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EXHIBIT 10.5
BUILD-TO-SUIT LEASE
Landlord: Britannia Hacienda V Limited Partnership
Tenant: ProBusiness, Inc.
Date: September 27, 1996
TABLE OF CONTENTS
1. PREMISES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Premises . . . . . . . . . . . . . . . . . 1
1.2 Landlord's Reserved Rights . . . . . . . . 1
1.3 First Refusal Right . . . . . . . . . . . . 2
2. TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Term . . . . . . . . . . . . . . . . . . . 3
2.2. Early Possession . . . . . . . . . . . . . 3
2.3. Delay In Possession . . . . . . . . . . . . 4
2.4. Construction . . . . . . . . . . . . . . . 4
2.5 Acknowledgement Of Lease Commencement . . . 5
2.6 Holding Over . . . . . . . . . . . . . . . 5
2.7 Option To Extend Term . . . . . . . . . . . 6
3. RENTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1. Minimum Rental . . . . . . . . . . . . . . 6
3.2. Late Charge . . . . . . . . . . . . . . . . 9
4 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.1. Personal Property. . . . . . . . . . . . . 10
4.2. Real Property . . . . . . . . . . . . . . . 10
5. OPERATING EXPENSES. . . . . . . . . . . . . . . . . . . . . . . 10
5.1. Payment Of Operating Expenses . . . . . . . 10
5.2. Definition Of Operating Expenses . . . . . 11
5.3. Determination Of Operating Expenses . . . . 13
5.4. Final Accounting For Lease Year . . . . . . 13
5.5. Proration . . . . . . . . . . . . . . . . . 14
6. UTILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.1. Payment . . . . . . . . . . . . . . . . . . 14
6.2. Interruption . . . . . . . . . . . . . . . 14
7. ALTERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.1. Right To Make Alterations . . . . . . . . . 14
7.2. Title To Alterations . . . . . . . . . . . 15
7.3. Tenant Fixtures . . . . . . . . . . . . . . 15
7.4. No Liens . . . . . . . . . . . . . . . . . 15
8. MAINTENANCE AND REPAIRS . . . . . . . . . . . . . . . . . . . 15
8.1. Landlord's Work . . . . . . . . . . . . . . 15
8.2. Tenant's Obligation For Maintenance . . . . 16
(a) Good Order, Condition And Repair . . . 16
(b) Landlord's Remedy . . . . . . . . . . . 16
(c) Condition Upon Surrender . . . . . . . 16
9. USE OF PREMISES . . . . . . . . . . . . . . . . . . . . . . . . 17
9.1. Permitted Use . . . . . . . . . . . . . . . 17
9.2. [Omitted.] . . . . . . . . . . . . . . . . 17
9.3. No Nuisance . . . . . . . . . . . . . . . . 17
9.4. Compliance With Laws . . . . . . . . . . . 17
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9.5. Liquidation Sales . . . . . . . . . . . . . 17
9.6. Environmental Matters . . . . . . . . . . . 17
10. INSURANCE AND INDEMNITY . . . . . . . . . . . . . . . . . . . . 18
10.1. Insurance . . . . . . . . . . . . . . . . . 18
10.2. Quality Of Policies And Certificates . . . 18
10.3. Workers' Compensation . . . . . . . . . . . 19
10.4. Waiver Of Subrogation . . . . . . . . . . . 19
10.5. Increase In Premiums . . . . . . . . . . . 19
10.6. Indemnification . . . . . . . . . . . . . . 19
10.7. Blanket Policy . . . . . . . . . . . . . . 20
11. SUBLEASEAND ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . 20
11.1. Assignment And Sublease Of Premises . . . . 20
11.2. Rights Of Landlord . . . . . . . . . . . . 20
12. RIGHT OF ENTRY AND QUIET ENJOYMENT . . . . . . . . . . . . . . 21
12.1. Right Of Entry . . . . . . . . . . . . . . 21
12.2. Quiet Enjoyment. . . . . . . . . . . . . . 21
13. CASUALTY AND TAKING . . . . . . . . . . . . . . . . . . . . . . 21
13.1. Termination Or Reconstruction . . . . . . . 21
13.2. Tenant's Rights . . . . . . . . . . . . . . 22
13.3. Lease To Remain In Effect . . . . . . . . . 22
13.4. Reservation Of Compensation . . . . . . . . 23
13.5. Restoration Of Fixtures . . . . . . . . . . 23
14. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
14.1. Events Of Default . . . . . . . . . . . . . 23
(a) Abandonment . . . . . . . . . . . . . . 23
(b) Nonpayment . . . . . . . . . . . . . . 23
(c) Other Obligations . . . . . . . . . . . 23
(d) General Assignment . . . . . . . . . . 23
(e) Bankruptcy . . . . . . . . . . . . . . 24
(f) Receivership . . . . . . . . . . . . . 24
(g) Attachment . . . . . . . . . . . . . . 24
(h) Insolvency . . . . . . . . . . . . . . 24
14.2. Remedies Upon Tenant's Default . . . . . . 24
14.3. Remedies Cumulative . . . . . . . . . . . . 25
15. SUBORDINATION, ATTORNMENT AND SALE . . . . . . . . . . . . . . 25
15.1. Subordination To Mortgage . . . . . . . . . 25
15.2. Sale Of Landlord's Interest . . . . . . . . 25
15.3. Estoppel Certificates . . . . . . . . . . . 26
15.4. Subordination to CC&R's . . . . . . . . . . 26
16. SECURITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
16.1. Deposit . . . . . . . . . . . . . . . . . . 26
17. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 27
17.1. Notices . . . . . . . . . . . . . . . . . . 27
17.2. Successors And Assigns . . . . . . . . . . 28
17.3. No Waiver . . . . . . . . . . . . . . . . . 28
17.4. Severability . . . . . . . . . . . . . . . 28
17.5. Litigation Between Parties . . . . . . . . 28
17.6. Surrender . . . . . . . . . . . . . . . . . 28
17.7. Interpretation . . . . . . . . . . . . . . 28
17.8. Entire Agreement . . . . . . . . . . . . . 28
17.9. Governing Law . . . . . . . . . . . . . . . 28
17.10. No Partnership . . . . . . . . . . . . . . 28
17.11. Financial Information . . . . . . . . . . . 28
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17.12. [Omitted.] . . . . . . . . . . . . . . . . 29
17.13. Time . . . . . . . . . . . . . . . . . . . 29
17.14. Rules And Regulations . . . . . . . . . . . 29
17.15. Brokers . . . . . . . . . . . . . . . . . . 29
17.16. Memorandum Of Lease . . . . . . . . . . . . 29
17.17. Corporate Authority . . . . . . . . . . . . 29
17.18. Execution and Delivery . . . . . . . . . . 30
17.19. Stock Warrants . . . . . . . . . . . . . . 30
17.20. Survival . . . . . . . . . . . . . . . . . 30
17.21. Consents . . . . . . . . . . . . . . . . . 30
17.22. Landlord Defaults . . . . . . . . . . . . . 30
EXHIBITS
EXHIBIT A Real Property Description
EXHIBIT B Site Plan
EXHIBIT C Construction
C-1: First Floor Plan
C-2: Second Floor Plan
C-3: Finish Specifications
EXHIBIT D Construction Timeline
EXHIBIT E Acknowledgement of Lease Commencement
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BUILD-TO-SUIT LEASE
THIS BUILD-TO-SUIT LEASE ("Lease") is made and entered into as of the
27th day of September, 1996, by and between BRITANNIA HACIENDA V LIMITED
PARTNERSHIP, a Delaware limited partnership (hereinafter called "Landlord") and
PROBUSINESS, INC., a California corporation (hereinafter called "Tenant").
THE PARTIES AGREE AS FOLLOWS:
1. PREMISES
1.1 Premises.
(a) Landlord leases to Tenant and Tenant hires and leases from
Landlord, on the terms, covenants and conditions hereinafter set forth, the
premises (the "Premises") consisting of a building, of approximately 129,322
square feet (the "Building") to be constructed by Landlord pursuant to the
terms of this Lease on a portion of the real property described in Exhibit A
attached hereto (the "Property"). The approximate location of the Building on
the Property and the approximate layout of the other site improvements to be
constructed by Landlord on the Property are depicted in the site plan attached
hereto as Exhibit B (the "Site Plan"). The parking areas, driveways,
sidewalks, landscaped areas and other portions of the Property that lie outside
the exterior walls of the Building (excluding any additional buildings depicted
on the Site Plan or otherwise constructed on the Property by Landlord from time
to time), as depicted on the Site Plan and as hereafter modified by Landlord
from time to time in accordance with the provisions of this Lease, are
sometimes referred to herein as the "Common Areas"; provided, however, that the
Common Areas shall not be construed to include any part of the portion of the
Property designated as Phase V or Phase VII on the Site Plan until such time as
(x) the construction of the Common Area improvements contemplated for and
located on such Phase has been completed in all material respects and such
improvements are ready and available for use, and (y) the construction of the
building(s) contemplated for and located on such Phase is substantially complete
(except for "punch list" items which do not materially impair or interfere with
the use of such building(s)).
(b) As an appurtenance to Tenant's leasing of the
Premises pursuant to Section 1.1 (a), Landlord hereby grants to Tenant, for the
benefit of Tenant and its employees, suppliers, shippers, customers and
invitees, during the term of this Lease, the non-exclusive right to use, in
common with others entitled to such use, the Common Areas (as they exist from
time to time) and all easements, access rights and similar rights and
privileges relating to or appurtenant to the Property and created or existing
from time to time under any easement agreements, declarations of covenants,
conditions and restrictions, or other written agreements now or hereafter of
record with respect to the Property, subject however to any limitations
applicable to such rights and privileges under applicable law and/or under the
written agreements creating such rights and privileges.
1.2. Landlord's Reserved Rights. Landlord reserves, in addition to
the right of entry set forth in Section 12.1 hereof, the following rights,
exercisable from time to time in Landlord's discretion: (i) to install, use,
maintain, repair and replace pipes, ducts, conduits, wires and appurtenant
meters and other equipment above the ceiling surfaces, below the floor surfaces
or within the walls of the Building in locations which will not materially
interfere with Tenant's use thereof; (ii) to relocate any pipes, ducts,
conduits, wires and appurtenant meters and equipment located within or outside
the Building; (iii) to construct, alter or add to other buildings or
improvements on the Property; (iv) to build adjoining to the Property; (v) to
lease any part of the Property for the construction of improvements or
buildings; (vi) to make changes to the Common Areas, including (but not limited
to) changes in the location, size or shape of any portion of the Common Areas,
and to relocate parking spaces on the Property; (vii) to close temporarily any
of the Common Areas for maintenance or other reasonable purposes, provided that
reasonable parking and reasonable access to the Building remain available;
(viii) to use the Common Areas while engaged in making additional improvements,
repairs or alterations to the Property or any
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portion thereof; and (ix) to do and perform such other acts with respect to the
Common Areas and the Property as may be necessary or appropriate; provided,
however, that the exercise by Landlord of its rights under this Section 1.2
shall not, without Tenant's prior written consent, (x) materially reduce the
parking ratio for the Property below that shown on the Site Plan, nor (y)
reduce the number of parking spaces on the portion of the Property designated
as Phase VI on the Site Plan (other than on a temporary basis incidental to
construction or maintenance activities of Landlord on the Property, in which
event Landlord shall exercise reasonable efforts to minimize the number of
parking spaces affected by such temporary activities), nor (z) make any other
change in the Site Plan that would have a material adverse effect on Tenant's
use of the Premises. Moreover, Landlord shall not exercise rights reserved to
it pursuant to this Section 1.2 in such a manner as to materially impair
Tenant's ability to conduct its activities in the normal manner, or in such a
manner as to cause any material diminution of Tenant's rights or any material
increase in Tenant's obligations under this Lease; provided, however, that the
foregoing shall not limit or restrict Landlord's right to undertake reasonable
construction activity and Tenant's use of the Premises shall be subject to
reasonable temporary disruption incidental to such activity diligently
prosecuted.
1.3 First Refusal Right.
(a) Beginning on the date on which Tenant takes occupancy
of the entire Premises (including the second phase of approximately 40,000
square feet as described in Exhibit C) and continuing for the remaining term of
this Lease (including any duly exercised extended terms), Landlord shall not
lease any space in any building(s) existing or to be built from time to time on
the portion of the Property designated as Phase V on the Site Plan, except in
compliance with this Section 1.3; and beginning on the date of this Lease and
continuing for the remaining term of this Lease (including any duly exercised
extended terms), Landlord shall not lease any space in any building(s) existing
or to be built from time to time on the portion of the Property designated as
Phase VII on the Site Plan, except in compliance with this Section 1.3;
provided, however, that the foregoing restrictions shall not apply during any
period in which Tenant is in default under this Lease in any material respect.
(b) If Landlord intends, during any applicable period
described in Section 1.3(a), to lease any space in any of the buildings
existing or to be built on Phase V or Phase VII of the Property from time to
time, and if Tenant is not then in default under this Lease in any material
respect, Landlord shall give written notice of such intention to Tenant,
specifying the material terms on which Landlord proposes to lease such space
(the "Offered Space"), and shall offer to Tenant the opportunity to lease the
Offered Space on the terms specified in Landlord's notice. Landlord shall not
need to have a bona fide written offer from a prospective tenant in order to
give such a notice, and such notice may, in Landlord's discretion, identify a
range of sizes, durations, rental rates, tenant improvement allowances and
other material terms on which Landlord is willing to lease the Offered Space.
Tenant shall have ten (10) business days after receipt of such notice from
Landlord in which to accept such offer by written notice to Landlord; if
Landlord's notice designated alternative terms or a range of terms, Tenant's
acceptance shall specify which alternative, within the offered range, is being
accepted by Tenant. Upon such acceptance by Tenant, the Offered Space (or
applicable portion thereof) shall be leased to Tenant on the terms set forth in
Landlord's notice and elected by Tenant (subject to the provisions of Section
1.3)(c)) and on the additional terms and provisions set forth herein (except to
the extent inconsistent with the terms set forth in Landlord's said notice) and
the parties shall promptly execute an amendment to this Lease adding the
Offered Space to the Premises and making any appropriate amendments to
provisions of this Lease to reflect different rent and other obligations
applicable to the Offered Space under the terms of Landlord's said notice and
Tenant's acceptance. If Tenant does not accept Landlord's offer within the
allotted time, Landlord shall thereafter have the right to lease the Offered
Space or any portion thereof to a third party, at any time within one hundred
eighty (180) days after Tenant's failure to accept Landlord's offer, at a
minimum rental and on other terms and conditions not more favorable to the
lessee than the minimum rental and other terms offered to Tenant in Landlord's
said notice. If Tenant does not accept Landlord's offer, then to the extent
Landlord does not lease the Offered Space to a third party within such 180-day
period, Landlord shall again be required to comply with the provisions of this
Section 1.3 prior to any further leasing of the Offered Space or any portion
thereof.
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(c) Notwithstanding any other provisions of this Section
1.3, if the terms (or range of terms) offered by Landlord to Tenant with respect
to the Offered Space do not include an expiration date which is coterminous with
the then current term of this Lease, then Tenant's acceptance (if any) of
Landlord's offer may take any of the following three forms: (i) Tenant may
accept the terms (or an alternative within the range of terms, if applicable)
offered by Landlord, without regard to the non-coterminous nature of the
respective lease terms for the Offered Space and for the initial Premises
hereunder; or (ii) Tenant may accept the terms (or an alternative within the
range of terms, if applicable) offered by Landlord with respect to the Offered
Space and concurrently extend the then current term of this Lease with respect
to the initial Premises to terminate concurrently with the lease term for the
Offered Space, in which event such extension by Tenant shall be deemed to be a
permissible early exercise of the extension option set forth in Section 2.7
hereof, without regard to the time limits set forth therein, and the rent for
the initial Premises for such extended term shall be determined in accordance
with Section 3.1(e) hereof for any portion of such extended term falling within
the First five (5) years after the original expiration date of this Lease, and
shall be determined in accordance with Section 3.1(f) hereof for any portion of
such extended term falling more than five (5) years after the original
expiration date of this Lease; or (iii) Tenant may elect to lease the Offered
Space for a term coterminous with the then remaining term of this Lease with
respect to the initial Premises, in which event (x) Landlord shall have no
obligation to improve the Offered Space or provide any tenant improvement
allowance for the Offered Space, regardless of any contrary terms set forth in
Landlord's original notice to Tenant, (y) the "minimum rent" for the Offered
Space shall be the fair market rental value thereof, in the then existing
condition of such space, which fair market rental value shall be determined
promptly in accordance with the procedure described in Section 3.1(e) hereof
(but at 100% of fair market rental value rather than 95%), and (z) Tenant's
lease of the Offered Space shall otherwise be on the terms set forth in
Landlord's notice and on the additional terms and provisions set forth herein
(except to the extent inconsistent with the terms set forth in Landlord's said
notice).
