EXHIBIT 10.21
========================================
Commercial Office Lease
between
Las Positas LLC,
as Landlord,
and
Tut Systems, Inc.
as Tenant,
dated
March __, 2000
========================================
Table Of Contents
Page
Basic Lease Information............................................. iii
1. Premises...................................................... 1
2. Term; Completion of Improvements.............................. 1
3. Rental........................................................ 2
4. Use........................................................... 7
5. Utilities and Services........................................ 8
6. Taxes Payable by Tenant....................................... 9
7. Alterations, Additions or Improvements........................ 11
8. Liens......................................................... 12
9. Repairs....................................................... 12
10. Destruction or Damage......................................... 14
11. Insurance; Waiver of Subrogation.............................. 15
12. Release; Indemnity............................................ 17
13. Compliance with Legal Requirements............................ 19
14. Assignment and Subletting..................................... 21
15. Rules......................................................... 25
16. Entry by Landlord............................................. 25
17. Events of Default............................................. 26
18. Landlord's Right to Terminate................................. 27
19. Continuation Notwithstanding Default.......................... 28
20. Additional Remedies........................................... 28
21. Landlord's Right to Cure Defaults............................. 28
22. Attorneys' Fees............................................... 29
23. Eminent Domain................................................ 29
24. Subordination................................................. 30
i
25. No Merger..................................................... 32
26. Sale.......................................................... 32
27. Estoppel Certificate.......................................... 32
28. No Light, Air, or View Easement............................... 33
29. Holding Over.................................................. 33
30. Abandonment................................................... 33
31. Surrender..................................................... 34
32. Waiver........................................................ 34
33. Notice........................................................ 34
34. Complete Agreement............................................ 35
35. Authority..................................................... 35
36. Miscellaneous Provisions...................................... 35
37. Exhibits...................................................... 37
38. Letter of Credit.............................................. 38
39. Brokerage..................................................... 40
40. Limitation of Liability....................................... 40
41. Option to Renew............................................... 40
42. Signage....................................................... 43
43. Use of Names.................................................. 43
44. Parking and Transportation.................................... 43
45. Landlord's Default............................................ 44
ii
Commercial Office Lease
Basic Lease Information
Lease
Section
Preamble Date: March __, 2000
Preamble Landlord: Las Positas LLC
Preamble Tenant: Tut Systems, Inc.
Preamble Guarantor: None
1 Building Rinconada Center
5956 & ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
1 Premises Approximately Eighty-Nine Thousand
Eighty-Six (89,086) rentable square
feet of the Building, as shown on
Exhibit A attached hereto.
2(a); 2(c) Possession Delivery Date One (1) day after (i) mutual execution
and delivery hereof, and (ii)
Landlord's receipt of the Letter of
Credit pursuant to Section 38, subject
to the second sentence of Section 2(a).
iii
Term Commencement: The later of (i) the date Landlord
substantially completes Landlord's Work
in accordance with Section 2(b), or
(ii) the earlier of (a) the date that
is ninety (90) days following the
Possession Delivery Date (as such date
may be extended as provided below), or
(b) June 1, 2000 (as such date may be
extended as provided below). Each of
the dates described in clauses (ii) (a)
and (ii)(b) of the preceding sentence
shall be extended one (1) day for each
day of any delay in Tenant's completion
of Tenant's Work (as defined in Exhibit
B) that may be caused by a breach by
Landlord of its obligations under
Exhibit B.
3(d) Commencement of Payment of Term Commencement
Base Rent and Additional Rent:
2 Term Expiration: April 30, 2007 subject to Section 2 of
the Lease.
---------------------------------------
3(a) Base Rent: Lease
Year Monthly Base Rent Installment
---------------------------------------
1 One Hundred Twenty Thousand
Two Hundred Sixty-Six and
10/100 Dollars ($120,266.10)
(based on a Monthly Base Rent
of $1.35 per square foot).
---------------------------------------
2 One Hundred Twenty-Four
Thousand Seven Hundred Twenty
and 40/100 Dollars
($124,720.40) (based on a
Monthly Base Rent of $1.40
per square foot).
---------------------------------------
iv
---------------------------------------
3 One Hundred Twenty-Nine
Thousand One Hundred Seventy-
Four and 70/100 Dollars
($129,174.70) (based on a
Monthly Base Rent of $1.45
per square foot).
---------------------------------------
4 One Hundred Thirty-Three
Thousand Six Hundred Twenty-
Nine and No/100 Dollars
($133,629.00) (based on a
Monthly Base Rent of $1.50
per square foot).
---------------------------------------
5 One Hundred Thirty-Eight
Thousand Eighty-Three and
30/100 Dollars ($138,083.30)
(based on a Monthly Base Rent
of $1.55 per square foot).
---------------------------------------
6 One Hundred Forty-Two
Thousand Five Hundred Thirty-
Seven and 60/100 Dollars
($142,537.60) (based on a
Monthly Base Rent of $1.60
per square foot).
---------------------------------------
7 One Hundred Forty-Six
Thousand Nine Hundred Ninety-
One and 90/100 Dollars
($146,991.90) (based on a
Monthly Base Rent of $1.65
per square foot).
---------------------------------------
33 Tenant's Address for Notices: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
After Term Commencement, to the
Premises:
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
v
33 Guarantor's Address for Not applicable
Notices:
33 Landlord's Address for c/o Landmark Asset Management Group
Notices: ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
and
c/o DRA Advisors, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
38 Letter of Credit: Letter of Credit in the amount of
$1,850,000.00, to be reduced by
$250,000 upon the expiration of each of
the first six Lease Years
Landlord's Broker Colliers International
Tenant's Broker ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ of California, Inc.
vi
The provisions of the Lease identified above in the margin are those provisions
where references to particular Basic Lease Information appear. Each such
reference shall incorporate the applicable Basic Lease Information.
Landlord: Las Positas LLC,
a Delaware limited liability company
By: G&I II Las Positas LLC,
a Delaware limited liability company,
its managing member
By: G&I II Investment Las Positas Corp.,
a Delaware corporation,
its managing member
By:
--------------------
Name:
------------------
Title:
-----------------
Tenant: Tut Systems, Inc.,
a Delaware corporation
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
vii
Commercial Office Lease
This Commercial Office Lease (this "Lease"), dated effective as of the date
set forth in the Basic Lease Information is made and entered into by and between
each of the persons or entities specified in the Basic Lease Information as
Landlord ("Landlord"), Tenant ("Tenant") and Guarantor, if any ("Guarantor"),
respectively.
1. Premises
Subject to the terms, covenants, agreements and conditions hereinafter set
forth, to which Landlord and Tenant hereby mutually agree, (i) Landlord hereby
leases to Tenant, and Tenant hereby leases from Landlord, for the Term (as
defined below), the Premises, as specified in the Basic Lease Information, which
are located in the Building, as specified in the Basic Lease Information, which
is located on the parcel of land described on Exhibit A attached hereto (the
"Land," and together with the Premises and the Building, collectively, the
"Property"), and (ii) Landlord hereby grants to Tenant, for the Term, the right
to use all areas and facilities within the Property, but outside the Premises,
including, without limitation, the parking areas, access and perimeter roads,
sidewalks, landscaped areas, service areas, trash disposal facilities, and
similar areas and facilities, and the exterior walls and windows of the
Building. In addition, throughout the Term Tenant shall be entitled to use the
generator located immediately outside the Building (the "External Generator").
2. Term; Completion of Improvements
(a) Term. The term of this Lease (the "Term") shall commence (the "Term
Commencement") and, unless sooner terminated as hereinafter provided, shall end
(the "Term Expiration") on the dates specified in the Basic Lease Information.
If Landlord, for any reason whatsoever, cannot deliver possession of the
Premises to Tenant (subject to Section 2(c) below) by the Possession Delivery
Date, as specified in the Basic Lease Information, this Lease shall not be void
or voidable and the Landlord shall not be liable to Tenant for any loss or
damage resulting therefrom; provided, however, that in such event Tenant may
terminate this Lease upon not less than ten (10) days prior written notice to
Landlord, or, at Tenant's option, subject to any contrary provisions in Exhibit
B attached hereto, the Term Commencement and the Term Expiration shall be
deferred for the number of days of such delay.
(b) Completion of Landlord's Work. The Premises are leased to Tenant in
their present "as-is" condition, except that prior to the Term Commencement
Landlord shall substantially complete Landlord's Work (as defined in Exhibit B),
subject only to the completion of punchlist items, and except as otherwise
expressly set forth herein or in Exhibit B. If Landlord has not substantially
1
completed Landlord's Work by the date that is ninety (90) days following the
Possession Delivery Date, Tenant may terminate this Lease upon not less than ten
(10) days prior written notice to Landlord. Following substantial completion of
Landlord's Work, Landlord's architect and Tenant shall conduct a joint
inspection of the Premises and shall prepare a punchlist of items to be
completed by Landlord in connection with Landlord's Work. Such punchlist items
shall be completed by Landlord within thirty (30) days following preparation of
such punchlist.
(c) Delivery of Possession; Early Access. Landlord shall deliver possession
of the Premises to Tenant on the Possession Delivery Date; provided, however,
that until the Term Commencement Tenant's possession of the Premises shall be
solely for the purpose of constructing the Tenant Improvements (as defined in
Exhibit B) as provided in Exhibit B. Landlord shall permit Tenant nonexclusive
access to the Premises before the Possession Delivery Date solely for the
purpose of preparing space plans and working drawings for the Tenant
Improvements. Any such possession of or access to the Premises before the Term
Commencement shall be on all of the terms of this Lease (subject to the
foregoing limitations on Tenant's use of the Premises, and excluding the
obligation to pay Base Rent and Additional Rent). Notwithstanding the foregoing,
Landlord shall be permitted access to the Premises before the Term Commencement
for the purpose of performing Landlord's Work.
3. Rental
Tenant shall pay to Landlord throughout the Term the following sums as
rental for the Premises:
(a) Base Rent. The monthly Base Rent payable during the Term shall be the
sum specified in the Basic Lease Information as the Base Rent subject to the
further provisions hereof.
(b) Additional Rent on Account of Operating Expenses. In addition to Base
Rent, Tenant, as provided in Section 3(c), shall pay to Landlord, as additional
rent ("Additional Rent") with respect to each calendar year of the Term, all
Operating Expenses paid or incurred by Landlord in such calendar year. For
purposes hereof, "Operating Expenses" shall mean (i) all direct and indirect
costs of management, operation and maintenance of the Building, including,
without limitation, the following: wages, salaries, employee benefits, and
payroll burden of personnel engaged in management, operation and maintenance of
the Building, a property management fee in the amount of three percent (3%) of
Base Rent, Landlord's cost of administering the Property (including, without
limitation, Building management office rent or rental value), maintenance of and
repairs of the Building and all Standard Building Systems (as defined below),
equipment, tools, materials and supplies, Insurance Expenses (as defined below),
license, permit and inspection
2
fees, maintenance contracts and general services, and depreciation on personal
property, (ii) the cost of any capital improvements made to the Building by
Landlord after the Term Commencement that are required under any governmental
law or regulation, such cost or allocable portion thereof to be amortized over
the useful life of the capital item in question in accordance with generally
accepted accounting principles together with interest on the unamortized balance
at the rate of ten percent (10%) per year, and (iii) any assessments, dues or
other amounts payable pursuant to the Covenants, Conditions and Restrictions
(the "CC&R's") of the Hacienda Business Park, as they may be amended from time
to time, including, without limitation, any periodic or special dues or
assessments of the Hacienda Business Park Association (the "Association") which
are applicable to the Property (provided, however, that Landlord may elect that
Tenant pay directly any such assessments or dues relating to any particular uses
of the Property made by Tenant or arising out of any actions or Tenant or its
agents, employees or invitees). Notwithstanding the foregoing, Operating
Expenses shall not include (a) Property Taxes (as defined below, and which are
payable by Tenant in accordance with the provisions set forth below), (b)
depreciation on the Building other than depreciation on personal property, (c)
costs of Landlord's Work or Landlord's Contribution (as each such term is
defined in Exhibit B attached hereto), (d) interest, (e) capital items other
than those referred to in clause (ii) above, (f) payments on debt (principal or
interest), (g) costs occasioned by the act, omission or violation of any law by
Landlord or its employees, agents or contractors, (h) costs occasioned by
casualties or by the exercise of the power of eminent domain, (i) costs to
correct any construction defect in the Property or to comply with any covenant,
condition, restriction, underwriter's requirement or law applicable to the
Property as of the date hereof, (j) costs incurred in connection with the
presence of any Hazardous Material except to the extent caused by any
Environmental Activity of Tenant or its employees, agents or invitees, (k)
expense reserves, (l) costs of structural repairs to the Building, and (m)
earthquake insurance premiums in excess of two (2) times the amount of such
premiums as of the date of this Lease. The determination of the costs of
management, operation, and maintenance of the Building and the costs of the
capital improvements referred to in clause (ii) above shall be in accordance
with generally accepted accounting principles consistently applied.
(i) Without limiting the foregoing, the costs of maintenance of the
Building, as contemplated by this Section 3(b), shall include the cost of a roof
maintenance contract entered into by Landlord with a roof maintenance contractor
for the performance of routine maintenance and repairs on the roof coverings
required to be performed during the Term.
(ii) Without limiting the foregoing, the costs of maintenance of the
Standard Building Systems, as contemplated by this Section 3(b), shall include
the cost of an HVAC service and maintenance contract entered into by Landlord
with
3
an HVAC service and maintenance contractor for the performance of routine
maintenance and repairs on the heating, ventilation and air conditioning systems
of the Building required to be performed during the Term.
(iii) As used herein, "Standard Building Systems" shall mean all
Building systems, including, without limitation, electrical, mechanical,
elevator, plumbing, heating, ventilation, air conditioning, life safety, power,
intrabuilding network cable ("INC"), telecommunications and lighting systems;
provided, however, that "Standard Building Systems" shall not include the Tenant
Extra Building Systems (as defined in Section 9(b)) or the existing halon fire
protection system, special air-conditioning units, telephone systems, or any
other existing systems specifically serving the computer room.
(iv) As used herein, "Insurance Expenses" shall mean the total costs
and expenses paid or incurred by Landlord in connection with the obtaining of
insurance on the Premises, the Building and/or the Property or any part thereof
or interest therein, including, without limitation, premiums for "all risk" fire
and extended coverage insurance, commercial general liability insurance, "Loss
of Rents" or abatement insurance, earthquake insurance, flood or surface water
coverage, and other insurance that may be required by Landlord's lender or may
otherwise be deemed necessary by Landlord or any mortgagee of Landlord, in its
reasonable discretion, and any deductibles paid under policies of any such
insurance. The foregoing shall not be deemed an agreement by Landlord to carry
any particular insurance relating to the Premises, Building, or Property.
(c) Procedure. The Additional Rent provided under Section 3(b) above shall
be paid in accordance with the following procedures:
(i) Not less than fifteen (15) days before the Term Commencement, and
at the end of each calendar year occurring during the Term, Landlord shall give
Tenant written notice of its estimate of the amount payable under Section 3(b).
On or before the later of thirty (30) days following such notice or the first
day of the calendar month next following such notice, Tenant shall pay to
Landlord that portion of the estimated amounts that already shall have accrued
and thereafter on or before the first day of each succeeding calendar month
shall pay a ratable portion of the balance remaining over the relevant period
covered. If for any reason such notice is not given as provided above, Tenant
shall continue to pay on the basis of the then applicable rental until the month
after such notice is given. If at any time or times Landlord determines that the
increased amount payable under Section 3(b) above will vary from its estimate by
more than ten percent (10%), Landlord may, by notice to Tenant, revise its
estimate for such year, and subsequent payments by Tenant for such year shall be
based upon such revised estimate.
4
(ii) Within ninety (90) days after the close of each respective
calendar year during the Term (or as soon after such ninety (90) day period as
practicable), Landlord shall deliver to Tenant a statement ("Expense Statement")
of the adjustments to be made pursuant to Section 3(b) above for such calendar
year. Such Expense Statement shall be prepared in accordance with generally
accepted accounting principles, and shall be final and binding upon Landlord and
Tenant. If on the basis of such Expense Statement Tenant owes an amount that is
less than the estimated payments for such year previously made by Tenant,
Landlord shall refund such excess to Tenant within thirty (30) days of the
delivery of such Expense Statement. If on the basis of the Expense Statement
Tenant owes an amount that is more than the estimated payments for such year
previously made by Tenant, Tenant shall pay the deficiency to Landlord within
thirty (30) days after delivery of the Expense Statement.
