lease by giving written
notice to the other party within thirty (30) days after the expiration of such
120 day period, in which event this Lease shall terminate as of the date of such
notice. Notwithstanding the foregoing, in the event that Landlord decides under
this Section 19(a) or under Section 19(b) within one hundred twenty (120) days
following the discovery of such damage or destruction, to demolish the Premises
rather than rebuild it, Landlord may notify Tenant in writing within such
120-day period of such election, in which event the Lease will terminate as of
the date of such notice to Tenant. In the event Landlord fails to complete
restoration of the Premises as provided in Sections 19(a) or 19(b) within the
270 day period specified, Tenant may terminate this Lease by giving written
notice to the Landlord within thirty (30) days after the expiration of such 270
day period, in which event this Lease shall terminate as of the date of such
notice.
(b) If the Premises are damaged or destroyed in whole or in part by any
uninsured or under insured casualty, Landlord may within one hundred twenty
(120) days following the date of discovery of damage: (i) commence to restore
the Premises to substantially the same condition as they were in immediately
before the destruction and, subject to the availability of necessary
governmental permits to complete such restoration, prosecute the same diligently
to completion within two hundred seventy (270) days after Landlord commences to
restore the Premise, in which event this Lease shall continue in full force and
effect; or (ii) within the 120 day period, Landlord may elect not to so restore
the Premises. In either event, Landlord shall give Tenant written notice of its
intention within one hundred twenty (120) days following such casualty.
(c) If any casualty occurs to the Premises during the last six (6) months of the
initial Term or within the last six (6) months of any extension thereof so that
Tenant's use or occupancy of the Premises is materially impaired, either party
shall have the right to terminate this Lease within thirty (30) days following
such casualty.
(d) In the event that a casualty not caused by Tenant or any of Tenant's
employees, agents, contractors, officers, directors, invitees, or licensees,
results in the material impairment of Tenant's use or occupancy of the Premises
and this Lease is not terminated in accordance with the terms of this Section
19, the Monthly Rent otherwise payable by Tenant shall be abated from the date
of such casualty until the Premises are substantially completed, based on the
extent to which Tenant's use or occupancy of the Premises is materially impaired
by such casualty. Except for the abatement of Monthly Rent, all other
obligations of Tenant under this Lease shall remain in full force and effect and
Tenant shall have no claim against Landlord for any loss suffered by Tenant due
to such Casualty or any restoration or repair work undertaken as herein
provided.
(e) The provisions of California Civil Code 1932(2) and 1933(4), and any similar
or successor statutes are hereby waived by Tenant and shall be inapplicable with
respect to any damage or destruction of the Premises, such sections providing
that a lease terminates on the destruction of the Premises unless Otherwise
agreed between the parties to the contrary. The foregoing notwithstanding, any
rights of Landlord's lender having a first lien on the Premises to any insurance
proceeds referenced above shall supercede the use of such proceeds and
Landlord's repair obligations as set forth in this Section 19.
Section 20. Condemnation.
(a) If, during the Term or any renewal or extension, the whole of the Premises
shall be taken pursuant to any condemnation proceeding, this Lease shall
terminate as of 12:01 a.m. of the date that actual physical possession of the
Premises is taken, and after that, both Landlord and Tenant shall be released
from all obligations under this Lease.
(b) If, during the Term or any renewal or extension, only a part of the Premises
is taken pursuant to any condemnation proceeding and the remaining portion is
not suitable or adequate for the purposes for which Tenant was using the
Premises prior to the taking, or if the Premises should become unsuitable or
inadequate for those purposes by reason of the taking of any other property
adjacent to or over the Premises pursuant to any condemnation proceeding, or if
by reason of any law or ordinance the use of the Premises for the purposes
specified in this Lease shall become unlawful, then and after the taking or
after the occurrence of other described events, Tenant shall have the option to
terminate, and the option can be exercised only after the taking or after the
occurrence of other described events by Tenant giving ten (10)
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days' written notice to Landlord, and Monthly Rent shall be paid only to the
time when Tenant surrenders possession of the Premises. Without limiting the
generality of the previous provision, it is agreed that in the event of a
partial taking of the Premises pursuant to any condemnation proceeding, if the
number of square feet of floor area in the portion remaining after the taking is
less than fifty percent (50%) of the number of square feet of floor area at the
commencement of the Term, Tenant shall, after the taking, have the option to
terminate this Lease on ten (10) days' written notice to Landlord, and Monthly
Rent shall be paid only to the time when Tenant surrenders possession of the
Premises.
(c) If only a part of the Premises is taken pursuant to any condemnation
proceeding under circumstances that Tenant does not have the option to terminate
this Lease as provided in this Section, or having the option to terminate,
Tenant elects not to terminate, then Landlord shall at Landlord's expense
promptly proceed to restore the remainder of the Premises to a self-contained
architectural unit, and the Monthly Rent payable shall be reduced effective the
date of the taking to an amount that shall be in the same proportion to Monthly
Rent payable prior to the taking, as the number of square feet of floor area
remaining after the taking bears to the number of square feet of floor area
immediately prior to the taking.
(d) If the whole or any part of the Premises are taken pursuant to any
condemnation proceeding, then Landlord shall be entitled to the entirety of any
condemnation award except that portion specifically allocable by the condemning
authority, if any, to (i) tenant Alterations installed and paid for by Tenant;
(ii) Tenant's furniture, fixtures, and equipment; or (iii) Tenant's moving or
relocation costs. The foregoing notwithstanding, any rights of Landlord's lender
having a first lien on the Premises to any condemnation award referenced above
shall supercede the use of such proceeds and any rights to that award, if any,
granted under this Section 20.
Section 21. Assignment and Subletting.
(a) Tenant shall not assign or hypothecate this Lease or any interest herein (by
operation of law or otherwise), shall not sublet the Premises or any part
thereof, or permit the use of the Premises by any party other than Tenant, shall
not mortgage or encumber the Lease (or otherwise use the Lease as a security
device) in any manner and shall not materially amend or modify an assignment,
sublease, or other Transfer that has been previously approved by Landlord (each
an Transfer) without the prior written consent of Landlord which shall not be
unreasonably withheld. If Tenant is a corporation, a partnership, or a limited
liability company, the transfer (as a consequence of a single transaction or any
number of separate transactions) of fifty percent (50%) or more of the
beneficial ownership interest of the voting stock of Tenant issued and
outstanding as of the date hereof (other than stock transfers to or within the
general public if, during the Lease Term, Tenant is or becomes a publicly traded
company on a nationally recognized exchange) or partnership interests in Tenant,
or ownership interests in Tenant, as the case may be, shall constitute a
Transfer hereunder for which such consent is required. Further, Tenant shall not
Transfer this Lease to any corporation which controls, is controlled by, or is
under common control with Tenant, or to any corporation resulting from merger or
consolidation with Tenant, or to any person or entity which acquires all the
assets as a going concern of the business of Tenant that is being conducted on
the Premises, without the prior written consent of Landlord which shall not be
unreasonably withheld. Any of the foregoing acts without such consent shall be
void, and, at the option of Landlord, shall terminate this Lease.
Notwithstanding anything to the contrary contained in this Section, provided the
use of the Premises does not change and Tenant fully complies with the remaining
provisions of this Section, including but not limited to subsection (f) below,
Tenant may Transfer this Lease without first obtaining Landlord's consent (a
Permitted Transfer) to a corporation, limited liability company, or other entity
which results from a merger, consolidation, reorganization, or asset sale with
Tenant in which the surviving entity (A) acquires substantially all of the
assets of Tenant as a going concern, (B) assumed, or is deemed by law to be
liable for, all of the liabilities of Tenant, and (C) has after such merger,
consolidation, reorganization, or asset sale a net worth not less than the
greater of Tenant's net worth as of the date of this Lease or Tenant's net worth
immediately preceding such merger, consolidation, or other reorganization.
(b) In the event that Tenant should desire to Transfer this Lease, Tenant shall
provide Landlord with written notice of such desire at least sixty (60) days in
advance of the effective date of such Transfer. Such notice shall include (i)
the name and legal composition of the proposed sublessee or assignee; (ii) the
nature of business to be conducted by the proposed sublessee or assignee in the
Premises; (iii) the terms and conditions of the proposed Transfer; (iv) a
current financial statement of the proposed sublessee or assignee,
15
financial statements of proposed sublessee or assignee coveting the preceding
three (3) years, if they exist, and, if available, an audited financial
statement of the proposed sublessee or assignee for a period ending not more
than one (1) year prior to the proposed effective date of the Transfer, all of
which are to be prepared in accordance with generally accepted accounting
principles; (v) a statement of all consideration to be given on account of the
Transfer, (vi) any other reasonable information that Landlord requests
reasonably required to evaluate the ability of the transferee to comply with the
terms this Lease; and a processing fee of Five Hundred Dollars ($500). At any
time within thirty (30) days following receipt of Tenant's notice, Landlord may
by written notice to Tenant elect to (i) in Landlord's sole and absolute
discretion, if the requested Transfer is for fifty percent (50%) or more of the
rentable square footage of the Premises for the majority of the remainder of the
Lease Term, terminate this Lease as to the space affected as of the effective
date of the proposed Transfer; (ii) consent to the proposed subletting of the
Premises or assignment of this Lease; or (iii) disapprove of the proposed
Transfer. If Landlord does not elect to terminate this Lease, however, Landlord
shall not unreasonably withhold its consent to a proposed Transfer if Tenant is
not in default under this Lease at the time Tenant requests such consent.
Without limiting other situations in which it may be reasonable for Landlord to
withhold its consent to any proposed assignment or sublease, Landlord and Tenant
agree that it shall be reasonable for Landlord to withhold its consent in any
one or more of the following situations: (i) if, in Landlord's reasonable
judgment, the net worth of the proposed subtenant or assignee does not equal or
exceed the Tenant's net worth at the time this Lease is signed; (ii) in
Landlord's reasonable judgment, the business history and reputation in the
community of the proposed subtenant or assignee does not meet the standards
applied by Landlord; (iii) the proposed subtenant or assignee shall be a
prospective tenant (with whom Landlord has received or delivered a written
proposal within the last six months) or a then existing tenant of Landlord; (iv)
the use proposed by the proposed subtenant or assignee will violate any lease or
agreement to which Landlord is a party or introduce undesirable Hazardous;
Materials to the Property; (v) the proposed subtenant or assignee does not meet
the qualifications applied by Landlord's lender having a first lien on the
Premises; (vi) or the proposed subtenant or assignee is a governmental agency,
maintains the power of eminent domain or is exempt from the payment of ad
valorem or other taxes which would prohibit Landlord form collecting any amounts
otherwise payable under this Lease; (vi) the Guarantor (if any) refuses to
affirm the Guaranty for the tenancy of the proposed subtenant or assignee. In
any event, Landlord shall be entitled to exercise its right of termination in
lieu of consenting to a transfer, as set forth above.
(c) Landlord and Tenant agree that fifty percent (50%) of any rent or other
consideration received or to be received by or on behalf of or for the benefit
of Tenant as a result of any Transfer, in excess of the aggregate of (i) the
Monthly Rent which Tenant is obligated to pay Landlord under this Lease
(prorated to reflect obligations allocable to that portion of the Premises
subject to such sublease); (ii) any leasing commissions paid by Tenant in
connection with the entry by it into the Transfer amortized over the remaining
months of the Lease Term and (iii) Tenant's Cost (defined in Exhibit C) over the
Allowance for construction of the Improvements amortized over the remaining
months of the Term, shall be payable to Landlord as additional rent under this
Lease without affecting or reducing any other obligation of Tenant hereunder.
Landlord's share of such excess rent or other consideration shall be paid
monthly by the subtenant or assignee directly to Landlord at the same time as
such rent or other consideration is payable to Tenant.
(d) Regardless of Landlord's consent, no Transfer shall release Tenant of
Tenant's obligation or alter the primary liability of Tenant for rent and
performance of all other obligations to be performed by Tenant hereunder.
Acceptance of rent by Landlord from any other person shall not be deemed to be a
waiver by Landlord of any provision hereof. Consent to one assignment or
subletting shall not be deemed consent to any subsequent or further Transfers.
