Exhibit 10.7
SUBLEASE
This sublease (the "Sublease") is made as of July 1, 1998 by and between
MultiGen Inc. of California ("Sublessor") and Cybersource of California
("Sublessee") with reference to the following:
A. Sublessor has entered into a Standard Office Lease (the "Master Lease")
dated March 31, 1995, as amended by a First Amendment dated June 19, 1997 with
California State Automobile Association Inter-Insurance Bureau (the "Master
Lessor"), and copy of which is attached hereto, for approximately 22,608
rentable square feet, (the "Premises").
B. Sublessor and Sublessee wish to enter into this Sublease pursuant to
which Sublessor shall sublease to Sublessee a portion of the Premises consisting
of approximately 3,068 square feet and referred to as Suite 406 and 410 (the
"Subleased Premises").
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Capitalized Terms. All capitalized terms used herein that are not
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otherwise defined shall have the definitions set forth in the Master Lease.
2. Subleased Premises. Sublessee desires to sublet the Subleased Premises
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from Sublessor and Sublessor desires to sublet the Subleased Premises to
Sublessee subject to the terms, provisions and conditions of this Sublease. For
purposes of this Sublease, the "Subleased Premises" shall mean and refer to the
portion of the Premises indicated on the copy of the space plan attached hereto
as Exhibit A (the "Space Plan").
3. Term. The "Sublease Term" shall commence on July 13, 1998 ("Commencement
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Date") and shall end on September 4, 2000 (the "Term").
4. Use. The Subleased Premises shall be occupied only for general office
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uses and for no other purpose.
5. Condition of Premises. Sublessee accepts the Subleased Premises in "as
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is" condition.
6. Subrent. Sublessee shall pay to Sublessor, as base rent for the
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Subleased Premises per month (the "Subrent") the following:
Period Monthly Subrent
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6/15/98 to 12/15/98 $2.70 per sq. ft.
12/16/98 to 12/15/99 $2.90 per sq. ft.
12/16/99 to 9/4/00 $2.90 per sq. ft.
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Sublessee shall pay the Subrent in monthly installments commencing on the
Commencement Date, except that the amount due for July, 1998 will be paid upon
execution of this Sublease. The Subrent payable for any portion of a calendar
month shall be a pro rata portion of the Subrent payable for a full calendar
month.
7. Direct Expenses and Tax Adjustment. Sublessee shall also pay to
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Sublessor, as additional rent, sublessee's share of the Excess Operating
Expenses, (approximately 3.2% of building premises) as defined in master lease.
The additional rent will be payable as and when "Tenant's Share of Excess
Operating Expenses" under the Master Lease are payable by Sublessor to Master
Lessor. If the Master Lease provides for payment by Sublessor of "Tenant's Share
of Excess Operating Expenses" on the basis of an estimate, then as and when
adjustments between the estimated and actual "Tenant's Share of Excess Operating
Expenses" are made under the Master Lease, the obligations of Sublessor and
Sublessee will be adjusted in the same manner. If the adjustment occurs after
the expiration or earlier termination of the Term, the obligations of Sublessor
and Sublessee under this paragraph will survive said expiration or termination.
Sublessor will furnish Sublessee with copies of all statements submitted by
Master Lessor of the actual or estimated "Tenant's Share of Excess Operating
Expenses" during the Term of Agreement.
8. Security Deposit. Upon Sublessee's execution of this Sublease,
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Sublessee shall pay to Sublessor a security deposit in the amount of $8,897.20.
The security deposit is not to be applied to the last months' rent, but shall be
retained by Sublessor to guarantee Sublessee's performance of this Sublease and
return to Sublessee within thirty (30) days after expiration or other
termination of this Sublease, provided that Sublessee has complied with the
terms of this Sublease.
9. Additional Services. If after hours HVAC is requested by Sublessee,
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Sublessee shall pay to Sublessor, as additional rent, all amounts for after-
hours HVAC payable by Sublessor under the Master Lease and attributable to the
Sublease Premises.
10. Payment. Sublessee shall pay the Subrent the first day of each
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calendar month. When Sublessor is billed for additional services pursuant to the
Master Lease, Sublessor shall submit a written statement to Sublessee setting
forth Sublessee's Additional HVAC, showing the calculations. Sublessee shall pay
said amount within fifteen (15) days after Sublessee's receipt of the statement.
All such amounts shall be sent to MultiGen Inc. Attention Accounts Receivables,
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ or such other address as
designated by Sublessor in writing. Upon reasonable prior written request, and
as permitted by law and the Master Lease, information relating to the Additional
HVAC that is within Sublessor's control shall be made available to Sublessee for
inspection during regular business hours at the place where said information is
maintained by Sublessor.
11. Indemnity. Sublessee agrees to protect, defend, indemnify, and hold
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Sublessor harmless from and against any and all liabilities, claims, expenses,
losses and damages (including reasonable attorney fees and costs), that may at
any time be asserted against Sublessee by (a) the Master Lessor for failure of
Sublessee to perform any of the
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covenants, agreements, terms, provisions, or conditions contained in the Master
Lease that Sublessee is obligated to perform under the provisions of this
Sublease; or (b) any person as a result of Sublessee's use or occupancy of the
Premises, except to the extent any of the foregoing is caused by the gross
negligence or willful misconduct of Sublessor. The provisions of the Section 12
shall survive the expiration or earlier termination of the Master Lease or this
Sublease.
12. Insurance. Sublessee shall maintain adequate liability, personal
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property damage and business interruption insurance coverage as may be necessary
to protect itself and the contents of the Premises, but in no event in an amount
less than $1,000,000.00 single limit for liability insurance and property
damage. Sublessee shall provide Sublessor with a certificate or other evidence
of insurance showing such coverage in effect at all times during the term of
this Lease and naming Sublessor and Master Lessor as additional insureds with a
thirty (30) day prior cancellation notice. Upon request, Sublessee shall provide
Sublessor with a complete copy of any such policy.
Sublessor will maintain adequate fire insurance to cover its personal
property located in the Premises. So long as their respective insurers so
permit, Sublessee and Sublessor hereby mutually waive their respective rights of
recovery against each other for any loss insured by fire, extended coverage and
other property insurance policies existing for the benefit of the respective
party. Each party shall obtain any special endorsement, if required, to
evidence compliance with this waiver.
13. Sublessor's Duties. Sublessor does not assume the obligations of the
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Master Lessor under the Master Lease, but shall exercise due diligence in
attempting to cause the Master Lessor to perform its obligations under the
Master Lease for the benefit of Sublessee. Sublessor shall use reasonable
efforts to perform the obligations applicable to the "Lessee" under the Master
Lease. Sublessor shall provide Sublessee with copies of all written notices
received by Sublessor from Master Lessor, within a reasonable time of receipt.
Sublessor shall seek to obtain the consent of Master Lessor on this Sublease
Agreement. This Sublease shall not become effective until such consent has been
obtained and if said consent has not been obtained by July 30, 1998, Sublessee
shall have the right to terminate this Sublease, in which event any payments
received by Sublessor shall be promptly refunded.
14. Covenant of Quiet Enjoyment. Sublessor represents that the Master
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Lease is in full force and effect and that there are no defaults on Sublessor's
part under it as of the Commencement Date of the Sublease Term. Subject to this
Sublease terminating as a result of the termination of the Master Lease,
Sublessor represents that, if Sublessee performs all of the provisions in this
Sublease to be performed by Sublessee, Sublessee shall have and enjoy throughout
the Sublease Term the quiet and undisturbed possession of the Subleased
Premises.
15. Assignment and Subletting. Sublessee will not assign this Sublease or
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further sublet all or any part of the Subleased Premises without Sublessor's
prior written consent, which shall not be unreasonably withheld, and Master
Lessor's prior written
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consent. Sublessor shall request Master Lessor's consent, but shall not be held
liable for Master Lessor's failure or refusal to consent to any assignment or
sublet.
16. Master Lease. A copy of the Master Lease is attached as Exhibit B and
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incorporated into this Sublease. Sublessee acknowledges having received a copy
of, and reviewed, the Master Lease. In the event of any conflict between the
Master Lease and this Sublease, the terms of this Sublease shall govern as
between Sublessor and Sublessee. Except as specifically provided herein, this
Sublease is subject to all of the terms, provisions and conditions of the Master
Lease and Sublessee shall not permit any act or omission to act that will
violate any of the provisions of the Master Lease, Sublessee assumes and agrees
to perform Sublessor's duties under the Master Lease during the Term to the
extent that these obligations are applicable to Sublessee and the Subleased
Premises. If the Master Lease terminates for any reason, this Sublease shall
terminate effective as of the termination of the Master Lease and the parties
shall be relieved from all liabilities and obligations under this Sublease;
except that, if this Sublease terminates as a result of a default of one of the
parties under this Sublease or the Master Lease, or both, the defaulting party
shall be liable to the nondefaulting party for all damage suffered by the non-
defaulting party as a result of termination.
17. Notices. All notices and demands which may or are required to be given
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by either party to the other hereunder shall be in writing and shall be deemed
to have been fully given (a) three (3) business days after deposit in the United
States mail, certified or registered, postage prepaid, or (b) one (1) business
day after delivered to a reputable and reliable overnight courier, and, in
either event, addressed to the other party at the address set forth on the
signature page to this Agreement, or to such other place as one party may from
time to time designate in a notice to the other party. Sublessor shall also send
copies of all notices of default given to the Sublessee under this Sublease to
Master Lessor.
18. Brokers. Sublessor and Sublessee each warrants that it has not dealt
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with any real estate broker in connection with this transaction.
19. Attorney Fees. If any action at law or in equity is brought by either
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party arising under or related to this Sublease, the prevailing party shall be
entitled to recover from the other party the full amount of its reasonable
attorneys' fees and costs.
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IN WITNESS WHEREOF, the parties have entered into this Sublease as of the
date above written.
Sublessor Sublessee
By: By:
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Title: Title:
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Address for Notice: Address for Notice:
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Master Lessor
By:
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Title:
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Address for Notice:
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ & Facilities - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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Exhibit B
Century Plaza
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STANDARD OFFICE LEASE
Landlord: California State Automobile Association
Inter-Insurance Bureau
Tenant: MULTIGEN, INC.
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BASIC LEASE INFORMATION
OFFICE LEASE
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Lease Date: March 31, 1995
Landlord: California State Automobile Association
Inter-Insurance Bureau, an inter-insurance exchange
Landlord's Address: Real Estate Services
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▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Send rental payments to:
Accounting
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Tenant: MultiGen, Inc., a California corporation
Tenant's Address ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
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Attn: ___________________
Total Rentable Area of Building 95,762 square feet
Premises: ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ of the Premises: 17,250 rentable square feet
Permitted Uses: general administrative offices of the Tenant,
including without limitation, software and computer
electronic development and sales and any other
legally permitted uses compatible with the Building
Term: Sixty-three (63) months from Commencement Date
Scheduled Term
Commencement Date: May 1, 1995
Monthly Base Rent: For months 1 through 3: $ -0-
For months 4 through 36: $31,050.00.
($1.80/rentable square foot)
For months 37 through 63: $33,637.50
($1.95/rentable square foot)
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Security Deposit: $33,637.50
Tenant's Share of Excess
Operating Expenses: 18.01% (based on 17,250 r.s.f.)
Base Year: 1995, adjusted to reflect a minimum of 95% occupancy
Option to Extend: One (1) three (3)-year option, as per Section 3.02
Broker: Cornish & ▇▇▇▇▇, Landlord's broker Colliers ▇▇▇▇▇▇▇
International, Inc., Tenant's broker
Brokers' Fee or Commission, if
any, paid by: Landlord. Brokers will split the fee 50/50.
Parking Rights: four (4) spaces in Parking Lot per 1,000 r.s.f.
The foregoing Basic Lease Information is hereby incorporated into and made
a part of this Lease. Each reference in this Lease to any of the term above
shall mean the respective information hereinabove set forth and shall be
construed to incorporate all of the terms provided under the particular
paragraph pertaining to such information. In the event of any conflict between
any Basic Lease Information and the Lease, the latter shall control.