(iii) Notwithstanding anything in Section 3(c)(ii) to the contrary,
provided that Tenant is not in default under the terms of this Lease beyond any
applicable notice and cure periods, Tenant, at its sole cost and expense, shall
have the right within ninety (90) days after the delivery of each Expense
Statement to review and audit Landlord's books and records regarding such
Expense Statement for the sole purpose of determining the accuracy of such
Expense Statement. Such review or audit shall be performed by Tenant's employees
or by a nationally recognized accounting firm that calculates its fees with
respect to hours actually worked (as opposed to a calculation based upon
percentage of recoveries or other incentive arrangement), shall take place
during normal business hours in the office of Landlord or Landlord's property
manager and shall be completed within three (3) business days after the
commencement thereof. If Tenant does not so review or audit Landlord's books and
records, Landlord's Expense Statement shall be final and binding upon Landlord
and Tenant. In the event that Tenant determines on the basis of its review of
Landlord's books and records that the amount payable by Tenant pursuant to this
Lease for the period covered by the Expense Statement is either less than or
greater than the actual amount properly payable by Tenant pursuant to the terms
of this Lease, (i) Tenant shall pay any deficiency to Landlord within thirty
(30) days of Tenant's completion of its review or audit or (ii) Landlord shall
refund any excess to Tenant within thirty (30) days after Tenant delivers
written notice and reasonable supporting documentation showing a refund to be
owing and Landlord shall pay at such time any reasonable audit expenses, if such
refund owing exceeds the aggregate amount properly payable by Tenant pursuant to
the terms of this Lease by ten percent (10%) or more.
(iv) If this Lease shall terminate on a day other than the last day of
a calendar year, the amount of adjustment to be made pursuant to Section 3(b)
above that is applicable to the calendar year in which such termination occurs
shall be prorated on the basis that the number of days from the commencement of
such year
5
to and including the Term Expiration bears to 365. The termination of this Lease
shall not affect the obligations of Landlord and Tenant pursuant to subparagraph
(ii) of this Section 3(c) to be performed after such termination.
(d) Rental Commencement; Rent Defined. Base Rent and Additional Rent shall be
paid to Landlord (i) upon the execution of this Lease by Tenant for the first
full month of the Term for which Base Rent and Additional Rent are payable as
set forth in the Basic Lease Information (as the same may be deferred pursuant
to Section 2(a) hereof), and (ii) with respect to the second full month and each
successive calendar month thereafter for which Base Rent and Additional Rent are
payable, on or before the first day of each such month. Base Rent, Additional
Rent and all other sums payable by Tenant pursuant to this Lease shall be deemed
to be "Rent". If this Lease commences on other than the first day of a calendar
month or ends on other than the last day of a calendar month, the second and
last installments of Rent shall be pro-rated for the partial months involved.
(e) No Deduction or Offset; Interest. All Rent due and payable by Tenant to
Landlord under any of the provisions of this Lease shall be paid to Landlord,
without abatement, deduction, offset, prior notice or demand, in lawful money of
the United States at Landlord's address for notices or to such other person or
at such other place as Landlord, from time to time, may designate in writing.
Tenant acknowledges that late payment by Tenant to Landlord of rental or such
sums will cause Landlord to incur costs not contemplated by this Lease, the
exact amount of such costs being extremely difficult and impracticable to fix.
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 upon the Property. Therefore, if any installment
of Rent due and payable by Tenant to Landlord is not paid to and received by
Landlord within five (5) days of the date when due:
(i) Tenant shall pay to Landlord an additional sum of five percent
(5%) of the overdue amount as a late charge. The parties agree that this late
charge represents a fair and reasonable estimate of the costs that Landlord will
incur by reason of late payment by Tenant; and
(ii) the sums due and payable shall bear interest from the date due
until paid at the lesser of prime plus 5% per annum or the highest rate legally
permitted by applicable law.
Acceptance of any late charge or interest shall not constitute a waiver of
Tenant's default on the overdue amount, or prevent Landlord from exercising any
of the other rights and remedies available to Landlord. The parties further
agree that the payment of a late charge and interest provided for above are
distinct and separate from one another in that the payment of interest is to
compensate Landlord
6
for the use of Landlord's money by Tenant, while the payment of a late charge is
to compensate Landlord for the additional administrative expenses incurred by
Landlord in handling and processing delinquent payments.
4. Use
The Premises shall be used only for general office purposes, for shipping,
receiving, warehousing, assembly, research and development purposes, and for
other purposes permitted by the CC&R's and applicable laws, regulations and
governmental approval requirements. Tenant shall neither do nor permit its
employees, agents or invitees to do in or about the Premises, nor bring or keep
therein, or permit its employees, agents or invitees to bring or keep therein,
anything which is prohibited by or will in any way conflict with any law,
statute, ordinance or governmental rule or regulation now in force or which may
hereafter be enacted or promulgated, or which now or hereafter is prohibited by
any insurance policy carried by Landlord, or cause a cancellation of any
insurance policy covering the Building or any part thereof or any of its
contents. Tenant, in its own respect and in respect of its agents, employees
and invitees, shall not use or allow its employees, agents or invitees to use
the Premises or the Building or any part thereof to be used by its employees,
agents or invitees for any improper, unlawful or objectionable purpose, nor
shall Tenant cause, maintain or permit its employees, agents or invitees to
cause or maintain any nuisance in, on or about the Property or any portion
thereof, or commit or suffer to be committed by its employees, agents or
invitees any waste or damage in or about the Property or any portion thereof.
Tenant agrees that the Property is subject and this Lease is subordinate to the
CC&R's. Tenant hereby acknowledges that it has received and read a copy of the
current CC&R's and knows the contents thereof. Throughout the Term, Tenant
shall faithfully and timely perform and comply with the CC&R's and any
modification or amendment thereof. Tenant shall comply with all duly adopted
rules, regulations and restrictions that may be adopted from time to time by the
Hacienda Business Park Owners Association (the "Association"). Tenant shall
indemnify, defend and hold Landlord free and harmless from and against any
claim, loss, liability, expense or damage, including attorneys' fees and costs,
arising out of the actual or asserted failure of Tenant to perform or comply
with the CC&R's. Tenant, its agents, employees and invitees shall have the
right, on a 24 hour per day - seven day per week basis during the Term, to the
exclusive use of the Premises. Tenant shall not use any portion of the Building
roof without Landlord's prior written consent, which consent may be withheld in
Landlord's sole and absolute discretion; provided, however that Landlord shall
not unreasonably withhold its consent to Tenant's use of the Building roof to
the extent such use is necessary for the operation of Tenant's business;
provided further, however, that Landlord shall be entitled to review and
reasonably approve Tenant's plans and specifications for any construction or
installation to be performed on the roof and Tenant shall be responsible for any
damage to the roof resulting from
7
Tenant's use thereof or Tenant's construction or installation thereon. Tenant
shall not place any equipment in or otherwise utilize the Premises in a manner
that would exceed the floor load limits specified by Landlord. Tenant shall not
dump or store waste materials or refuse or allow such materials or refuse to
remain outside the Building, except in the enclosed trash areas provided. Tenant
shall not store or otherwise place, or permit its employees, agents or invitees
to store or otherwise place, any material of any nature whatsoever outside the
Building. Tenant shall not do nor shall Tenant allow its agents, employees or
invitees to do anything to cause any damage, deterioration or unsightliness to
the Property.
Notwithstanding anything herein to the contrary, Tenant shall not be
required to comply with any rule or regulation of the Association, or with any
amendment to the CC&R's, which, in either case, is adopted, imposed or entered
into after the date hereof (a "New Requirement"), unless (i) Landlord's consent
was not required in order for such New Requirement to become effective, or (ii)
such New Requirement (a) applies non-discriminatorily to all occupants of
Hacienda Business Park, (b) does not unreasonably interfere with Tenant's use of
the Property (including Tenant's rights to use the parking areas on the
Property), and (c) does not materially increase the obligations or decrease the
rights of Tenant under this Lease. If any New Requirement is proposed which
would not become effective without Landlord's consent and which is not covered
by clause (ii) of the preceding sentence, Landlord shall consult with Tenant and
act reasonably in determining whether or not to consent to such New Requirement.
5. Utilities and Services
Tenant shall be solely responsible for obtaining and paying for all
utilities and services (including water, electricity, sewer, janitorial and
security) relating to the Premises. Landlord shall not be liable for, Tenant
shall not be entitled to any abatement or reduction of Rent by reason of, no
eviction of Tenant shall result from, and Tenant shall not be relieved from the
performance of any covenant or agreement in this Lease because of Tenant's
failure to obtain such utilities and/or services. Landlord reserves the right to
temporarily stop the services of the plumbing, electricity, water, ventilation,
air condition or heating systems when necessary by reason of accident,
emergency, or for repairs, maintenance or construction of Landlord's Work. To
the extent possible and practicable, Landlord shall give advance notice to
Tenant of any proposed shutdowns of services.
If the Premises should become not reasonably suitable for Tenant's use as a
consequence of cessation of utilities or other services, interference with
access to the Premises not existing on the date hereof, legal restrictions not
existing on the date hereof or the presence of any Hazardous Material on the
Premises which is not known to Tenant on the date hereof and does not result
from any Environmental Activity of Tenant or Tenant's employees, agents or
invitees, and in any of the
8
foregoing cases the interference with Tenant's use of the Premises persists for
seven (7) consecutive days, then Tenant shall be entitled to an equitable
abatement of Rent to the extent of the interference with Tenant's use of the
Premises occasioned thereby. If the interference persists for more than ninety
(90) consecutive days, Tenant shall have the right to terminate this Lease upon
written notice to Landlord. Landlord shall have the right, but not the
obligation, to take such action as may be reasonably necessary to remove the
cause of such any interference with Tenant's use of the Premises.
6. Taxes Payable by Tenant
(a) Property Taxes.
(i) Subject to subparagraphs (ii) and (iii) of this Section 6(a),
Tenant shall pay directly to the public authorities charged with collection
therefor, before delinquency, all Property Taxes that become payable with
respect to the Property for periods covered by the Term. If Tenant fails to pay
such Property Taxes as and when required hereunder, Tenant shall be in breach
hereof, and, without limiting any other remedy for such breach that Landlord may
have, Landlord may pay such Property Taxes, in which event the amount of such
payment shall become payable to Landlord on demand, and Landlord shall have (in
addition to any other right or remedy of Landlord) the same rights and remedies
in the event of the nonpayment thereof by Tenant as in the case of default by
Tenant in the payment of rental. For purposes hereof, "Property Taxes" shall
mean all real property taxes, assessments (general or special), property tax
reassessments caused by a change in ownership of the Property and all other
taxes (including any tax levied wholly or partly in lieu thereof) levied against
the Building (or this Lease, the occupancy of Tenant or the sums payable by
Tenant hereunder), excluding only (a) taxes covered by Section 6(b) hereof, (b)
federal and California income and death taxes imposed with respect to Landlord,
(c) taxes levied on Landlord's rental income, unless such tax is imposed in lieu
of real property taxes, and (d) any tax or assessment expense in excess of the
amount which would be payable if such tax or assessment expense were paid in
installments over the longest permitted term. For purposes hereof, "taxes" is
meant to be interpreted in its most comprehensive sense and to include any
impost, levy or the like levied by any governmental jurisdiction; and without
limiting the generality of the foregoing, "taxes" shall include any tax, fee,
excise, levy, transfer, gift or other impost imposed by the United States, the
State of California or any political subdivision of the State (including any
county, city, city and county, public corporation, district or any other
political entity or public corporation thereof), however described (including
any so-called value-added tax) as a direct substitution in whole or in part for,
or in addition to, real property taxes and assessments. Landlord agrees to give
appropriate written instructions to the public authorities charged with
collecting Property Taxes to cause statements and ▇▇▇▇▇▇▇▇ to be mailed directly
by such public authorities to Tenant at the address set
9
forth in the Basic Lease Information. Tenant shall deliver to Landlord, on
demand, original receipts or photocopies evidencing payment of Property Taxes.
(ii) All Property Taxes levied on the Premises for the tax period in
which the Term Commencement occurs shall be appropriately prorated between
Landlord and Tenant as of the Term Commencement. With respect to such tax
period, Tenant shall pay Tenant's share of the Property Taxes directly to
Landlord and not to the public authorities charged with the collection. Such
payment shall be made not later than thirty (30) days before the date on which
such Property Taxes would become delinquent. Such payment shall constitute full
performance by Tenant, and Landlord shall pay from those funds and Landlord's
own funds all of the Property Taxes for such tax period. Taxes levied on the
Premises for the tax period in which the Term Expiration occurs shall be
similarly prorated between Landlord and Tenant as of the Term Expiration. Tenant
shall pay Tenant's share of such Property Taxes to Landlord directly rather than
to the public authorities, and such payment shall constitute full performance
under this Lease with respect to such Property Tax liability.
(iii) Tenant shall not be required to pay any Property Tax so long as
Tenant diligently and in good faith contests the validity or the legality of the
Property Tax by appropriate legal proceedings, which should prevent the
collection of Property Tax contested; provided however, that Tenant, before the
date that such Property Tax becomes delinquent, shall either have paid it under
protest or shall have posted a bond with Landlord sufficient to cover the amount
of such Property Tax. Upon final determination of Tenant's contest of the
validity or legality of the Property Tax, Tenant shall immediately pay the
contested Property Tax, together with all interest and penalties, if any, and
remove and discharge any lien or forfeiture arising from the prior nonpayment.
Any proceedings for contesting the validity, legality, or amount of any Property
Tax, or to recover any Property Tax paid by Tenant, may be brought by Tenant in
the name of Landlord or in the name of Tenant, or both, as Tenant deems
advisable. Landlord agrees that Landlord will, upon the reasonable request of
Tenant, execute or join in the execution of any instrument or document necessary
in connection with any proceeding. However, if any proceedings are brought by
Tenant, Tenant agrees to indemnify Landlord for all loss, cost, or expense that
may be imposed on Landlord in connection with the proceeding. Tenant's right to
contest taxes as provided in this Lease shall not extend beyond the point where
Landlord's title to all or any portion of the Property could be lost. In any
event, Tenant shall notify Landlord in advance of any Property Tax contest
proceedings that Tenant intends to initiate, and shall then inform Landlord of
all significant developments in the proceedings as they occur.
(iv) If Tenant fails to pay any Property Taxes, including any penalties
and interest, as and when required under this Section 6, Landlord may, but shall
not be obligated to, pay such Property Taxes, together with any such interest
and
10
penalties, and any such amounts, together with interest at the lesser of prime
plus 5% per annum or the highest rate legally permitted by applicable law, shall
be repaid to Landlord by Tenant, upon demand, as Additional Rent.
(b) Other Taxes. In addition to the monthly rental and other charges that
are payable by Tenant hereunder, Tenant shall reimburse Landlord upon demand for
any and all taxes payable by Landlord whether or not now customary or within the
contemplation of the parties hereto which are upon, measured by, or reasonably
attributable to the cost or value of Tenant's equipment, furniture, fixtures,
and other personal property located in the Premises or by the cost or value of
any leasehold improvements made in or to the Premises by or for Tenant, other
than any installed and paid for by Landlord under Exhibit B, regardless of
whether title to such improvements shall be in Tenant or Landlord.
7. Alterations, Additions or Improvements
Except for the Tenant Improvements, the installation and payment of which
shall be governed by the provisions of Exhibit B, Tenant shall not make or
suffer to be made any alterations, additions, or improvements to or of the
Premises or any part thereof or attach any fixtures or equipment thereto
(collectively, "Alterations") without Landlord's prior written consent, which
consent shall not be unreasonably withheld or delayed; provided, however, that
Tenant may, without Landlord's prior written consent, make non-structural
Alterations the aggregate cost of which does not exceed $25,000 in any twelve
(12) month period ("Permitted Alterations"). Except for Alterations which
cannot be removed without structural injury to the Premises (which shall
immediately become Landlord's property and, at the end of the Term, shall remain
on the Premises without compensation to Tenant unless Landlord elects by notice
to Tenant to have Tenant remove the same), all Alterations shall belong to
Tenant and may be removed by Tenant at any time provided that Tenant repairs all
damage caused by such removal. At Landlord's option, which Landlord may
exercise in its sole and absolute discretion, by notice to Tenant (a) within
thirty (30) days after Tenant's written request therefor (which request shall be
accompanied by a copy of any space plans or other written information reasonably
required by Landlord), or (b) if no such request is made then at the end of the
Term, Tenant shall remove all or any Alterations, repair any damage to the
Premises, and restore the Premises to their condition prior to the installation
of the Alterations. Landlord shall have no lien in any item of Tenant's trade
fixtures, furniture, equipment or other personal property.