In the event of default by any assignee or successor of Tenant in performing any
of the terms hereof, Landlord may proceed directly against Tenant without the
necessity of exhausting remedies against said assignee or successor. Landlord
may consent to subsequent Transfers of this Lease or amendments or modifications
to this Lease with assignees of Tenant, without notifying Tenant, or any
successor of Tenant, and without obtaining its or their consent thereto and such
action shall not relieve Tenant or any successor of Tenant of liability under
this Lease.
(e) Tenant shall pay to Landlord, as an additional rent, all out of pocket and
actual costs and reasonable attorney fees (not to exceed $2,500) incurred by
Landlord (or imposed on Landlord by its lender having a first lien on the
Premises) in connection with the evaluation, processing, or documentation of any
requested Transfer, whether or not Landlord's consent is granted. Landlord's
costs shall include the cost of any review or investigation performed by
Landlord or on behalf of Landlord of: (i) any Hazardous Materials used,
16
stored, released, or disposed of by the proposed subtenant or assignee, or (ii)
violations of any Environmental Law by the Tenant or the proposed subtenant or
assignee.
(f) In order for any Transfer to be binding on Landlord, including any Permitted
Transfer, Tenant shall deliver to Landlord, promptly after execution thereof an
executed copy of such sublease or assignment whereby the sublessee or assignee
shall expressly assume the obligations of Tenant under this Lease and executed
original affirmation of the Guaranty (if any) whereby the Guarantor expressly
affirms the continuing guaranty of the obligations of the Tenant and subtenant
or assignee under the Lease. Any Transfer approved by Landlord shall not be
effective until Tenant has delivered to Landlord an executed counterpart of the
document evidencing the Transfer and affirmation of Guaranty (if any) in form
and substance reasonably satisfactory to Landlord.
(g) Any attempted Transfer without Landlord's consent shall constitute an Event
of Default. Landlord's consent to any one Transfer shall not constitute a waiver
of the provision of Section 21 as to any subsequent Transfer or a consent to any
subsequent Transfer. Tenant hereby waives any right to terminate this Lease from
the failure of Landlord to provide reasonable consent to any proposed subtenant
or assignee under any applicable governmental laws, ordinances, statutes,
orders, or regulations now or later in effect, waives any and all actual,
consequential or punitive damages resulting from any such failure and agrees
that Tenant's sole remedy in such event of such failure shall be the remedy of
specific performance.
Section 22. Default.
Any of the following events or occurrences shall constitute a material breach of
this Lease by Tenant and, after the expiration of any applicable grace period,
shall constitute an event of default (each an Event of Default):
(a) The failure by Tenant to pay any amount in full when it is due under the
Lease;
(b) The failure by Tenant to perform any obligation under this Lease, which by
its nature Tenant has no capacity to cure;
(c) The failure by Tenant to perform any other obligation under this Lease, if
the failure has continued for a period of ten (10) days after Landlord demands
in writing that Tenant cure the failure. If, however, by its nature the failure
cannot be cured within ten (10) days, Tenant may have a longer period as is
necessary to cure the failure, but this is conditioned on Tenant's promptly
commencing to cure within the ten (10) day period and thereafter completing the
cure within sixty (60) days after Landlord demands in writing that Tenant cure
the failure. Tenant shall indemnify and defend Landlord against any liability,
claim, damage, loss, or penalty that may be threatened or may in fact arise from
that failure during the period the failure is uncured;
(d) Any of the following: a general assignment by Tenant for the benefit of
Tenant's creditors; any voluntary filing, petition, or application by Tenant
under any law relating to insolvency or bankruptcy, whether for a declaration of
bankruptcy, a reorganization, an arrangement, or otherwise; the abandonment,
vacation, or surrender of the Premises by Tenant without Landlord's prior
written consent; or the dispossession of Tenant from the Premises (other than by
Landlord) by process of law or otherwise;
(e) Any of the following: the appointment of a trustee or receiver to take
possession of all or substantially all of Tenant's assets or the attachment,
execution or other judicial seizure of all or substantially all of Tenant's
assets located at the Premises or of Tenant's interest in this Lease, unless the
appointment or attachment, execution, or seizure is discharged within thirty
(30) days; or the involuntary filing against Tenant, or any general partner of
Tenant if Tenant is a partnership, of a petition to have Tenant, or any partner
of Tenant if Tenant is a partnership, declared bankrupt or for reorganization or
arrangement of Tenant under any law relating to insolvency or bankruptcy, unless
the petition is dismissed within thirty (30) days; or
(f) The abandonment of the Premises by Tenant.
(g) Tenant's failure to timely provide a requested Estoppel Certificate pursuant
to Section 27 or Subordination, Attornment and Non-Disturbance agreement under
Section 38.
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(h) Any failure of Guarantor to timely perform the obligations of Guarantor
under the Guaranty, if any.
Section 23. Remedies.
Upon the occurrence of an Event of Default, Landlord, in addition to any other
rights or remedies available to Landlord at law or in equity, shall have the
right to:
(a) Terminate this Lease and all rights of Tenant under this Lease by giving
Tenant written notice that this Lease is terminated, in which case Landlord may
recover from Tenant the aggregate sum of:
(i) the worth at the time of award of any unpaid rent that had been earned at
the time of termination;
(ii) the worth at the time of award of the amount by which (A) the unpaid
rent that would have been earned after termination until the time of the
award exceeds (B) the amount of the rental loss, if any, as Tenant
affirmatively proves could have been reasonably avoided;
(iii) the worth at the time of award of the amount by which (A) the unpaid
rent for the balance of the term after the time of the award exceeds (B) the
amount of rental loss, if any, as Tenant affirmatively proves could be
reasonably avoided;
(iv) any other amount necessary to compensate Landlord for all the detriment
caused by Tenant's failure to perform Tenant's obligations or that, in the
ordinary course of things, would be likely to result from Tenant's failure,
including, without limitation, the costs and expenses incurred by Landlord
for:
(A) retaking possession of the Premises;
(B) cleaning and making repairs and alterations (including installation of
standard leasehold improvements for the uses permitted under this Lease,
whether or not the same shall be funded by a reduction of rent, direct
payment, or otherwise) necessary to return the Premises to good condition and
preparing the Premises for reletting, with any tenant improvements necessary
to prepare the Premises for reletting being amortized over the life of such
improvements and charged to Tenant based on the then remainder of the Term
hereof;
(C) removing, transporting and storing any of Tenant's property left at the
Premises (although Landlord shall have no obligation to remove, transport, or
store any of the said property);
(D) reletting the Premises, including, without limitation, brokerage
commissions, advertising costs, and attorney fees;
(E) attorney fees, expert witness fees and court costs in terminating this Lease
and enforcing Landlord's rights thereunder;
(F) any unamortized real estate brokerage commissions paid in connection with
this Lease; and
(G) costs of carrying the Premises, such as repairs, maintenance, taxes,
insurance premiums, utilities, and security precautions, if any; and
(v) all other amounts in addition to or in lieu of those previously set out as
may be permitted from time to time by applicable California law.
As used in clauses (i) and (ii) of Section 23(a), the worth at the time of award
is computed by allowing interest at the rate of ten percent (10%) per annum. As
used in clause (iii) of Section 23(a), the worth at the time of award is
computed by discounting that amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award, plus one percent (1%). As used in
this Section, the term rent shall include Monthly Rent and any other payments
required by Tenant under this Lease.
(b) Continue this Lease pursuant to the remedy described in California Civil
Code Section 1951.4 (Lessor may continue lease in effect after lessee's breach
and abandonment and recover rent as it becomes due if lessee has rights to
sublet or assign subject only to reasonable limitations). In such event Landlord
may without terminating this Lease,
18
(i) recover all rent and other amounts payable as they become due; or
(ii) relet the Premises or any part on behalf of Tenant on terms and at the rent
that Landlord may deem advisable, all with the right to make alterations and
repairs to the Premises, at Tenant's cost, and apply the proceeds of reletting
to the rent and other amounts payable by Tenant. To the extent that the rent and
other amounts payable by Tenant under this Lease exceed the amount of the
proceeds from reletting, the Landlord may recover the excess from Tenant as and
when due.
(c) Re-enter the Premises, with or without terminating this Lease, and to remove
all persons and property from the Premises. Landlord may store the property
removed from the Premises in a public warehouse or elsewhere at the expense and
for the account of Tenant.
(d) None of the following remedial actions, alone or in combination, shall be
construed as an election by Landlord to terminate this Lease unless Landlord has
in fact given Tenant written notice that this Lease is terminated or unless a
court of competent jurisdiction decrees termination of this Lease: any act by
Landlord to maintain or preserve the Premises; any efforts by Landlord to relet
the Premises; any re-entry, repossession, or reletting of the Premises; or any
re-entry, repossession, or reletting of the Premises by Landlord pursuant to
this Section. If Landlord takes any of the previous remedial actions without
terminating this Lease, Landlord may nevertheless at any later time terminate
this Lease by written notice to Tenant.
(e) If Landlord relets the Premises, Landlord shall apply the revenue from the
reletting as follows: first, to the payment of any indebtedness other than rent
due from Tenant to Landlord; second, to the payment of any cost of reletting,
including, without limitation, finder's fees and leasing commissions; third, to
the payment of the cost of any maintenance and repairs to the Premises; and
fourth, to the payment of rent and other amounts due and unpaid under this
Lease. Landlord shall hold and apply the residue, if any, to payment of future
amounts payable under this Lease as the same may become due, and shall be
entitled to retain the eventual balance with no liability to Tenant. If the
revenue from reletting during any month, after application pursuant to the
previous provisions, is less than the sum of (i) Landlord's expenditures for the
Premises during that month and (ii) the amounts due from Tenant during that
month, Tenant shall pay the deficiency to Landlord immediately upon demand.
(f) After the occurrence of an Event of Default, Landlord, in addition to or in
lieu of exercising other remedies, may, but without any obligation to do so,
cure the breach underlying the Event of Default for the account and at the
expense of Tenant. However, Landlord shall by prior notice first allow Tenant a
reasonable opportunity to cure, except in cases of emergency, where Landlord may
proceed without prior notice to Tenant. Tenant shall, upon demand, immediately
reimburse Landlord for all costs, including costs of settlements, defense, court
costs, and attorney fees, that Landlord may incur in the course of any cure.
(g) No security or guaranty for the performance of Tenant's obligations that
Landlord may now or later hold shall in any way constitute a bar or defense to
any action initiated by Landlord for unlawful detainer or for the recovery of
the Premises, for enforcement of any obligation of Tenant, or for the recovery
of damages caused by a breach of this Lease by Tenant or by an Event of Default.
(h) Except where this is inconsistent with or contrary to any provisions of this
Lease, no right or remedy conferred on or reserved to either party is intended
to be exclusive of any other right or remedy, or any right or remedy given or
now or later existing at law or in equity or by statute. Except to the extent
that either party may have otherwise agreed in writing, no waiver by a party of
any violation or nonperformance by the other party of any obligations,
agreements, or covenants under this Lease shall be deemed to be a waiver of any
subsequent violation or nonperformance of the same or any other covenant,
agreement, or obligation, nor shall any forbearance by either party to exercise
a remedy for any violation or nonperformance by the other party be deemed a
waiver by that party of the rights or remedies with respect to that violation or
nonperformance.
Section 24. Late Charge.
Tenant acknowledges that Tenant's failure to pay any installment of Rent, or any
other amounts due under this Lease as and when due may cause Landlord to incur
costs not contemplated by Landlord when entering
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into this Lease, the exact nature and amount of which would be extremely
difficult and impracticable to ascertain. Such costs include, without
limitation, processing and accounting charges, and late charges that may be
imposed on Landlord by the terms of any encumbrance and note secured by any
encumbrance covering the Premises, extraordinary interest charges, penalties,
collection costs, attorney and accountant fees, and the like. Accordingly, if
any installment of Rent, or any other amount due under the Lease is not received
by Landlord as and when due, then Tenant shall pay to Landlord an amount equal
to ten percent (10%) of the past due amount, which the parties agree represents
a fair and reasonable estimate of the costs incurred by Landlord as a result of
the late payment by Tenant (the Late Charge).