"Landlord" "Tenant"
CALIFORNIA STATE AUTOMOBILE ASSOCIATION MULTIGEN, INC., a California corporation
INTER-INSURANCE BUREAU, an inter-insurance
exchange
By: By:
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Its: Its:
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By: By:
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Its: Its:
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STANDARD OFFICE LEASE
THIS LEASE ("Lease"), dated as of the Lease Date, by and between Landlord
and Tenant of space at the Building located on that certain real property
("Property") described more particularly on the Legal Description attached
hereto as Exhibit A, shall be upon the terms and conditions contained
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hereinafter.
1. PREMISES
1.01 Premises. Landlord leases to Tenant, subject to the provisions of this
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Lease, the Premises the usable space of which is shown on the Building Floor
Plan, attached hereto as Exhibit B. By entering and taking possession of the
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Premises, Tenant shall be deemed to accept the same in their condition existing
as of the Commencement Date and subject to all applicable municipal county,
state and federal statutes, laws, ordinances, including zoning ordinances, and
regulations governing and relating to the use, occupancy or possession of the
Premises. Tenant acknowledges that the only warranties an representations
Landlord has made in connection with the physical condition of the Premises or
Tenant's use of the same upon which Tenant has relied directly or indirectly for
any purpose are those expressly provided in this Lease.
1.02 Exhibits. The following Exhibits are attached to this Lease after the
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signatures and by reference thereto are incorporated herein:
Exhibit A Legal Description
Exhibit B Building Floor Plan
Exhibit C Tenant Improvements
Exhibit D Rules and Regulations
1.03 Common Areas. Tenant shall have, as appurtenant to the Premises and
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subject to reasonable rules and regulations from time to time made by Landlord
of which Tenant is given notice, the right to the use of the following in
common:
(a) Building Common Area. The common stairways and accessways,
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lobbies, entrances, stairs, elevators and any passageways thereto, and the
common pipes, ducts, conduits, wires and appurtenant equipment serving the
Premises;
(b) Land Common Area. The common walkways, sidewalk parking spaces
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and driveways necessary for access to the Building and parking spaces; and
(c) Parking Lot. The common Parking Lot ("Parking Lot") appurtenant
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to the Building. Tenant shall have the right to use the number of parking spaces
set forth in the Basic Lease Information in the Parking Lot during the Term.
1.04 Landlord's Reserved Rights in Common Areas. Landlord reserves the
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right from time to time to do any and all of the following, provided that doing
so will not unreasonably interfere with Tenant's use of the Premises:
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(a) Building Changes. To install, use, maintain, repair and replace
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pipes, ducts, conduits, wires and appurtenant meters and equipment for service
to other parts of the Building above the ceiling surfaces, below the floor
surfaces, within the walls and in the central core areas, and to relocate any
pipes, ducts, conduits, wires and appurtenant meters and equipment included in
the Premises which are so located or located elsewhere outside the Premises;
(b) Boundary Changes. To change the boundaries of the Property and
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to redesign and restripe the Parking Lot and make other reasonable changes and
grant other rights thereto including, without limitation, the granting of
easements, rights of way and rights of ingress and egress and similar rights
over, across and upon the Property. Tenant shall execute, acknowledge and
deliver to Landlord any documents which Landlord determines are necessary to
effectuate the purposes of this Article within five (5) days after written
request by Landlord;
(c) Facility Changes. To alter or relocate any other common areas or
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facility;
(d) Parking. To grant exclusive use a to portions of the Parking Lot
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to tenants; and
(e) Name Change. To change the name of the Building.
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1.05 Rentable Area. As used in this Lease, the rentable area of space
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within the Premises shall be determined applying the Building Owners and
Managers Association ("BOMA") American National Standard (Reprinted May, 1981).
1.06 Right to Negotiate for Additional Space. Tenant shall have the first
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right to negotiate on space that becomes available on the fourth or sixth floor
of the Building at the time it first becomes available for lease to third
parties. Landlord will give tenant written notice of the availability of the
space and Tenant will indicate in writing its intention to lease such space
within thirty (30) days of such notice from Landlord. If Tenant does not so
indicate its intention within thirty (30) days, Landlord may lease or use the
space in its sole discretion. If Landlord accepts Tenant's offer, such space
will be added to the Premises and will be subject to all the terms and
conditions of the Lease. Base Rent and Tenant's Share of Excess Operating
Expenses will be recalculated to include the additional rentable space. The
parties will execute an amendment to this Lease, stating the addition of the
expansion space to the Premises.
2. IMPROVEMENTS
2.01 Construction of Tenant Improvements. Landlord and Tenant shall
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cooperate in the construction of the tenant improvements ("Improvements") as
provided in Exhibit C, attached hereto. Landlord shall contract for the design
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and construction of the Improvements and be responsible for all payments
pursuant to such contract(s), but not in excess of Ten Dollars ($10) per usable
square foot. Tenant may review the plans and designs and request changes,
provided that any additional design costs shall be applied to Landlord's $10 per
square foot allowance. Landlord will not approve any
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change order that increases the cost of construction unless Tenant agrees in
writing to such change order. The Premises shall be Ready for Occupancy, as
defined in Article 2.03, below, by not later than the Scheduled Commencement
Date; provided, however, that the Scheduled Commencement Date shall be extended
for a period equal to the period of any delay encountered by Landlord affecting
the work of construction because of fire, earthquake, inclement weather, acts of
God, acts of a public enemy, riot, insurrection, governmental regulation of the
sales of materials or supplies or the transportation thereof, strikes or
boycotts, shortages of material or labor, Tenant's early entry under the
provisions of Article 2.04, or any causes beyond the control of Landlord.
2.02 Failure to Complete Construction. If the Premises are not Ready for
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Occupancy within six (6) months following the Scheduled Commencement Date, as
extended pursuant to Article 2.01 hereinabove, the sole remedy of Landlord or
Tenant shall be to terminate this Lease by delivering to the other party written
notice within ten (10) days after the day six (6) months following the Scheduled
Commencement Date, as extended. Upon termination of this Lease pursuant to this
Article 2.02, Landlord and Tenant shall have no further liability for any
damage, costs or claims which arise in connection with the Premises and this
Lease.
2.03 Completion and Delivery. The Premises shall be ready for occupancy
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("Ready for Occupancy") when construction is substantially completed, as
reasonably determined by Landlord. Landlord shall prepare, certify by
Landlord's signature and deliver to Tenant a written statement certifying (i)
that the Premises are substantially completed; and (ii) the date of such
completion. Landlord shall diligently complete any items of work not completed
when the Premises are Ready for Occupancy and complete any item of such work
within thirty (30) days of written notice that the item has not been completed.
2.04 Early Entry. With the prior written consent of Landlord, Tenant may,
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prior to the Commencement Date as defined in Article 3, at Tenant's sole risk,
enter the Premises and install trade fixtures and equipment in the Premises;
provided, however, that (i) Tenant's early entry shall not interfere with
construction of the Premises or cause labor difficulties; (ii) Tenant's early
entry shall be subject to the indemnification obligation set forth in Article
5.08; (iii) Tenant shall pay for and provide evidence of insurance satisfactory
to Landlord; and (iv) Tenant shall pay utility charges reasonably allocated by
Landlord to Tenant. Tenant shall not use the Premises for storage of inventory
or otherwise do business on the Premises prior to the Commencement Date without
the express prior written consent of Landlord.
2.05 Additional Useable Area. Tenant has requested reconfiguration of
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certain interior walls, to increase the useable office space. Such
reconfiguration will be part of the Improvements and subject to all the terms
and conditions that apply to the Improvements, including Landlord's allowance.
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3. TERM
3.01 Commencement of Term. The Term shall commence ("Commencement Date")
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upon the later of the following dates:
(a) The date on which the Premises are Ready for Occupancy; or
(b) The Scheduled Commencement Date.
3.02 Option to Extend. Tenant shall have one (1) option to extend the
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lease for three (3) years (the "Extension Term"). Tenant shall give written
notice to Landlord of its intention to extend the Lease not less than one
hundred twenty (120) days prior to the expiration of the term. Upon exercise of
such option by Tenant, the Term shall be extended for the Extension Term upon
the same terms, covenants and conditions of this Lease except that Base Rent
shall be adjusted as hereinafter provided.
3.03 Fair Market Value. The Base Rent during the Extension Term shall be
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ninety-five percent (95%) of the Fair Market Rental Value for the Premises, to
be determined as provided herein.
(a) Determination. Except as provided in 3.03(b), the term Fair
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Market Rental Value shall mean the going market rental as of the date of the
commencement of the Extension Term for equivalent space in the Building, for the
permitted uses, excluding any alterations or personal property of Tenant
installed in the Premises at Tenant's expense, and for a tenant proposing to
sign a lease equal to the Extension Term, taking into account any concession
including, without limitation, free rent and tenant improvement allowance, that
Landlord may at that time typically grant prospective tenants. It is understood
that in determining Fair Market Rental Value the parties shall negotiate in good
faith in order to reach agreement. In the event the parties are unable to reach
agreement within thirty (30) days of Tenant's notice of intention to extend the
Lease, the matter shall be determined by the appraisal procedure as hereinafter
provided.
(b) Appraisal. Within fifteen (15) days of failure to reach an
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agreement, each party, at its own cost and by giving notice to the other party,
shall appoint a real estate appraiser, with membership in the American Institute
of Real Estate Appraisers or the Society of Real Estate Appraisers and at least
five (5) years' full-time commercial appraisal experience in the area where the
Building is located, to appraise and determine the Fair Market Rental Value. For
the purposes of this Section 3.03(b), the term Fair Market Rental Value shall
mean the going market rental as of the date of the commencement of the Extension
Term for equivalent space in comparable office buildings in San Jose,
California. If in the time provided, only one (1) party shall give notice
appointment of an appraiser, the single appraiser appointed shall determine the
Fair Market Rental Value. If two (2) appraisers are appointed by the parties,
the two (2) appraisers shall independently, and without consultation, prepare an
appraisal of the Fair Market Rental Value within fifteen (15) days of the
appointment. Each appraiser shall seal its appraisal after completion. After
both appraisals are completed, the resulting
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appraisals of the Fair Market Rent Value shall be opened and compared. If the
appraisals differ by no more than ten percent (10%) of the value of the higher
appraisal, then the Fair Market Rental Value rent shall be the average of the
two (2) appraisals. If the appraisals differ by more than ten percent (10%) of
the value of the high appraisal, then within ten (10) days from the date the
appraisals are compared, the two (2) appraisers selected by the parties shall
appoint a third appraiser who meets the minimum qualifications described in this
Section. If the two (2) appraisers fail to select a third qualified appraiser, a
third appraiser shall b selected by the American Arbitration Association at the
request of either party or, if there is then no American Arbitration Association
or if it refuses to perform this function, then at the request of either
Landlord or Tenant, the appraiser shall be appointed by the then Presiding Judge
of the Superior Court of the State of California of the County in which the
Building is located. The two (2) appraisers shall each then submit his
independent appraisal in simple letter form to the third appraiser stating his
determination of the Fair Market Rental Value. The sole responsibility of the
third appraiser shall be to determine which of the determinations made by the
first two (2) appraisers is most accurate. The third appraiser shall have no
right to propose a middle ground or any modification of either of the
determinations made by the first two (2) appraisers. The third appraiser's
choice shall be submitted to Landlord and Tenant within fifteen (15) days after
the third appraiser has received the written determination from each of the
first two (2) appraisers. The Fair Market Rental Value shall be determined by
the selection made by the third appraiser from the determination submitted by
the first two (2) appraisers.
(c) Costs. Each party shall pay the fees and expenses of its own
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appraiser and fifty percent (50%) of the fees and expenses of the third
appraiser.