Tenant at its expense shall obtain any and all permits and consents of
applicable governmental authorities in respect of the Alterations and shall
comply with the requirements of all governmental authorities in connection
therewith, including all building codes; and Tenant shall be liable to Landlord
and shall reimburse Landlord for the costs of any improvements to the Building
(whether or
11
not within the Premises) which may be required by governmental authority as a
consequence of the Alterations.
All Alterations made by Tenant with the prior written consent of Landlord
shall be at Tenant's sole cost and expense, and, except for any Permitted
Alterations, shall be effected through the use of contractors approved by
Landlord who, with respect to any project costing in excess of $100,000, shall
furnish to Landlord upon demand such completion bonds and labor and material
bonds as Landlord may require so as to assure completion of the Alterations on a
lien-free basis (and the furnishing of the same shall not relieve Tenant of its
obligation under Section 8 hereof).
Without limiting any other provision hereof, before commencing any
Alteration Tenant shall furnish Landlord at least three (3) but no more than
fifteen (15) days' prior written notice so that Landlord may post any notices of
non-responsibility or other notices reasonably required by Landlord.
8. Liens
Tenant shall keep the Premises and the Building free and clear of and from
any and all mechanics', materialmen's and other liens for work or labor done,
services performed and for materials used or furnished in or about the Premises
by or on behalf of Tenant. Tenant at all times shall pay and discharge,
promptly and fully, any and all claims upon which any such lien may or could be
based, provided that Tenant in good faith may contest any such lien if Tenant
first obtains and records a statutory lien release bond the effect of which is
that the lien is expunged from Landlord's title as a matter of law. Tenant
shall save, defend, indemnify and hold Landlord, the Premises and the Building
free and harmless of and from any and all such liens or claims of liens or suits
or other proceedings pertaining thereto.
9. Repairs
(a) Condition of Premises. Tenant hereby accepts the Premises as being in
the condition in which Landlord is obligated to deliver the Premises, subject
only to completion of Landlord's Work (as defined in Exhibit B). Landlord has no
obligation and has made no promise to alter, remodel, improve, repair, decorate,
or paint the Premises or any part thereof, except as specifically herein set
forth in Exhibit B. Except as specifically set forth herein, Landlord has not
made any representations respecting the condition of the Premises to Tenant.
(b) Maintenance by Tenant. Throughout the Term, Tenant shall, at its sole
expense, subject to Sections 9(c), 10 and 23 hereof, (1) keep and maintain in
good order and condition the Premises and Tenant's personal property located in
or about the Premises, (2) keep and maintain in good order and condition, repair
and
12
replace each of the following Building Systems (the "Tenant Extra Building
Systems"): (a) the External Generator, and (b) any systems installed in the
Premises by Tenant, including, without limitation, Tenant's security system.
Notwithstanding the foregoing, Tenant shall have no obligation to perform or
construct any repair, maintenance or improvement which is made necessary by the
acts or omissions of Landlord or its employees, agents or contractors or which
would be treated as a "capital expenditure" under generally accepted accounting
principles (provided that Tenant shall pay its share of the cost of such repair,
maintenance or improvement to the extent that such cost is properly included in
Operating Expenses). In addition, Landlord shall cooperate reasonably with
Tenant, at Tenant's expense, in enforcing for Tenant's benefit any warranties
that apply to Tenant's repair obligations hereunder.
(c) Maintenance by Landlord. Subject to the provisions of Sections 9(b)(2),
10 and 23, and further subject to Tenant's obligation under Section 3 to
reimburse Landlord, in the form of Additional Rent, for the cost and expense of
the following items, Landlord agrees to repair and maintain the following items:
the roof membrane and coverings (which shall be deemed to exclude the plywood
roof panels), the Standard Building Systems, and the parking areas, pavement,
landscaping, sprinkler systems, sidewalks, driveways and curbs. Subject to the
provisions of Sections 9(b)(2), 10 and 23, Landlord, at its own cost and
expense, agrees to repair and maintain the following items: the structural
portions of the roof (specifically excluding the roof membrane and coverings),
the foundation, the footings, the floor slab, and the load bearing walls and
exterior walls of the Building (excluding any glass and any routine maintenance,
but including, without limitation, any painting, sealing, patching and
waterproofing of such walls). Notwithstanding anything in this Section 9 to the
contrary, Landlord shall have the right to either repair or to require Tenant to
repair any damage to any portion of the Premises, the Building and/or the
Property caused by or created due to any act, omission, negligence or willful
misconduct of Tenant or its agents, employees or invitees, and to restore the
Premises, the Building and/or the Property, as applicable, to the condition
existing prior to the occurrence of such damage; provided, however, that in the
event Landlord elects to perform such repair and restoration work, Tenant shall
reimburse Landlord upon demand for all costs and expenses incurred by Landlord
in connection therewith. Landlord's obligation hereunder to repair and maintain
is subject to the condition precedent that Landlord shall have received written
notice of the need for such repairs and maintenance; provided, however, that
such condition precedent shall not apply to (i) routine preventative maintenance
and repairs that would be within the scope of (a) a customary roof maintenance
contract for the performance of routine maintenance and repairs on the roof
coverings, or (b) a customary HVAC service and maintenance contract for the
performance of routine maintenance and repairs on the heating, ventilation and
air conditioning systems of the Building, or any (ii) maintenance or repair
needs of which Landlord otherwise actually becomes
13
aware. Landlord shall have a reasonable time to perform all of its repair and
maintenance obligations hereunder. Tenant shall promptly report in writing to
Landlord any defective condition known to Tenant's facilities personnel or
senior management which Landlord is required to repair, and failure to so report
such defects shall make Tenant responsible to Landlord for any liability to
third parties and any other damage or expense incurred by Landlord by reason of
Tenant's failure to report such condition.
(d) Tenant's Waiver of Rights. Tenant hereby expressly waives all rights to
make repairs at the expense of Landlord or to terminate this Lease, as provided
for in California Civil Code Sections 1941 and 1942, and 1932(1), respectively,
and any similar or successor statute or law in effect or any amendment thereof
during the Term.
10. Destruction or Damage
(a) Damage. If the Premises and/or the portion of the Building necessary
for Tenant's occupancy are damaged by fire, earthquake, act of God, the
elements, or other casualty, and if (i) such casualty does not occur during the
last Lease Year of the initial Term or, if such casualty occurs during the last
Lease Year of the initial Term, Tenant has timely exercised the Renewal Option
(as defined in Section 41(a)) pursuant to Section 41(a) and waives in writing
any right it may have to rescind such exercise under Section 41(c), (ii) such
casualty does not occur during the last Lease Year of the Extended Term (as
defined in Section 41(a)), if any, and (iii) such casualty, in Landlord's
opinion, can be repaired within one hundred eighty (180) days following the
issuance of all building permits required by the relevant governmental
authorities (the "Rebuilding Period"), then Landlord shall forthwith repair the
same, subject to the provisions of this Section hereinafter set forth, and this
Lease shall remain in full force and effect except that a proportional abatement
of rental (based upon square footage) shall be allowed Tenant for such part of
the Premises as shall be rendered unusable by Tenant in the conduct of its
business during the time such part is so unusable. Landlord's determination that
such repair may be made within the Rebuilding Period shall not obligate Landlord
to complete the same within such period. For purposes of this Section 10,
"repairs" shall include all repair and restorative work Landlord in Landlord's
good faith discretion deems advisable, including, without limitation, all work
and improvements Landlord deems advisable to improve the condition and quality
of the Building, whether in the form of government mandated building code
upgrades or otherwise.
(b) Repair. If any one or more of the conditions set forth in clauses (i),
(ii) and (iii) of the first sentence of subparagraph (a) above is not satisfied,
then either Landlord or Tenant may elect, by notice to the other party, within
30 days after the date of such fire or other casualty (or if later, in the case
of such termination by
14
Tenant on the ground that clause (iii) above has not been satisfied, within
ten (10) days after Tenant's receipt of notice from Landlord of Landlord's
determination that such repairs cannot be made within the Rebuilding Period), to
terminate this Lease, in which event this Lease shall terminate as of the date
of such fire or other casualty. In addition, if neither Landlord nor Tenant
terminates this Lease pursuant to the preceding sentence of this subparagraph
(b), and Landlord fails to repair the Premises within the Rebuilding Period (as
such period may be extended pursuant to Section 36(o)), Tenant may terminate
this Lease by written notice to Landlord. If this Lease is not terminated
pursuant to this subparagraph (b), this Lease shall continue in full force and
effect (except that the rent shall be proportionally abated as hereinabove
provided) and Landlord shall repair such damage with reasonable diligence.
(c) Waiver. Tenant waives California Civil Code Sections 1932(2) and
1933(4) providing for termination of hiring upon destruction of the thing hired
or any other law, statute or ordinance now or hereafter in effect.
(d) Costs of Repair. If the Premises are to be repaired under this
Section, Landlord (subject to the provisions of Section 12(b) hereof) shall
repair at its cost any injury or damage to the Building itself and the Tenant
Improvements. Tenant shall repair and pay the cost of repairing any Alterations,
Tenant's trade fixtures, Tenant's personal property and any other improvements
in the Premises not otherwise covered hereunder.
(e) Landlord's Option to Terminate. Notwithstanding anything in this Lease
to the contrary, in the event of damage to or destruction of all or any portion
of the Property that is not fully covered by insurance proceeds (including
applicable deductibles) received by Landlord or which has not been insured under
the insurance policies required to be carried under the terms of this Lease,
Landlord may terminate this Lease by written notice to Tenant, given within
thirty (30) days after the date of notice to Landlord that said damage or
destruction is not so covered. Notwithstanding the foregoing, Landlord's right
to terminate this Lease under this subparagraph (e) shall not apply if (i) the
damage to the Building (x) results from a risk required to be insured against
under Section 11(b) of this Lease, or (y) can be repaired for a cost of less
than ten percent (10%) of the replacement cost of the Building, or (ii) Tenant
agrees to pay any uninsured portion of the cost of repair.
11. Insurance; Waiver of Subrogation
(a) Tenant's Insurance. Tenant shall, during the entire Term and any other
period of occupancy, at its sole cost and expense, keep in full force and effect
the following insurance:
15
(i) Standard form property insurance insuring against the perils of
fire, extended coverage, vandalism, malicious mischief, special extended
coverage ("All-Risk") and sprinkler leakage. This insurance policy shall be upon
all property owned by Tenant, for which Tenant is legally liable and/or that was
installed at Tenant's expense, and which is located in the Building including,
without limitation, Alterations, furniture, fittings, installations, fixtures,
trade fixtures and any other personal property, in an amount not less than the
full replacement cost thereof. This insurance policy shall also insure the
direct or indirect loss of Tenant's earnings attributable to Tenant's inability
to use fully or obtain access to the Property in the amount as will properly
reimburse Tenant.
(ii) Commercial general liability insurance insuring Tenant against any
liability arising out of the lease, use, occupancy, or maintenance of the
Premises and all areas appurtenant thereto. Such insurance shall be in the
amount of Five Million Dollars ($5,000,000) combined single limit for injury to
or death of one or more persons in an occurrence, and for damage to tangible
property (including loss of use) in an occurrence. The policy shall insure the
hazards of premises and operations, independent contractors, contractual
liability (covering the indemnity contained in Section 12 hereof but in no way
limiting Tenant's indemnity obligation therein) and shall (1) name Landlord,
Landlord's property manager, and any mortgagees of Landlord as additional
insureds, (2) contain a cross-liability provision, and (3) contain a provision
that "the insurance provided the landlord hereunder shall be primary and
noncontributing with any other insurance available to the landlord."
(iii) Workers' compensation and employer's liability insurance (as
required by state law).
(iv) Business interruption insurance covering all amount of Rent due
hereunder for one (1) year.
All such policies shall be written in a form satisfactory to Landlord and
shall be taken out with insurance companies qualified to issue insurance in the
State of California and holding a General Policyholder's Rating of "A" and a
Financial Rating of "XIII" or better, as set forth in the most current issue of
Best's Insurance Guide. On or before the commencement of the Term, Tenant shall
deliver to Landlord copies of policies or certificates evidencing the existence
of the amounts and forms of coverage satisfactory to Landlord. No such policy
shall be cancelable in coverage except after thirty (30) days' prior written
notice to Landlord. Tenant shall, within ten (10) days prior to the expiration
of such policies, furnish Landlord with renewals or "binders" thereof, or
Landlord may order such insurance and charge the cost thereof to Tenant as
additional rent, if Tenant fails to so notify Landlord. If Landlord obtains any
insurance that is the responsibility of Tenant under this Section 11, Landlord
shall deliver to Tenant a written statement setting
16
forth the cost of any such insurance and showing in reasonable detail the manner
in which it has been computed.
(b) Landlord's Insurance. Landlord shall purchase and keep in force fire,
extended coverage and "all risk" insurance covering the Building and the
Property in the amount of the full replacement value thereof. Tenant shall, at
its sole cost and expense, comply with any and all reasonable requirements
pertaining to the Premises, the Building and the Property of any insurer
necessary for the maintenance of reasonable fire and commercial general
liability insurance, covering the Building and the Property. Without limiting
any other provision hereof, Landlord may maintain "Loss of Rents" insurance,
insuring that the Rent will be paid in a timely manner to Landlord for a period
of at least twelve (12) months if the Premises, the Building or the Property or
any portion thereof are destroyed or rendered unusable or inaccessible by any
cause insured against under this Lease.
(c) Subrogation. To the extent available, each party shall obtain from its
insurers under all policies of property insurance maintained by such party at
any time during the Term insuring or covering the Property or any portion
thereof or operations therein, a waiver of all rights of subrogation which the
insurer might have against the other party, and each party shall indemnify the
other party against any loss or expense, including reasonable attorneys' fees,
resulting from the failure to obtain such waiver to the extent the same is so
available. Notwithstanding anything herein to the contrary, Landlord and Tenant
each release the other from all liability for any property damage that results
from a risk which is actually insured against or which is required under this
Lease to be insured against by the releasing party, without regard to the
negligence or willful misconduct of the released party.
12. Release; Indemnity
(a) Tenant covenants and agrees that Landlord, its agents or employees and
any mortgagee of Landlord shall not at any time after the date hereof or to any
extent whatsoever be liable, responsible or in anywise accountable for, and
Tenant waives and releases any claim (including any claim for contractual or
implied indemnity) against Landlord, its agents or employees or any mortgagee of
Landlord, for Losses (hereinafter defined) which at any time after the date
hereof may be suffered or sustained by:
(i) Tenant; or
(ii) Any person whosoever may at any time be using or occupying or
visiting the Premises or be in, on or about the same, or in or about the
Building or the Property, and which Losses are caused in whole or in part by any
act or
17
omission (whether negligent, non-negligent or otherwise) of Tenant, its agents,
employees and invitees;
and whether in case of either clause (i) and/or (ii) such Losses shall be caused
in part by any act, omission or negligence of Landlord, its agents, employees or
contractors, except to the extent caused by the grossly negligent or willful act
or omission of Landlord, its agents or employees.
In connection with this Section 12, Tenant expressly waives the benefits of
Section 1542 of the California Civil Code which provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR EXPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN TO HIM MUST HAVE MATERIALLY AFFECTED THE SETTLEMENT WITH THE
DEBTOR."