Section 25. Default Interest.
All Rent and other amounts payable by Tenant to Landlord hereunder, if not
received by Landlord when and as due, shall bear interest from the due date
until paid at the maximum rate permitted by law. Interest due pursuant to this
Section shall be in addition to and not in lieu of late fees owing under Section
24 hereof. Acceptance of any late charge or interest payment shall not
constitute a waiver of Tenant's default with respect to the overdue amount, nor
prevent Landlord from exercising any of the other rights and remedies available
to Landlord under this Lease, at law, or in equity.
Section 26. Waiver.
Any express or implied waiver of a breach of any term of this Lease shall not
constitute a waiver of any further breach of the same or other term of this
Lease; and the acceptance of rent shall not constitute a waiver of any breach of
any term of this Lease, except as to the payment of rent accepted.
Section 27. Estoppel Certificates.
At any time, with at least ten (10) days' prior notice by Landlord, Tenant shall
execute, acknowledge, and deliver to Landlord a certificate, in the form
prescribed by Landlord, certifying:
(a) the Commencement Date, the occupancy date, and the Term;
(b) the amount of the Monthly Rent;
(c) the dates to which rent and other charges have been paid;
(d) that this Lease is unmodified and in full force or, if there have been
modifications, that this Lease is in full force, as modified, and stating the
date and nature of each modification;
(e) that no notice has been received by Tenant of any default by Tenant that
has not been cured, except, if any exist, those defaults shall be specified
in the certificate, and Tenant shall certify that no event has occurred that,
but for the expiration of the applicable time period or the giving of notice,
or both, would constitute an Event of Default under this Lease (to the extent
that none exist);
(f) that no default of Landlord is claimed by Tenant, except, if any, those
defaults shall be specified in the certificate; and
(g) other matters as may be reasonably requested by Landlord.
Any certificate may be relied on by prospective purchasers, mortgagees, or
beneficiaries under any deed of trust on the Premises or any part of it.
Tenant's failure to execute and deliver a completed Estoppel Certificate
within ten (10) days of Landlord's request therefore shall constitute an
Event of Default hereunder.
Section 28. Attorney Fees. If as a result of any breach or default or alleged
breach or alleged default on the part of Tenant under this Lease, Landlord uses
the services of an attorney in order to secure compliance with this Lease,
Tenant shall reimburse Landlord upon demand as additional rent for any and all
attorney fees and expenses incurred by Landlord, whether or not formal legal
proceedings are instituted, unless such breach or default or alleged breach or
alleged default results in a judgment in favor of Tenant. If any action at law
or in equity or any other proceeding is brought to recover any rent or other
sums under this Lease, or for or on account of any breach or alleged breach of
or to enforce or interpret any of the covenants, terms, or conditions of this
Lease, or for the recovery of the possession of the Premises, the prevailing
party shall be entitled to recover from the other party as part of prevailing
party's costs its actual attorney fees and other costs incurred in that action
or proceeding, including, but not limited to, expert expenses, in addition to
any other relief to which they may be entitled. The prevailing party shall
include, without limitation, (a) a party
20
who dismisses an action in exchange for sums allegedly due; (b) the party who
receives performance from the other party of an alleged breach of covenant or
a desired remedy where that is substantially equal to the relief sought in an
action; or (c) the party determined to be the prevailing party by a court of
law. In addition, if either party to this Lease becomes a party to or is
involved in any way in any action concerning this Lease or the Premises by
reason in whole or in part of any act, neglect, fault, or omission of any
duty by the other party, its employees or contractors, the party subjected to
said involvement shall be entitled to reimbursement for any and all
reasonable attorney fees and costs.
Section 29. Security for Tenant's Performance.
(a) Security Deposit. Tenant agrees that, on or before the execution of this
Lease, Tenant shall deposit with Landlord the amount of Fifty Thousand Two
Hundred Sixty-Two Dollars ($50,262), which amount shall be held by Landlord
as security for the full and faithful performance of all of Tenant's
covenants and obligations under this Lease (as the same may be further
increased pursuant to Section 29(b)), (the Security Deposit), it being
expressly understood and agreed that the Security Deposit is not an advance
rental deposit or a measure of the Landlord's damages in case of Tenant's
default. Upon the occurrence of any default by Tenant hereunder, Landlord may
(but shall not be required to), from time to time and without prejudice to
any other remedy provided by this Lease or by law, use the Security Deposit
to the extent necessary to make good any arrears of rent or other payments or
liability caused by such default or to compensate Landlord for any other
loss, damage, liability, or expense which Landlord may suffer by reason of
Tenant's default. Tenant shall within ten (10) days after written demand
therefor pay to Landlord the amount that was applied in order to restore the
Security Deposit to the amount held by Landlord prior to the application (as
such amount may be increased by Section 29(a) below). Tenant's failure to so
restore the Security Deposit shall constitute an event of default under this
Lease on the part of Tenant. Although the Security Deposit shall be deemed
the property of Landlord, if Tenant fully and faithfully performs and
observes every provision of this Lease to be performed and observed by
Tenant, the Security Deposit, or any then unused balance thereof, shall be
returned to Tenant (or at Landlord's option, to the last assignee of Tenant's
interest hereunder) after the expiration of the Term and after Tenant has
vacated and surrendered the Premises in accordance with the terms hereof.
Tenant shall not have the right to apply this Security Deposit or any part
thereof toward the payment of any Rent or sums due hereunder. In the event of
termination of Landlord's interest in this Lease, Landlord shall transfer the
unused balance of said Deposit to Landlord's successor-in-interest whereupon
Tenant hereby agrees to release Landlord from liability for the return of
such Deposit provided such successor-in-interest agrees to return the
Security Deposit to Tenant in accordance with the terms hereof. Landlord
shall not be required to keep the Security Deposit separate from the general
accounts of Landlord nor pay Tenant any interest thereon.
(b) Letter of Credit. Tenant agrees that, on or before the execution of this
Lease, Tenant shall deposit with Landlord and maintain throughout the Lease Term
(except as provided below) a Four Hundred Thousand Dollar ($400,000) irrevocable
letter of credit in form and substance and issued by a bank reasonably
acceptable to Landlord and Landlord's lender and naming Landlord (and, if
required, Landlord's lender holding the first lien against the Property) as
beneficiary (the "Letter of Credit"). The Letter of Credit will secure the full
and faithful performance of each provision of this Lease to be performed by
Tenant. If Tenant fails to perform any of Tenant's obligations under this Lease,
Landlord shall have the absolute right to draw down the full amount of the
Letter of Credit on Landlord's sworn statement of any Tenant Event of Default.
The draw down shall be added to and increase the amount of the Security Deposit
retained by Landlord and thereafter required under Section 29(a) above. If
Landlord does apply the Security Deposit, as increased by the Letter of Credit
amount, Tenant must within ten (10) days written demand replenish the Security
Deposit to the combined sum of the amount of the Letter of Credit and the
Security Deposit as required under 29(a). Following the third anniversary of the
Commencement Date and on each anniversary of the Commencement Date thereafter,
the face amount of the letter of credit may be reduced by One Hundred Thousand
Dollars ($100,000) upon Tenant's written request, provided such request confirms
to Landlord in Landlord's reasonable discretion, with such evidence as Landlord
may reasonably require, that: (i) The Letter of Credit
21
is in full force and effect and has not been drawn upon by Landlord; (ii) No
Event of Default has occurred under the Lease nor has there occurred any
event or omission which with the passage of time would constitute an Event of
Default; (iii) Tenant has experienced a minimum of three (3) consecutive
quarters in which the net income per quarter exceeds the annual rent due
hereunder. As used in this Section Net Income shall mean the gross revenues
and income of Tenant, exclusive of any extraordinary gains or losses or any
gains or losses from the sale or disposition of assets other than in the
ordinary course of business, less the aggregate for Tenant during such period
of: (a) operating expenses, (b) taxes, (c) depreciation and amortization of
payments and (d) any other items that are treated as expenses under GAAP, all
determined in accordance with GAAP consistently applied on a consolidated
basis, after eliminating all inter-company items.
Section 30. Authority. If Tenant is a corporation, trust, limited liability
company, or general or limited partnership, all individuals executing this
Lease on behalf of that entity represent that they are authorized to execute
and deliver this Lease on behalf of that entity. If Tenant is a corporation,
limited liability company, trust, or partnership, Tenant shall, prior to the
execution of this Lease, deliver to Landlord evidence of that authority and
evidence of due formation, all satisfactory to Landlord. If Tenant is a
partnership, Tenant shall furnish Landlord with a copy of Tenant's
partnership agreement and with a certificate from Tenant's attorney, stating
that the partnership agreement constitutes a correct copy of the existing
partnership agreement of Tenant. Tenant agrees that it shall in a timely
manner obtain all corporate and other approvals necessary to allow it to
execute this Lease and carry out Tenant's obligations hereunder.
Section 31. Notices. Except as otherwise expressly provided by law, all
notices or other communications required or permitted by this Lease or by law
to be served on or given to either party to this Lease by the other party
shall be in writing and shall be deemed served when personally delivered to
the party to whom they are directed, or in lieu of the personal service,
three days following deposit in the United States Mail, certified or
registered mail, return receipt requested, postage prepaid, addressed as set
forth above in the Summary of Terms. Either party, Tenant or Landlord, may
change the address for the purpose of this Section by giving written notice
of the change to the other party in the manner provided in this Section.
Section 32. Heirs and Successors. This Lease shall be binding on and shall inure
to the benefit of the heirs, executors, administrators, successors, and assigns
of Landlord and Tenant.
Section 33. Partial Invalidity. Should any provision of this Lease be held by
a court of competent jurisdiction to be either invalid or unenforceable, the
remaining provisions of this Lease shall remain in effect, unimpaired by the
holding.
Section 34. Entire Agreement. This instrument constitutes the sole agreement
between Landlord and Tenant respecting the Premises, the leasing of the
Premises to Tenant, and the specified lease term, and correctly sets forth
the obligations of Landlord and Tenant. Any agreement or representations
respecting the Premises or their leasing by Landlord to Tenant not expressly
set forth in this instrument are void.
Section 35. Time of Essence. Time is of the essence in this Lease.
Section 36. Amounts Deemed Rent. All monetary obligations of Tenant to
Landlord under the Lease, including, but not limited to, the Monthly Rent and
any amounts deemed additional rent hereunder shall be deemed rent.
Section 37. Amendments. This Lease may be modified only in writing and only if
signed by the parties at the time of the modification.
Section 38. Subordination, Nondisturbance and Attornment.
(a) This Lease and the rights of Tenant hereunder are subject and subordinate to
any ground or underlying lease and the lien of the holder of or beneficiary
under a mortgage or deed of trust which now or in the future encumbers the
Premises and to any and all advances made thereunder, and interest thereon, and
all modifications, renewals, supplements, consolidations, and replacements
thereof. Upon execution of this Lease, as a pre-condition to Landlord's
execution and delivery of this Lease, Tenant shall execute the
22
Subordination, Attornment and Non-Disturbance Agreement in favor of
Landlord's lender having a first lien on the Premises attached as Exhibit S.
(b) Tenant agrees that any ground or underlying lessor or lender may at its
option, unilaterally elect to subordinate in whole or in part, such ground or
underlying lease or the lien of such mortgage or deed of trust to this Lease.
With at least ten (10) days' prior notice by Landlord Tenant agrees to
execute, acknowledge, and deliver to Landlord upon demand any and all
instruments required by Landlord or any such ground or underlying lessor or
lender evidencing the subordination, attornment or priority of this Lease, as
the case may be, provided such instrument contains the standard
non-disturbance and attornment provisions acknowledging Tenant's interest in
this Lease customarily provided by such lessor or lender. Tenant's failure to
so execute, acknowledge, and deliver such instruments within ten (10) days
after written request therefor shall constitute an Event of Default hereunder.