4. RENT
4.01 Base Rent. The annual Base Rent shall be payable in equal monthly
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installments. Beginning with the fifth month of the Term, Tenant shall pay the
Base Rent to Landlord in advance upon the first day of each calendar month of
the Term, at Landlord's address for rental payments or at such other place
designated by Landlord in a notice to Tenant, without any prior demand therefor
and without any deduction, abatement or setoff whatsoever. If the Term shall
commence or end on a day other than the first day of a calendar month, then
Tenant shall pay, for the fifth month of the Term and on the first day of the
last calendar month, a pro rata portion of the Base Rent, prorated on a per diem
basis, with respect to the portion of the fractional calendar month included in
the Term. On or before the Commencement Date, Tenant shall pay the full month's
Base Rent owing hereunder for the fourth month of the Term, along with Tenant's
Security Deposit.
4.02 Additional Rent. All charges required to be paid by Tenant hereunder,
---------------
including without limitation, payments for Impositions, Operating Expenses, and
any other amounts payable hereunder, shall be considered additional rent for the
purposes of this Lease ("Additional Rent"), and Tenant shall pay Additional Rent
upon written demand by Landlord or otherwise as provided in this Lease. "Rent"
shall mean Base Rent and Additional Rent.
13
4.03 Late Payment. If any installment of Rent is not paid within three (3)
------------
days of written notice of nonpayment, Tenant shall pay to Landlord, in addition
to the installment of Rent then owing, a late charge equal to five percent (5%)
of the amount of the delinquent payment of Rent. Landlord and Tenant recognize
that the amount of damage Landlord shall suffer as a result of Tenant's failure
to timely pay any Rent is difficult to ascertain and the late charge provided in
this subsection is the best estimate of Landlord's damage resulting from any
late payment by Tenant. This provision shall not relieve Tenant of Tenant's
obligation to pay Rent at the time and in the manner herein provided.
4.04 Security Deposit. Upon executing this Lease, Tenant shall deposit the
----------------
Security Deposit as a security deposit with Landlord. The Security Deposit
shall secure Tenant's obligations under this Lease to pay rent and other
monetary amounts, to maintain the Premises and repair damages thereto, to
surrender the Premises to Landlord in clean condition and repair upon
termination of this Lease as required pursuant to Article 17.12 below and to
discharge Tenant's other obligations hereunder. Landlord may use and commingle
the Security Deposit with other funds of Landlord. If Tenant fails to perform
Tenant's obligations hereunder, Landlord may, but without any obligation to do
so, apply all or any portion of the Security Deposit towards fulfillment of
Tenant's unperformed obligations. If Landlord does so apply any portion of the
Security Deposit, Tenant, upon demand by Landlord, shall immediately pay
Landlord a sufficient amount in cash to restore the Security deposit to the full
original amount. Tenant's failure to forthwith remit to Landlord sufficient
amount in cash to restore the Security Deposit to the original sum deposited
within five (5) days after receipt of such demand shall constitute an Event of
Default. The Security Deposit shall be held by Landlord without liability r
interest on the same. Upon termination of this Lease, if Tenant has then
performed all of Tenant's obligations hereunder, Landlord shall return the
Security Deposit to Tenant. If Landlord sells or otherwise transfers Landlord's
rights or interest under this Lease, Landlord may deliver the Security Deposit
to the transferee, whereupon Landlord shall be released from any further
liability to Tenant with respect to the Security Deposit, provided that such
transferee assumes all the outstanding obligations of Landlord under this Lease.
4.05 Accord and Satisfaction. No payment by Tenant or receipt by Landlord
-----------------------
of a lesser amount than the Rent herein stipulated shall be deemed to be other
than on account of the Rent, nor shall any endorsement or statement on any check
or any letter accompanying any check or payment as Rent be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such Rent or pursue any other remedy
provided in this Lease.
5. INSURANCE
5.01 All Risk Coverage.
-----------------
(a) Landlord's Insurance. Landlord shall procure and maintain during
--------------------
the Term "all risk" property, fire, extended coverage, and special extended
coverage insurance with respect to the Building, with such coverage as Landlord
may elect
14
including, without limitation, earthquake and flood coverage, hazardous
materials endorsement, inflation endorsement, sprinkler leakage endorsement, and
boiler and machinery coverage, in such amounts as Landlord may elect. Landlord
shall have no obligation to insure Tenant's personal property. If the annual
premiums charged Landlord for such insurance exceed the standard premium rates
because the nature of Tenant's operations results in increased exposure, then
Tenant shall, upon receipt of an invoice, reimburse Landlord for such increased
amount as Additional Rent.
(b) Tenant's Insurance. Tenant shall procure and maintain during the
------------------
Term, at Tenant's sole cost and expense, insurance ("Personal Property
Insurance") covering leasehold improvements paid for by Tenant and Tenant's
personal property from time to time in, on, or at the Premises, in an amount not
less than one hundred percent (100%) of the full replacement cost, without
deduction for depreciation, providing protection against events protected under
"Fire and Extended Coverage," as well as against sprinkler damage, vandalism,
and malicious mischief. Any proceeds from the Personal Property Insurance shall
be used for the repair or replacement of the property damaged or destroyed,
unless this Lease is terminated under an applicable provision herein. If the
Premises are not repaired or restored following damage or destruction in
accordance with other provisions herein, Landlord shall receive any proceeds
from the Personal Property Insurance allocable to Tenant's leasehold
improvements constructed by Landlord.
5.02 Comprehensive General Liability Insurance. Tenant shall procure and
-----------------------------------------
maintain during the Term, at Tenant's sole cost and expense, a policy or
policies of comprehensive general liability insurance on an "occurrence" basis
against claims for personal injury liability, including, without limitation,
bodily injury, death, or property damage liability with limits of not less than
One Million Dollars ($1,000,000.00) per occurrence and Two Million Dollars
($2,000,000) aggregate. All of such insurance shall be primary and
noncontributing with any insurance which may be carried by Landlord and shall
contain a provision that Landlord, although named as an insured, shall
nevertheless be entitled to recover under the policy for any loss, injury, or
damage to Landlord, its agents and employees, or the property of such person by
reason of the negligence of Tenant. All such insurance shall specifically
insure Tenant's performance of the indemnity agreement contained in Article 5.08
of this Lease. The adequacy of the coverage afforded by the liability and
property damage insurance shall be subject to review by Landlord from time to
time, and, if it appears in such a review that a prudent business person in the
area operating a similar business to that operated by Tenant on the Premises
would increase the limits of its liability insurance, Tenant shall effect such
increases within thirty (30) days of receipt of notice from Landlord.
5.03 Rental Abatement Insurance. At Landlord's election, Landlord shall
--------------------------
keep and maintain in full force and effect during the Term, rental income
insurance against abatement or loss of Rent in case of fire or other casualty,
in an amount at least equal to the amount of the Rent payable by Tenant during
one year next ensuing, as reasonably determined by Landlord.
15
5.04 Insurance Certificates. Tenant shall furnish to Landlord, prior to
----------------------
the date of commencement of this Lease and thereafter within thirty (30) days
prior to the expiration of each such policy, a certificate of insurance issued
by the insurance carrier of each policy of insurance carried by Tenant pursuant
hereto. Said certificates shall expressly provide that such policies shall not
be cancelable or subject to reduction of coverage or otherwise be subject to
modification except after thirty (30) days' prior written notice to the parties
named as addition insureds in this Article 5.04. Landlord, its successors and
assigns, and any nominee of Landlord holding any interest in the Premises,
including, without limitation, any ground lessor and the holder of any fee or
leasehold mortgage, shall be named as additional insureds under each such policy
of insurance maintained by Tenant pursuant to this Lease. Nothing in this
Article 5 shall prevent Tenant from carrying any of the insurance required of
Tenant hereunder in the form of a blanket insurance policy or policies which
cover other properties owned or operated by Tenant in addition to the Premises,
provided that Tenant obtains Landlord's prior written consent to such blanket
insurance policy policies.
5.05 Tenant's Failure. If Tenant fails to maintain any insurance required
----------------
in this Lease, Tenant shall be liable for any loss or cost resulting from said
failure. This Article 5.05 shall not be deemed to be a waiver of any Landlord's
rights and remedies under any other section of this Lease.
5.06 Waiver of Subrogation. Any policy or policies of fire, extended
---------------------
coverage or similar casualty insurance, which either party obtains in connection
with the Premises, or Tenant's personal property therein, shall, to the extent
the same can be obtained without undue expense, include a clause or endorsement
denying the insurer any rights of subrogation against the other party to the
extent rights have been waived by the insured prior to the occurrence of injury
or loss. Landlord and Tenant waive any rights of recovery against the other for
injury or loss due to hazards covered by insurance containing such a waiver of
subrogation clause or endorsement to the extent of the injury or loss covered
thereby.
5.07 Tenant's Property and Fixtures. Tenant shall assume the risk of
------------------------------
damage to any furniture, equipment, machinery, goods, supplies or fixtures which
are or remain the property of Tenant or as to which Tenant retains the right of
removal from the Premises.
5.08 Indemnification. Tenant shall indemnify and hold Landlord, the
---------------
Premises, Building, Property and Parking Lot, harmless from and against (i) any
and all liability, penalties, losses, damages, costs and expenses, demands,
causes of action, claims or judgments arising from or growing out of any injury
to any person or persons or any damage to any property as a result of any
accident or other occurrence during the Term occasioned in any way as a result
of the use, maintenance, occupation or operation of the Premises during the Term
by Tenant or Tenant's officers, employees, agents, servants, subtenants,
concessionaires, licensees, contractors or invitees, and (ii) from and against
all legal costs and charges, including attorneys' fees, incurred in any such
matter and the defense of any action arising out of the same or in discharging
the Building, Property, Premises and Parking Lot or any part thereof from any
and all liens, charges or judgments which may accrue or be placed thereon by
reason of any act or omission of the Tenant;
16
provided, however, that Tenant shall not be required to indemnify Landlord for
any damage or injury of any kind arising as the result of the willful misconduct
or negligence of Landlord or its agents or employees. Landlord shall indemnify
and hold Tenant harmless from any damage or injury of any kind arising as the
result of the willful misconduct or negligence of Landlord or its agents or
employees. Each party's obligation to indemnify and hold the other party
harmless shall be limited to the sum that exceeds the amount of insurance
proceeds, if any, received by the party being indemnified. The obligations
pursuant to the foregoing indemnities shall survive the termination of this
Lease.
6. OPERATING EXPENSES
6.01 Operating Expenses. Tenant shall pay to Landlord, as Additional Rent,
------------------
Tenant's Share of Excess Operating Expenses. "Excess Operating Expenses" shall
mean the amount by which the "Operating Expenses" (as defined below) paid or
incurred in any calendar year of the Term exceed the Operating Expenses for the
Base Year set forth in the Basic Lease Information.
(a) Definition. "Operating Expenses" shall include all expenses and
----------
costs of every kind and nature which Landlord shall pay or become obligated to
pay because of or in connection with the ownership and operation of the
Building, Property, Parking Lot and surrounding property and supporting
facilities, including, without limitation: (i) all Impositions; (ii) license,
permit and inspection fees; (iii) premiums for insurance maintained by Landlord
pursuant to Articles 5.01 and 5.03; (v) wages, salaries and related expenses and
benefits of all on-site and off-site employees engaged in operation, maintenance
and security; (vi) all supplies, materials and equipment rental used in
operation of the Building; (vii) all maintenance and repair, janitorial,
security and service costs; viii) property management services; (ix) legal and
accounting expenses, including the cost of audits by certified public
accountants; (x) repairs, replacements and general maintenance (excluding those
paid for by proceeds of insurance or other parties and alterations attributable
solely to tenants of the Building other than Tenant); (xi) all maintenance and
repair costs, including sidewalks, landscaping, service areas, mechanical rooms,
Parking Lot and other parking areas, Building exterior, driveways; (xii)
amortization of capital improvements to the extent such capital improvements
reduce other Operating Expenses or to the extent that they are required by
governmental authorities; xiii) all other operating, management and other
expenses incurred by Landlord in connection with operation of the Building;
(xiv) all charges for heat, water, gas, electricity and other utilities used or
consumed in the Building and surrounding Property, entranceways, sidewalks,
etc.; and (xv) transportation services costs, including, without limitation, the
cost of implementing the requirements of any present or future transportation
systems.