(d) To the extent Tenant elects, pursuant to clause (ii)
of Section 1.3(c) hereof, an early exercise of one or both extended terms under
Section 2.7 hereof in whole or in part, then (A) the determination of the rent
for the initial Premises for the applicable extended term (or portion thereof)
shall be made during the period commencing six (6) months before the
commencement of the applicable extended term, pursuant to the procedure in
Section 3.1(e) or 3.1(f) hereof, as applicable, and (B) to the extent Tenant has
exercised its option as to only a portion of either extended term, then the
unexercised portion of such extended term shall be deemed to remain subject to a
continuing extension option by Tenant, which remaining option shall be
exercisable in accordance with Section 2.7 hereof not more than eight (8) months
and not less than six (6) months prior to the expiration of the initial portion
of such extended term already elected by Tenant under clause (ii) of Section
1.3(c) hereof.
2. TERM
2.1. Term. The term of this Lease shall commence on the earlier to
occur of (i) the date which is five (5) days after the date Landlord notifies
Tenant that Landlord's work pursuant to Section 2.4 and Exhibit C on the
Building shell and core and on the first phase (approximately 90,000 square
feet) of interior improvements is substantially complete and such work is in
fact substantially complete (but in no event earlier than July 1, 1997), or
(ii) the date Tenant takes occupancy of the Premises (except as otherwise
provided in Section 2.2), the earlier of such dates being herein called the
"Commencement Date," and shall end on the day immediately preceding the date
eleven (11) years thereafter, unless sooner terminated or extended as
hereinafter provided. Assuming execution of this Lease by October 1, 1996 and
approval of full plans, specifications and working drawings by December 1,
1996, the parties presently estimate that the Commencement Date will be no
later than September 1, 1997. For purposes of this Section 2.1, Landlord's
work shall be deemed to be "substantially complete" when all of the following
have occurred: (A) all improvements to be constructed by Landlord as part of
the Building shell and core and the first phase (approximately 90,000 square
feet) of interior improvements, pursuant to Exhibit C, have been completed
except for "punch list" items which do not materially, interfere with Tenant's
ability to utilize the First phase (approximately 90,000 square feet) of the
Premises for their intended purpose; (B) the City of Pleasanton has issued a
certificate of occupancy for the first phase (approximately 90,000 square feet)
of the Premises; (C) all utilities reasonably
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necessary for Tenant's use of the first phase approximately, 90,000 square
feet) of the Premises for their intended purpose are connected and available
for use at the Premises; and (D) all improvements to be constructed by Landlord
as part of the Common Areas contemplated for and located on Phase VI of the
Property as shown on the Site Plan have been completed, except for "punch list"
items which do not materially interfere with Tenant's ability to utilize the
Premises for their intended purpose, and are available for use by Tenant.
2.2. Early Possession. If Landlord permits Tenant to occupy, use or
take possession of the Premises prior to the Commencement Date determined under
Section 2.1, such occupancy, use or possession shall be subject to and upon all
of the terms and conditions of this Lease, including the obligation to pay rent
and other charges, unless Landlord and Tenant agree otherwise; provided,
however, that such early possession shall not advance or otherwise affect the
Commencement Date or termination date determined under Section 2.1; provided
further, that if Tenant takes such early possession solely for the purpose of
installing fixtures, equipment, furniture and furnishings and other similar work
preparatory to the commencement of business in the Premises (which early
possession Landlord shall be required to offer to Tenant at least three (3)
weeks prior to the estimated date for substantial completion of Landlord's work
as contemplated in Section 2.1 hereof), Tenant shall not be required to pay rent
or Operating Expenses by reason of such possession until the Commencement Date
otherwise occurs; and provided further, that Tenant shall not interfere with or
delay Landlord's contractors by such early possession and shall indemnify,
defend and hold harmless Landlord and its agents and employees from and against
any and all claims, demands, liabilities, actions, losses, costs and expenses,
including (but not limited to) reasonable attorneys' fees, arising out of or in
connection with Tenant's early entry upon the Premises hereunder.
2.3 Delay In Possession. Landlord agrees to use its best
reasonable efforts to pursue and complete the work described in Section 2.4 and
Exhibit C promptly, diligently, and within the respective time periods set forth
in the construction timeline attached hereto as Exhibit D and incorporated
herein by this reference, as such timeline may be modified from time to time by
mutual agreement of Landlord and Tenant, and subject to the effects of any
delays caused by or attributable to Tenant or any other circumstances beyond
Landlord's reasonable control (excluding any Financial inability); provided,
however, that except to the extent caused by a material default by Landlord of
its obligations set forth in this Lease (including, but not limited to, its
obligations set forth in this Section 2.3 and in Section 2.4 and Exhibit C),
Landlord shall not be liable for any damages caused by any delay in the
completion of such work, nor shall any such delay affect the validity of this
Lease or the obligations of Tenant hereunder.
2.4. Construction.
(a) The obligation of Landlord to construct and improve
the Premises for occupancy by Tenant hereunder, and to construct related site
improvements in the Common Areas for use by Tenant, is set forth in Exhibit C
attached hereto and incorporated herein by this reference. Except as set forth
in this Section 2.4 and in Exhibit C, Landlord shall have no responsibilities
or obligations with respect to preparation of the Premises or the Property for
Tenant's occupancy.
(b) Landlord shall deliver the Building core and shell
and first phase (approximately 90,000 square feet) of interior improvements in
the Building to Tenant clean and free of debris on the Commencement Date
(subject to Tenant's right of early possession stated in the second proviso in
Section 2.2), and Landlord warrants to Tenant, effective as of the Commencement
Date, that (i) the Building core and shell and first phase (approximately
90,000 square feet) of interior improvements therein and the Common Areas
contemplated for or located on Phase VI of the Property as designated on the
Site Plan are substantially completed and are free from material defects in
design and construction, (ii) the electrical, mechanical, plumbing, lighting,
air conditioning and heating systems, and the loading doors, if any, on the
Building are in good operating condition (to the extent necessary to serve the
first phase of approximately 90,000 square feet of interior improvements) and
are free of material defects in design, equipment and/or installation, and
(iii) the Building core and shell and first phase (approximately 90,000 square
feet) of interior improvements therein have been constructed in compliance in
all material respects with the plans and specifications developed and approved
pursuant to Exhibit C. If it is determined that this warranty has been violated
in any respect, then it shall be the obligation
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of Landlord, after receipt of written notice from Tenant setting forth with
specificity, the nature of the violation, to promptly, at Landlord's sole cost,
correct the condition(s) constituting such Violation. Tenant's failure to give
such written notice to Landlord within ninety (90) days after the Commencement
Date shall give rise to a conclusive presumption that Landlord has complied
with all Landlord's obligations under this Section 2.4 and Exhibit C, except
with respect to latent defects.
(c) Landlord warrants to Tenant that the Building core
and shell and first phase (approximately 90,000 square feet) of interior
improvements constructed by Landlord therein, as they exist on the Commencement
Date, but without regard to any use for which Tenant will occupy the Premises
other than general office use, shall not violate any covenants or restrictions
of record or any applicable building code, regulation or ordinance in effect on
the Commencement Date. If it is determined that this warranty has been
violated, then it shall be the obligation of Landlord, after written notice
from Tenant, to promptly, at Landlord's sole cost and expense, correct the
condition(s) constituting such violation. Tenant acknowledges that neither
Landlord nor any agent of Landlord has made any representation or warranty as
to the present or future suitability of the Premises for the conduct of
Tenant's business or proposed business thereon, except as expressly set forth
in this Lease.
(d) Landlord's obligations, representations and
warranties with respect to the second phase (approximately 40,000 square feet)
of interior improvements in the Premises shall be identical to the obligations,
representations and warranties set forth in this Section 2.4 and in Exhibit C
with respect to the first phase of interior improvements, but shall be deemed
to be made as of the date on which Landlord's construction of such second phase
of interior improvements is substantially complete (as defined in Section 2.1).
(e) TENANT ACKNOWLEDGES THAT THE FOREGOING WARRANTIES ARE
IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE
PHYSICAL CONDITION OF THE BUILDING AND IMPROVEMENTS TO BE CONSTRUCTED BY
LANDLORD AND THAT LANDLORD MAKES NO OTHER WARRANTIES EXCEPT AS EXPRESSLY SET
FORTH IN THIS LEASE.
2.5. Acknowledgement Of Lease Commencement. Upon commencement of
the term of this Lease, Landlord and Tenant shall execute a written
acknowledgement of the Commencement Date, date of termination, square footage
of the Premises and of the first phase of interior improvements delivered to
Tenant, excess cost of improvements (if applicable) and related matters,
substantially in the form attached hereto as Exhibit E (with appropriate
insertions), which acknowledgement shall be deemed to be incorporated herein by
this reference. Notwithstanding the foregoing requirement, the failure of
Tenant to execute such a written acknowledgement shall not affect Landlord's
determination of the Commencement Date, date of termination, square footage of
the Premises and of the first phase of interior improvements delivered to
Tenant, excess cost of improvements (if applicable) and related matters in
accordance with the provisions of this Lease.
2.6. Holding Over. If Tenant holds possession of the Premises
after the term of this Lease with Landlord's written consent, then except as
otherwise specified in such consent, Tenant shall become a tenant from month to
month at one hundred twenty-five percent (125%) of the rental and otherwise
upon the terms herein specified for the period immediately prior to such
holding over and shall continue in such status until the tenancy is terminated
by either party upon not less than thirty (30) days prior written notice. If
Tenant holds possession of the Premises after the term of this Lease without
Landlord's written consent, then Landlord in its sole discretion may elect (by
written notice to Tenant) to have Tenant become a tenant either from month to
month or at will, at one hundred twenty-five percent (125%) of the rental
(prorated on a daily basis for an at-will tenancy, if applicable) and otherwise
upon the terms herein specified for the period immediately prior to such
holding over, or may elect to pursue any and all legal remedies available to
Landlord under applicable law with respect to such unconsented holding over by
Tenant. Tenant shall indemnify and hold Landlord harmless from any loss,
damage, claim, liability, cost or expense (including reasonable attorneys'
fees) resulting from any delay by Tenant in surrendering the Premises (except
with Landlord's prior written consent), including but not limited to any
claims made by a succeeding tenant by, reason of such delay. Acceptance
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of rent by Landlord following expiration or termination of this Lease shall not
constitute a renewal of this Lease.
2.7 Option To Extend Term. Tenant shall have the option to extend
the term of this Lease at the minimum rental set forth in Section 3.1 (e)
and (f) and otherwise upon all the terms and provisions set forth herein with
respect to the initial term of this Lease, for up to two (2) additional periods
of five (5) years each, commencing upon expiration of the initial term hereof.
Exercise of such option with respect to the first such extended term shall be
by written notice to Landlord at least six (6) months and not more than eight
(8) months prior to the expiration of the initial term hereof; exercise of such
option with respect to the second such extended term, if the first extension
options has been duly exercised, shall be by like written notice to Landlord at
least six (6) months and not more than eight (8) months prior to the
expiration of the first extended term hereof. If there exists a material event
of default on the part of Tenant on the date of any such notice, then the
notice shall not be effective. If Tenant properly exercises one or more
extension options under this Section, then all references in this Lease (other
than in this Section 2.7) to the "term" of this Lease shall be construed to
include the extension term(s) thus elected by Tenant. Except as expressly set
forth in this Section 2.7 (as modified by clause (ii) of Section 1.3(c), if
applicable), Tenant shall have no right to extend the term of this Lease beyond
its prescribed term. To the extent provided in Sections 1.3(c)(ii) and 1.3(d),
Tenant may elect an early and/or partial exercise of one or both extended terms
in connection with an acceptance of Offered Space; in the event of any such
partial exercise, the remaining unexercised portion of the extended term(s)
shall be subject to a continuing option under this Section 2.7, as provided in
Section 1.3(d), and upon a proper exercise by Tenant of such remaining extended
term(s), the rent for such remainder of the extended term(s) shall be
determined, as of the commencement of such remainder of the extended term(s),
in the manner provided in Section 3.1(e) or 3.1(f), as applicable.
3. RENTAL
3.1. Minimum Rental.
(a) Tenant shall pay to Landlord as minimum rental for
the Premises, in advance, without deduction, offset, notice or demand, on or
before the Commencement Date and on or before the first day of each subsequent
calendar month of the term of this Lease, the following amounts per month: for
months 1-12, the sum of $99,000.00 per month; for months 13-24, the sum of
$142,254.00 per month; and for months 25-132, the adjusted rent determined
under Section 3.1(b) hereof. Notwithstanding the foregoing provisions of this
Section 3.1, however, at any time after month 24 of the term of this Lease,
Tenant in its sole discretion may elect, by written notice to Landlord, to
convert its minimum rental obligation for the period from the date of such
notice through the remainder of the initial term of this Lease to the following
amounts per month (as applicable):
Months After Minimum Rental
Commencement Date (per month)
------------------ ----------------
25-36 $ 150,789.00
37-48 156,821.00
49-60 163,094.00
61-72 169,617.00
73-84 176,402.00
85-96 183,458.00
97-108 190,796.00
109-120 198,428.00
121-132 206,365.00
If the obligation to pay minimum rental hereunder commences on other than the
first day of a calendar month or if the term of this Lease terminates on other
than the last day of a calendar month, the minimum rental for such first or
last month of the term of this Lease, as the case may be, shall be prorated
based on the number of days the term of this Lease is in effect during such
month. If an increase in minimum rental becomes effective on a day other than
the first day, of
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a calendar month, the minimum rental for that month shall be the sum of the two
applicable rates, each prorated for the portion of the month during which such
rate is in effect.
(b) If and only if Tenant does not exercise its
election under Section 3.1(a) to convert its minimum rental obligation to the
rent schedule set forth in Section 3.1(a), then and only then shall the
minimum rental hereunder be subject to adjustment as set forth in this Section
3.1(b). To the extent Tenant does not exercise such election as of the end
of month 24 of the term of this Lease, then for so long as such election
remains unexercised minimum rental hereunder shall be subject to adjustment on
the second anniversary of the Commencement Date effective for months 25-36 of
the term of this Lease, and on each subsequent anniversary of the Commencement
Date until the expiration of the initial term of this Lease, effective for the
succeeding twelve (12) months of the term of this Lease (each such anniversary
being herein called an "Adjustment Date"), in accordance with the provisions of
this paragraph (b). The base for computing such adjustment shall be (i) for
the first such adjustment, the Consumer Price Index for All Urban Consumers,
San Francisco/Oakland/San Jose Metropolitan Area, All Items (1982-84 = 100),
produced by the United States Department of Labor, Bureau of Labor Statistics
("Index") which is published for the month two (2) months prior to the month in
which the Commencement Date occurs and (ii) for each subsequent adjustment, the
Extension Index (as hereinafter defined) used for the immediately preceding
adjustment (each such Index identified in clause (i) or (ii) of this sentence,
as applicable, being hereinafter called the "Beginning Index"). If the Index
which is published for the month two (2) months prior to the month in which the
Adjustment Date occurs (the "Extension Index") has increased over the Beginning
Index, the minimum rental payable thereafter shall be increased to the
following amount(s):
(i) For the first such Adjustment Date, to an amount
equal to the minimum rental in effect immediately prior to such
Adjustment Date multiplied by the lesser of (x) 1.06 or (y) a
fraction, the numerator of which is equal to the sum of the Beginning
Index for such first Adjustment Date plus the product of 2.5 times the
difference between the Extension Index for such first Adjustment Date
and the Beginning Index for such First Adjustment Date, and the
denominator of which is the Beginning Index for such first Adjustment
Date; and
(ii) For each subsequent Adjustment Date, to an amount
equal to the minimum rental in effect immediately prior to such
Adjustment Date multiplied by the lesser of (x) 1.05 or (y) a
fraction, the numerator of which is equal to the sum of the Beginning
Index for such Adjustment Date plus the product of 2.5 times the
difference between the Extension Index for such Adjustment Date and
the Beginning Index for such Adjustment Date, and the denominator of
which is the Beginning Index for such Adjustment Date.