(c) Tenant agrees that this Lease and the rights of Tenant hereunder shall be
subject and subordinate to any agreement(s) placed upon the Property and the
real property owned by Landlord and adjacent to the Property and any
amendments, additions or supplements thereto, which provides for reciprocal
easements and/or covenants, conditions and restrictions pertaining to the
common areas located on the Property and the adjacent real property, which
agreements shall not materially interfere with Tenant's rights and use of the
Premises under this Lease or with Tenant's access to the Premises
(collectively "REA"). If a conflict between any such REA and this Lease
occurs, the provisions of the REA shall prevail provided that the REA is
recorded in the Official Records of the County of San Mateo and is binding
upon any such adjacent real property as well as the Property.
Section 39. Merger. The voluntary or other surrender of this Lease by Tenant,
or a mutual cancellation of the Lease, or a termination by Landlord shall not
work a merger, and shall, at the option of Landlord, terminate all or any
existing subtenancies or may, at the option of Landlord, operate as an
assignment to a Landlord of any of the subtenancies.
Section 40. Options To Extend Term.
(a) Tenant shall have one option (the Extension Option) to extend the Term
for three (3) years for the entire Premises by giving Landlord prior written
notice of Tenant's election to exercise this option not less than two hundred
ten (210) days before the expiration of the Term as the same may have been
extended. However, if there exists an uncured default on Tenant's part either
at the time of the exercise of any Extension Option or at the time that any
Option Period would commence, Landlord may cancel Tenant's exercise of such
Extension Option, in which case the Extension Option shall be of no further
force or effect and all subsequent Extension Options shall be deemed
canceled. Each Extension Option shall be on all the same terms of this Lease
provided that the Monthly Rent for each such Option Period shall be increased
in accordance with Section 42 of this Lease.
(b) The Extension Option is personal to the named tenant herein and any Transfer
of such tenant's interest in the Lease (other than a Permitted Transfer),
whether or not consented to by Landlord, shall cause such Extension Option to
terminate and be of no further force or effect.
Section 41. Right of Relocation. Intentionally Deleted.
Section 42. Determination of Monthly Rent for Extension Option. For purposes of
Section 41(a), Monthly Rent shall be determined as follows:
(a) Parties shall have until the later to occur of (i) fifteen (15) days from
the receipt by Landlord of Tenant's notice electing to exercise an Extension
Option, or (ii) one hundred ninety-five days prior to the expiration of the
initial Lease Term to agree on the Monthly Rent for the Option Period which
shall in any case no less than the previous Monthly Rental due for the last year
of the expiring Lease Term. If the parties agree on the Monthly Rent for the
Option Period, by such date, they shall immediately execute an amendment to this
Lease stating the Monthly Rent for the Option Period and memorializing the
extension of the Term in accordance with Section 41 hereof.
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(b) If the parties are unable to agree upon the Monthly Rent for the Option
Period in accordance with Section 42(a), then within fourteen (14) days after
the parties fail to agree on the Monthly Rent for the Option Period, each
party at its cost and by giving notice to the other party, shall appoint a
real estate appraiser with at least five (5) years full time MAI appraisal
experience in San Mateo County, to determine the Monthly Rent for the Option
Period, and shall deliver to said appraiser as well as the other party, such
party's proposal for the Monthly Rent for the Option Period. If a party does
not appoint an appraiser within said fourteen (14) day period and the other
party has given notice of the name of its appraiser, the single appraiser
appointed shall be the sole appraiser and shall determine the Monthly Rent
for the Option Period. If an appraiser is appointed by each of the parties as
provided in this section, they shall meet promptly and attempt to set the
Monthly Rent for the Option Period, by agreeing on which party's proposal
most closely reflects the Fair Market Rental Value of the Premises for the
Option Period. If they are unable to agree within thirty (30) days after the
second appraiser has been appointed, the two appraisers shall within ten (10)
days following the end of such thirty-day period chose a third appraiser or
if the two appraisers cannot agree on a third appraiser within such ten-day
period, either of the parties to this Lease, by giving ten (10) days notice
to the other party, can apply to the then Presiding Judge of the San Mateo
County Superior Court for the appointment of a third appraiser who meets the
qualifications stated in this section. The third appraiser, however, shall be
a person who has not previously acted in any capacity for either party during
the prior three years. Within thirty (30) days after the selection of the
third appraiser, a majority of the appraisers shall determine which party's
proposal more closely reflects the Fair Market Rental Value of the Premises
for the Option Period. The party whose proposal is not selected shall bear
the cost of appointing the third appraiser together with such third
appraiser's fee. As used herein, Fair Market Rental Value shall mean the then
prevailing annual rental rate per square foot of rentable area for office
space in comparable buildings and with comparable tenant improvements, in the
mid- San Francisco peninsula, San Mateo County area, for the renewal of
tenant designed premises which have been recently improved for tenant
occupancy similar to the Premises, comparable in area and location to the
space for which such rental rate is being determined (to the extent that
quoted rental rates vary with regard to location), being leased for a
duration comparable to the term for which such space is being leased and
taking into consideration rental concessions and abatements, tenant
improvement allowances, and renewal commissions, if any, being offered by
Landlord, the present condition of the space, operating expenses and taxes,
other adjustments to basic rent and other comparable factors to lease
renewal, but excluding any adjustments for brokerage commissions,
pre-occupancy construction period rent allowances, moving allowances or other
concessions offered in the market for new space leases.
(c) After the appraisers determine which party's proposal more closely
reflects the Fair Market Rental Value of the Premises for the Option Period,
the appraisers shall immediately notify the parties and the parties of their
findings and the parties shall immediately execute an amendment to this Lease
stating the Monthly Rent for the Option Period, which in any case shall be no
less than the previous Monthly Rental due for the last year of the expiring
Lease Term, and which amendment shall memorialize the extension of the Term
in accordance with Section 41 hereof.
Section 43. Improvements. Prior to the Commencement Date, Landlord shall provide
to Tenant, at Landlord's cost, a completed building shell including restrooms,
demising wall, common lobby/entrance, HVAC system stubbed to the Premises (but
not distributed) and roof screens as more particularly shown in attached Exhibit
C-1 (the "Base Building Improvements"). Pursuant to Exhibit C hereto, Tenant
shall construct Tenant Improvements (as defined in Exhibit C) for the Premises
at Tenant's cost. Landlord shall contribute a tenant improvement allowance (the
"Allowance") to construct such Tenant Improvements in the amount of $372,370 to
be applied toward all expenses associated with the construction, space planning,
engineering, construction drawings, construction management, signage and other
necessary permits directly associated with the Tenant Improvements. Under no
circumstances shall the Allowance be used for Tenant's due diligence review of
the Premises (or this Lease) nor the design, acquisition or planning costs of
Tenant's personal property, furniture, trade fixtures or equipment.
Section 44. Environmental Provisions.
(a) Definitions. As used in this Section, the following terms have the following
definitions:
"Access Agreement" means that Access Agreement dated as of April 29, 1997
between R&H and Landlord, a copy of which is attached hereto as Exhibit I-2
24
"Agencies" means any federal, state, or local governmental authorities,
agencies, or other administrative bodies with jurisdiction over Landlord, Tenant
or the Premises or the Property.
"Costs" shall have the same definition as the word "Costs" as set forth in
Section 9.1(a) of the R&H Indemnity (defined herein).
"Environmental Documents" means the studies, tests and reports listed in Exhibit
I.
"Environmental Laws" means any federal, state, or local environmental, health,
or safety-related laws, regulations, standards, court decisions, ordinances,
rules, codes, orders, decrees, directives, guidelines, permits, or permit
conditions, currently existing and as amended, enacted, issued, or adopted in
the future that are or become applicable to Tenant or the Premises.
"Existing Environmental Conditions" means the presence of Hazardous Materials
at, on, in, under or from the Property (including in soil, surface, or
groundwater) on or before the date on which this Lease is signed, including
without limitation the conditions disclosed in the reports set forth in the
Environmental Documents.
"Hazardous Materials" shall have the same definition as the word term "Hazardous
Materials" as set forth in Section 9.1(b) of the R&H Indemnity.
"Remediation Order" means California Regional Water Quality Control Board
("CRWQCB") Order No. 93-004 and any amendments thereto.
"Remediation Work" means all environmental activities necessary in order for R&H
(or any other responsible party other than Tenant) to comply with the
Remediation Order and any subsequent order of any governmental agency respecting
the Existing Environmental Conditions which may include the removal of
contaminated soil, groundwater and installation, operation, maintenance, repair,
replacement and removal of ▇▇▇▇▇, pumps, pipes, tanks and related facilities and
equipment for testing and monitoring environmental contamination and effecting
the correction, reduction or elimination of environmental contamination.
"R&H" means Rohm & ▇▇▇▇ Company, prior owner of the Property and responsible
party for the Remediation Work and R&H Indemnity.
"R&H Indemnity" means that certain assignable indemnification by R&H of Landlord
with respect to Existing Environmental Conditions as set forth in Article IX of
that certain Purchase and Sale Agreement executed between Landlord and R&H and
dated February 10, 1997 (the "Purchase and Sale Agreement") a redacted copy of
which is attached hereto and incorporated herein as Exhibit I-1. Landlord
represents that, to the best of Landlord's knowledge, the R&H Indemnity is in
full force and effect.
"Tenant's Parties" means Tenant's employees, agents, customers, visitors,
invitees, licensees, contractors, designees, or subtenants.
(b) Disclosure, Remediation and Indemnification Regarding Existing Conditions.
(i) Environmental Disclosure. In accordance with Section 25359.7 of the
California Health and Safety Code, Landlord hereby gives notice to Tenant (i)
that releases of Hazardous Materials have come to be located on or beneath the
Property and (ii) of the matters set forth in the Environmental Documents.
(ii) Ongoing Remediation. Tenant acknowledges that the Remediation Work is
being conducted on the Property and Landlord represents, warrants, and agrees
that the Remediation Work will be conducted at no direct cost to Tenant
during the Lease Term, and that no part of the direct or indirect costs of
such Remediation Work shall be reimbursed by Tenant to Landlord or any other
person under this Lease or otherwise. All parties conducting the Remediation
Work shall have the right to use the Property for the purposes of performing
the Remediation Work pursuant to the terms and conditions of the Purchase and
Sale Agreement and the Access Agreement until the Remediation Work has been
completed. Tenant shall
25
not interfere with the conduct of the Remediation Work in a manner that is
contrary to the rights of R&H under the Purchase and Sale Agreement and the
Access Agreement.
(iii) Assignment of R&H Indemnification. Pursuant to Section 9.2(b)
thereto, Landlord hereby irrevocably assigns to Tenant, without in any way
limiting the indemnity as it applies to Landlord and the Landlord
Indemnitees, on a non-exclusive basis to the fullest extent possible, all
rights provided under the R&H Indemnity, it being the intention of the
parties that Tenant shall have rights to enforce the R&H Indemnity
obligations as if Tenant were a direct party to the R&H Indemnity, provided,
however, that in no event shall Tenant have any direct or indirect obligation
or responsibility arising under or with respect to the R&H Indemnity or any
agreement of which it is a part or to which it relates.
(iv) Asbestos. Landlord represents that to the best of Landlord's
knowledge, there was no asbestos used in construction of the Base Building
Improvements and if asbestos is discovered in the Base Building Improvements,
absent any Alterations conducted by Tenant to introduce asbestos to the
Building, Landlord will be responsible for its removal in accordance with
applicable laws and regulations at Landlord's sole cost and expense
(c) Environmental Compliance.
(i) Tenant and Tenant's Parties will not, at any time during the Term, cause or
permit any Hazardous Materials to be brought upon, stored, manufactured,
generated, blended, handled, recycled, treated, disposed, or used on, under, or
about the Premises, the Building, or the Project for any purpose, except as
specifically approved in writing by Landlord ("Permitted Hazardous Materials"),
as amended from time to time. A copy of the Permitted Hazardous Materials as of
the date of this Lease is attached as Exhibit I-3. Any material change to the
Permitted Hazardous Materials must be approved in advance in writing by
Landlord, whose approval will not be unreasonably withheld, but may be
conditioned upon Tenant providing additional security, guarantees, insurance,
containment improvements and/or confirmation of the filing of any required or
recommended permits or plans with applicable government authorities and
compliance with any requirements contained therein. The foregoing
notwithstanding, Tenant may handle, store, use or dispose of products containing
small quantities of Hazardous Materials, (exclusive of the Prohibited Known
Contaminants defined herein) which products are of a type customarily found in
offices and houses (such as aerosol cans containing insecticides, toner for
copiers, paints, paint remover, and the like) on the Leased Premises provided
that Tenant shall handle, store, use and dispose of any such Hazardous Materials
in a safe and lawful manner and shall not allow such Hazardous Materials to
contaminate the Premises, the Building, the Property or the environment.