(b) In addition to, and not in limitation of (a) above, Tenant shall
forever indemnify, defend (by counsel reasonably acceptable to Landlord) and
hold Landlord, its agents or employees and any mortgagee of Landlord free and
harmless of, from and against any and all Losses arising from or caused in whole
or in part by any act or omission (whether negligent, non-negligent, or
otherwise) of Tenant, its agents, employees and invitees and suffered or
sustained by:
(i) Landlord, its agents or employees and any mortgagee of Landlord;
and/or
(ii) any third person who asserts a claim against Landlord on account
thereof;
and whether in case of either clause (i) and/or (ii) such Losses shall be caused
in part by any act, omission or negligence of Landlord, its agents or employees,
except to the extent caused by the grossly negligent or willful act or omission
of Landlord, its agents or employees. The foregoing indemnity obligation of
Tenant shall include reasonable attorneys' fees, investigation costs, and all
other reasonable costs and expenses incurred by Landlord, its agents or
employees and any mortgagee of Landlord from the first notice that any claim or
demand is to be made or may be made. Notwithstanding anything herein to the
contrary, Landlord shall not be released or indemnified from, and shall
indemnify, defend, protect and hold Tenant harmless from and against any Loss to
the extent such Loss arises from the gross negligence or willful misconduct of
Landlord or its agents, contractors or licensees, Landlord's violation of any
law, order or regulation (excluding, however, any such violation arising from
any condition or feature of the Building), or a breach of Landlord's obligations
or representations under this Lease.
18
(c) For purposes of this Lease "Losses" shall mean any and all losses,
damages, liabilities, claims, costs and expenses, direct and indirect, actual
and consequential, on account of injury to or death of persons, or loss of or
damage to property, interference with, or interruption of business (including
income and profits lost by reason thereof) of any kind or nature, including
without limitation, loss, injury, death, damage, interruption or interference
due to criminal act by third persons.
(d) The provisions of this Section 12 shall survive the termination of this
Lease with respect to any Losses occurring prior to such termination. The
insurance policy or policies required pursuant to the provisions of Section
11(a) by their terms shall cover the indemnity obligations of Tenant under
Section 12(b) but shall in no way limit Tenant's indemnity obligation therein.
13. Compliance with Legal Requirements
(a) Compliance. During the Term, Tenant, at its sole cost and expense,
shall comply promptly with (i) all laws, statutes, regulations, ordinances,
governmental rules, and requirements now in force or which may hereafter be in
force, (ii) the requirements of any board of fire underwriters or other similar
body now or hereafter constituted, (iii) any direction or occupancy certificate
issued pursuant to any law by any public officer or officers, and (iv) the
provisions of all recorded documents affecting the Property insofar as any of
clauses (i) through (iv) relate to or affect the condition, use or occupancy of
the Premises (collectively, the "Requirements"); provided, however, that Tenant
shall not be responsible for any failure to comply with such Requirements to the
extent that such failure (w) exists as of the date hereof and does not result
from the design or construction of the tenant improvements existing in the
Building as of the date hereof, (x) consists of a failure of the elevator system
or the restrooms, to the extent the same are not modified by Tenant as part of
Tenant's construction of the Tenant Improvements or any Alterations, to comply
with the Americans with Disabilities Act of 1990, as amended, (y) both (1)
arises under a Requirement that becomes effective after the date hereof and (2)
does not result from the particular design or construction of the Tenant
Improvements or any Alterations or Tenant's particular use of the Premises, or
(z) results from a breach of Landlord's repair and maintenance obligations under
Section 9(c). As soon as reasonably practicable after receipt of specific
written request therefor from Tenant, Landlord shall cure any failure of the
Property to comply with such Requirements which failure has a material adverse
effect upon Tenant's operation of its business in the Premises and is not
Tenant's responsibility under the preceding sentence.
(b) Environmental Matters.
19
(i) As used herein, the following items shall have the following
meanings:
"Environmental Activity" means any actual, proposed or threatened use,
storage, treatment, release, emission, discharge, generation, manufacture,
disposal or transportation of any Hazardous Materials from, into, on, under or
about the Property, or any other activity or occurrence that causes or would
cause any such event to exist but excluding the use and storage of ordinary
office supplies in a quantity commonly used by tenants of commercial office
buildings.
"Environmental Requirements" means all present and future federal, state,
regional or local laws, regulations and requirements relating to the use,
storage, treatment, existence, release, emission, discharge, generation,
manufacture, disposal or transportation of any Hazardous Materials.
"Hazardous Material" means at any time any chemical, substances or
materials which at such time are classified or considered to be hazardous or
toxic under any present of future federal, state, regional or local laws,
regulations or guidelines.
(ii) Tenant shall not engage in nor permit its employees, agents or
invitees to engage in any Environmental Activity. Tenant shall, at its own
expense, procure, maintain in effect and comply with all conditions of any and
all permits, licenses, and other governmental and regulatory approvals required
under any Environmental Requirements for any Environmental Activity by Tenant or
any person or entity using or visiting the Property, including, without
limitation, the discharge of (appropriately treated) materials or wastes into or
through any sanitary sewer serving the Premises, and upon termination of this
Lease shall cause all of its Hazardous Materials to be removed from the Premises
in accordance with and in compliance with all applicable Environmental
Requirements.
(iii) Upon having knowledge thereof, Tenant shall immediately notify
Landlord in writing of:
(A) any regulatory action that has been instituted, or threatened
by any governmental agency or court with respect to Tenant that relates to any
Environmental Activity;
(B) any claim relating to any Environmental Activity by Tenant
in, on or about the Property, or that arises out of or in connection with any
Hazardous Materials in, on, under or about the Property or removed from the
Property; or
(C) any actual or threatened material release on, under or about
the Property or any adjacent property of any Hazardous Material, except any
Hazardous Material whose discharge or emission is expressly authorized by and in
20
compliance with a permit issued by a federal, state, regional or local
governmental agency pursuant to Environmental Requirements.
(iv) Tenant shall provide Landlord with copies of any communications
with federal, state, regional or local governments, agencies or courts with
respect to any Environmental Activity or Environmental Requirement relating to
the Premises and any communications with any third party relating to any claim
made or threatened with respect to any Environmental Activity by Tenant in, on
or about the Property.
(v) Tenant shall indemnify, defend (by counsel reasonably acceptable
to Landlord) and hold Landlord, its agents or employees and any mortgagee of
Landlord free and harmless of, from and against any and all Losses to the extent
arising from or caused by (i) an Environmental Activity by Tenant or Tenant's
agents, employees and invitees, or (ii) Tenant's failure to comply with any
Environmental Requirement relating to an Environmental Activity by Tenant.
Tenant's obligations under this Section 13(b) shall include, without limitation,
and whether foreseeable or unforeseeable, all costs of any repair or cleanup,
removal or remediation action, or detoxification or decontamination of the
Premises, or the preparation and implementation of any closure, remedial action
or other plans in connection therewith that are required as a result of any
Environmental Activity by Tenant, and shall survive the expiration or earlier
termination of the Term.
(vi) Landlord represents and warrants to Tenant that (a) to Landlord's
actual knowledge, without any duty of inquiry, and except as otherwise disclosed
in that certain Final Report - Phase I Environmental Site Assessment, dated as
of December 15, 1998, relating to the Premises and designated as Job No. 39737-
013-044, prepared by Dames & ▇▇▇▇▇, (1) no Hazardous Material is present on the
Property or the soil, surface water or groundwater thereof, (2) no underground
storage tanks are present on the Property, and (b) Landlord has not received
written notice of any pending or threatened action, proceeding or claim
regarding any Hazardous Material on the Property or the soil, surface water or
groundwater thereof.
(vii) The provisions of this Section 13(b) shall survive the termination
of this Lease.
14. Assignment and Subletting
(a) Assignment and Subletting. Except as expressly permitted pursuant to
this Section, Tenant shall not, without the prior written consent of Landlord,
assign this Lease, or any interest herein, or sublet the Premises, or any part
thereof, or permit the use or occupancy of the Premises (or any right or
privilege appurtenant thereto) by any party other than Tenant. For purposes
hereof, "assignment" shall include
21
any proposed disposition or transfer, voluntary or involuntary, or
hypothecation; and where Tenant is a (i) partnership or limited liability
company, "assignment" shall include a transfer of twenty-five percent (25%) or
more of the equity interest therein (other than to an existing equity holder) or
(ii) a corporation "assignment" shall include (except with respect to a
corporation whose stock is publicly traded) any (A) merger, consolidation or
other reorganization of Tenant, (B) liquidation, dissolution or disposition of
all or substantially all of the assets of Tenant or (C) change in ownership of
twenty-five percent (25%) or more of the equity interest therein (other than a
transfer to an existing equity holder). Any of the foregoing acts without such
consent of Landlord shall be void. This Lease shall not, nor shall any interest
herein, be transferable or assignable as to the interest of Tenant by operation
of law without the written consent of Landlord.
Landlord's consent to any assignment or subletting of all or any part of the
Premises shall not be unreasonably withheld or delayed. Without limiting the
other instances in which it may be reasonable for Landlord to withhold its
consent to an assignment or subletting, Landlord and Tenant acknowledge that it
shall be reasonable for Landlord to withhold its consent from a proposed
assignment or subletting in the following instances:
(i) If Landlord determines that the use of the Premises by the
proposed assignee or sublessee would be in violation of Section 4 of this Lease;
(ii) If Landlord reasonably determines that the proposed assignee or
sublessee does not have a favorable reputation as a tenant of property;
(iii) If Landlord has experienced previous material defaults by or is in
litigation or threatened litigation with the proposed assignee or subtenant;
(iv) If the use of the Premises by the proposed assignee or subtenant
will violate any applicable law, ordinance or regulation, or any use permit
issued for the use and occupancy of the Premises;
(b) Information. If at any time, or from time to time, during the Term,
Tenant desires to assign, sublet or permit the occupancy or use by another of
all or any part of the Premises, Tenant shall give notice to Landlord setting
forth the following: (i) the name, address, and legal composition of the
proposed sublessee, occupier or user; (ii) the nature of the business proposed
to be carried on in the Premises (including proposed number of employees to be
located in the Premises, the proposed equipment to be used therein; (iii) a copy
of the proposed assignment or sublease agreement; and (iv) any other
documentation or information requested by Landlord, including financial
information covering the proposed assignee, sublessee, occupier or user with
respect to such proposed subletting. All such information may be considered by
Landlord in making Landlord's permitted
22
determinations hereunder, including the granting or withholding of consent in
respect of a proposed assignment or subletting.
(c) Assignment or Subletting Conditions. Subject to (i) the other provisions
of this Section 14 and (ii) Landlord's consent, which shall not be unreasonably
withheld, Tenant may assign or sublet such space to any third party on the
following conditions:
(i) In the case of a sublease, the same shall be subject and
subordinate to all of the provisions, terms and conditions of this Lease,
(ii) No assignment or sublease shall be valid and no assignee or
sublessee shall take possession of the Premises assigned or subleased until an
executed counterpart of such assignment or sublease, in form and substance
satisfactory to Landlord, shall have been delivered to Landlord, and Landlord
shall have expressly consented thereto in writing,
(iii) No assignee or sublessee shall have a further right to assign or
sublet without Landlord's prior written consent,
(iv) An amount equal to seventy-five percent (75%) of all sums or other
economic consideration received by Tenant as a result of such assignment or
subletting, however denominated (whether as consideration for the assignment,
rentals under a sublease, or otherwise) which exceed in the aggregate the total
sums which Tenant (or Tenant's assignee in case of an assignment) is obligated
to pay Landlord under this Lease, prorated to reflect obligations allocable to
that portion of the Premises subject to such assignment or sublease, shall be
payable to Landlord as additional rental under this Lease without affecting or
reducing any other obligations of Tenant hereunder, provided that in no event
shall Tenant be obligated to pay Landlord less than the rental specified in this
Lease.
(v) Tenant shall immediately and irrevocably assign to Landlord, as
security for Tenant's obligations under this Lease, all rental from any
subletting of all or a part of the Premises as permitted by this Lease, and
Landlord, as assignee and as attorney-in-fact for Tenant, or a receiver for
Tenant appointed on Landlord's application, may collect such rental and apply it
towards Tenant's obligations under this Lease; except that, except during the
existence of an Event of Default by Tenant as defined in Section 17, Tenant
shall have the right to collect such rental.
(vi) Notwithstanding anything in this Section 14 to the contrary,
before paying any amounts to Landlord pursuant to Section 14(c)(iv), Tenant may
recover out of the economic consideration received by Tenant as a result of such
assignment or subletting, and reimburse itself for, any brokerage commissions
paid by Tenant in connection with the assignment or subletting (such commission
not to exceed commissions typically paid in the market at the time of such
assignment or subletting) and the reasonable costs incurred by Tenant for any
Alterations made to prepare the space for such assignment or subletting. As a
condition to Tenant recovering the above-referenced costs, Tenant shall provide
to Landlord, within sixty (60) days of any such assignment or
23
subletting) and the reasonable costs incurred by Tenant for any Alterations made
to prepare the space for such assignment or subletting. As a condition to
Tenant recovering the above-referenced costs, Tenant shall provide Landlord,
within sixty (60) days of any such assignment or subletting, a detailed
accounting of these costs and supporting documentation, such as receipts and
invoices.
(d) Permitted Assignment. Notwithstanding anything in this Section 14 to the
contrary, Tenant shall have the right, without Landlord's prior written consent,
to assign or sublease all or any part of the Premises to a successor of Tenant
by merger, consolidation or other reorganization of Tenant (including by the
sale of substantially all of Tenant's assets) or to an Affiliate of Tenant. For
purposes hereof, "Affiliate" shall mean any person, firm or corporation (i)
which shall be controlled by, under the control of, or under common control with
the original Tenant, or (ii) which results from a merger of, reorganization of,
or consolidation with the original Tenant. For purposes hereof, "control" shall
mean the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person, firm or corporation,
whether through the ownership of voting securities, by contract or otherwise. In
the event of an assignment or subletting pursuant to this Section, Tenant shall
promptly thereafter notify Landlord of such assignment or subletting (including
the name of such assignee or sublessee) and Tenant agrees to execute such
documentation as reasonably requested by Landlord to memorialize such assignment
or subletting.
(e) Primary Liability. Regardless of Landlord's consent, no subletting or
assignment shall release the originally named Tenant of the originally named
Tenant's obligation or alter the primary liability of the originally named
Tenant to pay the rental and to perform all other obligations to be performed by
Tenant hereunder. The acceptance of rental by Landlord from any other person
shall not be deemed to be a waiver by Landlord of any provision hereof nor shall
the same be construed to make Landlord a party to any sublease or impose on
Landlord any obligations to any subtenant. Consent to one assignment or
subletting shall not be deemed consent to any subsequent assignment or
subletting. In the event of default by any assignees of Tenant or any successor
of Tenant in the performance of any of the terms hereof, Landlord may proceed
directly against the originally named Tenant without the necessity of exhausting
remedies against such assignee or successor. Landlord may consent to subsequent
assignments or subletting of this Lease or amendments or modifications to this
Lease with assignees of Tenant, without notifying the originally named Tenant,
or any successor of Tenant, and without obtaining its or their consent thereto,
and such action shall not relieve the originally named Tenant of liability under
this Lease, provided that any such amendments or modifications shall not
increase the originally named Tenant's liability hereunder.
24
(f) Attorneys' Fees. If Tenant shall assign or sublet the Premises or
request the consent of Landlord to any assignment or subletting, or if Tenant
shall request the consent of Landlord for any act that Tenant proposes to do,
then Tenant shall immediately, upon demand, pay Landlord's reasonable attorneys'
fees incurred in connection therewith, not to exceed $5,000.
(g) Conflicting Provisions. The provisions of this Section shall prevail
and govern over any conflicting provision in any assignment or subletting to
which Landlord gives written consent. Any modification of the terms of this
Lease as between Tenant and any sublessee or assignee shall be void and will not
be binding on the Landlord.
(h) Brokerage. Tenant shall indemnify, defend (by counsel reasonably
acceptable to Landlord) and hold Landlord, its agents or employees and any
mortgagee of Landlord harmless of, from and against any and all Losses for real
estate broker's or finder's fees or commissions of persons claiming by or
through Tenant arising from any assignment or subletting.
15. Rules
Tenant shall faithfully observe and comply with the rules and regulations
annexed to this Lease as Exhibit C and, after notice thereof, all modifications
thereof and additions thereto from time to time promulgated in writing by
Landlord which do not unreasonably interfere with Tenant's use of the Premises
or Tenant's parking rights or unreasonably increase the obligations or decrease
the rights of Tenant under this Lease.
16. Entry by Landlord
Landlord may enter the Premises at reasonable hours to (a) inspect the same,
(b) exhibit the same to prospective purchasers, lenders, or (during the last six
months of the Term only) tenants, (c) determine whether Tenant is complying with
all its obligations hereunder, (d) supply any service to be provided by Landlord
to Tenant hereunder, (e) post notices of non-responsibility and (f) make repairs
in the Premises or repairs to any adjoining space or utility services or make
repairs, alterations or improvements to any other portion of the Building.