If the Extension Index is not available until after the Adjustment Date, Tenant
shall continue to pay the then prevailing minimum rental until the Extension
Index is published, whereupon the adjustment provided in this paragraph shall
be made retroactive to the Adjustment Date and any accumulated excess of the
adjusted minimum rental over the amounts actually paid by Tenant since the
Adjustment Date shall be paid promptly by Tenant to Landlord upon notice by
Landlord to Tenant of the adjusted minimum rental. If the Index is changed so
that the base year differs from the base year used as of the Commencement Date,
the Index shall be converted in accordance with the conversion factor published
by the United States Department of Labor, Bureau of Labor Statistics. If the
Index is discontinued or substantially revised during the term of this Lease,
any comparable governmental index or computation with which it is replaced (or,
if none is available, any privately published index which is comparable in
coverage and purpose) shall be designated by Landlord in order to obtain
substantially the same result as would have been obtained if the Index had not
been discontinued or revised. Upon any adjustment of the monthly minimum
rental in accordance with the provisions of this paragraph, Landlord and Tenant
shall immediately execute a written acknowledgement of the new minimum rental
as adjusted, which acknowledgement shall be deemed to be incorporated herein
by this reference; provided, however, that any failure of one or both parties
to execute and deliver such a written acknowledgement shall not limit or affect
in any way the other obligations of the parties with respect to the applicable
rental adjustment or any subsequent rental adjustments required under this
paragraph (b).
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(c) The minimum rental amounts specified in this Section
3.1 are based upon an estimated area of 129,322 square feet for the Premises
(except during months 1-12 when the estimated area of the Premises is assumed
to be 90,000 square feet, reflecting the estimated area of the first phase of
the build-out of interior improvements in the Premises). If the actual area of
the Premises, when completed, is greater or less than such estimated area, then
the minimum rentals specified in Sections 3.1(a) and/or (b), as applicable,
shall be adjusted for each rental period in strict proportion to the ratio
between the actual area of the Premises during the applicable period (which
area shall be determined on the basis of measurement from the exterior faces of
the exterior walls of the Building, excluding overhangs, and, for purposes of
determining the amount of space occupied by Tenant during the first twelve
months of the term of this Lease, shall be measured to the centerline of any
interior demising walls) and the assumed area of 90,000 or 129,322 square feet,
as applicable. If Tenant occupies more than 90,000 square feet of the Premises
during any portion of the first twelve months of the term of this Lease (due to
acceleration of Tenant's occupancy of the second phase of interior improvements
or for any other reason), or if the actual area of the first phase of interior
improvements is more or less than 90,000 square feet, then the minimum rental
specified above for such portion of the first twelve months of the term of this
Lease shall be adjusted in strict proportion to the ratio between the
additional space occupied by Tenant in excess of 90,000 square feet or the
actual area of the first phase of interior improvements, as applicable, as
determined on the basis of measurement set forth in the immediately preceding
sentence hereof, and the assumed area of 90,000 square feet. If Landlord's
substantial completion of the second phase of interior improvements occurs
later than twelve months after the Commencement Date, then to the extent such
delayed completion results from any cause other than delays attributable to
acts or omissions of Tenant or its agents, employees or contractors, the
minimum rentals specified in Sections 3.1(a) and or (b), as applicable, shall
be reduced, for the period from the beginning of the thirteenth month of the
term of this Lease until the substantial completion and delivery by Landlord of
the second phase of interior improvements, in strict proportion to the ratio
between (i) the greater of the actual area of the space occupied by Tenant in
the Premises or the actual area of the first phase of interior improvements, as
determined in each case on the basis of measurement set forth in the second
preceding sentence hereof, and (ii) the assumed area of 129,322 square feet.
Measurements of building area under this paragraph shall be made initially by
Landlord's architect, subject to review and approval by Tenant's architect.
(d) The minimum rental amounts specified in Section 3.1(a)
do not reflect any excess improvement costs that may be chargeable to Tenant in
accordance with Exhibit C. If, upon completion of construction of the Premises,
it is determined that there are any such excess improvement costs chargeable to
Tenant in accordance with Exhibit C, then Tenant shall pay to Landlord as
additional minimum rental for the Premises during the initial term of this
Lease an amount each month equal to the amount necessary to amortize such
excess improvement costs on a level payment basis over the initial term of this
Lease with an imputed return at the rate of ten percent (10%) per annum. Upon
determination of the amount of any additional minimum rental in accordance with
the provisions of this paragraph, Landlord and Tenant shall incorporate such
amount in the Acknowledgement of Lease Commencement in the form of Exhibit E or
shall execute a separate written acknowledgement of such additional minimum
rental, which acknowledgement shall be deemed to be incorporated herein by this
reference; provided, however, that any failure of one or both parties to
execute and deliver such a written acknowledgement shall not limit or affect in
any way the other obligations of the parties with respect to the additional
minimum rental (if any) due under this paragraph (d). Notwithstanding any
other provisions of this Section 3.1, any additional minimum rental payable
under this paragraph (d) shall not be subject to adjustment under Section 3.1
(a), (b) or (c), regardless of any adjustments that may otherwise be
appropriate for other minimum rental components under such paragraphs (a), (b)
or (c).
(e) If Tenant properly exercises its right to extend the
term of this Lease pursuant to Section 2.7 hereof, the minimum rental during
the first extended term shall be equal to ninety-five percent (95%) of the fair
market rental value of the Premises (in "as is" condition as theretofore
improved under Section 2.4 and Exhibit C, but without regard to any tenant
improvement allowance for the extended term and without regard to the value of
any
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improvements which were installed by Tenant at its own cost and which Tenant has
the right to remove from the Premises pursuant to Article 7 hereof upon
expiration of the Lease), including any cost-of-living adjustments or other
rental increase provisions then customary in the relevant market for comparable
commercial leases, determined as of the commencement of such extended term in
accordance with this paragraph. Upon Landlord's receipt of a proper notice of
Tenant's exercise of its option to extend the term of this Lease, the parties
shall have sixty (60) days in which to agree on the fair market rental
(including any applicable rental increase provisions) for the Premises (as
theretofore improved under Section 2.4 and Exhibit C) at the commencement of the
first extended term for the uses permitted hereunder. If the parties agree on
such fair market rental and rental increase provisions (if any), they shall
execute an amendment to this Lease stating the amount of the applicable minimum
monthly rental and any applicable rental increase provisions. If the parties
are unable to agree on such rental (including any applicable rental increase
provisions) within such sixty (60) day period, then within fifteen (15) days
after the expiration of such period each party, by written notice to the other
party, shall appoint a real estate appraiser with at least five (5) years
experience appraising similar commercial properties in the City of Pleasanton or
County of Alameda. If either party fails to appoint an appraiser within the
allotted time, the single appraiser appointed by the other party shall be the
sole appraiser. If an appraiser is appointed by each party, the two appraisers
so appointed shall appoint a third qualified appraiser within fifteen (15) days
after the appointment of the later of the two appraisers to be appointed; if the
two appraisers are unable to agree upon a third appraiser, either party may,
upon not less than five (5) days notice to the other party, apply to the
Presiding Judge of the Superior Court for the county in which the Property is
located for the appointment of a third qualified appraiser. Each party shall
bear the fees and charges of the appraiser appointed by such party, shall bear
its own legal fees in connection with appointment of the third appraiser and
shall bear one-half of any other costs of appointment of the third appraiser and
of such third appraiser's fee. Each appraiser designated under this paragraph,
however selected, shall be a person who has not acted for either party (or for
any person or entity which controls, is controlled by or is under common control
with either party) in any capacity within five (5) years prior to the date of
such designation hereunder. Within thirty (30) days after the appointment of
the third appraiser, a majority of the three appraisers shall set the fair
market rental and any applicable rental increase provisions for the first
extended term and shall so notify the parties. If a majority are unable to
agree within the allotted time, each of the three appraisers at the end of such
30-day period shall submit his or her written determination of the fair market
rental and any applicable rental increase provisions and (i) the three appraised
fair market rentals shall be added together and divided by three and the
resulting quotient shall be the fair market rental for the first extended term
(except that any fair market appraisal that differs by more than 10% from the
"middle" appraisal shall be disregarded and the averaging process shall be
adjusted accordingly to reflect only the remaining appraisal(s)), and (ii) the
applicable rental increase provision (if any) shall be equal to the mathematical
average (or the nearest reasonable approximation thereto) of the two rental
increase provisions that are most closely comparable, which determinations shall
be binding on the parties and shall be enforceable in any further proceedings
relating to this Lease.
(f) If Tenant properly exercises its right to a second
extended term of this Lease pursuant to Section 2.7 hereof, the minimum rental
during such second extended term shall be determined in the same manner
provided in paragraph (e) of this Section for the first extended term, except
that (i) the determination shall be made as of the commencement of the second
extended term and (ii) the applicable percentage of fair market rental under
clause (ii) of the first sentence of paragraph (e) of this Section shall be one
hundred percent (100%) rather than ninety-five percent (95%).
3.2. Late Charge. If Tenant fails to pay when due rental or other
amounts due Landlord hereunder, such unpaid amounts shall bear interest for the
benefit of Landlord at a rate equal to the lesser of fifteen percent (15%) per
annum or the maximum rate permitted by law, from the date due to the date of
payment. In addition to such interest, Tenant shall pay to Landlord a late
charge in an amount equal to five percent (5%) of any installment of minimum
rental and any other amounts due Landlord if not paid in full on or before the
third (3rd) day after written notice from Landlord to Tenant that such rental
or other amount is past due; provided, however, that if any payment of rent or
other amounts by Tenant is more than five (5) days late and Landlord gave
written notice of delinquency to Tenant prior to such payment, than for the
next twelve (12) calendar months after such written notice was given, Tenant
shall be
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liable for late charges on any further payment of rental or other amount that
is not paid on or before the fifth (5th) day after such rental or other amount
is due, without any requirement of prior notice from Landlord to Tenant of such
default or delinquency. Tenant acknowledges that late payment by Tenant to
Landlord of rental or other amounts due hereunder will cause Landlord to incur
costs not contemplated by this Lease, including, without limitation, processing
and accounting charges and late charges which may be imposed on Landlord by the
terms of any loan relating to the Property. Tenant further acknowledges that
it is extremely difficult and impractical to fix the exact amount of such costs
and that the late charge set forth in this Section 3.2 represents a fair and
reasonable estimate thereof. Acceptance of any late charge by Landlord shall
not constitute a waiver of Tenant's default with respect to overdue rental or
other amounts, nor shall such acceptance prevent Landlord from exercising any
other rights and remedies available to it. Acceptance of rent or other
payments by Landlord shall not constitute a waiver of late charges or interest
accrued with respect to such rent or other payments or any prior installments
thereof, nor of any other defaults by Tenant, whether monetary or non-monetary
in nature, remaining uncured at the time of such acceptance of rent or other
payments.
4. TAXES
4.1. Personal Property. Tenant shall be responsible for and shall
pay prior to delinquency all taxes and assessments levied against or by reason
of (a) any and all alterations, additions and items installed or placed on the
Premises and taxed as personal property rather than as real property, and (b)
all personal property, trade fixtures and other property installed or placed by
Tenant on or about the Property. Upon request by Landlord, Tenant shall
furnish Landlord with satisfactory evidence of Tenant's payment thereof. If at
any time during the term of this Lease any of said alterations, additions or
personal property, whether or not belonging to Tenant, shall be taxed or
assessed as part of the Property, then such tax or assessment shall be paid by
Tenant to Landlord immediately upon presentation by Landlord of copies of the
tax bills in which such taxes and assessments are included and shall, for the
purposes of this Lease, be deemed to be personal property taxes or assessments
under this Section 4.1.
4.2. Real Property. To the extent any real property taxes and
assessments on the Premises, on any improvements therein or on the portion of
the Property identified as Phase VI in the Site Plan are assessed directly to
Tenant, Tenant shall be responsible for and shall pay prior to delinquency all
such taxes and assessments. Upon request by Landlord, Tenant shall furnish
Landlord with satisfactory evidence of Tenant's payment thereof. To the extent
the Property, the Premises and/or any improvements therein are taxed or
assessed to Landlord following the Commencement Date, such real property taxes
and assessments shall constitute Operating Expenses (as that term is defined in
Section 5.2 of this Lease) and shall be paid in accordance with the provisions
of Article 5 of this Lease.
5. OPERATING EXPENSES
5.1. Payment Of Operating Expenses.
(a) Tenant shall pay to Landlord, at the time and in the
manner hereinafter set forth, as additional rental, an amount equal to
sixty-nine and fifty-nine hundredths percent (69.59%) ("Tenant's Building
Operating Cost Share") or thirty-eight and fifty-seven hundredths percent
(38.57%) ("Tenant's Land Operating Cost Share"), as applicable, of the
Operating Expenses defined in Section 5.2. Tenant's Land Operating Cost Share
shall be applicable in determining Tenant's share of (x) the taxes, assessments
and other expenses described in clause (iii) of Section 5.2 (excluding personal
property taxes and the portion of real property taxes, assessments and similar
items allocable to buildings or improvements, as opposed to land), and (y)
assessments and dues described in clause (vi) of Section 5.2 and payable to the
Hacienda Business Park Owners' Association or otherwise payable under the
governing covenants, conditions and restrictions for the Hacienda Business
Park, including (but not limited to) the master Declaration as defined in
Section 15.4 hereof. Tenant's Building Operating Cost Share shall be
applicable in determining Tenant's share of all other Operating Expenses,
including (but not limited to), under Section 5.2(iii), personal property taxes
and the portion of real property taxes, assessments and similar items
allocable to buildings or Improvements as opposed to land.
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(b) The parties acknowledge that Landlord intends to
construct additional buildings on the Property, some of which may be constructed
substantially concurrently with the Building and some of which may be
constructed at a later time. Tenant's Building Operating Cost Share as
specified in paragraph (a) of this Section is based upon an estimated area of
90,000 square feet for the Premises (that being the portion anticipated to be
built out as the first phase of interior improvements and occupied by Tenant
during the first twelve months of the term) and upon an aggregate area of
129,322 square feet for the buildings owned by Landlord on the Property. If the
actual area of the first phase of interior improvements or of the entire
Building (when completed), as determined on the basis of measurement set forth
in Section 3.1 (c) hereof, differs from the assumed numbers set forth above, or
when Tenant occupies more than 90,000 square feet of the Premises as
contemplated in Section 3.1(c) and Exhibit C, then Tenant's Building Operating
Cost Share shall be adjusted to reflect the actual areas so determined. If and
when Landlord constructs additional buildings on the Property from time to time,
then the denominator of the fraction by which Tenant's Building Operating Cost
Share is determined shall be adjusted to include the gross square footage of
each such additional building from and after the date on which construction of
such additional building is substantially complete (as that term is defined in
Section 2.1 hereof), and the good faith determination of the gross square
footage of such additional building by Landlord's architects (in accordance with
whatever basis of measurement is applied by Landlord in good faith in
determining Operating Expense shares for tenants of such additional building
pursuant to the terms of their leases) shall be final and binding upon the
parties for purposes of this Section 5.1(b).
(c) Tenant's Land Operating Cost Share as specified in
paragraph (a) of this Section is based upon an estimated area of 7.46 acres for
the portion of the Property designated as Phase VI on the Site Plan and a
surveyed area of 19.339 acres for the entire Property. If the boundaries of
the Phase VI land area (which is intended to be the land area reasonably
allocable to the Building and its users, albeit on a nonexclusive basis) are
changed at any time by mutual agreement of Landlord and Tenant, or if the
actual area of Phase VI is determined to be greater or smaller than 7.46 acres,
then Tenant's Land Operating Cost Share shall be adjusted accordingly.
(d) If Landlord actually receives (and is not required to
pay over to The Prudential Insurance Company of America), during the term of
this Lease, any refund of real property taxes or assessments with respect to
the Property and such refund is attributable or allocable in whole or in part
to taxes or assessments paid during any period of time during which Tenant was
paying a share of real property taxes and assessments on the Property or any
portion thereof pursuant to this Lease, then the portion of such refund
received by Landlord that is fairly allocable to the amounts actually paid by
Tenant for such real property taxes and assessments during any portion of the
refund period shall be applied as a credit against Tenant's remaining Operating
Expense obligations under this Lease and, to the extent such credit exceeds the
total amount of Tenant's remaining Operating Expense obligations under this
Lease, shall be refunded in cash by Landlord to Tenant concurrently with the
final reconciliation of Tenant's Operating Expense obligations under this
Lease.