(ii) Tenant and Tenant's Parties will not, at any time during the Term, cause
any Prohibited Known Contaminants listed in the Schedule of Prohibited Known
Contaminants to be brought upon, stored, manufactured, generated, blended,
handled, recycled, treated, disposed, or used on, under, or about the Premises
or the Property for any purpose. A copy of the Prohibited Known Contaminants is
attached as Exhibit I-3.
(iii) During the Term, Tenant will take reasonable steps to protect against
intentional or negligent acts or omissions of third parties that might result
directly or indirectly in the release, disposal, or other placement of Hazardous
Materials on or under the Premises.
(iv) No asbestos-containing materials will be manufactured or installed for any
purposes on or as part of the Premises, whether as part of Tenant's or Tenant's
Parties' business operations or as tenant improvements, unless specifically
identified on Exhibit G and approved in advance in writing by Landlord, whose
approval will not be unreasonably withheld.
(v) Tenant will keep, operate, and maintain the Premises in compliance with all,
and will not cause or permit the Premises to be in violation of any,
Environmental Laws.
(vi) Neither Tenant nor any of Tenant's Parties will install or use any
underground storage tanks on the Premises.
26
(e) Landlord's Right of Entry and Testing. Landlord and Landlord's
representatives have the right, but not the obligation, at any reasonable time
to enter onto and to inspect the Premises and to conduct reasonable testing,
monitoring, sampling, digging, drilling, and analysis to determine if Hazardous
Materials are present on, under, or about the Premises and to review and copy
any documents, materials, data, inventories or notices or correspondence to or
from private parties or governmental authorities directly related to the
possible release of Hazardous Materials in, on or from the Premises
(collectively, "Inspection"). If the Investigation indicates the presence of any
environmental condition that occurred during the Term as a result of Tenant's or
Tenant's Parties' activities, or failure to act where Tenant had a duty to act,
in connection with the Premises, Tenant will reimburse Landlord for the cost of
conducting the tests.
(f) Environmental Assessment. In the event Landlord has reasonable cause to
believe Tenant is in violation of the provisions of this Section 44 during or
upon expiration of the Lease Term, Landlord may require Tenant to retain a duly
licensed environmental consultant acceptable to Landlord that will perform an
environmental compliance audit of the Premises and Tenant's and Tenant's
Parties' business activities and compliance with the provisions of Section 44.
If the results of the environmental compliance audit indicate that Tenant is or
may be in violation of Section 44, Tenant will be responsible for the cost of
any testing required by Landlord. Tenant must promptly provide a copy of the
report from the consultant to Landlord upon receipt, and upon request must
promptly provide to Landlord a copy of all data, documents, and other
information prepared or gathered in connection with the report. Tenant
acknowledges that Tenant has been provided an adequate opportunity to conduct
Tenant's own environmental investigation of the Premises with independent
environmental experts and consultants.
(g) Notification.
(i) Tenant must give immediate written notice to Landlord of:
(A) any enforcement, remediation, or other regulatory action or order, taken or
threatened, by any Agency regarding, or in connection with, the presence,
release, or threat of release of any Hazardous Material on, under, about, or
from the Premises resulting from Tenant's use of the Premises;
(B) all demands or claims made or threatened by any third party against Tenant
or Tenant's Parties or the Premises relating to any liability, loss, damage, or
injury resulting from the presence, release, or threat of release of any
Hazardous Materials on, under, about, or from the Premises or otherwise
resulting from Tenant's use of the Premises;
(C) any significant spill, release, or discharge of a Hazardous Material on,
under, about, or from the Premises, including, without limitation, any spill,
release, or discharge required to be reported to any Agency under applicable
Environmental Laws; and
(D) all incidents or matters where Tenant and Tenant's Parties are required to
give notice to any Agency pursuant to applicable Environmental Laws.
(F) copies of all Hazardous Materials Business Plans, Hazardous Waste Management
Plans, Chemical Hygiene Plans and any and all other plans or reports, and any
and all required periodic or special updates to such reports, which Tenant is
required to file with governmental agencies regulating Tenant's use of Hazardous
Materials on the Premises.
(ii) Tenant must promptly provide to Landlord copies of all materials, reports,
technical data, Agency inspection reports, notices and correspondence, and other
information or documents relating to incidents or matters subject to
notification under Section 44(g)(i). Also, Tenant must promptly furnish to
Landlord copies of all permits, approvals, and registrations Tenant receives or
submits with respect to Tenant's operations on the Premises, including, without
limitation, installation permits, and closure permits.
(h) Remediation.
(i) If any Hazardous Materials are released or found on, under, or about the
Premises arising out of Tenant's or Tenant's Parties' activities, or failure to
act where Tenant had a duty to act, in connection with the Premises, Tenant must
promptly take all actions, at Tenant's sole expense, necessary to investigate
and remediate the release or presence of Hazardous Materials on, under, or about
the Premises in accordance
27
with Environmental Laws and the requirements of all Agencies. However, unless an
emergency situation exists that requires immediate action, Landlord's written
approval of these actions will first be obtained, and the approval will not be
unreasonably withheld. Landlord's right of prior approval of these actions
includes, but is not limited to, the selection of any environmental consultant
to perform work on or related to the Premises, the scope of work, and sampling
activities to be performed by the consultant before the report is final. Tenant
will provide Landlord with at least three (3) business days' advance notice of
any sampling, and upon request of Landlord, will split samples with Landlord.
Tenant will also promptly provide Landlord with the results of any test,
investigation, or inquiry conducted by or on behalf of Tenant or Tenant's
Parties in connection with the presence or suspected presence of Hazardous
Materials on, under, about, or from the Premises. Tenant must notify Landlord in
advance and give Landlord the right to participate in any oral or written
communications with regulatory agencies concerning environmental conditions on
or arising from the Premises. Landlord has the right, but not the obligation, to
assume control of any required remediation on the Premises at Tenant's expense
if Tenant fails to notify Landlord and obtain Landlord's approvals as required
under Section 44(h). Within thirty (30) days after Tenant's completion of any
remediation of the Premises, Tenant must deliver to Landlord a letter from the
applicable Agency stating that the remediation was undertaken in accordance with
all applicable Environmental Laws and that any residual contamination remaining
after the remediation does not pose a threat to human health or the environment.
(ii) If Tenant or Tenant's Parties have caused or permitted a release of
Hazardous Materials that results in or threatens to result in Hazardous
Materials becoming present on, under, or about the Premises, threatens public
health or safety or the environment, or is in noncompliance with any applicable
Environmental Laws or requirements of Section 44, Landlord may demand that
Tenant promptly take action in accordance with Section 44(h)(i). If Tenant does
not respond within thirty (30) days (unless there is an emergency, in which case
Tenant must respond as soon as practicable, but not less than three (3) days),
Landlord has the right, but not the obligation, to enter onto the Premises and
take all actions reasonably necessary to investigate and fully remediate the
release or noncompliance at Tenant's sole expense (provided Tenant may seek
reimbursement under the R&H Indemnity or contribution from any other potentially
responsible party) which sums will be immediately due and payable upon receipt
of an invoice and will constitute additional rent under this Lease.
(j) Expiration and Termination Procedures. Upon expiration or termination of
this Lease and upon the request of Landlord, Tenant will at Tenant's sole
expense take all steps necessary to terminate, close, or transfer all
environmental permits, licenses, and other approvals or authorizations for the
Premises obtained by Tenant or for Tenant activities, equipment, or conditions
on the Premises, in accordance with all Environmental Laws. Tenant will also
obtain and provide to Landlord the written approval or verification of the
satisfactory completion of the termination, closure, or transfer from each
Agency with jurisdiction over the environmental permit, license, or other
approval obtained by Tenant or for Tenant activities or equipment.
(k) Tenant's Indemnification of Landlord. Tenant will indemnify, protect,
defend, and hold harmless Landlord and Landlord's partners, members, directors,
officers, employees, shareholders, lenders, agents, contractors, and each of
their respective successors and assigns (individually and collectively "Landlord
Indemnitees") from all claims, judgments, causes of action, damages, penalties,
fines, taxes, costs, liabilities, losses, and expenses arising as a result of or
in connection with Tenant's or Tenant's Parties' breach of any prohibition or
provision of Section 44, or the presence of any Hazardous Materials on or under
the Premises during the Term or any Hazardous Materials that migrate from the
Premises to other properties, as a result of Tenant's or Tenant's Parties'
activities, or failure to act where Tenant had a duty to act, on or in
connection with the Premises. This obligation by Tenant to indemnify, protect,
defend, and hold harmless Landlord Indemnitees includes, without limitation,
costs and expenses incurred for or in connection with any investigation,
cleanup, remediation, monitoring, removal, restoration, or closure work required
by the Agencies because of any Hazardous Materials present on, under, or about
the Premises as a result (directly or indirectly) of Tenant's or Tenant's
Parties' activities, or failure to act where Tenant had a duty to act; the costs
and expenses of restoring, replacing, or acquiring the equivalent of damaged
natural resources if required under any Environmental Law; all foreseeable
consequential damages; all reasonable damages for the loss or restriction on use
of rentable or usable space or of any amenity of the Premises; all reasonable
sums paid in settlement of claims; reasonable attorney fees; litigation,
arbitration, and administrative proceeding costs; and reasonable expert,
consultant, and laboratory fees. Neither the written consent of Landlord to the
presence of Hazardous Materials on or under the Premises, nor the strict
compliance by
28
Tenant with all Environmental Laws, will excuse Tenant from the indemnification
obligation. This indemnity will survive the expiration or termination of this
Lease. Further, if Landlord detects a deficiency in Tenant's performance under
this indemnity and Tenant fails to correct the deficiency within ten (10) days
after receipt of written notice from Landlord, Landlord has the right to join
and participate in any legal proceedings or actions affecting the Premises that
are initiated in connection with any Environmental Laws. However, if the
correction of the deficiency takes longer than ten (10) business days, Landlord
may join and participate if Tenant fails to commence corrective action within
the ten (10) day period and after that diligently proceeds to correct the
deficiency.
Section 45. Publicity. Tenant on behalf of itself and its agents and
representatives expressly agrees that it is not authorized to announce this
Lease or the terms and conditions contained therein to any third party without
the prior written consent of Landlord.
Section 46. Easements. Landlord reserves the right to grant easements, rights,
and dedications that Landlord deems necessary or desirable, and to record parcel
maps and restrictions, so long as these easements, rights, dedications, maps,
and restrictions do not unreasonably interfere with Tenant's use or occupancy of
the Premises. Tenant agrees to sign any of these documents immediately upon
request of Landlord.
Section 47. Covenants and Conditions. Each term of this Lease performable by
Tenant shall be deemed both a covenant and a condition.
Section 48. Recordation. Upon request, Tenant shall execute, acknowledge, and
record a memorandum of this Lease in form and substance reasonably satisfactory
to Landlord.
Section 49. Transfer by Landlord. If Landlord transfers the Premises, Landlord
shall be relieved of all liability for the performance of Landlord's obligations
after the date of the transfer. However, any prepaid rent or security deposit
held by Landlord at the time of the transfer shall be delivered to the
transferee.
Section 50. Security Measures. Tenant acknowledges that Landlord shall have no
obligation to provide any guard service or other security measures to the
Premises, and Tenant assumes all responsibility for the protection of Tenant,
Tenant's agents, subtenants, employees, invitees, and customers, and the
property of Tenant and of Tenant's agents, subtenants, employees, invitees, and
customers from acts of third parties.