Without limiting the foregoing, Landlord may, at any time or from time to time
during the Term, perform repair and maintenance work for which Landlord is
responsible under this Lease in and to the Building or the systems serving the
Building (which work may include, but need not be limited to, the repair or
replacement of the Building's exterior facade, exterior window glass, or
Standard Building Systems), any of which work may require access to the same
from within the Premises. Tenant agrees that (a) Landlord shall have access to
the Premises at all reasonable times, upon reasonable notice, for the purpose of
performing such work, and (b) Landlord
25
shall incur no liability to Tenant, nor shall Tenant be entitled to any
abatement of rent on account of any noise, vibration, order, or other
disturbance or annoyance to Tenant's business at the Premises (provided that
Tenant is not denied access to said Premises and Tenant's ability to conduct its
business on the Premises is not substantially impaired thereby) which shall
arise out of said access by Landlord or by the performance by Landlord of the
aforesaid renovations at the Building. Landlord shall use reasonable efforts
(which shall not include any obligation to employ labor at overtime rates) to
avoid disruption of Tenant's business and to comply with Tenant's reasonable
security measures during any such entry upon the Premises by Landlord. Except in
the case of emergency, Landlord and Landlord's agents shall provide Tenant with
one (1) business day's notice before entering the Premises.
Tenant hereby waives any claim for damages for any injury or inconvenience
to or interference with Tenant's business, any loss of occupancy or quiet
enjoyment of the Premises or any other loss occasioned by any such entry or
entries made by Landlord pursuant to any of the foregoing. Landlord shall at all
times have and retain keys with which to unlock all of the doors in, on or about
the Premises (excluding Tenant's vaults, safes and similar secure areas
designated by Tenant); and Landlord shall have the right to use any and all
means which Landlord may deem proper to open such doors in an emergency in order
to obtain entry to the Premises, and any entry to the Premises obtained by
Landlord by any of said means, or otherwise, shall not under any circumstances
be construed or deemed to be a forcible or unlawful entry into or a detainer of
the Premises or an eviction, actual or constructive, of Tenant from the
Premises, or any portion thereof.
17. Events of Default
The occurrence of any one or more of the following events (an "Event of
Default") shall constitute a breach of this Lease by Tenant: (a) if Tenant
shall fail to pay any rental due under Section 3 above within five (5) days of
the date when the same becomes due and payable; or (b) if Tenant shall fail to
pay any other sum when and as the same becomes due and payable and such failure
shall continue for more than five (5) days following written notice from
Landlord; or (c) if Tenant shall default in the performance or observance of any
other term hereof or of the rules and regulations described in Section 15 to be
performed or observed by Tenant, and within thirty (30) days following written
notice from Landlord to Tenant, Tenant shall have failed to completely cure such
default, or if the nature of such default is such that it cannot reasonably be
cured within such thirty (30) day period, Tenant shall not within such thirty
(30) day period have commenced with prompt diligence the curing of such default,
or, having so commenced, shall thereafter have failed to prosecute with prompt
diligence the complete curing of such default; or (d) if Tenant or any Guarantor
shall make a general assignment for the benefit of creditors, or shall admit in
writing its inability to pay its debts as
26
they become due, or shall file a petition in bankruptcy, or shall be adjudicated
a bankrupt or as insolvent, or shall file a petition in any proceeding seeking
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any present or future statute, law, or
regulation, or shall file an answer admitting, or fail to protest timely the
material allegations of a petition filed against it in any such proceeding, or
shall seek or consent to or acquiesce in the appointment of any trustee,
receiver, or liquidator of Tenant or any material part of its properties; or (e)
if within thirty (30) days after the commencement of any proceeding against
Tenant or any Guarantor seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any present or
future statute, law, or regulation, such proceeding shall not have been
dismissed, or if, within thirty (30) days after the appointment without the
consent or acquiescence of Tenant or any Guarantor, as applicable, of any
trustee, receiver, or liquidator of Tenant or of any material part of its
properties, such appointment shall not have been vacated; or (f) if this Lease
or any estate of Tenant hereunder shall be levied upon under any attachment or
execution and such attachment or execution is not vacated within thirty (30)
days; or (g) if Tenant shall abandon the Premises, or be dispossessed by process
of law; or (h) upon the election of Landlord, if not later than thirty (30) days
before the then applicable expiration date of the Letter of Credit (as defined
in Section 38), neither (1) the Bank (as defined in Section 38) shall have
notified Tenant that the Letter of Credit will be renewed for at least one (1)
year beyond the then applicable expiration date, nor (2) Tenant shall have
delivered to Landlord a replacement Letter of Credit in the amount required
hereunder and otherwise meeting the requirements set forth in Section 38.
18. Landlord's Right to Terminate
If an Event of Default shall occur, Landlord at any time thereafter may give
a written termination notice to Tenant, and on the date specified in such notice
(which shall be not less than three (3) days after the giving of such notice)
Tenant's right to possession shall terminate, unless on or before such date all
delinquent rent and all other sums payable by Tenant under this Lease and all
costs and expenses incurred by or on behalf of Landlord hereunder shall have
been paid by Tenant and all other breaches of this Lease by Tenant at the time
existing shall have been fully remedied to the satisfaction of Landlord.
Landlord may remove all persons and property located therein and hold,
administer and dispose of any or all of such properties in accordance with
applicable California law, including California Civil Code Section 1980 et seq.
and California Code of Civil Procedure Section 1174. Landlord may do all things
Landlord reasonably deems necessary in order to relet the Premises, including,
without limitation any demolition, alterations, repair and/or restoration of the
Premises. Upon such termination, Landlord may recover from Tenant: (a) the worth
at the time of award of the unpaid rental which had been earned at the time of
termination; (b) the worth at the time of award of the
27
amount by which the unpaid rental which would have been earned after termination
until the time of award exceeds the amount of such rental loss that Tenant
proves could have been reasonably avoided; (c) the worth at the time of award of
the amount by which the unpaid rental for the balance of the Term after the time
of award exceeds the amount of such rental loss that Tenant proves could be
reasonably avoided; and (d) any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom including, without limitation, to the extent
allocable to the remainder of the term hereof, tenant improvement costs, leasing
commissions and legal fees. The "worth at the time of award" of the amounts
referred to in clauses (a) and (b) above is computed by allowing interest at the
lesser of prime plus 5% per annum or the highest rate legally permitted under
applicable law. The "worth at the time of award" of the amount referred to in
clause (c) above is computed by discounting such amount at the discount rate of
the Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%). Notwithstanding any other provisions hereof, any efforts by Landlord to
mitigate damages caused by Tenant's breach of this Lease shall not constitute a
waiver of Landlord's right to recover damages hereunder and shall not affect the
right of Landlord to indemnification pursuant to the provisions of Section 12
hereof.
19. Continuation Notwithstanding Default
Even though Tenant has breached this Lease and abandoned the Premises, this
Lease shall continue in effect for so long as Landlord does not elect to
terminate Tenant's right to possession by written notice to Tenant, and Landlord
may enforce all its rights and remedies under this Lease, including the right to
recover the rental as it becomes due under this Lease. Acts of maintenance or
preservation or efforts to relet the Premises or the appointment of a receiver
upon the initiative of Landlord to protect Landlord's interest under this Lease
or any other act by Landlord, other than service of written notice of
termination upon Tenant, shall not constitute a termination of Tenant's right to
possession.
20. Additional Remedies
The remedies provided for in this Lease are in addition to any other
remedies available to Landlord at law or in equity by statute or otherwise.
21. Landlord's Right to Cure Defaults
All agreements and provisions to be performed by Tenant under any of the
terms of this Lease shall be at its sole cost and expense and without any
abatement of rental. If Tenant shall fail to pay any sum of money, other than
rental, required to be paid by it hereunder, or shall fail to perform any other
act on its part to be
28
performed hereunder and such failure shall continue for thirty (30) days after
notice thereof by Landlord, Landlord may, but shall not be obligated to do so,
and without waiving or releasing Tenant from any obligations of Tenant, make any
such payment or perform any such other act on Tenant's part to be made or
performed as in this Lease provided. All sums so paid by Landlord and all
necessary incidental costs shall be deemed additional rent hereunder and shall
be payable to Landlord on demand, and Landlord shall have (in addition to any
other right or remedy of Landlord) the same rights and remedies in the event of
the nonpayment thereof by Tenant as in the case of default by Tenant in the
payment of rental.
22. Attorneys' Fees
If as a result of any breach or default in the performance of any of the
provisions of this Lease, Landlord uses the services of an attorney in order to
secure compliance with such provisions or recover damages therefor, or to
terminate this Lease or evict Tenant, Tenant shall reimburse Landlord upon
demand for any and all attorneys' fees and expenses so incurred by Landlord,
provided that if Tenant shall be the prevailing party in any legal action
brought by Landlord against Tenant, Tenant shall be entitled to recover for the
fees of its attorneys in such amount as the court may adjudge reasonable. Any
such attorneys' fees and other expenses incurred by Landlord in enforcing a
judgment in its favor under this Lease shall be recoverable separately from and
in addition to any other amount included in such judgment, and such attorneys'
fees obligation is intended to be severable from the other provisions of this
Lease and to survive and not be merged in any such judgment. Without limiting
the foregoing, if either Landlord or Tenant shall bring any action or legal
proceeding for an alleged breach of any provision of this Lease or otherwise to
enforce, protect or establish any term or covenant of this Lease, the prevailing
party shall be entitled to recover as a part of such action or proceeding, or in
a separate action brought for that purpose, reasonable attorneys' fees, court
costs and expert fees as may be fixed by the court.
23. Eminent Domain
If any part of the Premises shall be taken as a result of the exercise of
the power of eminent domain, this Lease shall terminate as to the part of the
Premises so taken as of the date of taking, and either Landlord or Tenant shall
have the right to terminate this Lease as to the balance of the Premises
remaining after a partial taking by written notice to the other within thirty
(30) days after such date, provided, however, that (i) a condition to the
exercise by Tenant of such right to terminate shall be that such partial taking
shall be to such extent and nature as to substantially and permanently handicap,
impede, or impair the conduct of Tenant's business therein, and (ii) a condition
to the exercise by Landlord of such right to terminate shall be that such
partial taking shall affect twenty-five percent (25%) or more of the rentable
square footage of the Premises. If all of the Premises are
29
taken as a result of the exercise of the power of eminent domain, this Lease
shall terminate upon the date of taking.
Landlord shall be entitled to any and all compensation, damages, income,
rent, awards, or any interest therein whatsoever which may be paid or made in
connection with any exercise of the power of eminent domain, and Tenant shall
have no claim against Landlord for the value of any unexpired Term or otherwise,
except that Tenant shall be entitled to any specific award made in favor of
Tenant covering Tenant's trade fixtures, relocation expenses, and the
unamortized value of all improvements made to the Premises at Tenant's expense.
In the event of a partial taking of the Premises which does not result in a
termination of this Lease, the monthly rental thereafter to be paid shall ▇▇▇▇▇
in proportion to that portion of the Premises that is rendered unusable by
Tenant in the conduct of its business.
It is understood and agreed that the foregoing provisions of this Section
are intended to and do fully define and set forth the respective rights and
obligations of the parties in the event of a taking of the Premises or a part
thereof, including without limitation the circumstances under which this Lease
shall or may be terminated, and the disposition of any proceeds of any insurance
or award, and Landlord and Tenant each expressly waives the benefit and effect
of any rights and/or obligations whether purporting to arise by law, by
governmental order, under any insurance contract, or otherwise (including the
provisions of the California Code of Civil Procedure (S)1265.130), which are
inconsistent with the rights and obligations set forth herein.
For purposes hereof the "date of taking" shall be deemed to be the date that
physical possession of the property taken is delivered to the condemning
authority.
24. Subordination
(a) This Lease shall be subject and subordinate at all times to (a) all
ground or underlying leases which may hereafter be executed affecting the
Building and (b) the liens of all mortgages and deeds of trust now or hereafter
placed on or against the Building or on or against Landlord's interest or estate
therein or on or against all such ground or underlying leases, all without the
necessity of having further instruments executed on the part of Tenant to effect
such subordination; provided, however, that such subordination shall be
conditioned upon Tenant's receipt of a written agreement in form reasonably
satisfactory to Tenant from any such lender or ground lessor which provides that
as long as Tenant is not in default in the payment of rental or other sums or be
otherwise in default under the terms of this Lease beyond any notice and cure
period, and Tenant attorns to the landlord of any such ground or underlying
lease or to the purchaser upon foreclosure of the lien of any mortgage or deed
of trust, or, if requested, enters into a new lease for the balance of the
original or extended term hereof then remaining upon the same terms
30
and provisions as are in this Lease contained (which attornment or entry into a
new lease Tenant hereby agrees to do), the rights and possession of Tenant under
this Lease shall not be disturbed. Tenant shall execute and deliver to Landlord
within ten (10) days of request from Landlord, such further instruments
evidencing the subordination of this Lease in form reasonably acceptable to
Tenant. If any mortgagee, beneficiary, trustee or ground lessor elects to have
this Lease prior to the lien of such mortgagee's beneficiary's, trustee's or
ground lessor's mortgage or deed of trust or ground lease, and gives notice of
such election to Tenant, this Lease shall be deemed prior to the lien of such
mortgage or deed of trust or ground lease, whether this Lease is dated prior or
subsequent to the date of such mortgage, deed of trust or ground lease or the
date of recording thereof. Tenant shall execute and deliver to Landlord within
ten (10) days of request from Landlord, such further investments evidencing the
subordination of this Lease to such ground or underlying leases, and to the
liens of any such mortgages or deeds of trust, as may be requested by Landlord
and/or in such form as is required by Landlord's lender and reasonably
acceptable to Tenant (including without limitation provisions waiving as against
lender claims of, and giving to lender notice of and the right to cure, Landlord
defaults under this Lease), provided such instruments shall provide that as long
as Tenant is not in default in the payment of rental or other sums or be
otherwise in default under the terms of this Lease beyond any notice and cure
period, and Tenant attorns to the Landlord of any such ground or underlying
lease or to the purchaser upon foreclosure of the lien of any mortgage or deed
of trust, or, if requested, enters into a new lease for the balance of the
original or extended term hereof then remaining upon the same terms and
provisions as are in this Lease contained (which attornment or entry into a new
lease Tenant hereby agrees to do), the rights and possession of Tenant under
this Lease shall not be disturbed. If, in connection with Landlord's obtaining
financing for the Building, the lender shall request reasonable modifications in
this Lease as a condition to such financing, Tenant will not unreasonably
withhold, delay or defer its consent thereto, provided that such modifications
do not increase the obligations or decrease the rights of Tenant hereunder or
materially adversely affect the leasehold interest hereby created or Tenant's
rights hereunder. In the event of any default on the part of Landlord, Tenant
will deliver notice by registered or certified mail to any beneficiary of a deed
of trust or mortgagee under a mortgage covering the Property whose address shall
have been furnished to Tenant, and shall offer such beneficiary or mortgagee a
reasonable opportunity to cure the default, including time to appoint a
receiver, if such should prove necessary to effect a cure.
(b) Landlord shall use commercially reasonable efforts to deliver to
Tenant, within thirty (30) days after the Possession Delivery Date, a
subordination, nondisturbance and attornment agreement ("SNDA") in form
reasonably satisfactory to Tenant, executed by the holder (each, an "Existing
Lender") of any mortgage or deed of trust or any ground or underlying lease
affecting the Premises which exists as of the date hereof. Such SNDA (i) shall
provide that as long as
31
Tenant is not in default under the terms of this Lease beyond any applicable
notice or cure period, and Tenant attorns to the landlord of any such ground or
underlying lease or to the purchaser upon foreclosure of the lien of any such
mortgage or deed of trust (a "New Owner"), such New Owner shall not disturb the
rights and possession of Tenant under this Lease and shall recognize this Lease
and all of Tenant's rights thereunder, subject to the provisions of clause (iii)
below; and (iii) shall contain such other terms and conditions as are
customarily required by institutional lenders to be included in such a
subordination, nondisturbance and attornment agreement and are reasonably
approved by Tenant, including, without limitation, provisions requiring Tenant
to give such Existing Lender written notice of any default by Landlord under
this Lease and a reasonable opportunity to cure the same, including time to
appoint a receiver to obtain control of the Property, if such should prove
necessary to effect a cure. If for any reason Landlord fails to deliver to
Tenant such an SNDA executed by each Existing Lender within thirty (30) days
after the Possession Delivery Date, Tenant may terminate this Lease by written
notice to Landlord provided that such termination becomes effective not later
than forty-five (45) days after the Possession Delivery Date.