Operating Expenses will not include:
(i) any cost to the extent reimbursed to Landlord from any
source (including insurance or condemnation proceeds); (ii) except as
described in 6.01(a)(x) or (xii) of the Lease, costs incurred by Landlord
for alterations or acquisitions which are
17
considered capital improvements under generally accepted accounting
principles, consistently applied; or (iii) costs incurred for services or
items supplied to one specific tenant other than Tenant. Tenant agrees that
security services supplied to the Building are for the benefit of all
tenants.
(b) Proration. Any Operating Expenses attributable to a period which falls
---------
only partially within the Term shall be prorated between Landlord and Tenant so
that Tenant shall pay only that proportion thereof which the part of such period
within the Term bears to the entire period.
(c) Survival. Any such sum payable by Tenant which would not otherwise be
--------
due until after the date of the termination of this Lease, shall, if the exact
amount is uncertain at the time that this Lease terminates, be paid by Tenant to
Landlord upon such termination in an amount to be determined by Landlord with an
adjustment to be made once the exact amount is known.
(d) Estimated Payments. Prior to the commencement of each of Landlord's
------------------
accounting years of the Term, Landlord shall estimate the Additional Rent
payable by Tenant pursuant to this provision and Tenant shall pay to Landlord on
the first of each month in advance, one-twelfth (1/12) of Landlord's estimated
amount. At the end of each year there shall be an adjustment made to account for
any difference between the actual and the estimated Operating Expenses for the
previous year. If, within thirty (30) days of receipt of Landlord's adjustment
statement, Tenant requests a review of the records, Landlord shall allow Tenant
to review Landlord's records with respect to the Operating Expenses at any
reasonable time. If Tenant has overpaid the amount of Additional Rent owing
pursuant to this provision, Landlord shall credit Tenant the amount of such
overpayment in determining Tenant's estimated payments for the following lease
year; provided, that in the case of an overpayment for the final lease year of
the Term, Landlord shall refund such overpayment to Tenant within thirty (30)
days after the end of Landlord's accounting year. If Tenant has underpaid the
amount of Additional Rent owing pursuant to this provision, Tenant shall pay the
amount of such underpayment to Landlord, as Additional Rent, within five (5)
days after Landlord's written demand.
(e) Adjustment. Notwithstanding any provision hereinabove to the contrary,
----------
in the event the Building is not fully occupied during any year of the Term, an
adjustment shall be made in computing variable Operating Expenses for such year
so that the same shall be computed for such year as though the Building had been
fully occupied during such year, and in no event shall Landlord collect in
excess of one hundred percent (100%) of actual Operating Expenses.
(f) Limit on Increase. Notwithstanding any provision of this Lease to the
-----------------
contrary, including Section 6.01(e), in no event will Landlord be entitled to
charge Tenant any annual increase in Tenant's Share of Excess Operating Expenses
that exceeds the prior year's charge to Tenant by the greater of (i) five per
cent (5%) or (ii) the percentage increase for the prior year in the Consumer
Price Index ("CPI") for all Urban Consumers, All Items, San Francisco -
Oakland - San ▇▇▇▇ Metropolitan Area, as
18
published by the Bureau of Labor Statistics of the U.S. Department of Labor,
using the year 1984 as a base of 100. If the CPI fails to exist, then the CPI
shall be replaced by such other index selected by Landlord as may be generally
recognized as a successor index, or, if none, any other reasonable index which
Landlord may select.
6.02 Impositions. All transit charges, housing fund assessments, real
-----------
estate taxes and all other taxes relating to the Property, Premises, Parking Lot
and/or the Building, all other taxes which may be levied in lieu of real estate
taxes, all assessments, assessment bonds, levies, fees and other governmental
charges (including, but not limited to, charges for traffic facilities
improvements, water service studies and improvements, and fire service studies
and improvements) or amounts necessary to be expended because of governmental
orders, whether general or special, ordinary or extraordinary, unforeseen as
well as foreseen, of any kind and nature for public improvements, services,
benefits, or any other purpose which are assessed, levied, confirmed, proposed
or, become a lien upon the Property, Premises, Parking Lot or Building or become
payable during the Term shall collectively be referred to as "Impositions."
(a) Installment Election. In the case of any Impositions which may
--------------------
be evidenced by improvement or other bonds or which may be paid in annual or
other periodic installments, Landlord shall elect to cause such bonds to be
issued or cause such assessment to be paid in installments over the maximum
period permitted by law.
(b) Limitation. Nothing contained in this Lease shall require Tenant
----------
to pay any franchise, estate, inheritance or succession transfer tax of
Landlord, or any income, profits or revenue tax or charge, upon the net income
of Landlord from all sources; provided, however, that if at any time during the
Term under the laws of the United States Government or the State of California,
or any political subdivision thereof, a tax or excise on rent, or any other tax
however described, is levied or assessed by any such political body against
Landlord on account of Rent, or a portion thereof, Tenant shall pay one hundred
percent (100%) of any said tax or excise as Additional Rent.
(c) Personal Property Taxes. Tenant shall pay or cause to be paid,
-----------------------
prior to delinquency, any and all taxes and assessments levied upon all trade
fixtures, inventories and other personal property placed in and upon the
Premises by Tenant.
6.03 Services and Utilities. So long as Tenant is not in default under
----------------------
this Lease, Landlord shall provide: (i) to the Premises during the Business
Hours, as defined in the Rules and Regulations, electricity, gas, water,
lighting, janitorial services, elevator service, heating, ventilating and air
conditioning and other Building services required in Landlord's reasonable
judgment for the comfortable use and occupancy of the Premises; and, (ii) to the
common areas during the Business Hours, as defined in the Rules and Regulations,
utilities and maintenance as required in Landlord's reasonable judgment for the
comfortable use and occupancy of the Premises. Landlord shall not be liable for,
and Tenant shall not be entitled to, any reduction or abatement of Rent on
account of any failure on the part of Landlord to deliver the services and
utilities provided in this Lease unless the same results from the willful
misconduct of Landlord, nor shall Landlord be liable under any circumstances for
a loss of or injury to property, however occurring,
19
incidental to any failure to furnish any utilities or services. For the purposes
of this Lease, "comfortable use and occupancy" shall mean an average work
environment of approximately 70 degrees Fahrenheit in the Premises during
Business Hours.
6.04 Special Services.
----------------
(a) Additional Services. In the event Landlord provides utilities,
-------------------
elevator, heating, air conditioning and/or cleaning services to Tenant beyond
the standard services related to the operation and management of a first class
office building or at times other than during the Business Hours, as defined in
the Rules and Regulations, Tenant shall pay Landlord's reasonable charge for
such special services as Additional Rent. Landlord's current charge for
additional HVAC operations outside Business Hours is Five Dollars ($5.00) per
hour per pump zone; Landlord agrees not to increase such additional HVAC charge
in any year by an amount that exceeds the prior year's such charge by more than
ten percent (10%). Any cleaning of lunchrooms, cafeterias, conference rooms,
etc., shall be on a special services basis (except with respect to the removal
of trash from trash receptacles and cleaning incidental to normal cleaning).
(b) Utility Consumption. If Tenant is likely to or does consume
-------------------
quantities of electricity, water or gas in excess of the amounts customarily
consumed by tenants in the Building, Landlord shall have the right, at Tenant's
sole cost and expense, to install separate metering for such utilities or to
separately charge Tenant for any such excess utility consumption by Tenant. Any
such charges made by Landlord to Tenant shall be reasonably determined by
Landlord and shall be promptly paid by Tenant to Landlord as Additional Rent.
Landlord may, at Landlord's sole option, elect to rate the quantity of utilities
consumed by Tenant at the Premises. Such consumption shall be determined by one
of the following methods: (i) a rating by an appropriately licensed engineer
with costs to be computed on an average daily basis; (ii) metering by a licensed
utility company responsible for service to the Building; or (iii) a rating by an
appropriately licensed engineer and monitored by Landlord's central Building
computer. In each such case, the costs for administering such methods shall be
borne by Tenant.
7. REPAIRS AND MAINTENANCE
7.01 Landlord Repairs and Maintenance. Subject to the provisions of
--------------------------------
Paragraph 10, Landlord shall keep and maintain the roof, paving, structural
elements, landscaping, irrigation, and exterior walls of the Building and
Property in good order and repair. Landlord shall also keep and maintain the
windows, window frames, doors, hardware, and interior walls and the electrical,
plumbing, lighting, heating, and air conditioning systems. Such expenses shall
be included in Operating Expenses. If, however, any repairs or maintenance are
required because of an act or omission of Tenant, or its agents, employees or
invitees, Tenant shall pay to Landlord upon demand one hundred percent (100%) of
the costs of such repair or maintenance. Notwithstanding anything in this Lease
to the contrary, Landlord shall have no obligation to alter, remodel, improve,
decorate, or paint the Premises or any part thereof, except for the Improvements
described in Exhibit C hereto.
---------
20
7.02 Tenant Repairs and Maintenance. Except as expressly provided in
------------------------------
Section 7.01, Tenant shall, at its sole cost, keep and maintain the interior of
the Premises, in good and sanitary order, condition and repair. Should Tenant
fail to maintain the Premises as required of Tenant hereunder forthwith upon
notice from Landlord, Landlord, in addition to all other remedies available
hereunder or by law, and without waiving any alternative remedies, may make the
same, and in that event, Tenant shall reimburse Landlord for the cost of such
maintenance or repairs as Additional Rent, at Landlord's election on demand or
on the next date upon which Basic Rent becomes due. Tenant hereby expressly
waives the provisions of Subsection 1 of Section 1932, and Sections 1941 and
1942 of the Civil Code of California and all rights to make repairs at the
expense of Landlord, as provided in Section 1942 of said Civil Code.
7.03 Inspection of Premises. Landlord, at reasonable times and with
----------------------
twenty-four (24) hours prior notice, may enter the Premises to complete
construction undertaken by Landlord on the Property, Premises or Building, to
inspect, clean or repair the same, to inspect the performance by Tenant of the
terms and conditions hereof and to affix reasonable signs and displays, show the
Premises to prospective purchasers, tenants and lenders and for all other
purposes as Landlord shall reasonably deem necessary. In the event of an
emergency, Landlord may enter the Premises as described in this Section without
prior notice.
7.04 Liens. Tenant shall promptly pay and discharge all claims for work or
-----
labor done, supplies furnished or services rendered by Tenant and shall keep the
Property, Premises and Building free and clear of all mechanic's and
materialmen's liens in connection therewith. Landlord shall have the right to
post or keep posted on the Premises, or in the immediate vicinity thereof, any
notices of non-responsibility for any construction, alteration or repair of the
Premises by Tenant. If any such lien is filed, Landlord may, but not be required
to, take such action or pay such amount as may be necessary to remove such lien;
and, Tenant shall pay to Landlord as Additional Rent any such amounts expended
by Landlord within five (5) days after notice is received from Landlord of the
amount expended by Landlord.
8. FIXTURES, PERSONAL PROPERTY AND ALTERATIONS
8.01 Fixtures and Personal Property. Tenant, at Tenant's expense, may
------------------------------
install any necessary trade fixtures, equipment and furniture in the Premises,
provided that such items are installed and are removable without damage to the
structure of the Building. Landlord reserves the right to approve or disapprove
of curtains, draperies, shades, paint or other interior improvements visible
from outside the Premises on wholly aesthetic grounds. Such improvements must be
submitted for Landlord's written approval prior to installation, or Landlord may
remove or replace such items at Tenant's sole expense. Said trade fixtures,
equipment and furniture shall remain Tenant's property and shall be removed by
Tenant upon expiration of the Term, or earlier termination of this Lease. Tenant
shall repair, at Tenant's sole expense, all damage caused by the installation or
removal of trade fixtures, equipment, furniture or temporary improvements. If
Tenant fails to remove the foregoing items on termination of this Lease,
Landlord may keep and
21
use them or remove any or all of them and cause them to be stored or sold in
accordance with applicable law.