5.2. Definition Of Operating Expenses. Subject to the exclusions
and provisions hereinafter contained, the term "Operating Expenses" shall mean
the total costs and expenses incurred by or allocable to Landlord for
management, operation and maintenance of the Property and the buildings and
other improvements thereon, including, without limitation, the following costs
and expenses:
(i) insurance, property management, landscaping and
operations, repairs and maintenance of buildings and Common Areas,
except that property management expenses shall be excluded to the
extent they exceed two percent (2%) of minimum rent,
(ii) all utilities and services;
(iii) real and personal property taxes and assessments or
substitutes therefor, including (but not limited to) any possessory
interest, use, business, license or other taxes or fees, any taxes
imposed directly on rents or services, any assessments or charges for
police or fire protection, housing, transit, open space, street or
sidewalk construction or maintenance or other similar services from
time to time by any governmental or
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quasi-governmental entity, and any other new taxes on landlords in
addition to taxes now in effect, but excluding (aa) fees, exactions
and taxes imposed as a condition to the issuance of any entitlements
or building permits related to the Property and (bb) gift taxes,
inheritance taxes, transfer taxes and net income taxes of Landlord;
(iv) supplies, equipment, utilities and tools used in
management, operation and maintenance of the Property;
(v) capital improvements to the Property or the buildings
and other improvements thereon, amortized over the reasonable useful
life of the applicable improvement, (aa) which reduce or will cause
future reduction of other items of Operating Expenses for which Tenant
is otherwise required to contribute (provided that the amortizable
costs for this category of improvement shall be limited to the amount
of the reasonably estimated savings to be produced thereby), or (bb)
which are required by law, ordinance, regulation or order of any
governmental authority, or (cc) of which Tenant has use or which
benefit Tenant (provided that amortizable improvements under this
category shall be limited to those which are approved in writing by
Tenant or which are merely a reasonably necessary repair or replacement
of an existing improvement with one of like kind and quality, in which
event no such approval by Tenant shall be required; and provided
further that Tenant's obligation with respect to any amortization of
capital expenditures under this Section 5.2(v) shall terminate on the
earlier of (x) the expiration of the term of this Lease or (y) the
next date as of which minimum rental under this Lease is adjusted or
reset to a new rental based on fair market rental value (excluding,
however, any CPI-based or stepped adjustments pursuant to Section 3.1
(a) or (b) or pursuant to a prior fair market rental determination));
and
(vi) any other costs (including, but not limited to, any
parking or utilities fees or surcharges) allocable to or paid by
Landlord, as owner of the Property or the buildings and other
improvements thereon, pursuant to any applicable laws, ordinances,
regulations or orders of any governmental or quasi-governmental
authority or pursuant to the terms of any declarations of covenants,
conditions and restrictions now or hereafter affecting the Property.
The distinction between items of ordinary operating maintenance and repair and
items of a capital nature shall be made in accordance with generally accepted
accounting principles applied on a consistent basis. Notwithstanding any other
provisions of this Section 5.2, Operating Expenses shall not include any of the
following:
(A) any costs attributable to the work for which Landlord
is required to pay under Section 2.4 or Exhibit C;
(B) that portion of any Operating Expenses (other than
Operating Expenses to which Tenant's Land Operating Expense Share is
applicable) that is fairly allocable to any undeveloped portion of the
Property (including, but not limited to, Phase V and Phase VII as
designated on the Site Plan), until such time as the building(s) and
improvements on such portion of the Property have been substantially
completed and such portion of the Property is properly includable in
determining Tenant's Building Operating Cost Share under Section
5.1(b) hereof;
(C) the cost to repair damage caused by (i) fire,
earthquake or other peril, or (ii) the negligence of Landlord, its
agents, employees or contractors, or any other tenants of the Property
or their respective agents, employees, contractors or invitees;
(D) costs associated with procurement of new tenants,
preparation of their spaces and enforcement of their leases, including
(but not limited to) brokerage commissions, tenant improvement costs,
and attorneys' fees;
(E) the cost of maintenance and repair of structural
elements of the buildings located on the Property from time to time,
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(F) the cost to repair any defects in design,
construction or equipment for any building located on the Property
from time to time, to the extent resulting from or attributable to
work undertaken by Landlord or by its contractors on Landlord's behalf
(including, but not limited to, costs to correct any building code
violations caused by or attributable to Landlord's work);
(G) the cost to investigate and/or remediate any
contamination by hazardous or toxic substances or wastes, except to
the extent caused by Tenant or its agents, employees or contractors;
or
(H) the cost to correct any violation of any declaration
of covenants, conditions and restrictions applicable to the Property,
except to the extent such violation is caused by Tenant or its agents,
employees or contractors.
5.3. Determination Of Operating Expenses. On or before the
Commencement Date and during the last month of each calendar year of the term
of this Lease ("Lease Year"), or as soon thereafter as practical, Landlord
shall provide Tenant notice of Landlord's estimate of the Operating Expenses
for the ensuing Lease Year or applicable portion thereof. On or before the
first day of each month during the ensuing Lease Year or applicable portion
thereof, beginning on the Commencement Date, Tenant shall pay to Landlord
Tenant's Land Operating Cost Share or Tenant's Building Operating Cost Share,
as applicable, of the portion of such estimated Operating Expenses allocable
(on a prorata basis) to such month; provided, however, that if such notice is
not given in the last month of a Lease Year, Tenant shall continue to pay on
the basis of the prior year's estimate, if any, until the month after such
notice is given. If at any time or times it appears to Landlord that the
actual Operating Expenses will vary from Landlord's estimate by more than five
percent (5%), Landlord may, by notice to Tenant, revise its estimate for such
year and subsequent payments by Tenant for such year shall be based upon such
revised estimate.
5.4. Final Accounting For Lease Year. Within ninety (90) days
after the close of each Lease Year, or as soon after such 90-day period as
practicable, Landlord shall deliver to Tenant a statement of Tenant's Land
Operating Cost Share and Tenant's Building Operating Cost Share, as applicable,
of the Operating Expenses for such Lease Year prepared by Landlord from
Landlord's books and records, which statement shall be final and binding on
Landlord and Tenant, except as otherwise provided herein. Notwithstanding any
other provisions of this Section 5.4, Tenant shall have the right to audit or
review, directly or through its designated representative, Landlord's books and
records relating to Operating Expenses for any period, subject to the following
conditions: Such right shall be exercisable only by written request to Landlord
within 180 days after Tenant's receipt from Landlord of a statement of actual
Operating Expenses, shall be limited to the period covered by such statement,
and shall be exercisable only during normal business hours, on not less than
ten (10) days prior written notice to Landlord, and at Tenant's sole cost and
expense, except as hereinafter provided. To the extent that Tenant, following
any such review or audit, disputes any item in the applicable statement or in
the calculation of Tenant's obligations thereunder, Tenant shall give Landlord
written notice of the disputed items, in reasonable detail and with reasonable
supporting information, and Landlord and Tenant shall negotiate diligently and
in good faith to try to resolve the dispute. If Landlord and Tenant are unable
to resolve the dispute within thirty (30) days after Landlord's receipt of
Tenant's written notice specifying the disputed items, then either party may
elect, by written notice to the other, to have the dispute resolved through a
review and determination by an independent Certified Public Accountant who has
not previously rendered professional services to either party. Such review and
determination by the independent CPA shall be based on generally accepted
accounting principles and tax accounting principles, consistently applied. The
independent CPA shall be selected by mutual agreement of Landlord and Tenant;
if they are unable to agree on such selection within twenty (20) days after a
party's notice of desire to submit the dispute to a CPA review, then the
independent CPA shall be appointed by the Presiding Judge of the Alameda
County Superior Court upon application by either party (with notice to the
other party). If it is determined, on the basis of Landlord's statement or by
mutual agreement of Landlord and Tenant or by independent CPA review, as
applicable, that Tenant owes an amount that is more or less than the estimated
payments previously made by Tenant for the applicable period, then Tenant or
Landlord, as the case may be, shall pay the deficiency or overpayment to the
other party within thirty (30) days after final determination Of such
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underpayment or overpayment. The expenses of the independent CPA, if any,
shall be borne by Tenant unless the CPA's determination reflects an
overstatement or overpayment of five percent (5%) or more in Tenant's
obligation for Operating Expenses for the applicable period, in which event the
expenses of the independent CPA shall be borne by Landlord. Each party agrees
to maintain the confidentiality of the findings of any audit or review in
accordance with the provisions of this Section 5.4. Failure or inability of
Landlord to deliver the annual statement within such ninety (90) day period
shall not impair or constitute a waiver of Tenant's obligation to pay Operating
Expenses, or cause Landlord to incur any liability for damages.
5.5. Proration. If the Commencement Date falls on a day other than
the first day of a Lease Year or if this Lease terminates on a day other than
the last day of a Lease Year, the amount of Tenant's Land Operating Cost Share
and Tenant's Building Operating Cost Share, as applicable, payable by Tenant
with respect to such first or last partial Lease Year shall be prorated on the
basis which the number of days during such Lease Year in which this Lease is in
effect bears to 365. The termination of this Lease shall not affect the
obligations of Landlord and Tenant pursuant to Section 5.4 to be performed
after such termination.
6. UTILITIES
6.1. Payment. Commencing with the Commencement Date and thereafter
throughout the term of this Lease, Tenant shall pay, before delinquency, all
charges for water, gas, heat, light, electricity, power, sewer, telephone,
alarm system, janitorial and other services or utilities supplied to or
consumed in or upon the Premises, including any taxes on such services and
utilities.
6.2 Interruption. There shall be no abatement of rent or other
charges required to be paid hereunder and Landlord shall not be liable in
damages or otherwise for interruption or failure of any service or utility
furnished to or used in the Premises because of accident, making of repairs,
alterations or improvements, severe weather, difficulty or inability in
obtaining services or supplies, labor difficulties or any other cause.
Notwithstanding the foregoing provisions of this Section 6.2, however, in the
event of any interruption or failure of any service or utility to the Premises
which is caused in whole or in part by the negligence or willful misconduct of
Landlord or its agents or employees, which continues for more than 48 hours and
which materially impairs Tenant's ability to use the Premises for their
intended purpose hereunder, then Tenant's rental obligations under this Lease
shall be abated in proportion to the extent of the proportional fault of
Landlord and its agents and employees and in proportion to the degree of
impairment of Tenant's use of the Premises, and such abatement shall be
retroactive to the commencement of the interruption or failure and shall
continue until Tenant's use of the Premises is no longer materially impaired
thereby.
7. ALTERATIONS
7.1. Right To Make Alterations. Tenant shall make no alterations,
additions or improvements to the Premises, other than interior non-structural
alterations costing less than Fifty Thousand Dollars ($50,000.00) in each
instance, without the prior written consent of Landlord. All such alterations,
additions and improvements shall be completed with due diligence in a
first-class workmanlike manner, in compliance with plans and specifications
approved in writing by Landlord and in compliance with all applicable laws,
ordinances, rules and regulations. All such alterations, additions and
improvements shall be performed solely by a licensed and bonded general
contractor approved by Landlord, and Landlord shall be named as an additional
insured on such contractor's bond. Landlord may also, at its election, require
Tenant to furnish to Landlord, at Tenant's sole cost and expense, a lien and
completion bond in an amount equal to one and one-half times the estimated cost
of any such work, to ensure completion of the work and to protect Landlord
against any liens or claims relating thereto. If Tenant wishes to know in
advance whether it will be required to remove any specific alteration, addition
or improvement upon termination of this Lease, as contemplated in Section 7.2
hereof, then Tenant shall make an express written request for such a
determination by Landlord at the time Tenant requests Landlord's approval of
the applicable alteration, addition or improvement; if Tenant makes such a
written request and Landlord does not, in response thereto, advise Tenant that
Landlord intends
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to require (or at least to reserve the right to require) removal of the
applicable alteration, addition or improvement upon expiration of this Lease,
then Landlord shall not be entitled to request such removal, notwithstanding
any contrary provisions in Section 7.2 hereof.
7.2. Title To Alterations. All alterations, additions and
improvements installed in, on or about the Premises shall be part of the
Building and the property of Landlord, unless Landlord elects to require Tenant
to remove the same upon the termination of this Lease; provided, however, that
(a) the foregoing shall not apply to Tenant's movable furniture and trade
fixtures not affixed to the Property, and (b) Tenant shall not under any
circumstances be required to remove any of the improvements constructed by
Landlord pursuant to Section 2.4 and Exhibit C.
7.3. Tenant Fixtures. Notwithstanding the provisions of Sections
7.1 and 7.2, Tenant may install, remove and reinstall trade fixtures without
Landlord's prior written consent, except that any fixtures which are affixed to
the Premises or which affect the exterior or structural portions of the
Building shall require Landlord's written approval. The foregoing shall apply
to Tenant's signs, logos and insignia, all of which Tenant shall have the right
to place and remove and replace subject only to (a) Landlord's prior written
consent as to location, size and composition and (b) compliance with all
applicable legal requirements and all applicable covenants, conditions and
restrictions. Tenant shall immediately repair any damage caused by
installation and removal of fixtures under this Section 7.3.
7.4. No Liens. Tenant shall at all times keep the Premises free
from all liens and claims of any contractors, subcontractors, materialmen,
suppliers or any other parties employed either directly or indirectly by Tenant
in construction work on or about the Premises. Tenant may contest any claim of
lien, but only if, prior to such contest, Tenant either (i) posts security in
the amount of the claim, plus estimated costs and interest, or (ii) records a
bond of a responsible corporate surety in such amount as may be required to
release the lien from the Premises. Tenant shall indemnify, defend and hold
Landlord harmless against any and all liability, loss, damage, cost and other
expenses, including, without limitation, reasonable attorneys' fees, arising out
of claims of any lien for work performed or materials or supplies furnished at
the request of Tenant or persons claiming under Tenant.
8. MAINTENANCE AND REPAIRS
8.1. Landlord's Work.
(a) Landlord shall repair and maintain or cause to be
repaired and maintained the Common Areas of the Property and the roof, exterior
walls and other structural portions of the Building. The cost of all work
performed by Landlord under this Section 8.1(a) shall be an Operating Expense
hereunder, except to the extent such work (i) is required due to the negligence
or willful misconduct of Landlord or its agents or employees, of any other
tenant of the Property other than Tenant or of the agents, employees or
invitees of any such other tenant, (ii) is a service to a specific tenant or
tenants, other than Tenant, for which Landlord has received or has the right to
receive full reimbursement, (iii) is a capital expense not includible as an
Operating Expense under Section 5.2 hereof, (iv) is otherwise expressly
excluded from the definition of Operating Expenses under Section 5.2 hereof, or
(v) is required due to the negligence or willful misconduct of Tenant or its
agents, employees or invitees (in which event Tenant shall bear the full cost
of such work pursuant to the indemnification provided in Section 10.6 hereof,
subject to the release set forth in Section 10.4 hereof). Tenant knowingly and
voluntarily waives the right to make repairs at Landlord's expense, or to
offset the cost thereof against rent, under any law, statute, regulation or
ordinance now or hereafter in effect.
(b) Notwithstanding any contrary provisions of Section
8.1(a) hereof or of any other provision of this Lease, to the extent a
substantially complete replacement (as opposed to ordinary or routine
maintenance or repair) is required from time to time with respect to the roof or
major building systems (HVAC, plumbing, electrical and mechanical systems) of
the Building, or with respect to the parking or driveway areas or other portions
of the Common Areas of the Property, Landlord shall perform such replacement
when and as reasonably required. To the extent such replacement is required as
a result of defective design, construction, installation or
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materials, or as a result of the negligence or willful misconduct of Landlord
or its agents or employees, or as a result of the negligence or willful
misconduct of any other tenant of the Property other than Tenant or of any such
other tenant's agents, employees or invitees, such replacement shall be at
Landlord's sole cost and expense, subject to any rights of reimbursement
Landlord may have against contractors, suppliers, other tenants or other third
parties. To the extent such replacement is required as a result of the
negligence or willful misconduct of Tenant or its agents, employees or
invitees, Tenant shall bear the full cost of such work pursuant to the
indemnification provided in Section 10.6 hereof, subject to the release set
forth in Section 10.4 hereof. To the extent such replacement is required as a
result of casualty or condemnation, the provisions of Article 13 hereof shall
be controlling. To the extent such replacement is required due to ordinary
wear and tear or obsolescence, the cost of such replacement shall be amortized
by Landlord over the useful life of the replacement improvement or system and
either (i) in the case of replacement of the roof or a major building system of
the Building, Tenant shall reimburse to Landlord, as additional rent and not as
an Operating Expense, on a monthly basis or at other regular intervals as
reasonably requested by Landlord, the entire amortized cost of such replacement
allocable to the period of time from the date of replacement until the earlier
of (x) the expiration of the term of this Lease or (y) the next date as of
which minimum rental under this Lease is adjusted or reset to a new rental
based on fair market rental value (excluding, however, any CPI-based or stepped
adjustments pursuant to Section 3.1(a) or (b) or pursuant to a prior fair
market rental determination), or (ii) in the case of replacement of parking or
driveway areas or other portions of the Common Areas, the amortized cost of
such replacement shall be recoverable by Landlord as an Operating Expense
pursuant to Section 5.2(v)(cc) hereof.