25. No Merger
The voluntary or other surrender of this Lease by Tenant, or a mutual
cancellation thereof, shall not work a merger, and, at the option of Landlord,
either shall operate (a) to terminate all or any existing subleases or
subtenancies under this Lease or (b) as an assignment to Landlord of any or all
such subleases and subtenancies.
26. Sale
If the original Landlord hereunder, or any successor owner of the Building,
shall sell or convey the Building, all liabilities and obligations on the part
of the original Landlord, or such successor owner, under this Lease accruing
thereafter shall terminate provided that such new owner assumes the same in
writing, and thereupon all such liabilities and obligations shall be binding
upon the new owner. Tenant agrees to attorn to such new owner.
27. Estoppel Certificate
Tenant shall execute, acknowledge and deliver to Landlord, within ten (10)
days following request by Landlord, a certificate certifying (a) that this Lease
is unmodified and in full force and effect (or if there have been modifications,
that this Lease is in full force and effect as modified and stating the date and
nature of each modification), (b) the date, if any, to which rental and other
sums payable hereunder have been paid, (c) that no notice has been received by
Tenant of any default which has not been cured, except as to defaults specified
in said certificate
32
(d) that no offsets or defenses available to Tenant, except as specified in said
certificate, (e) that Landlord has performed all of its obligations (including
tenant improvement work), except as specified in said certificate, and that
Tenant has entered into and accepted occupancy of the Premises, and (f) such
other matters as may be requested by Landlord or Landlord's lender. Any such
certificate may be relied upon by any prospective purchaser, mortgagee, or
beneficiary under any deed of trust on the Building or any part thereof.
28. No Light, Air, or View Easement
Any diminution or shutting off of light, air, or view by any structure which
may be erected on lands adjacent to the Building shall in no way affect this
Lease or impose any liability on Landlord.
29. Holding Over
If, without objection by Landlord, Tenant holds possession of the Premises
after expiration of the Term, Tenant shall become a tenant from month to month
upon the same terms, conditions and provisions specified in this Lease but at a
monthly Base Rent equivalent to one hundred fifty (150%) of the then prevailing
fair market rental as determined in good faith by the Landlord but in no event
less than one hundred fifty percent (150%) of Base Rent being paid by Tenant in
the last month of the Term, payable in advance on or before the first (1st) day
of each month. Each party shall give the other notice at least one (1) month
prior to the date of termination of such monthly tenancy of its intention to
terminate such tenancy. In the event Landlord objects to Tenant's holding over,
Tenant shall be unlawfully and illegally in possession of the Premises and
Tenant shall be responsible for holdover rent in the amount set forth above on a
per-diem basis and shall otherwise be liable to Landlord and hereby agrees to
indemnify, defend and hold Landlord harmless from and against all Losses
incurred by Landlord resulting from such holdover.
30. Abandonment
Tenant shall not, by vacating or abandoning any part or all of the Premises,
cause the termination of any utility or other service which is necessary for the
normal operation of the Building. If Tenant shall be dispossessed of the
Premises by process of law or otherwise, any personal property belonging to
Tenant and left on the Premises may be removed by Landlord, and stored or sold,
all at Tenant's cost, in accordance with applicable law.
33
31. Surrender
(a) Subject to Section 7 and subparagraph (b) below, Tenant shall at the
end of the Term surrender to Landlord the Premises and all alterations,
additions and improvements thereto in the same condition as when received,
except for ordinary wear and tear, damage by fire, earthquake, act of God or the
elements, the presence of Hazardous Materials (other than those introduced to
the Premises by Tenant or Tenant's employees, agents or invitees), Landlord's
Work, the Tenant Improvements, and any Alterations permitted hereunder. In
addition to the foregoing and at Landlord's request, Tenant shall at Tenant's
cost and expense remove all communications and data wiring and cabling installed
by Tenant and repair and restore the Premises in respect of any damage caused by
such removal.
(b) Notwithstanding anything else herein to the contrary, at Landlord's
option, which Landlord may exercise in its sole and absolute discretion, Tenant
shall remove, at Tenant's sole cost and expense, all Tenant Improvements from
the "engineering area" of the portion of the Premises located at ▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, as such area is described on Exhibit D attached hereto, and
repair any damage caused by such removal (including, without limitation, any
damage to any Building system, which shall be restored to good working order),
upon the expiration or early termination of this Lease in the event, and to the
extent, that Landlord requests such removal by written notice to Tenant given
(i) upon Tenant's termination of this Lease under any of Section 5, the first
sentence of Section 10(b), or Section 23, or (ii) not later than five (5) months
before the expiration of this Lease.
32. Waiver
The waiver by either party of any term, agreement, condition, or provision
herein contained shall not be deemed to be a waiver of any subsequent breach of
the same or any other term, agreement, condition, or provision herein contained,
nor shall any custom or practice which may grow between the parties in the
administration of the terms hereof be construed to waive or to lessen the right
of such party to insist upon the performance by the other party in strict
accordance with said terms. The subsequent acceptance of rental hereunder by
Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of
any term, agreement, condition, or provision of this Lease, other than the
failure of Tenant to pay particular rental so accepted, regardless of Landlord's
knowledge of such preceding breach at the time of acceptance of such rental.
33. Notice
All notices, demands or other writings provided in this Lease to be given or
made or sent, or which may be given or made or sent by one party to another
party,
34
shall be deemed to have been fully given or made or sent when made in writing
and upon personal delivery (whether by such party or its agent, or by courier,
or, with respect to any notices other than notices given under Section 17
hereof, by electronically confirmed telefacsimile) or after three (3) business
days following deposit in the United States mail, registered or certified,
postage prepaid, and addressed to such party at the address specified in the
Basic Lease Information, or to such other place as such party may from time to
time designate in a notice to the other party or parties.
34. Complete Agreement
There are no oral agreements between Landlord and Tenant affecting this
Lease, and this Lease supersedes and cancels any and all previous negotiations,
arrangements, brochures, agreements, and understandings, if any, between
Landlord and Tenant or displayed by Landlord to Tenant with respect to the
subject matter of this Lease. There are no representations between Landlord and
Tenant other than those explicitly set forth in this Lease, and all reliance
with respect to any representations is solely upon such representations.
35. Authority
Tenant hereby represents and warrants to Landlord that Tenant is duly
organized, validly existing and in good standing under the laws of the state of
its organization and the persons executing this Lease on behalf of Tenant have
the full right and authority to execute this Lease on behalf of Tenant and to
bind Tenant without the consent or approval of any other person or entity.
Tenant has full, power, capacity, authority and legal right to execute and
deliver this Lease and to perform all of its obligations hereunder. This lease
is a legal, valid and binding obligation of Tenant, enforceable against Tenant
in accordance with its terms.
36. Miscellaneous Provisions
(a) The words "Landlord," "Tenant" and "Guarantor," if any, as used herein
shall include the plural as well as the singular.
(b) If there be more than one entity or person comprising Tenant, the
obligations hereunder imposed upon Tenant shall be joint and several.
(c) Subject to the provisions of subsection 36(o), time is of the essence
of this Lease and each and all of its provisions.
(d) Submission of this instrument for examination or signature by Tenant
does not constitute a reservation of or option for lease, and it is not
effective as a lease or otherwise until execution and delivery by both Landlord
and Tenant.
35
(e) The agreements, conditions and provisions herein contained shall,
subject to the provisions as to assignment and subletting, apply to and bind the
heirs, executors, administrators, successors and assigns of the parties hereto.
(f) Except where specifically provided otherwise, Landlord may act in its
sole and absolute discretion when required to act hereunder.
(g) The term "including" shall mean "including without limitation." The
term "gross negligence" shall mean any action or inaction taken with a reckless
disregard for the consequences.
(h) If any provision of this Lease shall be determined to be illegal or
unenforceable, such determination shall not affect any other provision of this
Lease and all such other provisions shall remain in full force and effect.
(i) This Lease shall be construed and enforced in accordance with the laws
of the State of California, without giving effect to any choice of law rule that
would cause the application of the laws of any jurisdiction other than the State
of California.
(j) All remedies hereinbefore and hereafter conferred upon Landlord shall
be deemed cumulative and no one shall be exclusive of the other, or shall in any
way limit the availability to Landlord of any other remedy conferred by law,
whether or not specifically conferred by the provisions of this Lease.
(k) All indemnities of Tenant and Landlord contained in this Lease shall
survive the expiration or other termination hereof with respect to any act,
condition or event which is the subject matter of such indemnity and which
occurs prior to such expiration or other termination.
(l) The parties acknowledge and agree that each party has reviewed and
revised, and has been provided the opportunity for its respective counsel to
review and revise, this Lease, and no rule of construction to the effect that
any ambiguities are to be resolved against the drafting party shall be employed
in the interpretation or construction of this Lease, or any amendments or
exhibits thereto, or any other document executed and delivered by either party
in connection therewith.
(m) Notwithstanding anything herein to the contrary, all provisions of this
Lease which require the payment of money or the delivery of property after the
termination of this Lease shall survive the termination of this Lease.
(n) The parties have agreed that any action or proceedings with respect to
this Lease (including an enforcement action against either or both of Tenant and
Guarantor) may appropriately be conducted in the State of California.
Accordingly, Tenant and Guarantor hereby consent and submit to the jurisdiction
36
of the courts of the State of California for purposes of such action or
proceedings and agree that, if suit is brought in such state, service of process
may be made, and personal jurisdiction over Tenant and Guarantor obtained by
serving a copy of the summons and complaint upon Tenant and Guarantor at the
Premises. Each of Tenant and Guarantor waives any objection it may now or
hereafter have to the laying of venue in such state on any claim that any action
or proceedings instituted in such state has been brought in any inconvenient
forum. Nothing contained herein, however, shall prevent Landlord from bringing
any action or exercising any rights against any security or against Tenant or
Guarantor personally, or against any property of Tenant and/or Guarantor, within
any other state or country. Initiating such proceeding or taking such action in
any other state or country shall not, however, constitute a waiver of the
agreement contained herein that the laws of the State of California shall govern
the rights and obligations of the parties hereunder.
(o) Except as may be otherwise specifically provided herein, time periods
for Landlord's or Tenant's performance under any provisions of this Lease not
involving the payment of money shall be extended for periods of time during
which the nonperforming party's performance is prevented due to circumstances
beyond the party's control, including, without limitation, strikes, embargoes,
governmental regulations, inability to obtain permits, acts of God, war or other
strife (a "Force Majeure Event"). Landlord and Tenant agree to use commercially
reasonable efforts to eliminate or mitigate a Force Majeure Event and agree to
perform promptly once the Force Majeure Event is eliminated or has subsided
enough to allow performance. Tenant hereby waives and releases its right to
terminate this Lease under Section 1932(1) of the California Civil Code or under
any similar law, statute or ordinance now or hereafter in effect.
Notwithstanding the foregoing, Tenant's termination and abatement rights under
Sections 2 and 5 shall not be affected by Force Majeure Events.
(p) Any expenditure by a party permitted or required under this Lease, for
which demands reimbursement from the other party, shall be limited to the actual
cost of the goods and services involved, shall be reasonably incurred, and shall
be substantiated by documentary evidence available for inspection and review by
the other party.
37. Exhibits
The exhibit(s), schedule(s) and addendum, if any, specified in any of the
Sections of this Lease are attached to this Lease and by this reference made a
part hereof.
37
38. Letter of Credit
(a) Upon execution of this Lease, and in any event before taking possession
of the Premises for any purpose other than to prepare space plans and working
drawings for the Tenant Improvements, Tenant shall deliver to Landlord the
Letter of Credit (as defined below) as security for Tenant's performance of all
of Tenant's covenants and obligations under this Lease; provided, however, that
neither the Letter of Credit nor any Letter of Credit Proceeds (as defined
below) shall be deemed an advance rent deposit or an advance payment of any
other kind, or a measure of Landlord's damages upon Tenant's default. The Letter
of Credit shall be maintained in effect from the date hereof through the date
which is one hundred twenty (120) days after the Term Expiration, as the same
may be extended in accordance with the provisions of this Lease, provided that
upon Tenant's surrender of the Premises at the Term Expiration, Landlord and
Tenant shall endeavor to determine as soon as practicable any amounts owing by
Tenant on account of its obligation to restore the Premises, and within five (5)
business days after payment of such amount (and any other amounts owing to
Landlord) and Tenant's fulfillment of any other obligations to Landlord,
Landlord shall return to Tenant the Letter of Credit and any Letter of Credit
Proceeds then held by Landlord (other than those held for application by
Landlord as provided below). Landlord shall not be required to segregate the
Letter of Credit Proceeds from its other funds, and in no event shall Letter of
Credit Proceeds or any portion thereof be deemed to be held in trust for Tenant.
No interest shall accrue or be payable to Tenant with respect Letter of Credit
Proceeds. Landlord may (but shall not be required to) draw upon the Letter of
Credit and use the proceeds therefrom (the "Letter of Credit Proceeds") or any
portion thereof to the extent required to cure any Event of Default under this
Lease, it being understood that any use of the Letter of Credit Proceeds shall
not constitute a bar or defense to any of Landlord's remedies provided herein.
In such event and upon written notice from Landlord to Tenant specifying the
amount of the Letter of Credit Proceeds so utilized by Landlord and the
particular purpose for which such amount was applied, Tenant shall immediately
deliver to Landlord an amendment Letter of Credit or a replacement Letter of
Credit in an amount equal to one hundred percent (100%) of the amount specified
below. Tenant's failure to deliver such replacement Letter of Credit to Landlord
within five (5) business days of Landlord's notice shall constitute a Event of
Default hereunder. If Tenant is not then in default, within one hundred twenty
(120) days after the termination or expiration of this Lease, or on such earlier
date as provided above, Landlord shall return to Tenant the Letter of Credit or
the balance of the Letter of Credit Proceeds then held by Landlord; provided,
however, that in no event shall any such return be construed as an admission by
Landlord that Tenant has performed all of its obligations hereunder. No
mortgagee of Landlord, nor any purchaser at any judicial or private foreclosure
sale of the Premises or any portion thereof, shall be responsible to Tenant for
such Letter of
38
Credit or any Letter of Credit Proceeds unless such holder or purchaser shall
have actually received the same.
(b) As used herein, "Letter of Credit" means an irrevocable letter of
credit issued by a major "money center" bank satisfactory to Landlord in its
sole and absolute discretion (the "Bank"), drawings under which may be made at
an office of the Bank located in either New York, New York, or San Francisco,
California, or Los Angeles, California, naming Landlord as beneficiary, in the
amounts set forth below, and otherwise in form and substance satisfactory to
Landlord. Landlord hereby approves Citibank, N.A. as the Bank. The amount of the
Letter of Credit shall be One Million Eight Hundred Fifty Thousand Dollars
($1,850,000.00) throughout the first Lease Year of the initial Term, and shall
be reduced by Two Hundred Fifty Thousand Dollars ($250,000) upon the expiration
of each of the first six (6) Lease Years of the initial Term. The Letter of
Credit shall be for an initial term of not less than one year and shall provide:
(i) that Landlord may make partial and multiple draws thereunder, up to the face
amount thereof, (ii) that Landlord may draw upon the Letter of Credit up to the
full amount thereof, as determined by Landlord, and the Bank will pay to
Landlord the amount of such draw upon receipt by the Bank of a sight draft
signed by Landlord and accompanied by a written certification from Landlord to
the Bank stating either: (A) that a Event of Default has occurred and is
continuing under this Lease or (B) that Landlord has not received notice from
the Bank that the Letter of Credit will be renewed by the Bank for at least one
(1) year beyond the then applicable expiration date and Tenant has not furnished
Landlord with a replacement Letter of Credit as hereinafter provided; and (iii)
that, in the event of Landlord's assignment or other transfer of its interest in
this Lease, the Letter of Credit shall be freely transferable by Landlord,
without charge and without recourse, to the assignee or transferee of such
interest and the Bank shall confirm the same to Landlord and such assignee or
transferee. The Letter of Credit shall further provide that a draw thereon
pursuant to clause (ii)(B) above may only be made during the thirty (30) day
period preceding the then applicable expiration date of the Letter of Credit. In
the event that no later than thirty (30) days prior to then applicable
expiration date of the Letter of Credit, neither (1) the Bank shall have
notified Landlord that the Letter of Credit will be renewed for at least one (1)
year beyond the then applicable expiration date, nor (2) Tenant shall have
delivered to Landlord a replacement Letter of Credit in the amount required
hereunder and otherwise meeting the requirements set forth above, then Landlord
shall be entitled to draw on the Letter of Credit as provided above, and shall
hold the proceeds of such draw as Letter of Credit Proceeds pursuant to
subparagraph (a) above, provided that such drawing shall not constitute a waiver
of Landlord's right to declare a Event of Default of this Lease pursuant to
Section 17.