8.02 Alterations. Except for alterations, additions or improvements that
-----------
cost less than One Thousand Dollars ($1,000), Tenant shall not make or allow to
be made any alterations, additions or improvements to the Premises, either at
the inception of this Lease or subsequently during the Term, without obtaining
the prior written consent of Landlord. Tenant shall deliver to Landlord full and
complete plans and specifications of all such alterations, additions or
improvements, and no such work shall be commenced by Tenant until Landlord has
given its written approval thereof. Landlord does not expressly or implicitly
covenant or warrant that any plans or specifications submitted by Tenant are
safe or that the same comply with any applicable laws, ordinances, etc. Further,
Tenant shall indemnify and hold Landlord harmless from any loss, cost or
expense, including attorneys' fees and costs, incurred by Landlord as a result
of any defects in design, materials or workmanship resulting from Tenant's
alterations, additions or improvements to the Premises. All alterations,
additions and improvements shall remain the property of Tenant until termination
of this Lease, at which time they shall be and become the property of Landlord.
All repairs, alterations, additions, and restoration by Tenant hereinafter
required or permitted shall be done in a good and workmanlike manner and in
compliance with all applicable laws and lawful ordinances, bylaws, regulations
and orders of any federal, state, county, municipal or other public authority
and of the insurers of the Building. Tenant shall not permit liens of any kind
to be imposed upon the Property, Premises or Building and Tenant shall discharge
of record any such liens within five (5) days after written notice thereof.
Tenant shall reimburse Landlord for Landlord's reasonable charges for reviewing
and approving or disapproving plans and specifications for any alterations
proposed by Tenant. Tenant shall require that any contractors used by Tenant
carry a comprehensive liability insurance policy covering bodily injury in the
amounts of Three Million Dollars ($3,000,000) per person and Three Million
Dollars ($3,000,000) per occurrence and covering property damage in the amount
of One Million Dollars ($1,000,000). Landlord may require proof of such
insurance prior to commencement of any work on the Premises.
9. USE AND COMPLIANCE WITH LAWS
9.01 Use. Tenant shall use the Premises only for the Permitted Uses
---
specified on the Basic Lease information, consistent with any covenants,
conditions, and restrictions affecting the Property, and all applicable Rules
and Regulations, and for no other use. Tenant shall not commit waste, interfere
with any other tenants in the Building, subject the Premises to any use which
would damage the Premises or raise or violate any insurance coverage maintained
at the Building or take any action that would impair parking or alter parking
spaces.
9.02 Compliance with Laws.
--------------------
(a) Tenant's Compliance. Tenant shall comply with all of the
-------------------
requirements of municipal, county, state, federal and other applicable
governmental authorities, now in force, or which may hereafter be in force,
pertaining to the Premises,
22
Building, Property and Parking Lot, provided that this Section 9.0 2 does not
create any obligation or liability of Tenant for compliance with the Americans
with Disabilities Act (the "ADA") for any area outside the Premises. Tenant is
responsible for compliance with the ADA as it applies to Tenant as an employer
and as it applies to Tenant's alterations, fixtures, equipment and other
property.
(b) Landlord's Compliance. Landlord represents, to the best of its
---------------------
knowledge, that as of the Commencement Date the Building and Premises do not
violate any ordinance, rule, code or regulation of any governmental agency,
including the ADA, and Landlord does not know of any currently effective notice
from any governmental agency regarding any such possible violation.
9.03 Signs. Landlord shall provide Building standard signs in the Building
-----
lobby and at the entrance to the Premises. Tenant shall not install any sign on
or in the Building or Premises without the prior written consent of Landlord.
Any sign placed or erected for the benefit of Tenant in the Building or Premises
shall contain only Tenant's name, or the name of any affiliate of Tenant
actually occupying the Premises, and no advertising matter. Landlord shall have
the right, in Landlord's sole discretion, to object to any sign proposed by
Tenant. Tenant shall remove any sign installed by Tenant upon termination of
this Lease and shall return the site of such sign to its condition prior to the
placement of the sign.
9.04 Parking Access. In addition to the general obligation of Tenant to
--------------
comply with laws and without limitation thereof, Landlord shall not be liable to
Tenant nor shall this Lease be affected if any parking privileges appurtenant to
the Premises are impaired by reason of any moratorium, initiative, referendum,
statute, regulation, denial of permit or other governmental decree or action
which could in any manner prevent or limit the parking rights of Tenant
hereunder. Any governmental charges or surcharges or other monetary obligations
imposed relative to parking rights with respect to the Premises, Building,
Property and Parking Lot shall be considered as Impositions and shall be payable
by Tenant under the provisions of Article 6 hereinabove.
9.05 Floor Load. Tenant shall not place a load upon any floor of the
----------
Premises which exceeds the load per square foot which such floor is designed to
carry and which is then allowed by law. The load factor will be available to
Tenant from Landlord's architect at the completion of the Improvements.
9.06 Deliveries. All deliveries to and from the Premises shall be made
----------
using the elevator designated by Landlord during the time periods specified by
Landlord and so as to cause the minimum amount of interference with the business
of other tenants of the Building.
9.07 Hazardous Materials. As used in this Lease, the term "Hazardous
-------------------
Material"' means any flammable items, explosives, guns, ammunition, radioactive
materials, hazardous or toxic substances, material or waste or related
materials, including any substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials" or "toxic
substances" now or subsequently
23
regulated under any applicable federal, state or local laws or regulations,
including without limitation, petroleum-based products, paints, solvents, lead,
cyanide, DDT, printing inks, acids, pesticides, ammonia compounds, asbestos,
PCBs and similar compounds, and including any different products and materials
which are subsequently found to have adverse effects on the environment or the
health and safety of persons. Tenant shall not cause or permit any Hazardous
Material to be generated, produced, brought upon, used, stored, traded or
disposed of in or about the Building by Tenant, its agents, employees,
contractors, sublessees or invitees in violation of applicable law.
10. DAMAGE AND DESTRUCTION
10.01 Reconstruction. If the Premises are damaged or destroyed during the
--------------
Term, except as otherwise provided in this Lease, Landlord shall diligently
repair or rebuild them to substantially the condition in which they existed
immediately prior to such damage or destruction.
10.02 Rent Abatement. Rent due and payable hereunder shall be abated
--------------
proportionately, but only to the extent of any proceeds received by Landlord
from rental abatement insurance described in Article 5.03 hereinabove, during
any period in which, by reason of any such damage or destruction, Tenant
reasonably determines that there is substantial interference with the operation
of Tenant's business in the Premises, having regard to the extent to which
Tenant may be required to discontinue its business in the Premises. Such
abatement shall continue for the period commencing with such damage or
destruction and ending with a substantial completion by Landlord of the work of
repair or reconstruction which Landlord is obligated or undertakes to do. If it
be determined that continuation of business is not practical pending
reconstruction, Base Rent due and payable hereunder shall ▇▇▇▇▇ to the extent of
proceeds from rental abatement insurance until reconstruction is substantially
completed o r until business is totally or partially resumed, whichever is the
earlier.
10.03 Excessive Damage or Destruction. If the Building is damaged or
-------------------------------
destroyed to the extent that Landlord determines that it cannot, with reasonable
diligence, be fully repaired or restored by Landlord within one hundred eighty
(180) days after the date of the damage or destruction, Landlord may terminate
this Lease. Notwithstanding the fact that the Premises have been damaged or
destroyed, Landlord shall determine whether the Building can be fully repaired
or restored within the one hundred eighty (180) day period, and Landlord's
determination shall be binding upon Tenant. If the Premises have been destroyed
or damaged to the extent that Landlord determines that the Premises cannot, with
reasonable diligence, be fully repaired or restored within one hundred eighty
(180) days after the date of the damage or destruction, either Landlord or
Tenant may terminate this Lease. Landlord shall notify Tenant of its
determination, in writing, within forty-five (45) days after the date of the
damage or destruction. If Landlord determines that the Building or the Premises
can be fully repaired or restored within the one hundred eighty (180) day
period, or if it is determined that such repair or restoration cannot be made
within said period but Landlord does not elect to terminate within forty-five
(45) days from the date of
24
[MISSING PAGE 23..... SECTION 11.]
11.
11.01
11.02 ..... restoring the Premises to their original condition, Landlord
shall not be required to spend an amount in excess of the product obtained by
multiplying Tenant's Share of Operating Expenses by the total amount of any
condemnation proceeds received by Landlord. If any parking areas are Condemned,
Landlord has the option but not the obligation to supply Tenant with other
parking areas. Landlord and Tenant hereby waive the provisions of California
Code of Civil Procedure (S) 1265.130.
11.03 Landlord's Award. If the Premises are wholly or partially Condemned,
----------------
then, subject to the provision of Article 11.04 below, Landlord shall be
entitled to the entire award paid for such condemnation, and Tenant waives any
right or claim to any part thereof from Landlord or the condemning authority.
11.04 Tenant's Award. Tenant shall have the right to claim and recover
--------------
from the condemning authority, but not from Landlord, only such compensation as
may be separately awarded to or recoverable by Tenant in Tenant's own right on
account of any and all costs or loss to which Tenant might be put in removing
Tenant's merchandise, furniture, fixtures, leasehold improvements and equipment
to a new location.
11.05 Temporary Condemnation. If the whole or any part of the Premises
----------------------
shall be Condemned for any temporary public or quasi-public use or purpose, this
Lease shall remain in effect and Tenant shall be entitled to. receive for itself
such portion or portions of any award made for such use with respect to the
period of the taking which is within the Term. If a temporary condemnation
remains in force at the expiration or earlier termination of this Lease, Tenant
shall pay to Landlord a sum equal to the reasonable cost of performing any
obligations required of Tenant by this Lease with respect to the surrender of
the Premises, including, without limitation, repairs and maintenance, and upon
such payment Tenant shall be excused from any such obligations. If a temporary
condemnation is for an established period which extends beyond the Term, the
Lease shall terminate as of the date of occupancy by the condemning authority,
and the damages shall be as provided in Articles 11.03 and 11.04 hereinabove and
Rent shall be adjusted to the date of occupancy.
11.06 Notice and Execution. Landlord shall, immediately upon service of
--------------------
process in connection with any condemnation or potential condemnation, give
Tenant notice in writing thereof. Tenant shall immediately execute and deliver
to the Landlord all instruments that may be required to effectuate the
provisions of this Article 11.
11.07 Sale Under Threat of Condemnation. A sale by Landlord to any
---------------------------------
authority having the power of eminent domain, either under threat of
condemnation or while
25
condemnation proceedings are pending, shall be deemed a taking under the power
of eminent domain for purposes of this Article 11.
12. DEFAULT
12.01 Events of Default. The occurrence of any of the following events
-----------------
shall constitute an "Event of Default" on the part of Tenant with or without
notice from Landlord:
(a) Vacation or Abandonment. While any other Event of Default is
-----------------------
outstanding, failing to use the Premises for the Tenant's general administrative
office, or otherwise vacating or abandoning the Premises;
(b) Payment. Failure to pay any installment of Base Rent, Additional
-------
Rent or other monies due and payable hereunder upon the date when said payment
is due, the failure continuing for a period of three (3) days following notice;
(c) Performance. Default in the performance of any of Tenant's
-----------
covenants, agreements or obligations hereunder (except default in the payment of
Rent, Additional Rent or other monies), the default continuing for thirty (30)
days after written notice thereof from Landlord;
(d) Assignment. A general assignment by Tenant for the benefit of
----------
creditors;
(e) Bankruptcy. The filing of a voluntary petition by Tenant, or the
----------
filing of an involuntary petition by any of Tenant's creditors seeking the
liquidation or reorganization of Tenant under any "law relating to bankruptcy,
insolvency or other relief of debtors;
(f) Receivership. The appointment of a receiver or other custodian
------------
to take possession of substantially all of Tenant's assets or of this leasehold;
(g) Insolvency, Dissolution, Etc. Tenant shall become insolvent or
----------------------------
unable to pay its debts, or shall fail generally to pay its debts as they become
due; or any court shall enter a decree or order directing the winding up or
liquidation of Tenant or of substantially all of its assets; or Tenant shall
take any action toward the dissolution or winding up of its affairs or the
cessation or suspension of its use of the Premises; or
(h) Attachment. Attachment, execution or other judicial seizure of
----------
substantially all of Tenant's assets or this leasehold.