8.2. Tenant's Obligation For Maintenance.
(a) Good Order, Condition And Repair. Subject to the
provisions of Section 2.4 hereof, by accepting possession of the Premises
(excluding any portion thereof in which interior improvements have not been
completed as a result of the phased construction of such interior improvements)
on the Commencement Date, Tenant shall be deemed to acknowledge that the
Premises (or the applicable initial portion thereof) are then in good and
sanitary order, condition and repair. Except as provided in Section 8.1
hereof, Tenant at its sole cost and expense shall keep and maintain in good and
sanitary order, condition and repair the Premises and every part thereof,
wherever located, including but not limited to the signs, interior, ceiling,
electrical system, plumbing system, telephone and communications systems, HVAC
equipment and related mechanical systems serving the Premises (for which
equipment and systems Tenant shall enter into a service contract with a person
or entity designated or approved by Landlord), all doors, door checks, windows,
plate glass, door fronts, utility facilities, fixtures, lighting, wall
surfaces, floor surfaces and ceiling surfaces and all other interior repairs,
foreseen and unforeseen, as required.
(b) Landlord's Remedy. If Tenant, after notice from
Landlord, fails to make or perform promptly any repairs or maintenance which
are the obligation of Tenant hereunder, Landlord shall have the right, but
shall not be required, to enter the Premises and make the repairs or perform
the maintenance necessary to restore the Premises to good and sanitary order,
condition and repair. Immediately on demand from Landlord, the cost of such
repairs shall be due and payable by Tenant to Landlord.
(c) Condition Upon Surrender. At the expiration or
sooner termination of this Lease, Tenant shall surrender the Premises,
including any additions, alterations and improvements thereto, broom clean, in
good and sanitary order, condition and repair, ordinary wear and tear excepted,
first, however, removing all goods and effects of Tenant and all fixtures and
items required to be removed or specified to be removed at Landlord's election
pursuant to this Lease, and repairing any damage caused by such removal.
Tenant expressly waives any and all interest in any personal property and trade
fixtures not removed from the Premises by Tenant at the expiration or
termination of this Lease, agrees that any such personal property and trade
fixtures may, at Landlord's election, be deemed to have been abandoned by
Tenant, and authorizes Landlord (at its election and without prejudice to any
other remedies under this Lease or under applicable law to remove and either
retain, store or dispose of such property at Tenant's cost and expense, and
Tenant waives all claims against Landlord for any damages resulting from any
such removal, storage, retention or disposal.
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9. USE OF PREMISES
9.1. Permitted Use. Tenant may use the Premises solely for office
and administrative purposes, production of payroll checks, light assembly of
products, storage, non-retail marketing and sales demonstrations and training
classes, and for no other purpose without the prior written consent of
Landlord.
9.2. [Omitted.]
9.3. No Nuisance. Tenant shall not use the Premises for or carry
on or permit upon the Premises or any part thereof any offensive, noisy or
dangerous trade, business, manufacture, occupation, odor or fumes, or any
nuisance or anything against public policy, nor interfere with the rights or
business of any other tenants or of Landlord in or about the Property, nor
commit or allow to be committed any waste in, on or about the Premises, nor
make any other unreasonable use of the Premises. Tenant shall not do or permit
anything to be done in or about the Premises, nor bring nor keep anything
therein, which will in any way cause the Premises to be uninsurable with
respect to the insurance required by this Lease or with respect to standard
fire and extended coverage insurance with vandalism, malicious mischief and
riot endorsements.
9.4. Compliance With Laws. Tenant shall not use the Premises or
permit the Premises to be used in whole or in part for any purpose or use that
is in violation of any applicable laws, ordinances, regulations or rules of any
governmental agency or public authority. Tenant shall keep the Premises
equipped with all safety appliances required by law, ordinance or insurance on
the Premises, or any order or regulation of any public authority because of
Tenant's particular use of the Premises. Tenant shall procure all licenses and
permits required for Tenant's use of the Premises. Tenant shall use the
Premises in strict accordance with all applicable ordinances, rules, laws and
regulations and shall comply with all requirements of all governmental
authorities now in force or which may hereafter be in force pertaining to the
use of the Premises by Tenant, including, without limitation, regulations
applicable to noise, water, soil and air pollution, and making such
nonstructural alterations and additions thereto as may be required from time to
time by such laws, ordinances, rules, regulations and requirements of
governmental authorities or insurers of the Premises (collectively,
"Requirements") because of Tenant's construction of improvements in or other
particular use of the Premises. Any structural alterations or additions
required from time to time by applicable Requirements because of Tenant's
construction of improvements in or other particular use of the Premises shall,
at Landlord's election, either (i) be made by Tenant, at Tenant's sole cost and
expense, in accordance with the procedures and standards set forth in Section
7.1 for alterations by Tenant, or (ii) be made by Landlord at Tenant's sole
cost and expense, in which event Tenant shall pay to Landlord as additional
rent, within ten (10) days after demand by Landlord, an amount equal to all
costs incurred by Landlord in connection with such alterations or additions.
The judgment of any court, or the admission by Tenant in any proceeding against
Tenant, that Tenant has violated any law, statute, ordinance or governmental
rule, regulation or requirement shall be conclusive of such violation as
between Landlord and Tenant.
9.5. Liquidation Sales. Tenant shall not conduct or permit to be
conducted any auction, bankruptcy sale, liquidation sale, or going out of
business sale, in, upon or about the Premises or the Property, whether said
auction or sale be voluntary, involuntary or pursuant to any assignment for the
benefit of creditors, or pursuant to any bankruptcy or other insolvency
proceeding.
9.6. Environmental Matters. Without limiting the generality of
Tenant's obligations set forth in Section 9.4 of this Lease:
(a) Tenant shall not cause or permit any hazardous or
toxic substance or hazardous waste (as defined in any federal, state or local
law, ordinance or regulation applicable to such substances or wastes) to be
brought upon, kept, stored or used on or about the Property without the prior
written consent of Landlord; provided, however, that nothing in this paragraph
(a) shall prohibit Tenant from using ordinary office and cleaning products and
other materials reasonably necessary for the conduct of Tenant's business for
the permitted uses described in Section 9.1 hereof, regardless of whether such
materials constitute hazardous or toxic substances or hazardous wastes, so long
as Tenant provides Landlord with prior or concurrent written notice
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of such use and complies with the requirements of paragraphs (b) and (c) hereof
with respect to such use:
(b) Tenant shall comply with all applicable laws, rules,
regulations, orders, permits, licenses and operating plans of any governmental
authority with respect to the receipt, use, handling, generation,
transportation, storage, treatment, release and/or disposal of hazardous or
toxic substances or wastes in the course of or in connection with the conduct
of Tenant's business on the Property, and shall provide Landlord with copies of
(x) any and all permits, licenses, registrations and other similar documents
that authorize Tenant to conduct any such activities in connection with
Tenant's use of the Property and (y) any and all notices and written
communications actually given by Tenant to or received by Tenant from, or
required by law to be given by Tenant to, regulatory authorities in connection
with such activities in the course of Tenant's use of the Property;
(c) Tenant shall indemnify, defend and hold Landlord
harmless from and against any and all claims, losses, damages, liabilities,
costs, legal fees and expenses of any sort arising out of or relating to (i)
any failure by Tenant to comply with any provisions of subparagraph (a) or (b)
above, or (ii) any receipt, use, handling, generation, transportation,
storage, treatment, release and/or disposal of any hazardous or toxic
substances or wastes on or about the Property in connection with Tenant's use
or occupancy of the Property or as a result of any intentional or negligent
acts or omissions of Tenant or of any agent or employee of Tenant;
(d) Landlord shall indemnify, defend and hold Tenant
harmless from and against any and all claims, losses, damages, liabilities,
costs, legal fees and expenses of any sort arising out of or relating to (i)
the presence on the Property of any hazardous or toxic substances or wastes
present on the Property as of the Commencement Date (other than as a result of
any intentional or negligent acts or omissions of Tenant or of any agent or
employee of Tenant), and/or (ii) any unauthorized release into the environment
of hazardous or toxic substances or wastes to the extent such release results
from the negligence of or willful misconduct or omission by Landlord or its
agents or employees; and
(e) The provisions of this Section 9.6 shall survive the
termination of this Lease.
10. INSURANCE AND INDEMNITY
10.1. Insurance.
(a) Tenant shall procure and maintain in full force and
effect at all times during the term of this Lease, at Tenant's cost and
expense, commercial general liability insurance to protect against any
liability to the public, or to any invitee of Tenant arising out of or
related to the use of or resulting from any accident occurring in, upon or
about the Premises, with limits of liability of not less than (i) One Million
Dollars ($1,000,000.00) for injury to or death of one person, (ii) Three
Million Dollars ($3,000,000.00) for personal injury or death, per occurrence,
and (iii) Five Hundred Thousand Dollars ($500,000.00) for property damage, or a
combined single limit of bodily injury and property damage insurance of not
less than Five Million Dollars ($5,000,000.00). Such insurance shall name
Landlord and its general partners as additional insureds thereunder. The
amount of such insurance shall not be construed to limit any liability or
obligation of Tenant under this Lease.
(b) Landlord shall procure and maintain in full force and
effect at all times during the term of this Lease, at Landlord's cost and
expense (but reimbursable as an Operating Expense under Section 5.2 hereof),
fire and "all risk" extended coverage property damage insurance for the
Building and for the improvements in the Common Areas of the Property on a full
replacement cost basis, with rental loss insurance. Such insurance may include
earthquake coverage to the extent Landlord in its discretion elects to carry
such coverage, and shall have such commercially, reasonable deductibles and
other terms as Landlord in its discretion determines to be appropriate.
Landlord shall have no obligation to carry property damage insurance for any
alterations, additions or improvements installed by Tenant on or about the
Premises. Tenant shall
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have no obligation to reimburse or compensate Landlord for the "deductible"
portion of any insured losses, except to the extent either (i) such losses
result from the negligence or willful misconduct of Tenant or its agents,
employees or invitees (as contemplated in Section 8.1(a)(v) and/or Section
10.6 hereof, but subject to the release set forth in Section 10.4 hereof), or
(ii) Tenant elects to pay repair or restoration costs under Section 13.1 hereof,
in order to avoid a termination of this Lease under certain circumstances as
specified in such Section 13.1.
(c) Tenant shall procure and maintain in full force and
effect at all times during the term of this Lease, at Tenant's cost and
expense, fire and "all risk" extended coverage property damage insurance for
all alterations, additions and improvements installed by Tenant from time to
time on or about the Premises (excluding, however, Tenant's trade fixtures,
equipment and personal property, as to which Tenant has no insurance obligation
hereunder), on a full replacement cost basis. Such insurance may have such
commercially reasonable deductibles and other terms as Tenant in its discretion
determines to be appropriate.
10.2. Quality Of Policies And Certificates. All policies of
insurance required hereunder shall be issued by responsible insurers and shall
be written as primary policies not contributing with and not in excess of any
coverage that Landlord may carry. Tenant shall deliver to Landlord copies of
policies or certificates of insurance showing that said policies are in effect.
The coverage provided by such policies shall include the clause or endorsement
referred to in Section 10.4. If Tenant fails to acquire, maintain or renew any
insurance required to be maintained by it under this Article 10 or to pay the
premium therefor, then Landlord, at its option and in addition to its other
remedies, but without obligation so to do, may procure such insurance, and any
sums expended by it to procure any such insurance shall be repaid upon demand,
with interest as provided in Section 3.2 hereof. Tenant shall obtain written
undertakings from each insurer under policies required to be maintained by it
to notify all insureds thereunder at least thirty (30) days prior to
cancellation, amendment or revision of coverage.
10.3. Workers' Compensation. Tenant shall maintain in full force
and effect during the term of this Lease workers' compensation insurance
covering all of Tenant's employees working on the Premises.
10.4. Waiver Of Subrogation. Notwithstanding anything to the
contrary contained in this Lease, to the extent permitted by law and without
affecting the coverage provided by insurance required to be maintained
hereunder, Landlord and Tenant each waive any right to recover against the
other (i) damage to property, (ii) damage to the Property or any part thereof,
or (iii) claims arising by reason of any of the foregoing, but only to the
extent that any of the foregoing damages and claims under subparts (i)-(iii)
hereof are covered, and only to the extent of such coverage, by insurance
actually carried or required to be carried hereunder by either Landlord or
Tenant. This provision is intended to waive fully, and for the benefit of each
party, any rights and claims which might give rise to a right of subrogation in
any insurance carrier. Each party shall procure a clause or endorsement on any
policy required under this Article 10 denying to the insurer 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. Coverage provided by
insurance maintained by Tenant under this Article 10 shall not be limited,
reduced or diminished by virtue of the subrogation waiver herein contained.
10.5. Increase In Premiums. Tenant shall do all acts and pay all
expenses necessary to insure that the Premises are not used for purposes
prohibited by any applicable fire insurance, and that Tenant's use of the
Premises complies with all requirements necessary to obtain any such insurance.
If Tenant uses or permits the Premises to be used in a manner which increases
the existing rate of any insurance on the Premises carried by Landlord, Tenant
shall pay the amount of the increase in premium caused thereby, and Landlord's
costs of obtaining other replacement insurance policies, including any increase
in premium, within ten (10) days after demand therefor by Landlord.
10.6. Indemnification.
(a) Tenant shall indemnify, defend and hold Landlord, its
partners, shareholders, officers, directors, affiliates, agents, employees and
contractors, harmless from any and all liability for injury to or death of any
person, or loss of or damage to the property of any
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person, and all actions, claims, demands, costs (including, without limitation,
reasonable attorneys' fees), damages or expenses of any kind arising therefrom
which may be brought or made against Landlord or which Landlord may pay or
incur by reason of the use, occupancy and enjoyment of the Property by Tenant
or any invitees, sublessees, licensees, assignees, employees, agents or
contractors of Tenant or holding under Tenant from any cause whatsoever other
than negligence or willful misconduct or omission by Landlord, its agents,
employees or contractors. Landlord, its partners, shareholders, officers,
directors, affiliates, agents, employees and contractors shall not be liable
for, and Tenant hereby waives all claims against such persons for, damages to
goods, wares and merchandise in or upon the Property, or for injuries to
Tenant, its agents or third persons in or upon the Property, from any cause
whatsoever other than negligence or willful misconduct or omission by Landlord,
its agents, employees or contractors. Tenant shall give prompt notice to
Landlord of any casualty or accident in, on or about the Property.
(b) Landlord shall indemnify, defend and hold Tenant,
its partners, shareholders, officers, directors, affiliates, agents, employees
and contractors, harmless from any and all liability for injury to or death of
any person, or loss of or damage to the property of any person, and all
actions, claims, demands, costs (including, without limitation, reasonable
attorneys' fees), damages or expenses of any kind arising therefrom which may
be brought or made against Tenant or which Tenant may pay or incur, to the
extent such liabilities or other matters arise by reason of any negligence or
willful misconduct or omission by Landlord, its agents, employees or
contractors.
10.7. Blanket Policy. Any policy required to be maintained
hereunder may be maintained under a so-called "blanket policy" insuring other
parties and other locations so long as the amount of insurance required to be
provided hereunder is not thereby diminished.
11. SUBLEASE AND ASSIGNMENT
11.1. Assignment And Sublease Of Premises. Tenant shall not have
the right or power to assign its interest in this Lease, or make any sublease
of the Premises or any portion thereof, nor shall any interest of Tenant under
this Lease be assignable involuntarily or by operation of law, without on each
occasion obtaining the prior written consent of Landlord, which consent shall
not be unreasonably withheld. Any purported sublease or assignment of Tenant's
interest in this Lease requiring but not having received Landlord's consent
thereto shall be void. Any dissolution, consolidation, merger or other
reorganization of Tenant, or any series of one or more of such related events,
involving in the aggregate a change of fifty percent (50%) or more in the
beneficial ownership of Tenant, or any sale of all or substantially all of the
assets of Tenant, shall be deemed to be an assignment hereunder and shall be
void without the prior written consent of Landlord as required above.
Notwithstanding the foregoing, Landlord's consent shall not in any event be
required for (i) an initial public offering of the common stock of Tenant, or
for any stock transfer or conversion in connection with any such initial public
offering; (ii) any merger, consolidation or other reorganization, or any sale
of substantially all of the assets of Tenant, provided that (x) the net worth
of the surviving entity or transferee is equal to or greater than that of
Tenant immediately prior to the applicable transaction, (y) Tenant gives
Landlord prior or concurrent written notice of the applicable transaction, and
(z) the surviving entity or transferee expressly assumes in writing, for the
benefit of Landlord, Tenant's remaining obligations under this Lease; and/or
(iii) any sale or transfer of the stock of Tenant, other than pursuant to a
dissolution, consolidation, merger, reorganization or sale of substantially all
assets as specifically described above.