(c) At any time during the Term, Tenant may replace any Letter of Credit
provided hereunder with another Letter of Credit meeting the requirements
39
hereunder, and Landlord shall cooperate in arranging a simultaneous exchange of
such Letters of Credit.
39. Brokerage
Each party warrants and represents to the other that such party has not
retained the services of any real estate broker, finder or any other person
whose services would form the basis for any claim for any commission or fee in
connection with this Lease or the transactions contemplated hereby except for
(a) real estate brokerage services rendered to Landlord by the broker listed in
the Basic Lease Information as Landlord's Broker, pursuant to a separate
agreement between Landlord and Landlord's Broker, the commissions earned with
respect to which Landlord shall pay to such broker pursuant to such separate
agreement, and (b) such real estate brokerage services as may have been rendered
to Tenant by the Broker listed in the Basic Lease Information as the Tenant's
Broker pursuant to a separate agreement between Tenant and Tenant's Broker.
Each party agrees to forever indemnify, defend (by counsel reasonably acceptable
to the indemnified party) and hold the other party free and harmless of, from
and against any and all Losses arising from any breach of its warranty and
representation as set forth in the preceding sentence. Landlord and Tenant each
are informed and acknowledge that Landlord's Broker has agreed, in a separate
agreement, to share with Tenant's Broker the commission paid by Landlord to
Landlord's Broker. Tenant acknowledges and agrees that Landlord has no
obligation to pay any commission directly to Tenant's Broker.
40. Limitation of Liability
With the exception of actions arising from Landlord's fraud, bad faith or
willful misconduct, any liability of Landlord under this Lease shall be limited
to Landlord's interest in the Building and the parcel of real property on which
the Building is located, and any appurtenant rights thereto and insurance,
condemnation and sale proceeds thereof.
41. Option to Renew
(a) Provided that Tenant is not then in default beyond any notice and cure
periods, Tenant shall have one (1) option to renew this Lease (the "Renewal
Option") with respect to all, but not less than all, of the Premises for a five
(5) year extended term (the "Extended Term"), commencing upon the Term
Expiration and otherwise upon the same terms and conditions as this Lease,
except that (i) Base Rent shall be determined as described below, (ii) there
shall be no option to renew, and (iii) at Landlord's option, which Landlord may
exercise in its sole and absolute discretion based on Landlord's financial
evaluation of Tenant at the time of the commencement of the Extended Term,
Tenant shall be required to furnish to
40
Landlord a new Letter of Credit in an amount not exceeding $1,850,000 but
otherwise determined by Landlord in its sole and absolute discretion, which
amount shall not be reduced during the Extended Term; provided, however, that
the amount of such required Letter of Credit shall not exceed $350,000 if Tenant
provides to Landlord evidence reasonably satisfactory to Landlord that during
each of the last three (3) Lease Years of the initial Term the amount of
Tenant's shareholder equity was not less than $100,000,000. In order to exercise
the option, Tenant shall give written notice (the "Election Notice") to Landlord
of Tenant's intention to exercise such option not more then eighteen (18) months
nor less than twelve (12) months prior to the Term Expiration, and if such
notice is not so given, the option shall terminate; the Tenant hereby expressly
acknowledges and agrees that time is of the essence for purposes of notice of
exercise of such option and that Tenant's failure to do so within such time
period will relieve Landlord of any obligation under this Section. Subject to
subparagraphs (b) and (c) below, if Tenant timely delivers the Election Notice
to Landlord and is not in default under this Lease at the time the Extended Term
commences, Landlord and Tenant shall be deemed to have entered into an extension
of this Lease with respect to the entirety of the Premises for the Extended Term
on the terms and conditions set forth herein. The parties hereto acknowledge
that Landlord shall be under no obligation to expend or agree to expend funds in
connection with this option to renew, including but not limited to, any funds
for improvement to the Premises.
(b) The monthly Base Rent payable during the Extended Term pursuant to
Section 3(a) shall be an amount equal to the Prevailing Market Rent (as
hereinafter defined), multiplied by the number of square feet constituting the
Premises, as then measured by Landlord in accordance with generally accepted
measurement standards. "Prevailing Market Rent" shall mean the prevailing rental
rate per square foot then being obtained by landlords of commercial office
buildings of similar location, character and stature as the Building, for
comparable improved space of similar size and for comparable duration and
otherwise upon substantially equivalent economic terms as this Lease. During the
option period, the Premises are to be leased "as is" and Landlord shall not be
obligated to provide any tenant improvements or financing for the same.
Notwithstanding the foregoing, the calculation of Prevailing Market Rent shall
be determined by making adjustments for any concessions or inducements,
including without limitation tenant improvement allowances, free rent, lease
take-over obligations, or moving costs, that may be paid to other tenants.
Landlord and Tenant shall meet and attempt in good faith to mutually determine
Prevailing Market Rent for the purposes of the foregoing. If the parties have
not reached agreement on Prevailing Market Rent by the date that is sixty (60)
days after the Election Notice (the "Initial Rent Determination Period"), each
party shall appoint an appraiser and shall give to the other party the identity
of the appraiser no later than the date that is ten (10) days after the Initial
Rent Determination Period. If either party fails to appoint an appraiser by such
date, the sole appraiser appointed, if any, shall determine the
41
Prevailing Market Rent. If no appraiser is appointed Landlord's determination of
Prevailing Market Rent shall be final and binding upon the parties. If two
appraisers are appointed, they shall immediately meet and attempt to agree upon
such Prevailing Market Rent. If the appraisers cannot reach agreement on the
Prevailing Market Rent by the date that is fifteen (15) days after appointment
of the appraisers by the parties hereto, each appraiser shall submit a
determination of Prevailing Market Rent to Landlord and Tenant. If the
determinations of Prevailing Market Rent made by these two appraisers vary by
five percent (5%) or less, the Prevailing Market Rent shall be the average of
the two determinations. If the determinations vary by more than five percent
(5%), the two appraisers shall within ten (10) days after submission of their
determinations, appoint a third appraiser. If the two appraisers shall be unable
to agree on the selection of a third appraiser within the 10-day period, then
either Tenant or Landlord may request such appointment by petitioning the
presiding judge of the Superior Court in and for the City of Pleasanton. Such
third appraiser shall, within thirty (30) days after appointment, make a
determination of the Prevailing Market Rent and submit such determination to
Landlord and Tenant. The Prevailing Market Rent shall be the determination of
Prevailing Market Rent submitted by the original two appraisers that is closer
to the Prevailing Market Rent determination of the third appraiser. If the third
appraiser's determination is exactly between the Prevailing Market Rent
determination of the original two appraisers, then Prevailing Market Rent shall
be the average of the original two determinations. For purposes of this Section,
"appraiser" shall mean an MAI designated appraiser with not less than 2 years of
substantial commercial appraisal or brokerage experience in Hacienda Business
Park. Each party shall bear the fees and costs incurred by each party's
appraiser in connection with the determination of Prevailing Market Rent and all
fees and costs incurred by the third appraiser, if any, in connection with the
determination of Prevailing Market Rent shall be shared equally by Landlord and
Tenant. If the determination of Prevailing Market Rent has not been made by the
Term Expiration then Tenant shall (i) continue to pay monthly Base Rent at the
rate of 110% of the monthly Base Rent for the last month of the Term (the
"Arbitration Period Base Rent") as well as any additional rent due under this
Lease and (ii) pay to Landlord, or receive as a refund from Landlord, as
applicable, on the first day of the month after the determination of Prevailing
Market Rent is made, an amount, if any, equal to the difference between the
Arbitration Period Base Rent that was paid to Landlord and the monthly Base Rent
for the Extended Term that should have been paid to Landlord as the monthly Base
Rent for the Extended Term as determined hereunder.
(c) Notwithstanding the foregoing provisions of this Section 41, upon
determination of the Prevailing Market Rent pursuant to subparagraph (b) above,
Tenant shall have the right, in its sole absolute discretion, to rescind its
exercise of the Renewal Option by giving Landlord written notice of such
election within ten (10) days after receipt of written notice of such
determination. If Tenant so
42
rescinds its exercise of the Renewal Option, (i) this Lease shall terminate on
the later of (A) the one hundred eightieth (180th) day after such notice of
rescission, or (B) the Term Expiration, and (ii) Tenant shall pay all fees and
costs incurred by each party's appraiser and the third appraiser, if any, in
connection with the determination of Prevailing Market Rent.
42. Signage
Tenant may install one monument building sign on the Land outside the
Building and one sign on the Building; provided, however, that the size, design,
color, location and other physical aspects of each such sign shall be subject to
Landlord's prior reasonable written approval, the CC&R's, including any design
review requirements provided for therein, Landlord's rules and regulations, and
applicable laws, regulations and governmental approval requirements. Until the
expiration or earlier termination of this Lease, all such signage shall be
maintained by Landlord in good condition and repair, and the cost of such
maintenance shall be an Operating Expense to be paid by Tenant in accordance
with Section 3. Upon the expiration or earlier termination of this Lease, all
such signage shall be removed by Tenant, at Tenant's sole cost and expense, and
Tenant shall restore the affected portions of the Building to the same condition
as existed immediately before the installation of such signage. Except as
expressly provided in this Section 43, tenant shall have no right to maintain
Tenant identification signs in any other location in, on or about the Property
and shall not display or erect any other Tenant identification sign, display or
other advertising material that is visible from the exterior of the Building.
43. Use of Names
Tenant shall not use the name of the Building or any of the words
"Rinconada," "Hacienda" or "Business Park" in the name or title of its business
or occupation without Landlord's prior written consent, which consent Landlord
may withhold in its reasonable discretion. Landlord reserves the right to
change the name of the Building without Tenant's consent and without any
liability to Tenant.
44. Parking and Transportation
(a) Tenant shall have the right to park in the Property's parking areas,
subject to reasonable rules and regulations imposed from time to time by
Landlord. Landlord shall not be liable to Tenant, nor shall this Lease by
affected, if any parking is impaired by moratorium, initiative, referendum, law,
ordinance, regulation or order passed, issued or made by any governmental or
quasi-governmental body. Landlord shall not impose any charge for the use of the
parking areas of the Property except for parking charges, fees or assessments,
if any, which may be imposed by any governmental or quasi-governmental
authority.
43
Landlord shall have no responsibility for assuring that use of such parking
areas is limited to Tenant's invitees and licensees.
(b) Tenant shall establish and maintain during the Term a program to
encourage maximum use of public transportation by personnel of Tenant employed
on the Premises, including, without limitation, the distribution to such
employees of written materials explaining the convenience and availability of
public transportation facilities adjacent or proximate to the Building,
staggering working hours of employees, and encouraging use of such facilities,
all at Tenant's sole reasonable cost and expense. Tenant agrees to comply with
any lawful regulation or ordinance of the City of Pleasanton or the County of
Alameda respecting transportation management in those jurisdictions, related to
the conduct of Tenant's business within the Premises.
45. Landlord's Default
In the event Landlord fails to perform any of its obligations under this
Lease and (except in the case of emergency posing an immediate threat to persons
or property, in which case no prior notice shall be required) fails to cure such
default within sixty (60) days after written notice from Tenant specifying the
nature of such default where such default could reasonably be cured within such
sixty (60) day period, or fails to commence such cure within such sixty (60) day
period and thereafter continuously with due diligence prosecute such cure to
completion where such default could not reasonably be cured within such sixty
(60) day period, then Tenant shall have the right, but not the obligation,
following fifteen (15) days' prior written notice to Landlord and Landlord's
continued failure to cure such default (or be in the process of diligently
pursuing the same to completion), to incur any reasonable expense necessary to
cure such default and invoice Landlord therefor. If Landlord fails to reimburse
Tenant within fifteen (15) days following receipt of such invoice, then Tenant
may apply the actual and reasonable cost of such cure against the next Rent
obligations due hereunder, at a rate not to exceed one-half (1/2) the monthly
installments of Base Rent until such amount has been paid in full.
44
In Witness Whereof, the parties have executed this Lease as of the date set
forth in the Basic Lease Information.
Landlord: Las Positas LLC,
a Delaware limited liability company
By: G&I II Las Positas LLC,
a Delaware limited liability company,
its managing member
By: G&I II Investment Las Positas Corp.,
a Delaware corporation,
its managing member
By:
--------------------------
Name:
------------------------
Title:
-----------------------
Tenant: Tut Systems, Inc.,
a Delaware corporation
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
45
Exhibit A
Site Plan
Diagram of Building
Diagram of Premises
A-1
Exhibit B
Tenant Construction Agreement
This Exhibit B is attached to and forms part of that certain Lease, dated as
of March __, 2000, by and between Las Positas LLC, as Landlord, and Tut Systems,
Inc., as Tenant (the "Lease"), relating to the Premises described therein. All
capitalized terms used but not otherwise defined herein shall have the meanings
set forth in the Lease.
Subject to the terms and conditions set forth herein and in the Lease,
Landlord and Tenant shall each construct or install in the Premises the
improvements as set forth below and in accordance with the procedures set forth
below:
1. Definitions
(i) "Base Building" shall mean the structural portions of the Building
(including exterior walls, roof structure, foundation and floor slabs of the
Building) and all Standard Building Systems.
(ii) "Codes" shall mean all applicable statutes, ordinances or regulations
issued or adopted by the governing authorities having jurisdiction over the
Building, including, without limitation, electrical, building, architectural,
barrier, zoning, health, safety, seismic, and fire codes.
(iii) "Final Plans" is defined in Section 3.1 below.
(iv) "Landlord's Architect" shall mean the architect designated from time
to time by Landlord.
(v) "Landlord's Contribution" is defined in Section 4.2.1 below.
(vi) "Landlord's Work" is defined in Section 2 below.
(vii) "Space Plans" is defined in Section 3.1 below.
(viii) "Tenant's Architect" is defined in Section 3.1 below.
(ix) "Tenant's Contractor" shall mean the contractor selected by Tenant
and approved by Landlord in accordance with Section 3.2 below.
(x) "Tenant Improvements" is defined in Section 3.1 below.
(xi) "Tenant Plans" is defined in Section 3.1 below.
(xii) "Tenant's Work" is defined in Section 3.4 below.
B-1
Capitalized terms not otherwise defined in this Exhibit B shall have the
meanings ascribed to them in the Lease.
2. Landlord's Work
On or before the Term Commencement, Landlord shall substantially complete,
at Landlord's sole cost and expense, the following work ("Landlord's Work"): (i)
installation of a new roof membrane on the Building as more fully described on
Schedule 1 attached hereto; (ii) any repairs to the Standard Building Systems
that may be necessary to bring such systems into good condition and repair;
(iii) repainting of the exterior of the Building in a color mutually and
reasonably approved by Landlord and Tenant; and (iv) enhancement of the
landscaping surrounding the Building. For a period of one (1) year after the
date hereof, Landlord warrants to Tenant that Landlord's Work shall be performed
and constructed in accordance with all applicable Codes, in a good and
workmanlike manner, free of defects and using materials and equipment of good
quality.
3. Tenant's Work
3.1 Tenant Plans
Tenant shall furnish to Landlord for Landlord's review and written approval
(which approval shall not be unreasonably withheld) detailed layout plans and
finish specifications (the "Space Plans") prepared by an architect reasonably
acceptable to Landlord ("Tenant's Architect"). Landlord hereby approves Studio
Architects, Inc. as Tenant's Architect. The Space Plans shall show all of the
improvements which Tenant desires to be constructed in the Premises, and all
such improvements shall comply with all Codes. The Space Plans shall separately
note any proposed structural work or extraordinary or supplemental electrical,
plumbing or HVAC requirements. Landlord shall respond to the Space Plans within
five (5) business days of its receipt thereof. In response to any objections of
Landlord to the Space Plans, Tenant shall resubmit appropriately revised Space
Plans prepared by Tenant's Architect, and such resubmitted Space Plans shall
clearly indicate which portions of the Space Plans are revised and which
portions of the Space Plans remain unchanged from the previously submitted Space
Plans. The Space Plans, as finally approved in writing by Landlord, shall be
referred to herein as the "Final Space Plans." Landlord hereby approves the
Space Plans attached hereto as Schedule 2 and agrees not to withhold consent to
the Working Drawings (as defined below) to the extent they are consistent with
such Space Plans.