12.02 Landlord's Remedies.
(a) Abandonment. If Tenant vacates or abandons the Premises, this
-----------
Lease shall continue in effect unless or until terminated by Landlord as
provided in Article 12.02(b) below, and Landlord shall have all of the rights
and remedies of a landlord provided by Section 1951.4 of the California Civil
Code.
26
(b) Termination. Following the occurrence of any Event of Default,
-----------
Landlord shall have the right, so long as the default continues, to terminate
this Lease by written notice to Tenant setting forth: (i) the default; (ii) the
requirements to cure it; and (iii) a demand for possession, which shall be
effective three (3) days after it is given. Landlord shall not be deemed to have
terminated this Lease other than by delivering written notice of termination to
Tenant.
(c) Possession. Following termination under Article 12.02(b) above,
----------
without prejudice to any other remedies Landlord may have by reason of Tenant's
default or of such termination, Landlord may then or at any time thereafter (i)
peaceably re-enter the Premises, or any part thereof, upon voluntary surrender
by Tenant, or, expel or remove Tenant and any other persons occupying the
Premises, using such legal proceedings as may be available; (ii) repossess and
enjoy the Premises, or relet the Premises or any part thereof for such term or
terms (which may be for a term extending beyond the Term), at such rental or
rentals and upon such other terms and conditions as Landlord in Landlord's sole
discretion shall determine, with the right to make reasonable alterations and
repairs to the Premises; and (iii) remove all personal property from the
Premises.
(d) Recovery. Following termination under Article 12.02(b) above,
--------
Landlord shall have all the rights and remedies of a landlord provided by
Section 1951.2 of the California Civil Code, which provides that Landlord may
recover from Tenant the following: (i) the worth at the time of the award of the
unpaid Rent which had been earned at the time of termination; (ii) the worth at
the time of the award of the amount by which the unpaid Rent which would have
been earned after termination until the time of the award exceeds the amount of
such Rent loss that Tenant proves could have been reasonably avoided; (iii) the
worth at the time of the award of the amount by which the unpaid Rent 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 (iv) any other amount
necessary to compensate Landlord for all detriment proximately caused by
Tenant's failure to perform Tenant's obligations under the Lease or which in the
ordinary course of things would be likely to result therefrom. The "worth at the
time of award" of the amounts referred to in (i) and (ii) of this subsection
shall be computed by allowing interest at the interest rate set forth in Article
12.03. The "worth at the time of the award" of the amount referred to in (iii)
above shall be computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%).
(e) Other. If Tenant causes or threatens to cause a breach of any of
-----
the covenants, terms or conditions contained in this Lease, Landlord shall be
entitled to retain all sums held by Tenant, any trustee or in any account
provided for herein, to enjoin such breach or threatened breach, and to invoke
any remedy allowed at law, in equity, by statute or otherwise as though re-
entry, summary proceedings and other remedies were not provided for in this
Lease.
(f) Cumulative. Each right and remedy of Landlord provided for in
----------
this Lease shall be cumulative and shall be in addition to every other right or
remedy
27
provided for now or hereafter existing at law, in equity, by statute or
otherwise. If Landlord undertakes to exercise any remedy provided for in this
Lease, or now or hereafter existing at law, in equity, by statute, or otherwise,
such action shall not preclude the Landlord from exercising any or all other
rights or remedies provided for in this Lease or now or hereafter existing at
law, in equity, by statute, or otherwise.
(g) No Waiver. No failure by Landlord to insist upon the strict
---------
performance of any term hereof or to exercise any right or remedy consequent
upon a breach thereof, and no acceptance of full or partial payment of Rent
during the continuance of any such breach shall constitute a waiver of any such
breach or of any such term. Efforts by Landlord to mitigate the damages caused
by Tenant's breach of this Lease shall not be construed to be a waiver of
Landlord's right to recover damages under this Article 12.02.
(h) Landlord's Right to Perform. Upon Tenant's failure to perform
---------------------------
any obligation to Tenant hereunder, including, without limitation, payment of
Tenant's insurance premiums and charges of contractors who have supplied
materials or labor to the Premises, Landlord shall have the right to perform
such obligations of Tenant on behalf of Tenant and/or to make payment on behalf
of Tenant to such parties. Tenant shall reimburse Landlord the reasonable cost
of Landlord's performing such obligations on Tenant's behalf, including, without
limitation, reimbursement of any amounts that may be expended by Landlord and
Landlord's reasonable attorneys' fees, plus interest from the date of any
expenditure of sums at the rate set forth in Article 12.03.
(i) Additional Remedies. In addition to the foregoing remedies and
-------------------
so long as this Lease is not terminated, Landlord shall have the right to remedy
any default of Tenant, to maintain or improve the Premises without terminating
this Lease, to incur expenses on behalf of Tenant in seeking a subtenant or
assignee, including, without limitation, brokers' commissions, expenses of
remodeling the Premises, and other inducements Landlord determines are
necessary, to cause a receiver to be appointed to administer the Premises and
new or existing subleases and to add to the Rent payable hereunder all of
Landlord's costs in so doing, including reasonable attorneys' fees, with
interest at the rate provided in Article 12.03 from the date of such expenditure
until the same is repaid.
(j) Additional Rent. For purposes of any unlawful detainer action by
---------------
Landlord against Tenant pursuant to California Code of Civil Procedure Sections
1161 through 1179, or any similar or successor statutes, Landlord shall be
entitled to recover as rent not only such sums specified as Base Rent herein
which may then be overdue, but also Additional Rent and all such additional sums
of money as may then be overdue.
(k) Indemnification. Nothing in this Article 12 affects the right of
---------------
Landlord to indemnification by Tenant in accordance with Article 5.08 for
liability arising from personal injuries, property damage, or any other cause
prior to the termination of this Lease.
28
(l) After Default. Landlord shall be under no obligation to observe
-------------
or perform any covenant of this Lease on its part to be observed or performed
which accrues after the date of any Event of Default, and for so long as the
Event of Default continues.
12.03 Interest. Any payment of Rent or other amount from Tenant to
--------
Landlord in this Lease which is not paid on the date due shall accrue interest
from the thirtieth (30th) day after the date due until the date paid at a rate
equal to three (3) points over the prime rate as announced by ▇▇▇▇▇ Fargo Bank,
N.A., at the time of the due date, but in no event less than ten percent (10%)
per year; provided, however, that if a court of competent jurisdiction
determines the above rate exceeds the highest lawful rate of interest, then at
the maximum rate permitted by law. This provision shall not relieve Tenant of
Tenant's obligation to pay any amount owing hereunder at the time and in the
manner provided.
13. ASSIGNMENT AND SUBLETTING
13.01 Assignment and Subletting: Prohibition. Tenant, including any
---------------------------------------
subsequent assignee or subtenant, shall not assign, mortgage, pledge, or
otherwise transfer this Lease, in whole or in part, nor sublet or permit
occupancy by any party other than Tenant of all or any part of the Premises,
without the prior written consent of Landlord in each instance. Landlord's
consent under this Article 13 shall not be unreasonably withheld. No assignment
or subletting by Tenant shall relieve Tenant of any obligation under this Lease,
including Tenant's obligation to pay Rent and other monies due hereunder. Any
purported assignment or subletting contrary to the provisions hereof without
Landlord's prior written consent shall be void. The consent by Landlord to any
assignment or subletting shall not constitute a waiver of the necessity for such
consent to any subsequent assignment or subletting. As Additional Rent
hereunder, Tenant shall reimburse Landlord for reasonable legal and other
expenses incurred by Landlord or its attorneys or advisors in connection with
the review and approval or disapproval of any request by Tenant for consent to
assignment or subletting, up to a maximum amount of $1000 per assignment or
subletting.
13.02 Documentation. Prior to any assignment or sublease which Tenant
-------------
desires to make, Tenant shall provide to Landlord the name and address of the
proposed assignee or subtenant, the proposed use of the Premises by the proposed
assignee or subtenant, true and complete copies of all documents relating to
Tenant's prospective assignment or sublease, current financial statements of the
proposed assignee or subtenant, including a balance sheet and a profit and loss
statement for the then current fiscal year and the two (2) immediately prior
fiscal years, if available, and such additional information and documentation as
Landlord shall reasonably require, and shall specify all consideration to be
received by Tenant for such assignment or sublease. Any request by Tenant to
Landlord to assign or sublet the Lease or the Premises shall be accompanied by
the proposed assignment or sublease agreement, which agreement shall include the
following provisions:
(a) Attornment. If Tenant proposes to assign, the assignment
----------
agreement shall provide that the assignee shall expressly assume the obligations
of
29
Tenant hereunder. If Tenant proposes to sublet, the sublease agreement shall
provide that sublessee will attorn to the Landlord in the event of any breach of
the Lease by Tenant;
(b) Assignment of Subrents. Tenant's agreement to assign all
----------------------
subrents to Landlord as security for Tenant's obligations under the Lease;
(c) Termination of Lease. A provision that the termination of this
--------------------
Lease shall, at Landlord's sole election, constitute a termination of every
assignment or sublease; and
(d) Subordination. A provision that the assignment or sublease is
-------------
subordinate to the provisions of this Lease.
13.03 Bonus Rental. If for any assignment or sublease, Tenant receives rent
------------
or other consideration, either initially or over the term of the assignment or
sublease, in excess of the Rent called for hereunder, or in case of the sublease
of a portion of the Premises, in excess of such Rent fairly allocable to such
portion, after appropriate adjustments to assure that all other payments called
for hereunder are appropriately taken into account, Tenant shall pay to
Landlord, as Additional Rent hereunder, fifty percent (50%) of the excess of
each such payment of rent or other consideration received by Tenant within three
(3) days after receipt. For purposes of this Article 13.03, "consideration"
shall include, without limitation, all monies or other economic consideration of
any kind, if such sums are related to Tenant's interest in this Lease, the
Premises or any improvements thereon, including but not limited to, bonus money,
and payments (in excess of book value thereof) for Tenant's assets, accounts,
good will, general intangibles, Tenant's personal property, and any capital
stock or other equity ownership of Tenant.
13.04 Scope. The prohibition against assigning or subletting contained in
-----
this Article shall be construed to include a prohibition against any assignment
or subletting that is effected by a merger or acquisition or by operation of
law. If this Lease is assigned, or if the underlying beneficial interest of
Tenant is transferred, or if the Premises or any part thereof is sublet or
occupied by anybody other than Tenant, Landlord may collect rent from the
assignee, subtenant or occupant and apply the net amount collected to the Rent
reserved and apportion any excess rent so collected in accordance with the terms
of the preceding paragraph, but no such collection shall be deemed a waiver of
any covenant, or the acceptance of the assignee, subtenant or occupant as
tenant, or a release of Tenant from the further performance of Tenant's
covenants hereunder. No assignment or subletting shall affect the continuing
primary liability of Tenant (which shall be joint and several with the
assignee), and Tenant shall not be released from performing any of the terms,
covenants and conditions of this Lease.
13.05 Waiver. Notwithstanding any assignment or sublease, or any
------
indulgences, waivers or extensions of time granted by Landlord to any assignee
or sublessee, or failure by Landlord to take action against any assignee or
sublessee, Tenant waives notice of any default of any assignee or sublessee and
agrees that Landlord may, at its option, proceed against Tenant without having
taken action against or joined such assignee or sublessee,
30
except that Tenant shall have the benefit of any indulgences, waivers and
extensions of time granted to any such assignee or sublessee.