11.2. Rights Of Landlord. Consent by Landlord to one or more
assignments of this Lease, or to one or more sublettings of the Premises or any
portion thereof, or collection of rent by Landlord from any assignee or
sublessee, shall not operate to exhaust Landlord's rights under this Article
11, nor constitute consent to any subsequent assignment or subletting. No
assignment of Tenant's interest in this Lease and no sublease shall relieve
Tenant of its obligations hereunder, notwithstanding any waiver or extension of
time granted by Landlord to any assignee or sublessee, or the failure of
Landlord to assert its rights against any assignee or sublessee. and regardless
of whether Landlord's consent thereto is given or required to be given
hereunder. In the event of a default by any assignee, sublessee or other
successor of Tenant in the performance of any of the terms or obligations of
Tenant under this Lease, Landlord may proceed directly
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against Tenant without the necessity of exhausting remedies against any such
assignee, sublessee or other successor. In addition, Tenant immediately and
irrevocably assigns to Landlord, as security for Tenant's obligations under
this Lease, all rent from any subletting of all or a part of the Premises
as permitted under this Lease, and Landlord, as Tenant's assignee and as
attorney-in-fact for Tenant, or any receiver for Tenant appointed on Landlord's
application, may collect such rent and apply it toward Tenant's obligations
under this Lease; except that, until the occurrence of an act of default by
Tenant, Tenant shall have the right to collect such rent.
12. RIGHT OF ENTRY AND QUIET ENJOYMENT
12.1. Right Of Entry. Landlord and its authorized representatives
shall have the right to enter the Premises at any time during the term of this
Lease during normal business hours and upon not less than twenty-four (24)
hours prior notice, except in the case of emergency (in which event no notice
shall be required and entry may be made at any time), for the purpose of
inspecting and determining the condition of the Premises or for any other
proper purpose including, without limitation, to make repairs, replacements or
improvements which Landlord may deem necessary, to show the Premises to
prospective purchasers, to show the Premises to prospective tenants (but only
during the final year of the term of this Lease), and to post notices of
nonresponsibility. To facilitate exercise of Landlord's right of entry, Tenant
shall ensure that Landlord or its agent at all times has at least one (1) key
to unlock all doors in or about the Building, and Tenant shall not change any
locks in or about the Building without prior notice to Landlord and delivery of
a key for the new locks to Landlord or its agent. Landlord shall not be liable
for inconvenience, annoyance, disturbance, loss of business, quiet enjoyment or
other damage or loss to Tenant by reason of making any repairs or performing
any work upon the Building or the Property or by reason of erecting or
maintaining any scaffolding or protective barricades in connection with any
such work, and the obligations of Tenant under this Lease shall not thereby be
affected in any manner whatsoever; provided, however, Landlord shall use
reasonable efforts to minimize the inconvenience to Tenant's normal business
operations caused thereby.
12.2. Quiet Enjoyment. Landlord covenants that Tenant, upon paying
the rent and performing its obligations hereunder and subject to all the terms
and conditions of this Lease, shall peacefully and quietly have, hold and enjoy
the Premises throughout the term of this Lease, or until this Lease is
terminated as provided by this Lease.
13. CASUALTY AND TAKING
13.1. Termination Or Reconstruction. If during the term of this
Lease the Building, or any substantial part thereof, is damaged materially by
fire or other casualty or by action of public or other authority in consequence
thereof, or if during the term of this Lease the Building or the parking area
serving the Building, or any material part of either of them, (i) is taken by
eminent domain or by reason of any public improvement or condemnation
proceeding, or in any manner by exercise of the right of eminent domain
(including any transfer in avoidance of an exercise of the power of eminent
domain), or (ii) receives irreparable damage by reason of anything lawfully
done under color of public or other authority, then in any such event this
Lease shall terminate as to the entire Premises at either Landlord's or
Tenant's election, by written notice given to the other party within sixty (60)
days after the damage or taking has occurred, subject to the following
limitations (and, to the extent applicable, the limitations set forth in
Section 13.2):
(a) in the case of damage or destruction by fire or other
peril prior to the final year of the term of this Lease, Landlord's termination
right shall be exercisable only if either (x) the reasonably estimated cost to
repair or restore the Building exceeds eighty percent (80%) of the replacement
cost of the Building and the remaining term of this Lease (including any
extended term, if Tenant elects an early exercise of any extension option under
Section 2.7 hereof in order to avoid a termination under this Section 13.1) is
less than three (3) years, or (y) the reasonably estimated cost to repair or
restore the Building exceeds the insurance proceeds available for such repair
or restoration by an amount greater than five percent (5%) of the replacement
cost of the Building (unless Tenant agrees in writing, within fifteen (15) days
after
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written request by Landlord, to pay all repair and restoration costs in excess
of the sum of the available insurance proceeds plus five percent (5%) of the
replacement cost of the Building, in which event Landlord shall have no
termination right under clause (y) of this paragraph (a));
(b) in the case of damage or destruction by fire or other
peril prior to the final year of the term of this Lease, Tenant's termination
right shall be exercisable only if the time reasonably estimated to be required
for the repair or restoration of the Building to the extent necessary to
permit Tenant to resume substantially all of its normal business activities
therein (which time estimate shall be given by Landlord to Tenant in writing
within forty-five (45) days after the date of the damage or destruction)
exceeds two hundred and seventy (270) days from the date of the damage or
destruction;
(c) in the case of damage or destruction by fire or other
peril during the final year of the term of this Lease (including any extended
term, if Tenant has already duly elected such term or elects an early exercise
of any extension option under Section 2.7 hereof in order to avoid a
termination under this Section 13.1), Landlord's termination right shall be
exercisable to avoid only if either (x) the reasonably estimated cost to repair
or restore the Building exceeds twenty percent (20%) of the replacement cost of
the Building, or (y) the reasonably estimated cost to repair or restore the
Building exceeds the insurance proceeds available for such repair or
restoration by an amount greater than five percent (5%) of the replacement cost
of the Building (unless Tenant agrees in writing, within fifteen (15) days
after written request by Landlord, to pay all repair and restoration costs in
excess of the sum of the available insurance proceeds plus five percent (5%) of
the replacement cost of the Building, in which event Landlord shall have no
termination right under clause (y) of this paragraph (c)); and
(d) in the case of damage or destruction by fire or other
peril during the final year of the term of this Lease (including any extended
term, if Tenant has already duly elected such term or elects an early exercise
of any extension option under Section 2.7 hereof in order to avoid a
termination under this Section 13.1), Tenant's termination right shall be
exercisable only if the damage affects more than twenty percent (20%) of the
floor area of the Building and the time reasonably estimated to be required for
the repair or restoration of the Building to the extent necessary to permit
Tenant to resume substantially all of its normal business activities therein
(which time estimate shall be given by Landlord to Tenant in writing within
thirty (30) days after the date of the damage or destruction) exceeds sixty
(60) days from the date of commencement of repairs.
If neither party elects to terminate this Lease pursuant to the foregoing
termination rights (if any) and/or Section 13.2 (if applicable), then Landlord
shall promptly and diligently repair any such damage and restore the Premises
(to the extent of Landlord's work therein under Section 2.4 and Exhibit C) and
the Building as nearly as reasonably possible to the condition existing before
the damage or taking.
13.2. Tenant's Rights. If any portion of the Premises is so taken
by condemnation, Tenant may elect to terminate this Lease if the portion of the
Premises taken is of such extent and nature as substantially to handicap,
impede or permanently impair Tenant's use of the balance of the Premises.
Tenant must exercise its right to terminate by giving notice to Landlord within
thirty (30) days after the nature and extent of the taking have been finally
determined. If Tenant elects to terminate this Lease, Tenant shall also notify
Landlord of the date of termination, which date shall not be earlier than
thirty (30) days nor later than ninety (90) days after Tenant has notified
Landlord of its election to terminate, except that this Lease shall terminate
on the date of taking if the date of taking falls on any date before the date
of termination designated by Tenant.
13.3. Lease To Remain In Effect. If neither Landlord nor Tenant
terminates this Lease as hereinabove provided, this Lease shall continue in
full force and effect, except that minimum monthly rental and Tenant's
Operating Cost Share shall abate to the extent Tenant's use of the Premises is
impaired for any period that any portion of the Premises is unusable or
inaccessible because of a casualty or taking hereinabove described. Each party
waives the provisions of Code of Civil Procedure Section 1265.130, allowing
either party to petition the Superior Court to terminate this Lease in the
event of a partial condemnation of the Premises or Property.
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13.4. Reservation Of Compensation. Landlord reserves, and Tenant
waives and assigns to Landlord, all rights to any award or compensation for
damage to the Premises. Building, Property and the leasehold estate created
hereby, accruing by reason of any taking in any public improvement,
condemnation or eminent domain proceeding or in any other manner by exercise of
the right of eminent domain or of anything lawfully done by public authority,
except that Tenant shall be entitled to any and all compensation or damages
paid for or on account of Tenant's moving expenses, trade fixtures, equipment
and any leasehold improvements in the Premises, the cost of which was borne
directly by Tenant, but only to the extent of the then remaining unamortized
value of such improvements computed on a straight-line basis over the initial
term of this Lease. Tenant covenants to deliver such further assignments of
the foregoing as Landlord may from time to time request.
13.5. Restoration Of Fixtures. If Landlord repairs or causes repair
of the Premises after such damage or taking, Tenant at its sole expense shall
repair and replace promptly all additions, alterations and improvements and all
other items installed or paid for by Tenant under this Lease (excluding,
however, any of Tenant's trade fixtures, equipment and personal property, the
repair or replacement of which shall be in Tenant's sole discretion, and
excluding any improvements originally constructed by Landlord under Section 2.4
and Exhibit C) that were damaged or taken, so as to restore the same to a
condition substantially equal to that which existed immediately prior to the
damage or taking. Provided that Tenant has maintained in effect the insurance
required under Section 10.1(c) hereof, Tenant's repair and restoration
obligation under the preceding sentence in the event of any casualty shall be
limited to the insurance proceeds available to Tenant with respect to such
casualty, plus the amount of any applicable deductible under Tenant's
applicable insurance policy. Tenant shall have the right to make modifications
to the Premises, fixtures and improvements, subject to the prior written
approval of Landlord and subject to all other applicable provisions of this
Lease. In its review of Tenant's plans and specifications, Landlord may take
into consideration the effect of the proposed modifications on the exterior
appearance, the structural integrity and the mechanical and other operating
systems of the Building.
14. DEFAULT
14.1. Events Of Default. The occurrence of any of the following
shall constitute an event of default on the part of Tenant:
(a) Abandonment. Abandonment of the Premises.
"Abandonment" is hereby defined to include, but is not limited to, the complete
absence by Tenant from the Premises for fifteen (15) consecutive days or
more while there exists an event of default on the part of Tenant under
any other provision of this Section 14.1 which has not been cured on or before
the expiration of such fifteen (15) day period. Tenant waives any right Tenant
may have to notice under Section 1951.3 of the California Civil Code, the terms
of this subsection (a) being deemed such notice to Tenant as required by said
Section 1951.3;
(b) Nonpayment. Failure to pay, when due, any amount
payable to Landlord hereunder, such failure continuing for a period of five (5)
days after written notice of such failure; provided, however, that any such
notice shall be in lieu of, and not in addition to, any notice required under
California Code of Civil Procedure Section 1161 et seq., as amended from time
to time;
(c) Other Obligations. Failure to perform any
obligation, agreement or covenant under this Lease other than those matters
specified in subsection (b) hereof, such failure continuing for fifteen (15)
days after written notice of such failure, or, if such default is curable in
nature but it is not possible to cure such default within fifteen (15) days,
failure to commence cure within said fifteen (15) day period and thereafter to
proceed diligently to complete cure; provided, however, that any such notice
shall be in lieu of, and not in addition to, any notice required under
California Code of Civil Procedure Section 1161 et seq., as amended from time
to time:
(d) General Assignment. A general assignment by Tenant
for the benefit of creditors:
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(e) Bankruptcy. The filing of any voluntary petition in
bankruptcy by Tenant, or the filing of an involuntary petition by Tenant's
creditors, which involuntary petition remains undischarged for a period of
thirty (30) days. In the event that under applicable law the trustee in
bankruptcy or Tenant has the right to affirm this Lease and continue to perform
the obligations of Tenant hereunder, such trustee or Tenant shall, in such time
period as may be permitted by the bankruptcy court having jurisdiction, cure
all defaults of Tenant hereunder outstanding as of the date of the affirmance
of this Lease and provide to Landlord such adequate assurances as may be
necessary to ensure Landlord of the continued performance of Tenant's
obligations under this Lease. Specifically, but without limiting the
generality of the foregoing, such adequate assurances must include assurances
that the Premises continue to be operated only for the use permitted hereunder.
The provisions hereof are to assure that the basic understandings between
Landlord and Tenant with respect to Tenant's use of the Premises and the
benefits to Landlord therefrom are preserved, consistent with the purpose and
intent of applicable bankruptcy laws:
(f) Receivership. The employment of a receiver appointed
by court order to take possession of substantially all of Tenant's assets or
the Premises, if such receivership remains undissolved for a period of thirty
(30) days;
(g) Attachment. The attachment, execution or other
judicial seizure of all or substantially all of Tenant's assets or the
Premises, if such attachment or other seizure remains undismissed or
undischarged for a period of thirty (30) days after the levy thereof; or
(h) Insolvency. The admission by Tenant in writing of
its inability to pay its debts as they become due, the filing by Tenant of a
petition seeking any reorganization or arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future statute,
law or regulation, the filing by Tenant of an answer admitting or failing
timely to contest a material allegation of a petition filed against Tenant in
any such proceeding or, if within thirty (30) days after the commencement of
any proceeding against Tenant seeking any reorganization or arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, such proceeding shall not have
been dismissed.
14.2. Remedies Upon Tenant's Default.
(a) Upon the occurrence of any event of default described
in Section 14.1 hereof, Landlord, in addition to and without prejudice to any
other rights or remedies it may have, shall have the immediate right to
re-enter the Premises or any part thereof and repossess the same, expelling and
removing therefrom all persons and property (which property may be stored in a
public warehouse or elsewhere at the cost and risk of and for the account of
Tenant), using such force as may be necessary to do so (as to which Tenant
hereby waives any claim for loss or damage that may thereby occur). In
addition to or in lieu of such re-entry, and without prejudice to any other
rights or remedies it may have, Landlord shall have the right either (i) to
terminate this Lease and recover from Tenant all damages incurred by Landlord
as a result of Tenant's default, as hereinafter provided, or (ii) to continue
this Lease in effect and recover rent and other charges and amounts as they
become due.
(b) Even if Tenant has breached this Lease or abandoned
the Premises, this Lease shall continue in effect for so long as Landlord does
not terminate Tenant's right to possession under subsection (a) hereof and
Landlord may enforce all of its rights and remedies under this Lease, including
the right to recover rent as it becomes due, and Landlord, without terminating
this Lease, may exercise all of the rights and remedies of a lessor under
California Civil Code Section 1951.4 (lessor may continue lease in effect after
lessee's breach and abandonment and recover rent as it becomes due, if lessee
has right to sublet or assign, subject only to reasonable limitations), or any
successor Code section. Acts of maintenance, preservation or efforts to relet
the Premises or the appointment of a receiver upon application of Landlord to
protect Landlord's interests under this Lease shall not constitute a
termination of Tenant's right to possession.
(c) If Landlord terminates this Lease pursuant to this
Section 14.2, Landlord shall have all of the rights and remedies of a landlord
provided by Section 1951.2 of the Civil Code of the State of California, or any
Successor Code section, which remedies include
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Landlord's right to recover from Tenant (i) the worth at the time of award of
the unpaid rent and additional rent which had been earned at the time of
termination, (ii) the worth at the time of award of the amount by which the
unpaid rent and additional rent which would have been earned after termination
until the time of award exceeds the amount of such rental loss that Tenant
proves could have been reasonably avoided, (iii) the worth at the time of award
of the amount by which the unpaid rent and additional 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 the detriment proximately caused by Tenant's
failure to perform its obligations under this Lease or which in the ordinary
course of things would be likely to result therefrom, including, but not
limited to, the cost of recovering possession of the Premises, expenses of
reletting, reasonable attorneys' fees, and other reasonable costs. The "worth
at the time of award" of the amounts referred to in clauses (i) and (ii) above
shall be computed by allowing interest at ten percent (10%) per annum from the
date such amounts accrued to Landlord. The "worth at the time of award" of the
amounts referred to in clause (iii) above shall be computed by discounting such
amount at one percentage point above the discount rate of the Federal Reserve
Bank of San Francisco at the time of award.