Section 51. Brokers. Tenant represents and warrants to Landlord that no real
estate broker, agent, or finder negotiated or was instrumental in negotiating or
representing Tenant in the negotiation of this Lease or the consummation hereof
except for Tenant's Broker. Landlord shall be responsible for the payment of the
commission or fee, if any, owed to Tenant's Broker pursuant to a separate fee
agreement between Landlord's Broker and Tenant's Broker. Tenant shall pay the
commission or fee of any other broker, agent, or finder acting for Tenant or
claiming any commissions or fees on the basis of contacts or dealings with
Tenant other than Tenant's Broker and Tenant shall indemnify and hold Landlord
harmless from and against any claims made by any such broker, agent, or finder
of Tenant and any and all costs and damages suffered by Landlord as a
consequence thereof, including without limitation attorney fees.
Section 52. Liability of Landlord.
(a) Limitation of Landlord Liability. Any liability of Landlord to Tenant under
this Lease (including all persons and entities that comprise Landlord, and any
successor landlord) and any recourse by Tenant against Landlord shall be limited
to the equity interest of Landlord and Landlord's successors in interest in and
to the Building and Property. On behalf of itself and all persons claiming by,
through, or under Tenant, Tenant expressly waives and releases Landlord from any
personal liability for breach of this Lease. Notwithstanding any other provision
of this Lease, Landlord shall not be liable for any consequential damages of any
kind (including lost economic opportunities, lost profits, lost proceeds and
similar types of damages), nor shall Landlord be liable for loss of or damage to
artwork, currency, jewelry, unique or valuable documents, securities,
instruments, electronics or other valuables, or for other property not in the
nature of ordinary fixtures, furnishings and equipment used in general
administrative and office activities and functions, which may result from any
default of the Lease by the Landlord or any action, omission, negligence or
misconduct of the Landlord in connection with the Property. Whenever in this
Lease Tenant (a) releases Landlord from any claim or liability, (b) waives or
limits any right of Tenant to assert any claim
29
against Landlord or to seek recourse against any property of landlord or (c)
agrees to indemnify Landlord against any matters, the relevant release, waiver,
limitation or indemnity shall run in favor of and apply to Landlord, its agents,
its lenders, the constituent partners, members, shareholders or other owners of
Landlord or its agents, and the directors, officers, and employees of Landlord
and its agents and each such constituent partner, member, shareholder or other
owner.
(b) Sale by Landlord. In the event of a sale or conveyance of the Building by
any owner of the reversion then constituting Landlord, the transferor shall
thereby be released from any further liability upon any of the terms, covenants
or conditions (express or implied) herein contained in favor of Tenant, and in
such event, insofar as such transferor is concerned, Tenant agrees to look
solely to the successor in interest of such transferor in and to the Building
and this Lease. Tenant agrees to attorn to the successor in interest of such
transferor. If Tenant provides Landlord with security for Tenant's performance
of its obligations hereunder, and Landlord transfers, or provides a credit with
respect to, such security to the grantee or transferee, of Landlord's interest
in the Property, Landlord shall be released from any further responsibility or
liability for such security.
Section 54. Parking. Tenant shall have the right to the non-exclusive use of
Fifty-three (53) parking spaces in the parking lot outside of the Building and
located on the Property ("Parking Lot"). There shall be no parking rental
charged Tenant during the initial Lease Term, however, Landlord reserves the
right to implement reasonable market rate charges thereafter. The use of such
spaces shall be for the parking of motor vehicles used by Tenant, its officers,
employees and customers only, and shall be subject to all reasonable, uniform
and non-discriminatory applicable laws and the rules and regulations adopted by
Landlord from time to time for the use of the Parking Lot. Parking spaces may
not be assigned or transferred separate and apart from this Lease, and upon
expiration or earlier termination of this Lease, Tenant's rights with respect to
all leased parking spaces shall immediately terminate. Tenant and its agents,
employees, contractors, invitees or licensees shall not unreasonably interfere
with the rights of Landlord or others entitled to similar use of the Parking
Lot. The Parking Lot shall be subject to the reasonable control and management
of Landlord, who may, from time to time, establish, modify and enforce
reasonable, uniform and non-discriminatory roles and regulations with respect
thereto. Landlord reserves the right to change, reconfigure, or rearrange the
parking areas to reconstruct or repair any portion thereof and to restrict the
use of any parking areas and do such other acts in and to such areas as Landlord
deems necessary or desirable without such actions being deemed an eviction of
Tenant or a disturbance of Tenant's use of the Premise and without Landlord
being deemed in default hereunder; provided that Landlord shall use commercially
reasonable efforts to minimize (to the extent consistent with applicable laws)
the extent and duration of any resulting interference with Tenant's parking
rights. Landlord may in its sole discretion, convert the Parking Lot to a
reserved and/or controlled Parking Lot, or operate the Parking Lot (or a portion
thereof) as a tandem, attendant assisted and/or valet parking facility. If
parking places are not assigned pursuant to the terms of this Lease, Landlord
reserves the right at any time to assign parking spaces in a reasonable manner,
and Tenant shall thereafter be responsible to insure that its employees park in
the designed areas. Tenant shall, if requested by Landlord, comply with all
reasonable parking practices and otherwise furnish Landlord with such
information as Landlord reasonably requests. Landlord shall not be liable for
any damage of any nature to, or any theft of, vehicles or contents thereof, in
or about the Parking Lot. At Landlord's request, Tenant shall cause its
employees and agents using Tenant's parking spaces to execute an agreement
confirming the foregoing.
Section 55. Force Majeure. If performance by a party of any portion of this
Lease is made impossible by any prevention, delay, or stoppage caused by
strikes; lockouts; labor disputes; acts of God; inability to obtain services,
labor, or materials or reasonable substitutes for those items; government
actions; civil commotions; fire or other casualty; or other causes beyond the
reasonable control of the party obligated to perform, performance by that party
for a period equal to the period of that prevention, delay, or stoppage is
excused. Tenant's obligation to pay Rent, however, is not excused by this
section 55.
Section 56. Quite Enjoyment. Tenant, upon fully complying with and promptly
performing all of the terms, covenants and conditions of this Lease on its part
to be performed, and upon the prompt and timely payment of all sums due
hereunder, shall have and quietly enjoy the Premises for the Term set forth
herein, subject to all provisions of this Lease and all matters of record
against the Property.
30
Section 57. Offer. Preparation of this Lease by Landlord or Landlord's agent and
submission to Tenant shall not be deemed an offer to lease. This Lease shall
become binding on Landlord and Tenant only when fully executed by Landlord and
Tenant, the Subordination, Attornment and Non-Disturbance Agreement attached as
Exhibit S has been executed by Landlord's lender and delivered to Landlord,
evidencing lender's consent to this Lease, and the Guaranty attached as Exhibit
G has been fully executed by Guarantor
Section 53. Governing Law. This Lease shall be governed by and construed in
accordance with California law.
IN WITNESS WHEREOF, the parties have executed this Lease as of the date first
above written.
LANDLORD: Chestnut Bay, LLC, a California limited liability company
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President
TENANT: ImproveNet, Inc., a Delaware corporation
By: /s/ [ILLEGIBLE]
------------------------------
Its: President
------------------------------
By: /s/ [ILLEGIBLE]
------------------------------
Its: Chairman
------------------------------
31
Exhibit A
PROPERTY DESCRIPTION
The land situated in the State of California, County of San Mateo, City of
Redwood City described as Parcel 2 as shown on that certain map entitled "PARCEL
MAP NO. 97-6, LYING ENTIRELY WITH THE CITY OF REDWOOD CITY, CALIFORNIA" filed in
the office of the County Recorder of San Mateo County, State of California on
December 10, 1997 in Book 70 of Parcel Maps at page(s) 17 and 18.
EXHIBIT "C"
WORK LETTER AND CONSTRUCTION AGREEMENT FOR INITIAL IMPROVEMENT
THE WOODSIDE TECHNOLOGY CENTER, BUILDING 720, SUITE 200
This Work Letter and Construction Agreement for Initial Improvement of the
Premises ("Work Letter") is attached to and incorporated within that certain
Office/R&D Lease ("Lease") between Chestnut Bay LLC, a California limited
liability company ("Landlord"), and ImproveNet, Inc., a Delaware corporation
("Tenant").
RECITALS
WHEREAS, the undersigned Landlord and Tenant have executed and delivered the
Lease to which this Work Letter is attached, and into which this Work Letter is
fully incorporated by reference;
WHEREAS, the Lease provides for the leasing of space (the "Premises") within ▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (hereinafter referred to as the
"Building");
WHEREAS, Landlord and Tenant desire to set forth herein their respective
agreements regarding the improvement of the Premises;
NOW, THEREFORE, in consideration of the foregoing recitals, the execution and
delivery of the Lease by the parties hereto, the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Landlord and Tenant, intending to be legally
bound, hereby agree as follows:
Section 1. DEFINITIONS.
1.01. Defined Terms. Capitalized terms used in the Lease and this Work Letter
shall have the same meanings ascribed to them in the Lease. Otherwise, the
capitalized terms used in this Work Letter shall have the meaning ascribed to
them at the point where defined.
1.02. "Base Building Improvements" shall mean the improvements to the Premises
provided by Landlord, shown in Space A of page 2 of Exhibit C of the Base
Building Plans.
1.03 "Base Building Plans" shall mean the improvements plan approved by Landlord
and Tenant and attached hereto as Exhibit C for the construction and
installation of the Base Building Improvements for the entire Building.
1.04 "Tenant Improvements" shall mean the improvements constructed and installed
in the Premises by Tenant in accordance with the Tenant Improvement Working
Drawings.
1.05 Intentionally deleted.
1.06 "Improvements" shall mean the combined Base Building Improvements and the
Tenant Improvements.
1.07 "Punch List Items" shall mean minor details of construction or decoration
or mechanical adjustments to the Base Building Improvements that do not
materially interfere with Tenant's occupancy of the Premises for the
construction by Tenant's Contractor of the Tenant Improvements.
1.08 "Tenant's Contractor" shall mean such contractor as Tenant designates and
Landlord approves in writing, provided Landlord will not unreasonably withhold
said approval.
1.09 "Tenant's Architect" shall mean API Design, Inc., Architectural
Planning/Interior Design FF
1.10 "Allowance" shall mean the $372,370 amount set forth in Section 43 of the
Lease representing Landlord's contribution toward the construction of the Tenant
Improvements to be applied toward all
1
expenses associated with the construction, space planning, engineering,
construction drawings, construction management, signage and other necessary
permits directly associated with the Tenant Improvements. Under no circumstances
shall the Allowance be used for Tenant's due diligence review of the Premises
(or this Lease) nor the design, acquisition or planning costs of Tenant's
personal property, furniture, trade fixtures or equipment.
1.11 "Tenant Improvement Costs" shall mean the total cost of (i) the preparation
of the Tenant Improvement Working Drawings, (ii) the construction and
installation of the Tenant Improvements, and (iii) all other construction costs
associated improving the Premises for Tenant's occupancy excluding the Base
Building Improvements.
1.12 "Tenant Costs" shall mean the total of all Tenant Improvement Costs in
excess of the Allowance.
1.13 "Landlord's Architect" shall mean ▇▇▇▇▇▇ ▇▇▇▇▇, AIA.
1.14 "Landlord's Contractor" shall mean South Bay Construction.
1.15 "Ready for Occupancy" shall mean when Landlord's Architect has furnished
Landlord with a certificate that the Base Building Improvements work to be done
by Landlord in the Premises has been substantially completed for purposes of
Tenant's installation of the Tenant Improvements except for Punch List Work.
Section 2. DRAWINGS AND SPECIFICATIONS
2.01 Approval of Base Building Plans. The Base Building Plans attached hereto
are hereby approved by the parties for construction by Landlord.