Tenant shall furnish to Landlord for Landlord's written approval (which
shall not be unreasonably withheld) working plans and specifications (the
"Working Drawings") prepared by Tenant's Architect for all of the improvements
which Tenant desires to be constructed in the Premises. The Working Drawings
shall show improvements that conform to the Final Space Plans. Landlord shall
respond
B-2
to the Working Drawings within five (5) business days of its receipt thereof.
In response to any reasonable objections of Landlord to the Working Drawings,
Tenant shall resubmit appropriately revised Working Drawings prepared by
Tenant's Architect, and such resubmitted Working Drawings shall clearly indicate
which portions of the Working Drawings are revised and which portions of the
Working Drawings remain unchanged from the previously submitted Working
Drawings. (The Working Drawings for all of the improvements to be constructed in
the Premises, as approved in writing by Landlord, as revised by Tenant from time
to time with Landlord's written approval in accordance with the following
provisions of this Section 3, are hereinafter called the "Final Plans", and the
improvements to be performed in accordance with the Final Plans are hereinafter
called the "Tenant Improvements"). Upon construction, the Tenant Improvements
shall become part of the Building and the property of Landlord.
In the event that Tenant shall desire any change in or to the Final Plans (a
"Change"), if such Change will affect any portion of the Base Building (other
than the electrical systems forward of the distribution panel in the Premises),
Tenant shall submit to Landlord for Landlord's review and written approval a
copy of the change order prepared by Tenant's Architect or Tenant's Contractor
with respect to such Change (the "Change Order"), together with revised working
drawings prepared by Tenant's Architect incorporating the requested Change and
clearly identifying the same as such on the revised Working Drawings. Landlord
shall not unreasonably withhold or delay its approval of the Change Order or
revised Working Drawings, provided, however, that, in any event, Landlord shall
have five (5) business days after receipt of the Change Order and revised
Working Drawings to review any proposed Change. Upon completion of the Tenant
Improvements, Tenant shall deliver to Landlord "CAD" as-built mylar plans of the
Tenant Improvements, together with the disk for the same (using auto-CAD).
The parties hereto acknowledge that, notwithstanding anything else herein to
the contrary, the components of the Space Plans or the Final Plans
(collectively, the "Tenant Plans") may be submitted to Landlord in stages, with
each such component being subject to the review and approval procedures set
forth above. Notwithstanding anything herein or in the Lease to the contrary,
Tenant may not begin work on any portion of the Tenant Improvements until such
time as Landlord has approved, or is deemed to have approved, the same.
Landlord's approval of the Tenant Plans shall create no responsibility or
liability on the part of the Landlord with respect to the completeness, design
sufficiency or Code compliance of the Tenant Plans.
In the event Landlord fails to respond to any request of Tenant as provided
herein, Landlord shall be deemed to have disapproved Tenant's request.
B-3
3.2 Tenant's Contractor
Tenant's Contractor shall be subject to Landlord's prior written approval,
which approval shall not be unreasonably withheld or delayed. Landlord hereby
approves ▇▇▇▇▇▇▇ Construction as Tenant's Contractor. Tenant's Contractor shall
(1) have substantial recent experience in the construction of tenant
improvements in similar class office buildings in the Hacienda Business Park,
(2) be licensed by the State of California (as evidenced by Tenant's submission
to Landlord of Tenant's Contractor's state license number), (3) have the
capacity to be bonded by a recognized surety company to assure full performance
of the construction contract for the work shown on the Final Plans (as evidenced
by Tenant's submission to Landlord of a commitment or other writing satisfactory
to Landlord issued by a recognized surety company confirming that Tenant's
Contractor is bondable for construction projects having a contract price not
less than the contract price under the construction contract for the Tenant
Improvements, but Tenant shall not be required to bond the construction of the
Tenant Improvements), and (4) have the capacity to meet all of the requirements
of Section 3.3 below (as evidenced by Tenant's submission to Landlord of
documentation satisfactory to Landlord).
3.3 Subcontractors; Insurance; Compliance with Law
Tenant shall be responsible for Tenant's Contractor, subcontractors,
suppliers and materialmen (A) obtaining Landlord's prior written approval (which
Landlord shall not unreasonably withhold or delay) of all subcontractors to be
utilized in the performance of such construction work, (B) obtaining all
necessary governmental permits and approvals in connection with all construction
work (including demolition, if applicable) shown on the Final Plans, (C)
furnishing to Landlord, before commencing any demolition or construction in the
Premises, certificates evidencing comprehensive public liability insurance with
limits per occurrence of not less than $2,000,000 and property damage insurance
with limits per occurrence of not less than $1,000,000, covering Tenant's
Contractor's and subcontractors' operations in the Premises and the Building
(including any liability arising out of work involving Hazardous Materials) and
builders' risk insurance providing coverage in an amount equal to the full value
of the Tenant Improvements upon completion thereof, and with respect to all such
insurance naming Landlord, its property manager, construction manager, and any
mortgagee of Landlord as additional insureds, and (D) performing the
construction work in accordance with applicable governmental requirements.
Notwithstanding clause (C) above, subcontractors performing minor portions of
the work may carry such lower insurance limits as Landlord shall reasonably
approve in writing, and Tenant, rather than Tenant's Contractor or
subcontractors, may carry the builders' risk insurance specified in such clause
(C). Landlord shall have no responsibility for furnishing any security services
in or about the Building or Premises to safeguard Tenant's construction of the
Tenant Improvements or materials in connection therewith.
B-4
Without limiting any other provision hereof, throughout the performance of
Tenant's Work, Tenant, at its sole cost and expense, shall carry, or cause to be
carried, workers' compensation insurance as required by law and general
liability insurance, with completed operations endorsements, for any occurrence
in or about the Building, in such coverage limits and with insurers, in each
case, meeting the requirements of the Lease. Landlord, its property manager,
construction manager, and any mortgagee of Landlord shall be designated as
additional insured parties on such insurance policies. Tenant shall furnish
Landlord with evidence satisfactory to Landlord that such insurance is in effect
before the commencement of Tenant's Work and, on request of Landlord during
construction, Tenant shall provide evidence satisfactory to Landlord that such
insurance remains in effect.
Upon receipt of written notice from Tenant, together with reasonable written
evidence of the same, that an existing violation by the Building of any Code
will be required to be corrected in order for Tenant to obtain any of the
permits, licenses, or other applicable approvals necessary for Tenant to
complete construction of the Tenant Improvements in accordance with this Section
3.3, then, at Tenant's election, (i) Tenant may cure such violation at Tenant's
cost, or (ii) Landlord shall cure such violation as soon as reasonably
practicable, at Landlord's cost; provided, however, that if such violation
results from the design or construction of the tenant improvements existing in
the Building as of the date hereof and does not consist of a failure of the
elevator system or the restrooms to comply with the Americans with Disabilities
Act of 1990, as amended, then, notwithstanding that Landlord cures such
violation, such cure shall be at Tenant's expense.
3.4 Construction
Before commencement of any demolition or construction in the Premises,
Tenant shall enter into a contract with Tenant's Contractor for construction of
the Tenant Improvements. Subject to Section 38(a) of the Lease, after Landlord's
delivery to Tenant of the Premises, Tenant may cause Tenant's Contractor to
commence and diligently pursue to completion the demolition, as necessary, of
any existing improvements in the Premises and the construction of the Tenant
Improvements ("Tenant's Work"). The Tenant Improvements shall be constructed by
Tenant's Contractor in conformance with the Final Plans and all Codes.
Tenant shall deliver written notice to Landlord at least three (3) but no
more than fifteen (15) days before the commencement of any of Tenant's Work to
permit Landlord to post on the Premises such notices, including without
limitation, notices of non-responsibility, as Landlord may deem appropriate.
3.5 Coordination
Tenant shall cause Tenant's Contractor and/or Tenant's Architect to
coordinate with Landlord's representative and/or Landlord's Architect to assure
timely and
B-5
orderly completion of Tenant's Work and Landlord's Work and to otherwise assure
the consistency of the Tenant Plans with the plans and specifications for
Landlord's Work. In furtherance of the foregoing, Tenant's Contractor and a
representative of Landlord shall hold construction meetings with reasonable
frequency. Appropriate procedures shall be adopted and followed by Tenant to
assure satisfaction or waiver of any potential mechanics' lien claims.
3.6 Liens and Violations
Tenant, at its sole cost and expense, shall diligently procure the
cancellation or discharge of all notices of violation arising from or otherwise
connected with Tenant's Work or any other work, labor, service or material done
for or supplied to Tenant, or any person claiming through or under Tenant, which
shall be issued by any governmental authority. Tenant shall not utilize
materials in Tenant's Work that are subject to security interests or other
liens. Tenant shall forever indemnify, defend and hold Landlord, its agents or
employees and any mortgagee of Landlord free and harmless of, from and against
any and all mechanics' liens, stop notices and other liens and encumbrances or
claims of liens or encumbrances filed in connection with Tenant's Work, or any
other work, labor, service or material done for or supplied to Tenant, or any
person claiming through or under Tenant, including, without limitation, security
interests in any materials, fixtures or other articles installed in the
Premises; and against all costs, expenses and liabilities incurred in connection
with any such lien or encumbrance, or claim of lien or encumbrance, its removal
or any related action or proceeding. Tenant, at its sole cost and expense,
shall satisfy or discharge of record each stop notice, lien or encumbrance
within fifteen (15) days after it is filed. If Tenant fails to do so, Landlord
shall have the right to satisfy or discharge the stop notice, lien or
encumbrance by payment to the claimant on whose behalf it was filed, by the
posting of a bond, or by any other action Landlord deems necessary. Tenant
shall reimburse Landlord on demand for the costs and expenses so incurred by
Landlord.
3.7 Indemnity
Tenant shall be directly responsible to Landlord for the performance of
Tenant's Contractor and any subcontractors, and shall forever indemnify, defend
and hold Landlord, its agents or employees and any mortgagee of Landlord free
and harmless of, from and against any and all claims, damages, liability and
losses (including, without limitation, attorney's fees and costs) suffered by
Landlord, its agents, employees or any mortgagee of Landlord arising from or
relating to the performance of Tenant's Work.
B-6
3.8 Inspection by Landlord
Landlord shall have the right to inspect Tenant's Work at any reasonable
time and upon reasonable prior notice, and may reasonably reject work that does
not conform with the Final Plans or any Codes.
4. Cost of Improvements
4.1 Landlord's Work
Landlord shall pay the entire cost of Landlord's Work.
4.2 Tenant's Work
4.2.1 Landlord's Contribution
In addition to the sum referenced in Section 4.1 above, Landlord shall
contribute toward the cost of the construction and installation of the Tenant
Improvements an amount not to exceed One Million Sixty-Nine Thousand Thirty-Two
Dollars ($1,069,032), based on a maximum Landlord contribution of Twelve Dollars
($12.00) per rentable square foot of the Premises ("Landlord's Contribution").
4.2.2 Excess Cost: Share of Costs.
If the cost of construction of the Tenant Improvements exceeds the funds
available therefor from Landlord's Contribution, then Tenant shall pay all such
excess.
4.2.3 Use of Landlord's Contribution.
Landlord's Contribution shall be used for (i) payment of the costs of
designing, planning and obtaining necessary governmental permits for Tenant's
Work, including, without limitation, payment of architectural and engineering
fees, governmental agency fees, and fees for permits, licenses and inspections;
(ii) payment of the costs of performing Tenant's Work, including, without
limitation, general contractors' overhead and supervision fees and such other
costs as may be reasonably incurred by Tenant in connection with such
construction; and (iii) payment of the costs of installing furniture, security
equipment and voice and data cabling in the Premises. Landlord's Contribution
shall not be used for purchasing any furniture (other than permanently attached
furniture), fixtures or equipment (other than system cabling) or for payment of
any costs associated with obtaining and maintaining insurance, canceling or
discharging any violations or for any indemnities of Landlord by Tenant
hereunder.
B-7
Tenant acknowledges that Landlord's Contribution is to be applied to the
Tenant Improvements (and the associated costs described above) covering the
entire Premises. If Tenant does not improve the entire Premises, then, without
limitation of any other rights or remedies of Landlord hereunder, Landlord's
Contribution shall be adjusted on a pro rata per rentable square foot basis to
reflect the number of rentable square feet actually being improved.
4.2.4 Disbursement of Landlord's Contribution.
Landlord's Contribution shall be paid in two lump sum payments (i) first,
following completion of one-half (1/2) of Tenant's Work, within thirty (30) days
after receipt of the following: (A) invoices for such half of Tenant's Work
reasonably satisfactory to Landlord demonstrating the cost incurred by Tenant in
connection with such portion of Tenant's Work, (B) a certificate signed by
Tenant and Tenant's Architect certifying that one-half (1/2) of Tenant's Work
has been substantially completed in accordance with Tenant's Plans, and (C) lien
waivers by Tenant's Contractor and subcontractors and materialmen for all of
their work performed at the Building which is part of such initial half of
Tenant's Work; and (ii) second, following completion of the balance of Tenant's
Work, within thirty (30) days following receipt of the following: (A) invoices
for the balance of Tenant's Work reasonably satisfactory to Landlord
demonstrating the cost incurred by Tenant in connection with such remaining half
of Tenant's Work, (B) a certificate signed by Tenant and Tenant's Architect
certifying that all of Tenant's Work has been substantially completed in
accordance with Tenant's Plans, and (C) lien waivers by Tenant's Contractor and
subcontractors and materialmen for all of their work performed at the Building,
and (D) a general release form Tenant's Contractor and subcontractors and
materialmen regarding their work at the Building. Landlord shall have the right
to inspect the Premises to confirm the completion of the Tenant's Work covered
by such invoices. Notwithstanding the foregoing, Landlord shall have no
obligation to disburse Landlord's Contribution to Tenant during the existence of
an Event of Default by Tenant under the Lease. Notwithstanding anything herein
to the contrary, if any Hazardous Materials are required to be remediated or
removed from the Property in order for Tenant to complete Tenant's Work, and if
any specialized procedures or personnel are required for the safe and lawful
remediation or removal of such Hazardous Substances, Landlord shall pay, in
addition to Landlord's Contribution, up to $25,000 of the cost of such
specialized procedures or personnel.
B-8
Exhibit C
Landlord's Rules
1. Signs. Except as otherwise expressly provided in the Lease, no sign,
placard, picture, advertisement, name or notice shall be inscribed, displayed,
printed or affixed on or to any part of the outside of the Building, or on or to
any part of the inside of the Building so as to be visible from outside the
Building, without the written consent of Landlord first had and obtained, and
Landlord shall have the right to remove any such sign, placard, picture,
advertisement, name or notice, without notice to and at the expense of Tenant.
2. Wiring. When wiring of any kind is introduced, it must be connected as
directed by Landlord, and no boring or cutting for wires will be allowed except
with the consent of Landlord. The location of telephones, electrical outlets,
and other office equipment affixed to the Premises shall be prescribed by
Landlord.
3. Halls and Stairways. The entries, passages, stairways, and elevators
shall not be obstructed by Tenant or used for any purpose other than ingress and
egress of persons to and from the respective offices.
4. Plumbing. The wash-bowls, water closets, and urinals shall not be used
for any purpose other than those for which they were constructed.
5. Closing Precautions. Before leaving the Building, Tenant shall cause (a)
all doors of the Premises to be closed and securely locked, (b) all water
faucets or water apparatus to be shut off, and (c) all unused electrical or gas
appliances to be shut off, all so as to prevent waste or damage.
6. Moving Equipment, Safes, etc. Landlord shall have the right to prescribe
the weight, size, and position of all safes and other heavy property brought
into the Building, and also the times and manner of moving the same in and out
of the Building. Landlord will not be responsible for loss of or damages to any
such safe or property from any cause and all damage done to the Building by
moving or maintaining any such safe or property shall be repaired at the expense
of Tenant.
7. Space Heaters. No space heaters or other similar electrical device shall
be permitted to operate in the Premises.
C-1
Exhibit D
Description of Engineering Area