14.3. Remedies Cumulative. All rights, privileges and elections or
remedies of Landlord contained in this Article 14 are cumulative and not
alternative to the extent permitted by law and except as otherwise provided
herein.
15. SUBORDINATION, ATTORNMENT AND SALE
15.1. Subordination To Mortgage. This Lease, and any sublease
entered into by Tenant under the provisions of this Lease, shall be subject and
subordinate to any ground lease, mortgage, deed of trust, sale/leaseback
transaction or any other hypothecation for security now or hereafter placed upon
the Building, the Property, or both, and the rights of any assignee of Landlord
or of any ground lessor, mortgagee, trustee, beneficiary or leaseback lessor
under any of the foregoing, and to any and all advances made on the security
thereof and to all renewals, modifications, consolidations, replacements and
extensions thereof, provided, however, that such subordination in the case of
any future ground lease, mortgage, deed of trust, sale/leaseback transaction or
any other hypothecation for security placed upon the Building, the Property, or
both shall be conditioned on Tenant's receipt from the ground lessor, mortgagee,
trustee, beneficiary or leaseback lessor of a nondisturbance agreement in a form
reasonably acceptable to Tenant (and subject only to reasonable limitations),
confirming that so long as Tenant is not in default hereunder, Tenant's rights
hereunder shall not be disturbed by such person or entity following any
foreclosure or other acquisition of the Property. Moreover, Tenant's obligations
under this Lease shall be conditioned on Tenant's receipt, within thirty (30)
days after mutual execution of this Lease, from SDK Incorporated and from any
other ground lessor, mortgagee, trustee, beneficiary or leaseback lessor
currently owning or holding a security interest in the Property, of a
nondisturbance agreement in a form reasonably acceptable to Tenant (and subject
only to reasonable limitations), confirming that so long as Tenant is not in
default hereunder, Tenant's rights hereunder shall not be disturbed by such
person or entity following any foreclosure or other acquisition of the Property.
If any mortgagee, trustee, beneficiary, ground lessor, sale/leaseback lessor or
assignee elects to have this Lease be an encumbrance upon the Property prior to
the lien of its mortgage, deed of trust, ground lease or leaseback lease or
other security arrangement and gives notice thereof to Tenant, this Lease shall
be deemed prior thereto, whether this Lease is dated prior or subsequent to the
date thereof or the date of recording thereof. Tenant, and any sublessee, shall
execute such documents as may reasonably be requested by any mortgagee, trustee,
beneficiary, ground lessor, sale/leaseback lessor or assignee to evidence the
subordination herein set forth or to make this Lease prior to the lien of any
mortgage, deed of trust, ground lease, leaseback lease or other security
arrangement, as the case may be. Upon any default by Landlord in the
performance of its obligations under any mortgage, deed of trust, ground lease,
leaseback lease or assignment, Tenant (and any sublessee) shall, notwithstanding
any subordination hereunder, attorn to the mortgagee, trustee, beneficiary,
ground lessor, leaseback lessor or assignee thereunder upon demand and become
the tenant of the successor in interest to Landlord, at the option of such
successor in interest, and shall execute and deliver any instrument or
instruments confirming the attornment herein provided for.
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15.2. Sale Of Landlord's Interest. Upon sale, transfer or
assignment of Landlord's entire interest in the Building and Property, Landlord
shall be relieved of its obligations hereunder with respect to liabilities
accruing from and after the date of such sale, transfer or assignment;
provided, however, that such relief from liabilities (i) shall be effective
only if and to the extent that the transferee expressly assumes in writing, for
the benefit of Tenant, Landlord's obligations under this Lease. (ii) shall not
apply to Landlord's environmental indemnification under Section 9.6(d) hereof
unless the transferee has, immediately after the transfer, a net worth equal to
or greater than that of Landlord immediately prior to the transfer, and (iii)
shall not in any event apply to Landlord's obligations with respect to the
initial construction of the Building and Common Areas under Section 2.4 and
Exhibit C. Moreover, in recognition of Tenant's substantial reliance upon
Landlord's creditworthiness and development experience with respect to the
initial construction of the Building and Common Areas, Landlord shall not sell,
transfer, convey or otherwise dispose of its ownership interest in the portion
of the Property designated as Phase VI on the Site Plan, or any portion
thereof, prior to the Commencement Date under Section 2.1 hereof, except (x)
with Tenant's prior written consent or (y) to an entity of which Britannia
Hopyard, LLC, or an entity controlling, controlled by or under common control
with Britannia Hopyard, LLC, is a general partner or has management
responsibilities and equity participation comparable to those of a general
partner.
15.3. Estoppel Certificates. Tenant shall at any time and from
time to time, within ten (10) days after written request by Landlord, execute,
acknowledge and deliver to Landlord a certificate in writing stating: (i) that
this Lease is unmodified and in full force and effect, or if there have been
any modifications, that this Lease is in full force and effect as modified and
stating the date and the nature of each modification; (ii) the date to which
rental and all other sums payable hereunder have been paid; (iii) that Landlord
is not in default in the performance of any of its obligations under this
Lease, that Tenant has given no notice of default to Landlord and that no event
has occurred which, but for the expiration of the applicable time period, would
constitute an event of default hereunder, or if Tenant alleges that any such
default, notice or event has occurred, specifying the same in reasonable
detail; and (iv) such other matters as may reasonably be requested by Landlord
or any institutional lender, mortgagee, trustee, beneficiary, ground lessor,
sale/leaseback lessor or prospective purchaser of the Property. Any such
certificate under this Section 15.3 may be relied upon by any lender,
mortgagee, trustee, beneficiary, assignee or successor in interest to Landlord,
by any prospective purchaser, by any purchaser on foreclosure or sale, by any
grantee under a deed in lieu of foreclosure of any mortgage or deed of trust on
the Property or Premises, or by any other third party. Failure to execute and
return within the required time any estoppel certificate requested
hereunder shall be deemed to be an admission of the truth of the matters set
forth in the form of certificate submitted to Tenant for execution.
15.4. Subordination to CC&R's. This Lease, and any permitted
sublease entered into by Tenant under the provisions of this Lease, shall be
subject and subordinate (a) to any declarations of covenants, conditions and
restrictions affecting the Property from time to time, which may include
easements, access rights and similar nonexclusive use rights and privileges in
favor of appropriate third parties, provided that the terms of such future
declarations are approved by Tenant in writing; (b) to the Declaration of
Covenants, Conditions and Restrictions for Hacienda Business Park (No. 2)
recorded on January 24, 1985 as Instrument No. 85-14396, Alameda County
Records, as amended from time to time (the "Master Declaration"), the
provisions of which Master Declaration are an integral part of this Lease; and
(c) to the provisions of the Corporation Grant Deed and Rider recorded on
June 28, 1996 as Instrument No. 96-158374, which provisions are binding upon
Tenant as if set forth herein in full. Tenant agrees to execute, upon request
by Landlord, any documents reasonably required from time to time to evidence
such subordination.
16. SECURITY
16.1. Deposit. Concurrently with Tenant's execution of this Lease,
Tenant shall deposit with Landlord the sum of One Hundred Forty-Three Thousand
Dollars ($143,000.00), which sum (the "Security Deposit") shall be held by
Landlord as security for the faithful performance of all of the terms,
covenants, and conditions of this Lease to be kept and performed by Tenant
during the term hereof. If Tenant defaults with respect to any provision of
this Lease,
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30
including, without limitation, the provisions relating to the payment of rental
and other sums due hereunder. Landlord shall have the right, but shall not be
required, to use, apply or retain all or any part of the Security Deposit for
the payment of rental or any other amount which Landlord may spend or become
obligated to spend by reason of Tenant's default or to compensate Landlord for
any other loss or damage which Landlord may suffer by reason of Tenant's
default. If any Portion of the Security Deposit is so used or applied,
Tenant shall, within ten (10) days after written demand therefor, deposit cash
with Landlord in an amount sufficient to restore the Security Deposit to its
original amount and Tenant's failure to do so shall be a material breach of
this Lease. Landlord shall not be required to keep any deposit under this
Section separate from Landlord's general funds, and Tenant shall not be
entitled to interest thereon. If Tenant fully and faithfully performs every
provision of this Lease to be performed by it, the Security Deposit, or any
balance thereof, shall be returned to Tenant or, at Landlord's option, to the
last assignee of Tenant's interest hereunder, at the expiration of the term of
this Lease and after Tenant has vacated the Premises. In the event of
termination of Landlord's interest in this Lease, Landlord shall transfer all
deposits then held by Landlord under this Section to Landlord's successor in
interest, whereupon Tenant agrees to release Landlord from all liability for
the return of such deposit or the accounting thereof.
17. MISCELLANEOUS
17.1. Notices. All notices, consents, waivers and other
communications which this Lease requires or permits either party to give to the
other shall be in writing and shall be deemed given when delivered personally
(including delivery by private courier or express delivery service) or four (4)
days after deposit in the United States mail, registered or certified mail,
postage prepaid, addressed to the parties at their respective addresses as
follows:
To Tenant: (until Commencement Date)
ProBusiness, Inc.
5934 Gibraltar Drive
Pleasanton, CA 94588
Attn: Mitch Everton, Executive Vice President
(after Commencement Date)
ProBusiness, Inc.
[street address of Premises, when known]
Pleasanton, CA 94588
Attn: Mitch Everton, Executive Vice President
with copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
Attn: Bradford C. O'Brien
To Landlord: Britannia Hacienda V Limited Partnership
1939 Harrison Street, Suite 412
Park Plaza Building
Oakland, CA 94612
Attn: T. J. Bristow
with copy to: Folger & Levin
Embarcadero Center West
275 Battery Street, 23rd Floor
San Francisco, CA 94111
Attn: Donald E. Kelley, Jr.
or to such other address as may be contained in a notice at least fifteen (15)
days prior to the address change from either party to the other given pursuant
to this Section. Rental payments and other sums required by this Lease to be
paid by Tenant shall be delivered to Landlord at
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Landlord's address provided in this Section, or to such other address as
Landlord may from time to time specify in writing to Tenant, and shall be
deemed to be paid only upon actual receipt.
17.2. Successors And Assigns. The obligations of this Lease shall
run with the land, and this Lease shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that, subject to the provisions of Section 15.2 hereof, the original
Landlord named herein and each successive Landlord under this Lease shall be
liable only for obligations accruing during the period of its ownership of the
Property, said liability terminating upon termination of such ownership and
passing to the successor lessor.
17.3. No Waiver. The failure of Landlord to seek redress for
violation, or to insist upon the strict performance, of any covenant or
condition of this Lease shall not be deemed a waiver of such violation, or
prevent a subsequent act which would originally have constituted a violation
from having all the force and effect of an original violation.
17.4. Severability. If any provision of this Lease or the
application thereof is held to be invalid or unenforceable, the remainder of
this Lease or the application of such provision to persons or circumstances
other than those as to which it is invalid or unenforceable shall not be
affected thereby, and each of the provisions of this Lease shall be valid and
enforceable, unless enforcement of this Lease as so invalidated would be
unreasonable or grossly inequitable under all the circumstances or would
materially frustrate the purposes of this Lease.
17.5. Litigation Between Parties. In the event of any litigation or
other dispute resolution proceedings between the parties hereto arising out of
or in connection with this Lease, the prevailing party shall be reimbursed for
all reasonable costs, including, but not limited to, reasonable accountants'
fees and attorneys' fees, incurred in connection with such proceedings
(including, but not limited to, any appellate proceedings relating thereto) or
in connection with the enforcement of any judgment or award rendered in such
proceedings. "Prevailing party" within the meaning of this Section shall
include, without limitation, a party who dismisses an action for recovery
hereunder in exchange for payment of the sums allegedly due, performance of
covenants allegedly breached or consideration substantially equal to the relief
sought in the action.
17.6. Surrender. A voluntary or other surrender of this Lease by
Tenant, or a mutual termination thereof between Landlord and Tenant, shall not
result in a merger but shall, at the option of Landlord, operate either as an
assignment to Landlord of any and all existing subleases and subtenancies, or a
termination of all or any existing subleases and subtenancies. This
provision shall be contained in any and all assignments or subleases made
pursuant to this Lease.
17.7. Interpretation. The provisions of this Lease shall be
construed as a whole, according to their common meaning, and not strictly for
or against Landlord or Tenant. The captions preceding the text of each Section
and subsection hereof are included only for convenience of reference and shall
be disregarded in the construction or interpretation of this Lease.
17.8. Entire Agreement. This written Lease, together with the
exhibits hereto, contains all the representations and the entire understanding
between the parties hereto with respect to the subject matter hereof. Any
prior correspondence, memoranda or agreements are replaced in total by this
Lease and the exhibits hereto. This Lease may be modified only by an agreement
in writing signed by each of the parties.
17.9. Governing Law. This Lease and all exhibits hereto shall be
construed and interpreted in accordance with and be governed by all the
provisions of the laws of the State of California.
17.10. No Partnership. The relationship between Landlord and Tenant
is solely that of a lessor and lessee. Nothing contained in this Lease shall
be construed as creating any type or manner of partnership, joint venture or
joint enterprise with or between Landlord and Tenant.
17.11. Financial Information. From time to time Tenant shall
promptly provide directly to prospective lenders and purchasers of the Property
designated by Landlord such financial
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information pertaining to the financial status of Tenant as Landlord may
reasonably request, provided, Tenant shall be permitted to provide such
financial information in a manner which Tenant deems reasonably necessary to
protect the confidentiality of such information, including (if Tenant so
requests) conditioning disclosure of such information upon execution of a
reasonable confidentiality agreement by Landlord and by any other proposed or
permitted recipient of such information; and provided further, that if Tenant
is then a publicly traded company filing periodic reports under the Securities
Exchange Act of 1934, as amended, and the regulations thereunder, Tenant shall
be required only to furnish copies of Tenant's most recent Form 10K, 10Q and 8K
(if any) reports and shall not be required to disclose any nonpublic financial
information pursuant to this Section 17.11. In addition, from time to time,
Tenant shall provide Landlord with such financial information pertaining to the
financial status of Tenant as Landlord may reasonably request, subject to the
final proviso of the immediately preceding sentence. Landlord agrees that all
financial information supplied to Landlord by Tenant shall be treated as
confidential material, and shall not be disseminated to any party or entity
(including any entity affiliated with Landlord) without Tenant's prior written
consent. For purposes of this Section, without limiting the generality of the
obligations provided herein it shall be deemed reasonable for Landlord to
request (and sufficient for Tenant to provide) copies of (i) Tenant's most
recent audited annual financial statements, or, if audited statements have not
been prepared, unaudited financial statements for Tenant's most recent fiscal
year, and (ii) Tenant's unaudited financial statements for Tenant's most recent
fiscal quarter, all of which unaudited statements shall be accompanied by a
certificate of Tenant's chief financial officer as to the accuracy of such
unaudited statements.
Landlord and Tenant recognize the need of Tenant to maintain
the confidentiality of information regarding its financial status and the need
of Landlord to be informed of, and to provide to prospective lenders and
purchasers of the Premises financial information pertaining to, Tenant's
financial status. Landlord and Tenant agree to cooperate with each other in
achieving these needs within the context of the obligations set forth in this
Section.
17.12. [Omitted.]
17.13. Time. Time is of the essence of this Lease, and of every term
and condition hereof.
17.14. Rules And Regulations. Tenant shall observe, comply with and
obey, and shall cause its employees, agents and, to the best of Tenant's
ability, invitees to observe, comply with and obey such rules and regulations
as Landlord may promulgate from time to time for the safety, care, cleanliness,
order and use of the Premises, the Building and the Property, provided that any
such rules and regulations promulgated after the date of this Lease shall not
materially and adversely affect Tenant's rights under this Lease.
17.15. Brokers. Landlord agrees to pay a brokerage commission to
Tenant's broker, Colliers Parrish International, Inc. in connection with the
consummation of this Lease in accordance with a separate agreement between
Landlord and such broker. Tenant represents and warrants that no other broker
participated in the consummation of this Lease and agrees to indemnify, defend
and hold Landlord harmless against any liability, cost or expense, including,
without limitation, reasonable attorneys' fees, arising out of any claims for
brokerage commissions or other similar compensation in connection with any
conversations, prior negotiations or other dealings by Tenant with any other
broker.
17.16. Memorandum Of Lease. At any time during the term of this
Lease, either party, at its sole expense, shall be entitled to record a
memorandum of this Lease and, if either party so elects, both parties agree to
cooperate in the preparation, execution, acknowledgement and recordation of
such document in reasonable form.