2.02 Tenant Improvement Working Drawings. Tenant will cause to be prepared and
delivered to Landlord within ten (10) business days of the final execution of
this Work Letter final plans and specifications and working drawings for the
construction of the Tenant Improvements that will include structural, fire
protection, life safety, mechanical and electrical working drawings, and final
architectural drawings for the Improvements (collectively, Tenant Improvement
Working Drawings). The Tenant Improvement Working Drawings will not adversely
affects the mechanical, electrical, plumbing, heating, ventilating and air
conditioning, life-safety or other systems of the Building, the Base Building
Improvements, the structure or exterior appearance of the Building, or any other
tenant's use of such other tenant's premises in the Building. No later than five
(5) business days following Landlord's receipt thereof, Landlord shall either
approve the Tenant Improvement Working Drawings or set forth in reasonable
detail (which may be a ▇▇▇▇-up of the plans) any changes necessary to bring the
Tenant Improvement Working Drawings into substantial conformity with the Base
Building Improvement Plans. Any structural modification to the Base Building
Improvements required by the Tenant Improvement Working Drawings shall be
identified by Landlord as a Change Order (defined herein). Landlord will not
unreasonably object to any items in the Tenant Improvement Working Drawings
necessitated by applicable law or City of Redwood City requirements, provided
that any increased cost or delay resulting from such change, which would not be
applicable to the Base Building Improvements except for the design of Tenant's
Tenant Improvements, shall be a Tenant Cost and/or a Tenant Delay. Upon receipt
of Landlord's comments, Tenant shall undertake such revisions as are reasonably
feasible and prepare final Tenant Improvement Working Drawings. Tenant shall
resubmit any disapproved plan to Landlord for approval within three (3) business
days which shall be reviewed by Landlord to confirm that Landlord's response to
the proposed Tenant Improvement Working Drawings has been incorporated into the
final Tenant Improvement Working Drawings. The above process will be repeated
until the Tenant Improvement Working Drawings are approved by Landlord. Upon
approval of the Tenant Improvement Working Drawings by Landlord and Tenant, the
final drawings and specifications will be referred to as the Approved Tenant
Improvement Working Drawings. Tenant acknowledges that Landlord shall review
Tenant's drawings for Landlord's sole benefit which cannot be relied upon by
Tenant with respect to the adequacy of such plans or their conformance with
applicable law. Failure
2
of Tenant to prepare Tenant Improvement Working Drawings which are approved by
Landlord on or before June 15, 1999 shall constitute a Tenant Delay hereunder.
2.03 Revisions to Approved Tenant Improvement Working Drawings. If at any time
after approval of the Approved Tenant Improvement Drawings Tenant desires to
make revisions, Tenant shall submit proposed working drawings and specifications
reflecting such changes to Landlord ("Change Order"). Landlord shall promptly
review such drawings and specifications and shall notify Tenant of any comments
thereon or proposed revisions thereto within ten (10) days after receiving such
drawings and specifications. Tenant shall resubmit to Landlord any such drawings
and specifications which are not approved by Landlord within five (5) days after
Landlord's disapproval, with such revisions as are requested by Landlord. Upon
Landlord approval of the drawings and specifications, such drawings and
specifications shall constitute the Approved Tenant Improvement Working
Drawings. Tenant shall be responsible for all costs associated with an changes
to the Working Drawings. In the event such changes require modification to the
Base Building Improvements, Landlord shall obtain promptly from Landlord's
Contractor the amount of any adjustment in the Tenant Improvement Costs, Tenant
Delay or Tenant Delay costs resulting from such revisions and submit the amount
thereof to Tenant for Tenant's approval. Within three (3) days of receipt of
Landlord's estimate, Tenant shall advise Landlord whether to proceed or not to
proceed with the Base Building Improvement modifications. Upon Tenant's approval
of the revised Tenant Improvement Costs, such changes to the Base Building
Improvements shall be conducted by Landlord's Contractor at Tenant's sole cost
and expense. Once any adjustment and its related cost have been approved by
Tenant, Tenant shall be deemed to have given full authorization to Landlord,
through its contract with Contractor, to proceed with the work of constructing
and installing changes to the Base Building Improvements in accordance with the
Approved Tenant Improvement Working Drawings, as revised.
2.04 ADDITIONAL PROVISIONS. Landlord may charge Tenant a management fee for its
work (including, without limitation, its work in reviewing the plans for the
Tenant Improvements and any review of construction of the Tenant Improvements);
other fees specifically authorized under the Lease or this Work Letter, and (B)
reasonable fees with respect to structural modifications to the Base Building
Improvements necessitated by the Approved Tenant Improvement Working Drawings.
Tenant shall use HVAC and electrical engineers approved by Landlord for design
of the Tenant Improvements. If Tenant's engineer is not approved by Landlord for
the Tenant Improvements, Tenant may nevertheless employ such engineer for such
purpose, and Landlord within Landlord's reasonable judgment, may consult with an
independent engineer, or other consultant with respect to such improvements and
Tenant will reimburse Landlord for the reasonable fees and expenses incurred by
Landlord.
Section 3. PAYMENT OF COSTS
3.01 Contractor Payments. Tenant shall be responsible for all payments to
Tenant's Contractor. Landlord shall reimburse Tenant in the amount of Landlord's
Allowance in the following manner: Subject to Landlord's construction lender's
requirements and a retention of ten percent (10%), Landlord shall make progress
payments, on a pro rata basis to Tenant from Landlord's Allowance in the
proportion that the Allowance bears to the total cost for the construction of
the Tenant Improvements, from time to time as the Tenant Improvements are
constructed, based upon paid invoices and properly executed conditional lien
releases submitted from Contractor and the Tenant's Architect's certification
that such work has been properly completed through the date of such progress
payment. Landlord shall pay the balance of Landlord's Contribution upon receipt
of properly executed mechanics lien releases in compliance with California Civil
Code Section 3262(d)(4) (Unconditional Waiver and Release Upon Final Payment)
and upon Landlord's determination that no substandard work exists which
adversely affects the mechanical, electrical, plumbing, heating, ventilating and
air conditioning, life-safety or other systems of the Building, the Base
Building Improvements, the structure or exterior appearance of the Building, or
any other tenant's use of such other tenant's premises in the Building. Landlord
shall be entitled to suspend or terminate construction of the Tenant
Improvements and to declare Tenant in default in accordance with the terms of
the Lease if payment by Tenant of any amounts required to be paid by Tenant
under this Paragraph 3.01 are not received by Contractor when due.
3
3.02 Suspension of Landlord's Obligations. The obligation of Landlord to make
any one or more payments pursuant to this Work Letter or to proceed with the
construction of the Base Building Improvements shall be suspended without
further act of the parties during any such time as there exists any event of
default under the Lease or any event or condition which, with the passage of
time or the giving of notice or both would constitute such an event of default.
Nothing in this Work Letter shall affect the obligations of Tenant under the
Lease with respect to any alterations, additions and improvements within the
Premises, including, without limitation, any obligation to obtain the prior
written consent of Landlord thereto. The obligation of Landlord to make any one
or more payments pursuant to this Work Letter or to proceed with the
construction of the Base Building Improvements shall be Suspended without
further act of the parties during any such time as there exists any event of
default under the Lease or any event or condition which, with the passage of
time or the giving of notice or both would constitute such an event of default.
Nothing in this Work Letter shall affect the obligations of Tenant under the
Lease with respect to any alterations, additions and improvements within the
Premises, including, without limitation, any obligation to obtain the prior
written consent of Landlord thereto.
3.03 Failure to Pay Tenant's Costs. Failure by Tenant to pay Tenant's Costs in
accordance with this Work Letter within ten (10) days of any Landlord's invoice
will constitute a failure by Tenant to pay rent when due under the Lease and
shall therefore constitute an event of default by Tenant under the Lease, and
Landlord shall have all of the remedies available to it under this Lease for
nonpayment of rent.
Section 4. CONSTRUCTION OF BASE BUILDING IMPROVEMENTS
4.01. Construction of Base Building Improvements. Promptly following
finalization and approval of the Approved Tenant Improvement Working
Drawings, Landlord will apply for and use diligent efforts to obtain the
necessary permits and approvals to allow construction of the Base Building
Improvements ("Permits"). Landlord shall execute a construction contract with
Landlord's Contractor who will diligently construct and complete the Base
Building Improvements substantially in accordance with Base Building Plans
subject to any approved Change Orders required by the Approved Tenant
Improvement Working Drawings. Landlord specifically reserves the right to
make at any time and from time to time during the construction of the Base
Building Improvements, any changes to the Base Building Plans necessary to
obtain any Permit or to comply with all applicable regulations, laws,
ordinances, codes and roles or to achieve the compatibility, as reasonably
determined by Landlord, of the Base Building Plans with the shell and the
core and the mechanical, plumbing, life safety and electrical systems of the
Building and any third-party warranties.
4.02. Condition of Improvements. Landlord's Contractor's construction
contract shall provide that all work performed by Landlord's Contractor will
be performed in a good and proper manner, will be of good quality and free
from defects in materials, and workmanship, and will be completed in
substantial compliance with the Base Building Plans, as the same may have
been modified by approved changes or other Revisions, alterations or
additions approved hereunder, on or before the September 1, 1999. Tenant and
its representatives shall have the right to inspect the work in progress,
provided that Tenant does not interfere with the progress of the work.
4.03 Punch List Work. The Premises shall be Ready for Occupancy
notwithstanding Landlord's Architect's submission of a punch list to
Landlord's Contractor. Tenant may add items to the punch list at any time
within ten (10) days after the Delivery Date. Landlord will cause Contractor
to diligently complete any Punch List Items no later than thirty (30) days
after the Premises are Ready for Occupancy, or thirty (30) days after
Tenant's notice as the case may be, except for those items which would
reasonably require in excess of thirty (30) clays to complete which items
Contractor shall commence to complete during said thirty day period and shall
diligently prosecute to completion.
4.04. Warranties. Landlord shall obtain from Landlord's Architect, Landlord's
Contractor and appropriate subcontractors commercially reasonable warranties
of all Base Building Improvement Work that may be assigned in whole or in
part to Tenant that the Base Building Improvements are free from defects in
workmanship or materials for a period of no less than one year from the date
of
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substantial completion thereof. Landlord shall assign all Landlord Contractor,
Landlord Architect and equipment vendor warranties to Tenant as of the
substantial completion of such work. Such warranties shall include: a warranty
from Landlord's Contractor that as of the Commencement Date, the sidewalks,
driveways, parking lot, truck doors, stubbed electrical and plumbing, roof and
roofing systems, stubbed VAV/HVAC system, including roof screens, standard
finish rest rooms, common lobby/entrance and demising wall serving the Premises
are in good operable condition; and a warranty from Landlord's Architect that as
of substantial completion thereof, the Base Building Improvements are in
compliance with current building codes. Landlord shall enforce such warranties
on Tenant's behalf for a minimum of one year from the date such warranties are
granted
Section 5. DELIVERY OF POSSESSION OF THE PREMISES
5.01 Delivery of Possession. Landlord shall be deemed to have delivered
possession of the Premises to Tenant on the earlier of: (i) the date on which
the Base Building Improvements have been certified as substantially completed
by Landlord's Architect for the purpose of Tenant's installation of the
Tenant Improvements, subject only to completion of Punch List Items ("Ready
for Occupancy"); or (ii) the date on which the Premises would have been Ready
for Occupancy but for Tenant Delays.
5.02 Delays in Delivery of Possession. Landlord shall exercise due diligence
to cause Landlord's Contractor to cause the Delivery Date to occur on the
Estimated Delivery Date. If, for any reasons whatsoever (other than Tenant
Delays), the Premises are not Ready for Occupancy by the Estimated Delivery
Date, this Lease shall not be void or voidable, nor shall Landlord be liable
for any loss or damages suffered by Tenant; provided however, that the
September 1, 1999 latest Commencement Date shall be extended one day for each
day after the Estimated Delivery Date that the actual Delivery Date occurs
and, provided further, that if possession of the Premises has not been
delivered to Tenant within five (5) months following the Estimated Delivery
Date, for any reason whatsoever (other than Tenant Delays and Unavoidable
Delays), either Landlord or Tenant may, at their option at any time
thereafter but prior to the delivery of possession, terminate this Lease by
notice to the other and Landlord and Tenant thereupon shall be released from
all obligations under this Lease.
5.03 Approvals by Landlord. Any approval by Landlord of or consent by
Landlord to any plans, specifications or other items to be submitted to
and/or reviewed by Landlord for the Tenant Improvements pursuant to this
Lease shall be deemed to be strictly limited to an acknowledgment of approval
or consent by Landlord thereto and such approval or consent shall not
constitute the assumption by Landlord of any responsibility for the accuracy,
sufficiency or feasibility of any plans, specifications or other such items
and shall not imply acknowledgment, representation or warranty by Landlord
that the design is safe, feasible, structurally sound or will comply with any
legal or any governmental requirements.