13.06 Release. Whenever Landlord conveys its interest in the Parking Lot,
-------
Property and/or Building, Landlord shall be automatically released from the
further performance of covenants on the part of Landlord herein contained, and
from any and all further liability, obligations, costs and expenses, demands,
causes of action, claims or judgments arising from or growing out of, or
connected with this Lease after the effective date of said release. The
effective date of said release shall be the date the assignee executes an
assumption of the assignment of Landlord's obligations, duties, responsibilities
and liabilities with respect to this Lease. If requested, Tenant shall execute
a form of release and such other documentation as may be required to further
effect the provisions of this Article 13.06.
13.07 Limitation on Elective Provisions. Any assignment or subletting by
---------------------------------
Tenant of the Premises, or any portion thereof, shall automatically operate to
terminate any and every right, option, or election of Tenant, if any, including,
but not limited to, the right to expand the Premises or to extend the Term of
this Lease as to all or any part of the Premises.
14. OFFSET STATEMENT, ATTORNMENT AND SUBORDINATION
14.01 Offset Statement. Within ten (10) days after request therefor by
----------------
Landlord, or if on any sale, assignment or hypothecation by Landlord of
Landlord's interest in the Building, Property and/or Parking Lot, or any part
thereof, an offset statement shall be required from Tenant, Tenant shall
deliver, in recordable form, a certificate to any proposed mortgagee or
purchaser, and to Landlord, certifying (if such be the case) that this Lease is
in full force and effect, the date of Tenant's most recent payment of Rent, and
that Tenant has no defenses or offsets outstanding, or stating those claimed by
Tenant, and any other information reasonably requested. Tenant's failure to
deliver said statement in time shall be conclusive upon Tenant that: (i) this
Lease is in full force and effect, without modification except as may be
represented by Landlord; (ii) there are no uncured defaults in Landlord's
performance and Tenant has no right of offset, counterclaim or deduction against
Rent hereunder; and (iii) no more than one period's Base Rent has been paid in
advance.
14.02 Attornment. In the event any proceeding is brought for the
----------
foreclosure of, or in the event of exercise of the power of sale under any
mortgage or deed of trust made by the Landlord, its successors or assigns,
encumbering the Premises, or any part thereof, Tenant shall attorn to the
purchaser upon such foreclosure or sale or upon any grant of a deed in lieu of
foreclosure and recognize such purchaser as the Landlord under this Lease.
14.03 Subordination. The rights of Tenant hereunder are and shall be, at
-------------
the election of the mortgagee, subject and subordinate to the lien of such
mortgage, or the lien resulting from any other method of financing, now or
hereafter in force and recorded against the Building, Property and/or Parking
Lot, and to all advances made or hereafter
31
to be made upon the security thereof; provided, however, that notwithstanding
such subordination, so long as Tenant is not in default under any of the terms,
covenants and conditions of this Lease, neither this Lease nor any of the rights
of Tenant hereunder, shall be terminated or subject to termination by any
trustee's sale, any action to enforce the security, or by any proceeding or
action in foreclosure. If requested, Tenant agrees to execute whatever
documentation may be required to further effect the provisions of this Article
within five (5) days of Landlord's request to do so.
15. NOTICES
15.01 Notices. All notices required to be given hereunder shall be in
-------
writing (except for notice required pursuant to Article 12.01(b)) and mailed
postage prepaid by certified or registered mail, return receipt requested, or by
personal delivery, to the appropriate address indicated in the Basic Lease
Information, or at such other place or places as either Landlord or Tenant may,
from time to time, respectively, designate in a written notice given to the
other. Notices shall be deemed served four (4) days after the date of mailing
thereof, or upon personal delivery.
16. SUCCESSORS BOUND
16.01 Successors Bound. This Lease and each of its covenants and
----------------
conditions shall be binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, successors and legal representatives and
their respective assigns, subject to the provisions hereof. Whenever in this
Lease a reference is made to the Landlord, such reference shall be deemed to
refer to the person in whom the interest of the Landlord shall be vested, and
Landlord shall have no obligation hereunder as to any claim arising after the
transfer of its interest in the Premises. Any successor or assignee of the
Tenant who accepts an assignment or the benefit of this Lease and enters into
possession or enjoyment hereunder shall thereby assume and agree to perform and
be bound by the covenants and conditions thereof. Nothing herein contained shall
be deemed in any manner to give a right of assignment to Tenant without the
written consent of Landlord.
17. MISCELLANEOUS
17.01 Waiver. No waiver of any default or breach of any covenant by either
------
party hereunder shall be implied from any omission by either party to take
action on account of such default if such default persists or is repeated, and
no express waiver shall affect any default other than the default specified in
the waiver, and then said waiver shall be operative only for the time and to the
extent therein stated. Waivers of any covenant, term or condition contained
herein by either party shall not be construed as a waiver of any subsequent
breach of the same covenant, term or condition.
17.02 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 or
in the vicinity of the Building shall in no way affect this Lease or impose any
liability on Landlord.
17.03 Corporate Authority. If Tenant executes this Lease as a corporation,
-------------------
each of the persons executing this Lease on behalf of Tenant hereby covenants
and warrants
32
that: (i) Tenant is a duly authorized and existing corporation; (ii) Tenant is
qualified to do business in the State of California; (iii) Tenant has full right
and authority to enter into this Lease; and (iv) each of the persons executing
on behalf of Tenant is authorized to do so.
17.04 Limitation of Landlord's Liability. The obligations of Landlord
----------------------------------
under this Lease shall not constitute the obligation of any other entity nor the
personal obligations of the individual directors or officers of Landlord, and
Tenant shall look solely to the real estate that is the subject of this Lease
and to no other assets of Landlord for satisfaction of any liability in respect
of this Lease and shall not seek recourse against any other entity or individual
or any of their assets for such satisfaction.
17.05 Time. Time is of the essence of every provision hereof.
----
17.06 Attorneys' Fees. In any action or proceeding which the Landlord or
---------------
the Tenant may be required to prosecute to enforce its respective rights
hereunder, the unsuccessful party therein agrees to pay all costs incurred by
the prevailing party therein, including reasonable attorneys' fees, to be fixed
by the court, and said costs and attorneys' fees shall be made a part of the
judgment in said action.
17.07 Captions and Article Numbers. The captions, article numbers and
----------------------------
table of contents appearing in this Lease are inserted only as a matter of
convenience and in no way define, limit, construe or describe the scope or
intent of such sections or articles of this Lease.
17.08 Severability. If any term, covenant, condition or provision of this
------------
Lease shall to any extent be held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, covenants,
conditions or provisions of this Lease shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.
17.09 Applicable Law. This Lease, and the rights and obligations of the
--------------
parties hereto, shall be construed and enforced in accordance with the laws of
the State of California.
17.10 Submission of Lease. The submission of this document for examination
-------------------
and negotiation does not constitute an offer to lease or option for leasing the
Premises. This document shall become effective and binding only upon execution
and delivery hereof by Landlord. No act or omission of any employee or agent of
Landlord or of Landlord's broker or managing agent shall alter, change, or
modify any of the provisions hereof.
17.11 Holding Over. Should Tenant, or any of its successors in interest,
------------
hold over the Premises, or any part thereof, after the expiration of the term of
this Lease, unless otherwise agreed to in writing, such holding over shall
constitute and be construed as tenancy from month-to-month only, at a monthly
rent equal to one hundred twenty-five percent (125%) the Base Rent in effect
during the final year of the Term of this
33
Lease as the same may be extended from time to time. The preceding sentence
shall not be construed as Landlord's permission for Tenant to hold over.
17.12 Surrender. Upon the expiration or earlier termination of this Lease,
---------
Tenant shall surrender the Premises to Landlord in good order, condition and
repair, except for reasonable wear and tear or as otherwise provided in Articles
10 and 11. Tenant shall not commit or allow any waste or damage to be committed
on any portion of the Property, Premises or Building. All property that Tenant
is required to surrender shall become Landlord's property upon the termination
of this Lease. Landlord may cause any of said personal property that is not
removed from the Premises within thirty (30) days after the date of any
termination of this Lease to be removed from the Premises and stored at Tenant's
expense, or, at Landlord's election said personal property thereafter shall
belong to Landlord without the payment of any consideration, subject to the
rights of any person holding a perfected security interest therein.
17.13 Rules and Regulations. At all times during the Term, Tenant shall
---------------------
comply with rules and recitations ("Rules and Regulations") for the Building,
Parking Lot and the Property, as set forth in Exhibit D (and such amendments as
---------
Landlord may reasonably adopt), attached hereto and by this reference made a
part hereof. In the event of any inconsistency between the Rules and Regulations
and the provisions of this Lease, the provisions of this Lease shall control.
Tenant hereby acknowledges that Tenant shall not use in excess of Tenant's pro
rata share of the Building's total parking spaces.
17.14 No Nuisance. Tenant shall conduct its business and control its
-----------
agents, employees, invitees and visitors in such a manner as not to create any
nuisance, or interfere with, annoy or disturb any other tenant or Landlord in
its operation of the Building.
17.15 Broker. Tenant warrants that it has had no dealings with any real
------
estate broker or agent other than Broker in connection with the negotiation of
this Lease, and that it knows of no other real estate broker or agent who is
entitled to any commission or finder's fee in connection with this Lease. Each
party agrees to indemnify and hold the other party harmless from and against any
and all claims, demands, losses, liabilities, lawsuits, judgments, costs and
expenses (including without limitation, attorneys' fees and costs) with respect
to any leasing commission or equivalent compensation alleged to be owing on
account of the indemnifying party's dealings with any real estate broker or
agent other than Broker.
17.16 Nonliability. Landlord shall not be in default hereunder or be
------------
liable for any damages directly or indirectly resulting from, nor shall the
rental herein reserved be abated by reason of (i) the interruption of use of the
Premises as a result of the installation of any equipment in connection with the
Property, Premises or Building or (ii) any failure or delay in furnishing any
services required to be provided by Landlord when such failure or delay is
caused by accident or any condition beyond the reasonable control of Landlord or
by the making of necessary repairs or improvements to the Property, Premises or
to the Building, or the rationing or restriction on use of water or electricity,
gas or any other form of energy or any other service or utility whatsoever
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serving the Property, Premises or the Building. Landlord shall use reasonable
efforts to remedy any interruption in the furnishing of such services.
17.17 Recording. This Lease shall not be recorded, but Tenant shall, at
---------
the option of Landlord, execute and deliver to Landlord a short form hereof, in
a recordable form approved by Landlord, and Landlord may, at Landlord's option,
cause the short form to be recorded. If a short form of this Lease is recorded,
Tenant shall, at Tenant's expense, upon the termination of this Lease, execute
and deliver to Landlord a recordable instrument evidencing the termination in a
form approved by Landlord.
17.18 Joint and Several Liability. If Tenant is more than (1) person or
---------------------------
entity, each such person or entity shall be jointly and severally liable for the
obligations of Tenant hereunder.
17.19 Entire Agreement. This Lease sets forth all covenants, agreements,
----------------
and conditions between Landlord and Tenant concerning the Premises, Building,
Parking Lot and Property, and there are no covenants, agreements or conditions,
either oral or written, between Landlord and Tenant other than as are herein set
forth. Except as herein otherwise provided, no subsequent amendment or addition
to this Lease shall be binding upon Landlord or Tenant unless reduced to writing
and signed by Landlord and Tenant.
17.20 Satellite Dish. Tenant shall be permitted to install a satellite
--------------
dish at the Building, on the conditions that Landlord shall have approved the
type of dish and its exact location in the Building, that operation of the dish
will not interfere with other communications facilities at the Building, and
that the installation is in compliance with all city, state and federal
requirements and regulations. Tenant shall be responsible for all costs and
maintenance of such system.
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IN WITNESS WHEREOF, the parties have executed this Lease as of the date
first above-written.