17.17. Corporate Authority. The person signing this Lease on behalf
of Tenant warrants that he or she is fully authorized to do so and, by so
doing, to bind Tenant. As evidence of such authority, Tenant shall deliver to
Landlord, upon or prior to execution of this Lease, a certified copy of a
resolution of Tenant's board of directors authorizing the execution of this
Lease and naming the officer that is authorized to execute this Lease on behalf
of Tenant.
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17.18. Execution and Delivery. Submission of this Lease for
examination or signature by Tenant does not constitute an agreement or
reservation of or option for lease of the Premises. This instrument shall not
be effective or binding upon either party, as a lease or otherwise, until
executed and delivered by both Landlord and Tenant. This Lease may be executed
in one or more counterparts and by separate parties on separate counterparts,
but each such counterpart shall constitute an original and all such
counterparts together shall constitute one and the same instrument.
17.19. Stock Warrants. In consideration of their mutual execution of
this Lease, Landlord and Tenant shall proceed diligently and in good faith to
negotiate and enter into a Warrant Purchase Agreement in mutually satisfactory
form within thirty (30) days after the date hereof, covering the issuance of
warrants for the purchase of an aggregate of twenty-two thousand five hundred
(22,500) shares of Series E Preferred Stock of Tenant at an exercise price of
$7.94 per share (which Series E Preferred Stock is then, under its present
terms, convertible into 45,000 shares of Common Stock of Tenant at no
additional cost).
17.20. Survival. Without limiting survival provisions which would
otherwise be implied or construed under applicable law or which are otherwise
explicitly set forth herein, the provisions of Sections 2.6, 5.4, 7.2, 7.3,
7.4, 9.6, 10.6, 13.4 and 17.5 hereof shall survive the termination of this
Lease with respect to matters occurring prior to the expiration of this Lease.
17.21. Consents. Whenever the approval or consent of a party is
required to be obtained under any provision of this Lease as a condition or
prerequisite to the taking of any action or effectiveness of any action by the
other party, then such approval or consent shall not be unreasonably withheld,
delayed or conditioned, regardless of whether or not such reasonableness
requirement is expressly stated in the applicable provision of this Lease.
17.22 Landlord Defaults. If Landlord fails to perform any
obligation, agreement or covenant under this Lease which relates specifically to
the Premises and does not materially affect other tenants of the Property (such
as, by way of example and not limitation, Landlord's obligation to maintain the
roof, exterior walls and other structural portions of the Building), and if such
failure continues for fifteen (15) days after written notice of such failure is
given by Tenant to Landlord or, if such default is curable in nature but it is
not possible to cure such default within fifteen (15) days, Landlord fails to
commence cure within such fifteen (15) day period or thereafter fails to proceed
diligently to complete cure, then Tenant shall have the right to perform such
obligation or cure such default of Landlord, and Landlord shall reimburse Tenant
for the reasonable cost thereof, together with interest at the rate specified in
the first sentence of Section 3.2 hereof from the date of payment by Tenant to
the date of reimbursement by Landlord, within fifteen (15) days after written
notice from Tenant of the completion and cost of such cure, accompanied by
copies of invoices or other supporting documentation. Under no circumstances,
however, shall Tenant have any right to offset the cost of any such cure against
rent or other charges falling due from time to time under this Lease.
[rest of page intentionally left blank)
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34
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the day and year first set forth above.
"Landlord" "Tenant"
BRITANNIA HACIENDA V LIMITED PROBUSINESS, INC.,
PARTNERSHIP, a Delaware limited a California corporation
partnership
By: BRITANNIA HOPYARD, LLC, By: /s/ Thomas H. Sinton
a California limited liability ---------------------------
company, General Partner Its: President
--------------------------
By: /s/ T. J. Bristow
--------------------------
T. J. Bristow
Manager & President
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EXHIBITS
EXHIBIT A Real Property Description
EXHIBIT B Site Plan
EXHIBIT C Construction
C-1: First Floor Plan
C-2: Second Floor Plan
C-3: Finish Specifications
EXHIBIT D Construction Timeline
EXHIBIT E Acknowledgement of Lease Commencement
36
EXHIBIT A
REAL PROPERTY DESCRIPTION
PARCEL ONE:
Lot 14A of Amended Parcel Map No. 4571, filed November 23, 1987, in Book 172 of
Maps, Pages 81 and 82, Alameda County Records.
PARCEL TWO:
Non-exclusive easements, appurtenant to Parcel One above, for the purpose of
vehicular (including trucks of all sizes) and pedestrian ingress and egress
over, along and across all that portion of Lot 14B as shown on said Parcel Map
No. 4517 lying within the lines of that certain "Community Driveway Easement"
depicted in said Parcel Map No. 4517, as the grant of such easement was
confirmed unto The Prudential Insurance Company of America, a New Jersey
corporation, pursuant to that certain "Grant of Easement and Maintenance
Agreement" dated July 30, 1985, recorded July 30, 1985, as Series No.
85-150156, Official Records of Alameda County.
EXHIBIT A
37
[SITE PLAN MAP]
EXHIBIT B TO
BUILD-TO-SUIT LEASE
38
[AP+1 Design, Inc. Logo]
PROBUSINESS
Tenant Improvement Notes
September 26, 1996
Page One
FLOORS
1. Provide direct glue carpet throughout unless otherwise noted.
Provide material cost of S18 per square yard for general office carpet.
2. Provide upgraded carpet in first floor lobby insets, lobby conference
rooms, stair, second floor atrium area, boardroom and presentation rooms.
Provide material cost of $34 per square yard for upgraded carpet. Provide
carpet pad at the stair.
3. Provide sheet linoleum in the servery and dining area of the
cafeteria. Provide quarry tile in the kitchen/prep area. Provide material
cost of $5 for the linoleum.
4. Provide 2" x 2" ceramic tile on the floors of all general office and
gym toilet rooms and shower rooms.
5. Provide stone flooring in the first floor lobby, lobby toilet rooms
and the elevator cab. Provide material cost of $10 per square foot.
6. Provide VCT at coffee bars, file rooms, storage rooms and the
Production area except at offices within Production.
7. Provide 6" stone base at all areas of stone flooring.
8. Provide 4" wood base at all upgraded carpet.
9. Provide 4" top set base at all general office carpet.
10. Provide 6" cove base at linoleum.
WALLS
11. Provide two coats of flat latex paint over smooth finish walls
throughout unless otherwise noted.
12. Provide eggshell enamel paint finish in Coffee Bars and other to be
determined areas.
Architecture Planning Interior Design
3945 Freedom Circle, Suite 108 Santa Clara, CA 95054 408.496.1892
FAX 408.496.1896
EXHIBIT C-3
39
ProBusiness
September 26, 1996
Page Two
13. Provide 4' wainscot of 4" x 4" ceramic tile in toilet rooms on wet
walls. Provide eggshell enamel paint above ceramic tile.
14. Provide furring and gyp board on all exterior concrete walls.
15. At owner's option, provide full height one hour walls at the lobby for
future use as multitenant building. (Current exiting configuration does not
require tile rating of the lobby, however, construction of tile walls to one
hour now should save time and effort later should the building become
multi-tenant).
16. All walls that are insulated at offices and conference rooms are to
attach to the structure above for optimum acoustical protection.
17. All columns are to be furred.
CEILINGS
18. Delete
19. Provide 9'- 0" dropped ceilings with building standard ceiling boards
in all open office areas, enclosed offices, conference rooms, and coffee areas.
except as defined in item 20.
20. Provide 2' x 2' Fineline 9/16" grid at upgraded ceilings in board
room, presentation rooms and upgraded areas. Provide upgraded ceiling tile
allowance of $3 per square foot for these areas.
21. Provide gyp board ceilings with smooth finish in the lobby and second
floor atrium space and toilet rooms.
22. Provide allowance for soffits and/or ceiling elevation changes in the
lobby, second floor atrium space, board room and presentation rooms.
23. Provide an allowance for four skylights in the second floor lobby.
Size to be determined.
DOORS, WINDOWS AND FRAMES
24. Provide 3' x 9' solid core maple veneer doors with clear aluminum
frames.
25. Provide clear anodized aluminum frames for all sidelights and glass
throughout the building
26. Provide Schlage "D" series Rhodes lever handles, brushed chrome
finish.
27. Provide wire glass at all rated walls as shown on the plans.
40
ProBusiness
September 26, 1996
Page Three
FIRE SPRINKLERS
28. Provide semi-recessed heads with white painted escutcheons in all
finished ceilings. Provide heads painted to match structure in open ceiling
areas.
INSULATION
29. Delete
30. Provide R-19, foil faced batt insulation to be installed throughout
the roof structure.
31. Provide R-11 foil faced batt insulation to be installed at all
exterior walls of conditioned spaces.
32. Provide 1/2" rigid sound board and fiberglass sound batts in all
office walls, conference rooms and toilet room walls. Provide 4' of fiberglass
batts over the ceiling on each side, of each insulated wall.
33. Provide R-11 foil faced batt insulation between conditioned spaces and
unconditioned warehouse areas.
ELECTRICAL
34. Provide three duplex electrical receptacles in all private offices and
conference rooms. Provide general convenience outlets throughout the space.
Provide allowance for additional dedicated or special electrical requirements
(as yet unspecified) in areas such as copy rooms, presentation rooms,
boardroom, etc.
35. Provide one pull wire for telephone and data in all private offices
and conference rooms.
36. Provide one junction box for every three open office furniture
workstations, 15 amps.
37. Light fixtures in all open office areas, enclosed offices, conference
rooms, coffee areas, etc. to be suspended 2' x 4' fluorescent fixtures with
parabolic lenses. Light fixtures in upgraded ceilings in board room,
presentation rooms and upgraded areas to be suspended 2' x 2' fluorescent
fixtures with parabolic lenses. Provide allowance for sconces at first floor
lobby, second floor atrium, boardroom and servery/dining area.
38. Provide downlights in key areas such as the first and second floor
lobby, boardroom and presentation rooms.
39. Provide emergency and exit lighting and smoke detectors in the unused
areas that serve as exits for the adjacent office areas.
40. Provide allowance for pendant light fixtures over the reception desk,
in the dining area and in the gallery space outside of the workout room.
41
ProBusiness
September 26, 1996
Page Four
HEATING & AIR CONDITIONING
41. Provide roof top variable air volume system.
42. Provide additional air conditioning in the IS computer room and the
Production room.
MISCELLANEOUS
43. Provide plastic laminate top and splash in the toilet rooms and locker
room.
44. Provide plastic laminate upper and lower cabinets with sinks at all
Coffee Bars.
45. Provide plastic laminate toilet room partitions, floor mounted,
overhead braced.
46. Provide stainless steel toilet room accessories.
47. Provide fiberglass shower stalls in the shower room.
48. Provide 1" horizontal blinds on all exterior and interior windows.
49. Delete
50. Provide allowance of $15,000 for the reception desk and $30,000 for
all audio visual cabinetry in the Boardroom and both Sales Presentation Rooms.
51. ProBusiness has contacted the caterer Bon Appetite to provide services
in the Kitchen/Servery. While the areas have not been planned yet, Bon Appetite
was instrumental in establishing the sizes of the areas. ProBusiness will
provide landlord with a proposed layout for the Kitchen/Servery. Landlord to
provide all plumbing, electrical, HVAC in accordance to the above layout.
42
[MAP]
43
[MAP]
EXHIBIT C-2
44
[MAP]
[SPACE PLAN NO. 1]
45
[MAP]
EXHIBIT C-1
46
PRO BUSINESS, BRITANNIA BUSINESS CENTER, HACIENDA 5, PLEASANTON
PREPARED ON 25 SEPTEMBER 96
SITE & SHELL
SEP OCT 96 NOV 96 DEC 96 JAN 97
23 30 1 7 14 21 28 4 11 18 25 2 9 16 23 30 6 13 20
GRADE SITE **** **** **** *****
SITE UTILITIES **** *****
FOUNDATIONS **** **** **** *****
UNDERSLAB UTILITIES **** **** *****
GROUND FLOOR SLAB **** **** **** *****
PANELS **** **** **** **** **** *****
ERECT PANELS **
STEEL DETAILING **** **** **** **** **** **** **** *****
FAB STEEL **** **** **** **** **** **** **** *****
FEB 97 MAR 97 APR 97 MAY 97
27 3 10 17 24 3 10 17 24 31 7 14 21 28 5 12 19 26
ERECT STEEL ** **** **** **** **** **** **** **** *****
STEEL JOISTS/DECKING **** **** **** **** **** **** **** *****
EXTERIOR FRAMING **** **** **** **** **** *****
ROOFING MEMBRANE **** **** *****
EXT PAINTING **** **** ****
ALUMINUM & GLAZING **** **** **** **** **** *****
JUNE 97 JULY 97 AUG 97 SEP 97
2 9 16 23 30 7 14 21 28 4 11 18 25 1 8 15
GRADE SITE AND PAD
SITE UTILITIES
FOUNDATIONS
UNDERSLAB UTILITIES
GROUND FLOOR SLAB
PANELS
ERECT PANELS
STEEL DETAILING
FAB STEEL
ERECT STEEL
STEEL JOISTS/DECKING
EXTERIOR FRAMING
ROOFING MEMBRANE
EXT PAINTING
ALUMINUM & GLAZING
SEP OCT 96 NOV 96 DEC 96 JAN 97 FEB 97
23 30 1 7 14 21 28 4 11 18 25 2 9 18 23 30 6 13 20 27 3 10 17 24
DESIGN SCHEDULE
FINAL LOBBY DESIGN 25 SEPT 96
T.I. SPACE PLAN
ALL PLUMBING LOCATED 30 SEPT 96
ANY OTHER UNDERGROUND 30 SEPT 96
SUBMIT SHELL FOR PERMIT 14 OCT 96
ARCH DWGS COMPLETE RESUBMIT 04 NOV 96
FINAL T.I. SPACE PLAN 18 OCT 96
SUBMIT FOR T.I. PERMIT 15 JAN 97
TENANT IMPROVEMENTS
VOICE/DATA TRENCHING **** **** **** *****
ROUGH M.E.P. **** **** **** **** *****
FRAME HIGH WALLS **** **** **** *****
DRYWALL @ HIGH WALLS **** *****
T-BAR GRID **** **** *****
FRAME BELOW GRID **** **** *****
M.E.P. **** *****
INSULATE WALLS *****
DRYWALL, TAPE & TOP **** *****
INTERIOR PAINTING *****
FINISH RESTROOMS **** **** *****
FLOOR COVERINGS *****
CABINETRY *****
FINISH MEP *****
PUNCH LIST *
MOVE IN *
SITE WORK
SITE CONCRETE **** **** **** *****
LANDSCAPING **** **** **** **** *****
PAVING **** **** *****
MAR 97 APR 97 MAY 97 JUNE 97 JULY 97 AUG 97 SEP 97
3 10 17 24 31 7 14 21 28 5 12 19 26 2 9 16 23 30 7 14 21 28 4 11 18 25 1 8 15
EXHIBIT D
to
Build-to-Suit Lease
47
EXHIBIT E
ACKNOWLEDGEMENT OF LEASE COMMENCEMENT
This Acknowledgement is executed as of ______________, 1997, by
BRITANNIA HACIENDA V LIMITED PARTNERSHIP, a Delaware limited partnership
("Landlord"), and PROBUSINESS, INC., a California corporation ("Tenant"),
pursuant to Section 2.5 of the Lease dated September 27, 1996 between Landlord
and Tenant (the "Lease") covering premises located at______________________,
Pleasanton, CA 94588 (the "Premises").
Landlord and Tenant hereby acknowledge and agree as follows:
1. The Commencement Date under the Lease is______________, 1997.
2. The termination date under the Lease shall be __________, 2008,
subject to any applicable provisions of the Lease for extension or early
termination thereof.
3. The agreed square footage of the Building, as built, is ______
square feet; the agreed square footage of the portion of the Premises initially
occupied by Tenant as of the Commencement Date is ___________ square feet.
4. Tenant accepts the Premises and acknowledges the satisfactory
completion of all improvements therein (if any) required to be made by
Landlord, subject only to any applicable "punch list" or similar procedures
specifically provided under the Lease.
5. The excess cost of improvements (if any) for which Tenant is
responsible under Exhibit C to the Lease is $______________ , resulting in an
additional rent amount of $_____________ per month pursuant to Section 3.1(d)
of the Lease.
EXECUTED as of the date first set forth above.
"Landlord" "Tenant"
BRITANNIA HACIENDA V LIMITED PROBUSINESS, INC.,
PARTNERSHIP, a Delaware limited a California corporation
partnership
By: BRITANNIA HOPYARD, LLC, a By:______________________
California limited liability Its:_____________________
company, General Partner
By:______________________
T. J. Bristow
Manager & President