5.04. Tenant's Delay. If Landlord's Contractor shall be delayed in
substantially completing the Base Building Improvements as a result of: (a)
Tenant's failure to timely approve the Tenant Improvement Working Drawings;
(b) Tenant's revisions to the Approved Tenant Improvement Working Drawings
which require modification to the Base Building Improvements; (c) Tenant's
interference with Landlord's Contractor's schedule through Tenant's Work; (d)
Change Orders; or (e) delays caused by Tenant in Landlord's construction (all
of the foregoing being referred to herein collectively as "Tenant's Delay");
then the Premises will be deemed to have been Ready for Occupancy (and
Tenant's obligation to pay Base Rent shall be accelerated) one day earlier
for each day of Tenant Delay, but in any case no earlier than September 1,
1999.
Landlord must identify any claimed Tenant Delay by written notice to Tenant
within five (5) business days following the commencement of any claimed
Tenant Delay ("Tenant Delay Notice"). The Tenant Delay Notice shall specify
the cause of the Tenant Delay as well as the estimated number of days that
substantial completion will be delayed by such Tenant Delay. Landlord may not
claim any Tenant Delay which has not been timely documented by a Tenant Delay
Notice, which does not actually cause a delay in the Delivery Date beyond the
Estimated Delivery Date. Tenant acknowledges that the length of any Tenant's
Delay is to be measured by the duration of the delay in substantial
completion caused by the event or conduct constituting Tenant's Delay, which
may exceed the duration of such event or conduct due to the necessity of
rescheduling work or other causes.
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Within a reasonable time after the Premises are Ready for Occupancy, Landlord
shall notify Tenant of the actual delay in the Delivery Date beyond the
Estimated Delivery Date, if any, caused by each and all Tenant Delays and
Unavoidable Delays (defined below), if any, and the resultant Tenant Delay costs
and calculated Delivery Date, which shall be the binding Delivery Date between
the parties with respect to the Lease.
5.05 UNAVOIDABLE DELAYS: Delays caused by: acts of God, unexpected delays of
public agencies, labor disputes, strikes, fires, freight embargoes,
extraordinary rainy and stormy weather that impedes the construction of the
Improvements, inability to obtain supplies, materials, fuels, or other causes or
contingencies beyond the reasonable control of Landlord with reasonable advance
planning. Landlord must identify any claimed Unavoidable Delay by written notice
to Tenant within five (5) business days following the commencement of any
claimed Unavoidable Delay ("Unavoidable Delay Notice"), which Notice shall
specify the cause of the Unavoidable Delay as well as the estimated number of
days that Delivery Date will be delayed by such Unavoidable Delay. Landlord may
not claim any Unavoidable Delay which has not been timely documented by an
Unavoidable Delay Notice, which does not actually cause a delay in the Delivery
Date beyond the Estimated Delivery Date, or that is offset by a time saving
caused by Tenant.
Section 6. Construction of Tenant Improvements.
6.01. PRICING THE WORK, LANDLORD'S SUPERVISION FEE. Upon completion of the
Working Drawings for the Tenant Improvements, Tenant shall solicit bids for
construction of the Tenant Improvements (the "Contractor's Bid"). Upon Tenant
agreeing on a price, Tenant shall deliver a copy of the construction contract
(or other documentation verifying the final bid and work to be performed) to
Landlord, such delivery to occur no later than fifteen (15) days after
Landlord's approval of the Working Drawings. If the Contractor is other than
Landlord's Contractor, Landlord shall be entitled to receive a fee for the
supervision of Contractor in an amount equal to three percent (3%) of the cost
of constructing the Tenant Improvements in the Premises.
6.02 ADMINISTRATION OF TENANT'S WORK. Following the Delivery Date, and after
acceptance of bids, Tenant's Contractor shall administer the construction of the
Tenant Improvements in accordance with the Approved Tenant Improvement Working
Drawings. Upon and following any entry into the Premises by Tenant's Contractor
prior to the Commencement Date of the Lease Term, Tenant shall perform all of
the obligations of Tenant applicable under the Lease during the Term (except the
obligation to pay Monthly Rent and Tenant's Share of Operating Expenses),
including without limitation, obligations pertaining to insurance, indemnity,
compliance with laws, hazardous materials and Alterations (Section 11), except
to the extent specifically inconsistent with this Work Letter. If Tenant
requests the installation of any Tenant Improvements that do not conform to the
Approved Tenant Improvement Working Drawings or conflict with elements of the
approved Working Drawings after such administration begins, such request shall
be deemed a change and shall be subject to the provisions of Paragraph 2.03.
Tenant Improvements shall comply with all applicable regulations, laws,
ordinances, codes and rules, such compliance being the obligation of Tenant.
6.03 INDEMNIFICATION. Tenant will indemnify, defend (with counsel satisfactory
to Landlord), and hold Landlord harmless from all suits, claims, actions, loss,
liability, cost, or expense (including claims for workers' compensation,
attorney fees, and costs) based on personal injury or property damaged or
contract claims (excluding any contracts to which Landlord is a party in which
such case the terms of such contract shall apply) arising from the construction
of the Tenant's Improvements. Tenant will repair or, if reasonably necessary,
replace (or, at Landlord's election, reimburse Landlord for the cost of
repairing or so replacing) any portion of the Building, Base Building
Improvements, Parking Lot improvements or item of Landlord's equipment or any of
Landlord's real or personal property damaged, lost, or destroyed by Tenant its
contractors, subcontractors or suppliers or any other tenant, invitee or guest
of Landlord in the performance of Tenant's Improvements. Landlord shall give
Tenant notice of any such claimed loss within a reasonable time of such loss.
6.04 INSURANCE. Tenant's Contractor will obtain and provide Landlord with
certificates evidencing Worker's Compensation, public liability, property damage
and Builder's All Risk insurance in amounts and forms and with companies
reasonably satisfactory to Landlord. Tenant shall confirm
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that Tenant's general contractor requires and obtains evidence of such insurance
in customary amounts and forms from all of its subcontractors and suppliers.
6.05 RULES AND REGULATIONS. Tenant and Tenant's Contractor will comply with any
reasonable rules, regulations, or requirements that Landlord or Landlord's
Contractor may impose by written notice to Tenant given sufficiency in advance
to permit such compliance. Tenant's agreement with Tenant's Contractor will
require each of the general contractor and subcontractors to provide cleanup of
the construction area at reasonable intervals to the extent that cleanup is
necessitated by the performance of the Tenant's Improvements.
6.06 TENANT'S CONTRACTORS. Tenant's Contractor will be bondable and Landlord may
require Tenant's contractor to provide construction or completion bonds at
Tenant's expense. Tenant agrees that in compliance with Landlord's lender's
requirements the Tenant agrees that if it shall cause construction of the Tenant
Improvements to be performed on or about the Premises by contractors who shall
employ craft workers who are members of unions that are affiliated with the
AFL-CIO Building and Construction Trades Department. Landlord and Tenant shall
diligently cooperate to avoid any delay, loss or damage that may result from
any, work stoppage or interruption arising from the use of nonunion employees.
6.07 EARLY ENTRY. Landlord will permit entry of Tenant's Contractor and
subcontractors into the Premises for the purposes of performing Tenant's
Improvements, prior to the Delivery Date, but only at the times that Landlord
Contractor reasonably deem feasible under the circumstances and pursuant to the
requirements of this Section 6. This license to enter before commencement of the
Term is expressly conditioned on the contractor retained by Tenant working in
harmony and not interfering with the workers, mechanics, and contractors of
Landlord. If at any time the entry or work by Tenant's contractor causes any
unreasonable interference, permission to enter may be withdrawn by Landlord
immediately on written notice to Tenant. Tenant's work shall not interfere with
the completion of the Base Building Improvements and any such interference may
be considered a Tenant Delay hereunder. Tenant's early entry solely for the
installation of Tenant Improvements shall not constitute "possession" for
purposes of determining the Commencement Date under Section 2(a)(i) of the
Lease.
6.08 RISK OF LOSS. All materials, work, installations, and decorations of any
nature brought on or installed in the Premises by or on behalf of Tenant before
the commencement of the Term will be at Tenant's risk, and neither Landlord nor
any party acting on Landlord's behalf will be responsible for any damage, loss,
or destruction except for damage arising from gross negligence or willful
misconduct.
6.09 CONDITION OF TENANT'S IMPROVEMENTS. All work performed by Tenant will be
performed in a good and proper manner, will be of good quality and free from
defects in design, materials, and workmanship, and will be completed in strict
compliance with the Approved Tenant Improvement Working Drawings, as the same
may have been modified by Tenant by Change Orders or otherwise. All work to be
performed by or for Tenant pursuant to this Work Letter will be performed
diligently, in a first-class manner, and in compliance with all applicable laws,
ordinances, regulations, and rules of any public authority having jurisdiction
over the Premises and Tenant and (if applicable) Landlord's insurance carriers.
Landlord will have the right, but not the obligation, to periodically inspect
the work on the Premises and, if any, work fails to conform to the Approved
Tenant Improvement Working Drawings, may require changes in the method or
quality of the work to conform to such approved plans and specifications. Tenant
must file and provide Landlord with a copy of the Notice of Completion,
Certificate of Occupancy (or equivalent document) and any other required permit
or notice for the Tenant Improvements. Tenant must provide Landlord with
Tenant's Architect's Certificate of Substantial Completion (AIA Form G704) and a
set of "as-built" drawings for the completed Tenant Improvement work.
Section 7. MISCELLANEOUS.
7.01 Tenant's Representative. Tenant hereby designates __________ as its sole
representative with respect to the matters set forth in this Work Letter, who
shall have full authority and
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responsibility to act on behalf of the Tenant as required in this Work
Letter, and Landlord shall be entitled to rely upon the decisions and
agreements made by such representative as binding upon Tenant.
7.02 Landlord's Representative. Landlord hereby designates ▇▇▇▇ ▇▇▇▇▇▇▇ of
▇▇▇▇▇▇▇▇▇ Construction Company as its sole representatives with respect to the
matters set forth in this Work Letter, who, until further notice to Tenant,
shall have full authority and responsibility to act on behalf of the Landlord as
required in this Work Letter.
7.03 Tenant's Lease Default. Notwithstanding any provision to the contrary
contained in this Lease, if an Event of Default as described in Section 22 of
the Lease or a default by Tenant under this Work Letter has occurred at any time
on or before the Commencement Date, then (i) in addition to all other rights and
remedies granted to Landlord pursuant to the Lease, Landlord shall have the
right to withhold payment of all or any portion of the Landlord's Allowance, and
(ii) all other obligations of Landlord under the terms of this Work Letter shall
be suspended until such time as such default is cured pursuant to the terms of
this Lease (in which case, Tenant shall be responsible for any delay in the
Delivery Date or Commencement Date caused by such inaction by Landlord).
7.04 Merger. The provisions of this Work Letter are deemed incorporated into the
Lease and together shall be interpreted as one document. Except as expressly set
forth in this Work Letter, Landlord has no other agreement with Tenant and has
no other obligation to do any work or pay any amounts with respect to the
Premises. Any other work in the Premises which may be permitted by Landlord
pursuant to the terms and conditions of the Lease shall be done at Tenant's sole
cost and expense and in accordance with the terms and conditions of the Lease.
7.05 Applicability of Work Letter. This Work Letter shall not be deemed
applicable to any additional space added to the original Premises at any time or
from time to time, whether by any options under the Lease or otherwise, or to
any portion of the original Premises or any additions thereto in the event of
damage or destruction of the Premises, condemnation of the Premises, or renewal
or extension of the initial term of the Lease, whether by any options under the
Lease or otherwise, unless expressly so provided in the Lease or any amendment
or supplement thereto.
IN WITNESS WHEREOF, the parties have executed this Work Letter as of the date of
the Lease.
"Landlord": Chestnut Bay LLC, a California limited liability company
/s/ ▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇, President
Date: June 21 1999
"Tenant" ImproveNet, Inc., Delaware corporation.
/s/ ▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Date: June 21, 1999
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