"Landlord" "Tenant"
CALIFORNIA STATE AUTOMOBILE ASSOCIATION MULTIGEN, INC.,
INTER-INSURANCE BUREAU, an inter-insurance exchange a California corporation
By: By:
------------------------------------- -------------------------------------
Its: Its:
------------------------------------ ------------------------------------
By: By:
------------------------------------- -------------------------------------
Its: Its:
------------------------------------ ------------------------------------
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EXHIBIT A
---------
LEGAL DESCRIPTION
-----------------
That certain real property situated in the City of San ▇▇▇▇, County of
Santa ▇▇▇▇▇, State of California, more particularly described as follows:
PARCEL ONE:
----------
All of Parcel 1 as shown on that certain Parcel Map filed for record in the
office of the Recorder, County of Santa ▇▇▇▇▇, State of California, on May 21,
1986 in Book 559 of Maps at pages 49 and 50.
PARCEL TWO:
----------
A non-exclusive easement for Ingress and Egress, for the benefit of Parcel One
above, over that portion of Parcel 2 as shown upon that certain Parcel Map filed
for record in the office of the Recorder, County of Santa ▇▇▇▇▇, State of
California, on May 21, 1986 in Book 559 of Maps, pages 49 and 50, designated on
said Parcel Map as 26' and 30' Ingress and Egress Easement.
PARCEL THREE:
------------
Non-exclusive easements for Parking and Pedestrian and Vehicular Access, for the
benefit of Parcel One, over a portion of Parcel 2 (as shown upon that certain
Parcel Map filed for record in the office of the Recorder, County of Santa
▇▇▇▇▇, State of California on May 21, 1986 in Book 559 of Maps, pages 49 and
50), as set forth in that certain Amended and Restated Declaration of Covenants,
Conditions and Restrictions recorded June 11, 1987 in Book K184, page 550 of
Official Records.
37
EXHIBIT "B"
-----------
38
EXHIBIT "C"
-----------
39
EXHIBIT D
---------
RULES AND REGULATIONS
---------------------
1. The sidewalks, entrances, lobby, elevators, stairways and public
corridors shall be used only as a means of ingress and egress and shall remain
unobstructed at all times. The entrance and exit doors of all suites are to be
kept closed at all times except as required for orderly passage to and from a
suite. Loitering in any part of the Building or obstruction of any means of
ingress or egress shall not be permitted. Doors and windows shall not be covered
or obstructed.
2. Plumbing fixtures shall not be used for any purposes other than those
for which they were constructed, and no rubbish, newspapers, trash or other
substances of any kind shall be thrown into them. Walls, floors and ceilings
shall not be defaced in any way and no one shall be permitted to ▇▇▇▇, drive
nails, screws or drill into, paint, or in any way mar any Building surface,
except that pictures, certificates, licenses and similar items normally used in
Tenant's business may be carefully attached to the walls by Tenant in a manner
to be prescribed by Landlord. Upon removal of such items by Tenant any damage to
the walls or other surfaces, except minor nail holes, shall be repaired by
Tenant.
3. No awning, shade, sign, advertisement or notice shall be inscribed,
painted, displayed or affixed on, in or to any window, door or balcony or any
other part of the outside or inside of the Building or the demised premises. No
window displays or other public displays shall be permitted without the prior
written consent of Landlord. All tenant identification on public corridor doors
beyond building standard will be installed by Landlord for Tenant but the cost
shall be paid by Tenant. No lettering or signs other than the name of Tenant
will be permitted on public corridor doors with the size and type of letters to
be prescribed by Landlord. The directory of the Building will be provided
exclusively for the display and location of Tenant only and Landlord reserves
the right to exclude all other names therefrom. All requests for listing on the
Building directory shall be submitted to the office of Landlord in writing.
Landlord reserves the right to approve all listing requests. Any change
requested by Tenant of Landlord of the name or names posted on directory, after
initial posting, will be charged to Tenant.
4. The cost of any special electrical circuits for items such as copying
machines, computers, microwaves, etc., shall be borne by Tenant unless the same
are part of the building standard improvements. Prior to installation of
equipment Tenant must receive written approval from Landlord.
5. The weight, size and position of all safes and other unusually heavy
objects used or placed in the Building shall be prescribed by Landlord and
shall, in all cases, stand on metal plates of such size as shall be prescribed
by Landlord. The repair of any damage done to the Building or property therein
by putting in or taking out or maintaining such safes or other unusually heavy
objects shall be paid for by Tenant.
40
6. All freight, furniture, fixtures and other personal property shall be
moved into, within and out of the Building at times designated by and under the
supervision of Landlord and in accordance with such regulations as may be posted
in the office of the Building manager. In no event will Landlord be responsible
for any loss or damage to such freight, furniture, fixtures or personal property
from any cause.
7. No improper noises, vibrations or odors will be permitted in the
Building, nor shall any person be permitted to interfere in any way with tenants
or those having business with them. No person will be permitted to bring or keep
within the Building any animal, bird or bicycle or any toxic or flammable
substances without Landlord's prior permission. No person shall throw trash,
refuse, cigarettes or other substances of any kind any place within or out of
the Building except in the refuse containers provided therefor. Landlord
reserves the right to exclude or expel from the Building any person who, in the
judgment of Landlord, is intoxicated or under the influence of liquor or drugs
or who shall in any manner do any act in violation of the rules and regulations
of the Building.
8. All re-keying of office doors or changes to the card access system,
after occupancy, will be at the expense of Tenant. Tenant shall not re-key any
doors or change the card access system in any way without making prior
arrangements with Landlord.
9. Tenant will not install or use any window coverings except those
provided by Landlord, nor shall Tenant use the balconies, if any, for storage,
barbecues, drying of laundry or any other activity which would detract from the
appearance of the Building or interfere in any way with the use of the Building
by other tenants.
10. If Tenant uses the Premises after regular business hours or on non-
business days, Tenant shall lock any entrance doors to the Building used by
Tenant or take such other steps as are necessary to secure the Building's doors
immediately after entering or leaving the Building.
11. If Tenant requires telegraphic, telephonic, burglar alarms or similar
services, it shall first obtain, and comply with, Landlord's instructions in
their installation.
12. Tenant shall not waste electricity, water or air conditioning and
agrees to cooperate fully with Landlord to assure the most effective operation
of the Building's heating and air conditioning.
13. Landlord reserves the right, exercisable without notice and without
liability to Tenant, to change the name and street address of the Building.
14. Tenant shall not obtain for use on the Premises ice, drinking water,
food, beverage, towel or other similar services or accept barbering or
bootblacking or other personal services upon the Premises, except at such hours
and under such regulations as may be fixed by Landlord.
41
15. Tenant shall not install any radio or television antenna, loudspeaker
or other device on the roof or exterior walls of the Building. Tenant shall not
interfere with radio or television broadcasting or reception from or in the
Building. Tenant shall not install, maintain or operate upon the Premises any
vending machine without the written consent of Landlord, which consent shall not
be unreasonably withheld. Canvassing, soliciting and distribution of handbills
or any other written material, and peddling in the Building, are prohibited, and
each tenant shall cooperate to prevent same.
16. Tenant shall not use in any space or in the public halls of the
Building any hand trucks except those equipped with rubber tires and side
guards, or such other material-handling equipment as Landlord may approve.
Tenant shall not bring any other vehicles of any kind into the Building.
17. Tenant shall not park its vehicles in any parking areas designated by
Landlord as areas for parking by other tenants or visitors to the Building.
Tenant shall not leave vehicles in the Parking Lot overnight nor park any
vehicles in the Parking Lot other than automobiles, motorcycles, motor driven or
pedal bicycles or four-wheeled trucks. Landlord may, in its sole discretion,
designate separate areas for bicycles and motorcycles.
18. Tenant shall be deemed to have read these Rules and Regulations and to
have agreed to abide by them as a condition to its occupancy of the Premises.
19. The normal business hours of the Building shall be 8:00 a.m. to 6:00
p.m., Monday through Friday, holidays excepted. Not less than once annually,
Landlord shall publish to all tenants a list of the holidays to be observed by
the Building.
20. Landlord may waive any one or more of these Rules and Regulations for
the benefit of Tenant or any other tenant, but no such waiver by Landlord shall
be construed as a waiver of such Rules and Regulations in favor of Tenant or any
other tenant, nor prevent Landlord from thereafter enforcing any such Rules and
Regulations against any or all of the tenants of the Building.
21. Landlord reserves the right to make such other and further rules and
regulations as in Landlord's judgment may be necessary for the safety, care and
cleanliness of the Premises and for the preservation of good order therein.
Tenant shall abide by all rules and regulations hereinabove stated and any
additional rules and regulations adopted by Landlord.
42
FIRST AMENDMENT TO LEASE
____________________
This First Amendment ("Amendment") is made this 19th day of June, 1997, to
the Lease dated March 31, 1995 ("Lease"), by and between CALIFORNIA STATE
AUTOMOBILE ASSOCIATION INTER-INSURANCE BUREAU ("Landlord") and MULTIGEN, INC.
("Tenant").
RECITALS
A. Pursuant to the Lease, Tenant leases the Fifth Floor of ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
B. Tenant and Landlord now desire to expand the premises that will be subject
to the Lease, to establish the rental for the additional premises, and to
make certain amendments to the Lease.
NOW, THEREFORE, the parties agree as set forth below.
1. Capitalized Words. Capitalized words used in this Amendment are used as
-----------------
defined the Lease, unless otherwise defined herein.
2. Additional Premises. Landlord leases to the Tenant, and Tenant leases from
-------------------
landlord, the additional space now designated as Suites 406, 410 and 605 of
the Building, which together total 5,358 rentable square feet (the
"Additional Premises"). The Additional Premises shall be deemed to be part
of the Premises for all purposes and subject to all terms and conditions of
the Lease, except where specific provisions are made for only the
Additional Premises.
3. Base Rent. Monthly installments of Base Rent for the Additional Premises
---------
shall be as follows:
Months 1-12: $2.40 per rentable square foot
Months 13-24: $2.50 per rentable square foot
Months 25-expiration of Term: $2.60 per rentable square foot
4. Security Deposit. Upon execution of this Amendment, Tenant shall increase
----------------
the Security Deposit by $13,930.80, bringing the total Security Deposit to
$47,568.30.
5. Commencement Date. The Commencement Date for the Additional Premises shall
-----------------
be the date on which Suite 605 is Ready for Occupancy, provided that Rent
will not commence as to current Suite 406 and 410 until those suites have
been combined and are Ready for Occupancy. The month during which the
Commencement Date for the Additional Premises occurs shall be "Month 1" for
purposes of determining when the Rent for the entire Additional Premises is
to be increased pursuant to Paragraph of this Amendment.
43
6. Term. The Term as to the Additional Premises will commence on the
----
Commencement Date for the Additional Premises and terminate at the same
time as does the Term for the Premises, including any extension period. The
parties agree that the original Term expires September 4, 2000.
7. Tenant Improvements. Tenant Improvements to Suite 605 will be constructed
-------------------
according to the space plan attached hereto as Exhibit A, with costs
allocated as stated in Exhibit B hereto. Tenant Improvements to the current
Suite 406 and 410 shall be made as agreed between Landlord and Tenant, with
Landlord providing an improvement allowance equal to Seven Dollars ($7.00)
per rentable square foot of Suites 406 and 410.
8. Operating Expenses. The Tenant's Share of Excess Operating Expenses will be
------------------
increased to 23.61% as of the Commencement Date for the Additional
Premises.
9. Brokers. Landlord shall pay a one-half leasing commission to Colliers
-------
▇▇▇▇▇▇▇ International, Inc., equal to three percent (3%) of the total Base
Rent for the Additional Premises for the original Term. Tenant represents
and warrants that it knows of no other broker or other person who may be
entitled to a commission or fee based upon Tenant's expansion into the
Additional Premises and agrees that Tenant's indemnity obligations pursuant
to Section 17.15 apply to Tenant's representation and warranty hereunder.
10. Lease Affirmed. Except as specifically modified herein, the Lease is
--------------
affirmed and remains in full force and effect.
IN WITNESS WHEREOF, the parties execute this Amendment as of the date first
written herein.
CALIFORNIA STATE AUTOMOBILE ASSOCIATION MULTIGEN, INC.
INTER-INSURANCE BUREAU
By: By:
------------------------------ ------------------------------
Title: Title:
---------------------------- ---------------------------
44